TMI Tax Updates - e-Newsletter
June 12, 2013

Case Laws in this Newsletter:

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

Articles

1. DELAY IN PAYMENT OF SERVICE TAX

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Statement Made by Chief Economic Adviser Dr. Raghuram G. Rajan to the Media Today; India Has Received Net Inflow Of $3.675 Billion Between May 1 and June 10, 2013; Large Part of the Decline in the Value of Rupee In Recent Days Is Because of Dollar Strength; Significant Drop in Gold Imports Expected During June, 2013 Due to Recent Measures Taken by the Government and Rbi; No Additional Restrictive Measures on Gold Contemplated : Cea

2. Challenges & Concerns the of Central Bank : Opportunities & Role for the Commercial Banks - presentation by Shri. Harun R Khan, DG, RBI at Bankers’ Club Thiruvananthapuram on June 10, 2013

3. Appointment of Acting Chief Justice of the High Court of Delhi

4. Appointment of Judges in The High Court of Punjab & Haryana

5. Appointment of Additional Judge in The High Court of Punjab & Haryana

6. Appointment of Judge in the High Court of Delhi

Notifications

DGFT

1. 17 (Re 2013)/2009-2014 - dated 10-6-2013 - FTP

Notification of Iran under Para 2.35 (b) of Foreign Trade Policy, 2009-2014

Circulars / Instructions / Orders

Customs

1. F. No. 390/Misc./163/2010-JC - dated 3-6-2013

Regarding Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme court

Highlights / Catch Notes

Income Tax

• Court Orders Release of Provisional Attachment u/s 281B, Except for Tax Demand Against Petitioner.

  Case-Laws - HC : Provisional attachment u/s 281B - Revenue directed to release provisional attachment except to the extent of tax demand raised against the petitioner. - HC
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• High Court Upholds ITAT's Decision: 12.5% of Trader's Alleged Bogus Purchases Retained as Potential Profit.

  Case-Laws - HC : Bogus Purchase - determinitation of income - Merely, it is pointed out that the assessee was a trader and ITAT retained 12.5% of the purchase towards its possible profit - no merit in appeal - HC
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• High Court supports assessee u/s 264 but denies condoning nearly 3-year delay in appeal filing.

  Case-Laws - HC : Revision u/s 264 in favor of assessee - petitioner has not waived his appellate right - delay of 2 years, 10 months and 8 days can not be condoned - HC
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• Court Rules Blood Sale by Trust is Charitable, Not Commercial, u/s 2(15) of Income Tax Act.

  Case-Laws - HC : Charitable Activity - Section 2(15) - value specified in first and second proviso - Sale of blood - medical relief - it cannot be said that the activity of the respondent-trust is not charitable purpose and on the other hand it was commercial. - HC
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• High Court Validates Case Transfer u/s 127(2) of Income Tax Act; Substantial Evidence Supports Decision.

  Case-Laws - HC : Transfer of case u/s 127(2) - It cannot be held that the ground for transfer is non-existent or mala fide - There is material showing investment with the companies in whose cases investigation is being carried out at New Delhi - transfer is not invalid - HC
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• High Court Upholds Section 148 Notice: Assessing Officer's Initial Opinion Validates Reassessment, Transfer Pricing Officer Confirms Later.

  Case-Laws - HC : Reassessment - opinion is formed by the AO and the reference if at all to the Transfer Pricing Officer is later for confirming, etc. - Notice u/s 148 sustained - HC
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• Section 80IB(10) Deduction: Full Utilization of Floor Space Index Not Required for Eligibility.

  Case-Laws - AT : Claim u/s.80IB(10) - utilization of permissible FSI - There is nowhere envisaged in the law that the entire FSI should be utilised for the purpose of claiming deduction u/s.80IB(10) - AT
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• Share Value Drop Seen as Notional Capital Loss, Not Revenue Expenditure for Tax Purposes.

  Case-Laws - AT : Diminution in the value of the shares - value of its investments that have fallen down which is nothing but a notional capital loss - cannot be allowed as Revenue expenditure. - AT
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• Revenue's Interpretation of Penalty u/s 271(1)(c) Misaligns with Legislative Intent, Risking Unjust Penalties for Assessees.

