TMI Tax Updates - e-Newsletter
July 3, 2014

Case Laws in this Newsletter:

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

Articles

1. MAT- A PROVISIONAL COLLECTION FOR WHICH NOW THERE IS NO REASON AND JUSTIFICATION –Section 115JB should be abolished

   By: DEVKUMAR KOTHARI

2. NIDHI COMPANIES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Streamlining the Procedure for Grant of Industrial Licenses

2. RBI Reference Rate for US $ and Euro

3. Media Advisory (General Budget 2014-15)

4. India Showcases Pharma Prowess in India Show in Japan India is a Responsible Health Care Giver: Commerce Secretary

5. Imposition of Minimum Export Price on Onion Export

Notifications

DGFT

1. 86 (RE – 2013)/2009-2014 - dated 2-7-2014 - FTP

Export Policy of Onions

Circulars / Instructions / Orders

FEMA

1. 09/2014-15 - dated 1-7-2014

Master Circular on Compounding of Contraventions under FEMA, 1999

2. 05/2014-15 - dated 1-7-2014

Master Circular on Risk Management and Inter-Bank Dealings (Updated as on March 31, 2015)

3. 13/2014-15 - dated 1-7-2014

Master Circular on Import of Goods and Services (As amended up to June 18, 2015)

4. 07/2014-15 - dated 1-7-2014

Master Circular on Establishment of Liaison / Branch /Project Offices in India by Foreign Entities

5. 03/2014-15 - dated 1-7-2014

Master Circular on Memorandum of Instructions for Opening and Maintenance of Rupee/ Foreign Currency Vostro Accounts of Non-resident Exchange Houses (As updated on May 20, 2015)

6. 14/2014-15 - dated 1-7-2014

Master Circular on Exports of Goods and Services (Updated upto May 14, 2015)

7. 01/2014-15 - dated 1-7-2014

Master Circular on Money Transfer Service Scheme (As updated on March 25, 2015)

8. 12/2014-15 - dated 1-7-2014

Master Circular on External Commercial Borrowings and Trade Credits (Updated up to June 11, 2015)

9. 06/2014-15 - dated 1-7-2014

Master Circular on Miscellaneous Remittances from India – Facilities for Residents

10. 11/2014-15 - dated 1-7-2014

Master Circular on Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad (Amended up to May 06, 2015)

11. 10/2014-15 - dated 1-7-2014

Master Circular on Memorandum of Instructions governing money changing activities (As updated on March 25, 2015)

Highlights / Catch Notes

Income Tax

• High Court Orders Revision u/s 263 Due to Assessing Officer's Failure to Consider All Evidence on Record.

  Case-Laws - HC : Revision u/s 263 - entire materials on record were not considered by the Assessing Officer - It would have definitely be an erroneous procedure adopted by the AO - HC
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• Settlement Commission Overlooks Key Conditions for Interest Waiver u/s 220(2) of Income Tax Act.

  Case-Laws - HC : Waiver of interest u/s 220(2) - There was total non-application of mind by the Settlement Commission on the crucial issue as to whether the assessee has fulfilled all the three conditions laid therein - HC
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• Court Finds Unexplained Cash Deposits Taxable u/s 68 of Income Tax Act; Assessee's Claims Dismissed.

  Case-Laws - HC : Addition u/s 68 – cash were deposited in the bank account of the assessee - The assertion of the assessee in this regard was that it was the amount received from his clients is not true - HC
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• Court Rules Advance Money as Taxable Income if Repayment Liability Ceases in Books of Accounts.

  Case-Laws - HC : Advance money in books of accounts - accrual of income – the amount found credited in the books of account of the assessee, the liability to pay back the same had ceased to exist - taxable - HC
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• Section 14A: Deduction Rules for Expenses Linked to Excluded Income Explained in Simple Terms.

  Case-Laws - HC : Section 14A is applicable only when any part of the income is not to be included in the total income of the assessee and the expenditure relating to that part of income is claimed by the assessee as deduction - HC
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• Assessment Order Date in Tax Case Not Suspicious Despite 47-Day Period.

  Case-Laws - HC : Effective date of passing assessment order - A period of 47 days’ time is not time long enough which can even make anyone suspicious as regards the correctness of the date of the order - HC
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• High Court rules personal reasons don't justify cash loan repayments, enforcing strict compliance with Section 269T of Income Tax Act.

  Case-Laws - HC : Repayment of certain loans or deposits in cash - Section 269T – explanation of the Assessee was that the loan was repaid in cash as the father of payee was not well and the amount was required for illness is not acceptable - HC
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Customs

• Heat Exchangers and Air Conditioners Not Classified Under Heading 84.19 for Customs; Intended for Domestic Air-Conditioning Use.

  Case-Laws - AT : Heat exchangers and air conditioners - goods can be classified under Heading 84.19 is not acceptable as the same are not for purposes other than air-conditioning machinery used for domestic purposes - AT
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• Import of Used Buoyancy Tanks and Equipment Exempt from Licensing; Not Subject to Customs Confiscation.

  Case-Laws - AT : Import of old and used Buoyancy Tanks along with wire ropes, shackles chain blocks and hydraulic pumps - appellant is not required to obtain any licence - there cannot be confiscation of goods - AT
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Service Tax

• Brand Endorsement Activities Taxable Under Service Tax Section 65 (105) (zzzzq) Since July 1, 2010.

  Case-Laws - AT : Activity of Brand endorsement - appearing in advertisement and promotional events - the services provided by the respondent are covered by Section 65 (105) (zzzzq) which had come into force w.e.f. 01/07/10 only - AT
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• Travel Desk in Hotels Exempt from Service Tax on Rent-a-Cab Services, Rules Clarify Exclusion.

  Case-Laws - AT : Rent a cab service - Applicant stationed travel desk in their hotels and respective travel desk provided Rent a cab service' to their customers - prima facie appellant is not taxable - AT
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• Penalty Imposed Despite Reversal of CENVAT Credit Before SCN; Option to Pay Reduced Penalty with Interest Available.

  Case-Laws - AT : CENVAT Credit - Trading activity - Credit reversed before issuance of SCN - amount of penalty confirmed subject to an option that shall be provided to the appellant, to remit 25% of the penalty together with the specified interest - AT
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Central Excise

• Adjudicating Authority Criticized for Shifting CENVAT Credit Verification to Tribunal, Seen as Unnecessary Burden Transfer.

