Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 13, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Fair rental value u/s 23(1)(a) - Municipal value or actual rent received – Merely because the rent has not been fixed under that Act does not mean that any other determination and contrary can be made by the AO. - HC
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Penalty proceedings against firm and partners u/s 271(1)(c) – the amounts invested in the Fixed Deposit Receipts belongs to the firm and the income also belong to the firm - penalty on partner is not justified - HC
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Nature of franchise expenses – it was not an expenditure incurred for acquisition of source of profit, but enabled the assessee to run the business profitably - held as revenue expenditure - HC
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Application of section 68 - Principles of natural justice - there were cash deposits in the bank account and thereafter cheques were issued to different parties and in such circumstances, the theory of peak credit could not be accepted - HC
Customs
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DFIA - in case of transferable license the nexus between the imported material and export product is not required to be proved afresh by the transferee/importer, once the imported material is otherwise covered by the advance license - AT
Service Tax
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Revision of refund claim - If service tax is not refunded on the ground that it was for Terminal Handling charges which is not a specified service, is not correct. - AT
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Denial of refund claim - Refund claim of CENVAT Credit under Notification No. 41/2007 - appellant is entitled to the refund of Service Tax paid on the said activity of movement of empty containers from the yard to factory premises. - AT
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CENVAT Credit - duty paying documents - Cenvat credit has been rightly availed on the strength of TR-6 challan through which the service tax has been paid - AT
Central Excise
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Levy of penalty - mandatory penalty u/s 11AC - where demand beyond the normal period of limitation has been dropped there is no case for levy of penalty u/s 11AC - AT
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Interest u/s 11B on delayed refund - Interest becomes payable on the expiry of the period of three months from the date of the receipt of the application for refund under sub-section (1) of Section 11B of the Act - HC
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Clandestine removal - huge burning loss of 6% and 5.5% - Unreasonable burning loss gives rise to the scope of clandestine removal of the goods. - AT
VAT
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Estimation of interstate sale Inter state sale taking the one day average - It is only a crude method which has no substance - HC
Case Laws:
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Income Tax
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2014 (8) TMI 356
Fair rental value u/s 23(1)(a) - Municipal value or actual rent received – Applicability of rent control legislation - Whether the Tribunal was right in holding that the fair rental value specified in section 23(1)(a) is the municipal value or actual rent received whichever is higher and not the annual letting value on the basis of comparable instances as adopted by the AO, though the property was not covered by the Rent Control Act – Held that:- Where Rent Control Legislation is applicable and as is now urged the trend in the real estate market so also in the commercial field is that considering the difficulties faced in either retrieving back immovable properties in metro cities and towns, so also the time spent in litigation, it is expedient to execute a leave and license agreements - Following the decision in Commissioner of Income Tax v. Mani Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] - These are usually for fixed periods and renewable - market rate in the locality is an approved method for determining the fair rental value but it is only when the AO is convinced that the case before him is suspicious, determination by the parties is doubtful that he can resort to enquire about the prevailing rate in the locality - municipal rateable value may not be binding on the AO but that is only in cases of afore-referred nature - It is definitely a safe guide. Even in the cases and matters brought by him to our notice, it is evident that the AO cannot brush aside the rent control legislation is applicable to the premises - the AO has to undertake the exercise contemplated by the rent control legislation for fixation of standard rent - The attempt by the AO to override the rent control legislation and when it balances the rights between the parties has rightly been interfered with in the given case by the Appellate authority - The AO either must undertake the exercise to fix the standard rent himself and in terms of the Maharashtra Rent Control Act, 1999 if the same is applicable or leave the parties to have it determined by the Court or Tribunal under that Act - Merely because the rent has not been fixed under that Act does not mean that any other determination and contrary can be made by the AO. From the three aspects namely of a municipal valuation, of obtaining interest free security deposit and the properties being covered by the Maharashtra Rent Control Act but no standard rent thereunder is fixed. Wherever the AO has not adhered to the those principles, and his finding and conclusion has been interfered with, by the higher Appellate Authorities, the revenue cannot bring the matter as no substantial question of law can be arising for determination and consideration – Decided against Revenue.
