TMI Tax Updates - e-Newsletter
June 17, 2013

Case Laws in this Newsletter:

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

TMI SMS

• Deduction u/s 80C - the payment of LIC premiums made during the previous year out of loan funds are also eligible for deduction u/s 80C - Tri

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Articles

1. SERVICE TAX - TENANT IS LIABLE- CONTRACT ACT ARBITRATION ETC.

   By: DEVKUMAR KOTHARI

News

1. A WORD FROM CHAIRPERSON, CBDT

2. Issue of Rs. 5 coins to commemorate the occasion of "150th Birth Anniversary of Motilal Nehru"

3. RBI Reference Rate for US $ and Euro

4. Increased Domestic Production of Oil, Coal & Restraining Gold Consumtion can Contain CAD; India Continues to Remain a Desired Destination for FDI and FII – P. Chidambaram

5. India’s Foreign Trade: May, 2013

6. Mid-Quarter Monetary Policy Review: June 2013

Notifications

VAT - Delhi

1. 337/CDVAT/2013/163 - dated 11-6-2013 - DVAT

Ruling under section 85 of DVAT Act, 2004 in respect of Sun Glasses

Circulars / Instructions / Orders

Income Tax

1. 127/2013 - dated 14-6-2013

Appointment of New Chairperson for CBDT

Highlights / Catch Notes

Income Tax

• TDS on Annual Maintenance Contracts to be deducted u/s 194C, not 194J, per Income Tax Act clarification.

  Case-Laws - AT : TDS U/s 194-J OR 194C - AMC - Rendering of services by using technical knowledge or skill is different than charging fees for technical services - TDS to be deducted u/s 194C - AT
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• Software Development Charges to DERPOL Classified as Revenue Expenses Under Income Tax Regulations.

  Case-Laws - AT : Service charges paid on software development to DERPOL - expenses claimed by the assessee are of revenue in nature - AT
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• LIC Premium Payments via Loan Funds Deductible u/s 80C for Previous Year Tax Benefits.

  Case-Laws - AT : Deduction u/s 80C - the payment of LIC premiums made during the previous year out of loan funds are also eligible for deduction u/s 80C - AT
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• Income Transferred to Policyholders' Account is a Charge, Not Application of Income, AO Excludes from Taxation.

  Case-Laws - AT : Business of Life Insurance - Income transferred to policy holders' a/c. was not application of income-it was charge on income and therefore AO had rightly excluded it from taxation. - AT
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• Assessing Officer to Determine Arm's Length Price Using Proper Comparable Selection for Transfer Pricing Compliance.

  Case-Laws - AT : Transfer pricing adjustment - selection of comparable - AO/TPO is directed to work out the ALP of the assessee with direction - AT
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Customs

• Court Rules Shipping Corporation of India as Importer for Vessel Scrapping on Transfer Date, Not Beaching Date at Alang.

  Case-Laws - HC : Import of vessel for scrapping - who is the importer - on which the vessel is broken up would be the date on which it is taken for breaking i.e. the date of transfer from the Shipping Corporation of India to the respondent and not the date of beaching at Alang and on that date the importer would be Shipping Corporation of India. - HC
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Service Tax

• Cenvat Credit Allowed for Input Services Before Registration, Boosting Export Refunds for Businesses.

  Case-Laws - AT : Cenvat Credit - Input services - prior to date of registration - export of services - refund allowed - AT
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Central Excise

• Refund of Excess Duty Approved: Purchaser's Credit Reversal Supports Claim Under Central Excise, Upholding Unjust Enrichment Principle.

  Case-Laws - AT : Refund of excess duty paid - Debit / Credit Note - unjust enrichment - purchaser reversed the credit - Refund allowed - AT
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• SSI Exemption Case: Demand Set Aside Due to Expired Limitation Period for Issuing Show Cause Notice.

  Case-Laws - AT : SSI Exemption - notification No. 8/2003 dated 1.3.2003 - Period of limitation - declaration filed as on 14.4.2004 - SCN issued as on 5.4.2006, beyond one year - demand set aside - AT
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VAT

• High Court Rules Seizure Unjustified Due to Missing Transit Declaration, All Other Compliance Met.

  Case-Laws - HC : Consignment was not accompanied with down loaded transit declaration form - Except this default everything was found in order - the irresistible conclusion is that the seizure order is bad - HC
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• High Court Grants Refund Despite Seller Charging Excessive 12.5% Tax Instead of 4%; Revenue to Pursue Seller.

