TMI Tax Updates - e-Newsletter
July 4, 2014

Case Laws in this Newsletter:

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

Articles

1. CBEC seeks adherence to judicial discipline in the matter of refunds

   By: Bimal jain

2. New Government, new hopes: Excise & Service tax law needs to be MODIfied

   By: Pradeep Jain

News

1. Government Approves One Proposal of Foreign Direct Investment (FDI) Amounting to About Rs. 0.01 Crore and Remaining Proposals Deferred

2. Government Approves Four Proposal of Foreign Direct Investment (FDI) Amounting to About Rs. 60.97 Crore

3. Government Approves One Proposal of Foreign Direct Investment (FDI) Amounting to About Rs. 489.99 Crore

4. RBI Reference Rate for US $ and Euro

5. ASSOCHAM National Conference on POST BUDGET DISCUSSION July 2014, New Delhi & Mumbai

6. Additional allocation of 50 lakh tonnes of rice for BPL and APL families in States/UTs for the period July, 2014 to March, 2015

7. Inclusion of onion and potato under the purview of stock holding limits under the Essential Commodities Act, 1955

8. 12th Plan scheme for modernization and strengthening of intellectual property offices

9. Printing Process for Union Budget 2014-15 Commenced with Halwa Ceremony; more than 100 Officials Involved in Making the Union Budget are Locked in Press till Union Budget is Presented by the Finance Minister on 10th July, 2014

Notifications

Customs

1. 49/2014 - dated 3-7-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from the 4th July, 2014

2. F. No. 437/68/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s KY Enterprises, 4 D/14, Old Rajendra Nagar, New Delhi and others to the Commissioner of Customs, Inland Container Depot (ICD), Tughlakabad, New Delhi

3. F. No. 437/67/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s Daikin Airconditioning India Pvt. Ltd., 12th Floor, Building No. 9, Tower ‘A’, DLF Cyber City, DLF Phase-III, Gurgaon to the Commissioner of Customs (Port-Imports), Jawaharlal Nehru Custom House, Nhava Sheva, Taluka-Uran, District Raigad, Maharashtra

4. F. No. 437/66/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s MS International, 117, 1st floor, J & K block, Laxmi Nagar, Delhi and others to the Commissioner of Customs (Export), Air Cargo Complex, Sahar, Andheri (East), Mumbai

5. F. No. 437/65/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s Hero Traders (Taken over by M/s JKB Rightways Exim Pvt. Ltd.) 5240, Ballimaran, Delhi and others to the Commissioner of Central Excise and Customs (in-charge: ICD, Loni), CGO Complex II, Kamla Nehru Nagar, Ghaziabad

6. F. No. 437/64/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority – In the case of misuse of Export incentive schemes by a group of firms in the export of fabrics to the Commissioner of Customs (Export), Jawaharlal Nehru Custom House, Nhava Sheva, Post Uran, District :Raigad, Maharashtra

7. F. No. 437/62/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s Om International, 11, Clive Row, 1st Floor, Suit No. A, Kolkata to the Commissioner of Customs (Import), Air Cargo Complex, Sahar, Andheri (East)Mumbai

8. F. No. 437/58/2014-Cus IV - dated 2-7-2014 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s Adroit Bio Science, 5-9-285/16/3, Rajiv Gandhi Nagar, Prashanthi Nagar Industrial Area, Kukatpally, Hyderabad

DGFT

9. 87 (RE–2013)/2009-2014 - dated 3-7-2014 - FTP

Amendments in the ITC (HS) 2012, Schedule 1(Import Policy)

SEZ

10. S.O. 1637(E) - dated 23-6-2014 - SEZ

Rescinds the sector specific Special Economic Zone for Multi Services at Villages Mohammadpur Jharsa, Narsighpur, Garouli Khurd and Harsaru, District Gurgaon in the State of Haryana

Highlights / Catch Notes

Income Tax

• Supreme Court Rules Date of Agreement as Effective Transfer Date for Section 54 Tax Exemption on Property Sales.

  Case-Laws - SC : Exemption of LTCG u/s 54 - transfer - determination of effective date of transfer of original house - date of agreement to be considered as effective date having the peculiar facts of the case - SC
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• High Court Rules Penalty Cannot Be Deleted Solely on Appeal Admission u/s 271(1)(c) of Income Tax Act.

  Case-Laws - HC : Whether the Tribunal is right in reversing in deleting the penalty u/s 271(1)(c) of the Act solely on the ground that the High Court has admitted the appeal and, therefore, the issue can be stated to be debatable - Held no - HC
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• High Court rules tax refund claims u/s 119(2)(b) must be processed on merits, despite limitation period.

  Case-Laws - HC : Claim for refund u/s 119(2)(b) - Period of limitation - TDS deducted during the Assessment year 2002-03 to 2004 - certificates received in November 2008 - refund to be processed on merit - HC
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• Court Rules Section 153C Assessment Invalid: No Relevant Documents Found During Seizure for Assessee's Year.

  Case-Laws - HC : Interpretation and construction of section 153C - assessment of another Assessee – no document pertaining to AY under consideration was found during seizure - The seized document was not belonging to the Assessee - assessment is not valid - HC
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• Tribunal Overlooks Classification of Agent Payments; Case Remanded for Review of Trade Discounts vs. Commissions in TDS Context.

  Case-Laws - HC : TDS on Payments made to agents for procuring advertisements - Trade discount OR commission – Tribunal has not considered all the aspects/questions in proper perspective - matter remanded back - HC
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• High Court Rules Technical Know-How Fee for Manufacturing Existing Items as Deductible Revenue Expenditure, Not Capital Expenditure.

  Case-Laws - HC : Nature of expenses on Technical know-how fee - such technical know-how was used for the purpose of manufacturing the existing items - held as revenue expenditure - HC
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• Section 11 Exemption: Accumulate 15% Income, Submit Form 10 Before Assessment Ends, AO Must Allow Submission Opportunity.

  Case-Laws - AT : Exemption u/s 11 - accumulation of 15% of income - Form 10 can be filed before the conclusion of the assessment proceedings - AO should provide opportunity for furnishing of Form 10 - HC
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• Section 11 Exemption Granted for 'Deep Mela' Profits; Activity Deemed Incidental to Charitable Objectives.

  Case-Laws - AT : Exemption u/s 11 - Charitable activity - profit from an exhibition viz., 'Deep Mela' - activity of organising 'Deep Mela' is incidental to the attainment of its objectives. - exemption allowed - AT
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• Tax Authority Upholds Reassessment u/s 263 for Thorough Examination of Expenditures to Ensure Compliance and Accuracy.

  Case-Laws - AT : Invocation of section 263 of the Act – Allowability of the expenditure - scope of deeper inquiry to be conducted by AO - revision upheld - AT
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• TDS for Information Management System Development to be Deducted u/s 194C, Not 194J.

  Case-Laws - AT : TDS u/s 194C or 194J – development of system for information management between Head Office and its on-site employees - not a fee for technical services - TDS to be deducted u/s 194C - AT
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• Revenue Criticized for Filing Mindless Appeal to ITAT Without Proper Judgment; Risk of Cost Imposition Highlighted.

  Case-Laws - AT : Non application of mind by revenue before filing an appeal before ITAT - This sort of mindless action by the Revenue does attract levy of cost - AT
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• Doubtful Debts Provision Not Deducted Cannot Be Income When Written Back: Tax Clarification.