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2014 (8) TMI 355
Technical services u/s 9(1)(vii) - Whether the Tribunal was justified in holding that the payments received under the various contracts are in the nature of technical service fees covered by the proviso to section 9(1)(vii) – Held that:- The Reference is wholly misconceived - whether payments received under various agreements were in the nature of “technical service fees” or “royalty”, are questions of fact arrived at after interpreting various clauses of the agreements - the order of the ITAT did not give rise to any question of law - CIT (Appeals) as well as the Tribunal have analysed and interpreted the various agreements entered into between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd in great detail and thereafter come to the conclusion that the payments made in the financial year were by way of fees for technical services. Exemption from tax - Whether these payments by way of fees for technical services were exempt from tax – Held that:- All the agreements between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd. were entered into prior to 1st April 1976 - clearly the proviso to section 9(1)(vii) of the Act was attracted - CIT(A) as well as the Tribunal after holding that that the payments received by the Assessee Company from FCI, IPCC and J.K. Synthetics Ltd. under the various agreements were in the nature of technical service fees were fully justified in holding that the payments were exempt from tax by virtue of the proviso to section 9(1)(vii) of the Act – Decided against Revenue.
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2014 (8) TMI 354
Penalty proceedings against firm and partners u/s 271(1)(c) – Income derived from the firm or not – Held that:- Penalty proceedings cannot be taken both in the hands of the partners as well as in the hands of the firm – any tax imposed upon a firm is in fact a tax upon the partners - penalty is nothing but an additional tax and consequently, a person cannot be punished more than once in respect of the same offence – CIT(A) was justified in cancelling the penalty imposed upon the assessee, who was subjected to penalty in the status of an individual - the assessee has not concealed the income on FDRs - the amounts invested in the Fixed Deposit Receipts belongs to the firm and the income also belong to the firm – FDRs were made from the current income of the firm and that the suppressed income was of the firm, which has been remitted and interest has been paid by the firm – there appears no justification for penalty on concealment does not appear in the hands of the assessee – Decided against Revenue.
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2014 (8) TMI 353
Nature of franchise expenses – 25% expenses treated as capital expenses – Held that:- The rights under the agreement acquired by the assessee could be lost during the tenure of the agreement itself and the assessee was utilising the goodwill and the trademark, which was owned by a third party – CIT(A) has rightly relied upon CIT versus J.K. Synthetics [2008 (12) TMI 21 - DELHI HIGH COURT] – Tribunal was rightly of the view that no new asset came into existence on account of payment of franchise fee and the rights under the agreement were only for the tenure of the agreement and no enduring benefit was derived by the assessee - it was not an expenditure incurred for acquisition of source of profit, but enabled the assessee to run the business profitably - The fixed assets of the assessee remained untouched and no enduring asset came into existence - the brand or the trademark in question was not owned by the assessee - No facts were highlighted and stated to justify the conclusion – Decided against Revenue. Advertisement expenses u/s 37 – Whether 25% of the advertisement expenditure should be capitalized or not – Held that:- Following the decision in Commissioner of Income Tax versus Salora International Limited, [2008 (8) TMI 138 - DELHI HIGH COURT] - the expenditure on advertising was of revenue nature - Advertisement expenses when incurred to increase sales of products are usually treated as a revenue expenditure, since the memory of purchasers or customers - Advertisement are issued from time to time and the expenditure is incurred periodically, so that the customers remain attracted and do not forget the product and its qualities - Advertisements and sales promotion are conducted to increase sale and their impact is limited and felt for a short duration - Expenses for advertising consumer products generally are a part of the process of profit earning and not in the nature of capital outlay - expenses were not incurred once and for all, but were a periodical expenses which had to be incurred continuously in view of the nature of the business - It was an on-going expense – Decided against Revenue.
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2014 (8) TMI 352
Rectification of order u/s 154 - Mistake apparent on record – Various marketing expenses - Held that:- If the Tribunal concludes that some point or issue which may be very debatable, but was not raised or argued before the Tribunal, then it cannot take note of the grievance of the Revenue - That would require it to conduct an exercise of going behind the entire order and record and find out whether it omitted from consideration certain vital factual material or statement or figures therein – thus, the conclusion recorded does not suffer from any perversity nor can be termed as vitiated by any error of law apparent on the face of the record enabling us to exercise our writ jurisdiction – Decided against Revenue.