  Case-Laws - HC : Refund claim rejected - seller paid tax @ 12.5% instead of 4% - all that the Revenue could do is to proceed against the seller of the goods for charging the purchaser at a rate not legally sustainable - refund allowed - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 383
  Re-assessment proceedings - Whether the proposed action was barred by limitation? - Held that:- In the present case, the concurrent finding of fact is that it is a case of omission and failure of the appellant to disclose the liability to pay expenditure tax in respect of chargeable expenditure for the relevant period of assessment years 1994-95 to 1996-97. On this finding the case would be clearly covered by clause (a) of Section 11. As a concomitant of that finding, the reassessment opened by the AO in terms of notice served on the assessee on 18th February, 2002, cannot be barred by limitation. Against assessee. Whether no regular assessment order was passed by the AO for the assessment years 1994 -95 to 1996-1997 - argument of the appellant that the assessment could not have been completed without giving notice to the assessee as required under Sub Section (1) of Section 9 of the Expenditure Tax Act, 1987- Held that:- Submission of assessee clearly over-looks that the requirement of notice would be necessary if the Assessment Officer was to disagree with the returns already filed by the assessee either wholly or in part. However, when AO proceeds to accept the returns filed by the Assessee as it is, the requirement of issuing notice would not arise. Without issuing such notice the assessment could still be completed by the AO as has been done in the present case vide entry dated 30.3.1998 in the order sheet. Once it is found that the assessment was already completed by the Assessing Officer it would follow that it is open to the Assessing Officer to take recourse to re-assessment by invoking powers under Section 11 if the fact situation so required. The fact that the SLP filed by the Department was pending in the Supreme Court would not give licence to the Appellant not to disclose the taxable items in the returns as filed as the operation of the Act was not interdicted by the pendency of the said proceedings. Taking any view of the matter, therefore, the question under consideration will have to be answered against the Appellant.

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• 2013 (6) TMI 382
  Claim u/s.80IA denied in respect of eligible undertakings viz., Earth Stations, Internet and Inmarsat M&B services - whether appellants method of calculating the deduction u/s.80IA totally unacceptable? - Held that:- Neither the AO nor the FAA had deliberated upon the allowabililty of section 80IA with regard to internet services. Assessee fairly conceded that issue of allowing deduction with relating to internet services was never decided by any of the lower authorities considering the amended provisions. In these circumstances in the interest of justice matter should be restored back to the file of the FAA for passing fresh order keeping in mind the amended provisions of the section 80IA. In favour of assessee for statistical purposes. Prior periods expenditure disallowed - travelling, professional fees, audit fees, printing and advertisement expenses, medical and HRA arrears, municipal tax etc., as well as repairs and maintenance - Held that:- From the records available it is found that out of prior period expenditure 2.18 crores bill amounting to Rs. 69.20 lakhs (49.206 lakhs + 19.94 lakhs) were received before the due date of approval of accounts. As the liability crystallisation took place during the year under consideration, same should be allowed. Partly in favour of assessee. Depreciation on undersea ‘FLAG’ cable system - Held that:- As it is well settled position of the law that the eligibility to claim depreciation u/s.32 is governed by the factum of beneficial ownership of the depreciable assets notwithstanding the absence of legal title thereto, accordingly the appellant is entitled to claim depreciation on the value of the indefeasible rights and such claim of the appellant has been wrongly denied by the AO. As the revenue has been allowing depreciation in the subsequent year and principles of consistency should be followed as per the ratio of the judgment of CIT Vs. Dalmia Promoters P. Ltd. (2006 (1) TMI 57 - DELHI High Court). As DR was not able to factually contradict that the claim of the assessee that it is a Member of International Consortium that owned the cables and that it is a part owner, with the right to transfer its share to other and also a right to share the sale proceed on decommissioning of the system, in proportion to the rights held by it depreciation is to be allowed. In favour of assessee.

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• 2013 (6) TMI 381
  Non deduction of tax at source on payments to the hospitals - TPA - appellant prays that they have not availed any professional services as contemplated u/s. 194J - default u/s 201(1) - interest levied u/s. 201(1A) - Held that:- In view of decision of Dedicated Health Care Services TPA vs. ACIT [2010 (5) TMI 98 - BOMBAY HIGH COURT] observe that CIT(A) has rightly held that assessee was required to deduct TDS u/s.194J in respect of payments made by the assessee to the hospitals/nursing homes. Therefore issue is decided against the assessee. A.R. submitted that the only balance amount left out of Rs. 9,92,48,570 is Rs. 7,34,60,140 on which assessee is liable to pay TDS & also conceded that assessee is also liable to pay interest u/s.201(1A) on the TDS payable on Rs. 7,34,60,140 and is also liable to pay interest on the TDS payable of Rs. 89,61,485 till the date of payment of tax thereon by the deductee. D.R. has no objection to that extent subject to the condition that assessee should furnish the requisite certificates as per CBDT Circular No.8 of 2009 dated 24.11.2009 - restore the issue to the file of AO with a direction to calculate the TDS payable by the assessee and the liability of interest u/s.201(1A) subject to the observations made hereinabove after giving due opportunity of hearing and also considering such evidences as may be produced by the assessee before him. In favour of assessee.