  Case-Laws - AT : Penalty - if the contention of the revenue is accepted then in case where the addition is made the assessee will invite the penalty u/s 271(1)(c) - This is not the intendment of legislature - AT
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Customs

• Customs Breach: Importer Not Informed of Value Doubts or Given Hearing Opportunity Violates Natural Justice Principles.

  Case-Laws - HC : Enhancment of value - By failing to inform the importer of the grounds of his doubt and of allowing the importer an opportunity of being heard with reference to those grounds, there has been a clear breach of principles of natural justice. - HC
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• Transformers Denied Exemption from Additional Customs Duty u/s 3(1) of Customs Tariff Act, 1975.

  Case-Laws - AAR : Eligibility of the transformers for exemption from additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975 - not exempt - AAR
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Service Tax

• Sub-contractor exempt from Service Tax as main contractor pays full amount; stay granted on decision.

  Case-Laws - AT : Service Tax liability on sub-contractor - main contractor has discharged the Service Tax liability on the total contract value? - prima facie case in favor of assessee - Stay grated - AT
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Central Excise

• Cenvat Credit Affirmed for Welding Electrodes and H.R. Plates Used in Repair and Maintenance for Manufacturing Operations.

  Case-Laws - AT : Eligibility for cenvat credit - welding electrodes and H.R. Plates - regular repair and maintenance is an essential activity for smooth manufacturing operation - cenvat credit allowed - AT
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• Product Labeling for Industrial Use Doesn't Affect Duty Obligations Under Central Excise Law: MRP vs. Transaction Value.

  Case-Laws - AT : MRP or Transaction value - Just because the appellant has mentioned "exclusively for industrial use" and "not to be sold in loose", can not be forced to pay duty on transaction vlaue - AT
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VAT

• Court Finds Petitioner Received Double Benefit from Seigniorage Fee and Work Contract Tax Escalations.

  Case-Laws - HC : Work Contract Tax - whether petitioner derived double benefit in the form of the escalation of seigniorage fee and Work Contract Tax (WTC) - held yes - HC
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• Tax Reassessment: 'Raw' vs 'Dressed' Hides and Skins Classified Separately for VAT and Sales Tax Purposes.

  Case-Laws - HC : Reassessment - 'raw hides and skins' and 'dressed hides and skins' both are different commodities. - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 258
  Provisional attachment u/s 281B - held that:- The bank accounts of an assessee are provisionally attached to secure the interest of the Revenue pending assessment pro-ceedings to meet the eventuality of demand of tax to be raised against such assessee. Once the assessment has been completed, the Revenue would be justified to attach the account to the extent of demand raised against an assessee and not the entire amount standing to the credit of the assessee. We find that the action of the Revenue in extending the period of attachment in respect of the all the bank accounts of the petitioner and in respect of over Rs. 33 lakhs in these circumstances is wholly unjustified and illegal. Revenue directed to release provisional attachment except to the extent of tax demand raised against the petitioner. Such tax demand shall not be realized till such time, the appeal filed by the assessee is not decided by the competent authority. - Decided in favor of assessee.

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• 2013 (6) TMI 257
  Bogus Purchase - amount to be added in the income - held that:- being one of only purchase but not from disclosed sources, it would be only the profit element embodied in such purchase which could be added in the income of the assessee and, thus, rightly so done by the Commissioner (Appeals) and the Tribunal. The only question arises whether such profit element should be estimated at the rate of 30 per cent. or 12.5 per cent. Whenever such a question arises, some reasonable estimation is always permissible. Hardly any question of law on such aspect would arise. Merely, it is pointed out that the assessee was a trader and that the Tribunal retained 12.5 percent of the purchase towards its possible profit, we do not find any reason to entertain the appeal. - Decided against the revenue.

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• 2013 (6) TMI 256
  Offence - proceedings before the Additional Chief Metropolitan Magistrate, (Economic Offences II), Chennai - Held that:- the office was compounded under section 279(2) of the Income Tax Act, 1961 - As a result of the order/proceedings passed by the Chief Commissioner of Income Tax, Chennai-2, the relief sought for in the writ petition becomes infructuous. The respondents are at liberty to take steps for withdrawal of the complaint in EOCC No.52 of 1997 filed and pending before the Additional Chief Metropolitan Magistrate (EO II), Egmore, Chennai, in terms of the order passed under Section 279(2) of the Income Tax Act, 1961.

