TMI Tax Updates - e-Newsletter
July 4, 2013

Case Laws in this Newsletter:

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

Articles

1. SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF NON-CONVERTIBLE REDEEMABLE PREFERENCE SHARES) REGULATIONS, 2013

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

2. RBI Board meets in Chennai

3. E M S Natchiappan Calls on Prime Minister

4. India Mauritius Co-Host Ior-Arc Economic and Business Conference in Port Louis Region Vital for India's Economic Plans: Anand Sharma

5. RBI Reference Rate for US $ and Euro

Notifications

Customs

1. 15/2013 - dated 3-7-2013 - ADD

Seeks to levy anti-dumping duty imposed on imports of ‘Poly Vinyl Chloride Resin, originating in, or exported from, European Union

2. 14/2013 - dated 3-7-2013 - ADD

Seeks to impose anti-dumping duty on imports of ‘Acetone’, exported from M/s Chang Chun Plastics Co Ltd, Chinese Taipei and were subjected to provisional assessment by order vide notification No. 44/2011-Customs, dated the 27th May, 2011

3. 70/2013 - dated 4-7-2013 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 5th July 2013

DGFT

4. 26 (RE-2013)/2009-2014 - dated 3-7-2013 - FTP

Amendment of Category 3D001 of SCOMET List

5. 25 (RE-2013)/ 2009-2014 - dated 3-7-2013 - FTP

Amendment in Para 4A.2.1 and 4A.2.2 of FTP

Circulars / Instructions / Orders

Income Tax

1. HRD/CM/102/3/2009-10/(Pt)/1102 - dated 2-7-2013

Implementation of the approved Restructuring of the Income Tax Department

Central Excise

2. 971/05/2013-CX - dated 29-5-2013

Regarding writing off of arrears of Central Excise duty, Customs duty and Service Tax - Constitution of Committees to advise the authority for writing off of arrears

Highlights / Catch Notes

Income Tax

• High Court Upholds Settlement Commission Proceedings as Valid; Revenue Issues Remain Open for Future Consideration.

  Case-Laws - HC : Validity of proceedings before Settlement commission - All the conclusions made by the Settlement Commission up till now are only prima facie conclusions and do not foreclose the issues raised by the Revenue - No interference - HC
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• High Court Jurisdiction in Tax Matters Tied to Assessing Officer's Location, Not ITAT's.

  Case-Laws - HC : Jurisdiction of court - Jurisdiction of the High Court is determined by the situs of the Assessing Officer and not by the situs of ITAT - HC
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• Penalty Confirmed u/s 271(1)(c) Despite Acceptance of Revised Returns Due to Initial Non-Disclosure of Income.

  Case-Laws - HC : Penalty u/s 271(1)(c) - The fact that the assessee had filed revised returns and the same was accepted, by itself does not efface the fact of non-disclosure of the income - penalty confirmed - HC
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• Remand Orders: To Be Used Sparingly and Only in Exceptional Cases When Justified by Case Facts.

  Case-Laws - HC : Remand order - Remand is not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action - HC
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• High Court Rules No Penalty for Audit Delay u/s 44AB Due to Valid Justification u/s 273B.

  Case-Laws - HC : Audit of accounts u/s 44AB - delay in appointing auditor and getting audit report - Penalty u/s 273B - assessee justified the delay - no penalty - HC
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• High Court: Missing Audit Report Form Isn't Grounds to Deny Income Tax Deduction u/s 80-1A.

  Case-Laws - HC : Deduction u/s 80-1A - not furnishing the report of audit in the prescribed form duly signed and verified by the accountant alongwith the return of income is no ground to deny the deduction - HC
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• Approval from DIPP Required to Avail Section 80IA(4)(iii) Income Tax Benefits for Industrial Projects.

  Case-Laws - AT : Deduction u/s. 80IA(4)(iii) of the IT Act – Benefit u/s. 80IA(4)(iii) could be availed only after approval by DIPP under scheme - AT
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• Section 271(1)(c) Penalty Not Mala Fide for Disallowance Failure u/s 43B When Return Shows Loss.

  Case-Laws - AT : Penalty u/s 271(1)(c) - the failure of the assessee to make disallowance u/s 43B in the return of income cannot be held to be mala fide because the assessee has filed the return of loss - AT
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Customs

• Penalty Under Customs Act Section 114(iii) Dismissed; No Violation Found for Sailing Without Let Export Order.

  Case-Laws - AT : Penalty under Section 114(iii) of the Customs Act imposed - vessel was sailed on 26.1.2007 without obtaining Let export order - As the appellant has not violated the provisions, no penalty - AT
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• Revenue Appeal Delayed by Committee Clearance; Section 35E(3) Limits Mean Late Orders Are Invalid and Ineffective.

