Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 9, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Consideration / fees for technical services - There is no profit element in the pro rata costs paid by the agents of the assessee to the assessee - the amounts paid by the agents to utilise the amount arose out of the shipping business cannot be brought to tax as sought to be done. - HC
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Consideration / fees for technical services - It related to shipment of cargo and their movement across the oceans. The views of the revenue that it amounted to technical service is misconceived. - HC
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Book Adjustments u/s 115JA - Minimum Alternate Tax (MAT) - Provision for doubtful debts - entire provision represented advances towards sister concern and not trade debts - not stand covered by clause (c) of the explanation to Section 115JA(2) - HC
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100% EOU - The moment the decision / approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted by the Development Commissioner. If that be so, it cannot be said that the assessee was not a Export Oriented Unit, which was entitled to the deduction under Section 10B - HC
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Exemption u/s.11 - levy of surcharge on patients and doctors - we do not think that despite the directions of the Charity Commissioner, the revenue can insist that the amounts charged or sur-charges levied should not be treated as income from the activities of the trust - HC
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Addition u/son 69/69(C) - The assessee never offered and/or claimed deduction as expenditure. Therefore, it is rightly observed by the learned Tribunal that there was no question of making any addition under Section 69/69(C) - HC
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Reopening of assessment - AO already had raised the said issue of amortization of royalty paid to the Wireless Planning Commission of Government of India while framing the assessment under Section 143(3) - notice of reopening fails with all consequential reliefs - HC
Customs
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Classification of goods - Merely because LCDs are to be used as parts in the electricity supply meters, can it be said that they are to be included in Entry 9028? - LCD would be covered by 'other devices' mentioned in 9013.80 - SC
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Valuation of import of goods - In the absence of identical goods, valuation on the basis of similar goods is valid - order of the Commissioner cannot be faulted - SC
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Denial of refund claim - Unjust enrichment - Simply stating that the goods were sold at a loss does not establish that the duty incidence was not passed - No refund - AT
Service Tax
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Denial of refund claim - Notification No. 41/2007-ST - certain conditions stipulated in the Notification was not complied with but non-compliance of such condition was compensated with other corroborative documents - refund allowed - AT
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Penalty u/s 78 - Once it is categorically held by Commissioner (Appeals) that appellant was under a bonafide belief that service tax as demanded was not payable, then a view can not be entertained that the facts will justify imposition of penalty under Section 78 of the Finance Act, 1994 - AT
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C&F Agent services - The fact that a person describes himself as a forwarding agent is not conclusive: and it is a question of fact to be decided according to the circumstances of each case - SC
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Clearing and forwarding agent service or not - providing certain services as Agent to maintain constant liaison with the Railways for the actual placing of coal rakes - There is no role of the appellant in getting the coal cleared from the collieries/ supplier of the coal - Not taxable as C&F agent services - SC
Central Excise
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Manufacture of medical equipment - Defibrillators are not capable of being used internally without paddles and paddle is an accessory which does not qualify for exemption any longer - as defibrillators are sold without paddles, benefit of exemption was rightly denied - SC
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Valuation - Levy of penalty u/s 11AC - it is the appellant which had worked out the final costing and it is the chartered accountant of the appellant which had prepared the said costing and submitted to the Department. - appellant cannot feign ignorance or be pretentious about its innocence - SC
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Penalty u/s 11AC - Interest u/s 11AB - interest and penalty are imposable and there is no discretionary power vested with the authorities for waiving the same.- HC
VAT
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Challenge to the orders of assessment - enhancement of the rate of tax has been done without notice to the petitioner - therefore the order is in violation of principles of natural justice - HC
Case Laws:
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Income Tax
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2015 (5) TMI 236
Disallowance made u/s.40(c) - remuneration paid to two directors of the company - ITAT allowed claim - Held that:- disallowance made by the ITO under section 40(c) of the Act was not justified. The amounts paid to the two individuals were not paid in their capacity as members of the Board of Directors but these amounts were paid as professional charges for directing and producing a film. The revenue is, therefore, not justified in disallowing the claim, the character of the remuneration mode being different. As we have observed above, we are of the view that the Tribunal was right in deleting the disallowance. - Decided in favour of assessee. Deduction section 80J - whether business of production of films constitutes an industrial undertaking ? - Held that:- As relying on Commissioner Of Income-Tax Versus DK. Kondke [1991 (3) TMI 82 - BOMBAY High Court] if the production of a cinematograph film amounts to manufacture of an article or goods within the meaning of section 104 (40(a) as it then stood, it follows that the said activities must be treated as that of an industrial undertaking within the purview of Section 80J of the Act.Accordingly, the activities of production of a film amounted to manufacturing of an article or goods. The activities be treated as those of an industrial undertaking within the purview of Section 80J of the Act. Even otherwise, this Court was of the view that film production will have to be considered as a manufacturing activity and the undertaking will have to be considered as an industrial undertaking as the same is considered under excise law and other allied laws also. - Decided in favour of assessee.
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2015 (5) TMI 235
Consideration / fees for technical services - AO held that the amounts paid by the three agents to the assessee taxable in India under Article 13(4) of the DTAA and assessed tax at 20% under section 115A - Tribunal allowed the appeal of the assessee Held that:- There is no finding by the Assessing Officer or the Commissioner that there was any profit element involved in the payments received by the assessee from its Indian agents. On the other hand, having considered the various submissions, we are of the view that no technical services as contemplated by the Act have been rendered in the instant case. The provisions of Section 9 Income Tax Act were applicable and the provisions of DTAA, if more beneficial than the I.T. Act, the provisions of DTAA would prevail. Thus, in the instant case also, it is not possible for the revenue to unilaterally decide contrary to the provisions of the DTAA. We are informed that the agreements inter parties had been performed and the payments were made by the agents to use Maersk Net for the Maersk group's global shipping business and for no other reason. It related to shipment of cargo and their movement across the oceans. The views of the revenue that it amounted to technical service is misconceived. Repayment of money may be construed as “reimbursement” only if it is bereft of profits for the services rendered. There is no profit element in the pro rata costs paid by the agents of the assessee to the assessee and accordingly, we have no hesitation in holding that the amounts paid by the agents to utilise the amount arose out of the shipping business cannot be brought to tax as sought to be done. - Decided in favour of assessee.
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2015 (5) TMI 234
Long term capital gain working - Valuation of the property - Appellant claims that he was owner of 1/3rd share in a immovable property - penalty under section 271(1)(c) as the capital gain had been computed on inadvertent assumption that the said property had been acquired prior to 1st April, 1981, while it had in fact been acquired on 24th August, 1981 - non granting of personal hearing - Held that:- The only thing that can be said about the argument desperately canvassed before us is that the Assessing Officer did not give a personal hearing nor granted an opportunity to the Assessee before imposing penalty is that such argument is now being raised without pointing out such a defect in the Assessing Officer's order before the Tribunal. Apart therefrom, we do not find how, when the Assessing officer's order was challenged before the Commissioner and the Assessee succeeded before the Commissioner, the penalty was set aside, that from an Appeal by the Revenue against the Tribunal's order can such a ground be raised. Even if such a plea can be raised now, we do not find that there is any prejudice caused, as all the fact finding authorities have gone elaborately through the contentions raised by the Assessee. There is no miscarriage of justice. No substantial question of law - Decided against assessee.
