Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 1, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance of interest u/s 40A(2)(b) - money was first diverted by the assessee from his business as a gift to the three persons and thereafter the same money was given to the assessee at the rate of 16% per annum - the entire series of transactions were illusory, colourable and not genuinely for the purpose of the business - HC
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Disallowance of depreciation - Vehicles registered in the names of the purchasers and financed by the assessee under a hire purchase agreement - depreciation allowed - HC
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Deduction u/s 10B - designer products - manufacturing activity for export of handicraft items of dried parts of plants - The process that the assessee had undertaken clearly points out the irreversible nature of the final end product from a raw material purchased - exemption allowed - HC
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TDS u/s 194J - whether TDS is to be deducted on the amount payable on account of service tax or not - ITAT set aside the demand - tribunal order sustained being no substantial question of law arises - HC
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Application of Section 44BB - AO did not make any inquiry, whether the assessee had a fixed place of business or profession in India or a permanent establishment in India - matter remitted back to A.O. - HC
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TDS on Payment toward stake money u/s 194B - Assessee in default u/s 201(1) - if aggrieved, the petitioner has to pursue the remedy of appeal available under the Statute, but they cannot straightaway invoke the jurisdiction of this Court under Article 226 of the Constitution of India - HC
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DVO's report may be a useful tool in the hands of the AO, nevertheless it is an estimation and without there being anything more, cannot form basis for additions u/s 69B of the Act - HC
Customs
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Validity of detention order - where proceedings such as the one contemplated under Section 7 of the COFEPOSA Act were initiated consequent upon absconding of the proposed detenu, the challenge to the detention orders on the live nexus theory is impermissible. - SC
Service Tax
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Computer Reservation System (CSR) – Commission received by the petitioner from M/s Amadeus for using its software and hardware falls under the category of Business Auxiliary Service – prima facie case against the Assessee. - AT
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Service Tax on Works contract - Levy prior to 01.06.2007 - difference of opinion - matter referred to larger bench
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Quantum of fees to be charged from the appellants in case of appeals before CESTAT dealing with refund/rebate of Service Tax – No fees is payable on appeals relating to refund/rebate of Service Tax - AT
Central Excise
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The entire Central Excise Tariff Act is now aligned with HSN tariff and hence if there is no dispute that the appellant is manufacturing Chlorinated Paraffins/ Chloroparaffins in liquid form, then the classification of the said product, prima-facie, would be covered under Chapter 38 - AT
VAT
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Levy of import fee on import of rectified spirit - State have not been able to justify the impugned levy on rectified spirit on the basis of services provided in lieu thereof - a conflict of the taxing power of the Union and of the States cannot arise - HC
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Purchase from unregistered dealer - assessee had failed to establish purchase of machine crushed stone blasts of 65 mm, which he had admittedly supplied to N.T.P.C. from a registered dealer, hence he was liable to pay tax on the value of goods supplied - HC
Case Laws:
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Income Tax
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2013 (8) TMI 15
Disallowance of interest u/s 40A(2)(b) - Rejection of books of accounts - CIT deleted estimation of additional profit - Tribunal set aside CIT order and upheld addition - Held that:- out of the three persons from whom loan taken, two persons cannot be said to be related to the assessee within the meaning of section 40A(2) (b) - It is required to be noted that as such the aforesaid persons are found to be nephews of the assessee and the finding that money was first diverted by the assessee from his business as a gift to the aforesaid three persons and thereafter the same money was given to the assessee at the rate of 16% per annum and on which the assessee claimed benefit under section 40A(2)(b) and the entire series of transactions were illusory, colourable and not genuinely for the purpose of the business - Decided against Assessee. Disallowance of salary payment u/s 40A(2)(b) - ITAT held that the assessee has devised a colourful mechanism to avoid tax liability in the hands of his proprietary business - Held that:- although payment might have been made and there might have been agreement in existence, still it would be open to the Assessing Officer to take into consideration various factors which would go to show whether the payment was made as required by the section 37 of the Act or not. It is required to be noted that as such the Assessing Officer after taking into consideration the relevant factors came to the conclusion that the payment was not made wholly or exclusively for the purpose of the business of the assessee and therefore, the Assessing Officer rightly disallowed the aforesaid deduction which has been rightly restored by the ITAT - Decided against assessee.