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2014 (8) TMI 351
Estimation of income - Applicability of section 44AD on gross turnover – Books of accounts not produced by assessee – Held that:- The Tribunal was rightly of the view that estimate made by the AO has to be on some basis and determination of gross profit rate cannot be on mere ipsi dixit - Tribunal felt that the gross profit rate as mentioned in the statute in Section 44AD should be applied – assessee had declared income of ₹ 7,34,920/- and the assessed income @ 8% gross profit on gross receipt of ₹ 2,86,70,726/- would be about ₹ 22,93,658 - Section 44AD prescribes a thumb rule and is applicable to small assesses, but while prescribing the thumb rule the Legislature, it is apparent, must have taken into account material and evidence to come to the figure of 8%. – thus, no substantial question of law arises for consideration – Decided against Revenue.
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2014 (8) TMI 350
Service charges of dyeing and knitting – Deduction u/s 80HHC - Whether the Tribunal was right in law in holding that service charges of dyeing and knitting to be excluded from the total turnover of the assessee while computing deduction u/s 80HHC – Held that:- The assessee is a manufacturer and exporter of cotton yarn, woolen hosiery garments and also trades in cotton yarn - The assessment was framed by the ACIT - Deduction u/s 80HHC of the Act was reduced as service charges were included in the total turnover for the computation of deduction u/s 80HHC of the Act - the Tribunal modified the order holding that service charges to be excluded from the total turnover for the purpose of computing deduction u/s 80HHC of the Act - Following the decision in Commissioner of Income Tax III, Ludhiana v M/s Nahar Spinning Mills Limited, Ludhiana – Decided against Revenue.
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2014 (8) TMI 349
Application of section 68 - Principles of natural justice - Non-speaking order – Held that:- Following the decision in Shri Sudhir Kumar Sharma (HUF) v. The Commissioner of Income Tax-III [2014 (7) TMI 47 - PUNJAB & HARYANA HIGH COURT] - Tribunal had rightly held that there were cash deposits in the bank account and thereafter cheques were issued to different parties and in such circumstances, the theory of peak credit could not be accepted - assessee had not been able to show that there existed any nexus whereby the amount deposited in cash had been withdrawn in cash and thereafter re-deposited to take benefit under peak credit theory – thus, no substantial question of law arises for consideration – Decided against Assessee.
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2014 (8) TMI 348
Ex-parte order passed by Tribunal – non appearance of assessee - No malafide intention - Held that:- As such there was no mala fide intention on the part of the assessee not to remain present at the time of hearing of the appeal before the tribunal on 15/04/2013 – the court was of the opinion that if on imposing reasonable cost upon the assessee, one additional opportunity is given to submit the case on merits before the tribunal – matter restored back to tribunal.
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2014 (8) TMI 347
Rejection of stay application – Application already pending - Held that:- The assessee has not fulfilled the relevant condition stipulated by C.B.D.T and observing that the Board has eloborately narrated the circumstances/ conditions required to be satisfied by the assessee - Since the petitioner has filed an appeal and stay petition is pending as on date before the appellate authority, a conditional order of stay is granted till the disposal of the appeal before the respondent – the petitioner is directed to deposit a sum of Rupees seventy five lakhs – Partial stay granted.
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Customs
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2014 (8) TMI 359
Waiver of pre deposit - Import of BMW cars under EPCG scheme - tourist purposes - Non maintenance of books of accounts - Lack of evidence - Held that:- there is no material available that the imported cars were used for tourist purposes. The Hon'ble Delhi High Court in the case of Interglobe Enterprises [2006 (1) TMI 145 - HIGH COURT OF DELHI] held that in the case of import of the cars under EPCG Scheme, it was observed that while capital goods may or may not be capable of generating convertible foreign exchange by their independent use, least the importer must demonstrate is that the goods were put to use for business activity for which the same were imported. Prima facie there is violation of exemption notification insofar as the applicant failed to produce any evidence that the payments were received in freely convertible foreign currency for services rendered to use of the cars. Hence the applicant failed to make out a prima facie case for waiver of pre-deposit of the entire amount of duty along with interest and penalty. - entire amount of duty directed to be pre-deposited - interest and penalty stayed - stay granted partly.