  Case-Laws - AT : CENVAT Credit - duty paying documents -adjudicating authority has unnecessarily chosen to raise the level of litigation by denying the credit as if it is Tribunal's job to get verification done. - AT
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• Assessee Granted Duty Remission for Inputs Lost in Fire Under Central Excise Regulations.

  Case-Laws - AT : Remission of duty - assessee are entitled for remission of duty on inputs gone in the manufacturing process which has been lost in fire - AT
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• Mandatory Penalty Not Applicable for Unutilized Cenvat Credit on Capital Goods with Depreciation Claim.

  Case-Laws - AT : Capital goods - availing depreciation while availing cenvat credit - Cenvat credit lying in Cenvat credit account unutilized in that situation, mandatory penalty is not imposable. - AT
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• CENVAT Credit on Capital Goods: No Reversal Required if Credit Was Not Initially Taken by Respondent.

  Case-Laws - AT : CENVAT Credit - Capital goods - removal as such - when the respondent has not taken CENVAT credit therefore, they are not required to reverse any credit on these capital goods. - AT
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• 277-Day Delay in Addressing Order Due to Unit Closure; Delay Condoned After Security Guard's Oversight.

  Case-Laws - AT : Condonation of delay - There is a delay of 277 days admittedly that impugned order was received by the Chowkidar but he did not inform the management and the unit was closed - delay condoned - AT
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• CENVAT Credit Approved for Safety Shoes: Recognized as Essential Equipment Under Welfare Legislation.

  Case-Laws - AT : CENVAT Credit - use of safety shoes - Once the indispensable necessity is the requirement of welfare legislation and that is also a Central legislation, object thereof cannot be defeated - Credit allowed - AT
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VAT

• University Prospectus Sales Subject to VAT, Not Classified as "Book" for Tax Exemption Purposes.

  Case-Laws - HC : Demand of tax - Sale of prospectus and application forms by the university - prospectus of the University cannot be treated as “book“ or “book meant for reading“ - held as taxable - HC
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Case Laws:

• Income Tax

• 2014 (7) TMI 57
  Liability to deduct TDS from payment u/s 194C - assessee being merely administrator or acting as transporter - hiring of independent truck owners by the assessee – Freight expenses u/s 40(a)(ia) of the Act – Held that:- The tender for carriage of LPG from IOC Baddi was in the name of the assessee himself and that he had hired the trucks from the aforesaid three persons for the purpose of carrying out the work undertaken by him as a ‘Contractor’ from the IOC, Baddi - While insofar as the transportation work carried out by the said three persons is concerned, the assessee had no liability to provide anything such as the drivers, fuel, accessories etc. rather the truck owners had incurred all the expenses related to the transportation of the LPG and the appellant had made the payment to them not on the basis of individual trips of the trucks but for the entire deal work - The nature of transportation between the assessee and the three persons was self-explanatory as the assessee had himself submitted that the payments were made under an independent contract between him and the truck owners. The freight charges were being paid by the appellant to the three persons in respect of the sub-contract u/s 194C (2) following the assessee’s own contract with IOC, Baddi, it was evident that the assessee was trying to take undue benefit of the amendment brought about in Section 194C (1) w.e.f. 1.6.2007 by taking the plea that the transaction with the three truck owners was in the nature of a contract - the society does not retain any profits - It only retain as nominal amount as “parchi charges” which is used for meeting the administrative expenses of the society - the Society has an independent legal status and is also contractor within the meaning of Section 194C - the members have a separate status but there is no sub-contract between the society and the members - The society is nothing but a collective name for all the members and the contract entered by the society is for the benefit of the constituent members and there is no contract between the society and the members - The provisions of Section 40 (a) (ia) of the Act were applicable not only to the amount which were shown as outstanding on the closing of the relevant previous year, but to the entire expenditure which became liable for payment at any point of time during the year under consideration and which was also paid before the closing of the year – thus, no substantial question of law arises for consideration – Decided against assessee.

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• 2014 (7) TMI 56
  Attachment of personal rental income u/s 226(3) of the Act – Credit for TDS deduction – Held that:- The TDS amount was Rs.2,29,271/- and if credit is given, the tax liability of the assessee would drastically come down - there was no proper response, the assessee made a representation to the revenue - assessee made a detailed representation to give credit to rental income collected from tenants and the TDS payments for Annual year 2008-2009 and 2010-2011 with interest for which credit was not given - Court directed the revenue to consider the representation – Decided in favour of Assessee.

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• 2014 (7) TMI 55
  Stay application allowed in part – Held that:- The appellate authority had not discarded the genuineness of the reasons disclosed by the appellant for not producing the agriculturists before the AO - it has been noted in the order that "certain genuine difficulties" were disclosed and "which will be examined during appeal proceeding" - all the agriculturists have filed their affidavits in support of the transactions and there is some force in the submission of the assessee that the entire burden was not upon the assessee and the AO could have summoned them - where the assessment is unreasonably high pitched, the demand should be stayed during the pendency of the appeal – the assessee shall deposit a sum of Rs.7 lacs towards the demand – Partial stay granted.

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• 2014 (7) TMI 54
  Deletion of penalty u/s 271(1)(c) of the Act – Additions made by AO – Held that:- The assessee has succeeded up to Tribunal, against which the Tax Appeals are admitted - the issues were/ are debatable issue - both the authorities have rightly observed that the assessee had neither concealed the income nor furnished inaccurate particulars of income before the AO for which provision u/s 271(1)(c) was required to be invoked - there was neither concealment of income nor any inaccurate particulars were furnished by the assessee and even otherwise the issues with respect to the addition or disallowances are debatable – Relying upon Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Limited – [2010 (3) TMI 80 - SUPREME COURT] - the orders passed by the Tribunal confirming the order passed by the CIT(A) in deleting the penalty imposed by the AO u/s 271(1)(c) of the Act is not required to be interfered with – Decided against Revenue.