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2013 (8) TMI 14
Deduction u/s 10B(2)(ii)(iii) - designer products - manufacturing activity for export of handicraft items of dried parts of plants - Reconstruction of business - Tribunal referring to case Aspinwall & Co. Ltd. V. CIT [2001 (9) TMI 3 - SUPREME Court] - allowed deduction deduction u/s 10B(2)(ii)(iii) - Held that:- process which the assessee had undertaken satisfies the test of manufacture to qualify for relief under Section 10B - apart from cleaning and grading, the assessee had taken further processing; that what is purchased as raw material and what is exported as a product for export are totally different items. The process that the assessee had undertaken clearly points out the irreversible nature of the final end product from a raw material purchased - Decided against Revenue.
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2013 (8) TMI 13
Disallowance of depreciation - Vehicles registered in the names of the purchasers and financed by the assessee under a hire purchase agreement - CIT disallowed depreciation - Tribunal allowed depreciation - Held that:- Section 32 requires that the assessee must use the asset for the "purposes of business". It does not mandate usage of the asset by the assessee itself. As long as the asset is utilised for the purpose of business of the assessee, the requirement of Section 32 will stand satisfied, notwithstanding non-usage of the asset itself by the assessee - As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out - Following decisions of CIT v. Bansal Credits Ltd.[2002 (11) TMI 76 - DELHI High Court], CIT v. M.G.F. (India) Ltd.[2004 (1) TMI 10 - DELHI High Court] and CIT v. Annamalai Finance Ltd.[2004 (10) TMI 51 - MADRAS High Court] - Decided against Revenue.
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2013 (8) TMI 12
TDS u/s 194J - whether TDS is to be deducted on the amount payable on account of service tax or not - ITAT set aside the demand - Held that:- The words, “any sum paid”, used in Section 194J of the Act, relate to fees for professional services, or fees for technical services. As per the terms of agreement, the amount of service tax was to be paid separately and was not included in the fees for professional services or fees for technical services - The service tax was to be paid separately or not, is purely a question of fact and as per the agreement entered in the present case, it was to be paid separately and there is a finding of fact in this regard, recorded by the Appellate Authority as well as the Appellate Tribunal also - Decided against Revenue.
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2013 (8) TMI 11
Application of Section 44BB - Tribunal held that assessee is sully covered u/s 44BB - Held that:- Section 44BB deals with all kind of services in connection with prospecting for, or extraction or production of mineral oils; Section 44DA deals with, amongst others, fees for technical services from a non resident, not being a company, or a foreign company, after 31st March, 2003. At the same time, Section 115A deals with technical service fees in case of a foreign company - in respect of fees received by a non-resident assessee for providing service in connection with prospecting for, or extraction or production of mineral oil, such assessee would be covered by Section 44BB until before proviso to Sub-section (1) of Section 44BB was inserted - Assessing Officer did not make any inquiry, whether the assessee had a fixed place of business or profession in India or a permanent establishment in India - Therefore matter remitted back to A.O. - Decided against Revenue.
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2013 (8) TMI 10
Non-compliance of Section 194-B - TDS on Payment toward stake money - Assessee in default u/s 201(1) - Held that:- respondent arrived at the said conclusion on appreciation of various factual aspects relating to petitioner's business activity and the documents furnished along with its explanation. Therefore, it is only for the appellate authority to determine on examination of the record and on appreciation of the documents produced by the petitioner, whether the respondent has exceeded its jurisdiction in holding the petitioner as a defaulter assessee. That being so, the error of jurisdiction which the respondent has allegedly committed in passing the impugned orders is not a mere error apparent on the face of the record which can be corrected under Article 226 of the Constitution of India - if aggrieved, the petitioner has to pursue the remedy of appeal available under the Statute, but they cannot straightaway invoke the jurisdiction of this Court under Article 226 of the Constitution of India - Decided against assessee.
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2013 (8) TMI 9
Addition u/s 69B - Valuation report u/s 142A - Tribunal deleted addition - Held that:- sole basis for making the addition was the DVO's report. DVO's report may be a useful tool in the hands of the Assessing Officer, nevertheless it is an estimation and without there being anything more, cannot form basis for additions under Section 69B of the Act - Decided against Revenue.