  Case-Laws - AT : Revenue appeal - delay in clearance from committee of clearance - condonation of delay - the limitation period prescribed under Section 35E(3) should be given its literal meaning and order passed beyond the limitation period prescribed is invalid and ineffective - AT
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Service Tax

• Renting a Bullock Cart Excluded from 'Supply of Tangible Goods for Use Service' in Service Tax Context.

  Case-Laws - AT : Supply of Tangible Goods for use - mere activity of renting of bullock cart does not come within the purview of ‘Supply of Tangible Goods for use Service' - AT
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• Appellant Still an "Outdoor Caterer" Even When Using Premises Provided by Service Recipient.

  Case-Laws - AT : Outdoor catering Service - the appellant does not cease to be an ‘outdoor caterer', merely because the service has been provided at the premises provided by the service recipient - AT
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• Charter Hiring of Drilling Units Deemed Taxable as Supply of Tangible Goods, Compensation Based on Daily Rate.

  Case-Laws - AT : Supply of Tangible goods - the agreement is for charter hiring of drilling units - the compensation is fixed on per day basis - prima facie the activity is taxable - AT
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Central Excise

• Pan Masala Export Case: Higher Benefit Claim Denied; Rebate Granted per Notification No. 32/2008-C.E. (N.T.

  Case-Laws - CGOVT : Export of Pan Masala - Claim of higher benefit - there is no question of applicability of two notifications in the instant case - rebate granted as per notification no. 32/2008-C.E. (N.T.) - CGOVT
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• Export Benefit Granted Despite Missing Self-Certification on ARE-2 Form as Required by Notification No. 42/2001.

  Case-Laws - CGOVT : Procedural infraction in export of goods - failure to incorporate self-certification on ARE-2 as prescribed in Notification No. 42/2001 - benefit of export allowed - CGOVT
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• Rebate Claim Rejected if Original and Duplicate ARE-1 Copies Not Submitted with Claim.

  Case-Laws - CGOVT : Rebate claim is not admissible if the original and duplicate copy of ARE-1 is not submitted along with rebate claim. - CGOVT
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VAT

• Court Rules Trademark Transfer to Franchisees Not a Sale of Intangible Goods, Exempt from VAT Liability.

  Case-Laws - HC : Levy of VAT on transfer of Trade Mark to the franchisees - scope of the term 'intangible goods' - deemed sale - not a transfer of goods - not liable to VAT - HC
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• Transporter of Goods Can File Representation & Appeal Under UP VAT Sections 48(7) & 57(4) for Seized Goods.

  Case-Laws - HC : Seizure of goods - UP VAT - transporter of the goods, who is person incharge is entitled to file representation u/s 48(7) and appeal u/s 57(4) - HC
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Case Laws:

• Income Tax

• 2013 (7) TMI 95
  Validity of proceedings before Settlement commission - Full and true disclosure - Validity of settlement applications - Commissioner of Income tax objected on orders passes on settlement application that Applicants had neither disclosed their full and true income nor the manner in which such income had been derived - Held that:- Point of maintainability of an application under Section 245C(1) does not get foreclosed by virtue of the Settlement Commission passing an order under Section 245D(1) or Section 245D(2C) and that such an issue could be examined by the Settlement Commission at the final hearing of the matter, that is, at the stage of passing an order under Section 245D(4) - Even when the Settlement Commission decides to proceed with the application when it passes an order under Section 245D(1) or Section 245D(2C), it would not be denuded of its power to examine as to whether the assessee has made a full and true disclosure of his undisclosed income in the application for settlement - There is no stipulation for revision of an application filed under Section 245-C(1) and thus the natural corollary is that determination of income by the Settlement Commission has necessarily to be with reference to the income disclosed in the application filed under the said section in the prescribed form. All the conclusions made by the Settlement Commission up till now are only prima facie conclusions and do not foreclose the issues raised by the Revenue - According to Section 245K(2) which stipulates that where a person has made an application under Section 245C on or after the first day of June, 2007, and if such application has been allowed to be proceeded with under Section 245D(1), such person shall not subsequently be entitled to make an application under Section 245C - This is not the stage at which this Court ought to interfere with the impugned orders and the proceedings pending before the Settlement Commission - Following the decision of Commissioner of Income Tax v. K. Jayaprakash Narayanan [2009 (2) TMI 740 - SUPREME COURT OF INDIA], Commissioner of Central Excise, Vishakapatnam v. True Woods Private Ltd. [2005 (11) TMI 12 - HIGH COURT OF DELHI] and Ajmera Housing Corporation v. Commissioner of Income Tax [2010 (8) TMI 35 - SUPREME COURT OF INDIA] - Decided against the revenue.

