TMI Tax Updates - e-Newsletter
June 4, 2013

Case Laws in this Newsletter:

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

TMI SMS

• Levy of service tax on Chit Fund - constitutional validity - Courts do not interfere with the fiscal policy where the Government acts in Public Interest - HC

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• Import of Crude palm oil - high acid value - entitled to get benefit of exemption of duty - exemption cannot be taken away by adding to the words in the NTF -HC

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• Loss on revaluation of security - securities maintained as per RBI Guidelines - only 30% treated as stock in trade - 70% treated as long term asset - HC

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• Interest on refund u/s 244A - interest from the date of actual deposit on the excess amount made in pursuance of the demand notice issued u/s 156 allowed - HC

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News

1. Auction for Sale (REISSUE) of Government Stocks

2. Seventh Meeting of the Financial Stability and Development Council (FSDC) Held Under The Chairmanship of The Union Finance Minister; Reviews The Position of Asset Quality and Capital Adequacy of The Banking System in the Country, National Strategy for Financial Education and the Recommendations of The Financial Sector Legislative Reforms Commission Among Others

3. Provisional Accounts of the Union Government for the Year 2012-2013 Released; Fiscal Deficit is 4.9 Percent, Revenue Deficit 3.6 Percent and Effective Revenue Deficit 2.5 Percent of GDP during the Period

Highlights / Catch Notes

Income Tax

• High Court Upholds ITAT Decision: Exemption Granted u/s 11 Despite No Loan Permission from Charity Commissioner.

  Case-Laws - HC : Exemption u/s. 11 - ITAT allowed the claim though assessee failed to get the permission of the Charity Commissioner to raise loans for the trust - order of ITAT sustained - HC
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• High Court Bound by Lower Court Findings in Tax Cases Unless Errors Are Proven.

  Case-Laws - HC : Whether findings of fact binding on to the High Court - This findings are, indisputably, binding unless shown that the facts are not correct or are perverse. - HC
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• Court Rules 30% of Securities as Stock in Trade, 70% as Long-Term Assets Under RBI Guidelines, Affecting Tax Treatment.

  Case-Laws - HC : Loss on revaluation of security - securities maintained as per RBI Guidelines - only 30% treated as stock in trade - 70% treated as long term asset - HC
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• High Court Rules Tariff Subsidy for Power Costs Eligible for Deduction u/s 80IA of Income Tax Act.

  Case-Laws - HC : Deduction u/s 80IA - tariff subsidy specifically given to meet the cost of power of the industrial undertaking - deduction allowed in respect of operational subsidy u/s - HC
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• Interest on Tax Refund u/s 244A: Calculated from Date of Excess Payment After Demand Notice.

  Case-Laws - HC : Interest on refund u/s 244A - Petitioner is entitled to receive interest from the date of actual deposit on the excess amount made in pursuance of the demand notice issued u/s 156 - HC
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Customs

• Duty Exemption for Crude Palm Oil with Acid Value Over 4: No Restriction to Acid Value Between 4 and 10.

  Case-Laws - HC : Crude palm oil imported, having acid value of more than 4, is entitled to get benefit of exemption of duty, and such exemption cannot be taken away by adding to the words in the notification as “ between 4 and 10” - HC
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• High Court Supports Tribunal's Decision to Remand EOU Case for Further Review of Capital Goods Under Customs Laws.

  Case-Laws - HC : 100% EOU - net foreign exchange earnings - NFE - Since the adjudicating order has treated both the capital goods and other goods on the same putting, the Tribunal was justified in remanding back the case - HC
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Service Tax

• Tribunal Restores Case After Petitioners Pay Full Pre-Deposit and Interest Following Initial Dismissal.

  Case-Laws - HC : Stay - dismissal of petition for non deposit of predeposit - petitioners have fully made good the pre-deposit amount along with interest - matter restored before tribunal - HC
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• Court Reviews Constitutional Validity of Service Tax on Chit Funds; Emphasizes Limited Judicial Interference in Fiscal Policy.

  Case-Laws - HC : Levy of service tax on Chit Fund - cash management - constitutional validity - Courts do not interfere with the fiscal policy where the Government acts in “Public Interest”. - HC
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• Tribunal Condones Advocate's Delay Due to Personal Issues, Restores Case for Fresh Decision.

  Case-Laws - HC : Condonation of delay - Advocate, due to problems in his matrimonial life, did not pay attention - matter restored before tribunal for fresh decision. - HC
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• High Court Can Hear Service Tax Dispute if Part of Cause of Action Arises Within Its Jurisdiction.

  Case-Laws - HC : Service Tax dispute - territorial jurisdiction of high court - Import of services - To confer jurisdiction on a Court even if a part of the cause of action arises within its jurisdiction, it is sufficient. - HC
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Central Excise

• High Court can't hear appeal on SSI Exemption penalty; falls under localized dispute per Section 35G, Central Excise Act.

  Case-Laws - HC : Penalty for availing wrong SSI Exemption - maintainability of appeal before HC - such localized dispute does not fall within the exception of Section 35G of the Act. - HC
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• High Court orders revenue authority to refund rebate in cash to 100% EOU for exempted goods u/r 18.