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• 2014 (7) TMI 53
  Deletion of addition of material lost – stock at the year end was taken on actual verification wherein, such variations automatically get accounted for, leaving no scope for further deduction - Held that:- The Tribunal has considered the aspect in detail in its order - there is substance in the contention of the Assessee because the closing stock was not reduced by the quantity of stock - the Tribunal held that the insistence on actual proof considering the nature of the business and the reasonableness of the claim made by the Assessee was improper - No insistence would have been there considering the claim made by the Assessee - the Tribunal found that this is not a case of lack of proof of the loss - thus, no substantial question of law arises for consideration - Decided against Revenue.

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• 2014 (7) TMI 52
  Ex-parte decision of the tribunal in favor of assessee in the absence of assessee - Applicability of Section 56(2)(v) of the Act – Income from other sources - Casual and nonrecurring receipt - Revenue proceeded on the footing that the receipt in this case was taxable as income from other sources under Section 56(1) of the Income Tax Act, 1961. - Held that:- In the absence of any material to indicate that the ground was indeed pressed before the Tribunal – the assessee was not before the Tribunal when the Appeal was decided by the Tribunal - the receipt was casual and nonrecurring was pressed and not considered by the Tribunal, will be unfair to the Assessee – the Court entertains an appeal against an order of the Tribunal on a question termed as a substantial question of law by the Revenue in the absence of any argument or discussion - This course would not be permissible in the given facts and circumstances – thus, no substantial question of law arises for consideration – Decided against Revenue.

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• 2014 (7) TMI 51
  Additions made in respect of OTS collection and revenue recovery collection - Accrual of income - Tribunal remanded the matter for re adjudication - Assessee contended that the issue is covered in their favor by virtue of the decision in Harayana Financial Corporation [2011 (7) TMI 693 - Punjab and Haryana High Court] - Held that:- Actually the Tribunal has not rendered finding in view of non-availability of materials before it and the assessing authority has been directed to re do the matter – thus, there was no reason to consider the matter - when the matter is re-done pursuant to the remand, the authority will also consider the decision in CIT v. Harayana Financial Corporation [2011 (7) TMI 693 - Punjab and Haryana High Court].

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• 2014 (7) TMI 50
  Revision u/s 263 - Validity of show cause notice u/s 263 - an order erroneous and prejudicial to revenue – Allowability of deduction on expenses far in excess of the income received - the contention of the assessee that assessment order was passed after consultation with the CIT - Held that:- there is nothing on record to show that order has been passed after consultation with the Commissioner, who has passed the impugned orders nor is it pleaded that there is any such office procedure available - Decided against the assessee. Next contention of the assessee is that, revision under Section 263 could be made only if there is a legal infirmity in the order. - Held that:- The issues specifically dealt with in the impugned notices are not seen discussed by the Assessing Officer, except the expenditure for foreign travel. This is a case where the entire materials on record were not considered by the Assessing Officer. The Commissioner had taken into account the information available to the Department, as revealed from the records called for under Section 263, and found many transactions to have been omitted to be considered by the Assessing Officer. - contentions of the assessee rejected - Decided against the assessee. It would have definitely be an erroneous procedure adopted by the AO, wherein the entire materials available to the Department had not been taken into account, resulting in prejudice to the interests of the revenue – Commissioner has not attempted a substitution of his opinion to that of the AO, but has taken cognizance of the 'lack of enquiry' with respect to certain transactions as distinguished from 'insufficient enquiry'- this reveals clear non-application of mind by the AO – Relying upon [M/s. Appollo Tyres Ltd. Versus The Deputy Commissioner of Income Tax 2013 (10) TMI 1233 - KERALA HIGH COURT] - no interference can be made at the stage of show cause notice - assessee would have their remedies before the CIT, who shall definitely consider the objections placed before him and pass reasoned orders as is mandated u/s 263 - With respect to the power of the Commissioner u/s 263 to issue a show cause notice in the nature of the orders in the writ petitions, it was perfectly proper and legal and within the powers of the Commissioner u/s 263 of the Act – thus, invocation of extra-ordinary powers u/s 226 is declined – Decided against Assessee.

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• 2014 (7) TMI 49
  Waiver of interest u/s 220(2) of the Act – Interest before the date of filing of application before settlement commission u/s 245(1) of the Act - Whether the Settlement Commission was justified in granting waiver of interest levied on the assessee u/s 220(2) of the Act without considering as to whether the assessee fulfilled all the three conditions laid down u/s 220(2A) of the Act and recording reasons as to how the assessee is entitled for such waiver of interest - Held that:- There was total non-application of mind by the Settlement Commission on the crucial issue as to whether the assessee has fulfilled all the three conditions laid down under Clauses (i), (ii) and (iii) of Sub-section (2A) of Section 220 of the Act. No reasons have been recorded in the order on the entitlement of the assessee for such waiver of interest levied u/s 220(2) of the act – section 220(2) of the Act restricts the power of the Settlement Commission to reduce or waive the amount of interest paid or payable by an assessee only if such authority is satisfied that the assessee has fulfilled all the three conditions laid down u/s 220(2A) of the Act - the Settlement Commission has to exercise its discretion judicially and satisfy that the three conditions laid down under Clauses (i), (ii) and (iii) of Sub-section (2A) of Section 220 of the Act have been fulfilled, before passing an order waiving interest - Still further, such an application has to be decided by a speaking order – Relying upon Kishan Lal Versus Union of India And Others (And Other Petitions) [1998 (1) TMI 1 - SUPREME Court] –revenue is directed to consider the application filed by the second respondent u/s 220(2A) of the Act, with regard to waiver of interest levied u/s 220(2) of the Act - thus, the order of the settlement commission is set aside – Decided in favour of Revenue.

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• 2014 (7) TMI 48
  Deletion of unexplained investment – Held that:- The Tribunal had remitted to the AO - It is clarified that telescoping can only be done to the extent there is direct nexus of receipt of amount on account of sale of shares which has been invested in the purchase of shares during the period from 1.4.2002 to 31.3.2003 and 1.4.2003 to 31.3.2004 - for the AY 2003-04 and 2004-05, benefit of telescoping shall only be allowed by the AO after recording a finding that there is direct nexus resulting from sale of shares and investment in shares made by the assessee. Deletion of surrender during survey u/s 133A of the Act – Held that:- Tribunal noticed that the assessee had surrendered a sum of Rs.15 lacs, the credit of which was allowed to him - once the assessee had surrendered the amount, necessary credit could not be denied to him - It could not be shown that the approach of the Tribunal was erroneous in any manner - thus, no interference is called for in the findings recorded by the Tribunal – Decided against Revenue.