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• 2013 (6) TMI 380
  TDS U/s 194-J OR 194C - Services for annual maintenance of sophisticated medical equipments - Installation of machinery, AC system fitting for dialysis, ACC system installation and Air conditioner - CIT(A) deleted interest charged u/s 201(1)A - Held that:- The nature of work involves repairing, maintenance etc. which is part of work contract. Therefore, the same will not fall in the category of professional or technical services. Further, it is noticed that though the work involved is of specialization, still as the AO has failed to bring on record any evidence which shows that technical services received enhanced the knowledge of the appellant, these will also not be charged u/s 194J. Rendering of services by using technical knowledge or skill is different than charging fees for technical services. Where the services of technically qualified person were rendered only for maintaining machinery but that knowledge did not vest in the assessee so that assessee itself could make use of it, the amount cannot be considered as fees for technical services within the meaning of section 194J. See DCIT v Parasrampuria Synthetics Ltd [2007 (11) TMI 436 - ITAT DELHI]. Thus the appellant has rightly deducted tax at source u/s 194C. Charging of interest u/s 201(1A) on short deduction of various contract payments - Held that:- CIT(A) has given cogent reasons for coming to the conclusion that the nature of job & as these transactions are held to be not subjected to the provisions of section 194J, there will not be any question of charging of interest u/s 201(1A). Therefore, the interest charged u/s 201(1A) will also have to be cancelled. Accordingly the A.O. is directed to cancel the demand raised on this account as well.

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• 2013 (6) TMI 379
  Service charges paid on software development to DERPOL - CIT(A) deleted the addition - Held that:- Issue in question is squarely covered in favour of assessee as ITAT in the preceding year from January, 2006 to March, 2006 on the basis of same agreement had allowed the expenditure stating that as from the agreement and the nature of the services provided by M/s DERPOL Investment Ltd. it is not at all established that the assessee had acquired any asset of capital in nature. AO has failed to point out as to how and in what manner, the expenses incurred by the assessee for availing the services of M/s DERPOL can said to be of enduring in nature. Since no capital assets was acquired nor any benefit of enduring nature so as to treat the expenditure as of capital in nature has been acquired by the assessee and since assessee has availed the services of M/s DERPOL in the course of carrying on its business of software development and deployment and the payment is related to the services rendered. Thus the expenses claimed by the assessee are of revenue in nature - Against revenue. Confirmation of disallowance on account of legal and professional charges - Held that:- CIT(A) has elaborately dealt with the issue and AR did not bring any fresh material in support of the expenses claimed. Therefore, no infirmity in the order of CIT(A). Against assessee.

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• 2013 (6) TMI 378
  Deduction u/s 80C on the LIC premium paid in respect of his LIC policies paid out of loan funds - CIT(A) disallowed the claim - Held that:- The provisions of sec. 80C, as applicable to the year under consideration, do not specify the condition that the LIC premium payments should be paid out of income chargeable to tax. Further, as stated earlier, section 80C is included in Part-B of Chapter VI-A of the Act which provides for deduction in respect of certain payments. Only certain sections included in Part-B of Chapter VI-A contain the words “out of income chargeable to tax” and certain sections do not contain the above said words, i.e., within the sections included in Par-B of Chapter VI-A of the Act, the parliament has prescribed the condition that the payments should have been made out of income chargeable to tax only in certain sections, meaning thereby, the parliament has consciously omitted the above said condition in certain sections. As stated earlier, no such condition is prescribed in sec. 80C . It is a well settled proposition of law that one cannot supplement or add words to a section, which are not intended to be included by the parliament. Thus the payment of LIC premiums made during the previous year out of loan funds are also eligible for deduction u/s 80C - appeal of the assessee allowed.