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2014 (8) TMI 358
Import against transferable duty free import authorization (DFIA) - fulfillment of conditions - import of Patchouli Oil by the appellant being a bona fide transferee - Notification No. 98/2009-Cus. dated 11.9.2009 - Whether Patchauli Oil is capable of being used in food industry in Assorted Confectionery - Held that:- in case of transferable license the nexus between the imported material and export product is not required to be proved afresh by the transferee/importer, once the imported material is otherwise covered by the advance license - In view of this authoritative judicial pronouncement the department cannot now loosely interpret the provisions under scheme by reading several contrasting instructions issued from time to time - Decision in the case of Hico Enterprises [2008 (4) TMI 117 - SUPREME COURT] followed. Merely because in the instant case, licenses are not transferable, it does not mean that the customs authorities are permitted to go beyond the license to deny exemption benefits. In the instant case, the specifications of the goods imported are squarely covered by the advance license issued by the licensing authority. The appellant has thus established a nexus as envisaged by the advance licensing scheme. The License Amendment Sheet dated 23.11.2011 (at page 24) at Sr. no. 4 mentions the modified Import Item as ‘Essential Oils’ without any further restriction as to its description or classification. ‘Patchouli Oil’ being admittedly covered under the scope of the permissible input ‘Essential Oil’ mentioned in the transferrable DFIA, the appellant is entitled for duty exemption under Notification No. 98/2009-Cus.dated 11.9.2009, without insisting on specifications, being a transferee of DFIA - Decided in favour of assessee.
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2014 (8) TMI 357
Mis-declaration of export - fraudulent claim of DEPB benefit - Forgery of signatures - Held that:- adjudication order reveals that one Shri Vijay Madaan who was representative of CHA appellant had forged signatures and also substituted antedated documents to defraud Revenue. It also appears that some of the customs officers were involved in the fraud. Shri M P Singh, Inspector brought out above fact. There is no evidence to show that the appellant was innocent and without his knowledge the documents were filed. He had not taken any legal action against Vijay Madaan. Customs area is a sensitive place where the protection of Revenue as well as security of the country is involved. Therefore we send back the matter to learned Adjudicating authority to make a full inquiry as to ascertain who had forged the signatures and who were involved in antedating the documents and issuing summons to Qimiti Lal Sharma and also Vijay Madaan shall discover the truth behind the scene - matter remanded back.
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Service Tax
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2014 (8) TMI 383
Works contract - construction of staff quarters, students hostels for polytechnic colleges - Held that:- Claim of the appellant that they have paid the entire tax liability in respect of works contract services required to be verified since there is a dispute on this issue. The liability of balance amount attributable to construction of staff quarters, students hostel etc. for Polytechnic College, we hold that the demand does not exist. Since there is a dispute regarding the payment of service tax claimed to have been made by the appellant, we consider it appropriate that matter has to be remanded to the original authority for the limited purpose of quantifying the correct amount and verifying the payment made by the appellant. In case of any discrepancy, the original authority shall intimate the same to the assessee for making payment - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 382
Condonation of delay - Medical grounds and out of city ground - Commissioner declined to condone delay - Held that:- no perversity in the order of the Appellate Commissioner rejecting the appeal, consequent on rejection of the application for condonation of delay, since no wholly satisfactory cause was furnished before the Appellate Commissioner for condoning the delay, However, since a copy of medical certificate certifying that the appellant was medically incapacited during the period of the delay is placed on record - Therefore, delay is condoned with order of costs - Decided conditionally in favour of assessee.
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2014 (8) TMI 381
Condonation of delay - Expiry of Director's daughter - concerned employee of the applicant-company left the job without intimating the receipt of the order - Held that:- Directors daughter expired on 16.11.2012 at Mangalore. The applicant received the impugned order on 21.2.2013. Hence, the death of the Directors daughter has no relevance for condoning the delay of filing the appeal - No merit for condoning the delay of 196 days involved in the filing of the appeal. Accordingly, the COD application is dismissed - Condonation denied.