  Case-Laws - HC : 100% EOU - Export - Rebate / refund under Rule 18 - exempted goods - Revenue is bound to refund the rebate payable to the petitioner, in cash, subject to certain conditions - HC
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• High Court Confirms Raipur Commissioner's Jurisdiction Over Chhattisgarh via 2001 Notification, Not Government Orders.

  Case-Laws - HC : Cenvat Credit - jurisdiction - The Commissioner, Raipur was given jurisdiction over State of Chhattisgarh by the 2001 Notification and not by the GOs - There is no illegality in the same - HC
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VAT

• High Court: Address Municipal Objections on Excise Licenses for Indian Made Foreign Liquor; VAT and Sales Tax Context Emphasized.

  Case-Laws - HC : Excise licenses for selling Indian Made Foreign Liquor in sealed bottles - objections raised by the Nagar Nigam cannot be ignored or taken lightly. - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 50
  Genuineness of expenses claimed as deduction - 5 out 17 sample vouchers given by assessee were not bearing any signature of recipient & most of payments were in cash - freight & transportation expenses - held that:- On being satisfied that there was cogent material available on the record to sustain the say of the assessee and in absence of any reason to disallow such claim when both (CIT(A) and ITAT) of them concurrently held such an issue in favour of the assessee, we see no reason to interfere. - The entire issue is based on factual matrix with no perversity in the findings of these authorities. - No question of law much less any substantial question of law arises. - Decided against the revenue. Payment to drivers and helpers - held that:- CIT(A) and ITAT have dealt with the issue of disallowance of 10% daily allowance given to the drivers appropriately on the basis of substantive material available in support thereof. It can also further be noted that the Tribunal was right in holding that it is next to impossible to expect these drivers and helpers to maintain supporting evidences and vouchers in respect of their food and miscellaneous expenses. Again with nothing on record to hold such expenses as non-genuine or not for the business, both the authorities have is also rightly concluded. - Decided against the revenue. Clearing and forwarding expenditures - held that:- With regard to the clearing and forwarding expenses and general labour charges, the truck association fees, etc. were not required to be recovered from the end-users. However, those which were paid towards clearing and forwarding charges, were necessarily recovered from the end-users. Eloquently, the facts vindicated the stand taken by both the CIT (Appeals) and the Tribunal in setting aside the conclusion of the Assessing Officer. We see absolutely no reason to interfere with as both the authorities have given cogent reasonings while concluding the said issue. - decided against the revenue.

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• 2013 (6) TMI 49
  Exemption u/s. 11 - ITAT allowed the claim though assessee failed to get the permission of the Charity Commissioner to raise loans for the trust - Held that:- There is no bar in the Trust Deed to take unsecured loans. Moreover, it is not in dispuse that the unsecured loans taken in earlier years were duly reflected in the books maintained by the assessee and though prior approval was not obtained, the assessee had, in fact, subsequently applied for approval from the Charity Commissioner and the Charity Commissioner has neither granted approval nor initiated any proceedings under the Trust Act for the alleged violation of obtaining unsecured loan without prior permission - no reason to entertain question proposed by the revenue. Depreciation on the assets & repayment of loan disallowed as the cost of which has already been allowed as a deduction on account of application of income - Held that:- Issue arising herein are covered by the decision of CIT v. Institute of Banking Personnel Selection (IBPS) [2003 (7) TMI 52 - BOMBAY High Court] - in favour of the assessee.

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• 2013 (6) TMI 48
  Payments to sister concerns - disallowance u/s 40A(2)(a) - ITAT deleted the addition - Held that:- As the payments made by the assessee to its sister concerns was reimbursement for the salaries of the employees who have been deputed by the sister concerns to work with the respondent assessee & it is not the case of the revenue that the assessee had made any payment for consideration extraneous to any allegation that the amounts paid to its sister concerns were over and the above the salaries due to the employees. Tribunal conclusion that the expenditure was incurred for salaries and thus no occasion to invoke Section 40(a)(ia) requires no entertainment. Disallowance of interest expenditure - interest free advances for non business purposes - the Tribunal upheld the finding of fact of the CIT(A) that no advances for non business purposes had been made by the assessee - Held that:- As applying the decision of CIT v. Reliance Utility & Powers Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] to hold that the respondent was in possession of its own interest free funds to the extent of Rs.72 lacs. it has to be presumed that interest free advances have been made out the same - no reason to entertain this question.