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• 2013 (6) TMI 377
  Entitlement to the exemption u/s 10(34) - LIC engaged in the business of Life Insurance - Held that:- Rule 5 to Schedule I was for General Insurance, that assessee was engaged in the business of Life Insurance, that rule 2 of Schedule was applicable to the business of the assessee, that the assessee was entitled to exemption u/s. 10(34). See General Insurance Corporation of India (2011 (12) TMI 70 - BOMBAY HIGH COURT) & ICICI Prudential Insurance Co. Ltd. [2012 (11) TMI 13 - ITAT MUMBAI] - In favour of assessee. Addition of Negative Reserve shown in Form - I - Held that:- As decided in case of ICICI Prudentail Insurance Co. [2012 (11) TMI 13 - ITAT MUMBAI] on examining the method of accounting and the mandate given by regulations to appoint Actuarial on the concept of mathematical reserves the mathematical reserve is a part of Actuarial valuation and the surplus as discussed in Form-I under Regualtion 4 takes in to consideration this mathematical reserve also. Therefore the order of the order of the CIT(A) is approved. Moreover AO has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r.w.s.44 of the I.T. Act. The principle laid down in LIC vs.CIT [1963 (12) TMI 5 - SUPREME Court] about the power of the Assessing Officer also restricted the scope and adjustment by the AO. In view of this uphold the order of the CIT(A) and dismiss the Revenue's ground. In favour of assessee. Addition of income from shareholder's funds credited directly to the shareholder's Account - Held that:- There is no doubt that income had accrued to the assessee and same was transferred to the share holders' account. Once income is earned by the assessee and later on it is applied for some specific purpose it cannot be treated as charge on profit. It is application of income. Preparation of books of accounts as per the Insurance account is different from determining the tax liability under income tax. Income transferred to policy holders' a/c. was not application of income-it was charge on income and therefore AO had rightly excluded it from taxation. Income earned by the assessee-corporation on dividend and interest, in a strict sense, cannot be held to be earned from the insurance business. Initial capital contribution was made by the Government of India in 1955 for carrying out insurance business, but income earned by the assessee as dividend and interest in the year under consideration cannot be termed as income of the Sovereign - Against assessee.

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• 2013 (6) TMI 376
  Transfer pricing adjustment - selection of comparable - determination of Arm's Length Price (ALP) - AO re-computed the deduction u/s 10A by holding that the communication expenses (i.e., the lease line charges, broadband charges, foreign travel expenses and insurance expenses) attributable to the delivery of computer software outside India should be reduced from the export turnover while computing the deduction under section 10A - Held that:- As decided in CIT v Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] when the expenses are reduced from the export turnover while computing deduction under section 10A the same should also be reduced from the total turnover in order to maintain parity between the numerator and the denominator. In the light of the above judgment AO directed to reduce the said sum from the export turnover as well as from the total turnover while computing deduction under section 10A. Improper selection of comparable - Held that:- The line of business of the assessee in this case and that of two case laws Trilogy E-Business Software India (P.) Ltd.'s case [2013 (1) TMI 672 - ITAT BANGALORE] & Mercedes Benz [2013 (6) TMI 56 - ITAT BANGALORE] are similar, namely, development of software and the size/turnover was also similar to that of the assessee in the instant case. Moreover, the assessment year 2007-08 was subject matter of consideration in the case of Trilogy E-Business Software India (P.) Ltd. (supra) and Mercedes Benz Research Development India (P.) Ltd.'s case (supra) and the comparables selected by the TPO in those cases are identical to that of the instant case. The TPO had, while selecting the above 26 comparables, applied a lower turnover filter of Rs. 1 crore but preferred not to apply any upper turnover limit. The size of the comparable is an important factor in comparability. The ICAI TP guidance note has observed that the transaction entered into by a Rs. 1000 crores company cannot be compared with the transaction entered into by a Rs. 10 crores company and the two most obvious reasons are the size of the two companies and related economies of scale under which they operate. The TPO's range had resulted in selection of companies as comparable such as Infosys which was 277 times bigger than that of the assessee. The Bangalore Bench of the Tribunal in the case of Genisys Integrating Systems (India) (P.) Ltd. v. Dy. [2011 (8) TMI 952 - ITAT BANGALORE] relying on Dun and Bradstreet's analysis had held that turnover range of Rs. 1 crore to 200 crores is appropriate. Thus in view of the above said reasoning the following 8 companies Flextronics Software Systems Limited, iGate Global Solutions Limited, Infosys Technologies Limited, Mindtree Limited, Persistent Systems Limited, Persistent Systems Limited, Sasken Communication Technologies Limited, Tata Elxsi Limited,Wipro Limited will have to be eliminated from the list of comparable selected by the TPO. Inclusion of Lucid Software Ltd. as a comparable by the TPO - Held that:- As identical objection has been raised against the inclusion of Lucid Software in case of Telcordia Technologies. Since the facts and the assessment year are identical, following the order of the Tribunal in the case of Telcordia Technologies India (P.) Ltd. (2012 (6) TMI 388 - ITAT MUMBAI) direct the Assessing Officer/TPO not to include Lucid Software Limited as a comparable. After excluding from the TPO's list of comparables, the companies having turnover exceeding Rs. 200 crores and five companies which are functional dissimilar to that of the assessee, the following thirteen companies in TPO list are retained as comparables Datamatics Limited, E Zest Solutions Limited, Geometric Ltd. (seg), Helios & Matheson Information Technology Ltd, IshirInfotech Ltd, LGS Global Ltd (Lanco Global Solutions Ltd), Mediasoft Solutions Pvt. Ltd, Megasoft Ltd (Seg), Quintegra Solutions Ltd, R S Software (India) Ltd, R Systems International Ltd (Seg), SIP Technologies & Exports Ltd, Thirdware Solutions Ltd (Seg) Megasoft Ltd - In conformity with the findings of the earlier Bench in the case of Trilogy E-Business Software India (P.) Ltd.'s (supra), we are of the considered view that the TPO was justified in selecting M/s. Megasoft Ltd as comparable. However, the AO/TPO is directed to take segmental margins of 23.11% for comparability. It is ordered accordingly. Ishir InfoTech Limited - Since the facts and the assessment years are identical, in conformity with the a order of the Tribunal in the case of Mercedes Benz Research Development India (P.) Ltd. (supra) Assessing Officer/TPO directed to re-examine whether Ishir Infotech Ltd. should be included in the list of comparables. AO/TPO is directed to work out the ALP of the assessee and if found that the differential in the margin of the assessee and the comparable is beyond 5% bandwidth recognized in proviso to section 92C (2) then adjustment is required to be made to the reported value of the assessee's transaction with its AE. It is ordered accordingly

