TMI Tax Updates - e-Newsletter
July 13, 2013

Case Laws in this Newsletter:

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

Articles

1. JURISDICTION OF SERVICE TAX: TAXABLE & NON-TAXABLE TERRITORY

   By: Dr. Sanjiv Agarwal

News

1. Government is keen to Provide a Suitable Mechanism for Resolution of Tax Disputes between the Tax Department and Foreign Companies Operating in India: J.Seelam, MOS (Revenue)

2. Internationalisation and Integration of Asian Capital Markets: Expanded Role for Asian Currencies, including the Renminbi (Comments submitted by Shri G. Padmanabhan. Executive Director, Reserve Bank of India circulated at the OMFIF-LKY Asia's role in the global economy forum, July 12, 2013, Singapore)

Notifications

SEZ

1. S.O. 1695(E) - dated 11-6-2013 - SEZ

Set up a sector specific Special Economic Zone for information technology and information technology enabled services at Airoli and Dighe, District Thane in the State of Maharashtra

VAT - Delhi

2. F.3 (356)/Policy/VAT/2013/412-423 - dated 11-7-2013 - DVAT

Issuance of bill by Composition Dealer

3. F. 7 (239)/P-I/VAT/2009/424-437 - dated 11-7-2013 - DVAT

Allahabad Bank authorized for e-payment

4. F. 3(364)/Policy/VAT/438-449 - dated 11-7-2013 - DVAT

Online filing of VAT TDS return

Circulars / Instructions / Orders

Customs

1. F. No. 528/109/2011-STO (TU) - dated 12-7-2013

Clarification regarding applicability of the Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order 2009 for used tyres

Highlights / Catch Notes

Income Tax

• High Court Upholds Constitutionality of Sections 115JA and 115JAA Under Minimum Alternate Tax Framework, Validating Taxation System.

  Case-Laws - HC : Minimum Alerter Tax (MAT) - Constitutionality of Section 115J and 115JA - Provisions of Sections 115JA and 115JAA of the Act are neither arbitrary nor unreasonable. - HC
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• High Court Confirms Additions: Agricultural Land Transferred to AOP, Converted to Industrial Land Without Formal Agreement.

  Case-Laws - HC : Transfer of capital asset - Agricultural land transferred to AOP and changed to industrial land - there is no conveyance by the appellant in favour of AOP, nor there is any agreement between the appellant and the AOP - additions confirmed - HC
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• High Court: Notional Interest on Deposits Excluded from House Property Income for Fair Rent Calculation.

  Case-Laws - HC : Income from House Property - inclusion of Notional Interest - interest accrued on deposit cannot be added to the agreed rent, so as to make a fair rent or market rent - HC
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• High Court Rules Deeming Provision in Explanation 3 to Section 153 Inapplicable for Reassessment Notices Beyond Four Years.

  Case-Laws - HC : Reassessment u/s 147 - Notice beyond 4 years – the deeming provision provided in Explanation 3 to Section 153 does not get attracted because an opportunity of hearing had not been given to the assesse - HC
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• Deemed Dividend Rule Excludes Non-Shareholder Companies from Income Addition u/s 2(22)(e) of the Income Tax Act.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - If the assessee company which has received the loan is not a shareholder then fiction cannot be extended on the ground that the directors were common - no addition - AT
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• Court Confirms Additions on Deemed Dividends u/s 2(22)(e) of Income Tax Act; Evidence Lacking from Assessee.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - advance or loan to a shareholder - assessee has merely made a claim, but same has not been supported by any evidence. - additions confirmed. - AT
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• Foreign Exchange Gains from Export Receipts Qualify for Exemption u/s 10A of the Income Tax Act.

  Case-Laws - AT : Deduction u/s 10A - foreign exchange gain - the gain on receipts of foreign exchange as export proceeds are extricably linked, eligible for exemption u/s 10A - AT
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Customs

• Stay Applications in Customs Cases Not Time-Barred If Appeal Filed Timely; Delays in Submission Not Penalized.

  Case-Laws - AT : Delay in filing of stay application - There is no time limit prescribed for filing of stay application - where the appeal is filed in time, stay application should be entertained - AT
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Indian Laws

• High Court Rules Online Posting Insufficient for Written Objections; Direct Written Communication Required for Validity.

  Case-Laws - HC : Communication of objection - Mere posting of the letter on the website does not constitute communication of the objection or proposal in writing - HC
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Service Tax

• Tribunal Dismisses Incorrectly Filed Appeal; Rejects Transfer Request to Commissioner (Appeals) Due to Misadvice.