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2014 (8) TMI 380
Banking and financial services - providing micro finance to self-employed women by organizing them into Self-Help Groups - They take finance from other financial institutions @ 12% and while providing finance to SHGs they charge 15% from such persons. Revenue was of the view that this 3% was towards loan processing fee and service charges and would be taxable under “banking and other financial services” as defined under Section 65(12) and made taxable under Section 65(105)(zm) of Finance Act, 1994 - Held that:- prima facie, appellant is not a financial institution considering the definitions at Sections 45I(c) and 45I(e) in RBI Act, 1934 - Since Only for a brief period under dispute, Section 65(12) provided for taxing service rendered by “any other person” for the rest of the period the service was taxable only if it was provided by a Financial Institution, NBFC or a commercial concern. Therefore, the demand for service tax is not maintainable - stay granted.
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2014 (8) TMI 379
Waiver of pre deposit - Sub letting of services - Invoices issued in name of company whom applicant alloted work - Held that:- Court have gone through the copies of sample invoices produced by the applicant, issued by Times Global Broadcasting Co. Ltd. In the invoices it is specifically mentioned that the advertiser is Indian Oil Corporation Ltd. (applicant) - advertising agencies while discharging the service tax liability are not to take into consideration the expenses in respect of the advertisement in the electronic media - as the invoices on the strength of which credit has been availed are in the name of the applicant, therefore prima facie the applicant has made out a case for waiver of pre-deposit of the dues. The pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal - stay granted.
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2014 (8) TMI 378
Revision of refund claim - Discrepency on scrutiny of refund of service tax - Terminal Handling Charges - Held that:- show-cause notice had clearly observed that service tax was paid under the category of port services by the service providers. Even though the charge was named as “Terminal Handling Charges”, tax liability was in fact, discharged under port services which is one of the specified services under Notification No. 41/2007-S.T., dated 6-10-2007. Without revising classification of the service at the end of service provider, denial of refund of service tax paid under the category of port service at the receiver’s end is not correct. If service tax is not refunded on the ground that it was for Terminal Handling charges which is not a specified service, is not correct. In any case, Terminal Handling was not a separate service during the relevant time nor at this time. It falls under the category of port services only. Moreover, it is quite possible that Terminal Handling Charges are collected by CHA/Service Provider of the appellant and paid to persons who actually did not work. In view of the fact that Service Tax paid under the category of port services, the action taken by the Commissioner to deny service tax is not in accordance with law - impugned order is required to be set aside - Decided in favour of assessee.
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2014 (8) TMI 377
Denial of refund claim - Refund claim of CENVAT Credit under Notification No. 41/2007 - Assistant Commissioner allowed partial refund claim - Rejection of refund of Service Tax paid on transportation of the containers from the stock yard to appellants factory and detention charges - Held that:- refund of Service Tax paid on the transportation of empty containers from yard to the factory for stuffing of the export goods is admissible inasmuch as the said activity is in relation to the transportation of the export goods. As such, by following the decision of the above judgement, we hold that the appellant is entitled to the refund of Service Tax paid on the said activity of movement of empty containers from the yard to factory premises. Refund of service tax paid by the appellant as Service Tax on the detention charges, the appellants contention is that such detention charges is a part of transportation charges which was used for transportation of export goods. The department has accepted the payment of Service Tax on such detention charges and as such, they cannot take the different view for the refund of the same - Such detention charges are paid on containers waiting for their turn to be cleared. As such, till the appellant is given the green signal for clearance of the containers, the appellant is not able to export the goods. As such, broadly speaking, such detention charges are in relation to transportation of the export goods - Till the transportation is factually completed the charges paid for detention of the same prior to the completion have to be held as ‘in relation to transportation of the export goods’ - Decided in favour of assessee.
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2014 (8) TMI 376
Denial of refund claim - Notification No. 17/2009-S.T., dated 7-7-2009 - Non fullfilment of conditions of Notification - Held that:- There is a minor infraction of the condition specified in the notification but that cannot be reason for denying a substantial benefit like refund of tax incidence on export of goods. I consider that the level of co-relation established by the appellant through the different documents is sufficient for granting the refund. Therefore, I set aside the impugned order and order that the impugned refund may be granted to the appellants - Decided in favour of assessee.
