TMI Tax Updates - e-Newsletter
July 3, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

Articles

1. Restricted Input tax credit on inter-state stock transfers whether constitutional?

   By: AMIT BAJAJ ADVOCATE

2. EXEMPTION TO HEALTH CARE SERVICES

   By: Dr. Sanjiv Agarwal

News

1. The Central Government to Continue to Engage with the Mutual Fund(MF) Industry and SEBI to Make Mutual Fund More Competitive and to Attract Greater Retail Participation ; Special Emphasis to Improve Penetration of MF Products in Tier II and Tier III Cities and to Redress the Grievance of Investors.

2. Anand Sharma to Review Pharma Exports Tomorrow To Mull Promotion of Brand India Pharma with the Industry.

3. CBDT Issues Notification Making E-Filing of Income Tax Returns Mandatory.

4. India’s Foreign Trade: May, 2012.

Notifications

DGFT

1. 05 (RE-2012)/2009-2014 - dated 2-7-2012 - FTP

Conditions for export of Carpets, Handicraft items and Silk items.

2. 04 (RE – 2012)/2009-2014 - dated 2-7-2012 - FTP

Prohibition on import of milk and milk products from China.

3. 03(RE-2012)/2009-2014 - dated 29-6-2012 - FTP

Export Policy of Onions.

Service Tax

4. Corrigendum - dated 2-7-2012 - ST

Corrigendum of Notification No. 36/2012-Service Tax.

5. 43/2012 - dated 2-7-2012 - ST

Exemption to Railways from Service Tax After Finance Act 2012

Highlights / Catch Notes

Income Tax

• Court Rules Inter-Corporate Deposits and Interest Income Alone Don't Prove Money Lending Business Activity; Bad Debt Claim Denied.

  Case-Laws - HC : Bad debts - mere fact that the assessee had made some inter-corporate deposits and the assessee earned income by way of interest in itself is not a circumstance to conclude that it was carrying on money lending activity as part of its business activity. - Claim of bad debts denied - HC
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• Court Clarifies Prior Period Expenses Must Be Included in Book Profit Calculation for MAT u/s 115JA.

  Case-Laws - HC : Computation of book profit - MAT u/s 115JA - on mere fact that the assessee had shown its prior period expenses in the extra ordinary items separately, did not mean the net profit was arrived at de hors these items. - HC
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• Rigs Maintenance Costs by Asset Owner Allowed as Business Deductions Under Income Tax Regulations.

  Case-Laws - AT : Expenditure incurred on maintenance of rigs leased out - Assessee, being the owner of the asset, it was in its own interest, that the assets were maintained properly. Hence, the same is allowed as business expenditure. - AT
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• Assessee Contends Relinquished Disputed Rights Shouldn't Be Taxed as Capital Gains Due to No Acquisition Cost.

  Case-Laws - AT : Capital gains - Considering the arguments of the assessee that relinquishment of disputed right cannot taxed since the said rights have no cost of acquisition, it is appropriate to admit the additional ground. - AT
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• Franchise Fee for Support Services Classified as Revenue Expenditure, Not Just Business Fee for Restaurant Operations.

  Case-Laws - AT : Franchise fees - payment as a franchise fee by the assessee was not only a business fee for use of support service like running and up-keeping the restaurant. - held as revenue expenditure - AT
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• Court Rules: Law Bars Placing Assessee in Worse Position Than Before in Second Litigation Round.

  Case-Laws - AT : Addition during second round of litigation - held that:- it is a settled law that the assessee cannot be put to a more adverse situation than what he was. - AT
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• No Interest u/s 234B if Payer Fails to Deduct Tax at Source; Payee Not Liable for Payer's Duty.

  Case-Laws - AT : TDS - Levy of interest u/s 234B of the Act – When a duty is cast on the payer to pay the tax at source, on failure, no interest can be imposed on the payee assessee. - AT
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DGFT

• New Export Guidelines for Carpets, Handicrafts, and Silk: Compliance with DGFT Standards Required for Legal Trade.