  Case-Laws - AT : Competency to entertain the appeal - appeal was filed with the Tribunal instead of Commissioner (Appeals) - the appellant was ill-advised - appeal dismissed - pray for transfer rejected - AT
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• Entities Exempt from Paying Service Tax Twice if Initially Paid Under Wrong Code, Confirms Rule.

  Case-Laws - AT : Assessee is not liable to pay service tax again if he has discharged the service tax liability even though under a wrong accounting code - AT
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Central Excise

• Manufacturers Must Prove Cenvat Credit Legitimacy or Face Recovery, Especially with Forged DEPB Scrips Involved.

  Case-Laws - AT : Cenvat Credit - Forged DEPB Scrips - burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacture taking such credit - credit to be recovered - AT
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• Authority Reviewing Order Cannot Decide Appeal on Same Order to Ensure Fairness and Impartiality in Process.

  Case-Laws - AT : The same authority who reviewed the order cannot decide the appeal. - AT
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• Cenvat Credit Allowed for Inputs Lost in Fire Accident During Manufacturing Process Under Tax Rules.

  Case-Laws - AT : Cenvat Credit - when the capital goods/inputs were in use for manufacturing of final products and lost during the fire accident, credit cannot be denied - AT
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VAT

• High Court Rules Against Double Taxation on Assessee's Agent Transactions, Prevents Duplicate Turnover Assessment.

  Case-Laws - HC : Double assessment - Assessee was sought to be assessed in respect of the turnover belonging to the transaction relating to its agent - assessment not allowed - HC
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Case Laws:

• Income Tax

• 2013 (7) TMI 325
  Cash Credit - Addition u/s 68 - Benamidar - Tribunal concluded that three alleged depositors were income-tax assessees in their own capacity and from perusal of statement of affairs filed by each of them along with their returns of income and reproduced by CIT (A) in the impugned order further goes to establish that each of them was having sufficient capital with him to lend the amount - Held that:- no substantial questions of law arises for consideration. - Decided against the revenue.

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• 2013 (7) TMI 324
  MAT - defective stock written off - Unascertained liability - adjustment to book profit u/s 115JA - Tribunal deleted addition on basis of previous decisions - Held that:- No substantial question of law arises for consideration - Decided against Revenue.

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• 2013 (7) TMI 323
  Constitutionality of Section 115J and 115JA - Minimum Alerter Tax (MAT) - Whether, these sections arbitrary and violative of Article 14 of the Constitution of India - Held that:- Introduction of a minimum tax on profit making companies was considered necessary as certain companies were declaring high profits but not paying any taxes on account of deductions available under the normal computation provisions of the Act including set off of carried forward depreciation - It is settled law that Article 14 does not forbid reasonable classification and the question whether any classification is reasonable has to be tested on the basis of whether the same bears a reasonable nexus with the object of the statute. Section 115JA of the Act was to ensure that all corporate assessees pay tax at least on 30% of the book profits declared by them. In this respect, section 115JA of the Act affected only those companies who declared large profits, however, as per the normal provisions of the Act, were liable to pay tax less than that as calculated on 30% of the declared profits. Treating such companies as a separate class has a direct nexus with the object of ensuring that all corporate assessees having profits pay at least the minimum specified tax - Upon a plain reading of section 115J of the Act, the income calculated on the basis of book profits squarely falls within the definition of total income as defined under the Act. Section 115JA only provides for an alternate method for calculating tax and thus, provides a measure for purposes of levying tax. The same cannot be confused with the subject matter of the levy which continues to be tax on income - Section 115J of the Act only creates a legal fiction to supplant the measure of total income which is chargeable to tax. The non obstante clause indicates that the provisions of 115JA of the Act would override the other provisions of the Act for computation of taxable income in certain cases falling within the sweep of section 115JA. Section 115JA of the Act is a special provision to calculate taxable income in certain cases. The levy of income tax is under Section 4 of the Act, which is the charging section. Section 115J of the Act only creates a legal fiction to supplant the measure of total income which is chargeable to tax. Thus, indisputably, tax as computed on the basis of Section 115J of the Act is a tax on income. Provisions of Sections 115JA and 115JAA of the Act are neither arbitrary nor unreasonable. Following decisions of ITO v. N. Takin Roy Rymbai [1976 (2) TMI 2 - SUPREME Court], East Indian Tobacco Co. v. State of Andhra Pradesh [1962 (4) TMI 57 - SUPREME COURT OF INDIA], Budhan Choudhry v. State of Bihar[1954 (12) TMI 17 - SUPREME COURT], National Thermal Power Corporation Ltd v. Union of India & Ors. [1991 (4) TMI 97 - DELHI High Court] and State of West Bengal v. Kesoram Industries Limited [2004 (1) TMI 71 - SUPREME Court] - Decided against assessee.