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Customs
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2013 (8) TMI 8
Validity of detention order - Third member decision - whether a detention order passed under the provisions of the COFEPOSA Act could be challenged at the pre-execution stage only on any of the five exceptions carved out by the Court in Addl. Secretary, Govt. of India vs. Alka Subhash Gadia (1990 (12) TMI 216 - SUPREME COURT OF INDIA) or whether such challenge could be maintained on other grounds as well – Held that:- those who have evaded the process of law shall not be heard by this Court to say that their fundamental rights are in jeopardy. At least, in all those cases, where proceedings such as the one contemplated under Section 7 of the COFEPOSA Act were initiated consequent upon absconding of the proposed detenu, the challenge to the detention orders on the live nexus theory is impermissible. Permitting such an argument would amount to enabling the law breaker to take advantage of his own conduct which is contrary to law. The question whether the five circumstances specified in Alka Subhash Gadia case (1990 (12) TMI 216 - SUPREME COURT OF INDIA ) are exhaustive of the grounds on which a pre-execution scrutiny of the legality of preventive detention order can be undertaken was considered by us earlier in the instant case. We held that the grounds are not exhaustive. Dropti Devi Vs. Union of India [2012 (7) TMI 202 - SUPREME COURT OF INDIA] - But that does not persuade me to hold that such a scrutiny ought to be undertaken with reference to the cases of those who evaded the process of law. - All petitions dismissed.
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2013 (8) TMI 7
Claim for duty drawback – assessee filed a claim of duty drawback for export goods - The show cause notice was issued to the assessee for confiscation of 5268 cartons exported for which the drawback claimed - penal action u/s 114AA on the assessee - penal action u/s 114(iii) on the exporters and rejection of the duty drawback claim - Held that:- Commissioner (Appeals) had rightly held drawback claim admissible at lower rate on Customs portion only - penalties u/s 114(iii) of Customs Act on the exporter - The penalty imposed on exporter u/s 114AA was set aside as the imposition of penalty u/s 114(iii) will meet the ends of justice - penalty was already imposed on exporting company and therefore the penalty imposed on u/s 114(iii) was set aside. CENVAT credit - availing Cenvat credit of some inputs and input services used in the manufacture of export goods was not denied by the exporter - The reversal of said Cenvat credit cannot make him entitled for drawback claim at higher rate since the condition for claiming higher rate of drawback were not satisfied at the time of export – availment of Cenvat credit facility by exporter manufacturer is not denied by exporter and therefore the charge of mis-declaration of statement on the part of all noticees in relation to claim of drawback with an intention to avail drawback at higher rate stands proved. Commissioner (Appeals) has erred in setting aside the redemption fine and penalties - the redemption fine and penalties imposed by adjudicating authority appears harsh and their reduction is warranted – order modified.
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Corporate Laws
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2013 (8) TMI 6
Refund of advance - Promised quantity of goods not supplied - Held that:- Since the company says that unless the sales tax forms are furnished by the petitioner to company, the company is liable to pay an amount of Rs. 8 lakh to the appropriate authorities, such matter has to be assessed. In any event, there is also a defence of the company that the value of the goods sold to the petitioner was not of the lesser amount attributed by the petitioner - Defence may ultimately be found to be wanting, a creditor's petition is not admitted on impressions, and the company here must be afforded a chance to fight the claim in a regularly constituted action. Accordingly, the claim of the petitioning-creditor is relegated to a suit - Decided in favour of petitioner.
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Service Tax
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2013 (8) TMI 21
Validity of substantial liability of service tax - Whether non-addition of Section 71-A in the Finance Act, 1994 and also in its non insertion in erstwhile Section 73 of the Finance Act, 1994 invalidates the substantial liability of service tax - GTA - Show cause notice issues for realization - Commissioner confirmed service tax and levied penalty - Tribunal held demand of service tax not sustainable - Held that:- The liability to file return is cast on the appellants only under Section 71A, which was introduced in the Finance Bill, 2003. The class of persons, who come under Section 71A is not brought under the net of Section 73 and thus a show cause notice invoking Section 73 is not maintainable - It is not denied that the respondent was not required to file the return nor any show cause notice or demand was issued or was outstanding when the amendment in the Act came into force - Following decision of Commissioner of Central Excise Vadodara-I vs. Gujarat Carbon & Industries Ltd [2008 (8) TMI 4 - SUPREME COURT] - Decided against Revenue.