  Notifications : Conditions for export of Carpets, Handicraft items and Silk items. - Notification
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• India Bans Milk and Milk Product Imports from China to Ensure Safety and Quality Standards Compliance.

  Notifications : Prohibition on import of milk and milk products from China. - Notification
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• DGFT Updates Export Policy: New Restrictions and Quotas on Onion Exports to Stabilize Local Prices and Supply

  Notifications : Export Policy of Onions. - Notification
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Service Tax

• Railway Services Exempt from Service Tax as per Finance Act 2012 Notification: Key Regulatory Changes Clarified.

  Notifications : Exemption to Railways from Service Tax After Finance Act 2012 - Notification
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• Corrigendum Issued for Notification No. 36/2012: Updates Ensure Clarity and Accuracy in Service Tax Regulations.

  Notifications : Corrigendum of Notification No. 36/2012-Service Tax. - Notification
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• Appellant Challenges Service Tax on Turnkey Contracts, Citing Pre-June 2007 Exemption for Works Contracts.

  Case-Laws - AT : Works contract Service - Turnkey contract - appellant had considered this turnkey contract as a works contract. Thus, appellant has made out a prima facie case that prior to 01.6.2007 service tax liability on works contract does not arise. - AT
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• Vocational Training Classification May Provide Tax Relief for Business, Fashion Tech, Media, and Hospitality Coaching Services.

  Case-Laws - AT : Training and coaching in the field of 1) Business 2) Fashion Technology 3) Advertisement and Graphic Design 4) Media 5) Hospitality and 6) Hospital Administration. - held as Vocational training - AT
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• Court Rules Service Tax Refundable for Construction Services to Non-Profit; Tax Department Lacks Authority to Retain Funds.

  Case-Laws - HC : Refund – limitation – refund claim on the ground that building construction which was done by assessee was to a non-profit organization - once it is not payable in law there was no authority for the department to retain such amount - HC
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Central Excise

• Credit Denial Overturned: Technical Violations in RG 23 A Not Enough to Deny Credit for Imported Goods.

  Case-Laws - AT : Denial of credit - allegation of making the entries in RG 23 A prior to actual receipt of the imported goods - credit should not be denied on the technical and procedural violations - AT
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• Demand for 10% Value of Goods to SEZ Developers Found Unsustainable Under Cenvat Credit Rules.

  Case-Laws - AT : Cenvat Credit - Demand of an amount equivalent to 10% of the value of the goods cleared by the appellant to SEZ developers - demand is not sustainable - AT
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Case Laws:

• Income Tax

• 2012 (7) TMI 21
  Validity of reopening of assessment - non-furnishing of reasons recorded by the Assessing Officer in notice dated 28.03.07 - first notice issued on 31.01.07 - second notice issued on 28.03.07 stating that the earlier notice dated 31.1.2007 may be treated as cancelled for technical - AY 2000-01, 2001-02, & 2002-03 - Held that:- It is an undisputed fact that the reasons actually recorded by the Assessing Officer were not furnished to the assessee till 14.06.2012 despite repeated requests and demands and therefore, the gist of reasons as furnished vide letter dated 28.06.2007 cannot be treated as reasons actually recorded by the Assessing Officer as per section 148(2) and as mandated by the Supreme Court in case of GKN Driveshafts (India) Ltd (2002 (11) TMI 7 (SC)). Thus, the Assessing Officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, than the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain. Accordingly, we set aside the reassessments for all 3 years under consideration being invalid - Decided in favor of assessee.