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• 2013 (7) TMI 322
  Rejection of books accounts u/s 145 - difference in stock statement submitted to bank - Tribunal held that books of accounts cannot be rejected on the basis of discrepancies and defects found in the valuation of stock - Held that:- additions were made by the Assessing Officer on the ground that the assessee has not properly disclosed the closing stock of the raw material. There is discrepancies with regard to the closing stock of raw material in between the statement furnished before the bank and as shown in the account-books - there is evidence on record to show that the closing stock in the bank statement disclosed by the assessee is incorrect but the account books are properly maintained - Decided against the revenue.

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• 2013 (7) TMI 321
  Revision u/s 263 - Assessee advanced more than 46% of capital to its sister concern company - Commissioner ordered re-assessment owing that borrowing was made by the assessee company in its own name for investing it in sister concern company - Held that:- issue on the borrowed money given to the sister concern was not a subject matter of consideration by the Assessing Officer - purpose of invoking jurisdiction under Section 263 of the Income Tax, the Commissioner has to have some material to enable him to form a prima facie view that the order passed by the Officer was erroneous and was prejudicial to the interest of the Revenue - No justifiable ground to hold that there was no error in the order of the Assessing Officer to justify the invoking of the jurisdiction under Section 263 - Decided in favour of Revenue. whether the amount advanced was a measure of commercial expediency - Held that:- authorities and the Courts should examine the purpose for which the assessee advanced the money and what the sister concern did with the money - in considering the question that the borrowed amount was not utilized by the assessee in its own business but had been advanced as interest free loan to its sister concern is not relevant, what is relevant is whether the amount was advanced as a measure of commercial expediency and not from the point of view whether the amount was advanced for earning profits - advancing of funds by the assessee into the sister concern was in terms of the BIFR's order - Matter not remanded back - Decided in favour of Revenue.

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• 2013 (7) TMI 320
  Reassessment u/s 147 - True and full disclosure of facts - Appellate authority held reassessment not valid since no new information brought on record - Held that:- it is a case in which after filing of the return by the assessee the matter was scrutinized and on thorough examination of the facts, the initial assessment order was passed. On the basis of same set of facts, if the assessing officer was of the view that it was a case of escaped assessment, then it was a case of change of opinion and not a case for reassessment - there was no new material before the assessing officer to record a finding that on the basis of some new material, he had formed an opinion that it was a case of escaped assessment and the assessee had not disclosed the fact truly and rightly - No substantial question of law involved - Decided against Revenue.

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• 2013 (7) TMI 319
  Transfer of capital asset - Agricultural land transferred to AOP and changed to industrial land - Appellant contended that he and other land owners having agricultural land within that declared industrial estate formed an AOP, transferred the agricultural land to AOP, whereupon AOP applied for conversion of land use and the same having been granted, the industrial land was ultimately sold by AOP. It was contended that transfer by him of a piece of agricultural land to AOP does not attract any capital gain. Held that:- for the purpose of income tax, a capital asset may be transferred to an AOP as is provided in Section 2 (47) of the Act. However, when the capital asset is an immovable property by reason of the provisions contained in the Transfer of Property Act read with the Registration Act, transfer of an immovable property of the nature dealt with herein requires an instrument which is also required to be registered - there is no conveyance by the appellant in favour of AOP, nor there is any agreement between the appellant and the AOP coupled with the contention by the AOP that in pursuance with that agreement and in part performance thereof it is in possession of the property in question - Decided against assessee.