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• 2013 (6) TMI 46
  Set off of carried forward losses before claiming deduction under chapter VI - Deduction u/s 80HHC - computation of deduction under section 80HHC - held that:- We reject the contention that computation of business profits for the purpose of section 80HHC(3) of the Act can only be in terms of Chapter IV and as set off or carried forward losses occurring in section 72 is in Chapter VI of the Act, cannot be factored, for the reason that computation should be in the first instance as per the provisions of the Act and, secondly, though section 72 of the Act does occur in Chapter VI, it qualifies for computation in a situation where there is carried forward unabsorbed depreciation allowance not absorbed for earlier years in terms of section 72(2) of the Act and such is the present situation. This exercise is not because of any provisions of Chapter VI-A, but by the operation of the provisions of the Act itself. Section 72(2) of the Act also contemplates that allowance which are brought forward shall be first given effect to, i.e., whatever brought forward unabsorbed depreciation allowance was there, that should be first given effect to. There can be a situation where the amount which qualifies for deduction under section 80HHC of the Act may be more than the available profits of the assessee and in view of section 80A(2) of the Act that has to be limited to the available profits, but if the method suggested by Sri Shankar, learned counsel for the appellant, is to be employed, even in such situation if the depreciation is excluded and as was sought to be done, deduction under section 80HHC of the Act is first done, the amount left over may not be sufficient to give a set off against unabsorbed depreciation of earlier years, in which event, it only amounts that the assessee is being given a benefit much more than the ceiling contemplated under section 80A of the Act. If that is so, it is an indirect way of defeating the purpose and object of section 80A(2) of the Act and, therefore, also we cannot accept the argument as the argument if accepted, it runs contrary to section 80A(2) of the Act and can defeat the very purpose of section 80A(2) of the Act. - Decided against the assessee.

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• 2013 (6) TMI 45
  Whether findings of fact binding on to the High Court - Deduction u/s 80HHC - export of marble blocks - no value addition in terms of cost of exported blocks as required in Circular No. 693, dated November 17, 1994 - held that:- the finding of the learned Income-tax Appellate Tribunal is in favour of assessee-respondents and it has been categorically held that the assessee-respondents are eligible for deduction under section 80HHC of the Act for export of marble blocks, which were cut and polished. This findings are, indisputably, binding on, this court in view of the law laid down by the hon'ble Supreme Court in the case of Sudarshan Silks and Sarees v. CIT [2008 (4) TMI 5 - Supreme Court]. The appellant-Revenue has also not controverted that the findings arrived at by the learned Tribunal on facts are not correct or are perverse. Therefore, the findings of facts arrived at by the learned Income-tax Appellate Tribunal need not be gone into by us. - ITAT was justified in allowing the deduction under section 80HHC of the Act regarding the export of cut and polished marble blocks during the relevant years by the assessee-respondents. - Decided against the revenue.

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• 2013 (6) TMI 44
  Deduction u/s 80HHE - reduction of foreign exchange earning paid for providing technical services out side India from income derived in foreign exchange - held that:- Tribunal has not examined the factual position satisfactorily and, therefore, while setting aside the order of the Tribunal relating to this question, the matter has been remanded to the Assessing Officer to examine this question afresh in the light of the material to be placed by the assessee before him. - matter remanded back to ITAT. Exclusion of interest income and dividend income - held that:- While it is no doubt true that 90 per cent. of the amount is excluded in arriving at the profits of the business of the assessee attributable to this receipt, i.e., under the head of miscellaneous income, the gross receipts, nevertheless, form part of the total business turnover of the assessee for the purpose of arriving at the total turnover, as indicated in clause (e) of the Explanation to section 80HHE of the Act, the amount mentioned therein has to be excluded. - receipts for the purpose of miscellaneous income under the residuary head necessarily be as part of total turnover and, therefore, the Tribunal was not right in reversing the finding of the Assessing Officer on this aspect. - such is the view taken by the Supreme Court in the case of CIT v. K.Ravindranathan Nair [2007 (11) TMI 10 - Supreme Court of India]. - Decided in favor of revenue.