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2015 (5) TMI 233
Disallowance of mark to market loss on account of close of the year in derivative transactions - ITAT allowed the claim - Held that:- The transactions in derivatives market has been taken out of the purview of "speculation transaction”. As per guidelines of SEBI, it is imperative to all who have open position, in the F&O segment on the end of the financial year i.e. 31st of march to show mark to market loss in their books of account. On the basis of the directions of the SEBI, the ICAI, which is the highest accounting body of the country, has issued necessary guidelines for the purposes of accounting mark to market losses. Thus no hesitation to hold that the losses booked on the close of the financial year in respect of open positions in futures is a crystalised liability and therefore allowable. We accordingly reverse the findings of the Ld.CIT(A) and direct the AO to allow the loss of ₹ 22,77,095/-. The view taken is in consonance with the factual materials and the guidelines so also the directions from the Securities Exchange Board of India (SEBI) and the Institute of Chartered Accountants of India (ICA). - Decided in favour of assessee.
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2015 (5) TMI 232
Rectification application u/s.154 - ITAT directing AO not to include the current profit to be part of accumulated profit while determining the amount of deemed dividend - Held that:- Considering the provisions of Section 2(22)(e) more particularly, Explanation 2 to Section 2(22)(e) of the Act, it cannot be said that the Tribunal has committed any error in directing the Assessing Officer not to include the current profit to be part of accumulated profit while determining the amount of deemed dividend under Section 2(22)(e) of the Act. While determining the amount of deemed dividend under Explanation 2 to Section 2(22)(e) of the Act, the current profit was not required to be included to be part of accumulated profit. As such, as observed by the learned Tribunal, the issue is already against the Revenue in the case of Associated Banking Corporation of Ind. Ltd. V/s. Commissioner of Income-Tax, Bombay reported in (1964 (10) TMI 7 - SUPREME Court ) by which, the view taken that the profit accrues when the books of account are closed. - Decided against the Revenue.
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2015 (5) TMI 231
Book Adjustments u/s 115JA - Minimum Alternate Tax (MAT) - Provision for doubtful debts - entire provision represented advances towards sister concern and not trade debts - Held that:- It is very clear from the language of clause (c) of the explanation to Section 115JA(2) of the Act that it only refers to the amount set aside for provisions made for meeting liabilities, which are not ascertained. In the present case, indisputably, the amount of ₹ 20.5 lakhs sought to be added to the book profits, is in fact a provision made in respect of unlikely recovery of an advance made by the respondent to its sister concern. Thus, the same is not in the nature of a liability of the respondent assessee, but is in the nature of a recoverable from its sister concern. Such a provision causes a possible diminution in the value of asset i.e. amount recoverable. Thus there is no debt payable by the respondent assessee, but it is a debt receivable and would not stand covered by clause (c) of the explanation to Section 115JA(2) of the Act. Thus, the issue stands concluded in favour of the respondent by the decision of the Apex Court in HCL Connect System and Services Ltd (2008 (9) TMI 18 - SUPREME COURT) and Rolta India Ltd (2011 (1) TMI 5 - SUPREME COURT OF INDIA) - Decided in favour of the respondent Assessee Interest u/s 234B&C - ITAT deleted addition - Held that:- This question stands concluded in favour of the Revenue, by the decision of the Apex Court in Joint Commissioner of Income Tax Vs. Rolta India Ltd. (2011 (1) TMI 5 - SUPREME COURT OF INDIA). Decided in favour of Revenue.
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2015 (5) TMI 230
Disallowance of deduction under Section 10B - CIT(A) deleting the disallowance admitting additional evidence in the form of approval granted by the Board of Approval (BOA) to the alleged export oriented Unit - Held that:- The moment the decision / approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted by the Development Commissioner. If that be so, it cannot be said that the assessee was not a Export Oriented Unit, which was entitled to the deduction under Section 10B of the Act. Incidentally it is to be noted that in the subsequent circular No.68 issued by the Export Promotion Council for Eous & SEZS dated 14/05/2009 it mentions that from 1990 onwards Board of Approval had delegated the power of approval of 100% to the Development Commissioner and, therefore, it can be very well argued and said that the Development Commissioner while granting the approval of 100% EOU exercises delegated powers. In any case and apart from the above when it is found that at the relevant time the Development Commissioner granted the approval of 100% EOU in favour of the assessee-Company, which came to be subsequently ratified by the Board of Approval and as observed hereinabove as such the ratification shall be from the date on which the Development Commissioner granted the approval, both the learned CIT(A) as well as the learned Tribunal have rightly held that the assessee was entitled to deduction under Section10B of the Act as claimed. We confirm the view taken by both the authorities below holding that the assessee was entitled to 100% EOU as claimed. No substantial question of law arises in the present Tax Appeal. - Decided against revenue.
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2015 (5) TMI 229
Unexplained source of the cash deposit in bank account - ITAT deleted addition relying upon its observation in the case of M/s. Natural Biocon (India) Ltd - Held that:- On considering the order passed by the learned Tribunal in the case of M/s. Natural Biocon (India) Ltd. for the Assessment Year 1996-97 the learned Tribunal had an occasion to consider the share application money of ₹ 25 lacs received by M/s. Natural Biocon (India) Ltd. from the present assessee-Shri Makwana. It is true that in the case of M/s. Natural Biocon (India) Ltd. the Assessing Officer made a protective addition of ₹ 25 lacs as Shri Makwana claimed that the investment of ₹ 25 lacs was made by taking advance from the M/s. Natural Biocon (India) Ltd.. However, while deleting such addition, the learned Tribunal did observe that the source of the share application money of ₹ 25 lacs made by Shri Makwana has been explained as advance received by him from M/s. Natural Biocon (India) Ltd.. The learned Tribunal has also observed in the case of M/s. Natural Biocon (India) Ltd. that the Assessing Officer himself admitted that such advance was given to Shri Makwana through banking channel. The learned Tribunal also observed that there is no dispute about the capacity of the M/s. Natural Biocon (India) Ltd. in giving the advance of ₹ 25 lacs to Shri Makwana. Thus it cannot be said that the learned Tribunal has committed any error in deleting the addition of ₹ 25 lacs made by the Assessing Officer as unexplained investment confirmed by the learned CIT(A). We confirm the view taken by the learned Tribunal. No substantial question of law - Decided against revenue.