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• 2013 (7) TMI 318
  Income from House Property - inclusion of Notional Interest - Annual letting value section 23 - Whether the interest received on lease rent deposit is to be added to the actual rent agreed to be paid between the parties for the purpose of determining the annual letting value of the property under Section 23 - Held that:- The notional interest on the interest free security cannot be taken as the determinative factor to arrive at a fair rent - The provisions of section 23(1)(a) do not mandate this - In a taxing statute it would be unsafe for the court to go beyond the letter of the law and try to read into the provision more than what is already provided for - annual letting value would be the sum at which the property may be reasonably let out by a willing lessor to a willing lessee uninfluenced by any extraneous circumstances - An inflated or deflated rent based on extraneous consideration may take it out of the bounds of reasonableness - Actual rent received, in normal circumstances, would be a reliable evidence unless the rent is inflated/deflated by reason of extraneous consideration – as decided in COMMISSIONER OF INCOME TAX v/s MONI KUMAR SUBBA reported in (2011 (3) TMI 497 - DELHI HIGH COURT ) - Such annual letting value, however, cannot exceed the standard rent under the rent control legislation applicable to the property - If the standard rent has not been fixed by the Rent Controller, it is the duty of the Assessing Officer determine the standard rent according to the provisions of the rent control enactment - the Standard rent is the upper limit, and if the fair rent is less than the standard rent, it is fair rent which shall be taken as the annual letting value and not the standard rent. Remand appeal - The addition of notional interest on the interest free security deposit to the rent agreed upon is not permissible in law - It is open to the Assessing Authority to take note of the amount of advance paid which gives an indication of the fair rent of the property that fetches in the market - But the interest accrued on such deposit cannot be added to the agreed rent, so as to make a fair rent or market rent - remand cannot be granted – Decided against the revenue.

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• 2013 (7) TMI 317
  Reassessment u/s 147 - Notice for income escapement u/s 148 beyond 4 years – Barred by limitation - whether the assesse had been given an opportunity of hearing - Held that:- No opportunity of hearing was given to the assesse - bar of limitation prescribed by Section 149 is not lifted - the deeming provision provided in Explanation 3 to Section 153 does not get attracted in the present case because an opportunity of hearing had not been given to the assesse - the provisions of Section 150 would also not be attracted - In such a situation, the normal provisions of limitation prescribed under Section 149 would apply - Those provisions restrict the time period for reopening to a maximum of six years from the end of the relevant assessment year - In the present writ petitions, the notices under Section 148 have all been issued beyond the said period of six years. Therefore, we are of the view that the said notices are time barred- notices under Section 148 of the said Act are set aside and so, too, are all the proceedings pursuant thereto, including the assessment orders that have been passed – petition allowed in the favor of the assessee.

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• 2013 (7) TMI 316
  Deemed dividend u/s 2(22)(e) - Held that:- It is in undisputed fact that assessee is not a shareholder in M/s. Agrawal Galvanising Pvt. Ltd. which has advanced loan of Rs. 1,88,83,665 to the assessee. To bring this loan into the ambit of deemed dividend under section 2(22)(e), it has to be established first that the same was given to a shareholder out of accumulated profits. If the assessee company which has received the loan is not a shareholder then fiction cannot be extended on the ground that the directors were common and having more than 10% of voting rights, clause (e) of section 2(22) must be given strict interpretation. See ACIT Versus Bhaumik Colour (P) Limited [2008 (11) TMI 273 - ITAT BOMBAY-E] & Commissioner of Income-tax versus Universal Medicare Private Limited [2010 (3) TMI 323 - BOMBAY HIGH COURT]. Against revenue.

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• 2013 (7) TMI 315
  Revision u/s 263 - CIT held that the assessee has made total investment of Rs. 132.03 lakhs in various properties out of his undisclosed income and surrendered Rs. 72 lakhs only and directing the A.O. to make addition of Rs. 60.03 lakhs to the total income of the assessee - Held that:- it cannot be said that the A.O. has not applied his mind to this issue. Thus when the A.O. adopts one of the permissible course of law, the ld. CIT does not agree with it, the order cannot be treated as erroneous in so far as it is prejudicial to the interest of the Revenue unless the view taken by the A.O. is unsustainable in law. CIT set aside issue of verification of new cash creditors introduced during the year - Held that:- This matter was also properly examined by the A.O. The assessee filed its reply stating all facts in his letter dated 18.8.2011. The A.O. applied his mind and took a decision. The assessee also filed affidavit, which was considered by the A.O. The contents of the affidavit are deemed to be accepted in the absence of cross-examination. CIT set aside the case on account of allowing telescopic by the A.O. of Rs. 2 lakhs surrendered during the course of survey - Held that:- Investment in house at 154 G-Block, Sriganganagar, the A.O. made enquiries. The assessee surrendered Rs. 2 lakhs of brokerage receipt, which is mentioned in first para at page 9 of the assessment order. Thus, in view of the aforementioned legal position and the facts the assessment order is neither erroneous and when the twin conditions do not co exist, the order cannot be revised - Decided in favor of assessee.