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• 2012 (7) TMI 20
  Bad debts - advance given to sister concern - dis-allowance on ground that advance has been given to sister concern to tide over its financial situation, and cannot be treated as bad debt when the assessee is not carrying on money lending business or having lent this amount in the course of business activity of the assessee - Held that:- Purpose for which the amount was given, the nature of the lending, nature of the activity carried on by the assessee, which constitutes business activity of the assessee, are all factors which are to be considered in determining as to whether an amount given by the assessee is one which qualifies as a 'debt'. A debt may be because of any service provided by the assessee to its customers for which an amount or fees is payable but not so paid or a price payable for any of the goods supplied but not paid by the customer or an amount actually lent out by the assessee as part of the business activity of the assessee and to qualify for deduction u/s 36(1)(vii), it is such debt which has become irrecoverable for various reasons. In present case, mere fact that the assessee had made some inter-corporate deposits and the assessee earned income by way of interest in itself is not a circumstance to conclude that it was carrying on money lending activity as part of its business activity. The assessee's main business activity was only in providing services in telecommunication technology and not in money lending activity. Therefore, interest-free amount of Rs. 5.34 crore advanced to its sister concern cannot qualify as bad debt u/s 36(1)(vii) - Decided in favor of Revenue.

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• 2012 (7) TMI 19
  Dis-allowance u/s 14A - premium paid on redemption of premium notes - assessee being an investment and trading companies issued unsecured optionally convertible premium notes and invested the same in the purchase of shares of Reliance Utilities and Power Ltd (RUPL), income of which is exempt u/s 10(23G) - Held that:- Proceeds of premium notes (OCPN) on which the impugned redemption premium was paid by the assessee had been invested in the shares/debentures of RUPL and although the dividend income and income from long term capital gain from the said investment was exempt from tax u/s 10(23G), however the same was exempt only for the specific period i.e. AY 1999-2000 to 2001-2002, extended upto AY 2004-05. Further, said investment had the potential of generating taxable income viz short term capital gain, income from stock lending, income by way of fees for providing of shares, as collateral etc. Therefore, such premium paid can not be regarded as expenditure incurred exclusively in relation to earning of exempt income so as to invoke the provisions of section 14A - Decided in favor of assessee.

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• 2012 (7) TMI 18
  Machinery replacement expenditure - revenue or capital expenditure - Held that:- In respect of oxygen analyser it is held that CIT(A) has rightly held that since the whole machinery was not performing well, new machines were installed, they being independent item of machinery. Since replacement had brought about enduring benefit by the installation of new machines, the expenditure was capital in nature - Decided in favor of Revenue. Replacement of SS Shell and other machinery - Held that:- Considering the fact that what was done was only refurnishing of the existing one and packed with refractories, bricks etc, the same is current repairs and allowed as revenue expenditure - Decided against the Revenue. Depreciation on wind mills - dis-allowance on ground that actual commissioning of the windmill took place only after the relevant accounting period - Held that:- Considering the fact that the department itself had not questioned the State Electricity Board's certificate that the wind mill was commissioned during the year under consideration, being a factual finding, question is decided against Revenue. Deduction u/s 80HH - inclusion of profit margin of goods captively consumed - Held that:- Since the items were transferred from one unit to another by the same company, hence, the assessee could not make profit from itself. Therefore, the profit margin element had to be excluded for computing deduction u/s 80HH - Decided against Revenue. Deduction u/s 80HHC - Revenue contended inclusion of conversion charges and sundry sales as forming part of the turnover - Held that:- Conversion charges and the sundry charges did not form part of the turnover for the purpose of deduction u/s 80HH. However, sundry sales being part of the gross total income as profit of the business, the same has to be included in the total turnover for the purpose of deduction u/s 80HHC.

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• 2012 (7) TMI 17
  Computation of book profit - adjustment of the prior period expenses in computing book Profit u/s 115JA - Revenue contending non-deduction of Prior period expenses since the same was not debited in the P & L A/c - Held that:- Whether the prior period expenses were shown separately or not, the assessee would nevertheless be entitled to have the adjustment of the prior period expenses in the matter of computing the net profit of the assessee. Thus on mere fact that the assessee had shown its prior period expenses in the extra ordinary items separately, did not mean the net profit was arrived at de hors these items. In present case, in computing the net profit, assessee had adjusted prior period expenses, rightly, the assessee offered the book profit for assessment. No exception could be taken to the course adopted by the assessee in adjusting the prior period expenses in computing the net profit. Order of tribunal set aside. See CIT v. KHAITAN CHEMICALS AND FERTILIZERS LIMITED (2008 (9) TMI 89 (HC)) - Decided in favor of assessee. Jurisdiction of Officer - Held that:- Once the officer accepts the book profit, he cannot travel beyond what had been disclosed in the book profit.