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• 2014 (7) TMI 47
  Initiation of proceedings u/s 147/148 of the Act - Addition u/s 68 of the Act – Non-speaking order – Peak credit - cash were deposited in the bank account of the assessee - The assertion of the assessee in this regard was that it was the amount received from his clients. - Held that:- Various amounts in cash were deposited in the bank account of the assessee and the onus was upon the assessee to explain the nature and source of the cash deposits - The assertion of the assessee was that it was the amount received from his clients - the assessee failed to give the list of such persons along with confirmation in respect of the cash credits nor any of the persons were produced for examination, who had advanced the cash to him, before the AO - assessee also failed to bring on record any evidence to prove that it was the amount received from persons who were his clients. The Tribunal had also noticed that inspite of opportunity having been provided to the assessee, there was no justification to allow the further opportunity to produce the persons - Tribunal had rightly held that there were cash deposits in the bank account and thereafter cheques were issued to different parties and in such circumstances, the theory of peak credit could not be accepted - assessee had not been able to show that there existed any nexus whereby the amount deposited in cash had been withdrawn in cash and thereafter re-deposited to take benefit under peak credit theory – thus, no substantial question of law arises for consideration – Decided against Assessee.

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• 2014 (7) TMI 46
  Advance money in books of accounts - accrual of income – Held that:- Tribunal rightly held that if an amount is received in the course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character, when the amount becomes the assessee’s own money because of limitation or by any other statutory or contractual right - When such a thing happens, the commonsense demands that the amount should be treated as income of the assessee - the amount was assessable as income of the assessee under the head ‘income from business’ and not as unexplained credits u/s 68 of the Act. The entries which had been shown in the books of account of the assessee were not treated to be income u/s 41(1) or 68 of the Act – Relying upon Commissioner of Income-Tax Versus TV Sundaram Iyengar And Sons Limited [1996 (9) TMI 1 - SUPREME Court] - where the amount which was initially of capital nature but had changed its character to be of revenue nature, it was treated to be taxable income of the assessee - the amount found credited in the books of account of the assessee, the liability to pay back the same had ceased to exist - the Tribunal had rightly treated it to be assessee's taxable income – as such no substantial question of law arises for consideration – Decided against assessee.

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• 2014 (7) TMI 45
  Availability of alternate remedy - Opportunity of being heard - Whether high court was justified in interfering with the order passed by the assessing authority u/s 148 of the Act in exercise of its jurisdiction under Article 226 of the Constitution of India when equal efficacious alternative remedy was available to the assessee under the Act – Held that:- The assessee had submitted a submission note, the same has not been considered by the respondent with reference to the survey conducted u/s 133 of the Act nor he has referred to the documents produced by the assessee - the assessee has produced information about the filing of returns by the recipient of the amount from the Society and thus, assessee rightly opposed action - if returns has been filed by the recipient and he has computed tax liability and/or has paid the tax, the payer referred to u/s 201 of the Act is not liable for payment of tax or to deduct TDS - These are all factual issues and there is no reason why the respondent-Officer should hesitate or shy from enquiring into this issue - When the Statute creates liability, there has to be a fact finding on the issue - Though the assessee has not produced the certificate from the accountant with respect to the income of the recipient, it is hard to accept that benefit of the provision will not be available to the assessee - there has to be a realistic assessment of the fact situation and in that any material information regarding filing of returns/ payment of tax by recipient furnished by the petitioner should receive consideration. The officer should have examined the truth or otherwise of the statement made by the petitioner that the recipient of the amount had filed its returns for tax assessment - Had the assessee been given an opportunity of personal hearing as sought for, a realistic assessment could have been done – the order of assessment has no reference to the information furnished by the assessee regarding filing of returns by the recipient of the amount nor does it contend any opinion as to why such statement of the assessee was not considered. The order passed by the authority is an order without granting due opportunity to the assessee which has resulted in treating the assessee as assessee in default - the assessee has been saddled with not only the tax liability but even penalty - The officer has also proceeded in haste to resort to coercive steps to freeze the bank account to paralyze its function - The manner in which proceedings are initiated and culminated by the impugned order and demand notice, speaks of arbitrariness and no judicious approach - as the main ground in the order is passed without giving any opportunity to the assessee, the order is seriously impacted – the AO is directed to commence fresh proceedings after giving due opportunity to the assessee - Decided in favour of assessee.

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• 2014 (7) TMI 44
  Allowability of deduction u/s 14A of the Act – Interest liability out of other income – Held that:- Unless and until, there is receipt of exempted income for the concerned AYs (dividend from shares) - Section 14A of the Act cannot be invoked - revenue has not dispelled the findings of the CIT(A), nor the statement of the assessee before AO that assessee is not in receipt of any dividend income - the AO has erred in invoking Section 14A of the Act, to disallow various interest payments on capital account, security deposits and unsecured loans – Relying upon Joint Commissioner of Income Tax v. Holland Equipment Co. B.V. [2005 (4) TMI 514 - ITAT MUMBAI] - Section 14A is applicable only when any part of the income is not to be included in the total income of the assessee and the expenditure relating to that part of income is claimed by the assessee as deduction - In such cases only, the expenditure relating to the exempted income can be disallowed and not otherwise - the entire income is found to be taxable, no disallowance can be made u/s 14A of the Act – Decided against Revenue.

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• 2014 (7) TMI 43
  Validity of reopening of notice u/s 148 of the Act - Mere change of opinion – Held that:- The notice issued u/s 148 of the Act is beyond the period of four years from the end of relevant AY - The reasons recorded do not indicate anywhere that the income for the relevant AY has escaped assessment on account of assessee not having disclosed any material fully and truly - The reasons does speak of the Form No. 10 submitted by the assessee not having reflected the setting apart of a sum of Rs. 93.20 lakhs for any specific purpose - When the reasons themselves do not indicate anywhere that the assessee had not truly and fully disclosed all material facts now has any material brought to reveal non-disclosure - for the subsequent year, the notice for reopening was within the period of four years and yet on examination of the fact - it was a mere change of opinion on the part of the AO who previously framed assessment on scrutiny and the notice came to be quashed – the assumption of jurisdiction on the part of the AO itself is not sustainable – Decided in favour of Assessee.