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• 2013 (7) TMI 314
  Deemed dividend u/s 2(22)(e) - whether the marginal overdrawing/debit balance of the assessee director represented advance or loan to a shareholder and hence covered by the provisions of section 2(22)(e) - Held that:- As there is difference in term loans and advances and the term deposits assessee had not led any evidence before the FAA or us as these were so called deposits. Any correspondence entered into by the assessee and the company evidencing the proof that transaction under consideration were deposits has not been produced. FAA has given a categorical finding that these transaction were loan and advances and all the conditions stipulated by the provisions of section 2(22)(e) were fulfilled. The basic conditions substantial interest in the company and loan/advances by the company to the assessee were satisfied and therefore AO and the FAA in the first round and the FAA in the second round of hearing had held that amounts in questions were Deemed Dividends. Besides, proof of utilisation of amounts in question for business of the company were never produced at any stage - onus was on the assessee to prove that loans received by him were for business purposes of the company. Making a claim about non taxability of any amount before the tax authorities and supporting the same with evidences is the logical sequence of events. In the case under consideration assessee has merely made a claim, but same has not been supported by any evidence. Therefore, uphold the orders of the FAA. Cases cited by the assessee are of no help for deciding the issue under consideration. Against assessee.

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• 2013 (7) TMI 313
  Deduction under section 10A - foreign exchange gain - to be treated as Income from Other sources or Profits and Gains of Business - Held that:- The revenue authorities did not look into the account of the assessee, which were placed before them as it is noted that in the year under consideration only two items have been shown as income in the Profit & Loss Account (besides nominal amount of Rs. 283/- as interest), which are export proceeds and exchange difference. It is not the case of the revenue authorities that the conception of exchange difference is not from export proceeds, but from some other source. It could also not be inferred from the Balance Sheet and Profit & Loss Account of the assessee, that exchange gain emanated from any other source or any other funds parked else where. DR, also, could not apprise as to how the exchange gain was detached from export proceeds or how the decision of Changepond Technologies (P) Limited. Vs ACIT [2008 (2) TMI 486 - ITAT MADRAS-A] could not be relied upon. It has also not been shown by the revenue authorities that the export proceeds were not received within the stipulated period, i.e. the last day of the previous year. Thus the gain recorded by the assessee on receipts of foreign exchange as export proceeds are extricably linked and are, therefore, eligible for exemption under section 10A of the Income Tax Act. In favour of assessee.

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• 2013 (7) TMI 312
  Disallowance u/s 14A r.w.r. 8D - additional ground taken before the CIT(A) against disallowance - Held that:- It is not disputed that the assessee had filed the appeal well within the prescribed time. The assessee had only raised an additional ground, that too, within the disclaimer ground, which says, "Your Petitioner craves leave to add, alter, amend and/or withdraw any or all the above grounds of appeal". In this ground, the assessee has already sought the permission of the CIT(A) to "add" any ground. The issue is now squarely covered by the decision CIT vs Pruthvi Brokers and Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) wherein held assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them, therefore, admit the additional ground and restore the issue to the file of the AO, who shall adjudicate on the issue afresh. In favour of assessee.

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• 2013 (7) TMI 311
  Increase in value of closing stock u/s 145 - inclusion of interest cost - assessee is in the business of ship breaking industry - CIT observed that there is no room to disturb the valuation of closing stock. The interest expenses are revenue expenses for capital borrowed and allowed u/s.36(1)(iii). They cannot be allocated to the closing stock. - Held that:- from the orders of the revenue authorities it is not clear, as to how and when the letter of credit was discharged. - Matter needs reconsideration - matter remanded back. Unproved loan u/s 68 - CIT(A) deleted the addition - Held that:- It is not very clear from the orders of both the revenue authorities as to how the addition u/s 68 was made, when all the persons, who had advanced loans to the assessee in the previous and/or earlier years, had been accepted. On the other hand, the CIT(A) also accepted the submissions of the assessee without considering the reply of the revenue. - Matter needs reconsideration - matter remanded back.

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• Customs

• 2013 (7) TMI 310
  Time limit of stay application - Commissioner denied condonation of delay - Held that:- Appeal against order filed within prescribed time limit under Customs Act - There is no time limit prescribed for filing of stay application - stay application should not have been dismissed on the ground of delay in filing the stay application particularly in the circumstances when the appeal was filed in time - Matter remitted back - Decided in favour of assessee.