  Case-Laws - AT : If provision for doubtful debts is not claimed as deduction in the computation of total income, then, naturally, the amount of provision written back cannot equally be treated as income - AT
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• Expenditure Allowed Despite Lack of Prior Approval u/s 37 of Income Tax Act and Section 297 of Companies Act.

  Case-Laws - AT : Disallwance u/s 37 - consideration paid without obtaining prior approval of the Central Government in accordance with the provisions of section 297 of the Companies Act, 1956 - expenditure allowed - AT
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• Court Upholds Disallowance of Long-Term Capital Gains Due to Questionable Transaction Authenticity Under Income Tax Law.

  Case-Laws - AT : Disallowance of LTCG - claim of long term capital loss - genuineness of transactions - Establishment of source of amount received – addition made by the CIT(A) is to be upheld - AT
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Customs

• Flower Seed Imports Differ from Plants Under Tariff Rules; No Violation of Courier Import Regulations 1998 Found.

  Case-Laws - AT : Import of flower seeds - Even the Tariff recognizes seeds for sowing and plants and parts thereof differently - No contravention of provisions of Courier Import & Export (Clearance) Regulations, 1998 - AT
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Corporate Law

• Company's Request to Alter Shareholder Register Denied by CLB, Specific Performance Not Allowed as Rectification.

  Case-Laws - Board : Rectification of register of shareholders - atonement of shares in lieu of payment against sale proceeds of land - Petitioner company under the guise of rectification is seeking to enforce a specific performance - not allowed - CLB
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Service Tax

• Entity Failed to Remit Collected Taxes on Erection and Commissioning Services; Non-Taxable Argument Dismissed.

  Case-Laws - AT : Erection and commissioning service - Tax collected but not paid - since the taxes have been collected, there is no merit in the contention that the activity of the assessee were not taxable - AT
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• Agreement for Work with Payment Per Metric Ton; Not a Manpower Recruitment Service.

  Case-Laws - AT : Nature of service - agreement with their principal to do certain work with the help of their assurance of production of big mill and small mill and the payment of the same is to be made per Metric Ton - Not a manpower recruitment service - AT
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• Dispute Over Service Tax on Transformer Repairs: Labor Charges vs. Material Sales Under Contract Valuation Rules.

  Case-Laws - AT : Valuation - repair and maintenance of the transformers - composite contract or not - appellants paid service tax only on the ‘Labour Charges' - no service tax would be leviable on the value of the materials sold - AT
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• Appellant's Excess Service Tax Payment Adjusted Against Future Liabilities; No Contestation Involved.

  Case-Laws - AT : Suo moto adjustment of excess service tax paid - excess payment is not in dispute and same has been adjusted for the future liability of Service Tax by the appellant - AT
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Central Excise

• Cut Flowers from 100% EOU to DTA Not Imported; Only Excise Duty u/s 3 Applicable, No Customs Duty.

  Case-Laws - AT : 100% EOU - DTA clearance of cut flowers - goods produced in an EoU cannot be treated as imported goods and only excise duty under Section 3 of the Central Excise Act is payable and customs duty is not demandable - AT
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• CENVAT Credit Denied u/r 9(1)(b) Due to Suppression of Facts; Duty Not Considered Paid by Settlement Commission.

  Case-Laws - AT : CENVAT Credit - denial of credit since the matter settles by settlement commission applying the provision of Rule 9(1)(b) - whether duty can be held as paid due to suppression of facts - Held no - AT
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• Appellants Denied SSI Exemption Due to Infringement of "Prince" Brand Name, Citing Lack of Bona Fide Use.

  Case-Laws - AT : SSI Exemption - Brand name - there is intention on the part of the appellants to use the brand name ‘Prince’ which belonged to others - they cannot claim bonafide - decision of SC distinguished - AT
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• Section 35F Allows Pre-Deposit via Cenvat Credit Account, Court Rules Method Permissible.

  Case-Laws - AT : Whether the amount of pre-deposit ordered in the stay order for compliance with provisions of Section 35F can be deposited by the debiting the Cenvat Credit Account - Held yes - AT
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VAT

• VAT Act Section 9(5) Tax Demand Invalidated by SEZ Act Sections 21 and 22 Non-Obstante Clause.

  Case-Laws - HC : Application of sections 21 and 22 of the SEZ Act - Non obstante clause - Demand raised by the respondents from the present petitioners for payment of purchase tax under section 9(5) of the VAT Act is invalid and impermissible - HC
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• Valuation of Works Contracts: Deducting Profit from Labor and Services Under VAT and Sales Tax Laws.

  Case-Laws - HC : Valuation - works contract - profit earned by the Contractor to the extent it is relatable to supply of labour and service + profit attributable to labour and like charges are separate permissible deductions - HC
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Case Laws:

• Income Tax

• 2014 (7) TMI 99
  Exemption of LTCG u/s 54 - transfer - determination of effective date of transfer of original house - assesee entered into an agreement to sell on 27th December, 2002, but unfortunately they could not execute the sale deed on account of the litigation - transfer deed was executed as on 24th September, 2004 - New house property was purchased as on 30th April, 2003 - fulfillment of condition of purchase of a residential house/new asset within one year prior or two years after the date on which transfer of the residential house – Held that:- A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid Rs. 15 lakhs by way of earnest money. No doubt, such contractual right can be surrendered or neutralized by the parties through subsequent contract or conduct leading to no transfer of the property to the proposed vendee but that is not the case at hand. If a person, who gets some excess amount upon transfer of his old residential premises and thereafter purchases or constructs a new premises within the time stipulated under Section 54 of the Act, the Legislature does not want him to be burdened with tax on the long term capital gain and therefore, relief has been given to him in respect of paying income tax on the long term capital gain. In the case of Oxford University Press v. Commissioner of Income Tax [2001 (1) TMI 79 - SUPREME Court] this Court has observed that a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. In view of the aforestated peculiar facts of the case and looking at the definition of the term ‘transfer” as defined under Section 2(47) of the Act, the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property and used for purchase of a new asset/residential house. - Decided in favor of assessee.

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• 2014 (7) TMI 98
  Penalty u/s 271(1)(c) of the Act – Failure to offer satisfactory explanation - Whether the Tribunal is right in reversing the order passed by the CIT(A) deleting the penalty u/s 271(1)(c) of the Act solely on the ground that the High Court has admitted the appeal and, therefore, the issue can be stated to be debatable – Held that:- The decision in Prakash S Vyas [2014 (7) TMI 89 - GUJARAT HIGH COURT] followed - The Tribunal erred in deleting the penalty - Admission of a Tax Appeal by the High Court, in majority cases, is exparte and without recording even prima facie reasons - Whether ex-parte or after by-parte hearing, unless some other intention clearly emerges from the order itself, admission of a Tax Appeal by the High Court only indicates the Court's opinion that the issue presented before it required further consideration - It is an indication of the opinion of the High Court that there is a prima facie case made out and questions are required to be decided after admission. Mere admission of an appeal by the High Court cannot without there being anything further, be an indication that the issue is debatable one so as to delete the penalty u/s 271(1)(c) of the Act even if there are independent grounds and reasons to believe that the assessee’s case would fall under the mischief envisaged in the Clause (c) of Sub-Section (1) of Section 271 of the Act - unless there is any indication in the order of admission passed by the High Court simply because the Tax Appeal is admitted, would give rise to the presumption that the issue is debatable and that therefore, penalty should be deleted - upon mere admission of a Tax Appeal on quantum additions, is an indication that the issue is debatable one and that therefore, penalty should automatically be deleted without any further reasons or grounds emerging from the record – the order of the Tribunal is set aside and remitted back for fresh consideration – Decided in favour of Revenue.