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• 2012 (7) TMI 16
  Expenditure incurred on maintenance of rigs leased out - revenue or capital expenditure - assessee, engaged in the business of drilling, leased out four rigs to M/s Saipem, SPA, Italy, being used by the said Sapem, SPA, in Saudi Arabia for drilling - Held that:- It is not disputed that assessee was owning the four rigs, and payments were made to M/s Saipem, SPA, Italy, towards planned and extraordinary maintenance activities of those rigs. The fact that such rigs were old has also not been disputed by the Revenue. That old rigs require periodical overhauling for keeping them in working condition, is a fact which cannot be overlooked. Assessee’s concern that unless such extraordinary maintenance or planned maintenance or overhauling was done, life of the rigs and life of the workmen rendering services in such rigs, would be jeopardized, appears to be well justified. Assessee, being the owner of the asset, it was in its own interest, that the assets were maintained properly. Hence, the same is allowed as business expenditure. Dis-allowance u/s 40(a)(ia) on account of non deduction of tax at source - Held that:- Insofar as business of leasing of rigs was concerned, it was carried on by the assessee outside India. Income received by M/s Saipem, SPA, Italy from the assessee, even if a part thereof is considered as FTS, would not attract Section 9(1)(vii). Since M/s Saipem, SPA, Italy was not having any business connection in India, the business income earned by the said company will not fall within the ambit of Section 9(1)(i) also. There being no failure on the part of the assessee for not deducting tax at source, it could not be fastened with the rigours of Section 40(a)(i) - Decided in favor of assessee.

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• 2012 (7) TMI 15
  Amount received for relinquishing the disputed rights over the land - capital gains - assessee pleaded for admission of additional ground contesting taxability in view of fact that same does not fall under definition of capital asset and cost of acquisition of the disputed rights in hands of the appellant is nil - Held that:- There is a reasonable cause for raising additional ground by the assessee before us for the first time. Considering the arguments of the assessee that relinquishment of disputed right cannot taxed since the said rights have no cost of acquisition, it is appropriate to admit the additional ground. However, the lower authorities have no occasion to go into the merit of the additional ground raised by the assessee before us. Accordingly, additional ground remitted back to the file of the AO for due consideration in the light of judgement of Supreme Court in the case of B.C. Srinivasa Setty (1981 (2) TMI 1 (SC)) and also the other judgements.

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• 2012 (7) TMI 14
  Denial of claiming exemption under section 11 - revised return filed for claim in view of registration under section 12A - DR stated that assessee is not entitled for exemption as it does not apply 85% of its income towards charitable purpose since it charges 2% from trade from the traders as Mandi Fee and out of this, 1% is directly deposited to the State Government - Held that:- AO has not brought any material on record nor made any adverse comments in the remand report to show that the assessee has violated any condition laid down under section 11 - the assessee has applied more than prescribed percentage of its income for furtherance and in the attainment of its objectives with no material on record to show that that the assessee Samiti has been established or carried out activities for personal or private gains - contention of the DR that the assessee Samiti has deposited 1% fund to the State Government out of 2% charges made by the traders is not acceptable as the fund transferred to the State Government are always utilized for welfare of person of the State which amounts to charitable purpose - in favour of assessee.