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• Corporate Laws

• 2013 (7) TMI 309
  Decision of NSE in granting listing and trading approval of the equity shares pursuant to its rights issue - circular dated October 15, 2012 challenged - Held that:- The appellants have failed to show how the listing permission granted by NSE by the impugned circular has affected their legal rights or caused legal wrong or injury to the appellants. The appellants' grievance does not flow from the impugned circular of NSE. As it is not a case where the various representations addressed by the appellants to the SEBI or to the intermediaries with regard to said issue were not considered. It is a matter of record that said representations were examined and appropriate response given to the appellants. In case the appellants were not satisfied with the response/reply received by them to their representations, it may have been a cause of grievance and the appellants could have availed appropriate remedy against those responses. In the garb of challenging the circular dated October 15, 2012 of NSE granting listing permission of rights issue of respondent no. 4, the appellants are in effect challenging decision of some of the respondents on its various representations which were duly considered and response sent to the appellants. The appellants are now seeking multiple reliefs against various respondents which are in the nature of a direction not covered within the scope of Section 23L of the Act. Appeal dismissed.

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• Service Tax

• 2013 (7) TMI 330
  Payment of service tax under wrong category – assessee contended that as per Board's clarification vide Circular No. 58/07/2003-CX (ST) dated 20/05/2003, if an assessee has paid service tax under a wrong accounting code, they should not be asked to pay the service tax again - Held that:- Appellant was not required to pay service tax again inasmuch as they have remitted their liability to the exchequer, though under a wrong accounting code - the assessee is not liable to pay service tax if he has discharged the service tax liability even though under a wrong accounting code as decided in Pepsico India Holding Pvt. Ltd. vs. Commissioner of Central Excise, Allahabad (2010 (4) TMI 521 - CESTAT NEW DELHI ) – appeal decided in the favour of the assessee.

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• 2013 (7) TMI 329
  Mismatched service tax liability – assessee was engaged into discharging the service tax liability under the category of Clearing and Forwarding Agent Services and Business Auxiliary Services - a show cause notice demands the service tax liability for the period 2004-05 to 2008-09 – Held that:- Adjudicating authority should be given a chance to verify the facts appellant claiming and is able to show that they had paid the entire amount of the service tax liability as demanded in the show cause notice and much more than that - the issue needs to be factually verified – matter remanded back to the adjudicating authority – appeal allowed in the favour of assessee.

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• 2013 (7) TMI 328
  Competency to entertain the appeal - Preliminary objection was raised by the department was that the order was passed by the JC and appeal against it should have been preferred to the Commissioner (Appeals) – Held that:- appellant appeal is not maintainable - the present appeal was filed with the Tribunal at a time when much time was left for the appellant to prefer an appeal to the Commissioner (Appeals) - According to the tenor the appellant was ill-advised - he blindly chose to go by the defective preamble to the order-in-original rather than by the provisions of the statute - Even after receipt of the corrected preamble to the order-in-original, the appellant did not care to take corrective measures - he proceeded to file the present appeal – appeal decided against the assessee. The plea of the learned consultant for transmitting the appeal to the Commissioner (Appeals) or for issuing other directions to the Commissioner (Appeals) cannot be accepted as we do not have equitable powers. Such a course of action can invite more appeals of this nature from ill-advised parties.

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• 2013 (7) TMI 327
  Construction activities – Industrial, Commercial and residential Buildings – Is service tax applicable on Builder, Promoter or Developer who builds a residential complex with the services of his own staff and employing direct labour or petty labour contractors whose total bill does not increase 4.0 lakhs in one previous year – Held that:- Liability arises in the hands of the appellants - the appellants will be eligible for Cenvat credit on services provided by the contractor to the appellants if such services were billed to the appellants and paid for by them – The actual construction activity is undertaken by the contractor for which he is liable to pay tax - Such activity is only an input service for providing services rendered by the appellants to the individual buyers of UDS in land, for constructing the flats - the entry will cover not just the activity of construction but all other activities in relation to construction of the complex - If the tax paid corresponds to the same service and amounts billed to the individual customers then the tax paid by sub-contractor cannot be more than the demand on the provider of service itself as it comes out from the facts of the case. - one third amount ordered to be pre-deposited - stay granted partly.

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• Central Excise

• 2013 (7) TMI 308
  Transfer of Credit - shifting of factory - disallowance on the ground that capital goods were not transferred - Provisions of Rule 10(3) of the Cenvat Credit Rules, 2004 – Held that:- Appellant shifted all their inputs both as such or in process, and its finished goods to their unit at Dolvi on payment of duty equal to the credit availed on inputs. - the department case is only that the capital goods has not been transferred alongwith inputs. - It is pertinent that Rule 10(3) uses the expression “inputs or capital goods” and “not inputs and capital goods” as has been contended by the department - Appeal is allowed – Decided in favor of Assessee.