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• 2014 (7) TMI 97
  Deduction of profits u/s 80IB(10) sub section (14) of the Act – Scope of term Built up area – Held that:- the definition which has been brought on the statute book with effect from 1st April 2005, would not apply to such projects which are completed prior to 1st April 2005 - the balcony area would not therefore be includable - computation of 'built up area' of the flat is concerned, the amendment having been brought in and introduced on 1st April 2005, then, in any housing project approved by the local authority prior to this date, balcony area cannot be included but will have to be excluded, is the conclusion reached by the Division Bench - the Assessee is an individual - after obtaining the development permission, the property was developed by constructing 97 flats - The details have been provided - the Assessee claimed the deduction by urging that it had completed the project and full occupation certificate was issued by the Municipal Corporation of Greater Mumbai as early as in 2004 - That being the case, the amended definition would not apply since that is relevant for the Assessment Year 2005-2006. - Decision in the case of M/s. Tinnwala Industries [2014 (7) TMI 90 - BOMBAY HIGH COURT] followed. The profits booked by the Assessee is on sale of the flats as that would be the only manner in which he would derive profit and later on book them - he cannot take assistance of the position prevailing prior to the amendment or the Division Bench order - This is not a pure question of law and which can decide with reference to some chart - This is a mixed issue and ought to have been squarely raised for consideration - the undertaking developing and building housing project has set out, the dates of completion of the project and issuance of full occupation certificate, namely, 27th December 2004 – thus, no substantial question of law arises for consideration - Decided against Revenue.

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• 2014 (7) TMI 96
  Deduction of product development expenses u/s 37(1) - revenue or capital in nature – Held that:- The Assessee is in the business of manufacturing ready to eat cereals that these expenses of product development were claimed - The details of expenses have been set out - The CIT(A) had directed deletion of the addition - the Tribunal followed its own order for the prior Assessment Year – thus, no substantial question of law arises for consideration – Decided against Revenue. Expenditure on purchase of pallets and advertising expenses – Held that:- The Tribunal was satisfied with regard to the claim to the extent of Rs.45.29 lakhs - the details of the expenses for advertisement which were aired on behalf of the Assessee are produced on record - advertisements were aired on various dates prior to 31st March 2004 - the Tribunal directed the AO to consider as to whether the deductions can be granted - even this question cannot be said to be a substantial question of law, the entities who had advertised the product on behalf of the Assessee were identified, the bills raised and invoices which have been produced demonstrate that the expenses have been incurred during the subject AY – Decided against Revenue.

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• 2014 (7) TMI 95
  Claim for refund u/s 119(2)(b) - Period of limitation - credit of TDS which was not claimed earlier - TDS deducted during the Assessment year 2002-03 to 2004 - certificates received in November 2008 - denial of credit on the ground of period of limitation based on Non-existing circular - Held that:- The order dated 24.4.2012 rejected the application on the basis of a non-existing circular No. 670 of 1993 of the C.B.D.T. for the reason the same stands modified by Instruction No. 13 of 2006 dated 22.12.2006 and this modified instruction does not in any manner provide for rejection of the refund claim on the ground that the same is a supplementary claim for refund - the three applications dated 17.3.2009 filed on 26.3.2009 of the assessee has been rejected by applying a non-existing circular and ignoring the circular/Instruction dated 22.12.2006 - thus, the order is set aside and the Chief Commissioner of Income Tax is directed to hear the assessee and dispose of the assessee's applications u/s 119 (2) (b) of the Act for A.Y.2002-03 to 2004-05 without applying circular No.670 of 1993 – Decided in favour of Assessee.

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• 2014 (7) TMI 94
  Interpretation and construction of section 153C - assessment of another Assessee – search and seizure action was carried out in the case of one Shri Ramchandra Dada Shinde, working as Accounts Officer - Held that:- There is no general rule laid down, save and except, outlining the seriousness of the proceedings - there was no justification for proceeding u/s 153C of the Act - The seizure of the ledger involving the Assessee has been referred to - no document pertaining to AY under consideration was found during seizure - The seized document was not belonging to the Assessee - The rest of the documents relate to the AY 2006-07 which is not the subject matter of CIT (A) and Tribunal's orders - the Tribunal's view was justified in the facts and circumstances peculiar to the Assessee and do not lay down any general rule or principal law – thus, no substantial question of law arises for consideration – Decided against Revenue.

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• 2014 (7) TMI 93
  TDS on Payments made to agents for procuring advertisements - Trade discount OR commission – Applicability of provisions of Chapter XVIIB – Held that:- The 'format agreement' and one of the agreements executed between advertising agencies, which had not been registered with INS and the assessee had lot of difference between the terms and conditions in the agreements - the assessee had entered into agreements with the advertising agencies which had not registered with INS, were to be governed by the terms and conditions stipulated in the agreements executed between such agencies and the respondent-assessee, and in which case the question of looking into format agreement (Appendix-IV) would not arise. Tribunal was of the view that the Appendix-IV executed by the assessee with the accredited agencies and the agreements executed between unregistered advertising agencies and the assessee - the Tribunal has not considered all the aspects/questions in proper perspective – the matter is remitted back to the Tribunal for adjudication – Decided in favour of Revenue.

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• 2014 (7) TMI 92
  Allowability of expenses u/s 37(1) of the Act – Technical know-how fee - revenue expense or capital expense – Held that:- Following Commissioner of Income Tax v. Swaraj Engines Ltd. [2008 (5) TMI 257 - SUPREME COURT] and Dy. CIT v. Sayaji Industries Ltd. [2013 (4) TMI 11 - GUJARAT HIGH COURT] - assessee was merely a licensee for the purpose of its business temporarily - For acquisition of know-how, the assessee paid lump sum payment - It had also come on record before the Tribunal that such technical know-how was used for the purpose of manufacturing the existing items which the assessee was manufacturing since years - the expenditure are revenue in nature and the expenses are allowable u/s 37(1) of the Act – Decided against Revenue.

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• 2014 (7) TMI 91
  Exemption u/s 11 - Revision u/s 263 - non application of 80% of income towards charitable purpose - Interest income on funds parked in FDs – Failure to file Form 10 regarding accumulation of 15% of income - Held that:- Following Commissioner of Income-Tax And Another Versus Karnataka Urban Infrastructure Development And Finance Corporation [2006 (2) TMI 114 - KARNATAKA High Court] - the interest income ought to be excluded from the income - 85% of the income which was arrived by the CIT in his order u/s 263 of the Act will stand modified - The application of income by the assessee for charitable purposes has been accepted by the CIT - the amount determined by the CIT in the order as sum assessable u/s 11(2) of the Act will also stand revised - The AO is directed to do the revised computation. - Decided partly in favor of assessee. Regarding non submission of form 10 for accumulation of income - Held that:- in CIT Vs. Nagpur Hotel Owner’s Association 2000 (12) TMI 99 - SUPREME Court] it has been held that it was abundantly clear from the wordings of sub-s. (2) of s. 11 that it is mandatory for the person claiming the benefit of s. 11 to intimate to the assessing authority the particulars required, under r. 17 in Form No. 10 - even assuming that there is no valid limitation prescribed under the Act and the Rules even then, it is reasonable to presume that the intimation required under s. 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under s. 11, therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. - Form 10 can be filed before the conclusion of the assessment proceedings - the AO did not call upon the assessee to show cause regarding non-furnishing of Form 10 - Even the CIT in the proceedings u/s. 263 of the Act did not afford opportunity to the assessee to file Form 10 – thus, the order of the CIT is set aside and the matter is remitted back to the AO for adjudication – Decided partly in favour of Assessee.