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• 2013 (7) TMI 94
  Jurisdiction of court - Assessee Contended that the High Court having jurisdiction over the Assessing Officer at Jammu, who passed the assessment order would have jurisdiction - Held that:- Assessment records for the relevant assessment years had not been transferred in referred cases - Jurisdiction of the High Court is determined by the situs of the Assessing Officer - When the Assessing Officer itself has been changed from one place to another, the High Court exercising jurisdiction in respect of the territory covered by the transferee Assessing Officer would be the one which would have jurisdiction to hear the appeal under Section 260-A - The fact that the Amritsar Bench of the Tribunal had passed the impugned orders or the fact that the initial assessment orders were passed by the Assessing Officer at Jammu would not be relevant for the purposes of determining the jurisdiction of the court at the point of time at which an appeal under Section 260-A is filed - On the dates on which the present appeals were filed, the Assessing Officer of the respondent was the Assessing Officer at New Delhi and, therefore, this court would have jurisdiction to entertain these appeals - Decided in favour of Commissioner of Income Tax-X.

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• 2013 (7) TMI 93
  Penalty u/s 271(1)(c) - Tribunal cancelled penalty - Held that:- It could be noticed from the material that the penalty proceedings were initiated essentially on the ground that the consumption of the material for an year under consideration was 20% more whereas the consumption of the power and fuel was less than the previous year - Such ratio was found unbelievable by the Assessing Officer - It was held to be furnishing of the inaccurate particulars and concealment on the part of the assessee - Tribunal has rightly noted that these circumstances were aptly explained by the assessee who had reiteratively mentioned that there was extraordinary inflationary trend during the year under question in chemical business of the assessee as compared to the previous year - Decided in favour of assessee.

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• 2013 (7) TMI 92
  Penalty u/s 271(1)(c) - additional income shown in the Revised returns - Tribunal ordered that there was concealment of income under original returns warranting levy of penalty under Section 271(1)(c) - Held that:- Revised return was filed by the assessee offering an income under the head of capital gains - However, original return filed made no reference to the sale of shares at all and it merely indicated the salary income received by the assessee - Leaving aside the valuation on shares, there is hardly any indication as regards the transaction in shares, which, even accepting the assessee's case, had not been a loss - when confronted with the question on the source of funds on the investment made in mutual fund by the assessee's wife, the assessee took his opportunity first to file the revised returns to set his assessment in order - On the incorrectness of the returns originally filed, not disclosing the transaction in shares, the proceedings subsequent to the statement filed certainly indicates the conduct of the assessee. The fact that the assessee had filed revised returns and the same was accepted, by itself, however, does not efface the fact of non-disclosure of the income arising under the head of "capital gains" in the original return. In the background of this conduct, we do not find any acceptable ground to set aside the order of the Tribunal as held by the Apex Court in a series of decisions. - Following the decision of Union of India Vs. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - Decided in favour of Revenue.

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• 2013 (7) TMI 91
  Deduction u/s 80HHC - Exchange rate difference - Tribunal deleted the disallowance of amout being exchange rate difference pertaining to earlier years for the purpose of export turnover - Held that:- The assessee is an exporter of various items like caster oil, garments etc - Assessee received a sum being the difference between the booked amount of export in the previous year and higher amount of realization in the year under question - Department had admitted that the sum belongs to the previous year and the assessment of the previous year could be rectified under the law - Decided in favour of Revenue. Addition on account of the goods - Tribunal deleted the addition on account of cost of goods estimated by the Assessing Officer - Held that:- when the purchases are made together for both export and domestic sales, direct cost of the purchase need to be bifurcated on pro rata basis. Deletion of disclaimer amount - Tribunal deleted the disclaimer amount worked out by the Assessing Officer for eligible deduction under section 80HHC - Held that:- Tribunal has merely followed its own order of the earlier year, which has been accepted by the Revenue - Tribunal restored the file to the Assessing Officer for working out deduction under section 80HHC considering the division-wise profitability on the basis of turnover/profit as adopted in the earlier years. Freight expenses - Tribunal directed to allow freight expenses beyond custom point - Assessee claimed freight expenses on export, Assessing Officer held that expenditure beyond custom point was eligible for reduction from direct expenses but not the freight paid upto the custom point and hence not liable for reduction from direct expenses - However, CIT(Appeals) clarified the entire issue and rendering correct decision directed Assessing Officer to work out necessary relief in favour of the assessee - Tribunal noted that the Assessing Officer out of confusion as to whether the said amount is the cost upto the custom clearance point or beyond it, was unable to adjudicate appropriately - Interpretation is made by the Tribunal keeping in mind Explanation (b) to section 80HHC(4C) and it held that any expense made on goods or merchandise beyond the custom point needs to be excluded from export turnover and not from direct cost - Decided in favour of Revenue.