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• 2012 (7) TMI 13
  Franchise fees - revenue or capital expenditure - assessee has been provided with special know how of preparing food and beverages and also been given initial training and on going training in relation to restaurant business - Held that:- Since Revenue failed to bring any material on record to show that the assessee had paid any price for acquisition of any capital assets and that the payment as a franchise fee by the assessee was not only a business fee for use of support service like running and up-keeping the restaurant. Hence, order of CIT(A) allowing the same as revenue expenditure is upheld - Decided against The Revenue. Admission of additional evidence by CIT(A) without offering opportunity to Assessing Officer to verify the evidences - legal expenses - Revenue contending same to be capital expenditure on ground of same being incurred before commencement of business - Held that:- There was clear violation of Rule-46. Assessing Officer should also have an opportunity of verifying the evidences, which were produced before the CIT (Appeals). Hence, we remand the matter back to the file of the Assessing Officer for re-adjudicating the issue afresh.

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• 2012 (7) TMI 12
  Penalty imposed u/s 271(1)(c)- assessee contested that simply because addition/disallowances have been sustained in appeal this fact would not lead to levy of penalty - Held that:- Penalty can not be imposed merely on the ground that the claim made by the appellant is allowable in the subsequent year - appellant has not made a false claim nor has it made a wrong claim, only the year in which it is allowable is under dispute between the assessee and the department,thus in such a situation penalty cannot be imposed - A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - in favour of assessee.

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• 2012 (7) TMI 11
  Whether the grounds of assumption of jurisdiction u/s 158-BD which was not taken in the appeal by the assessee in the first round of appellate proceedings, can be taken in the second round of assessment proceedings – Held that:- assessing officer had not provided the copy of satisfaction note recorded by the assessing officer while initiating proceedings under section 158BD of the Act. The satisfaction note was provided on interference of the ld. CIT (Appeals) in the second round of appellate proceedings - only the assessee came to know the reasons as to why proceedings against it were initiated under section 158-BD of the Act as no search under section 132 of the Act was conducted in the case of the assessee - assessee is justified in taking the ground agitating the jurisdiction under section 158BD in the second round of assessment proceedings Whether the assessing officer could have initiated proceedings under section 158BD of the Act when no assessment proceedings under section 158BD have been completed in the case of searched assessees – Held that:- Initiation of 158BD proceedings is independent of the action taken in the case of searched person - completion of assessment under section 158BC in the case of searched person is not condition precedent for recording of the satisfaction under section 158BD of the Act – Decided against assessee Whether typing errors should be ignored - satisfaction note has not been recorded before issue of notice u/s 158BD of the Act - satisfaction note is dated 16/09/2004 whereas on top of notice u/s 158BD, the typed date is 16/11/2003 - notice under section 158BD was served on the assessee on 20/09/2004 – Held that:- date of issue of notice on 16/11/2003, appears to be typing mistake - date mentioned on the notice under section 158BC 16/11/2003 is a typographic mistake - contention of the assessee is rejected Whether combined satisfaction note recorded in respect of three different searched persons is bad in law – Held that:- assessing officer is same for all the searched persons, because of this reason, a combined satisfaction note has been prepared. When the assessing officer is the same for all the searched persons, making a satisfaction note based on material found from the premises of different persons, which was conveyed by the authorized officer to the assessing officer, preparation of combined satisfaction note will not be detrimental to the interest of the Revenue - What is to be seen is whether before issue of notice u/d 158BD satisfaction should be recorded by the assessing officer which has been done in the case of the assessee - CIT (Appeals) was justified in rejecting the claim of the assessee that proceedings initiated under section 158BD read with section 158BC were bad in law Addition was made by the AO on the ground that payments were illegal - commission and commission expenses - Proviso to section 69C has come into operation only since 1/04/1999 – Held that:- assessee had incurred expenditure during the course of business. There is no material on record to prove that the said expenditure was incurred after 1/04/1999 when proviso to section 69-C of the Act was inserted in the statute. In the absence of any such evidence to prove that the commission was in the nature of illegal and the year to which the same relate, addition under section 69-C cannot be made – in favor of assessee. Addition during second round of litigation - held that:- it is a settled law that the assessee cannot be put to a more adverse situation than what he was. The assessee approached the Tribunal being dissatisfied with the estimation of income at the rate of 8 per cent on disclosed turnover u/s 44AD - ITAT set aside the matter remanded back the issue with direction - the addition cannot be made under section 158BB of the Act merely on presumption that assessee had earned undisclosed income and had incurred expenses outside the books of account. Interest under section 220(2) of the Act - assessee submitted that interest under section 220(2) is chargeable in relation to post assessment period only - interest had been charged under section 220(2) vide demand notice which formed part and parcel of block assessment – Held that:- charging of interest was patently erroneous - Since addition is deleted, interest under section 220(2) will not be leviable - assessee's grounds are allowed on merits