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• 2014 (7) TMI 42
  Effective date of passing assessment order - Bar of limitation – Demand Notice served after 47 of expiry of limitation alognwith the copy of order - Whether the order dated 31st December, 2008 could be said to have been passed on 31st December, 2008 when the demand notice together with a copy of the order was served after 47 days – Held that:- The appellate authority cannot be expected to dispose of an appeal without looking into the assessment records - Had the appellate authority relied upon any independent enquiry or the result of any such enquiry, then it would have been incumbent upon the appellate authority to inform the assessee about the result of such enquiry so as to afford an opportunity to the assessee to make his submission with regard thereto - An appellate court cannot be prevented from perusing the lower court records - It is a strange submission to make that the lower court records could not have been perused without giving an opportunity to the assessee - Tribunal was not taking evidence of the matter as a Court at the first instance would do. A period of 47 days’ time is not time long enough which can even make anyone suspicious as regards the correctness of the date of the order - the presumption arising out of clause (e) of Section 114 proves the fact that the order was passed on 31st December, 2008 - The same presumption once again would apply to the order dated 13th November, 2009 passed by the CIT (A) - There is no reason to even entertain any doubt as regards the existence of the file including the order dated 31st December, 2008 - There is equally no reason to doubt that the assessment order was passed on 31st December, 2008 – thus, the order of the Tribunal is set aside – Decided in favour of revenue.

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• 2014 (7) TMI 41
  Ascertainment of date of deposits - Late payment of PF and ESIC on employee’s contribution – Held that:- Neither in the order of AO nor in the order of CIT(A) the dates of deposit have been mentioned - there was delay in making the deposit but on what exact dates month-wise deposits have been made, was not noted by the Revenue Authorities – thus, the matter is liable to be remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (7) TMI 40
  Computation of income received from technical services – Grant of refund declined - Held that:- When the Court in its order dated 5 May 2010 specifically directed the revenue to pass fresh assessment orders excluding the income received by Davy for providing technical services to Petitioner pursuant to BEAT agreement, the revenue is duty bound to comply with the direction - There appears to be substance in the grievance made by the assessee that notice was sent to the address of Chartered Accountant of Davy which has been closed down - the notice on Davy would never be served - the assessee has made out a case for grant of interim relief – thus, the ITO is directed to pass a fresh order for the A.Ys. 1990-91 and 1991-92 after excluding the income received by Davy as fees for providing technical services – Decided in favour of Assessee.

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• 2014 (7) TMI 39
  Requirement of replacement of vakalatnama – Counsel designated as senior advocate - Held that:- Even if the department expects Mr. Gupta to argue the cases as a Senior Advocate and on the part of the revenue the least that is expected is that he is instructed by an Advocate on record - The main proceedings are handled by an Advocate duly engaged to act, appear and plead for the revenue - That has not been done in most of the Appeals which have been filed with vakalatnama of Mr.Gupta – the revenue is directed to take care and not to cause embarrassment to Mr. Gupta.

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• 2014 (7) TMI 38
  Applicability of section 269T of the Act - Mode of repayment of certain loans or deposits – Held that:- CIT(A) as well as the Tribunal found that the explanation of the Assessee was that the loan was repaid in cash as the father of Amrutpal Singh Sandhu was not well and the amount was required for illness - This explanation was found to be lacking in bona fides - the loan has been repaid in cash and which loan is to the extent indicated in Section 269T – The object and purpose of section 269T is to encourage the loans being repaid and of huge amounts by account payee cheque or by bank draft - thus, no substantial question of law arises for consideration – Decided against Assessee.

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• Customs

• 2014 (7) TMI 61
  Classification of goods - Heat exchangers and air conditioners - Classification claimed by the appellants in respect of these items under Heading 8419.50 whereas Revenue contends it in falling under Heading 8415.90 - Held that:- under the sub-heading 84.19 only those machinery which are other than machinery or plant of a kind used for domestic purposes are included - heat exchanger unit covered under sub-heading 8419.50 can only include a heat exchanger unit which is not used for domestic purposes - goods can be classified under Heading 84.19 is not acceptable as the same are not for purposes other than air-conditioning machinery used for domestic purposes - appellants have described the goods differently as heat exchangers to claim assessment under Heading 8419.50 at a lower rate which is not permissible - Following decision of assessee's own case in [2012 (9) TMI 783 - CESTAT, CHENNAI] - Decided against assessee.

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• 2014 (7) TMI 60
  Import of old and used Buoyancy Tanks along with wire ropes, shackles chain blocks and hydraulic pumps for the purpose of laying off-shore pipeline at various projects sites - Violation of Foreign Trade Policy 2004-09 - Confiscation of goods - Redemption fine - Penalty - Held that:- Appellant has imported old and used Buoyancy Tanks along with wire ropes, shackles chain blocks and hydraulic pumps. In fact, these imported goods are being used by the appellant for laying off-shore pipeline which means these goods are capital goods imported for rendering the service. As per para 2.17 of the Foreign Trade Policy 2004-09, the old and used goods can be imported freely without obtaining any specific licence. Therefore, I hold that the appellant is not required to obtain any licence for importation of the impugned goods. Hence, the question of confiscation of the said goods does not arise and consequently, the redemption fine and penalty are also not imposable. - decided in favour of assessee.

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• Corporate Laws

• 2014 (7) TMI 59
  Application under Section 117C - Debenture redemption reserve - Company's liability to create such reserve - Option to convert debentures - Held that:- the provisions of Section 117C(4) are applicable to all debentures whether issued prior or after the introduction of the Amendment Act, 2000, i.e., 13.12.2000 and pending redemption - provisions of Section 117C(4) being analogous to Section 58A(9) and 45QA(2) are beneficial provisions intended to protect the interest of debentureholders. Such a provision, in my view, should be exercised in favour of aggrieved investors. The above view taken by CLB cannot be lost sight of and the interest of the aggrieved debentureholders deserves to be protected by invoking the provisions of Section 117C(4) of the Act. Respondent company is hel-bent on refusing the right of the applicants to get relief under Section 117C of the Act on frivolous grounds either by resorting to limitation act or faulty application affirmed by one of the applicants or non-eligibility of the application for redemption of impugned debentures under the provisions of Section 117C of the Act. - application filed by the applicants under section 117C of the Act is considered to be maintainable and according the respondent company is hereby directed to redeem the debentures covered by this application by payment of the principal amount and interest due thereon as per the terms and and conditions of issue of such debentures within 3(three) months of issue of such order - Decided in favour of appellant.