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2015 (5) TMI 228
Penalty under Section 271(1)(c) - Disallowance of set-off loss on derivative trading by AO - AO also treated F&O derivatives as "business income", disallowing the capital loss claim - Held that:- When the present controversy arose, there was some divergence of opinion as to the character of such transactions and whether they constitute speculative loss. The introduction of Section 43(5)(b) and related provisions brought in its wake certain complications in that not all stock exchanges were notified to deal with commodities. The Mumbai Bench decision of ITAT in Arnav (2012 (9) TMI 447 - ITAT MUMBAI ) clarified that subsequent recognition or notification of the stock exchange would relate back to the point of time when the legislation was amended. Having regard to these facts, the Court is of the opinion that the ratio in Auric (2007 (7) TMI 276 - DELHI HIGH COURT ) squarely applies to the circumstances of the present case wherein held that since assessee filed full details of the sale of shares, he did not conceal any particulars of income – mere treatment of the business loss as speculation loss by the Assessing Officer does not automatically warrant inference of concealment of income. The imposition of penalty was not warranted. It is accordingly directed to be deleted and the impugned order of the ITAT is set aside. - Decided in favour of assessee.
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2015 (5) TMI 227
Qualifying amount for deduction u/s.35D - whether the quantum of deduction admissible under the section for a period of ten successive years at the rate of 1/10th of the expenditure having been fixed and become final in the initial year, the amount of such deduction can be varied in any subsequent year? - Held that:- The amount deductible under sub-section 1 of Section 35D is subject to the provisions contained in Sub-section 3 of Section 35D. The provision contained in Sub-section 3 provide an outer limit. Therefore, there can be no dispute nor has Mr. Khaitan, learned Senior Advocate disputed that deduction under Section 35D cannot be in excess of the provision contained in Sub-section 3 which is 2.5% of the total capital employed. One special variety of estoppel is res judicata. This results from the rule which prevents the parties to a judicial determination from litigating the same question over again, even though the determination is demonstrably wrong. But res judicata in this branch of law is bound to yield to two fundamental principles of public law: that jurisdiction cannot be exceeded; and that statutory powers and duties cannot be fettered. The jurisdiction of the CIT (A) in its order dated 29th May, 1998 extended merely to the assessment year 1995-96. The assessment year 1996-97 is a separate unit and that assessment cannot be made otherwise than in accordance with law. - Decided in favour of the revenue
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2015 (5) TMI 226
Exemption u/s.11 - Assessing Officer pointed out specific defects in treating the income earned by levying surcharge at a specific rate for the bills raised on patients and doctors on the fees paid to them and treating them as corpus donation instead of income earned from the activities of the trust - ITAT allowed exemption - Whether ITAT is justified in ignoring the fact that application of the assessee u/s.10(23C)(via) has been rejected by the CCIT, Mumbai?- Held that:- . The definition of the term "charitable purpose" is appearing in section 2(15) of the Income Tax Act, 1961 and which includes medical relief. Insofar as section 10(23C) is concerned, that pertains to any income received by any person on behalf of hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit. In relation to that, we find that the Commissioner passed an order denying the exemption and that order of the Commissioner has been challenged by the assessee by filing a Writ Petition in this Court and that is pending. In the present case, neither the Commissioner nor the Tribunal has decided anything by which it can be gathered that above exemption or the order in relation thereto forms the basis for the conclusion reached by the Commissioner and Tribunal concurrently. Insofar as exemption under section 11 is concerned It is clear from the Tribunal's order that there was no issue before the Commissioner in respect of any exemption under section 10(21) and 10(23C). The assessing officer had disallowed the claim of exemption under section 11 of the I.T. Act. The Tribunal's earlier orders are in relation to this exemption. The Tribunal concurred with its earlier order dated 10th January, 2005. The Tribunal, therefore, found that when the facts are identical to the Assessment order under consideration, then, there is no difficulty in applying and following its views for the earlier assessment years. No substantial question of law. The argument of Mr.Malhotra that the levy of surcharge on patients and doctors ought not to have been treated as income earned from the activities of the trust but a corpus donation, need not detain us. Mr.Malhotra himself had pointed to us that certain directions were issued to the Assessee by the Charity Commissioner of the State in exercise of his powers under section 34 of the Bombay Public Trust Act, 1950. They have been referred to in the order of the assessing officer as well. In the circumstances and when section 41-AA was inserted in the Bombay Public Trust Act by the Maharashtra Act of 1985 with a avowed and specific purpose, that we do not think that despite the directions of the Charity Commissioner, the revenue can insist that the amounts charged or sur-charges levied should not be treated as income from the activities of the trust. The authorities under the Income Tax Act are suppose to scrutinise the papers and related documents of the trust or the assessee so as to bring the income to tax and in accordance with the I.T. Act. - Decided against revenue.
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2015 (5) TMI 225
Transaction of shares - short term capital gain v/s business income - Held that:- In the given facts of the case, the mere circumstance that for the previous year, a part of the stock in trade was converted into investments would not have been conclusive as to whether the realisation out of purchase and sale of shares was by way of income from business. The AO had accepted the assessee's claim for long term capital gains and completed the assessment. Having done so, he could not have fallen back upon the facts of the previous years when the conversion took place. Furthermore, we are of the opinion that the ITAT duly considered the applicable law in deciding that the income was not business income but in fact short term capital gain. The question of law urged, therefore, does not arise. - Decided against revenue. Disallowance under Section 14A - Held that:- The order of the ITAT merely remands the matter for re-adjudication afresh in the light of the directions in Maxopp Investment Ltd. v. CIT, ( 2011 (11) TMI 267 - Delhi High Court ) - Decided against revenue.
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2015 (5) TMI 224
Addition u/son 69/69(C) - ITAT deleted addition as when the assessee did not offer ₹ 43,07,179/- as expenditure and did not claim deduction as expenditure, AO was not justified in invoking Section 69/69C and/or in making the addition as unexplained expenditure - Held that:- The assessee never offered and/or claimed deduction of ₹ 43,07,179/- as expenditure. Therefore, it is rightly observed by the learned Tribunal that there was no question of making any addition under Section 69/69(C) of the Act. Section 69(C) of the Act would be applicable in a case where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Tribunal has rightly held that the Assessing Officer has committed error in making addition of ₹ 43,07,179/- under Section 69/69C of the Act. No substantial question of law - Decided against revenue.
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2015 (5) TMI 223
Addition u/s 68 set off against unabsorbed depreciation - Held that:- On considering the decision of the Hon'ble Supreme Court in case of D.P. Sandu Bros. Chembur (P) Ltd. (2005 (1) TMI 13 - SUPREME Court ) which is on the point no error has been committed by the Tribunal in dismissing the appeal confirming the order passed by the learned CIT (Appeals) holding and/or permitting the addition made under section 68 of the Act liable to be set off against unabsorbed depreciation. - Decided against revenue.