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• 2014 (7) TMI 90
  Deduction u/s 80IB (10) - Built up area – Effect of amendment from 1-4-2005 - Whether the Tribunal was justified in holding that the area of balcony and rewas are not to be included while computing the built up area of the residential units in a housing project eligible for deduction u/s 80IB (10) of the Act – Held that:- If the expression 'built up area' in a housing project approved by the local authority does not include the balcony area, then, prior to 1st April 2005 it would apply while considering the eligibility u/s 80IB (10) of the Act - where the Legislature with effect from a particular date has defined a particular expression by including a meaning which is not ordinarily included in that expression, then, the definition cannot be applied retrospectively - the inclusive definition of the expression 'built up area' introduced with effect from 1st April 2005 could not be applied retrospectively and the CESTAT was justified in holding that upto 1st April 2005, the expression 'built up area' would exclude the balcony area – CESTAT was justified in holding that the assessee was entitled to Section 80IB (10) deduction – Decided against Revenue.

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• 2014 (7) TMI 89
  Penalty u/s 271(1)(c) of the Act – Quantum additions - Whether the Tribunal is right in reversing the order passed by CIT(A) and deleting penalty levied u/s 271(1)(c) of the Act, in spite of the fact that the addition made in both the AYs were on the basis of seized documents establishing the fact of running an undisclosed business, taxing the income from which has been confirmed by the Appellate Tribunal – Held that:- The Tribunal erred in deleting the penalty - Admission of a Tax Appeal by the High Court, in majority cases, is exparte and without recording even prima facie reasons - Whether ex-parte or after by-parte hearing, unless some other intention clearly emerges from the order itself, admission of a Tax Appeal by the High Court only indicates the Court's opinion that the issue presented before it required further consideration - It is an indication of the opinion of the High Court that there is a prima facie case made out and questions are required to be decided after admission. Mere admission of an appeal by the High Court cannot without there being anything further, be an indication that the issue is debatable one so as to delete the penalty u/s 271(1)(c) of the Act even if there are independent grounds and reasons to believe that the assessee’s case would fall under the mischief envisaged in the Clause (c) of Sub-Section (1) of Section 271 of the Act - unless there is any indication in the order of admission passed by the High Court simply because the Tax Appeal is admitted, would give rise to the presumption that the issue is debatable and that therefore, penalty should be deleted - upon mere admission of a Tax Appeal on quantum additions, is an indication that the issue is debatable one and that therefore, penalty should automatically be deleted without any further reasons or grounds emerging from the record – the order of the Tribunal is set aside and remitted back for fresh consideration – Decided in favour of Revenue.

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• 2014 (7) TMI 88
  Determination of total income – Low GP ratio @ 6.6 % - trading in air conditioners (ACs) and maintenance/servicing of ACs - Non deduction of TDS amount – Held that:- Assessee contended that substantial works were carried out in March - accounts of the labour contractors were settled at the end of the year in order to close the accounts and the discrepancy found out by the AO in work expenses are not justified - It is not the case of the Department that expenses are related to non-business activity. - The AO further should have noted that non-deduction of TDS on work expenses was due to the amounts being below the limit for attracting TDS – thus, the addition of an amount of Rs. 32,13,620 made by the AO to the income returned is not justified - thus, the order of the CIT(A) is upheld – Decided against Revenue.

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• 2014 (7) TMI 87
  Exemption u/s 11 - Charitable activity - profit from an exhibition viz., 'Deep Mela' - commercial activity or not – Requirement to maintain separate books of accounts – Held that:- The activity of organising 'Deep Mela' is not a commercial activity - What is prohibited under the Act is carrying on business and not generating income in furtherance of its objects - The assessee was to generate income to finance its educational/charitable activities – Relying upon Assistant Commissioner Of Income-Tax Versus Thanthi Trust [2001 (1) TMI 80 - SUPREME Court] - a business whose income is utilised by the trust or the institution for the purpose of achieving the objectives of the trust or the institution surely is a business which is incidental to the attainment of the objectives of the trust - The objectives of the society would include financing charitable activities - the activity of organising 'Deep Mela' is incidental to the attainment of its objectives. - Decided in favor of assessee. Non utilization of amount - accumulation - Held that:- The AO has pointed out that the assessee failed to utilise the amount within the period allowed u/s. 11(2) of the Act and assessee filed details of its utilization – the issue of accumulation and utilisation of the amount accumulated is to be remitted back to the AO for verification of the details – Decided partly in favour of Assessee.

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• 2014 (7) TMI 86
  Invocation of section 263 of the Act – Allowability of the expenditure - scope of deeper inquiry to be conducted by AO - Held that:- The decision in Malabar Industrial Company Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME Court] is a locus classicus on the subject - the matter is primary factual, so that it would be required to be seen if the AO has considered all the materials, or that there has been a proper examination and verification by him, demonstrating application of mind, in adopting a considered view and, thus, eschew the charge of non-application of mind - the occasion to explain the scope and meaning of the clause of the agreement, which without doubt is extremely relevant in-as-much as it determines the scope of the contractual obligation on the assessee in respect of the expenditure, i.e., in-so-far as the charge of non-application of mind by the AO is concerned, is before the latter and not subsequently in the review proceedings. There would have been a dislocation of the assessee’s operations during the period the property was subject to renovation - it is claimed that the expenditure was incurred by the lessor in the first instance, and subsequently reimbursed by the assessee - the issue as to the nature of the expenditure, explained as non-regular or accumulated repairs, may be relevant from the stand-point of its allowability, including the provision of law under which it is - A finding of a business purpose as well as the provision under which it is allowable must precede and inform the assessment, and on which we observe no enquiry by the AO – the present case is one of lack of or absence of enquiry by the AO, so that the revision jurisdiction in relation the deduction of the expenditure in assessment stands validly assumed by the competent authority – the direction for fresh adjudication after examining the facts, and upon allowing proper opportunity to the assessee is consistent with the finding of the non-application of mind, necessitating fresh determination of the matter – thus, there was no infirmity in the order – Decided against Assessee.