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• Service Tax

• 2014 (7) TMI 78
  Classification of service - activity of Brand endorsement - appearing in advertisement and promotional events - assessee is business entity or not - whether the activity of the respondent is Business Auxiliary Service covered by Section 65 (105) (zzb) readwith Section 65 (19) or is the service of brand promotion covered by Section 65 (105) (zzzzq) - Held that:- notwithstanding the language of the respondent’s contracts with her clients that she was to provide the services of endorsement/promotion of the clients services and products, ongoing through the details of the activities through which the service of endorsement/promotion of the client’s product/services is to be provided, it is clear that the overall objective of these agreements is the brand promotion and not mere promotion or marketing of a particular product or service. Therefore, we hold that the services provided by the respondent are covered by Section 65 (105) (zzzzq) which had come into force w.e.f. 01/07/10 and, hence, during the period prior to 01/07/10 the respondent’s activity in terms of her contracts mentioned above could not be taxable under Section 65 (105) (zzb), as, as held by Tribunal in the case of Jetlite (India) Ltd. vs. CCE, New Delhi (2010 (12) TMI 40 - CESTAT, NEW DELHI), Gujarat State Petronet Ltd. vs. CST, Ahmedabad (2010 (8) TMI 220 - CESTAT, AHMEDABAD ) and Triveni Earthmovers Pvt. Ltd. vs. CCE, Salem (2009 (4) TMI 9 - CESTAT CHENNAI), an activity is not liable to service tax under a pre-existing category when that activity had been brought under tax net from a certain date. - Decided against Revenue.

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• 2014 (7) TMI 77
  Waiver of pre deposit of Service Tax - Rent a cab service - Applicant stationed travel desk in their hotels and respective travel desk provided Rent a cab service' to their customers - In turn the said travel desk has raised bill either in favour of the applicant - Held that:- Applicant are not providing the 'rent a cab services', but the same were provided by one M/s. International Travel House Ltd., who has been stationed in the premises of the Applicant. The said travel house renders the services and the consideration was either directly billed or charged to the Applicant, who in turn, recovers the said charges from the respective customers. We find that the Ld. Commissioner has not accepted their plea solely on the ground that the Applicant could not place evidences of payment of Service Tax by the said travel desk. At this stage we do not find any justification to ask the Applicant to deposit the Service Tax amount which according to them had already suffered Service Tax in the hands of M/s. International Travel House Ltd., as the invoices raised by the said travel house refers to the Service Tax Registration Number mentioned therein - prima facie case is in favor of assessee - Stay granted.

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• 2014 (7) TMI 76
  Disallowance of CENVAT Credit - Trading activity - Credit reversed before issuance of SCN - Thereafter assessee did not respond to SCN and not attended hearing - Ex parte order passed - Imposition of penalty and interest - Held that:- From the judgment in Bill Forge Pvt. Limited [2011 (4) TMI 969 - KARNATAKA HIGH COURT], it is clear that liability to interest under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 would arise only on that amount of cenvat credit, both debited in assessee’s books of accounts and utilised (taken) for remittance of the assessee s tax liability. There is no discussion in the adjudication order on this aspect of the matter. We, therefore, remit the matter to the respondent -Adjudication Authority for computation of the amount of interest liability, on the basis of the actual amount of cenvat credit utilised for discharging its service tax liability on the taxable services provided, by the assessee. Adjudication orders are sustained to the extent of the asssessed demand of cenvat credit and appropriation of the irregularly availed credit reversed by the assessee. The amount of penalty is also confirmed subject to an option that shall be provided to the appellant, to remit 25% of the penalty together with the specified interest, within thirty days from the date an order is passed by the Respondent determining the interest liability afresh, under Rule 14 of the Cenvat credit Rules read with Section 75 of the Finance Act, 1994, and the order is communicated to the appellant. This option shall be provided by the adjudication Authority in the order to be passed, pursuant to this remand - Decided partly in favour of assessee.

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• 2014 (7) TMI 75
  Waiver of pre-deposit of Service Tax - appreciation of evidences - demand of service tax on the basis of figure shown as other income in the profit and loss account - difference with ST-3 return - demand on GTA Service - Held that:- It is the claim of the department that the Applicant though pleaded before the adjudicating authority that they were carrying out the activity of sale of LPG, as well as rendering the services of bottling of LPG for M/s.HPCL, but could not establish the same through evidences. On the other hand, it is the grievance of the Appellant that the ‘sales’ and ‘other income’ figures are self-explanatory, as mentioned in the respective Balance sheet and though they could place the VAT payment challans, VAT Audit Report but due to internal family dispute, could not produce the VAT Returns filed with State VAT department and other corroborative evidences, in support of sale of LPG. We find that the case relates to scrutiny of evidences, in arriving at a conclusion that the Appellant are rendering services of bottling LPG as well as carrying out the activity of sales of LPG. Appellant even though produced VAT audit report etc., but other documents like VAT returns, sales and purchase of LPG etc., could not be produced before the Ld.Commissioner to establish sale of LPG because of internal disputes in the management of factory. Similarly, in the case of Service Tax liability on GTA Service, we find that the documents indicating the claim of payment of Service Tax by GTA service provider had not been verified/scrutinized by the adjudicating authority. In these circumstances, we are of the view that the Appellant be given an opportunity to place all necessary evidences in support of their claim that they were carrying out the activity of sales as well as rendering services to M/s.HPCL and also the claim of payment of Service Tax on GTA service by the respective GTA service provider. In the result the impugned order is set aside and the matter is remitted to the Ld. adjudicating authority to decide all the issues afresh - Decided in favour of assessee.