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2015 (5) TMI 222
Reopening of assessment - accounting treatment in respect of unutilized Cenvat credit questioned - Held that:- Identical question came to be considered by the Division Bench of this Court in the case of Heavy Metal and Tubes Limited (2015 (2) TMI 820 - GUJARAT HIGH COURT) and in identical facts and circumstances of the case, the Division Bench quash and set aside the reassessment proceedings which were sought to be initiated on the very grounds on which the impugned reassessment proceedings are initiated against the petitioner - assessee, by observing that where the issue of accounting treatment in respect of unutilized Cenvat credit for the purpose of valuing closing stock was already examined by the Assessing Officer during the scrutiny assessment, reassessment proceedings on the same issue without any tangible material was mere a change of opinion and hence not sustainable. Applying the decision of the Division Bench of this Court in the case of Heavy Metal and Tubes Limited (supra) as well as Lanxess ABS Limited Now known as INEOS ABS (India) Ltd. (2012 (5) TMI 133 - Gujarat High Court), to the facts of the case on hand and as observed hereinabove, there does not appear to be failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the initiation of the impugned reassessment proceedings which are initiated beyond the period of four years, are not permissible and the same cannot be sustained and on that ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. - Decided in favour of assessee.
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2015 (5) TMI 221
Reopening of assessment - reassessment proceedings on the basis of the audit objections raised by the audit party - Held that:- The issue involved in the present petition is squarely covered by the decisions of Shilp Gravures Ltd. (2013 (11) TMI 581 - GUJARAT HIGH COURT), in the case of Vodafone West Ltd. (2015 (5) TMI 216 - GUJARAT HIGH COURT) and in the case of Mayur Wovens Pvt. Ltd. (2014 (7) TMI 722 - GUJARAT HIGH COURT) by which a view is taken that if the reassessment proceedings are initiated merely and solely at the instance of the audit party and when the Assessing Officer tried to justify the Assessment Orders and requested the audit party to drop the objections and there was no independent application of mind by the Assessing Officer with respect to subjective satisfaction for initiation of the reassessment proceedings, the impugned reassessment proceedings cannot be sustained and the same deserves to be quashed and set aside. Thus the impugned reassessment proceedings for A.Y. 2009-2010 are hereby quashed and set aside on the aforesaid ground alone. - Decided in favour of assessee.
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2015 (5) TMI 220
Income under the head "Management Development Programme and consultancy charges - whether exemption was not admissible because the requirement which is set out in sub-section (4A) of section 11 has not been satisfied? - ITAT allowed claim - Held that:- Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then, this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular person, separate books of account are also maintained, then, this income cannot be brought to tax. This conclusion is also not perverse and given the facts and circumstances which are undisputed. - Decided against revenue. Admissibility of depreciation - asset purchased by trust - itat allowed claim - Held that:- There is nothing like double deduction. When the assessee has acquired an asset from the income of the trust and thereafter the amount that is claimed is the depreciation on the use of the assets, such depreciation claim does not mean double deduction. The deduction earlier claimed is towards towards application of funds of the trust for acquiring assets. The latter is depreciation and it is permissible deduction considering the use of the assets. This has been clarified repeatedly by this Court. If any reference is required then the case of Commissioner of Income Tax V/s. Institution of Banking reported in (2003 (7) TMI 52 - BOMBAY High Court ) is enough. - Decided against revenue.
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2015 (5) TMI 219
Benefit under section 10(23C)(iiiab) - ITAT allowed the claim - once a benefit is granted under section 10(23C)(iiiab) of the Act, the assessee is also entitled to the benefit under section 11 and, therefore, the Revenue's appeals were dismissed by Tribunal - Held that:- The material on record discloses that the Government has financed the institutions and their share is roughly about 25 per cent. It is not in dispute that the assessee is carrying on its activities of imparting education. It is not existing for the sake of profit-making. When 25 per cent. of the finance to the assessee-institutions flows from the Government it constitutes the substantial finance and, therefore, it has satisfied all the legal requirements provided under section 10(23C)(iiiab) of the Act. Thus the finding recorded by the Tribunal that the assessee is entitled to the benefit exempted under section 10(23C)(iiiab) cannot be found fault with. The question, whether once a benefit under section 10(23C)(iiiab) of the Act is granted, the grant of exemption under section 11 of the Act is attracted or not is not gone into. It shall be decided as and when occasion arises before the appropriate court. Therefore, the finding of the Tribunal to that extent is kept open to be agitated in an appropriate forum and it will not act as precedent in the future assessment. - Decided against revenue.
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2015 (5) TMI 218
Investment allowance under Section 32A disallowed - Held that:- The contract dated 18.08.1986 was not a new contract but only a continuation or in other words modification of the existing contract dated 02.05.1986 as there was a price escalation and improvement of product. Even the insurance which was covered by shipper was also taken on 09.06.1986 which was prior to 12.06.1986. The finding of fact recorded by the CIT(A) is in consonance with section 32A(8B) of the Act. The Tribunal has erred in taking a contrary view and has misinterpreted section 32A(8B) of the Act and the facts are not properly appreciated. However, the assesee shall be entitled only to deduction on the amount which was referred in the contract dated 02.05.1986 which on pro-rata basis comes to ₹ 47,25,633/- and 20% of the same comes to ₹ 9,45,126/-. We therefore answer the question raised in the present appeal in the affirmative to that extent. The assessee shall be entitled to deduction on investment allowance to the extent of ₹ 9,45,126/- - Decided partly in favour of assessee.
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2015 (5) TMI 217
Reopening of assessment - Commissioner quashed the notice under section 148 also upheld by ITAT AS action for sanction by JCIT was without application of mind and as this was done in a mechanical manner - Held that:- While according sanction, the Joint Commissioner, Income Tax has only recorded so “Yes, I am satisfied”. If the case in hand is analysed on the basis of the principle laid down in case of Arjun Singh [1998 (11) TMI 26 - MADHYA PRADESH High Court] the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue - Decided against revenue.
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2015 (5) TMI 216
Reopening of assessment - notice of reopening includes the ground that only on objection raised by the audit department, such exercise is undertaken - Income reflected as on "Advance Income (Prepaid)" was in fact for the outright purchase of "Recharge" by Prepaid Connection Customers and the same was not an advance to be appropriated against the future use of services and Non-amortization of royalty paid to the Wireless Planning Commission of Government of India by treating the same as capital expenditure instead, entire expenditure charged to P&L Account was allowed as deduction resulting into under assessment of income - Held that:- Section 147 of the Act permits initiation of reassessment proceedings only when the Assessing Officer has a reason to believe that income has escaped the assessment. Whenever the audit party raises objections, it may provide information, however, eventually it is the Assessing Officer who should be satisfied himself & form a belief of his own that taxable income escaped the assessment. He cannot abdicate his decision making power by choosing to solely rely on the audit objection or follow such direction without his subjective satisfaction. In the instant case, therefore, the petitioner has succeeded on this ground alone and notice of reopening does need to be quashed. The amount paid for prepaid service was contended to be the outright purchase of "Recharge" by Prepaid Connection Customers and not an advance to be appropriated against the future use of services. The petitioner followed mercantile system of accounting and yet recognized the revenue only when the services were rendered to the prepaid customers.It was the stand of the petitioner that as long as no services were rendered by the assessee to the customers, income cannot be recognized by the assessee. It is only at the time of actual use made of the network of the assessee by the customers that he would be required to render the services. Such issue was threadbare examined by the Assessing Officer and therefore also, it cannot be said that the assessee failed to disclose fully and truly all material facts. As far as the second question was concerned, Section 35ABB provides for amortization of license fees paid for operating telecommunication services. Petitioner's claim for the Assessment Year 2008-2009 was disallowed to the extent of ₹ 98,29,17,915/- charged to P & L account but one eleventh (1/11 th) of which was allowed as deduction for considering the same for amortization. It is the stand of the petitioner that the royalty paid to the Wireless Planning Commission of Government of India is not paid for obtaining the license & this being revenue expenditure & not capital expenditure for obtaining license, is not amortizable under Section 35ABB. The respondent-Assessing Officer thus, already had raised the said issue of amortization of royalty paid to the Wireless Planning Commission of Government of India while framing the assessment under Section 143(3) of the Act. See CIT v. Kelvinator India Ltd. reported in (2010 (1) TMI 11 - SUPREME COURT OF INDIA). Thus the impugned notice of reopening fails with all consequential reliefs - Decided in favour of assessee.