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• 2013 (7) TMI 90
  Remand order - Tribunal ordered that issue regarding re-insurance premium paid to Non-Resident Reinsurers and TDS to be made have to be considered by the Assessing Officer based on DTAA - Held that:- when materials, which were considered by the Officer are there before the Tribunal on the issue raised, even assuming for a moment that in the course of pendency of the appeals, amendments are effected retrospectively, touching on the very same issue in the context of the amendment provision, however, does not call for any remand, particularly for the reason that the Tribunal with all its wisdom is competent to go into the legal provision, which would govern the issue - Remand is not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action - no material which necessitated the remand of the case to the Assessing Officer - Following the decision of GE India Technology Centre Private Ltd. Versus Commissioner of Income Tax & Anr. [2010 (9) TMI 7 - SUPREME COURT OF INDIA] - Decided in favour of assessee.

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• 2013 (7) TMI 89
  Non-Service of rejection orders - Tribunal denied benefit of Section 80G to assessee - Held that:- no material to controvert the allegation of the assessee about the non-furnishing of the copies of the statement recorded as well as the records seized and in fact, it is a matter of record that the Income Tax Appellate Tribunal itself has pointed out about the non-furnishing of the copies of the seized records to the assessee-Trust - Matter is remanded back to the Commissioner of Income Tax.

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• 2013 (7) TMI 88
  Audit of accounts u/s 44AB - delay in appointing auditor and getting audit report - Penalty imposed on Assessee u/s 273B - Held that:- Relief was given by the Tribunal to the respondent under Section 273B of the Income Tax Act holding that, in that matter of delaying in completing the audit and signing the audit report, respondent has been able to establish that there was reasonable cause therefor, inasmuch as, neither appointment of the auditor was within its domain and, at the same, time, it was also not within his domain to have the auditor to be appointed by the Registrar or such other person to be appointed by the State Government to complete the same within the time as provided for in the Income Tax Act - Decided against Revenue.

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• 2013 (7) TMI 87
  Deduction u/s 80-1A - Submission of Audit Report - Assessing Officer denied benefit u/s 80-1A unless report of audit is furnished alongwith the return of income - Held that:- emphasis in sub-section (7) of section 80-1A of the Act is to have the claim audited by an accountant, as defined in the explanation below sub-section (2) of section 288 of the Act and not furnishing the report of such audit in the prescribed form duly signed and verified by the accountant alongwith the return of income. - Following the decision of Gujarat Oil & Allied Industries versus I.T.O [1981 (9) TMI 141 - ITAT AHMEDABAD-C] - Decided against revenue.

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• 2013 (7) TMI 86
  Deduction u/s 80HHC - export of marble blocks - Tribunal deleting the addition on account of disallowance of deduction - Held that:- Finding of the learned Tribunal is in favour of assessee-respondents and it has been categorically held that the assessee-respondents are eligible for deduction under s.80HHC of the Act for export of marble blocks, which were cut and polished - appellant-Revenue has also not controverted that the findings arrived at by the learned Tribunal on facts are not correct or are perverse - Following the decision of Commissioner of Income Tax vs. Arihant Tiles & Minerals (P) Ltd. & Ors. [2013 (6) TMI 45 - RAJASTHAN HIGH COURT] and Sudarshan Silks & Sarees Versus Commissioner of Income Tax, Karnataka [2008 (4) TMI 5 - Supreme Court] - Decided against revenue.

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• 2013 (7) TMI 85
  Penalty u/s 271D - period of limitation - Held that:- when the authority competent to impose penalty under s.271D was the Jt.CIT, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of first show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings - Present proceedings hit by the bar of limitation - Tribunal not committed any error in setting aside the order of penalty - Following decision of Commissioner of Income Tax vs. Jitendra Singh Rathore [2013 (3) TMI 222 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.

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• 2013 (7) TMI 84
  Reframing of assessment - assessment in pursuance of direction by CIT in revision u/s 263 - Earlier ITAT had set aside the order and remanded the matter back to AO - Held that:- in so far as the first two issues relating to disallowance under S.40(a)(ia) and interest not offered to tax are concerned, the entire additions made by the Assessing Officer in pursuance of the specific direction of the Commissioner of Income-tax have no legs to stand, and as such they have become redundant. The disallowance made u/s. 40(a)(ia) by the Assessing Officer in the consequential assessment order is also beyond the scope of the directions given by the CIT(A) under S.263, as he has only directed the Assessing Officer to levy interest under S.201(1A) for non-deduction of tax at source on interest payment of Rs.9,71,452. Consequently the relief granted by the CIT(A) cannot be found fault with. - Decided against the assessee.