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• 2014 (7) TMI 85
  Non application of mind by revenue before filing an appeal before ITAT - TDS on expenditure booked towards software development - TDS u/s 194C or u/s 194J - whether in the nature of payments towards technical services/fees - Levy of tax and interest short deducted u/s 201 and 201(1A) of the Act Held that:- CIT(A) upheld the contention of the AO that the amounts are covered by the provisions of section 194J - assessee also preferred the appeal on the same issue - revenue is contesting on an issue which was decided in its favour, which indicates the non-application of mind not only by the AO but also by the CIT-(TDS), who approved the filing of appeal - This sort of mindless action by the Revenue does attract levy of cost - the Revenue authorities is advised to apply their mind before preferring appeals to ITAT Decided against Revenue. Categorisation of payment - TDS u/s 194C or 194J development of system for information management between Head Office and its on-site employees. - Held that:- The packages are to be developed by vendors - payments made to the vendor companies do fall under 194C - Even though assessee is in the software business and services rendered/work undertaken are also on the field of software services, these cannot be considered as per professional services as they have not rendered any personal services to the company - It is a contract between a company and company - Even though the nature of contract differs from activity to activity, assessee s nature of work do indicate that those companies have not rendered any technical / professional services so as to come within the definition of section 9(1)(vii) - categorization of works contract as agreement for services cannot be accepted. Relying upon Glaxosmithkline Pharmaceuticals Ltd., vs. ITO 2011 (10) TMI 21 - ITAT, PUNE] - payment made for services of security guard provided by contractor cannot be kept in the nature of managerial, technical or consultancy services so as to attract clause 7 to section 9(1) read with section 194J - for treating the payment for technical services to be covered u/s 194J, there should be consideration for acquiring or using technical knowhow simplicitor provided, or made available by human element and there should be direct or live link between payment and receipt/use of technical services information thus, the payments made are rightly covered u/s 194C and assessee has deducted tax - the demands to the extent of 201(1) and interest u/s 201(1A) cannot be sustained Decided in favour of Assessee. TDS on expenditure overseas for providing onsite services - TDS u/s 195 - whether payment is taxable in India - Held that:- since the amounts are paid outside India to persons outside Indian territory, who does not have any tax liability as far as I.T. Act, 1961 is concerned, the amounts paid abroad cannot be considered as sums chargeable under the provisions of this Act. - No TDS - decided in favor of assessee.

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• 2014 (7) TMI 84
  Provision for warranty and other expenses - Held that:- The addition is deleted on account of provision for warranty and other expenses by holding it to be an ascertained liability - the addition made by the AO in the original proceedings for some amount of provision for warranty and other expenses does not stand, there can be no question of making the remaining part of the amount of the provision – the order of the CIT(A) is upheld. Provision for doubtful debts written back – Held that:- If provision for doubtful debts is not claimed as deduction in the computation of total income, then, naturally, the amount of provision written back cannot equally be treated as income - If the position so stated by the assessee is correct, then, there can be no question of adding provision for doubtful debts written back to the total income - the facts are not clear, the AO is directed to verify the assessee’s contention about not claiming deduction of provision for doubtful debts in the year(s) in which such provision was created. Provision for doubtful debts – Held that:- The AO has started his computation of total income with the income assessed which tallies with the income declared by the assessee before set off of brought forward losses and unabsorbed depreciation, this indicates that the sum was also added by the assessee to its total income representing provision for doubtful debts - addition of the equal sum by the AO in proceedings u/s 154 has led to making of double addition - the sum cannot be added to the total income under regular provisions. Computation of book profits u/s 115JB of the Act - Provision for gratuity – Held that:- The computation of total income filed by the assessee along with the return of income, the provision for gratuity was suo motu added back by the assessee in its computation of total income – Relying upon CIT vs. Echjay Forgings Pvt. Ltd. [2001 (2) TMI 56 - BOMBAY High Court] - provision for gratuity is deductible in the computation of book profits for the purposes of Section 115J of the Act - there is not much difference to the language of the Explanation, affecting the nature and treatment of provision for gratuity - Decided partly in favour of assessee.

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• 2014 (7) TMI 83
  Disallwance u/s 37 of payment made to job worker / related parties - consideration paid without obtaining prior approval of the Central Government in accordance with the provisions of section 297 of the Companies Act, 1956 - assessee submitted that the post facto approval for the transactions with the related parties undertaken during the year, was obtained from the Company Law Board on payment of compounding charges for the condonation of delay and hence there was no violation of law - Manufacture and export of surgical blades – Whether it can be said that the assessee incurred an expenditure for any purpose which is an offence or which is prohibited by law - Held that:- If the purpose of expenditure is not to commit an offence or is otherwise not prohibited by law, then any breach of some procedural statutory provision necessary to be complied with before incurring such expenditure, would not per se convert the otherwise lawful purpose into an offence or prohibition under law so as to attract the wrath of the Explanation - A line of distinction needs to be drawn between the cases where the purpose of the expenditure incurred itself is unlawful on one hand and the cases where the purpose of expenditure is lawful but there is some lapse in complying with the procedural provisions for incurring such expenditure on the other. Relying upon CIT v. Dhanpat Rai purpose of incurring the expenditure of job charges is neither an offence nor is prohibited by law, we fail to comprehend as to how the otherwise lawful purpose would become contingent upon obtaining or not obtaining the prior approval of the Central Government - such expenditure in itself is neither an offence nor prohibited by any law and there is a valid and lawful quid pro quo for the same - CIT(A) erred in sustaining the disallowance of Rs. 41.24 lac incurred on payment of job work charges – Decided in favour of Assessee.

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• 2014 (7) TMI 82
  Disallowance of LTCG - claim of long term capital loss - genuineness of transactions - Establishment of source of amount received – only sale agreement was produced - no sale deed was executed - Held that:- CIT(A) was rightly of the view that the assessee failed to establish the genuineness and capacity of the said amount received from one Sh. Rana Iqbal Singh Jolly. Sh. Rana Iqbal Singh jolly has not been produced though his presence was specifically required and the books of accounts from which the said amount of Rs. 2.4 crores was deposited in his bank account have also not been produced - Merely mentioning a PAN No. does not establish the genuineness and capacity of Sh. Rana Iqbal Singh Jolly, when a specific enquiry is being made by the Department - the assessee has evaded giving any evidence regarding the source of the said amount which was routed through Sh. Rana Iqbal Singh Jolly - The transaction becomes completely doubtful and improbable in view of the facts that no documents pertaining to possession being given or taken has been submitted, besides this the said transaction has been claimed to be not executed, inasmuch as it is claimed that the said amount was paid back to Sh. Rana Iqbal Singh Jolly in the next AY and the repossession of the land was taken (no documentary evidence to support the said claim) and subsequently the land was sold to M/s Patel Estate (P) Ltd. – thus, the addition made by the CIT(A) is to be upheld and the property was sold in the next AY stands demonstrated by the Registration of the transaction – Decided against Assessee. Levy of Penalty – Held that:- The amount has been shown as an income in 2007-08 A.Y. and only in the appellate proceedings due to the same having been considered as income in 2006-07 A.Y. the same has been deleted - neither the assessee filed any inaccurate particulars nor has any income been concealed - The finding arrived at is fact specific - Following CIT vs Reliance Petro Product [2010 (3) TMI 80 - SUPREME COURT] - penalty on the addition sustained is not maintainable - the penal action was not warranted either on the grounds of concealment nor on the grounds of filing the inaccurate particulars - The record shows that full facts and necessary disclosures were made by the assessee and for whatever reasons the property was not Registered in Mr. Rana Iqbal Singh Jolly’s name suspicions cannot be resorted to conclude that the filing of particulars were inaccurate or there was any concealment – onus is on the Revenue to show which fact or particular was concealed or inaccurately filed - At best the assessee can be faulted for basing its claim on the belief that it was a case of part performance as the Registration of the sale had not taken place - The wrong claim in the peculiar facts it is seen is neither a fraudulent claim nor it is a false claim - the assessee has consistently argued its income over the years consistently remains at a loss figure as such neither can there be any motive or purpose - The wrong claim made on facts is a bonafide claim which though on facts cannot be accepted in the quantum proceedings – Decided in favour of Assessee.