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Customs
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2015 (5) TMI 257
A writ of Mandamus by an informer of the Customs Department - Release of balance amount of reward amount due - Reward is purely an ex-gratia payment - Ex-gratia payment has to be paid in consonance with the guidelines and the scheme dated 16th April, 2004 framed by the Government of India - The informer cannot be left to the whims and caprices and /or mercy of the Respondents and/or the members of the Reward Committee - Held that:- In the present case, the Petitioner on 19th July, 2010 had provided a specific information pertaining to five containers which were lying in the port and based on the said information seizure was effected by the Respondent authorities. The show cause notice dated 3rd December, 2010 also in unequivocal terms mentions that “Specific information was received by the officers of Central Intelligence Unit” about a party by name M/s. Limra Traders with respect to the five containers, numbers of which are undoubtedly tallying with the numbers provided by the informer/ Petitioner in firstly, the gist of the information given to Mr. Rakesh Kumar Gaur, Superintendent of Customs (CIU) and subsequently in the information report dated 19th July, 2010. The show cause notice also makes specific reference that on investigation it is found that the said containers have been imported on Bill of Lading No.859498700 showing the goods as 'Welded Mesh” and under its garb consumer items were imported thereby causing substantial and huge loss of revenue to the Government of India. We are of the opinion that, the Customs officers at this stage cannot be allowed to take a spacious plea that they were already in receipt of the information since January 2010 and therefore, the Petitioner is not entitled for further reward amount. It is to be noted here that on the basis of the specific information provided by the Petitioner, the Respondent authorities were able to recover an amount of ₹ 2,65,26,500/- by auctioning the confiscated goods. According to us and in our considered opinion, the stand taken by the Respondent authorities appears to be clearly an afterthought, taken only with a view to deprive the informer / Petitioner from his legitimate dues / payments towards his reward as per the reward policy. We may also note here that the affidavit dated 15th March, 2014 filed by the Deputy Commissioner of Customs is as vague as possible and it appears to us that the said authority is either suppressing certain vital information from this Court and / or has filed the said affidavit without perusing the entire original record available with its office. As far as the contention raised by the Deputy Commissioner of Customs in his affidavit at paragraph No.7 that the reward is purely ex-gratia payment which may be granted on absolute discretion of the authority competent to grant reward and no party can claim the reward as a matter of right, we are of the considered opinion that though, paragraph 5 of the said policy dated 16th April, 2004 mentions that the reward is purely an ex-gratia payment and cannot be claimed by anyone as a matter of right, the ex-gratia payment has to be paid in consonance with the guidelines and the scheme dated 16th April, 2004 framed by the Government of India and the informer cannot be left to the whims and caprices and /or mercy of the Respondents and/or the members of the Reward Committee. It is manifest that the informers provide information with a legitimate expectation of reward to be received in time. Non-payment of the reward amount within a stipulated time will have frustrating effect on the reward policy framed by the Government of India which may perhaps result in not getting the information of the unscrupulous and anti-social elements and thereby would cause loss to the government exchequer. We are of the considered opinion that the guidelines enunciated in the reward policy dated 16th April, 2004 are to be adhered to, by all the concerned and the discretion as mentioned in paragraph 5 of the said policy, given to the Reward Committee, cannot be treated as an unfettered power with the authority competent to grant rewards, which may lead to frustrate the basic intention of the Government behind framing the policy. - Decided in favour of appellant.
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2015 (5) TMI 241
Classification of goods - LIQUID CRYSTAL DEVICES (LCD) - Classification under Chapter Heading 9013.80 or under Chapter Heading 9028.90 - Held that:- LCDs are specifically provided in tariff item 9013. The only condition is that such LCDs should not constitute 'articles' provided more specifically in other headings. In the present case, it is also not in dispute that LCDs imported by the appellant did not constitute any such 'article' which is more specifically provided in other headings. - The only reason for including the goods under Chapter Heading 9028 is that the LCDs were to be used in the electricity supply meters. However, Entry 9028 does not pertain to LCDs but gas, liquid, etc. and includes electricity supply meters as well. Merely because these LCDs are to be used as parts in the said electricity supply meters, can it be said that they are to be included in Entry 9028? Here, Note 2 of this Chapter Notes becomes important since LCDs are used in the electricity supply meters only as parts thereof. In accordance with Chapter Note 5, measuring or checking optical appliances, instruments and machines are excluded from this heading and fall in heading 90.31. Chapter Note 4, however, classifies certain refracting telescopes in this heading and not in heading 90.05. It should, moreover, be noted that optical instruments and appliances can fall not only in headings 90.01 to 90.12 but also in other headings of this Chapter (in particular, heading 90.15, 90.18 or 90.27). - LCD would be covered by 'other devices' mentioned in 9013.80 - Decided in favour of assessee.
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2015 (5) TMI 240
Valuation of goods - Demand of differential duty - Redemption fine - Held that:- Comparable instance which was taken into consideration by the Commissioner was not that of "identical goods" but "similar goods". This is so stated by the Commissioner in his order itself. - when the Commissioner rejected the transaction value declared by the respondent applying Rule 10A of the Customs Valuation Rules, 1988, on that basis he held that Rule 4(1) would not apply. Thereafter he proceeded sequentially from Rule 5 onwards. As far as Rule 5 is concerned, again he stated that this would not apply as there was no evidence of "identical goods". It is for this reason he undertook the exercise, as contemplated in Rule 6, by giving the example of "similar goods". We would like to point out at this stage that the instances which were given by the Department and even by the respondent himself, no objection was raised by the respondent that these instances were not of similar goods. Therefore, relying upon those instances by the Commissioner cannot be faulted. Price of ₹ 58/- has not been accepted by the Commissioner, and rightly so, by giving a very valid reason, namely, even in respect of that import by the importer declaring the value of ₹ 58/-, a show cause notice had been issued by the Department and the case was under scrutiny. In the show cause notice which was issued by the Department the price proposed was ₹ 90/- per piece. Thus, the entire basis of the Tribunal's order is misplaced as it is founded on total misconception of law and is also contrary to the facts on record. For the aforesaid reasons we set aside the order of the Tribunal and affirm the order of the Commissioner insofar as it relates to redemption of the value declared by the respondent at ₹ 36/- per piece and fixing the value at ₹ 73.94 per piece, as well as demand of differential duty on that basis. - Decided in favor of revenue. Redemption fine of ₹ 20 lakhs and the penalty of ₹ 5 lakhs which is imposed in the facts of this case is on a higher side. Insofar as redemption fine is concerned, the same is reduced to ₹ 6 lakhs which is the equivalent to the differential duty and penalty imposed is set aside altogether.- Decided partly in favour of assessee.