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• 2012 (7) TMI 10
  Partnership firm doing wholesale liquor business - rejection of allowance claimed under the act on ground of same being assessed as Association of Persons - Revenue contended that since only one of the partners was holding a license to carry on the liquor business, in absence of who, firm could not have run the business hence the same could be assessed as AOP - Held that:- Since the partnership deed is reconstituted subsequent to the amendment of Income-tax Act w.e.f. 1-4-1993 the AO ought to have discussed the facts of the present case in the light of law laid down in the case of CIT vs Rangila Ram (2000 (8) TMI 11 (SC)) and also in the light of provisions of Karnataka Exercise (General Conditions Rules), 1967. Further, AO has also not explored whether there was transfer of license of one partner to carry on the business of liquor in favour of the firm. Hence, matter is remitted back to the AO for fresh assessment in the light of above observations.

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• 2012 (7) TMI 9
  Penalty under Section 271(1)(c) of the Income Tax Act - disallowance under Section 35D, reduction in exemption under Section 10B and rejection of claim under Section 80HHC – Held that:- Explanation-1 to Section 271(1)(c) gets attracted only when the assessee failed to substantiate its claim to explain or the explanation given by the assessee were found to be false. But when the explanation given by the assessee is simply not accepted by the Revenue, the same cannot be made a ground for levy of penalty. It is a case where the explanation offered by the assessee is not accepted but the same has not been found to be false by any of the authorities. Appeals of the Revenue are dismissed. Penalty in respect of enhancement of book profit - enhancement made by the CIT(A) in the quantum proceedings regarding book profit, but no penalty proceedings had been initiated on the enhancement of the book profit – Held that:- authority, which is adding the income, has to record a satisfaction to the effect that the penalty is required to be levied. In the absence of such satisfaction and any mention of initiation of penalty in the appellate order making enhancement in book profit, penalty is not leviable. No penalty is justified in respect of enhancement of book profit.

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• 2012 (7) TMI 8
  Stay - demand - assessee - claim of the petitioner is that he is acting as an agent of the Government for the Navi Mumbai project - assessment order issued holding the petitioner to be chargeable to tax for all its projects including the Navi Mumbai – (i) the land for Navi Mumbai project was acquired by the State Government ; (ii) compensation was paid by the State Government ; and (iii) the lands have been registered in the name of CIDCO for and on behalf of the State Government – Held that:- Under sub-section (3) of section 40(1B), the provisions of Chapter VI of the Act apply mutatis mutandis to the special planning authority as they apply to the development authority as if the notified area were to be a new town, subject to certain modifications including the deletion of section 113A. Under section 160, upon dissolution of the special planning authority or new town development authority, all properties, funds and dues vest in the State Government and all liabilities are enforceable against the State Government - stay is granted of the recovery of the dues

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• 2012 (7) TMI 7
  TDS - Levy of interest u/s 234B of the Act – payment to non-resident company – assessee did not deducted TDS – Held that:- If the payer making payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is required to pay taxes. However, in such a case, the non-resident is liable to pay income-tax and not advance tax. It would not be permissible to levy any interest under Section 234B of the Act for failure to pay advance tax. When a duty is cast on the payer to pay the tax at source, on failure, no interest can be imposed on the payee assessee. These assessees are not liable to pay any interest u/s 234B of the Act. In favor of assessee.