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• 2013 (6) TMI 255
  Offence - proceedings before the Additional Chief Metropolitan Magistrate, (Economic Offences II), Chennai - Held that:- the office was compounded under section 279(2) of the Income Tax Act, 1961 - As a result of the order/proceedings passed by the Chief Commissioner of Income Tax, Chennai-2, the relief sought for in the writ petition becomes infructuous. The respondents are at liberty to take steps for withdrawal of the complaint in EOCC No.52 of 1997 filed and pending before the Additional Chief Metropolitan Magistrate (EO II), Egmore, Chennai, in terms of the order passed under Section 279(2) of the Income Tax Act, 1961.

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• 2013 (6) TMI 253
  Charitable Activity - Section 2(15) - value specified in first and second proviso - Sale of blood - medical relief - recognition under section 80G(5) - held that:- the activity carried on by the respondent-trust is a charitable purpose. Further, the second proviso to section 2(15) of the Act specifies that the aggregated value of the receipts from the activities referred to there is Rs. 25,00,000 or less in the previous assessment years then the first proviso is not applicable. The receipts are less than the amount specified in the second proviso to section 2(15) of the Act. Secondly, the receipts are less than the expenditure incurred during the relevant assessment year. From any angle, it cannot be said that the respondent-trust is not covered under section 2(15) of the Act. - Decided in favor of assessee. No notice was issued by the Commissioner to the respondent calling upon them to show cause with regard to the violation committed by them to cancel the exemption certificate granted under section 80G. In the absence of any such notice, the Commissioner committed an illegality in cancelling the exemption certificate granted in favour of the respondent. - it cannot be said that the activity of the respondent-trust is not charitable purpose and on the other hand it was commercial. - Decided in favor of assessee.

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• 2013 (6) TMI 252
  Transfer of case - section 127(2) - held that:- the petitioners had made investment by way of share capital and unsecured loans with the Brahmaputra group of companies whose cases are being investigated and are related to the Commonwealth games. In view of the nexus of the petitioners with the said company, for co-ordinated and effective investigation centralization of assessment was necessary. Undoubtedly, transfer of assessment may cause inconvenience and monetary loss to the assessee and the power to transfer is not mere administrative power but quasi-judicial powers as observed in the judgments relied upon on behalf of the petitioners but in public interest such transfer is statutorily permissible with the object of co-ordinated and effective investigation. It is not necessary that in the show-cause notice or in the order of transfer any deficiencies in the assessment of the assessee are to be pointed out. The grounds for transfer should have nexus with the object of co-ordinated and effective investigation calling for centralization of assessment. Once such grounds exist, there is no ground to interfere with the transfer. It cannot be held that the ground for transfer is non-existent or mala fide. There is material showing investment of the petitioners with the Brahmaputra group of companies in whose cases investigation is being carried out at New Delhi. - Decided against the assessee.

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• 2013 (6) TMI 251
  Reassessment - notice u/s 148 based on report of the Transfer Pricing Officer - Held that:- The basis was already known and it is always the duty of the Assessing Officer to procure the relevant material which, if at all, to be put to the assessee before concluding the assessment, but that does not vitiate the reopening.Though the learned counsel for the appellant has placed reliance on the judgment of the Supreme Court in the case of Asst. CIT v. Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India], we find, that was a case where the Supreme Court took the view that the opinion of the DVO cannot itself be substituted that the opinion of the Assessing Officer, who has passed the order on escapement of income and in the present case, we find the opinion is formed by the Assessing Officer and the reference if at all to the Transfer Pricing Officer is later for confirming, etc. - Decided against the assessee.