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• 2013 (6) TMI 43
  Loss on revaluation of security - Nature of securities - permanent investment - claim for writing off bad debts - deduction u/s 80M - dividend income - net dividend income or gross dividend - Mercantile system of accounting - Applicability of the provisions of RBI Act and the directions issued by the RBI in the matter of computation of tax liability and taxable income - Entertainment expenditure - HELD THAT:- While 30% of the amount claimed as loss is allowed by the assessing authority itself and this amount is not in issue before us and therefore we have not opined anything on the same. The issue raised is on the rejection of the claim for deductions as a business loss in respect, of balance 70% and on the above examination, we find that the amount insofar as 70% of the investment is concerned, even as per the assessee it is held as permanent investment and may be because it is required to be held so by the assessee- Bank in terms of the instructions and guidelines issued by the RBI and to fulfil the statutory requirement under the RBI Act read with Banking Regulation Act. In fact, we are of the view that the Assessing Officer has not merely recorded the finding of fact on this aspect, but also very correctly, as in our considered opinion, no assessee can claim an investment of lasting nature, to be part of its trading asset or as an asset held by way of stock-in-trade. While it is possible to convert any long term asset as part of a trading asset and the Income-tax Act also recognizes the same, it also deals with the consequences of such declaration and it is because of this reasons, Mr. Seshachala had drawn our attention to the definition of Capital asset under Section 2 (14) and transfer under Section 2(47) of the Act. Be that as it may, we are of the view that on the Assessees own declaration that it was permanent investment, the Tribunal could not have held otherwise as lasting asset and definitely cannot assume the character of Stock-in-trade. In the instant case we are of the view that on the findings, recorded by the Assessing Officer and as confirmed by the appellate commissioner, the Tribunal could not and should not have upset such a finding by drawing a comparison to a situation prevailing in respect of some other bank and the view of the Tribunal in that case was based on the board circular which had held the field at the relevant point of time. Even otherwise, we find in the facts and circumstances, this is a clear case of investment in the securities, which cannot be characterized as stock-in-trade at all, as even as per the admission of the assessee and as per the relaxation, assuming it has any relevance, given by RBI, it can only be 30% of the investment which can be clothed with the character of stock-in-trade, as the assessee-bank had some freedom in exchanging such securities or any other form of security, it can be said that to this extent securities are available for sale, but the condition is that it again should be invested in any other security, so that requirement of investment in securities as per RBI guidelines/instructions is maintained by the bank. It is for this reason, we also reject the request of Sri Parthasarathy that the matter warrants remand to the Tribunal for reexamination on this aspect of the matter. Accordingly, questions 1 and 2 are answered in the negative and in favour of the revenue. Bad debts - Following the Supreme Court in the case of Catholic Syrian Bank Ltd v. CIT [ 2012 (2) TMI 262 - SUPREME COURT] . Accordingly, we answer the question in the negative, set aside the finding of the Tribunal on this aspect, but nevertheless, remand the matter to the Assessing Officer, to re-examine this question afresh in the wake of the law as declared by the Supreme Court in the case of Catholic Syrian Bank Ltd ( supra ) by applying the law as expounded by the Supreme Court to the facts of the assessee s case. Entertainment expenditure - Deduction claimed by the assessee by way of expenditure incurred on its employees - Any expenditure incurred by the employer which comes within the scope of this definition and not being an expenditure incurred towards its employees vis- -vis any obligations or terms of employment, the expenditure inevitably partakes the character of entertainment expenditure and therefore the limitation stipulated in terms of Section 37(2) operates in allowing such an expenditure as deduction while computing the profits of the assessee. Therefore, this question is answered in the negative and against the assessee. Dividend income in terms of Section 80M - In view of the fact that Section 80AA of the Act. This question is answered in favour of the assessee and against the revenue, for the reason that the revenue had not made out any case for deduction by demonstrating the actual expenditure incurred by the assessee for earning a dividend income and therefore just because Section 80AA of the Act provides for such deduction, deduction as applied by the Assessing Officer by resorting to best judgment, which was not justified and the Tribunal was right in setting aside this part of the order of the assessing authority and in directing entire deduction claimed by the assessee to be allowed under Section 80M of the Act is justified in law. In the result, this appeal is allowed in part, questions are answered as indicated above and the Assessing Officer to give effect to the finding herein while recomputing the liability of the assessee for the assessment year in question.

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• 2013 (6) TMI 42
  Deduction u/s 80IA - tariff subsidy specifically given to meet the cost of power of the industrial undertaking - exclusion from computing the deduction admissible under Section 80IA - held that:- As already stated, the admitted case is that the assessee received operational subsidy based on the performance of the assessee in its industrial activity. When the receipt is thus referable to the source of income earning activity of the assessee, applying the decision in Liberty India vs. Commissioner of Income Tax (2009 (8) TMI 63 - SUPREME COURT), we have no hesitation in setting aside the order of the Tribunal by holding that the assessee is entitled to deduction in respect of operational subsidy under Section 80IA. As far as reference to the decision of the Apex Court in Pandican Chedmicals Ltd., Vs. Commissioner of Income Tax (2003 (4) TMI 3 - SUPREME Court) is concerned, the Tribunal referred to the said decision for the purpose of considering the relief of interest receipt on the deposit made with the Electricity Department. The assessee has restricted its claim before this court with reference to the tariff subsidy alone and has not raised any issue as regards the interest receipt. - Decided in favor of assessee.

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• 2013 (6) TMI 41
  Interest on refund u/s 244A - The case of the Department for denying the claim of the petitioner with regard to the interest is that in view of the Explanation to section 244A, as no amount was paid in excess of the demand notice issued under section 156, interest is not payable. - held that:- An assessee who has paid the tax as demanded in the notice of demand issued under section 156 of the Act, and also challenged the demand in appeal and the appeal is allowed fully or partially the demand stands modified accordingly, to the extent the relief is granted, the amount becomes in excess to the original demand and it is liable to be refunded. The Explanation intends to define "date of payment of tax or penalty" for the purposes of calculation of interest amount. The circumstances when interest will be payable by the Revenue has been given sub-section (1) of section 244A. The Explanation, therefore, cannot be interpreted in a manner which will control, prevail upon sub section (1) of section 244A. It cannot control the substantive provision. The interpretation of the Explanation, as suggested by the Department, runs counter to the scheme of grant of interest on refund. The said interpretation cannot be accepted as there cannot be any situation from where a person will pay tax or penalty over and above or in excess of the demand notice under section 156. Petitioner is entitled to receive interest from the date of actual deposit on the excess amount made in pursuance of the demand notice issued under section 156 of the Income-tax Act to the date of actual refund. The stand of the Department that since the petitioner has not paid in excess of any sum mentioned in the notice of demand issued under section 156, no interest is payable, is rejected. This is a novice stand which has been taken by the Department in the present case. The apex court in the case of Sandvik Asia Ltd. v. CIT [2006 (1) TMI 55 - SUPREME Court] has examined the question of payment of interest upon the interest amount in great depth. In that connection, it has observed that payment of interest for delayed refund is nothing but a compensation for depriving the assessee to utilize the money. Then it was urged that in view of sub-section (2) of section 244A, the delay is attributable to the petitioner and, therefore, the petitioner is not entitled for any interest. The said argument has been stated to be rejected. - It is apposite to note that the delay attributable to the assessee is referable to the late filing of the return, etc., and has nothing to do with regard to the claim of the refund. The said point can be illustrated with the help of example II as given in the Departmental Circular No. 549. It demonstrates that where the return was filed with delay of four months, the interest shall not be payable by the Government for the period of delay attributable to the assessee. Except making a bald statement, it was neither pleaded nor proved with the help of cogent material to show that the delay was attributable to the petitioner. - Interest allowed - Decided in favor of assessee.