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2015 (5) TMI 239
Denial of refund claim - Unjust enrichment - provisional duty was paid - later found that goods were covered by the Advance License - Held that:- It is clear from the facts that consequent to Hon'ble High Court's direction, an amount of ₹ 6,13,139/- was paid as duty even though the Bill of Entry was assessed provisionally. Therefore, the case of Veekay Products Ltd. (2013 (9) TMI 587 - CESTAT MUMBAI) is not applicable. - duty was finally assessed by the order of the Commissioner. At the time of provisional assessment, the amount was paid as duty and the goods were released. Clearly when the amount has been paid as duty, the test of unjust enrichment will have to be applied. - Simply stating that the goods were sold at a loss does not establish that the duty incidence was not passed. - C.A. certificate dated 19.11.2010 clearly states that the amount of duty has been added to the cost of material purchased in the balance-sheet. This establishes that burden of duty was passed to the customers - appellant has not been able to clear the test of unjust enrichment - Decided against assessee.
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Corporate Laws
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2015 (5) TMI 238
Petition for confirming the reduction of the share capital under Sections 100 to 104 of the Companies Act, 1956, read with Rules 11(a)(3), 46 and 47 of the Companies (Court) Rules, 1959 - Confirming the reduction of the share capital of the Petitioner by setting off the accumulated losses as approved in terms of special resolution passed by the shareholders of the Petitioner - Held that:- The Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai, has filed an affidavit, wherein, in paragraph No.6, he has pointed out that the petitioner company is regular in filing their statutory returns and no prosecution filed, no complaints pending and no inspection has been conducted. It is further stated in paragraph No.8, that the scheme of reduction of share capital has been examined and has been decided not to make any objection to the scheme. The same is recorded. In view of the above, this Company Petition is ordered with confirming the reduction of the share capital of the Petitioner company by setting off the accumulated losses as approved in terms of special resolution passed by the shareholders of the Petitioner on 30th December 2014. Also dispensing with the words And Reduced pursuant to the adjustment in the share capital and approving the action taken. - Petition for confirming the reduction of the share capital approved.
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2015 (5) TMI 237
Application for confirming the reduction of Equity Share Capital under Sections 100 to 104 of the Companies Act, 1956, read with Rules 11(a)(3) and 46 of the Companies (Court) Rules, 1959 - Permission for not to use Word 'and reduced' as last words after the company name - Held that:- At this juncture, it is relevant to extract the Special Resolution passed by the petitioner Company in accordance with Section 189 of the Companies Act, 1956, at the Extra Ordinary General Meeting held at Chennai on 15th December, 2014. In this it was resolved that that the reduction shall be effected in the books of accounts of the Company on approval of Honourable High Court of Judicature of Madras and on filing requisite forms with Registrar of Companies. It was also resolved that Directors of the Company be and are hereby severally authorized in their name and behalf of the Company to do all such other acts, matters, deeds and things necessary in connection with or incidental to give such effect to the proposal of reduction for the purpose of the above resolution. The Regional Director, Southern Region, Ministry of Corporate Affairs, Chennai, has filed an affidavit stating no objection to the proposal made by the petitioner Company for reduction of the Paid-up Equity Share Capital. In view of the above, the company petition is ordered with confirming the reduction of the paid-up equity share capital of the petitioner Company duly approved in terms of the Special Resolution passed by the equity shareholders at the Extra Ordinary General Meeting held at Chennai on 15th December, 2014,also not requiring the petitioner Company to add the words "and reduced" to its name as the last words thereof. - Application for confirming the reduction of Equity Share Capital approved.
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Service Tax
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2015 (5) TMI 256
Denial of refund claim - Use of input services in export goods -fulfillment of conditions stipulated in the Notification No. 41/2007-ST dated 06/10/2007 and Notification No. 17/2009-ST dated 07/07/2009 - Held that:- In the case of CHA and clearing and forwarding services, the conditions stipulated that the reference of shipping bill should appear in the service invoice. In some of the invoices the said reference is not mentioned but there are other documents like bill of lading, export invoice, etc. on the basis of which the correlation of services with the export of good is established. - exercise carried out by the adjudicating authority on that basis cannot be faulted. As regard the agreement between the appellant and foreign buyer regarding technical testing and analysis, it is a fact that such agreement has not been entered into. Therefore, it is beyond the control of the appellant to produce such agreement. Even as per para 2(f)(iii) of Notification 41/2007-ST it is clearly mentioned that such agreement can be produced wherever applicable. Similarly, in respect of courier service also invoice of service provider indicates the airway bill number, name and address of the recipient, destination of courier delivered, weight and number of pieces and the amount charged for service. Therefore, the correlation is clearly established. - even though 100% compliance of the conditions were not made by the appellant, but when the correlation of service with the export goods is established on the basis of other appropriate documents, even if any deficiency in fulfilling the condition exist, on that basis refund cannot be denied. Therefore, the Commissioner (Appeals) order, which is only on the basis of certain conditions stipulated in the Notification was not complied with but ignoring the fact that non-compliance of such condition was compensated with other corroborative documents, cannot be sustained and the same is set aside. - Decided in favour of assessee.
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2015 (5) TMI 255
Penalty u/s 78 - Whether penalty under Section 78 of the Finance Act, 1994 is imposable upon the appellant when the entire amount of service tax along with interest was paid before the issue of show cause notice - Held that:- Once it is categorically held by Commissioner (Appeals) that appellant was under a bonafide belief that service tax as demanded was not payable, then a view can not be entertained that the facts will justify imposition of penalty under Section 78 of the Finance Act, 1994. Duty demanded in the show cause notice was ₹ 11,10,965/- but was confirmed only to the extent of ₹ 7,14,996/- in the Adjudication proceedings. The differential tax was only a reconciliation of accounts maintained by the appellant. Appellant is a co-operative bank. In view of the above facts this case is not fit for imposition of penalty under Section 78 of the Finance Act, 1994 - Decided in faovur of assessee.
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2015 (5) TMI 254
Restoration of appeal - Appeal dismissed for the ground of non-payment of the pre-deposit amount directed - Held that:- Commissioner (A) has not discussed the merits of the case and has rejected the appeal on the ground of non-compliance with the requirement of pre-deposit, therefore, considering the submissions of the appellant, I am of the prima facie view that matter should be remanded back to the Commissioner (A) for passing a reasonable and speaking order without insisting on any pre-deposit. Accordingly, the appeal is allowed by way of remand to the Commissioner (A) for passing a speaking order after giving a reasonable opportunity of hearing to the appellant. - Decided in favour of assessee.