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• 2013 (7) TMI 83
  Deduction u/s. 80IA(4)(iii) of the IT Act – No valid approval as required u/s. 80IA – Held that:- Admitted fact that no approval for assessee's project – On date of application made by assessee, no scheme in operation under Industrial Park Policy, 2002 – 2002 scheme lapsed as it was ineffective – Benefit u/s. 80IA(4)(iii) could be availed only after approval by DIPP under scheme – Following the decision of Regency Soraj Infrastructures vs. Union of India & Ors. [2012 (4) TMI 331 - DELHI HIGH COURT] and SSPDL Ltd. vs. DCIT [2013 (7) TMI 18 - ITAT HYDERABAD], decided against the assessee.

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• 2013 (7) TMI 82
  Condonation of delay - Held that:- As decided Vijayeswari Textiles Ltd. vs. CIT [ 2001 (10) TMI 36 - MADRAS High Court] Tribunal did not stop with the order declining to condone the delay, but considered the matter on the merits and has practically treated the appeal as being properly before it and has answered the question brought before it with reference to the material placed on record. Thus delay in filing the appeal before the CIT(A) is deemed to have been condoned by the CIT(A). Estimation of GP - @ 21.61% as reported by assessee or @ 32% as per AO as comparing with other concerns engaged in the same line of business - Held that:- As the assessee could not produce the vouchers in respect of various expenses claimed by it AO was justified in rejecting the book results. As Gross Profit rate disclosed by other concerns engaged in the similar line of business was in the range of 28.92% to 31.22% & before the tax authorities, the assessee has stated that the sale of inferior quality items was high vis-a-vis the high quality items & the profit margin in respect of inferior quality item is usually low, since the assessee could not substantiate the said explanation the rate of gross profit is required to be estimated on the basis of other external information - the issue would meet the ends of justice, if the rate of gross profit in the instant case is estimated at 28%. Partly in favour of assessee.

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• 2013 (7) TMI 81
  Penalty u/s 271(1)(c) - disallowances u/s 43B for unpaid liability of sales tax, provident funds etc. - Held that:- As decided in CIT Vs. Reliance Petroproducts Pvt.Ltd [2010 (3) TMI 80 - SUPREME COURT] & Price water house Coopers Pvt.Ltd. [2012 (9) TMI 775 - SUPREME COURT] mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee. If the assessee's claim is bona fide, then he will not be liable for penalty. In the present case, the failure of the assessee to make disallowance u/s 43B in the return of income cannot be held to be mala fide because the returned loss by the assessee was Rs. 1,57,14,572/-. Even after the disallowance u/s 43B amounting to Rs. 14,14,057/-, the assessed loss is Rs. 1,43,00,515/-. That ordinarily, no assessee would try to increase the loss by making a wrong claim. Moreover, the assessee has already disclosed that the amount was payable. Thus, there was no concealment of any fact or furnishing of inaccurate particulars - appeal of the assessee allowed.

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• Customs

• 2013 (7) TMI 80
  Penalty under Section 114(iii) of the Customs Act imposed - consignment was loaded on the vessel and vessel was sailed on 26.1.2007 without obtaining Let export order - Held that:- After going to the port area, the CHA exporter have no control over the goods as held by the Tribunal in the case of N. Karim & Sons. Therefore, the appellant namely M/s. Falcon International and M/s Venkatesh Agencies being exporter and CHA respectively are not liable to be penalized under Section 114(iii) of the Customs Act, 1962. Accordingly penalty on both the appellants have been dropped. As the appellant M/s. Falcon International has not violated the provisions of the Customs Act, therefore goods are not liable for confiscation. Accordingly, redemption fine imposed on the appellant is also waived. With regard to the penalty on M/s Albatross Shipping Ltd., it is the shipping line who loaded the goods without obtaining Let export order, therefore, they have violated the provisions of Section 40 of the Customs Act, 1962. Therefore, they are liable to be penalized. But in the case of CSAV Group Agencies (India) P. Ltd. [2009 (7) TMI 165 - HIGH COURT OF JUDICATURE AT BOMBAY] penalty was reduced to 40% by the adjudication authority. Therefore the penalty in the present case is also be reduced to 40%.