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• 2014 (7) TMI 74
  Import of services - reverse charge - Appellant claimed that the service tax demanded against them under the Head, ‘Intellectual Property Service’, had already been discharged under the Head, ‘Scientific and Consultancy Services’ - Held that:- After going through the Certificate of the Chartered Accountants dated 23.01.2014 placed before us, apparently we find that the Applicant had discharged the service tax involved in the present case, under the category, ‘Scientific and Consultancy Services’, for which the show cause notice was issued to them under the category, ‘Intellectual Property Services’, as is evident from the Annexure to the said show cause notice - Matter remanded back - Decided in favour of assessee.

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• Central Excise

• 2014 (7) TMI 71
  Valuation of goods - Determination of assessable value of free issue materials - Held that:- value of the free issue materials were not furnished by the appellant, therefore, its value had been determined on the basis of comparable prices of other units. In our opinion, since the issue involved is of Valuation of goods and debatable, hence, needs to be addressed by the Ld. Commr. (Appeals); at this stage, the offer made by the Ld. Consultant for the appellant seems to be reasonable, keeping in view the financial hardship expressed by the Ld. Consultant. - Matter remanded back - Decided conditionally in favour of assessee.

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• 2014 (7) TMI 70
  CENVAT Credit - duty paying documents - Whether the appellant is entitled to the credit availed on the ground that the registration number of the service provider was not indicated on the invoices. - Held that:- It is the fact on record that during the adjudication proceedings, the appellant had provided to the department, the registration number of the service providers. Therefore, the adjudicating authority could have easily verified whether these service providers were registered with the department at the relevant time and whether they had discharged the service tax liability in accordance with the law. He has unnecessarily chosen to raise the level of litigation by denying the credit as if it is Tribunal's job to get verification done. In these circumstances, we are of the view that the matter has to be remanded back to the adjudicating authority for verification of the registration numbers declared by the appellant in respect of the service providers and also for verifying whether the service tax indicated in the invoices was paid to the exchequer or not - Matter remanded back - Decided in favour of assessee.

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• 2014 (7) TMI 69
  Remission of duty - Loss due to fire which was caused due to short circuit - loss of inputs which has been used in manufacturing process - remission denied due to insurance claim - Held that:- Considering the fact that the initial refund claim was filed without documents, and same was returned on account of deficiency in documents. Later on after obtaining the insurance claim from the insurance company, the respondent filed claim of remission of duty with supporting documents and to know how much amount of duty is required to be remitted. In these circumstances, the Commissioner has rightly entertained the claim of remission of duty and same shall not amount to review of his own order. Therefore, the ground that Commissioner has no power to review his own order is not sustainable. Further, I find that this Tribunal in Urmi Chemicals vs. CCE [2014 (6) TMI 785 - CESTAT MUMBAI] has held that if inputs has gone in the manufacturing process which has been lost in fire/flood are entitled for remission of duty. Therefore, I hold that the Commissioner has not committed any error in holding that the respondent are entitled for remission of duty on inputs gone in the manufacturing process which has been lost in fire - Decided against Revenue.

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• 2014 (7) TMI 68
  CENVAT Credit - Capital goods - availing depreciation while availing cenvat credit - Cenvat credit account unutilized - interest and equivalent amount of penalty - Held that:- As demand of duty and interest has not been disputed, demand of duty and interest are confirmed. With regard to the penalty as held by the Tribunal in Indian Leaf Springs Mfg. Co. (2013 (7) TMI 337 - CESTAT BANGALORE) wherein it was held that if Cenvat credit is taken and simultaneously depreciation is also claimed for income tax purposes, further the Cenvat credit lying in Cenvat credit account unutilized in that situation, mandatory penalty is not imposable. Therefore, following the decision of this Tribunal, I set aside the imposition of penalty in both cases against the appellants. - Decided in favour of assessee.

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• 2014 (7) TMI 67
  CENVAT Credit - Capital goods - removal as such - reversal of credit - Held that:- It is an admitted fact that at the time of procurement of capital goods the respondent has not taken the CENVAT credit at all. Therefore, as per the Rule 3(5) of CENVAT Credit Rules, 2004 an assessee is required to reverse the CENVAT credit taken on clearance of the input/capital goods "as such". Admittedly, in this case when the respondent has not taken CENVAT credit therefore, they are not required to reverse any credit on these capital goods. In this set of facts, issuance of show-cause notice was not required at all. Therefore, all the proceedings initiated in the show-cause notice are set aside. In these circumstances, I do not find any infirmity with the impugned order and the same is upheld - Decided against Revenue.

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• 2014 (7) TMI 66
  Denial of refund claim - Bar of limitation - Held that:- The fact is that the learned Commissioner (Appeals) has settled the issue only on 18.08.2004 as the demand is not maintainable against the respondent. In these circumstances, the relevant date for filing the refund claim is from 18.8.2004 and not prior to that. Therefore, it cannot be said that the refund claim is barred by limitation. Further, the amount paid by the respondent during the course of investigation is not a duty. When no duty has been paid, therefore bar of unjust enrichment is not applicable. In these circumstances, I do not find any infirmity with the impugned order and the same is upheld - Decided against Revenue.

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• 2014 (7) TMI 65
  Power of CESTAT to rectify / review its own order - Reversal of the Cenvat credit - whether after passing final order by Tribunal against appeal of the appellant on the self-same issue Tribunal can say that there is pending of dispute since entertaining the appeal against above rejection order shall amount to review of the appeal decision of past - Held that:- It is settled law that after Tribunal passes order it becomes functus officio and it does not have power to review its order in absence of statutory mandate in that regard. Therefore entertaining the present appeal shall result in review in disguise of the appeal decision made in the appeal already disposed as stated aforesaid. Pendency of the dispute is not possible to be appreciated in absence of pendency of remedy before higher court against Final Order dated 2-2-2010 passed by Tribunal. The appellant appears to have misconceived that its dispute is pending when it has not approached the higher court against the final order of the Tribunal - Decided against assessee.