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• 2013 (7) TMI 307
  Cenvat Credit - Forged DEPB Scrips - Extended period of limitation - As per the case of CC (Preventive) vs. Aafloat Textiles (I) P. Ltd. decided by the Apex Court, vide judgment reported in [2009 (2) TMI 75 - SUPREME COURT], wherein in a case where the importer had made duty free imports against DEPB strips purchased from another person and subsequently DEPB strips were found to be forged, the Apex Court following the principle of caveat emptor, held that the duty would be recoverable from the importer and for this purpose, the extended period under proviso to Section 28 of the Customs Act, 1962 would be applicable. Held that:- Ratio of the above judgment of the Apex Court is applicable to this case as sub-rule (5) of Rule 9 of Cenvat Credit Rules, 2004 emphasises that burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacture taking such credit - It is for the manufacturer taking Cenvat credit on the basis of an invoice issued by a manufacturer or registered dealer to ensure that the credit is correctly taken – Higher Cenvat Credit availed to be recovered - Decided against the assessee. Penalty - No dispute that the invoices issued by the registered dealer were having reference to the manufacturer's invoices - The manufacturers invoices had not been enclosed by the registered dealer and as such, the appellant on the basis of the invoices issued by the registered dealer not were in a position to know as to whether higher credit has been passed on – Held that:- In the circumstances of the case, they would not be liable for penalty under Rule 15 (2) of Cenvat Credit Rules, 2004, readwith Section 11AC of the Central Excise Act, 1944. - Decided in favor of assessee.

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• 2013 (7) TMI 306
  Same person who reviewed the order cannot decide the appeal - The adjudication order was reviewed by the then Commissioner of Central Excise, Shri Bhikhoo Ram, and thereafter Shri Bhikhoo Ram as Commissioner (Appeals) accepted the appeal filed by the Revenue – Held that:- Merit in the contention of the applicant and that the same authority who reviewed the order cannot decide the appeal. In these circumstances, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) to decide afresh - jurisdictional Chief Commissioner of CE requested to entrust this appeal to the Commissioner (Appeals) other than Shri Bhikhoo Ram – In favor of Assessee.

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• 2013 (7) TMI 305
  Cenvat Credit on Inputs and Capital goods destroyed in fire accident - Capital goods were used by the appellant and the inputs were also gone into manufacturing process – Held that:- As per Board's Circular No. 66/88-CX-6 dated 06.09.1988, the credit paid on inputs is permissible when the inputs are actually used in the manufacture of final products therefore, credit cannot be denied - A certificate from the National Insurance Company certifying that the Insurance Company has not considered the claim of the modvat/CENVAT credit of duty paid while entertaining their claim for damaged capital/input/work in-process was produced. Therefore, the ground on which the adjudicating authority denying the credit, is not sustainable. Facts of the case are distinguishable from the facts of the case of Monica Electronics [1994 (11) TMI 215 - CEGAT, NEW DELHI] , inputs were damaged prior to issuance for manufacture, means ‘inputs' were not gone into manufacturing process, therefore, credit is inadmissible but in this case ‘inputs' gone in the process of manufacturing and capital goods were also in use therefore, credit cannot be denied – Relying upon the decision in the case of CCE vs Indichem Electronics –[2002 (9) TMI 195 - CEGAT, CHENNAI] and Motor Industries Co Ltd. vs CCE-[2004 (1) TMI 492 - CESTAT, BANGALORE]wherein this Tribunal has held that when the capital goods/inputs were in use for manufacturing of final products and lost during the fire accident, credit cannot be denied, allowed the appeal of the Assessee – Decided in favor of Assessee.

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• 2013 (7) TMI 304
  Separate Show-Cause Notice for demand of Interest u/s 11AB - For the period 2007 – 08, Appellant paid the differential duty amounting to Rs.9,17,914/-. This amount was paid on 2.1.2009. However, they did not pay any interest on this amount as required under Section 11AB of the Central Excise Act – Held that:- When the amount was paid, the interest also should have been paid and there was no need for issue of any separate show-cause notice relying upon the decision in the case of CCE Vs. International Auto Ltd –[2010 (1) TMI 151 - SUPREME COURT OF INDIA] Limitation - The Department issued a show-cause notice without any inordinate delay that is within about six months – Held that:- Assessee should pay such interest even without a notice being served on them – Decided against the Assessee.