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• Customs

• 2013 (6) TMI 40
  Import of Crude Palm Oil - high content of Acid about 10% - applicability of exemption notification 21/2002 cus dated 1.3.2003 - held that:- the judgment in the case of Gokul Refoils & Solvents Pvt. Ltd. v. Union of India & Others [2012 (10) TMI 8 - CALCUTTA HIGH COURT] has no application to the facts of the cases on hand inasmuch as according to paragraph 52 thereof, “the principal question that arises for determination in this appeal is whether the Palm Oil sought to be imported by the appellant was a prohibited goods within the meaning of the Customs Act”, whereas in this case the issue is, whether exemption is available to Crude Palm Oil having Acid Value more than 10. Under the notification, as the limit of acid value has been given as 4 and above, there is no reason to construe the notification by taking aid of the Prevention of Food Adulteration Rules, 1955 which has no application to the facts of the present case when the petitioners intended to import the same not as a ‘food’ but as crude palm oil (edible grade) as pointed out in the exemption notification. Discrimination - held that:- If importer in a different State gets benefit of exemption whereas the importers of the State of Gujarat is deprived of such benefit, they will not be able to compete with importers of other States in the same field of business. On that count also, we are of the view that the plea of the Revenue is not tenable. Impact of Non filing of appeal in earlier case - held that:- By taking benefit of Article 14 of the Constitution of India, one cannot get benefit of a wrong order, but at the same time, when Committee of Commissioners has decided to accept the decision and decided not to prefer appeal, as it appears from the affidavit of the Revenue, the present case cannot be said to be one of acceptance of a wrong order when the decision not to prefer the appeal is of the Committee of Commissioners and is a positive decision. Crude palm oil imported, which falls within Serial No. 1511 having acid value of more than 4, is entitled to get benefit of exemption of duty, and such exemption cannot be taken away by adding to the words in the notification as “ between 4 and 10”. - Decided in favor of assessee.

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• 2013 (6) TMI 39
  100% EOU - net foreign exchange earnings - NFE - CESTAT observed that assessee is liable to pay Customs duty only in respect of the goods imported but not exported - Circular No. 12/2008, dated 24-7-2008 - held that:- the finding recorded by the Tribunal is in consonance with the aforesaid circular and in accordance with law and that cannot be found fault with. Since the adjudicating order has treated both the capital goods and other goods on the same putting, the Tribunal was justified in remanding the case to the Original Authority for quantification of duty on the goods other than capital goods which are imported/indigenously procured duty free but not utilized in the manufacture of articles for export. - decided against the revenue.

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• 2013 (6) TMI 38
  Penalty - It is submitted, the question whether assessee is liable to pay customs duty was the subject matter of appeal before this Court. - held that:- The said appeal is already disposed of holding that the appeal is not maintainable and the Revenue has to approach the Apex Court under Sec. 130(e) of the Customs Act, 1962. The Impugned order in the appeal being a consequential order imposing penalty, this also has to be decided by the Apex Court. - Decided against the revenue.

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• Corporate Laws

• 2013 (6) TMI 37
  Whether the Respondent was paid in excess as claimed by the OL? - Winding up - Held that:- The facts not in dispute are that the Respondent along with her husband did make as many as twenty investments in the company. From the tabular chart placed on record, it is seen that the deposits which were processed for payment on various dates, the earliest being 23rd April 1990 and the last 27th February 1992. There can be two situations – one where no interest is prescribed as payable on any debt or certain sum by the company. In that event, the creditor would be entitled to interest not exceeding 4% p.a. from the time when the debt or sum was payable up to the date of payment. In the second situation, if there was nothing to indicate from when the debt was payable, then it would be payable from the date when a demand is made and the interest would be calculated from that date till the date of payment. In the instant case, beyond the date of maturity of the deposits, there was no agreement between the Respondent and the company as to the rate of interest that was payable. There was no automatic deemed renewal of the deposit. The compound rate of interest was payable only as long as the deposits had not matured. After the date of maturity and in the absence of any renewal, the Respondent would be entitled to interest not exceeding 4% on the deposit amounts for the period from the date of the maturity till the date of payment. The amount payable to Mrs. Madhu Bala Sharma was Rs. 1,26,701.14. Therefore, clearly, an excess payment was made to her. None of the objections of the Respondent either to the maintainability of the application or to its merits is tenable. The Respondent is directed to refund to the OL the excess amount of Rs. 6,13,408 together with simple interest @ 9% p.a. from 12th May 2006 till the date of payment, which, in any event, cannot be beyond eight weeks from today. If the payment is not made within the time granted, the Respondent will be liable to pay penal simple interest @ 12% p.a. on the said sum for the period of delay.