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• 2013 (6) TMI 375
  Company s income from trading of shares - whether be treated as business income / speculative business - assessee is a private limited company engaged in the business of share brokerage and share trading - Held that:- The case laws relied upon by assessee of CIT v. Lokmat Newspapers (P) Ltd. [2010 (2) TMI 94 - BOMBAY HIGH COURT] and CIT v. Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] the facts in both the cases are different from that of the assessee s case CIT(A) was justified in holding that the provision of section 73 and explanation thereto was applicable in the assessee s case and AO was justified in treating the income on account of brokerage of shares as business income and income on account of trading of shares for itself as speculation income within the meaning of section 73 and explanation thereto of the Act. The AO was further rightly directed to carry forward losses if any as per provisions. On this account AR submitted that AO has not allowed to carry forward of the losses as directed by the CIT(A). This limited issue is restored to the AO with a direction to allow carry forward of losses as directed by the CIT(A) as per provisions of the Act after providing opportunity of hearing to the assessee.

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• 2013 (6) TMI 374
  Upward adjustment in determining the arm's length price - Rejecting the functional analysis, search process adopted and documentation maintained by the Appellant for this transaction - assessee contested against exclusion of Coral Hubs Ltd. as comparable and for the purpose of taking correct rate of profit in hands of Mold-tek Technologies Limited and Datamatics Financial Services Ltd. - Held that:- Respectfully following the decision of in the case of Willis Processing Services (I) (P.) Ltd. (2013 (3) TMI 415 - MUMBAI TRIBUNAL COURT) restore this issue to the file of AO/TPO for verification of the fact that whether for the year under consideration also the activity of ITES is outsourced by Coral Hubs Ltd. If it is so, then the Coral Hubs Ltd. has to be removed from the list of comparables following the aforementioned decisions. Profit margin of Mold-tek Technologies Limited taken by TPO at 96.66%, the assessee has given calculation of profit rate and reference has also been made to the financial account of the said concern. This issue was raised by the assessee before TPO as well as DRP but no specific findings have been given on that. Therefore, it just and proper to restore this issue also to the file of AO/TPO to give specific finding on that and after giving the assessee a reasonable opportunity in this regard, the correct profit margin should be taken. So far as it relates to contention of the assessee that only segmental result should be taken in the case of Datamatics Financial Services Ltd., this issue is also supported by the decision of the Tribunal in the case of Willis Processing Services (I) (P.) Ltd. (supra). Accordingly direct the A0/TPO to take segmental result for the purpose of computing the arithmetic mean of the said comparable. Assessee should be given reasonable opportunity of hearing and after giving such opportunity the mean margin of comparables should be computed and if the mean margin computed is within the safe harbour of ± 5% then no adjustment should be made - appeal filed by the assessee is partly allowed for statistical purposes.