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• 2013 (6) TMI 250
  Claim u/s.80IB(10) disallowed - As per AO assessee has not utilised the fully permissible FSI - CIT(A) deleted the addition - Held that:- There is nothing in the provision to suggest that there is a necessity that entire permissible FSI on the plot of land has to be consumed. It is prerogative of builder to consume the FSI on the plot and there are various factors which are in the domain of builder itself. There is nowhere envisaged in the law that the entire FSI should be utilised for the purpose of claiming deduction u/s.80IB(10). The assessee's size of the plot as per completed building plan is 7638 sq.mt. and permissible built up area was 4569 sq.mt. which is more than 1 acre (4047 sq.mt.). Secondly, the approval to construct from the local authority is 21.06.2003 which is after 01.10.1998. Thirdly, the residential unit developed and built up area of 300 sq.ft. per unit which is less than 1500 sq.ft. as applicable to Nashik, and lastly the construction has been completed as per the completion certificate on 04.11.2006 which is before 31.03.2008. Thus all the conditions have been complied by the assessee for claiming deduction u/s.80IB(10) on the housing project. AO was not justified in rejecting the claim on the ground that assessee has not utilised the fully permissible FSI - appeal filed by the Revenue dismissed.

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• 2013 (6) TMI 249
  Profits and gains of business or profession v/s income from other sources - Recoveries from candidates who did not stick upto the agreement [Security deposits (forfeiture) & Bank guarantee invoked], Administrative fees collected from candidates, Interest income from bank fixed deposit, Excess received from overseas client & Others - Held that:- A receipt during the course of the business is a receipt which is attributable to the business activity of the assessee or a receipt of the assessee which has a nexus direct or indirect with the business of the assessee or receipts arising out of the business asset of the assessee is assessable under the head ‘profits and gains of business or profession’. As in the instant case, the lower authorities have not verified the nature and source of six receipts in question properly, it shall be fair and in the interest of justice to restore this issue back to the file of the AO for deciding afresh by passing a speaking order after allowing proper opportunity of hearing to the assessee. The profits and gains derived from export which is allowable as deduction u/s 10B is to be computed in accordance with the provisions of section 10B(4) wherein profits and gains of the undertaking is to be ascertained which may not be same as the amount assessable under the head ‘profits and gains of business or profession’ of the assessee. Thus, the grounds of appeal of the assessee are allowed for statistical purposes.

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• 2013 (6) TMI 248
  Addition u/s 14A r.w.r. 8D - CIT(A) deleted the addition - Held that:- CIT (A) has not given plausible basis for estimating the administrative expenses at the rate of 0.1% of the total value of purchases and sales of the shares of the group companies at Rs.65,49,99,000/- resulting in disallowance of Rs.6,54,999/- against Rs.22,17,677/- made by the AO. Thus while setting aside the first appellate order in this regard remand the matter to the file of the AO to decide the issue afresh keeping in view the decision of Maxopp Investment Ltd. Vs. CIT (2011 (11) TMI 267 - Delhi High Court) and after affording proper opportunity of being heard to the assessee.

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• 2013 (6) TMI 247
  Diminution in the value of the shares - disallowance of the expenditure - Held that:- It is not in dispute that the assessee has made investments in another company i.e. M/s. Flexcel International Pvt. Ltd and has invested a sum of Rs. 54,28,500/-. Plea of the assessee that due to sharp decline in the value of its investments, the value of shares have diminished substantially, therefore the same should be allowed as business expenditure cannot be accepted because it is not supported by any precedence. Undisputedly, the assessee has made investments and it is only the value of its investments that have fallen down which is nothing but a notional capital loss. That being the fact of the matter it cannot be allowed as Revenue expenditure. Against assessee. Addition on the basis of TDS certificate - Held that:- The whole dispute revolves around whether the assessee has shown the impugned sale in its earlier years return. It is the say of the lower authorities that the assessee has not filed necessary details whereas it is the contention of the assessee that the Revenue authorities did not appreciate the facts of the case properly. In the interest of justice and fair play, this issue needs further verification in the light of the documents submitted by the assessee before us. The assessee is directed to substantiate its claim by filing necessary documentary evidences before the AO. In favour of assessee for statistical purposes. Liability for Fringe Benefit tax - Held that:- In the light of the legislative intent for bringing FBT in statute, the expenditure incurred by the assessee cannot be termed as expenditure on staff welfare inviting the deeming provision of FBT. The expenditure incurred by the assessee is a one-time affair and is not in the nature of recurring expenditure and therefore cannot be said to be out of consideration for employment. Therefore, no merit in levying FBT on such expenditure. In favour of assessee.