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• 2014 (7) TMI 81
  Deduction u/s 10A of the Act – Computation of export turnover – Exclusion of non-export turnover but inclusion in total turnover – It was clarified by the assessee, that the corporate subsidy of Rs. 3,36,56,472/- pertained to the period April 2006 to October 2006 and the balance amount of Rs. 3,46,96,577/- pertained to the period from November 01,2006 onwards. - Held that:- there was no merit in the ground raised by department because CIT(A) deleted the addition on the ground of double addition which finding has not been controverted by department – Following CIT Vs. Lakshmi Macahine Works [2007 (4) TMI 202 - SUPREME Court] - any receipt which does not have an element of turnover cannot find a place either in the export turnover or the total turnover - Reimbursement of expenses has to be excluded from both export turnover and total turnover - Decided against Revenue.

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• 2014 (7) TMI 80
  Opportunity of being heard - Admission of additional evidences - Held that:- The assessee has given a statement that the Commissioner (Appeals) has not provided opportunity of hearing to the assessee, because the name of the authorised representative which has been noted in the order of the Commissioner (Appeals) is Mr. Dhananjay Sharma, Chartered Accountant, whereas in the body of the order, he has mentioned the name of one Mr. Ramakant Sharma, had appeared and explained the case - Commissioner (Appeals) had rejected the adjournment and proceeded to decide the case on merit after noting the presence of Mr. Ramakant Sharma, who was not well versed with the facts of the case - the assessee has given the statement at the bar and in the absence of any rebuttal by other side – the matter is to be remitted back to the CIT(A) for admission of the additional evidences which have been filed – Decided in favour of Assessee.

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• 2014 (7) TMI 79
  Penalty u/s 271(1)(c) of the Act – Concealment of income – Inaccurate particulars furnished – Held that:- The AO had issued a notice to the assessee and had asked it to explain the reasons for not adding the item to the computation of total income – FAA rightly was of the view that the case of the assessee is covered by the provisions of explanation 1 to section 271(1)(c) of the Act - assessee was aware of the hearing of the matter - in absence of the assessee or his representative, the matter is decided on the basis of available material - assessee did not file any satisfactory explanation before him - the explanation filed by the assessee has been found not to be a bonafide explanation - FAA was justified in confirming the penalty levied by the AO u/s 271(1)(c) of the Act – Decided against Assessee.

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• Customs

• 2014 (7) TMI 102
  Import of flower seeds through courier - revenue contended that plants and parts thereof cannot be imported through courier as per the Regulations. - Contravention of provisions of Courier Import & Export (Clearance) Regulations, 1998 - Held that:- Seeds of kind used for sowing are classifiable under Chapter 12 of the Tariff whereas trees, plants, bulbs and roots are classifiable under Chapter 6 of the Tariff. Even the Tariff recognizes seeds for sowing and plants and parts thereof differently. In the present case, the seeds are for sowing i.e. for seasonal flowers. In these circumstances, there cannot be any redemption file and penalty - Decided against Revenue.

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• 2014 (7) TMI 101
  Condonation of delay - Commissioner(Appeals) rejected the review application on the count of time bar. - Levy of CVD - Benefit of Exemption Notification No.6/2006-CE dated 01.03.2006 - Classification under CTH 84186990 or under CTH 8434200 - dairy machine Icecream Candy - Held that:- order of the Deputy Commissioner was accepted by the Department initially, however, based on audit objection by the internal audit department of Kolkata Customs House, a decision was taken to review the said order. In this regard we find from the provisions of Section 129D(2) of the Customs Act that Commissioner of Customs may of his own motion call for and examine the records of any proceedings in which the order has been passed by the subordinate officers for the purpose of satisfying himself as to legality or propriety of any such decision or order and may direct to apply to the Commissioner(Appeals) for the determination of such point arising out of the decision or order as may be specified by him in his order. As against this we notice that in the present case the Committee of Commissioners had examined the order passed by the Deputy Commissioner to be legal and proper and accepted the said order. We are of the opinion that once the legality and propriety of the order passed by the lower authorities has been examined and the same found to be legal and proper, no subsequent review order can be passed under Section 129D(2) of the Customs Act, 1962 - Decided against Revenue.

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• Corporate Laws

• 2014 (7) TMI 100
  Rectification of register of shareholders - atonement of shares in lieu of payment against sale proceeds of land - Held that:- Petitioner company under the guise of rectification is seeking to enforce a specific performance and in the circumstances detailed aforesaid invoking the jurisdiction of this Bench under sections 111(4) and 111A of the Companies Act, 1956 is completely misplaced and in my view an abuse of process of Law. The petition is considered an exercise in futility and liable to be dismissed - Decided against Petitioner.

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• Service Tax

• 2014 (7) TMI 120
  Export of service - Business Auxiliary Service - business of money transfers - assessees had provided Business Auxiliary Service (BAS) to either the principal Indian agent, or wherever the assessees are the principal agent to the overseas entity which is in the business of money transfers - Commissioner deleted penalty u/s 76 - Held that:- There is no dispute that as a consequence of the ratio discernable from the judgement of the Larger Bench in Paul Merchant Ltd. principal agents and sub-agents of M/s Western Union Ltd. and similarly circumstanced foreign Money Transfer entities are not liable to service tax under provisions of the Act; since the services provided by these agents amounts to export of services and these are exempted from the levy of Service Tax under the Export of Service Rules 2005. As on date the decision of the Larger Bench in Paul Merchant Ltd. [2012 (12) TMI 424 - CESTAT, DELHI (LB)] is extant and operative and has not suffered any appellate eclipse - Decided in favour of assessee

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• 2014 (7) TMI 119
  Condonation of delay - non-receipt of order - Held that:- Delay which is of approximately 604 days is quite substantial in filing appeal before us. Only point which has been forcefully argued by the consultant as well as in the affidavit filed before us by the Secretary of the appellant is that they had not received impugned order nor they have received any letters from the Supdt Office. We find that though the appellant is stating on oath that he has not received copy of the impugned order, there is a contradiction in as much as the acknowledgement card which indicates serving of OIA on the appellant’s address is the same where the appellant’s office is situated and the address given in the appeal memoranda and said acknowledgment card are the same. We find no proper explanation given. They also stated that the signature or scribbling on the acknowledgement card is neither the secretary nor any of the staff engaged. We are unable to accept the explanation given by the secretary of the appellant co-op society for the simple reason that they have received the hearing notice from Tribunal bearing the same address which is given in the appeal memoranda. In our view, the appellant is not able to convince us that there is a justifiable cause in the delay in filing before the tribunal - Condonation denied.

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• 2014 (7) TMI 118
  Erection and commissioning service - Tax collected but not paid - Held that:- During the period in dispute appellant had collected the service tax as provider of taxable service, this fact is admitted even in the statement of facts in para 5 of the appeal filed before the Tribunal. As appellant collected tax as provider of taxable service the same was deposited only in the year 2006 though the same also relates to the year 2005. In these circumstances, we find no merit in the contention of the appellant that appellants are not liable to pay service tax as provider of erection, commissioning and installation service - As the appellant had collected the service tax and retained the same even without disclosing to the Revenue - Decided against assessee.

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• 2014 (7) TMI 117
  Waiver of pre-deposit - CENVAT Credit - reversal of credit with interest whether amount to non availment of credit - Non maintenance of records - Held that:- Rule 6 of the Cenvat Credit Rules has been amended retrospectively in 2002 vide Finance Act, 2011 and the Tribunal in the case of Jost's Engineer cited [2013 (8) TMI 463 - CESTAT MUMBAI] relied upon by the applicants held that reversal of credit by the assessee on the entire input service credit taken alongwith interest amounts to non availament of credit therefore the provisions of Rule 6 (3) of Cenvat Credit Rules are not attracted. In view of the above decision, prima facie the applicants have made out a strong case for waiver of pre-deposit on merits. Pre-deposit of the dues is therefore waived and recovery thereof stayed for hearing of the appeal - Stay granted.