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2015 (5) TMI 249
Classification of service - Clearing and forwarding agent service - whether the services were liable to service tax under the provisions of the Act - held that:- Larger Bench of the Tribunal in the said case has rightly interpreted the definition of 'clearing and forwarding agent' contained in Section 65(25) of the Act. Notwithstanding the aforesaid dicta of the larger Bench, learned senior counsel appearing for the Revenue submitted that judgment in Prabhat Zarda (2002 (2) TMI 4 - CEGAT, KOLKATA) has not been overruled entirely, as is clear from the reading of para 11 of the judgment where the larger Bench has said that Prabhat Zarda (supra) 'stands overruled to the extent of the aforesaid ratio laid down thereunder'. His endeavour was to demonstrate that in the present case the Tribunal in the impugned judgment had rightly relied upon Prabhat Zarda (supra) and when the services rendered by the appellant are looked into, it would clearly fall within the definition of 'clearing and forwarding agent' contained in Section 65(25) of the Act. In order to qualify as a C F Agent, such a person is to be found to be engaged in providing any service connected with 'clearing and forwarding operations'. Of course, once it is found that such a person is providing the services which are connected with the clearing and forwarding operations, then whether such services are provided directly or indirectly would be of no significance and such a person would be covered by the definition. - In the process, it may include warehousing of the goods so cleared, receiving dispatch orders from the principal, arranging dispatch of the goods as per the instructions of the principal by engaging transport on his own or through the transporters of the principal, maintaining records of the receipt and dispatch of the goods and the stock available on the warehouses and preparing invoices on behalf of the principal. The larger Bench rightly enumerated these activities which the C F Agent is supposed to perform. There is no role of the appellant in getting the coal cleared from the collieries/ supplier of the coal. Movement of the coal is under the contract of sale between the coal company and Ambuja companies. Even the coal is loaded on to the railway wagons by the coal company. The goods are not under any legal detention from which they need to be freed by the appellant. Not only this, destination of the goods is known to the coal company and the railway rakes are placed by the coal company for the said destinations. The destination is the factories of the principal itself, namely, Ambuja companies, where the coal is to be delivered by the coal company as per pre-determined/agreed covenants between them. Therefore, there is no occasion for Ambuja companies to instruct the appellant to dispatch/forward the goods to a particular destination which is already fixed as per the contract between the coal company and the Ambuja companies. The appellant does not even undertake any loading operation. The primary job of the appellant, as per the contract between the appellant and the Ambuja companies, is of supervising and liaisoning with the coal company as well as the Railways to see that the material required by Ambuja companies is loaded as per the schedule. - services rendered by the appellant would not qualify as C F Agent within the meaning of Section 65(25) of the Act - Decided in favour of assessee.
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Central Excise
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2015 (5) TMI 248
Manufacture of medical equipment - Defibrillators - Disallowance of benefit of the Notification No.8/96 dated 23.07.1996 and Notification No.4/97 dated 01.03.97 - As per the department, Defibrillators manufactured by the appellant were designed to provide external counter shock and the apparatus for which nil rate of duty had been prescribed was for defibrillators meant for internal use only and not for conventional Defibrillators manufactured and cleared by the appellant. - Held that:- It becomes apparent that originally those D.C. Defibrillators which were meant for both internal as well as external use and also pacemakers and their accessories etc. were eligible for exemption. Certain goods which did not qualify for exemption like cardiac monitor, Cardioscopes etc. were specifically excluded. On the other hand some of the components of D.C. Defibrillators which were exempted from payment of Excise duty were also specifically mentioned. For our purposes what is relevant is that in the original Notification dated 11.06.1986, as amended on 01.03.1989 and 01.03.1994, the goods which qualified for exemption were “Defibrillators for internal and external use and pacemakers and their accessories including patient cable internal defibrillator paddles 45mm and 55mm sizes”. Implantable cardiac pacemaker and accessories were also specifically included. This entry under went a substantial challenge in the notification No. 8/96 dated 23.07.1996. In this Notification, replacing the earlier notifications, defibrillators for external use are no more eligible for exemption. - Though in the earlier notification, patient cable for pacemaker was included as exempted item, it is omitted altogether in Notification No.8/96. This position is maintained in Notification No.4/97 dated 01.03.1997. Defibrillators are not capable of being used internally without paddles and paddle is an accessory which does not qualify for exemption any longer. It would be pertinent to note that in Handicraft Export's case this Court also held that importer will have to prove that the goods were not only capable of being utilized as embellishment for shoes but also that the same were imported for and were actually been used for embellishment for footwear. In the present case as defibrillators are sold without paddles, obviously the sale as such is not intended by the purchaser to be used for internal purpose. We are, therefore, of the view that the majority opinion of the Tribunal [2004 (5) TMI 160 - CESTAT, BANGALORE]is correct in law. - Decided against assessee.
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2015 (5) TMI 247
Classification of goods - Classification under Chapter Heading 11.01 or under Chapter Heading 1301.10 - Held that:- Impugned order is set aside the impugned order and remit the case back to the Tribunal. We direct that the matter shall be heard by a larger Bench. We may record that in the impugned order the Tribunal has held that the aforesaid process constitutes 'manufacture'. Since in the case of Hindustan Gum and Chemicals Ltd. this issue was left open to be decided by the Tribunal, the larger Bench of the Tribunal can take a fresh look into this issue in the instant case as well. - Following decision of Commissioner of Central Excise, Ahmedabad v. Hindustan Gum & Chemicals Ltd. [2011 (9) TMI 676 - SUPREME COURT OF INDIA] - larger Bench of the Tribunal to decide the matter within six months.
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2015 (5) TMI 246
Valuation of goods - Levy of penalty u/s 11AC - appellant was not taking into consideration the "other works overhead" element in arriving at the assessable value though according to the Department, it formed part of the costing element of 'conversion cost' shown in the costing report - Held that:- Appellant had not included the cost of 'other works overhead' in arriving at the assessable value though it forms part of the costing element of 'conversion cost' shown in the costing report. - there was no intentional omission/ suppression on its part inasmuch as the differential duty was paid on the basis of average cost of raw material as intimated by P&G in their cost audit report and therefore, the appellant acted bona fide in relying upon the said report and recalculating the differential duty based thereupon. - cost audit report was supplied by the P&G. However, based thereupon, it is the appellant which had worked out the final costing and it is the chartered accountant of the appellant which had prepared the said costing and submitted to the Department. Therefore, the appellant cannot feign ignorance or be pretentious about its innocence in allegedly acting upon the cost audit report as supplied by P&G. - Decided against assessee.