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• 2013 (6) TMI 246
  Penalty u/s 271(1)(c) - 1/5th of expenditure related to project report (market survey and legal charges for drafting agreement) disallowed as the amount was incurred after commencement of assessee’s business and no new industrial undertaking had been set up or expanded - Held that:- As decided in Price Waterhouse Coopers Pvt. Ltd. vs. C.I.T. and Anr. [2012 (9) TMI 775 - SUPREME COURT] absence of due care does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Also see CIT vs. Reliance Petro Products Ltd. [2010 (3) TMI 80 - SUPREME COURT] wherein held that the law laid down in the Dilip N Sheroff case (2007 (5) TMI 198 - SUPREME Court) as to the meaning of word ‘concealment’ and ‘inaccurate’ continues to be a good law because what was overruled in the Dharmender Textile case [ [2008 (9) TMI 52 - SUPREME COURT ] was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon’ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not acceptedby the Assessing Officer for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature. Thus the levy of penalty in this case is not justified. In favour of assessee.

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• Customs

• 2013 (6) TMI 245
  Refund of amount recovered during search and seizure - Detention of containers lying at ICD - held that:- applying the principles enunciated by the Hon'ble Apex Court in Godavari Sugar Mills Limited's case (2003 (12) TMI 584 - SUPREME COURT OF INDIA), it could not be said that writ petition was not maintainable. It is trite law that unless a demand, which is finalized and is existing which is liable to be discharged, the revenue cannot retain any amount unless there exists specific provision in the statute for the retention of the amount. Revenue directed to retain an amount of Rs. 2 Crores to safeguard its interest for being adjusted against any liability that might be created on the basis of investigations and/or show cause notice issued to the petitioners and return the balance amount of Rs. 8 Crores within a period of two weeks from the date of receipt of certified copy of the order. - Partly decided in favor of assessee.

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• 2013 (6) TMI 244
  Assessing the bills of entry under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 r.w.s. 14 of the Customs Act, 1962, after making an addition to the declared value - submission of the assessee that impugned order has been passed in violation of the principles of natural justice and without complying with the mandatory procedural requirements set out in Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Held that:- As the record before the Court would indicate, the procedure which is laid down in Rule 12 was not followed. The proper officer initially called upon the importer to submit documentary material. This was in compliance with the requirements of Rule 12(1). Upon scrutinising the material, evidently the proper officer had reason to doubt the truth or accuracy of the transaction value declared by the importer. The proper officer was required to formulate the grounds on which he entertained a doubt in writing and to furnish them to the importer. The importer had no opportunity to call upon the proper officer to disclose the grounds because the record would indicate that after the importer submitted a letter dated 25 February 2013, the Deputy Commissioner of Customs proceeded to dispose of the case by passing the impugned order dated 19 March 2013. By failing to inform the importer of the grounds of his doubt and of allowing the importer an opportunity of being heard with reference to those grounds, there has been a clear breach of principles of natural justice. There has been a clear breach of the principles of natural justice by the failure on the part of the Deputy Commissioner of Customs to follow the mandatory requirement of Rule 12. The existence of an alternate remedy of an appeal is not a bar to the maintainability of a petition under Article 226 of the Constitution where there is a breach of the principles of natural justice - thus allowing the petition by setting aside the impugned order remanding back for a decision afresh.

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• 2013 (6) TMI 243
  Eligibility of the transformers for exemption from additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975 in terms of Notification No. 06/2006-Central Excise dated 1st March, 2006. - Held that:- imported transformers are not covered by the entry at Serial No. 13 of List 5 read with the entry at Serial No. 84 of the Table to the Notification No. 6/2006-Central Excise and consequently will not be eligible for the benefit of exemption from the levy of additional duty in terms of the said Notification No. 06/2006-C.E.

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• Corporate Laws

• 2013 (6) TMI 242
  Winding up petition - appointment of provisional Liquidator pending disposal of the winding up petition. - held that:- strong case for indebtedness has been made out. Equally strong case has been made out about the act of waste of the present management. They are not trustworthy nor do they inspire any confidence in the mind of the Court to keep the properties with them with free hands. But when we take note of argument of Learned Advocate General, we find State Government is keen to lend support for putting back the company in running. Hence judgment and order of the learned Trial Judge appointing Official Liquidator as Provisional Liquidator for taking full control and management of the company is not warranted at this stage. Official Liquidator directed to make inventory of all the books of account of the company and the Special Officer shall paymonthly visit and preserve in all respect upon taking symbolic possession to preserve all the properties. However symbolic possession of the Special Officer will not prejudice the present management of the company to take lawful steps for the revival of the company but the company will not approach BIFR once again without leave of the learned Trial Judge.