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• Service Tax

• 2013 (6) TMI 54
  Stay - dismissal of petition for non deposit of predeposit - matter pending since 2006 - the petitioners deposited sum of Rs. 10 lakh along with interest for interregnum period before the Tribunal sometime in December 2012. Having made such deposit, the petitioners once again approached the Tribunal for restoration of the appeals. Such applications however, came to be dismissed by impugned order dated 10.1.2013. - held that:- we are of the opinion that the petitioners should be given an opportunity to pursue their appeals before the Tribunal on merits. It is of course true that the Tribunal required a pre-deposit of Rs.10 lakh way back in the year 2006 and such amount was deposited only in December 2012. However, we cannot lose sight of the fact that the petitioners in the meantime were all along pursuing their remedy questioning the very requirement of pre-deposit condition imposed by the Tribunal. When the petitioners have fully made good the pre-deposit amount along with interest for a considerable period that last in between, we are of the opinion that the petitioners appeal should be heard on merits. - matter restored before tribunal.

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• 2013 (6) TMI 53
  Levy of service tax on Chit Fund - cash management - constitutional validity - held that:- no provision of law is under challenge in any of these writ petitions; particularly the amendment brought about to Section 65(12)(a)(v) of the Finance Act, 1994, in the year 2007. This being the position, the decisions cited from the part of the respondents, as to the way in which ‘Constitutional validity’ of a provision is to be examined and interpreted and on such other incidental aspects are not necessary, to be considered or dealt with. However, having cited the above decisions, it is worthwhile to have a reference to some of them as well in a different context. It has been made clear by the Apex Court in paragraph 21 of the judgment reported in Kasinka Trading and Another v. Union of India and Another (1994 (10) TMI 64 - SUPREME COURT OF INDIA) that ‘the power to exempt includes the power to modify or withdraw the, same’. Public Interest - held that:- It has been further observed in paragraph 23, that withdrawal of exemption in “Public Interest” is a matter of policy and Courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government, that a change in the policy was necessary in “Public Interest”. As observed, Courts do not interfere with the fiscal policy where the Government acts in “Public Interest”. The scope of interference especially with regard to taxing laws has been explained by another Constitution Bench of the Apex Court in Federation of Hotel & Restaurant v. Union of India [1989 (5) TMI 50 - SUPREME Court] more particularly in paragraphs 46, 47 and 48. In Karnataka Bank Ltd. v. Stale of Andhra Pradesh and Others [2008 (1) TMI 605 - SUPREME COURT OF INDIA], it has been held that, any interpretation which renders a legislation unconstitutional, is to be avoided. It difficult to agree with the proposition mooted by the petitioners in these writ petitions and most respectfully disagrees with the view expressed by the Division Bench of the High Court of Andhra Pradesh [2008 (7) TMI 227 - HIGH COURT ANDHRA PRADESH]. This Court holds that the writ petitions are devoid of any merit - Decided against the assessee.

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• 2013 (6) TMI 52
  Condonation of delay - Advocate, due to problems in his matrimonial life, did not pay attention as a result of which the appeal could not be filed within the prescribed period of limitation. - held that:- There is no legal provision which provides for condoning the delay in filing the appeal on a condition of depositing 50% of the tax amount. The delay in filing the appeal is condoned or refused depending upon the sufficiency of cause for delay. If the party is found to be prevented by a sufficient cause to the satisfaction of the Appellate Authority/Tribunal, the delay is condoned and if not found to be prevented by a sufficient cause, the delay is not condoned. - matter restored before tribunal for fresh decision.