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• 2013 (7) TMI 79
  Revenue appeal - delay in clearance from committee of clearance - condonation of delay - Held that:- it is clear that the order of Committee of Chief Commissioners was passed after expiry of period of three months from the date of communication. There is no question of condoning by the Tribunal of the delay in exercise of the power by the Committee under Section 129D(1), as any order issued by the Committee after expiry of limitation period prescribed in Section 129D(3), is invalid and ineffective. Though in para 22 of Larger Bench judgment of Tribunal in case of C.C.E., Raipur v. Monnet Ispat & Energy Ltd. [2010 (8) TMI 50 - CESTAT, NEW DELHI], it is mentioned that in C.C.E. v. M.M. Rubber Co. (1991 (9) TMI 71 - SUPREME COURT OF INDIA), the issue which arose for consideration was as to what was the relevant date for the purpose of counting the period of one year provided under Section 35E(3) of Central Excise Act, 1944, from para 18 of the Apex Court’s judgment in case of C.C.E. v. M.M. Rubber Co. (1991 (9) TMI 71 - SUPREME COURT OF INDIA), quoted above, it is clear that the Apex Court while deciding the main question, has also held in clear terms that the limitation period prescribed under Section 35E(3) should be given its literal meaning and order passed beyond the limitation period prescribed is invalid and ineffective. - Decided against the revenue.

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• Corporate Laws

• 2013 (7) TMI 78
  Maintainability of application - not enough support for filling petition - Mismanagement of the affairs of the company - oppression to the minority shareholders - Held that:- On a plain reading of the Power of Attorney, it would appear the Power of Attorney was signed by Gaggar to facilitate compliance all formalities of registration of the shares as also the utilization of shares so long it was not registered with the company. Even if the Power of Attorney as well as affidavits of Gaggar and Lodha taken together it would find, Gaggar did not deny sale of shares. Even if Lodha exercised power on behalf of Gaggar that would relate to only the shares that were sold by Gaggar to Lodha. Gaggar executed the Power of Attorney so that such power could be used by the purchaser through the constituted attorney being two Directors of BDPL. Hence, the consent was valid. No rigid restricted meaning of Power of Attorney in this regard be given. Gaggar never authorized his attorneys to use his power other than his right over the shares. The learned Judge did not apply His Lordship’s mind on the issue. His Lordship did not assign any reason why it would be unsafe to rely on the support of Gaggar when it was in consonance with the wishes of the beneficial owners. Mr. Gaggar never raised his finger towards the transactions. He denied having read the petition. Even if we give full credence to what he had said, such positive averment on behalf of Chatterjees in their petition would be superfluous as it was not the legal necessity. Thus the petition filed by Chatterjees maintainable. Hence, BDPL would be entitled to be transposed and/or substituted in place of Chatterjees in the proceeding & direct the department to substitute BDPL as the petitioner with permission to proceed with the application - request the Single Judge to give priority to the matter as it was pending for last 22 years.

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• Service Tax

• 2013 (7) TMI 99
  Waiver of pre deposit –demand of service tax by registered dealers - The applicant is a registered dealer selling cars on payment of appropriate VAT – Held that:- Applicants are purchasing and selling the cars - it cannot be said that the applicants are commission agent of the car manufacturer - the demand is not sustainable. Customer care services - Providing assistance in respect of registration- contended that the applicant is provided business auxiliary services – Held that:- Applicants are not promoting the business of state transport authorities but are only providing assistance to the car purchasers – applicant is not providing the customer care services. Waiver of pre-deposit – Part of the service tax was said to be deposit and on the pre-deposit of the balance amount of service tax, interest and penalties are waived.

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• 2013 (7) TMI 98
  Supply of Tangible Goods for use - service - Section 65(105)(zzzzj) – the appellant rented out bullock carts to the farmers for transportation of the sugar cane to the factories - Held that:- The bullock carts are supplied without the bullocks - the possession and control over the cart does not lie with the service provider - mere activity of renting of bullock cart does not come within the purview of ‘Supply of Tangible Goods for use Service'. - Decided in favor of assessee.

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• 2013 (7) TMI 97
  Outdoor catering Service - Section 65(76)(a) – catering at a place other than his own - Section 65(105)(zzt) defines ‘taxable service' – Held that:- From the nature of the transaction it is clear that the service is provided by the appellant to the company and not to the employees - Service recipient is the person who pays for the services received and it is the company who is making the payment in the present case - The definition of ‘outdoor catering' also includes a person who provides such service at a place of the service recipient - the appellant does not cease to be an ‘outdoor caterer', merely because the service has been provided at the premises provided by the service recipient – the court rejected the argument of the appellant that the transaction is one of sales and the plea of financial hardship is without any merits. The appellant directed to make a pre-deposit of 50% of the service tax demand - stay granted partly.

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• 2013 (7) TMI 96
  Supply of Tangible goods for use - Services u/s Section 65(105)(zzzzj) - stay – the appellant provided the rigs for drilling operations/ drilling wells in the offshore waters – did not discharge any service tax liability on the services rendered - appellant contended that the activity undertaken is not "supply of tangible goods' but comes under the category of drilling of oil wells – Held that:- Prima facie after going through the agreement, it was held that the service undertaken by the appellant falls under the category of "supply of tangible goods for use"- the agreement is for charter hiring of drilling units - the compensation is fixed on per day basis - thus even when no drilling takes place, the service provider is compensated – thus the transaction involved is one of service as it was decided in Indian National Ship owners Association Vs. UOI (2009 (3) TMI 29 - BOMBAY HIGH COURT). Validity of show cause notice – The notice was served within a period of one year – thus the show-cause notice is within time and the allegation of time bar is not sustainable. Appellant directed to submit 50% of the amount - stay granted partly.