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• 2013 (6) TMI 373
  Payments made to the Broadcasters - Non deduction of TDS u/s 194C - Treating the assessee as an assessee in default and levying of tax and interest u/s.201(1) & 201(IA) - CIT(A)confirmed additions - Held that:- CIT(A) after hearing the assessee and considering the provisions contained in Section 201(1) as well as Section 194C and the decision of Kurukshetra Darpans (P)Ltd v. CIT (2008 (3) TMI 48 - High Court Punjab and Haryana) has come to the conclusion that the tax u/s.194C is deductible on the payments made to T.V.channels. Thus assessee could be treated as “assessee in default” Levy of interest u/s.201(1A) confirm as relying on Hindustan Coca Cola Beverages (P) Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA) and CIT v. Eli Lilly & Co.(India) P. Ltd (2009 (3) TMI 33 - SUPREME COURT). Thus the impugned orders of theCIT(A) are not infirm in any way requiring any interference. Against assessee.

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• Customs

• 2013 (6) TMI 372
  Condonation of delay - delay of 850 days in filing an appeal - held that:- No merit in the application for condonation of delay. There is a colossal delay of 850 days in filing the appeal. No satisfactory explanation has been furnished. The plea taken in the application for condonation of delay is that the appellant-company being a sick company was lying closed and all its employees had left. There was only one male Director who due to heavy losses could not file the appeal. The said Director was making efforts for revival of the company for which dispute with the Excise Department is required to be settled. The appeal has, therefore, been filed which is belated due to these unavoidable circumstances. Such an explanation does not fulfil the test of “sufficient cause” so as to entitle the appellant for condonation of huge delay of 850 days in filing the appeal. Accordingly, the application is dismissed. - Decided against the assessee.

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• 2013 (6) TMI 371
  Exemption from customs duty - ATA Garnet System - Notification No. 157/90-Customs - proof of re-export of goods - held that:- The Certificate of Disposition was produced as part of the record. The order of the Appellate Commissioner reveals that this was produced before that authority too, even though while rejecting the claim the document was not adverted to. To the Court, the certificate issued by the US authorities appears to be a valid proof of re-exportation of the goods against the said Carnet. It is important to note that none of the authorities which dealt with the matter disbelieved the authenticity of the Certificate of Disposition. Moreover, we also notice that the Letter of Evidence dated 24-6-2009 issued by USCIB to the petitioner clarifies that the goods had been re-exported. The findings of the respondents were therefore unjustified and unreasonable, as the Appellate Commissioner and the revisional authority failed to take into account relevant and material facts. - Decided in favor of assessee.

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• 2013 (6) TMI 370
  Import of vessel for scrapping - who is the importer - sale it is for scrapping - ship breaking activity - foreign going vessel or not - Notification No.163/65 - held that:- it is apparent that by virtue of the provisions of Notification No.163/65-Cus., at the time when the ship was to be broken up, there was a deemed import of the ship for the purpose of breaking up. As held by the Supreme Court in the case of Jalyan Udyog (1993 (9) TMI 108 - SUPREME COURT OF INDIA) even a deemed import has to be given full effect. Thus, all the necessary concomitants which go with import, would be required to be followed even in the case of a deemed import. The respondent stepped into the shoes of Shipping Corporation of India who was the original owner of the subject vessel and as such, was liable to discharge all statutory duties in respect thereof. It is an undisputed position that it is the respondent-assessee who has filed the bill of entry, albeit at the instance of the customs authorities; however, it cannot be gainsaid that prior thereto the vessel had not been cleared for home consumption after the status of the vessel was converted to a vessel intended for breaking up. In the aforesaid premises, the respondent assessee squarely falls within the definition of “importer” as envisaged under sub-section (26) of section 2 of the Act. Even if notification No.163/65 did not expressly provide for filing of a fresh bill of entry, such requirement has to be read into it, inasmuch as a condition precedent for importing any goods is filing of a bill of entry. Therefore, the subsequent Notification No.16/2000-Cus only makes explicit what was otherwise implicit in the earlier notification. The Tribunal has misread the decision of the Supreme Court in the case of Union of India v. Jalyan Udyog (1993 (9) TMI 108 - SUPREME COURT OF INDIA) in holding that the date on which the vessel is broken up would be the date on which it is taken for breaking i.e. the date of transfer from the Shipping Corporation of India to the respondent and not the date of beaching at Alang and on that date the importer would be Shipping Corporation of India. Decision of tribunal set aside - decided in favor of revenue.

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• Service Tax

• 2013 (6) TMI 389
  Cenvat Credit - Input services - prior to date of registration - export of services - The second ground taken for rejection of the refund claim is that refund under Rule 5 of Cenvat Credit Rules, 2004 is permissible only if the dutiable goods are exported under bond or LUT. - Held that:- refund allowed. Decision in the cases of J.R. Herbal Care India Limited v. CCE, Noida - [2010 (3) TMI 391 - CESTAT, NEW DELHI], CCE v. Drish Shoes Limited - [2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] and Repro India Limited v. UOI [2007 (12) TMI 209 - BOMBAY HIGH COURT] followed.