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2014 (8) TMI 375
CENVAT Credit - duty paying documents - Availment on basis of non prescribed documents - Held that:- Appellant had discharged the service tax liability by paying service tax through TR-6 challan and that is the document, which evidences payment of tax and it is on the basis of such payment, input service tax credit can be availed. Prior to 16-6-2005, there was a lacuna in the Rule and the Rule did not prescribe TR-6 challan as document for availing the credit. The same was rectified by amending the Rules. The amendment is only a correction of lacuna in the Rule and therefore, it is operational retrospectively. Even otherwise, for availment of credit it is duty paying document that is relevant and in the instant case, the duty paying document is TR-6 challan and therefore, the Cenvat credit has been rightly availed on the strength of TR-6 challan through which the service tax has been paid - Following decision of Essel Propack Ltd. [2007 (9) TMI 43 - CESTAT, MUMBAI] and Crompton Greaves Ltd. [2008 (1) TMI 173 - CESTAT, MUMBAI] - Decided in favour of assessee.
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2014 (8) TMI 374
Demand of service tax - Bar of limitation - Invocation of extended period of limitation - Held that:- If the normal period for issuing show-cause notice is to be one year from 14-11-2003, extended period would be 5 years on that date. In view of the fact that during the whole period from 1997-1998 till 2008, the appellant had not fulfilled statutory obligation of filing the return or intimating the department, it has to be held that the extended period is correctly invoked. Under these circumstances, the demand of service tax and interest thereof are to be upheld and accordingly are upheld. - However, penalties are set aside - Decided partly in favour of assessee.
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Central Excise
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2014 (8) TMI 369
Denial of CENVAT Credit - Misplacement of invoices - Held that:- Revenue's case in the show cause notice is for denial of credit availed in respect of 52 invoices on the sole ground that they have failed to produce said 52 invoices. Though the show cause notice is not available on record, but the said fact become clear from the earlier order of the Commissioner as also from the order of the Tribunal. As such, when the Tribunal remanded the matter with specific direction to examine the 52 invoices, which also stand examined by the Commissioner, it was not open to the Commissioner to decide the matter on the basis of percentage use of strips in question. In as much as there is no dispute about 52 invoices having produced by the appellant on record, I find no justifiable reason to deny the Cenvat credit to the appellants. decided in favour of assessee.
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2014 (8) TMI 368
Levy of penalty - mandatory penalty u/s 11AC - Commissioner (appeals) while confirming the duty reduced the penalty - Excisability - Marketability - Intermediate product - manufacturing of intermixture of vitamin - captive use in the manufacture of instant baby food - Exemption Notification No. 67/1995-CE - Held that:- in the denovo decision of the Tribunal in NESTLE INDIA LTD. [2011 (4) TMI 675 - CESTAT, NEW DELHI], while the Tribunal held that the intermixture of vitamin is marketable and, hence, excisable, in para 95 of the judgment, the Tribunal held that the demand would be limited only to normal limitation period in view of the Apex Court's judgment, wherein the Apex Court held that the view taken by the Tribunal in the earlier order that extended period of limitation was not applicable, was justified. Since, the language of proviso to Section 11A (1) of Central Excise Act, 1944 which provides for the extended limitation period of 5 years for recovery of short paid, non-paid or erroneously refunded duty and the language of Section 11AC of Central Excise Act, 1944 which provides for imposition of penalty equal to the duty demand confirmed in certain situations, is identical and the situations and circumstances in which the extended period can be invoked under proviso to Section 11A (1) and the situations and circumstances in which the penalty under Section 11AC can be imposed are identical, when a finding has been given by the Apex Court that extended limitation period is not invokable, the penalty under Section 11AC also would not be attracted. Penalty could be imposed only under Rule 25 (1) of the Central Excise Rules, where it is discretionary and it need not be equal to the quantum of duty demand - Decided against Revenue.