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• 2013 (6) TMI 51
  Service Tax dispute - territorial jurisdiction of high court - Import of services - levy of service tax u/s 66A - reverse charge - held that:- What can be culled out from various pronouncements of the Supreme Court is that one of the most important considerations so far as the aspect of territorial jurisdiction is concerned, is to ascertain, as to whether the facts pleaded have any bearing with the lis or the dispute involved in the case. In the present case, what we find is that the registered office of the petitioner is at Mumbai, and the show-cause notice was also received at the Mumbai office. All queries were answered before the Commissioner of Service Tax at Mumbai. Levy of Service Tax under Section 66A of the Finance Act, 1994 has also been challenged in the High Court of Bombay. Thus, according to us, no part of cause of action can be said to have arisen within the territorial jurisdiction of this High Court. In our view, whether the diamonds imported were received at Mumbai or Surat by itself would not be conclusive factor for determining territorial jurisdiction of the High Court. Because by merely receiving consignment at a particular place by itself will not confer jurisdiction to the Court of that place where the consignment is received. This is not such a factor or circumstance which by itself will confer jurisdiction to the Court. Each and every fact pleaded in the Writ Petition does not ipso facto lead to the conclusion that those facts give rise to a cause of action which the Court’s territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis or dispute involved in the case. The facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned. The territorial jurisdiction must be decided on the facts pleaded in the petition, the truth or otherwise of the averment made in the petition being immaterial. To confer jurisdiction on a Court even if a part of the cause of action arises within its jurisdiction, it is sufficient. It is purely a question of fact. The preliminary objection as raised by the respondents as regard territorial jurisdiction of this High Court deserves to be sustained. - Decided against the assessee.

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• Central Excise

• 2013 (6) TMI 35
  Penalty for availing wrong SSI Exemption - maintainability of appeal before HC - brand name ‘Guru’ - Doctrine of merger - effective date of assignment (memorandum of understanding) - right to use - manufacture of sanitary and bath fittings - held that:- The issue in the present lis is regarding benefit of exemption under Notification No.8/2001 available to an assessee, a Small Scale Industry. It is not an issue relating to rates of duty or the value of goods, but only to the effect whether the assessee is entitled to exemption granted to a Small Scale Industrial Unit on the basis of trade mark of another concern. Any decision thereon, is relevant only inter-parties and has no wider ramification within the jurisdiction of this Court much less in the Country. Therefore, such localized dispute does not fall within the exception of Section 35G of the Act. - an appeal would be maintainable before this court. - in favor of revenue. Doctrine of merger - appeal filed by the assessee before the SC was dismissed - held that:- dismissing Civil Appeal leads to merger of that part of the order alone, which was against the assessee. Once the assessee has availed the remedy of appeal and such appeal has been dismissed, the findings of the Tribunal, which are against the assessee, stands affirmed and stood merged with the order of the Hon’ble Supreme Court. It is more so, when the appeal was dismissed without notice to the Revenue and the Revenue had no opportunity to point that it intends to file an appeal against an order of the Tribunal. Therefore, the findings against the Revenue could be disputed before the competent Court of law. - in favor of revenue. Regarding penalty - held that:- The Tribunal has set aside the order of imposing penalty finding that it is a bona fide belief of the assessee in using the brand name of its sister concern. Therefore, such user is not with intent to evade payment of duty and, thus, levy of penalty has been rightly set aside. In respect of penalties imposable under Rule 26, again the penalty is payable if a person acquires possession of, or in any manner deals with any excisable goods ‘which he knows or has reason to believe’ are liable to confiscation under the Act. Such provision again makes the mens rea a necessary ingredient for imposition of penalty, as held by the Supreme Court in Pepsi Foods Ltd. case (2010 (12) TMI 15 - Supreme Court of India). - No penalty - decided in favor of assessee.

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• 2013 (6) TMI 34
  Review petition - order passed by the Tribunal is in violation of the order passed by the Supreme Court inasmuch as the order was to be passed after recording the evidence - whether the Customs, Excise & Service Tax Appellate Tribunal could have pass an order in violation of the order passed by the Supreme Court? - Held that:- Additional Commissioner on the basis of the application filed by the appellant under Section 35 (c) (2) of the Central Excise Act, 1944, seeking rectification of the order by the Tribunal and the Tribunal, though dismissed the application, but made certain observations and on the basis of the said observations, the matter was taken into consideration by the petitioner department itself and the Additional Commissioner vide letter dated 04.02.2013 had directed to the Deputy Commissioner, Customs & Central Excise, Pithampur, the aforesaid order was passed disposing of the appeal by setting aside the order of the Tribunal. No apparent error on the face of record so as to invoke the jurisdiction of review, which is extremely limited - impose cost of Rs.20,000/- on the petitioner.

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• 2013 (6) TMI 33
  100% EOU - Export - Rebate / refund under Rule 18 - exempted goods - revision authority rejected the rebate claim on the ground that goods in question are exempt from the payment of duty, in terms of the Notification No.24/2003-CE, dated 31.3.2003, and therefore, the petitioner cannot choose to pay the duty and claim the rebate thereon. - held that:- Revenue is bound to refund the rebate payable to the petitioner, in cash, subject to certain conditions to safe guard the interests of the respondent department. In view of the fact that the petitioner had paid the excise duty on the goods exported by it, and as it may not be of use to the petitioner if the respondent department keeps the amount of rebate claim in credit, as the petitioner does not have local sales, the respondent department is directed to refund the duty paid by the petitioner, on the goods expored by it, as expeditiously as possible, subject to certain conditions, which may be necessary to safeguard the interests of the respondent Department. - Decided in favor of assessee.