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• Service Tax

• 2013 (6) TMI 265
  Tour Operator - appellant had obtained the permit of vehicle as service vehicle/ordinary Bus for factory employee convenience under Section 76 of M.V. Act, 1988. - Held that:- the subject vehicle has a permit to carry more than 6 persons excluding the drivers and is to be used by M/s. Ranbaxy Ltd., Malanpur for carrying persons in connection with their trade or business otherwise than for hire or reward i.e. their employees and was not used for public purposes and was authorized by the R.T.O. to be used as ‘Private Service Vehicle’. Therefore, subject motor vehicle was a ‘Private Service Vehicle’ and not a ‘tourist vehicle’. To bring a person to the field of ‘Tour Operator’ service, that person should have been engaged in the business of operating tours in a tourist vehicle covered by a permit granted under Motor Vehicle Act, 1988. The person must have been engaged in the business of operating tours, the tours must be conducted using tourist vehicle, the vehicle must have been under the grant of permit under Motor Vehicle Act to conduct tourism business, but in the present case, the evidences on record does not support the allegations made in the impugned Show Cause Notice. The appellant’s vehicle was not a ‘tourist vehicle’ as contemplated under Section 2(43) of the Motor Vehicle Act, 1988, which is sine qua non for the application of the Finance Act, 1994. Thus, if the subject vehicle was not a ‘tourist vehicle’, the provisions of Finance Act, 1994 would not apply against the appellant and more particularly the provisions of Section 65(115) and the other allied Sections 73, 75 and 76 of the Finance Act, 1994 - Decided in favor of assessee.

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• 2013 (6) TMI 264
  Vehicle on hire - rent-a-Cab service - Held that:- In the absence of any contrary evidence produced by the Revenue that the said vehicle was not a goods transport vehicle, relying upon the affidavit filed by the appellant to state that the said vehicle was a goods vehicle, we hold that any amount received by the appellant towards services rendered by such vehicle to M/s. Torrent Power Limited, by any stretch of imagination, cannot be considered as services rendered under the category of Rent-a-Cab services. - Demand set aside - Decided in favor of assessee.

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• 2013 (6) TMI 263
  Condonation of delay in filing an appeal before Commissioner (Appeals) - delay of 69 days - held that:- By adopting the guidelines laid down by Hon’ble Supreme Court in Perumon Bhagvathy Devaswom, Perinadu Village Versus Bhargavi Amma (Dead) By LRs & Ors. [2008 (7) TMI 836 - SUPREME COURT], we deem it fit that the appellant has to be shown some leniency in the present case for the purpose of condoning the delay before Commissioner (Appeals). The circumstances explained by the appellant cannot be held leading to any conscious delay or dilatory tactics on their behalf. As such we are of the view that Commissioner (Appeals) should have condoned the delay and should have decided the appeal on merits. The decisive factor in condonation of delay, is not the length of delay but sufficient of a satisfactory explanation - Decided in favor of assessee.

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• 2013 (6) TMI 262
  Clearing and forwarding agent (C&F) service - Held that:- assessee (respondents) were free to sell the goods to their own customers and were not merely dispatching the goods on the orders of their principal. - the invoice was being issued by the respondent themselves. - respondent can not be held to be C & F agent. - Decided in favor of assessee.

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• 2013 (6) TMI 259
  Service Tax liability on amount received from the main contractor - whether assessee is liable to pay if the main contractor has discharged the Service Tax liability on the total contract value? - both the lower authorities have relied upon CBE&C Circular 23.08.2007 to demand service tax - Held that:- The amount which has been received by them is prior to 23.08.2007 and by virtue of the main contractor having discharged the Service Tax liability, the appellant is not liable to discharge the Service Tax liability fortified by the fact that the earlier CBE&C circular, dt.6.6.1997 and 2.7.1997 specifically mentioned that the sub-contractors need not pay Service Tax if the main contractor has paid the Service Tax. Tribunal in the case of Monarch Surveyors & Contractors [2013 (1) TMI 547 - CESTAT MUMBAI] has specifically applied this circular and held in favour of the assessee therein, who was a sub-contractor prior to 23.08.2007. Appellant has made out a strong case for waiver of pre-deposit of the amounts involved.