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• Central Excise

• 2013 (7) TMI 77
  Principle of Natural Justice not followed – Adjudication done within a short-period by Adjudicating Authority – Proper opportunity of being heard not allowed. Impugned order is non-speaking order, issued in less than 24 hours of conducting the hearing by the adjudicating authority. Appellants were called for personal hearing on 22.08.2012 and when they sought additional time the same was denied and final hearing was held on 30.08.2012. According to Ld. Advocate the time given was totally insufficient for submitting the reply. - Held that:- A reasonable time should have been given to them so as to enable them to make further written submissions. The case remanded back to the Commissioner for adjudication.

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• 2013 (7) TMI 76
  Export of Pan Masala - Claim of higher benefit - Rebate under Notification 32/2008-C.E. (N.T.), dated 28-8-2008 or Notification No. 19/2004-C.E. for Export under Rule 18 of the Central Excise Rules, 2002 read with Rule 14 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rule, 2008 under self-assessment procedure/self-sealing and self-certification. - Held that:- as per Rule 14 of Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008, no rebate of excise duty paid on pan masala shall be granted under Rule 18 of Central Excise Rules, 2002 except in accordance with the terms and conditions as Government may specify in the notification. Further, Government issued Notification No. 32/2008-C.E. (N.T.), dated 28-8-2008 for granting rebate of duty paid on exported pan masala. This notification is issued under Rule 18 of Central Excise Rules, 2002 read with Rule 14 of Pan Masala (Capacity Determination & Collection of Duty) Rules, 2008 providing for rebate of duty paid on exported pan masala. The provisions of Rule 14 ibid clearly stipulate that in the instant case rebate of duty has to be granted under Notification No. 32/2008-C.E. (N.T.) and not under Notification No. 19/2004-C.E. (N.T.). The provision of Notification No. 19/2004-C.E. (N.T.) cannot be made applicable to pan masala in respect of which rebate is not admissible except under the provisions of Notification No. 32/2008-C.E. (N.T.). So there is no question of applicability of two notifications in the instant case. Since, in this case only the provisions of one Notification No. 32/2008-C.E. (N.T.) are attracted, the case laws cited by the applicant for the proposition that benefit of notification granting more benefit has to be given, are of no help to the applicant. Government, therefore holds that lower authorities have rightly sanctioned the rebate claim in accordance with the provisions of Notification No. 32/2008-C.E. (N.T.), dated 28-8-2008. - Decided against the assessee.

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• 2013 (7) TMI 75
  Procedural infraction in export of goods - failure to incorporate self-certification on ARE-2 as prescribed in para (iii) of the Notification No. 42/2001-C.E. (N.T.) r/w para (5) of the Notification No. 21/2004-C.E. (N.T.) - Held that:- Substantial benefit of rebate of duty paid on inputs cannot be denied for such technical procedural infractions. There is catena of judgment wherein it has been held that export related incentives cannot be declined for the minor procedural lapses. However, the respondent cannot be allowed to violate the procedural requirements repeatedly. If the respondent is found to commit such lapses again, department may take action in accordance with law. - Decided in favour of Assessee.

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• 2013 (7) TMI 74
  Export without payment of duty - Procedural lapses by Assessee - penalty under rule 25 - export by merchant exporter - Shown the clearance for Export without payment of duty in their ER-1 return; but they had not submitted triplicate and quadruplicate copies of ARE-1 to Range office within 24 hrs of clearance for export as required under Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 issued under Rule 19 of Central Excise Rules, 2002. - Held that:- Government therefore after considering the submission of the applicant about some business difficulty and lack of cooperation from the side of merchant-exporter, thinks it proper that these documents can be considered and accepted as the same are not questioned by lower authorities with regard to their authenticity. Therefore since the substantial evidences of co-relatability are there, the rebate should not be denied for minor procedural lapses as held by this authority in case of COTFAB Exports [2005 (11) TMI 100 - GOVERNMENT OF INDIA]. - Decided in favor of assessee. Regarding penalty - Held that:- Applicant had not complied with certain procedural requirements including that of not properly submitting copies of impugned ARE-1s well within 24 hrs. of stated clearances. So the applicant is rightly held liable to penalty under Rule 25 of the Central Excise Rules, 2002. Government therefore upholds the penalty imposed as per impugned Order-in-Original. - Decided against the Assessee.