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• Customs

• 2012 (7) TMI 6
  Exemption under Notification No. 64/88-Cus – pre-condition – Held that:- Appellant during 1995 and 1996 have failed to meet their obligation of treating at least 40% OPD patients free - obligation to treat at least 40% OPD patients and all indoor poor patients free and reserving at least 10% of the beds for this purpose is a continuing obligation and an integral part of the condition subject to which the exemption under Notification No. 64/88-Cus had been granted, the appellant, on account of their failure to treat at least 40% OPD patients free during 1995 and 1996 have become ineligible for the exemption - exemption notifications have to be construed strictly and non- fulfilment of the condition, whether intentional or unintentional will result in denial of the same Post import obligation - limitation – Held that:- Provisions of Section 28 are not applicable for recovery of duty for violation of post-import conditions. Therefore, the duty demand has been correctly confirmed. SCN - Allegations without any basis - does not state as to which category the appellant's hospitals belongs - allegation aforesaid in the SCN cannot be considered to have brought out allegations in clear terms to grant fair opportunity to the appellant to defend – Held that:- Without ascertaining the status of the appellant hospital, the Authority reached to abrupt conclusion on the allegation of not furnishing of details made in the SCN which was not the requirement of any disclosure by hospitals in terms of the Notification unless otherwise called for by Authorities under law - principles of natural justice is not followed matter to be remanded to the original authority Difference of opinion between members – regarding exemption notification No.64/88-Cus and whether basis of allegation was disclosed to assessee – Held that:- Matter referred to 3rd member for consideration of following question

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• Corporate Laws

• 2012 (7) TMI 5
  Winding up – alleged that company unable to pay its debt – winding up petition filed by supplier – Held that:- non-compliance with the requirement of Section 434(1) of the Companies Act, 1956 - notice of demand has not been addressed to the registered office of the company - notice is sent at the factory address - it has been duly replied by the respondent by pointing out that there is a subsisting JVA and the LPA under which the obligations are reciprocal - since petitioner had repeatedly made reference of JVA and LPA in its statements, transactions in respect of which claim had been raised by petitioner would not be said to be distinct and independent of JVA and LPA - defence raised by respondent was bona fide and substantial and petitioner had suppressed material and relevant facts from Court in relation to its demand, winding up petition against respondent was to be dismissed

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• Service Tax

• 2012 (7) TMI 27
  Applicability of Notification No.45/10 dated 20.07.2010 issued under section 11C - Held that:- Powers conferred by section 11C R.W.S 83 of the said Finance Act the service tax payable on said taxable services relating to transmission and distribution of electricity provided by the service provider to the service receiver not being levied in accordance with the said practice during the period up to 26th day of February, 2010 for all taxable services relating to transmission of electricity and the period up to 21st day of June, 2010 for all taxable services relating to distribution of electricity - in favour of assessee.

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• 2012 (7) TMI 26
  Works contract Service - Turnkey contract - Revenue contended the same to be the contract of Erection, Commissioning and Installation services classifiable under the category of Erection, Commissioning and Installation services - period involved prior to 01.06.07 - Held that:- There is no dispute that the entire demand is in respect of services rendered by the appellant under the turnkey contract to the service receiver. It is also to be noted that the appellant had considered this turnkey contract as a works contract. Thus, appellant has made out a prima facie case that prior to 01.6.2007 service tax liability on works contract does not arise. Pre- deposit waived and recovery thereof stayed till disposal of appeal. See Asea Brown Boveri Limited (2011 (2) TMI 1093 (Tri)) - Decided in favor of assessee.