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• Central Excise

• 2013 (6) TMI 241
  Eligibility for cenvat credit - welding electrodes and H.R. Plates used for repair and maintenance of the plant and machinery - Held that:- As decided in Ambuja Cements (2010 (4) TMI 429 - CHHAITISGARH HIGH COURT), Hindustan Zinc Ltd. (2008 (7) TMI 55 - HIGH COURT RAJASTHAN) and Alfred Herbert (India) Ltd. (2010 (4) TMI 424 - KARNATAKA HIGH COURT) welding electrodes other items used for repair and maintenance of plant and machinery would be eligible for cenvat credit. Also decided in Singh Alloys & Steel Ltd. case (1993 (1) TMI 97 - HIGH COURT AT CALCUTTA) that for determining the question as to whether an input is eligible for cenvat credit what is relevant is whether its use is commercially expedient and what ought to be used is not relevant. Since with defective machinery, leaking pipes and tubes and leaking tanks manufacturing operations are not commercially possible and regular repair and maintenance is an essential activity for smooth manufacturing operation, the inputs used for repair and maintenance of the plant and machinery would be eligible cenvat credit. In favour of assessee.

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• 2013 (6) TMI 240
  Eligibility for CENVAT credit - welding electrodes, MS angles, CTD bars, MS bars and rods, tool bits, blank HR Plates etc. - appellant seeking waiver of predeposit - Held that:- The issue of CENVAT credit on electrodes used in maintenance and repair of machinery stands referred to the Larger Bench of Supreme Court vide Ramala Sahkari Chini Mills Ltd. Vs. CCE - [2010 (11) TMI 34 - SUPREME COURT OF INDIA]. In the case of other items also there is a dispute as to whether these are accessories to machineries or whether it can be considered as supporting structure for machinery. Since these issues are still under dispute before many courts and the matter is yet to be finally resolved by the higher forums, waiver of predeposit of the dues arising from the impugned orders for admission of the appeals allowed and stay its collections during the pendency of the appeals.

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• 2013 (6) TMI 239
  Cenvat Credit on inputs imported under the DEPB Scheme denied - Additional Duty of Customs (CVD) was adjusted through DEPB and not paid by cash - whether the appellant is eligible to take credit in respect of the CVD paid by debiting in the DEPB as per the provisions of Exemption Notification NO. 45/2002-Cus? - Held that:- As decided in Essar Steel Ltd [2004 (8) TMI 123 - CESTAT, NEW DELHI] mere debit in DEPB pass book is not sufficient for eligibility of Modvat credit availed on the strength of Bills of Entry wherein importers availed benefit of Notification NO. 34/97-Cus which exempts duties of customs when duty leviable on goods debited to DEPB. As per para 4.3.5 of Exim Policy 2002-07 specifically provides that in case where the Additional Customs duty is adjusted from DEPB no benefit of Cenvat Credit or duty drawback is eligible. In view of the clear provisions of the Exim Policy and in view of the admitted fact no infirmity in the impugned order whereby the demand is confirmed after denying the credit along with interest and penalty. In respect of the time bar, the authorized signatory in his statement stated that the appellants were aware of the fact that as per the Exim Policy no credit is admissible. Further, the appellant has not disclosed the fact that duty has been paid by making debit in the DEPB while denying credit in the monthly return. Thus no infirmity in the order whereby demand is confirmed by invoking the extended period of limitation. Penalty on the managing Director - as the appellant availed benefit of Notification No. 45/2002-Cus and was aware of the Exim Policy appellants were not eligible for credit of duty adjusted from DEPB and this fact was admitted by the Managing Director. Therefore, no ground to interfere with the impugned order imposing penalty on the Managing Director. In favour of revenue.