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2013 (8) TMI 20
Stay - Service Tax as Business Auxiliary service – Computer Reservation System – Held that:- The petitioner is "required under the. agreement with M/s Amadeus India to exclusively use only the Amadeus India provided software for connectivity employing the enabling hardware, also furnished by M/s Amadeus India. This interface/ synergy between the petitioner and M/s Amadeus India provides the petitioner travel agency access to a cosmos of connectivity for booking airline tickets, of several airlines in the world for beneficial employment in the core business of the petitioner which is a travel agent - The complementary benefit derived by M/s.Amadeus India is an expansion of its footprint in its core business, with airlines, with regard to booking of tickets of the airlines, by travel agents such as the petitioner - Commission received by the petitioner from M/s Amadeus for using its software and hardware falls under the category of Business Auxiliary Service – prima facie case against the Assessee. Period of Limitation – Stay Application - Case of wilful suppression or contravention of the provisions of Act with an intent to evade tax – Held that:- It is a matter to be considered at the final hearing Stay Application – Held that:- The liability of the petitioner for the period 2008-09, which falls within the normal period of limitation is determined to be ₹ 11,77,038/-, for the provision of Business Auxiliary Service and ₹ 10,191/- for having provided tour operator service – Petitioner to remits ₹ 11,87,000 /- representing the cumulative liability on the two taxable services for the period 2008-09, to the credit of Revenue within four weeks.
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2013 (8) TMI 19
Non-compliance of the direction of pre-deposit - Applicant was directed to deposit 50% of the Service Tax within a period of Eight weeks from the date of communication of the order and to report compliance – Held that:- Order of Tribunal has been dispatched to applicant on 25th April, 2013 and the applicant has not reported compliance as directed by this Tribunal in its order dated 18/04/2013 - Appeal is dismissed for non-compliance with the provisions of Section 83 of Finance Act, 1994 – Decided against the Assessee.
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2013 (8) TMI 18
Service Tax on Works contract - Levy prior to 01.06.2007 - difference of opinion - matter referred to larger bench on the following issues: i) Whether a works contract can be vivisected even prior to 01/06/2007 and the service portion discernible in the contract can be subjected to levy of service tax and in the present case, since the discernible service is "erection, installation and commissioning", the said activity is leviable to service tax under section 65(105)(zzd) read with section 65(39a)/65(28) as they stood at the relevant time prior to 01/06/2007 and under section 65(105)(zzzza) on or after 01/06/2007 as held by Hon'ble Member (Technical), relying on the ratio of the decision of the Larger Bench of this Tribunal in the case of BSBK Pvt. Ltd. [2010 (5) TMI 46 - CESTAT, NEW DELHI - LB] and the decision of the Hon'ble Apex Court in the case of BSNL Ltd., [2006 (3) TMI 1 - Supreme court]– Tamil Nadu Kalyana Mandapam Association [2004 (4) TMI 1 - SUPREME COURT OF INDIA], and Nagarjuna Construction Co. Ltd. vs. Govt. of India [2012 (11) TMI 404 - SUPREME COURT] and the matter should be remanded back to the adjudicating authority for re-determination of the value of the taxable service by extending the benefit of notification no. 12/2003-ST, 19/2003-ST & 01/2006-ST; and ii) The limitation of time bar does not apply except in the case of Contract pertaining to Chennai Petroleum Corporation Ltd. as held by the Member (Technical) based on the decision of the Hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd. [2010 (4) TMI 631 - GUJARAT HIGH COURT] and the Larger Bench decision in the case of Usha Rectifier Corporation [2000 (4) TMI 117 - CEGAT, COURT NO. II, NEW DELHI]. OR i) Whether a works contract cannot be vivisected prior to 01/06/2007 and subjected to levy of service tax under "erection, installation and commissioning service" as held by Hon'ble Member (Judicial), based on the decision of the Tribunal in the case of Jyoti Ltd. vs. CCE, Vadodara [2007 (12) TMI 20 - CESTAT, AHMEDABAD], Indian Oil Tanking Ltd. [2009 (1) TMI 443 - CESTAT, MUMBAI] and of the apex Court in Govind Saran Ganga Saran vs. Commissioner of Service Tax – 1985 (60) STC 1 (SC); and (ii) The demand is time barred as held by the Hon'ble Member (Judicial).
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2013 (8) TMI 17
Quantum of fees to be charged from the appellants in case of appeals before CESTAT dealing with refund/rebate of Service Tax Held that:- Section 86(6) which came into effect on 01.11.2004, sub-section (6) of Section 86 clearly speaks of charging of fees in respect of demand of service tax, interest or levy of penalty - Section 86(6) neither talks of refund /rebate nor there is any residuary clause in 86(6) to cover appeals other the demand of service tax, interest and penalty. We also note that prior to 01.11.2004 all appeal were chargeable to fees. New Section 86(6) restricts charging of fees on appeals involving demand of service tax, interest or levy of penalty only Thus, legislature did not intend to charge any fees in appeals relating to refund/rebate - No fees is payable on appeals relating to refund/rebate of Service Tax Decided in favor of Assessee.