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• 2014 (7) TMI 64
  Condonation of delay - Held that:- There is a delay of 277 days admittedly that impugned order was received by the Chowkidar but he did not inform the management and the unit was closed - as per the provisions of Section 35B of the Central Excise Act the Tribunal can condone the delay on showing the sufficient cause for not filing the appeal within the normal period of limitation. The Hon’ble Supreme Court in the case of Perumon Bhagvathy Devaswom v. Bhargavi Amma reported in 2008 (8) SCC 321 held that the words “sufficient cause for not making the application within the period of limitation” should be understood and applied in a reasonable, pragmatic, practical and liberal manner, depending upon the facts and circumstances of the case, and the type of case. The words ‘sufficient cause’ in Section 5 of Limitation Act should receive a liberal construction so as to advance substantial justice, when the delay is not on account of any dilatory tactics, want of bona fides, deliberate inaction or negligence on the part of the appellant” - delay condoned subject to cost of Rs. 1 lakh.

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• 2014 (7) TMI 63
  Waiver of pre deposit - 100% EOU - valuation - clearance of goods and scrap to sister unit in DTA - benefit of Notification No. 23/2003-C.E., dated 31-3-2003 - Held that:- applicants are not taking in consideration the Selling and Distribution Expenses, and fixed overhead expenses, while arriving at the assessable value of goods. - further, applicant cleared scrap to DTA for availing benefit of Notification No. 23/2003-C.E., dated 31-3-2003, Prima facie we find merit in the contention by the Revenue that applicant had not fulfilled the condition of the benefit of notification. In view of these circumstances, we find that applicant had failed to make out a case for total waiver of duty. - stay granted partly.

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• 2014 (7) TMI 62
  CENVAT Credit - credit of duty paid of safety shoes - safety shoes worn by the workers in iron & steel factory - nexus with manufacture - Held that:- The only reason for disallowance is that safety shoes are not used in the manufacture. No doubt it is not a capital goods but without shoes being worn by the workers carrying out manufacture activity is difficult. Therefore, use of such shoes is indispensable necessity for iron & steel factory where workers move on hot plates. Ensuring health of workers is mandate of Section 7A(2)(c) of the Factories Act, 1948. Once the indispensable necessity is the requirement of welfare legislation and that is also a Central legislation, object thereof cannot be defeated. Such a spirit was also conveyed by Hon’ble High Court of Bombay in the case of CCE, Nagpur v. Ultratech Cement Ltd. - [2010 (10) TMI 13 - BOMBAY HIGH COURT] and Hero Motorcorp Ltd. v. CCE - [2013 (3) TMI 343 - CESTAT NEW DELHI] - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2014 (7) TMI 73
  Imposition of tax - Reopening of assessment - Taxability of mobil oil - taxability at the point of sale to the consumer - The case of the appellant, who was the dealer, is that it purchased burnt mobil oil and refined the same mobil oil, but the assessing authority levied tax on the said burnt mobil oil under section 3AAAA of the Act treating the said oil as "old, discarded and unserviceable store". - The Tribunal came to a finding that the refined mobil oil is manufactured by the dealer from burnt mobil oil, therefore, item is taxable at the point of manufacturer and is not liable to be taxed at the point of sale to the consumer under section 3AAAA of the Act - High court decided the case against assessee - Held that:- unless the High Court, as a revisional authority, finds that those factual conclusions by both the appellate authorities are perverse, it cannot overturn the same by relying on a judgment which is factually distinguishable. In the judgment on which the High Court relied, there is no finding by the Tribunal, the last fact-finding authority, on the nature of the goods, which was the subject-matter of the disputed transaction. Therefore, there is substantial factual difference between the present case and the case on which the High Court relied while dealing with the revision proceedings before it. High Court was not correct in relying on a decision, which is factually distinguishable - Matter remanded back to high court - Decided in favour of assessee.

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• 2014 (7) TMI 72
  Demand of tax - Sale of prospectus and application forms by the university - whether sale of Sale of prospectus is amount to sale of books - Imposition of interest and penalty - Held that:- Registration certificate is not meant for carrying on business in buying or selling of any particular commodity or goods, but it is general in nature. - once having registered as a dealer under Section 22 of the Act the total turnover would mean aggregate turnover in all goods of a dealer at a place of business in the State, whether or not the whole or any portion of such turnover is liable to tax. The University cannot conveniently take a stand that they were registered as dealer and certificate issued by the concerned authority was only for the sale of medicines and equipments in the hospital and not for the sale of prospectus and application forms. Collection towards sale of prospectus and application forms during particular months was more than one crore. It is not the case of the University that they sale or sold the prospectus and application forms at cost. The price, as contended by learned counsel for the University, of the prospectus during the relevant period was ranging from Rs. 350-Rs.500. We have perused the prospectus for the relevant period, which, in our opinion, was on the higher side. Therefore, it cannot be stated that there was no profit motive as claimed by the University. Merely because, the University was established for imparting education does not mean that it is not indulging in the business so as to make profit out of the sale of prospectus and application forms. Their intention to make profit is clear from the facts and figures placed on record. Having regard to meaning of the word "prospectus", we have no doubt that the prospectus of the University cannot be treated as "book" or "book meant for reading". It is a printed document which could be called a brochure or a catalogue or a printed document detailing the courses, facilities etc. of their colleges. In any case, it cannot be treated as a book meant for reading as is known in common parlance. The prospectus of the University cannot be treated even as periodical or journal. sale of prospectus and application forms would fall under Entry 71 of the Third Schedule. - Decided against assessee.

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• Indian Laws

• 2014 (7) TMI 58
  Transfer of Commercial Tax Officer - Order of transfer is challenged mainly on the ground that the same is passed against the petitioner, even before completion of two years of mandatory assessment service as required for promotion to the post of Assistant Commissioner of Commercial Taxes - Held that:- petitioner has already put in nearly one year and 10 months of service in Musiri circle in the assessment field as Commercial Tax Officer, no prejudice would be caused to the Department if he is permitted to continue in the same field to complete the mandatory assessment of two years of service - The petitioner has also given an undertaking that he will go to Pudukottai after completion of his two years service period. Therefore, by recording the said undertaking, the respondents are directed to keep the impugned order of transfer dated 30.05.2014 passed against the petitioner in abeyance till the completion of two years period by the petitioner as Commercial Tax Officer in the assessment Circle. Consequently, the respondents are directed to post the petitioner at Jeyankondam circle as Commercial Tax Officer (Assessment circle) within a period of seven days from the date of receipt of a copy of this order - Decided in favour of petitioner.

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