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• 2013 (6) TMI 238
  MRP Based duty or Transaction value - under section 4 OR 4A - whether the appellants not required to print MRP as it is a raw material specially packed for exclusive use of any industry? - assessee company manufactures self adhesive tapes classifiable under chapter 3919 of the Central Excise Tariff Act - Held that:- As relying on Jayanti Food Processing (P) Ltd case [2007 (8) TMI 3 - Supreme Court] and in the light of provisions of Section 4A of Central Excise Act, 1944 and the provisions of SWM Rules especially Rule 34, an assessee cannot be forced or can be said to be not covered by Rule 34 of SWM Rules. Just because the appellant has mentioned "exclusively for industrial use" and "not to be sold in loose", Rule 34 cannot be compulsorily applied. The definition of 'Retail Sale" under Rule 2 makes it quite clear that the retail sale definition is vide enough to cover the transaction in question and therefore unless an assessee claims exemption from printing MRP under Rule 34 of SWM Rules, the MRP is required to be printed and assessable value has to be determined under Section 4A of Central Excise Act, 1944. Thus appellant has made out a case that goods are required to be assessed and value has to be determined as per the provisions of Section 4A of Central Excise Act, 1944 keeping the MRP as the basis.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 261
  Work Contract Tax - whether petitioner derived double benefit in the form of the escalation of seigniorage fee and Work Contract Tax (WTC) and the amount paid in excess was directed to be recovered through memo, dated 28.03.2009? - Held that:- The agreement between the petitioner and the respondents provides for the revision of the bills or the amounts, in case there is revision of the tax regime. The petitioner made claims for enhancement of the bills on account of seigniorage fee and WCT. The scrutiny however has revealed that the benefit was availed at two stages; the first is in the form of cost of material and the second is under Clause 70.8. So was the case with the WCT. On coming to know that serious irregularities in this regard were taking place, the Government issued memo, dated 28.03.2009, directing that wherever the benefit of escalation of seigniorage fee or WCT was extended more than once, recoveries must be effected. It is in this context that the respondents withheld the amount. The petitioner does not dispute that the benefit of escalation in the seigniorage fee and WCT was extended to it in a different form and at the same time, the benefit was claimed under clause 70.8. In case, the petitioner disputes the correctness of the memo, dated 28.03.2009 or it is of the view that it did not avail the double benefit, it can certainly institute proceedings vis-a-vis the same. Withholding of the amount under that count by the respondents cannot be said to be without any basis. The petitioner, which is a Central Government agency, ought not to have driven the respondents to such a prolonged and unnecessary litigation. Therefore, the writ petition is dismissed, with costs of Rs.5,000/-.

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• 2013 (6) TMI 260
  Reassessment - sanction granted to reopen the assessments by the Additional Commissioner - held that:- Apex Court has clearly laid down in the case of TVL K.A.K. Anwar and Company (1997 (11) TMI 489 - SUPREME COURT OF INDIA) that the decision rendered by it in the case of Telangana Steel Industries (1994 (3) TMI 108 - SUPREME COURT OF INDIA) cannot be treated as a binding precedent for the simple reason that the said decision was delivered without taking into account the earlier binding precedent of larger bench in the case of Hajee Abdul Shakoor (1964 (5) TMI 40 - SUPREME COURT OF INDIA). In TVL K.A.K. Anwar and Company (1997 (11) TMI 489 - SUPREME COURT OF INDIA) the Apex Court has laid down clearly that 'raw hides and skins' and 'dressed hides and skins' both are different commodities. It has also been laid down that merely because in an Entry the separate items are mentioned, they cannot be treated as one. Reliance was placed upon its earlier judgment in the case of State of Tamil Nadu Vs. Pyare Lal Malhrotra [1976 (1) TMI 151 - SUPREME COURT OF INDIA] that sales tax law is intended to tax sales of different commercial commodities and not to tax the production or the manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. With regard to the second point, the learned standing counsel submits that, as a matter of fact, the assessing authority while framing the assessment order failed to examine the relevant issue and preferred to follow the judgment of the Apex Court in the case of Telangana Steel Industries (1994 (3) TMI 108 - SUPREME COURT OF INDIA). The said approach of the assessing authority is clearly erroneous in view of two authoritative pronouncements of the Apex Court of the larger bench referred to above. - We are leaving this question open to be considered if so raised by the authority concerned in the reassessment proceedings. - Decided against the assessee.

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