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2015 (5) TMI 245
Penalty u/s 11AC - Interest u/s 11AB - Discretion of Tribunal to impose penalty and interest - Held that:- Insofar as the issue relating to the imposition of penalty under Section 11AC of the Central Excise Act is concerned, if tax is paid before issuance of show cause notice under the provisions of the Finance Act, 1994, the said issue now stands resolved by a Larger Bench decision of the Supreme Court in Union of India and others - Vs - Dharamendra Textile Processors & Ors. [2008 (9) TMI 52 - SUPREME COURT], wherein it was held that penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion. The provisions of Section 11AB of the Central Excise Act came into effect from 28.9.1996 by Finance (No.2) Act, 1996. No doubt that in the year 2001, there is a change in the rate of interest from 11.5.2001 from 10% - 36% to 18% - 36%, but that is irrelevant. Therefore, the plea of the appellant that the adjudicating authority was fully justified is imposing interest is sustainable. Further, there is no escapement for the assessee from payment of interest under Section 11AB of the Act, even though the assessee had paid the duty prior to issuance of show cause notice. Accordingly, the order of the Tribunal deleting the interest levied under Section 11AB of the Central Excise Act is also liable to be set aside. - no hesitation to hold that interest and penalty are imposable and there is no discretionary power vested with the authorities for waiving the same. - both the Commissioner (Appeals) and the Tribunal have no discretion to waive the interest and penalty and, therefore, the orders are liable to be interfered with - Decided in favour of Revenue.
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2015 (5) TMI 243
Exemption of the Central Excise - Notification No. 50/2003-C.E. dated 10.6.2003 - Penalty under Rule 26 of the Central Excise Rules, 2002 - Held that:- Petitioners are not guilty of issuing any excise duty invoice without delivery of the goods nor such invoice was used to take ineligible benefit under the Act or the Rules nor both the petitioners were found guilty in transporting, removing or depositing any excisable goods, which were liable to be confiscated. On the other hand, both the petitioners, raised the legal claim pursuant to the Notification No. 50/2003 C.E. dated 10.6.2003. Therefore, taking the legal ground, which subsequently found not to be available to the unit would not permit the invocation of Rule 26 of 2002 Rules. - Personal penalty imposed against both the petitioners is beyond the scope of Rule 26 - Decided in favour of assessee.
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2015 (5) TMI 242
Shortage of goods - Non accounting of goods - Clandestine removal of goods - Evasion of duty - Held that:- With respect to clandestine removal and the liability sought to be imposed upon the assessee, the evidence between the two units i.e. the assessee and D.P. Industries was common. The second aspect which this Court notices facially in the impugned order is that what triggered the show cause notice was the inspection which took place on 22.07.1996. That irregularity or underreporting of the material found have stood concluded in the application made by the assessee under the “kar vivad samadhan scheme”, which was accepted without reservation by the Revenue. Having regard to these circumstances, as to whether the cross examination of one witness was offered and whether the inference drawn by the CESTAT in this particular case was sustainable, cannot in the opinion of this Court constitute a substantial question of law requiring adjudication. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (5) TMI 253
Request for early disposal of appeal - Held that:- Petitioner has filed an appeal before the Joint Commissioner of Commercial Taxes/respondent no.1 herein. As that appeal has not yet been taken up for consideration, the only direction that can be issued in this writ petition to the respondent no.1 is to consider the appeal filed by the petitioner as against the order at Annexure- D in accordance with law and in an expeditious manner in the context of registration of the petitioner’s Firm under the provisions of the Karnataka Value Added Tax Act, 2003 Act. For that purpose, petitioner is directed to appear before the 1st respondent on 3.12.2014 without insisting on any separate notice from that authority. - Petition disposed of.
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2015 (5) TMI 252
Detention of vehicle - movement of vehicle was suspicious and it has unnecessarily entered into Sidco, Sundarapuram, instead of going to Puducherry - petitioner has contravened the provisions of Section 71 of Tamil Nadu Value Added Tax Act, 2006 - Held that:- Admittedly, the impugned proceedings are the only show cause notice for composition of offence and draft compounding notice. It is well open to the petitioner to submit their objection and to satisfy the respondent that the goods were accompanied by proper documents. Merely because, the driver of the vehicle had gone into Sidco Sundarapuram will not make the transportation of goods in any manner as illegal or in contravention of the provisions of the Act. However, without submitting their objection, the petitioner has approached this Court directly. - petitioner submitted that the petitioner is ready and willing to submit their objection before the respondent, however, in the interregnum period, the vehicle may be released. - Therefore, there shall be a direction to the respondent to release the vehicle in question, subject to the certain conditions - Decided conditionally in favour of assessee.
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2015 (5) TMI 251
Challenge to the orders of assessment - Increase in rate of tax - Held that:- On a perusal of the impugned assessment order dated 31.07.2014 for the Assessment Year 2011-12, it is seen that there is no reference to any show cause notice issued to the petitioner and the only reference is the order of original assessment dated 07.10.2013. If the authority had issued a show cause notice, the same should have find place in the reference column and that should also be in the reference of the body of the assessment order as to whether the notice was served on the Dealer and whether the Dealer has submitted his objection and such other things, these basic requirements are necessary while passing the impugned order dated 31.07.2014. Therefore, the impugned order is held to be illegal. So far as the impugned order relating to the assessment year 2010-11, it is a original assessment. The petitioner had filed monthly return in Form I for the said year and reported a total taxable turnover of ₹ 73,11,750/- and ₹ 19,77,050/- and they have remitted tax at the rate of 4% on Direct Sales. However, while making the assessment, the respondent has assessed the dealer at 12.5%. It is alleged in the impugned order that the Concessional Tax Rate at 4% is not applicable and the goods are taxable at 12.5%. However, this enhancement of the rate of tax has been done without notice to the petitioner. Therefore, the impugned order of assessment dated 31.07.2014 for the assessment year 2010-11 is in violation of principles of natural justice. Accordingly, the same is also held to be bad in law. - Decided in favour of assessee.
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2015 (5) TMI 250
Challenge to the orders of assessment - Violation of principle of natural justice - Non consideration of assessee's objections - Held that:- Petitioner has given their objection by letter dated 03.09.2013, wherein, apart from raising factual objections on merits of the assessment, the petitioner requested for furnishing a photocopy of VST-3A proposal of the Deputy Commissioner (CT), Enforcement Central, Chennai, dated 10.07.2013 and this communication is said to have been served on the respondent by handing over in the office of the respondent by way of delivery book on 04.09.2013. Though the petitioner, in para 8 of the affidavit filed in support of the writ petition, has specifically stated that the communication was received in the office of the respondent on 04.09.2013, there is no specific denial of the said averment in the counter affidavit, more particularly, in para 9 of the counter affidavit. Therefore, this Court is inclined to accept the submissions made by the petitioner since they had objected the proposal of revision of assessment. However, other issues are not gone into. Hence, it is held that the impugned orders are in violation of principles of natural justice and the same calls for interference of this Court only on the ground of violation of principles of natural justice, since the objection filed on 03.09.2013 was not considered by the respondent. - Matter remanded back - Decided in favour of assessee.
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