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Central Excise
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2013 (8) TMI 5
Calculation of Education Cess on the excise duty chargeable by EOU for the goods cleared into DTA – Held that:- The Larger Bench, in the case of Kumar Arch Tech Pvt. Limited vs. CCE, Jaipur-II, as reported at - [2013 (4) TMI 482 - CESTAT NEW DELHI] has specifically held in favour of the assessee and answered the reference accordingly and in the case in hand, the assessee has been following the very same procedure - Decision of the Larger Bench is binding on the Division Bench, thus, applicable in favor of assessee in the present case – Decided in favor of Assessee.
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2013 (8) TMI 4
Waiver of pre-deposit – Stay application – Held that:- Having regard to the facts and circumstances of the case, more particularly, when the company is closed since 6 to 7 years, appellant is directed to deposit a sum of ₹ 7.50 lacs with the department as predeposit, it will be in the fitness of things and it will be in the interest of justice - Appeal succeeds in part
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2013 (8) TMI 3
Limitation - Demand of ineligible cenvat credit – Held that:- Show cause notice dated 01.08.2012 invokes extended period while the appellant has always been intimating the authorities regarding availment of cenvat credit on specific inputs/ capital goods. On perusal of the sample return produced by the learned counsel, appellant have intimated the department about the Chapter sub-heading numbers which are mentioned in the invoices along with invoice numbers. The impugned order to the extent it confirms demand prior to 01.06.2011 is hit by limitation – Decided in favor of Assessee.
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2013 (8) TMI 2
Cenvat credit on the inputs and the capital goods which were used in Research and Development works – Relying upon the judgment of the Hon ble High Court of Bombay in the case of Tata Engineering Locomotive Company Limited vs. CCE, Pune [2010 (2) TMI 601 - BOMBAY HIGH COURT] and also because appellant is unable to justify his claim that these inputs were used in relation to manufacture, held that appellant has not made out a case for prima facie use of such materials – Directed to make pre-deposit of Rs.50,000/- (Rupees fifty thousand only) within a period of four weeks.
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2013 (8) TMI 1
Classification of the product ‘Liquid Paraffin Wax’ under Chapter heading 3824 or 27.12 of the Central Excise Tariff Act – Held that:- Paraffin Wax comes in liquid form as well as in solid state – It is undisputed fact that the appellant is manufacturing only Liquid Paraffin Wax and are not manufacturing solid Paraffin Wax - Board Circular dated 01.08.2011 specifically indicates that HSN Explanatory Notes, as indicated in (B) (9) as classification of Chlorinated Paraffins/ Chloroparaffins (in liquid) to get classified under Chapter heading 38.24. The entire Central Excise Tariff Act is now aligned with HSN tariff and hence if there is no dispute that the appellant is manufacturing Chlorinated Paraffins/ Chloroparaffins in liquid form, then the classification of the said product, prima-facie, would be covered under Chapter 38 - prima facie case in favor of assessee - stay granted.
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CST, VAT & Sales Tax
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2013 (8) TMI 22
Purchase from unregistered dealer - Tribunal deleted tax liability on presumptions - Held that:- it was established from account books that the assessee had supplied 65 mm machine crushed stone blasts to Rehand. It was the case of the assessee himself that under the contract with N.T.P.C., he had supplied 65 mm machine crushed stone blasts after purchasing the same from Vidut Kumar Singh. Admittedly, Vidut Kumar Singh did not have any machine available with him for crushing. Therefore, the Assessing Authority as well as the First Appellate Authority were justified in recording the finding that the assessee had failed to establish purchase of machine crushed stone blasts of 65 mm, which he had admittedly supplied to N.T.P.C. from a registered dealer, hence he was liable to pay tax on the value of goods supplied - Decided in favour of Revenue.