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• 2014 (7) TMI 116
  Demand of service tax - Manpower Recruitment Service or not - agreement with their principal to do certain work with the help of their assurance of production of big mill and small mill and the payment of the same is to be made per Metric Ton. - Held that:- As per the agreement the appellant are to do certain activity at the premises of their principals and remuneration towards their services are to be paid as per the work executed and as not per the labour supplied. Therefore, as per the decision of Ritesh Enterpries (2009 (10) TMI 182 - CESTAT, BANGALORE) wherein this Tribunal has held that contracts for execution of work of loading, unloading, bagging, stacking and destacking in terms of the agreement, the payment is to be made for lump sum work not as per the labour supplied. In these circumstances, the demand under the Manpower Recruitment service is not sustainable. As observed by us, in this case also the remuneration of the work done by the appellant are to be paid as per the work done in lump sum and not as per labour supplied. In these circumstances, the demand under the category of Manpower Recruitment and Supply Agency Service does not sustain - Decided in favour of assessee.

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• 2014 (7) TMI 115
  Valuation - repair and maintenance of the transformers - composite contract or not - appellants revealed that they were paying service tax only on the ‘Labour Charges' - demand of service tax on total contracted value - Held that:- on examination of the documentary evidences, we find that the agreements as also the invoices reflected the cost of the materials and the labour separately as also establishes the fact of payment of excise duty, VAT/CST on the said goods sold, it has to be held that no service tax would be leviable on the value of the materials sold. - Decided in favor of assessee. It is also seen that the Commissioner vide a separate order dated 21.02.2011 in another associated company M/s. Surya Transformers has set aside the demand based on identical ground. Though the said order was placed before the Commissioner, he has not followed the same by observing that the said order has not been accepted by the Department and the appeal has been filed there against before the Tribunal. However, there is no stay of operation of the said order. - Decided in favour of assessee.

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• 2014 (7) TMI 114
  Suo moto adjustment of excess service tax paid - denial for adjustment with future payments - Held that:- A plain reading of the Rule 6(3) shows that if the assessee has paid Service Tax during the particular period for which they have not provided the service to the client and the said Service Tax paid to the department has been either refunded to the client or not collected, in that situation, the excess payment of Service Tax can be adjusted for future payments - if adjustment of excess service tax is not allowed for future payments, the provisions of Rule 6(3) ibid shall become otiose and non-implementable. As the fact that the excess payment is not in dispute and same has been adjusted for the future liability of Service Tax by the appellant, therefore, to pay Service Tax is only an exercise which created hurdle in the smooth functioning of imposition and collection, as held by the Tribunal. Therefore, the adjustment can be allowed - Following decision of Nirma Architects & Valuers [2005 (10) TMI 4 - CESTAT - New Delhi] - Decided in favour of assessee.

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• Central Excise

• 2014 (7) TMI 111
  100% EOU - DTA clearance of cut flowers - Exemption under Notification 126/94-Cus dated 03/06/1994 - Held that:- Notification 126/94 grants exemption to inputs imported for the production, manufacture or packaging of articles for export purposes. One of the conditions stipulated for availing the benefit of exemption is that if the articles which are manufactured/produced are not excisable and are not exported, then customs duty can be demanded on the imported inputs used for the purpose of production and manufacture of such articles in an amount equal to the customs duty leviable on such articles as if they are imported as such. In other words the duty demand is on the imported inputs and not on the articles which have been produced and such duty is demandable at the time of clearance of the non-excisable articles into DTA. Notification does not permit demand of duty on the articles manufactured/produced in Indian when cleared into DTA. In the present case, the show cause notice proposes to demand excise duty on cut-flowers which are not excisable. Therefore, the provisions of Notification 126/94 has no application - Decision in the of Cosco Blossoms Pvt. Ltd. vs. Commissioner of Customs [2003 (12) TMI 114 - CESTAT, NEW DELHI] followed - goods produced in an EoU cannot be treated as imported goods and only excise duty under Section 3 of the Central Excise Act is payable and customs duty is not demandable - Decided against Revenue.

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• 2014 (7) TMI 110
  CENVAT Credit - input services - definition of Rule 2(l) of CENVAT Credit Rules, 2004 - insurance cover on the employees - Held that:- Any service availed by the manufacturer of excisable goods in the course of their manufacturing activity during the impugned period is entitled for input service credit therefore, the issue is no more res integra . In this case, the insurance cover taken by the appellant are for the welfare of their employees during their course of manufacturing activity - Decided in favour of assessee.

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• 2014 (7) TMI 109
  Condonation of delay - Restoration of appeal - Inordinate delay of 4 years - Held that:- In the application there is no explanation given as to why it has taken almost 4 years to file the restoration application - Though the Central Excise law does not lay down any time limit for filing of restoration application, the settled legal position is that time limit for filing of appeal would apply in respect of application for restoration of appeal also as held by the Hon'ble High Court of Bombay in the case of Kirtikumar Jawahar lal Shah Vs. Union of India - [2012 (10) TMI 228 - BOMBAY HIGH COURT] and by the Hon'ble High Court of Gujarat in the case of L.J. Synthetic Mils Vs. Commissioner of Central Excise, Ahmedabad-I - [2010 (3) TMI 833 - GUJARAT HIGH COURT]. In view of the above, application is belated and time barred - Condonation denied.

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• 2014 (7) TMI 108
  Duty demand - Manufacturing of sugar - Baggase as waste or taxable product - Held that:- Baggase is only a waste arising in the course of manufacture of sugar and cannot considered as 'manufactured' goods and, therefore, the provisions of Rule 6(3) of Cenvat Credit Rules, 2004 would not be attracted - Following decision of Balrampur Chini Mills Ltd [2013 (1) TMI 525 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.

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• 2014 (7) TMI 107
  CENVAT Credit - denial of credit since the matter settles by settlement commission applying the provision of Rule 9(1)(b) - whether duty can be held as paid due to suppression of facts - manufacture of Asceptic Packings - Non fulfillment of export obligation - import of excess inputs as permitted in licence - Held that:- Matter has been settled by the Settlement Commission which was not in dispute. Thereafter, no adjudication took place to prove the charge of suppression. This case is squarely covered by the decision of Indian Oil Corporation (2011 (6) TMI 520 - CESTAT, MUMBAI) wherein this Tribunal has held that as adjudication did not take place therefore, the allegation of suppression of facts inconclusive. In these circumstances, the assessee is entitled to take CENVAT Credit of duty paid. The facts of the case in hand are similar to the facts of the case of Indian Oil Corporation Ltd. (supra). Therefore, I hold that the respondents are entitled to take the CENVAT Credit of the duty paid - Decided against Revenue.

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• 2014 (7) TMI 106
  SSI Exemption - Brand name - Manufacture in other person's name - bonafide mistake - Held that:- Appellants are not disputing the fact that ‘Prince’ is belonging to M/s. Kalsi Engineeers and was registered in their name. Further the fact that the appellants were also manufacturing the identical goods i.e. centrifugal pumps, which was being manufactured by M/s. Kalsi Engineeers, in the brand name of ‘Prince’ cannot be held to be reflecting upon their bona fide intention. - Appellant being in the same business is expected to know about the ownership of the brand name, which they are putting on the goods manufactured by them. As such, we are of the view that there is intention on the part of the appellants to use the brand name ‘Prince’ which belonged to M/s. Kalsi Engineeers. Decision relied upon by the assessee in the case of Bhalla Enterprises [2004 (9) TMI 109 - SUPREME COURT OF INDIA] or in the case of Vetcare Organics P. Ltd [2004 (9) TMI 164 - CESTAT, BANGALORE] distinguished - decided against assessee.