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• 2012 (7) TMI 25
  Denial of claim of exemption by Notification No. 24/04-ST dated 10.9.04 - Voluntary training and coaching in the field of 1) Business 2) Fashion Technology 3) Advertisement and Graphic Design 4) Media 5) Hospitality and 6) Hospital Administration. - branches in ten cities across the country - Held that:- As decided in Ashu Export Promoters Pvt Ltd Vs CST New Delhi [2011 (11) TMI 387 (Tri)] the impugned training would qualify to be Vocational training'

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• 2012 (7) TMI 24
  Demand of Service Tax on Clearing and Forwarding services received - period from 16.07.1997 to 31.08.1999 - show cause notice on 22.04.2004 – Held that:- demand is not sustainable since the show cause notice was issued under Section 73 of Finance Act, 1994 and on the day on which show cause notice was issued, the Section 73 was not applicable in respect of short levy arising in respect of the ST - 3 returns filed under Section 71A – In favor of assessee

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• 2012 (7) TMI 23
  Construction of Residential Complexes undertaken by the appellants - value of free supplied materials - adjudicating authority has not given the benefit of Notification No. 15/2004 – Held that:- If free materials were supplied by the principals to the appellant, if the value needs to be included in the gross value, that is claimed as a portion of the material, if so, the benefit of the Notification No. 15/2004 could not be restricted and it is for the adjudicating authority to see whether the records maintained by the assessee/supplier are enough to come to a conclusion, that the appellant can avail the benefit of Notification No. 15/2004 and only charge service tax on the balance of 33% of the value sought to be included - matter remanded to the adjudicating authority

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• 2012 (7) TMI 22
  Refund – limitation – refund claim on the ground that building construction which was done by assessee was to a non-profit organization - construction service provided by it to non-profit organization was not liable to service tax under Circular No. 80/10/2004, dated 17-9-2004 – Held that:- they have paid the amount by mistake and therefore they are entitled for the refund - once there was no compulsion or duty cast to pay this service tax, amount paid by petitioner under mistaken no objection, would not be a duty or "service tax" payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount - appellant authorities is directed to refund

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• Central Excise

• 2012 (7) TMI 3
  Denial of credit - allegation of making the entries in RG 23 A prior to actual receipt of the imported goods - Held that:- As all the details were available in the invoices are clearly mentioned credit cannot be denied to the respondents - the goods in question were actually received by the respondents, as was clear from the gate entries and material received notes - in respect of certain entries where the quantity did not tally with the quantity shown in the bill of entry the Deputy Commissioner is directed to allow the credit after verification as the goods were entered in RG I register in different lots. Notification No. 7/99- CE read with Boar s Circular No. 441/7/95 C E dated 23.2.99 was not applicable as issued subsequent to the period involved - Held that:- Reading of Board s Circular makes it clear that the credit should not be denied on the technical and procedural violations and wherever there is no dispute about the duty paid character of the goods, their receipt in the assessee's factory and subsequent use in the manufacture of final product, the show cause notices should not be issued for denial of such credit. Admittedly such clarification relate to past period also. No dispute on availability of credit on merits - the Revenue case as projected in the show cause notice was only in respect of procedural violations thus there is no need for verification of the otherwise admissible modvat credit.

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• 2012 (7) TMI 2
  Ineligible CENVAT Credit challenged by the appellant of the Service Tax paid by the service provider - Stay Petition for waiver of pre-deposit of penalties - Held that:- Having reversed the ineligible availmaint of the CENVAT Credit on being pointed out by the Audit party, the appellant has shown their bonafide on admitting the error. In view of this the imposition of penalty on the appellant is liable to be set aside - in favour of assessee.

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• 2012 (7) TMI 1
  Demand of an amount equivalent to 10% of the value of the goods cleared by the appellant to SEZ developers - Held that:- The issue is settled by the judgment of this Tribunal in the case of Sujana Metal Products Ltd. vs. CCE Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE] as in view of Section 51 of the SEZ Act, the supplies made by DTA units to SEZ units will amount to export for the purpose of all export benefits. The benefit shall include benefits available in respect of exports provided by exception to Rule 6 of Cenvat Credit Rules, 2004 - in favour of assessee.

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