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2013 (8) TMI 16
Rules made under section 90 of the Jharkhand Excise Act, 1915 to be held as ultra vires being beyond the rule making power of the Board of Revenue under Articles 265 of the Constitution of India read with Entry-8 and Entry 51 of List-II in the Seventh Schedule of the Constitution of India - By the said rule, it has been directed that a sum of ₹ 6.00 per LP Litre shall be levied as import fees on import of rectified spirit imported firstly for manufacture of Extra Neutral Alcohol (ENA) through re-distillation process and then for manufacture of Indian made foreign liquor ( IMFL) – Held that:- State under List-II is empowered to levy fee under Entry 66 in respect of any of the matters in the list but not including fees taken in any Court. Entry 66 read with entry 8 of List II therefore provides competence to the State to levy fee in respect of intoxicating liquor i.e. alcoholic liquor fit for human consumption i.e. to say on the production, manufacture, possession, transport, purchase and sale of intoxicating liquor. The present levy seeks to levy fee on the import of rectified spirit to be utilized for the purpose of, firstly for manufacture of ENA through re-distillation process and then for manufacture of IMFL. Rectified spirit is not fit for human consumption and it therefore does not come within the meaning of intoxicating liquor as contained in Entry 8 of List II - Board of Revenue in exercise of power conferred under section 90 of the Excise Act, 1915 has chosen to levy fee on the import of rectified spirit which is used for manufacture of ENA through re-distillation process and then for the purpose of manufacture of IMFL at the time before bottling @ ₹ 6.00 per LP Litre. Industrial alcohol / non-potable spirit i.e. rectified spirit being not alcoholic liquor fit for human consumption, cannot be the subject matter of any regulation or control by the State under Entry 8, 51 and 66 of List II of Seventh Schedule of the Constitution Held that:- The levy of import fees on rectified spirit therefore by the State Legislature before bottling of IMFL by shifting the event of taxation, cannot be held to be justified as in pith and substance, the levy is on import of rectified spirit i.e. non-potable liquor i.e. alcohol not fit for human consumption. Levy of fee on non-potable liquor i.e. unfit for human consumption or industrial alcohol is permissible under Entry 52 of List-I of Seventh Schedule of the Constitution. Under Entry 84 of List-I, excise duty on tobacco and other goods manufactured or produced in India can be levied except on alcoholic liquor for human consumption; opium, Indian hemp and other narcotic drugs and narcotics. In the wake of such clear demarcation of legislative fields between Union and State Legislature, the impugned notification levying import fees on rectified spirit i.e. non potable liquor or alcoholic liquor unfit for human consumption by applying the rule of pith and substance, cannot come within the legislative competence of the State Legislature. The impugned levy therefore is beyond the legislative competence of the State Legislature and consequentially also beyond the rule making power of the Board of Revenue. As per the Apex court judgment in the case of Godfrey Phillips India Ltd. and Another versus State of U.P. and others reported in (2005 (1) TMI 391 - SUPREME COURT OF INDIA), following observation has been made:“A scrutiny of Lists I and II of the SeventhSchedule would show that there is no overlappinganywhere in the taxing power and theConstitution gives independent sources oftaxation to the Union and the States. Followingthe scheme of the Government of India Act,1935, the Constitution has made the taxingpower of the Union and of the States mutuallyexclusive and thus avoided the difficulties whichhave arisen in some other Federal Constitutionsfrom overlapping powers of taxation.” Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. Respondent State to justify that any services in lieu thereof are provided in the nature of quid pro quo to justify the imposition of such a levy. The petitioner is already having various licences granted by the Excise Department, Government of Jharkhand in Form- 19, 19(B), 20, 25 and 28(A) prescribed by the Board of Revenue and is paying the licence fee for grant of such licences. Under Form-19 a licence for compounding and blending of foreign liquor is given. In Form-19(B), petitioner has been granted licence for the manufacture of foreign liquor / beer as also for the sale of foreign liquor / beer through licencee distributors as also to import or transport the same under bond. The petitioner has a licence for bottling of potable foreign liquor under Form-20 for which it pays fees in advance of ₹ 50,000/- for the year. In Form-25 it has been granted licence to manufacture denatured spirit at its distillery / warehouse. The petitioner also has a licence under Form-28(A) to manufacture spirit in distillery not used in the manufacture of potable liquor for which it also pays a licence fees. It is the contention of the petitioner that it is paying establishment charges on the posting of excise official at its premises. Therefore, the respondent State have not been able to justify the impugned levy on rectified spirit on the basis of services provided in lieu thereof - The notification dated 10thNovember 2012 issued by the Board of Revenue, Jharkhand in exercise of powers conferred under section 90 of the Jharkhand Excise Act, 1915, cannot be sustained in law and it is accordingly quashed – Decided in favor of Assessee.
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