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• 2013 (7) TMI 303
  Dispute was with regard to whether an assessee can avail the benefit of either of the abovesaid two notifications whichever is beneficial to him or he is bound to avail the unconditional exemption under Notification No. 29/2004-C.E. as amended, during the period under dispute in terms of the provisions of Section 5A(1A) of the Central Excise Act, 1944 - contention of applicant that he has the option to avail one notification which suits him if more than one notification exist, was relevant when the provision of sub-section (1A) of Section 5A did not exist prior to 13-5-2005. The said sub-section (1A) was inserted into section 5A w.e.f. 13-5-2005 by Section 75 of Finance Act, 2005 (18 of 2005). Held that:- The Ministry of Law has opined that the language used in the said Section 5A(1A) is unambiguous and principles of harmonious construction cannot be applied in the instant case in view of the specific provision under sub-section (1A) of Section 5A of the Central Excise Act. The Law Ministry has accordingly concluded that in view of the specific bar provided under sub-section (1A) of Section 5A of the Central Excise Act, the manufacturer cannot opt to pay the duty under Notification 59/2008-C.E., dated 7-12-2008 and he cannot avail the Cenvat Credit of the duty paid on inputs. Notification No. 29/2004-C.E. & 30/2004-C.E. can be availed simultaneously will also apply to the amended notification as the nature of notification does not change does not hold good because a specific Circular No. 937/27/10-C.E., dated 26-11-2010 was issued by C.B.E. & C. w.r.t. Notification Nos. 29/2004-C.E. as amended by Notification No. 58/2008-C.E., dated 7-12-2008 and Notification No. 59/2008-C.E., dated 7-12-2008

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• 2013 (7) TMI 302
  Rebate under Rule 18 of the Central Excise Rules – Held that:- Notification No. 24/2003-C.E., dated 31-3-2003 was issued under Section 5A(i) of Central Excise Act, 1944, exempts goods manufactured by 100% EOU and cleared for export from whole of duty unconditionally. Therefore in view of provisions of sub-section (1A) of Section 5A(1), the applicant manufacturer cannot pay duty - As such rebate claim is not admissible in terms of Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 as supported from the decisions of the Apex Court in M/s. ITC Ltd. v. CCE [2004 (9) TMI 103 - SUPREME COURT OF INDIA] and M/s. Paper Products v. CCE [1999 (8) TMI 70 - SUPREME COURT OF INDIA] that the simple and plain meaning of the wordings of statute are to be strictly adhered to. Duty paid without the authority of law cannot be treated as duty paid under the provision of Central Excise Act - Such paid amount to be treated as a voluntary deposit made by applicant with the Government – Assessee entitled to cash refund only of the portion deposited by it by actual credit and for remaining portion, refund by way of credit is appropriate - Excess paid amount/duty is required to be returned to the respondent in the manner in which it was paid by him initially – Ordered to be re-credited in their Cenvat Credit Account - Rebate claims are rightly held inadmissible under Rule 18 of Central Excise Rules, 2002 read with Not. No. 19/2004-C.E. (N.T.), dated 6-9-2004. Decided against the Assessee.

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• CST, VAT & Sales Tax

• 2013 (7) TMI 331
  Double assessment - Assessee was sought to be assessed in respect of the turnover belonging to the transaction relating to its agent - Held that:- Additional Government Pleader on verification of the files stated that the agent was assessed in respect of the turnover and tax had also been collected - there could be no double taxation in respect of turnover at the hands of the assessee herein towards principal - Order of Tribunal set aside - Decided in favour of Assessee.

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• Indian Laws

• 2013 (7) TMI 326
  Communication of objection - Petitioner not informed of objection raised on trademark application - Authority treated application abandoned - Held that:- respondent was bound to communicate any objection or proposal in writing to the applicant. The respondent admittedly did not do so. Placing the notice of the website does not constitute compliance with that Rule 38(4) - Rule 38(4) by itself does not require an applicant for registration to inspect the respondents' website. The petitioner therefore cannot be imputed with the knowledge of the said letter - Mere posting of the letter on the website does not constitute communication of the objection or proposal in writing - Letter can be said to have been communicated to the petitioner only on the date on which the petitioner noticed it on the website - Petitioner's application for registration cannot therefore, be deemed to have been abandoned - Decided in favour of Petitioner.

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