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• 2013 (6) TMI 388
  Cenvat Credit - Input services - commission agent services - Rule 2(l) of CCR - Held that:- the appellant has been taking the services of the Commission Agent for sale of the final products which is an activity relating to business. - Credit allowed.

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• 2013 (6) TMI 387
  Condonation of delay - appeal by DIRECTORATE OF MARKETING AND INSPECTION (DMI) - Held that:- There is no explanation for such long gaps in between various actions of the applicant. The appreciation of the entire consequence of events, as reflected in the above application reflects upon the casual approach of the applicant and lapses on their part to take the matter seriously and to file the appeal within the limitation period. In spite of the fact that a draft appeal was vetted in or around July 2008, the actual filing of the same occurred on 17.8.2011 - no justifiable reasons, to condone such a huge delay in filing the present appeal. - Decided against the assessee.

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• 2013 (6) TMI 384
  Sale of SIM Cards - bonafide belief - extended period of limitation - Held that:- following the decision in f Bharti Hexacom Ltd. Vs CCE Jaipur [2013 (6) TMI 369 - CESTAT NEW DELHI] levy of service tax for the normal period is confirmed annulling the demand relating to extended period of limitation. - Partly decided in favor of assessee.

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• Central Excise

• 2013 (6) TMI 394
  Cenvat Credit - Input Services - GTA - Outward transportation - Held that:- . The expression "up to the place of removal" has a clear and absolute meaning beyond the pale of doubt. In the present case, the final product was cleared from the place of removal (whether it be factory or depot) by the appellant by making use of GTA service. The service so used is not coming within the ambit of the definition of 'input service' for the period after 31.3.2008. - Pre deposit ordered for an amount of Rs. 1 crore and rs. 46.83 lacs.

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• 2013 (6) TMI 393
  Requirement to make pre-deposit equal to 50% - Appeal was dismissed for non deposit - Cenvat Credit - MS Angles, Channels and H.R. Plates - Extended period of limitation - Held that:- Commissioner (Appeals) to dispose of the assessee’s appeal (filed against Order-in-Original) on merits subject to pre-deposit, by the appellant, of an amount of Rs. 2,00,000/- (Rupees Two lakhs only) within six weeks.

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• 2013 (6) TMI 392
  Refund of excess duty paid - unjust enrichment - Held that:- It is undisputed that the respondent is not liable to pay 4% SAD on the clearances of the goods to DTA on which VAT/CST is levied. On being pointed out, the respondent informed the purchasers who has reversed the cenvat credit and respondent herein has raised a credit note indicating the reversal of the amount to be received to their respondent purchasers. - It is also undisputed that M/s. Element Chemilink Pvt. Ltd. has not paid an amount of Rs.8,10,578/- to the respondent. - assessee has been able to pass the hurdle of contentions of the department regarding unjust enrichment. It is then, contended by the revenue, that mechanism of issuance of debit note and credit note, if countenanced, it will open flood gates for pilferage of revenue. Firstly, we do not agree with the preposition, that it can open flood gates, in as much as, where false, fictitious or shame Debit note and credit note are issued for adjustment, the revenue can very well lead evidence, or can lead evidence in rebuttal. Simply because the revenue fails, and is not able to rebut evidence, it cannot be assumed, that it will open flood gates for pilferage of the revenue. - Refund to be allowed - Decided in favor of assessee.

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• 2013 (6) TMI 391
  SSI Exemption - notification No. 8/2003 dated 1.3.2003 - Period of limitation - declaration filed for the year 2003-2004 on 14.4.2004 - Held that:- appellants have declared the value of dutiable as also exempted final product, total of which exceed Rs. 3 crores thus making the assessee not entitled to the benefit of exempted notification in the subsequent financial year. Inspite of appellants having disclosed the full information in the said declaration, the Revenue has raised the Show cause notice only on 5.4.2006, i.e. beyond the limitation period. - Decided in favor of assessee.