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• 2013 (7) TMI 73
  Rebate claim under rule 18 - Procedural lapses of non-filing of original copy of ARE-1 - Assessee has not submitted original copy of ARE-1 and submitted the two triplicate copies (pink copies) along with the rebate claims. - Held that:- The submission of application for removal of export goods in ARE-1 form is must because such leniencies would lead to possible fraud of claiming an alternatively available benefit which may amount to additional/double benefit. This has never been the policy of the Government to allow unintended benefit. Hon’ble Supreme Court in case of Sharif-ud-Din. Abdul Gani [1979 (11) TMI 225 - SUPREME COURT] has observed that distinction between required forms and other declarations of compulsory nature and/or simple technical nature is to be judiciously done. When non-compliance of said requirement leads to any specific/odd consequences then it would be difficult to hold that requirement as non-mandatory. As such there is no force in the plea of the applicant that this lapse should be considered on a procedural lapse of technical nature. The Hon’ble Supreme Court in the case of J. Yashoda v. Shobha Rani 2007 (4) TMI 11 - SUPREME COURT OF INDIA has discussed Sections 63, 64 & 65 of Evidence Act, 1872 and therein upheld the High Court view that the photocopies cannot be received as secondary evidence in terms of Section 63 of the Act and they ought not to have been received since the documents in question were admittedly photocopies, there was no possibility of the documents being compared with the originals. Government, therefore holds that non-submission of statutory documents i.e. ARE-1 original and duplicate copy duly endorsed by customs and not following the basic procedure of export goods as discussed above, cannot be treated as just a minor/technical procedural lapse for the purpose of granting rebate of duty - Rebate claim is not admissible if the original and duplicate copy of ARE-1 is not submitted along with rebate claim. - Decided in favour of the Revenue.

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• CST, VAT & Sales Tax

• 2013 (7) TMI 101
  Levy of VAT on transfer of Trade Mark to the franchisees - scope of the term 'intangible goods' - deemed sale - royalty received from franchisees for use of Trade Mark - Entry Serial No.68 of the Third Schedule to the KVAT Act, 2003 - Held that:- even though both sides relied upon the provisions of Articles 246 and 254 of the Constitution of India, we need not enter into a finding on the said question, as we are of the view that the tests laid down in BSNL's case (2006 (3) TMI 1 - Supreme court) are squarely applicable here. Herein, it cannot be said that there are goods deliverable at any stage which is the test laid down by the Apex Court in paragraphs 78 and 79 of BSNL's case (2006 (3) TMI 1 - Supreme court) and for that reason also, there is no transfer of right to user at all. Coupled with the same, is the fact that during the period in question the franchisee is having the right, it is not to the exclusion of the franchisor and as it is seen that even during the period during which the transaction is going on, the franchisor can again transfer the right to others, the tests laid down in sub paragraphs (d) and (e) under para 97 of BSNL's case (2006 (3) TMI 1 - Supreme court) are not satisfied. We are unable to agree with the view taken by the learned Single Judge [2012 (11) TMI 927 - KERALA HIGH COURT]. The view taken in para 14 of the judgment is that the transaction in question is a deemed sale as defined under Section 2(x)(iii) of the KVAT Act. The above view was taken by concluding that the trade mark of the appellant is transferred to the franchisees for their use and the consideration received is the royalty paid to the appellant. In para 17, the principles stated in BSNL's case (2006 (3) TMI 1 - Supreme court) were distinguished on the facts of the said case and it was held that in the said case the Court was not dealing with a case involving transfer of intellectual property rights such as trade mark. It was held that there is total transfer of trade mark on payment of royalty which alone will attract the provisions of KVAT Act. With great respect, we are unable to agree with the same. Order of single judge reversed [2012 (11) TMI 927 - KERALA HIGH COURT] - Decided in favor of assessee.

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• 2013 (7) TMI 100
  Seizure of goods under Section 50 of the U.P. Valued Added Tax - orders for conditional release of goods on payment of 40% of the value of the goods as security - whether transporter of the goods though a person incharge of the vehicle is not owner of the goods and thus has no locus standi to demand the release of the seized goods in his independent capacity? - Held that:- Since the owner of the goods had filed objections and his objections were rejected, it is always open to him as well as the transporter to file representation under the proviso to sub-section (7) of Section 48 before the same authority and thereafter if they are not satisfied with the order, to file an appeal under Section 57 (4) of the Act. Unable to agree with the submissions that the transporter of the goods, who is person incharge is not entitled to file representation under Section 48 (7) and appeal under Section 57 (4) of the Act as expression 'person aggrieved' is much wider than the expression 'party aggrieved' - writ petition dismissed on the ground of alternative remedy of filing representation under the proviso to sub-section (7) of Section 48 of the Act, and thereafter an appeal, if necessary.

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