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• 2014 (7) TMI 105
  Waiver of pre deposit - Debit made in CENVAT Credit - whether the amount of pre-deposit ordered in the stay order for compliance with provisions of Section 35F can be deposited by the debiting the Cenvat Credit Account - Held that:- though the Commissioner (Appeals) has relied upon the Tribunal’s judgment in the case of Fibre Glass Insulation (2000 (11) TMI 453 - CEGAT, NEW DELHI), the Tribunal in two other cases of Nicco Corporation Ltd. (2012 (8) TMI 815 - CESTAT, KOLKATA) & Minwool Rock Fibres Ltd. (2012 (11) TMI 1002 - CESTAT BANGALORE) has taken contrary view and has clearly held that pre-deposit made by the way of debiting the Cenvat Credit Account is permitted. The decision of the Tribunal in case of Minwool Rock Fibers Ltd. (supra) and Nicco Corporation Ltd. (supra) is in accordance with the decision in case of Birla Yamaha Ltd. reported in [1995 (10) TMI 139 - CEGAT, NEW DELHI] which has not been considered in the case of M/s. Fibre Glass Insulation (supra). The judgment in case of Birla Yamaha Ltd. (supra) is of a Bench of Three Members. In view of this I hold that the impugned order is not correct and the appellant would have to be treated as having complied with the direction of pre-deposit in the stay order - Matter remanded back - Decided in favour of assessee.

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• 2014 (7) TMI 104
  Rectification of mistake - Benefit of Notification No. 2/95-C.E. - Penalty under Rule 173Q of Central Excise Rules, 1944 - Held that:- Perusal of the appellate order throws light that the appellant did not argue on cum-duty price in the course of appeal hearing. Further, the Tribunal held that benefit under Notification No. 8/96 is deniable. Remand was made clearly directing to consider eligibility to Notification No. 2/95 and quantify duty as well as penalty - It may be stated that what that is not pleaded in the course of appeal hearing is not required to be dealt by the Tribunal because Tribunal cannot discover a case not argued. Merely taking ground in the grounds of appeal without arguing thereon during hearing of appeal, the appellant loses right to ask for a finding by the Tribunal - Tribunal having no power to review its own order, becoming functus officio after passing the appeal order - Decided against assessee.

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• 2014 (7) TMI 103
  CENVAT Credit - whether the MS Plates, MS Sheets, etc. used for repair and maintenance of the existing plant and machinery or for modification of the existing plant and machinery are eligible for Cenvat credit or not - Held that:- While the Commissioner (Appeals) in the impugned Order-in-Appeal has observed that the items, in question - MS Plates, MS Sheets, etc. were used in the factory for construction of supporting structure for machinery and foundation, in the show cause notice it has been alleged that the items, in question, were used by the appellant for repair and maintenance of the existing plant and machinery or for modification of the existing plant and machinery. Thus, the allegation that the items, in question, were used in the foundation of capital goods or for fabricating supporting structures for capital goods was not there in the show cause notice itself and, hence, the same cannot be raised at the appellant stage. As regards, the question as to whether the steel plates used for repair and maintenance for plants and machinery are eligible for Cenvat credit or not there are judgments of two High Courts - Hon’ble Rajasthan High Court in the case of UOI v. Hindustan Zinc Ltd. (2006 (5) TMI 44 - HIGH COURT RAJASTHAN ) and Hon’ble Karnataka High Court in the case of CCE, Bangalore-I v. Alfred Herbert (India) Ltd. (2010 (4) TMI 424 - KARNATAKA HIGH COURT ) - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2014 (7) TMI 113
  SEZ - Non obstante clause - levy of purchase tax - whether the non-obstante clause contained in section 22 of the SEZ Act had a limited application - Held that:- nonobstante clause has to be seen in light of the legislative intent - Such intention, however, has to be gathered from the statute containing such nonobstante clause. We have perused sections 21 and 22 of the SEZ Act and also other provisions contained in the SEZ Act. There is nothing to indicate that section 22 of the SEZ Act desired to have limited application when it came to the fiscal benefits contained in section 21 of the SEZ Act. As we have noted, section 21 of the SEZ Act granted several benefits of tax waivers to the transactions entered into in the specified areas within the SEZ. These were necessarily State taxes. But for section 21 of the SEZ Act such taxes would be levied even on the transactions entered into within the said specified areas. In absence of section 22 of the SEZ Act, there would be a conflict between various taxing statutes and section 21 of the SEZ Act. In order to avoid such conflict, section 22 of the SEZ Act was enacted giving overriding effect. Without making any matching provision in the VAT Act, the overriding effect given to the provisions made in the SEZ Act by virtue of section 22 of the Act cannot be whittled down. If the VAT Act and in particular, sections 5A and 9(5) also had a similar non-obstante clause, it would become a matter of legal scrutiny as to which one of the two non-obstante clauses would prevail. In the present case, we are not confronted with such a situation. It was in this background that the Supreme Court in the case of Ketan Parekh (supra) had an occasion to consider as to which one of the two clauses, namely, Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993, would prevail since both contained non-obstante clauses. State legislature desired to give overriding effect to all the provisions of SEZ Act over other State laws and in terms of section 21, particularly, in respect of fiscal statutes, prescribing levy of various duties. There was no intention to limit the operation of this non-obstante clause. No such intention is borne out from the SEZ Act. We are afraid any other contrary intention emerging from any other State fiscal statute would not limit the scope of the non-obstante clause when no overriding effect is given to such provision though enacted much after SEZ Act was introduced. Demand raised by the respondents from the present petitioners for payment of purchase tax under section 9(5) of the VAT Act is invalid and impermissible. The same is, therefore, quashed. The tax recovered, if any, from the petitioners shall be refunded with statutory interest - Decided in favour of assessee.

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• 2014 (7) TMI 112
  Valuation - works contract - Disallowance of deduction of gross profit at 27.44% on labour charges - Availment of deduction of 30% towards labour charges under Rule 6(4)(n)(v) of the table of KST Rules - Held that:- profit earned by the Contractor to the extent it is relatable to supply of labour and service as a permissible deduction for the purpose of arriving at the taxable turnover of the works contractor - further that profit attributable to labour and like charges are separate permissible deductions. Appellant had executed various works contracts during the relevant assessment years. The assessee was not in a position to show the actual amount that he had incurred towards the labour and like charges and therefore, he has adopted standard rate of deduction provided under Rule 6(4)(n)(v) and claimed deduction of 30% on its contract receipt towards the labour and like charges. As per Explanation -II, the appellant had apportioned the gross profit earned by it between the value of goods transferred and labour and like charges. The Assessing Authority after considering the relevant provision of the law allowed the deductions. However, the Revisional Authority without critically examining the matter held that when the assessee availed the deduction of 30% towards labour charges under Rule 6(4)(n)(v) they are not entitled for deduction of 27.44% of gross profit on labour charges. Hence, the order passed by the Revisional Authority insofar as denial of the appellant's claim of deduction of gross profits attributable to labour and like charges under Rule 6(4)(n) of the KST Rules read with Explanation-II appended thereto is not sustainable in law - Decided in favour of assessee.

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