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• 2013 (6) TMI 390
  Benefit of reduced penalty equal to 25% - Clandestine removal - manufacturing of cigarette - Held that:- there is no dispute that the appellant had paid the entire duty chargeable on the cigarettes found short even before the issue of the show cause notice and still in the adjudication order passed by the Assistant Commissioner, no option has been given to the appellant to pay lower penalty in terms of proviso to Section 11AC by paying the reduce penalty within the 30 days of the order. - , the benefit of reduced penalty under proviso to Section 11AC cannot be denied to the appellant. Personal penalty - Held that:- taking into account the fact he is only a paid employee of the appellant firm, the penalty of Rs. 25,000/- imposed is on higher side and, as such, the same is reduced to Rs. 5,000/-.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 386
  Consignment was not accompanied with down loaded transit declaration form as prescribed by the Commissioner, Commercial Tax, U.P. vide its circular No.552 dated 30th of July, 2009 - assessee transporting a consignment of steel casting machines - seizure order with a direction to release of the goods on furnishing the security to the extent of 15% of the value of the goods in cash and 25% - U.P. Value Added Tax Act - as per assessee any such form prescribed by the the Commissioner, Commercial Tax, U.P. is illegal as the the Commissioner, Commercial Tax, U.P. is not authorized under the said Act or Rules to prescribe any such form - Held that:- Rule 58 itself empowers the Commissioner to determine the documents which a driver of a vehicle should carry with while passing through the State of U.P. carrying the taxable goods. The State Government had also prescribed similar form being form no.43 as per unamended section 52 of the Act. The power of Commissioner in the case on hand prescribing the document is referable to Rule 58 read with section 52. Therefore, unable to agree with the aforesaid submission of the petitioner. On the merits of the case, as petitioner submitted that except the down loaded form prescribed by the Commissioner the goods were moving along with all necessary documents. The department has neither raised nor doubted the genuineness of other documents which were being carried by the driver of the vehicle at the time of interception of the goods. The goods were booked at Ballabhgarh, Faridabad (State of Haryana) to BHEL, a Government of India Enterprizes. The details of the consignor and consignee were not found to be incorrect. The goods were not meant for consumption, use or sale by the public at large. The submission is that there was no intention to evade the payment of tax in the State of U.P. A perusal of the impugned order would show that the goods were intercepted and security for their release was demanded only on the ground that it did not accompany with the down loaded transit pass. Except the above default everything was found in order. Even in the case of Sodhi Transport (1986 (3) TMI 303 - SUPREME COURT OF INDIA) as also in the circular issued by the Commissioner it has been laid down that a rebuttable presumption in absence of necessary documents to be drawn against a person & examined this issue in depth and laid down that the presumption is rebuttable presumption. This Court in the case of the above M/S Balaji Timbers & Paints Versus The Commissioner, Commercial Tax, U. P. Lucknow [2010 (5) TMI 707 - ALLAHABAD HIGH COURT] has gone to the extent that if the transit form is furnished subsequently, after the interception of the vehicle, the seizure order becomes bad. The Appellate Authority fixed 15 per cent cash security and bank guarantee to be given for 25 per cent of the value of the goods as a condition for releasing the goods. This order was modified by this Court while passing an interim order by providing that if the petitioner gives the bank guarantee for remaining 15 per cent of the amount also, the goods shall be released in its favour. In absence of any finding by any of the authorities below, that there was an intention to evade the payment of tax, the irresistible conclusion is that the seizure order is bad. On merits, therefore, the seizure order cannot be allowed to stand and is hereby set aside.

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• 2013 (6) TMI 385
  Refund claim rejected - discrepancy in the purchase invoice supplied by the petitioner containing incomplete information on the rate of tax and the actual tax payable - proposal to restrict the petitioner's claim of ITC to 4% on the purchase of capital goods that have been purchased on payment of 12.5% - Tamil Nadu Value Added Tax Act - Held that:- It is admitted that the petitioner had in fact paid the tax at 12.5% which could not be refuted by the seller. If there had been a charging of tax by the seller when effected the sale to the purchaser at the rate over and above what is payable under the TNVAT Act, all that the Revenue could do is to proceed against the seller of the goods for charging the purchaser at a rate not legally sustainable. Do not agree with the contention of the Additional Government Pleader, who overlooks the fundamental fact of difference between the earlier Act and the present Act that when the ITC claim clearly shows that the purchaser had paid the tax at 12.5%, the question of the seller coming forward before the authority concerned as regards the collection of tax or as to the proof on the passing of liability, does not arise. Additional Government Pleader contention that section 18(2) does not have any restrictive words to mean that the "dealer" could refer only a purchaser to grant a refund is to be rejected as this line of contention outright, as given the fact that the zero rating of tax is as per Section 18 of the TNVAT Act and the same is only at the hands of a purchasing dealer of goods and not at the hands of the seller, who sells the capital goods, the acceptance of the stand of the Department would only amount to either ignoring Section 18 or cutting down the width of Section 18, for that matter, even to overlook Section 19 - thus claim of the petitioner as regards the refund of tax without any reduction has to be accepted.

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