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• 2013 (6) TMI 32
  Cenvat Credit - jurisdiction - validity of Notices under Rule 14 of the 2004 Rules to show cause why action be not taken for wrongly taking Cenvat credit for the aforesaid items. Hence, the present two writ petitions. - held that:- The power to specify jurisdiction of different officers could be entrusted to the Board under Section 3 of the Constituting Act read with Section 37(1) of the Act - Sections 37(2)(ib) and 37(2)(xx) do not prohibit framing of such rules - Rule 3(2) of the 2002 Rules is not illegal. The Commissioner, Raipur was given jurisdiction over State of Chhattisgarh by the 2001 Notification and not by the GOs [office orders]. The 2001 Notification was published in official gazette. There is no illegality in the same. Shri Pradeep Kumar and Shri Pramod Kumar were merely promoted by the GOs [office orders]. There was no necessity to publish the GOs in the official gazette. They had jurisdiction to issue notice - Decided against the assessee.

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• 2013 (6) TMI 31
  Validity of Show Cause notice when the orders of CESTAT in operative - manufacturer of Intravenous Fluids - exemption vide notification no. 3/2001 - held that:- As matter of the petitioner has not been decided till date in compliance of the order of the Apex Court and during the period when the order of Tribunal dated 27-2-2004 was operative, impugned show cause notices by which recovery was directed against the petitioner were totally untenable as at that time no recovery could have been directe. Show cause notices quashed - The Customs, Excise & Service Tax Appellate Tribunal, who has been directed by the Apex Court [2009 (3) TMI 55 - SUPREME COURT], shall decide the matter as per directions issued by the Apex Court.- If the matter is decided in favour of the petitioner then there would be no question of imposing of any excise duty against the petitioner. However, if the matter is decided against the petitioner, the department shall be free to issue fresh show cause notices. However, this action shall be subject to final adjudication of the dispute after the order passed by the Tribunal.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 55
  Administrative charges on occupier of a sugar factory - rate not exceeding five rupees per quintal on the molasses sold or supplied by him being enhanced to Rs.11/- per quintal - Petitioner's alleges that the State Government is already charging taxes from the petitioner under the U.P. Sheera Niyantran Adhiniyam, 1964, which is the special enactment for molasses only as such, under the U.P. Trade Tax Act or VAT Act, no tax should be realised as, it amounts to double tax under two different enactments - Held that:- As decided in M/s. SAF Yeast Company Private Limited. Vs. State of U.P. and another [2008 (10) TMI 583 - ALLAHABAD HIGH COURT] it cannot be said that the State was unaware that molasses is not taxable under the U.P. Trade Tax Act. The action of the opposite parties in collecting and realising the trade tax from the petitioner on the purchase of molasses from various Sugar Mills in the State of U.P. subsequent to the dismissal of Special Leave Petition in State of U.P. and others v. D.S.M. Group of Industries & another [2003 (3) TMI 665 - SUPREME COURT] is arbitrary, illegal and unjust. Thus the petitioner is entitled for the refund. As during the pendency of the special appeal before Hon'ble Supreme Court[2010 (3) TMI 933 - SUPREME COURT] the decision of the Division Bench of this Court, has not been stayed by the Hon'ble Supreme Court except providing by interim measure that there will be stay on refund and in case the assessee succeeds in the appeal, it would be entitled to interest which would be imposed on the State at the final hearing of the matter. The respondents shall not realise tax on molasses but shall keep an account of molasses purchased/sold during the pendency of appeal so that in any case, the appeal fails by the judgment of Hon'ble Supreme Court, the petitioner shall be held liable to pay tax in accordance with law.

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• 2013 (6) TMI 36
  Excise licenses for selling Indian Made Foreign Liquor in sealed bottles - whether Nagar Nigam have any power to impose a license on the petitioners when they have already obtained a license from the Excise Department under the U.P. Excise Act and direction to pay Rs. 12,000/- per annum as licence fee? - Held that:- Nagar Nigam is a body that has to perform certain obligatory duties. These duties are provided under Section 114 of the Nagar Nigam Adhiniyam. A cursory look at the section will make it abundantly clear that these duties are directly related to public welfare, health, peace and well being. Further, in order to carry out these duties there is a huge financial burden that the Nagar Nigam has to meet, this financial burden is reduced by collecting taxes and fees in lieu of these services. As Rule 5(8) enshrines that in urban areas, no new shop shall be opened without notice to the Nagar Mahapalika, Town area or notified area, as the case may be. Sending of notice is not a mere formality. Requiring of notice denotes that if any objection is made by the Nagar Nigam it will be decided by the collector. Thus the objections raised by the Nagar Nigam cannot be ignored or taken lightly. Since for regulatory fee there is no need for any quid pro quo, though the fee cannot be excessive. The assertion of the petitioners that charging of Rs. 12,000/- per annum is highly excessive. The bye-laws have provided Rs. 6,000/- as licence fee for country-made liquor and Rs. 12,000/- for foreign liquor. Thus the fee of Rs. 6,000/- for country-made liquor and Rs. 12,000/per annum is not excessive as it works out to only about Rs. 500/- and Rs. 1,000/- per month, which is a meagre amount. Writ dismissed.

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