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2014 (8) TMI 367
Interest u/s 11B on delayed refund - refund was allowed after a long litigation process - Held that:- it is apparently clear that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act provides that in case any duty paid is found to be refundable and if duty is not refunded within a period of three months from the date of receipt of the application submitted under sub-section (1) of Section 11B then interest would be payable at such rate as may be fixed by the Central Government on the expiry of the period of three months from the date of the receipt of the application. The explanation after the proviso to Section 11BB introduces a deeming fiction, namely, that where an order for refund of duty is not made by Assistant Commissioner of Central Excise but by the appellate authority or by the Court then for the purpose of this section the order made by such higher appellate authority or by the Court shall be deemed to be an order passed under sub-section (2) of Section 11B of the Act. Interest becomes payable on the expiry of the period of three months from the date of the receipt of the application for refund under sub-section (1) of Section 11B of the Act - Following decision of Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (10) TMI 16 - Supreme Court of India] - Decided against Revenue.
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2014 (8) TMI 366
CENVAT credit - input services - Gardening Services availed by the appellant - Held that:- as per Clause 3(j) of permission granted to the appellant by Gujarat Pollution Control Board, Gandhi Nagar, which is obligatory to carry out adequate plantation all along the periphery of the industrial premises in such a way that the density of plantation is at least 1000 trees per acre of the land and a green belt of 5 meters width is developed. It was emphasized by the learned advocate that the maintaining of green belt was mandatory and services of such service providers were availed for which the credit has been taken - appellant has prima facie strong case on merits, therefore, order passed by the first appellate authority is set-aside and case is remanded back for de-novo consideration without insisting on any deposit from the appellant - Following decision of CCE Vadodara Versus M/s Diamines & Chemicals Ltd. [2013 (7) TMI 674 - CESTAT AHMEDABAD] - stay granted.
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2014 (8) TMI 365
Penalty for electronically Late filing for ER-1 returns - quantum of penalty - Rule 27 of Central Excise Rules, 2002 - Held that:- It is observed from the show cause notice dt.27.06.2013 that appellant was called upon to show cause as to why for each months delay penalty should not be separately imposed under Rule 27 of Central Excise Rules, 2002 for contravening the provisions of Rule 12 of Central Excise Rules, 2002. For each months delay, adjudicating authority has imposed certain penalty which do not individually exceed ₹ 5,000/-. It is also observed from Para 3 of the OIO dt.14.08.2013 passed by adjudicating authority that for the period before June 2012 and after February 2013, there is no case of late filing of ER-1 return on the part of the appellant. Appellant was thus taking it for granted that for the period earlier than June 2012 a lenient view was taken by the Revenue for not imposing penalty, as argued by ld.Consultant appearing on behalf of the appellant, and continued with late filing of returns. Therefore, imposition of penalties by the first appellate authority has been correctly upheld. However, looking to the facts and circumstances of this case, penalties imposed upon the appellant for each months delay is reduced to ₹ 1,000/- - Decided partly in favour of assessee.
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2014 (8) TMI 364
Recovery of CENVAT Credit - Invocation of extended period of limitation - Whether bar of limitation as prescribed under Rule 14 of the Cenvat Credit Rule, 2014 read with Section 11A was not attracted and cenvat credit was recoverable - Difference of opinion - Majority decision - Held that:- The show cause notice was issued only on the ground that credit of service tax paid on outward transportation is not admissible in view of definition of the input service. The credit is not being denied on the ground that the freight is not part of assessable value or any reason. The only allegation in the show cause notice is that the appellant has wrongly availed credit which is not admissible and deliberately suppressed the fact with intent to evade payment of duty - Appellants were regularly filing statutory returns and also utilising the same - the allegation of suppression of facts with intent to evade payment of duty is not sustainable hence the demand beyond the normal period is not sustainable - Following decision of ABB Limited vs. CCE&ST, Bangalore [2009 (5) TMI 48 - CESTAT, BANGALORE] - Decided in favour of assessee.
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2014 (8) TMI 363
Waiver of predeposit of duty - Central Excise duty paid in cash/PLA under Rule 8 (3A) of the Central Excise Rules, 2002 - applicant already reversed the entire amount from CENVAT account which is in consonance with Rule 8(3A) - applicant submitted that it is incurring huge loss as evident from the Income Tax letter as well as the company has been declared layoff, there is no means to pay further amount as predeposit - Held that:- Karnataka High Court in the case of Manjunatha Industries Ltd. (2013 (4) TMI 534 - KARNATAKA HIGH COURT) held that in the case of default of discharging monthly duty, provisions of Rule 8(3A) of Central Excise Rules for utilizing CENVAT account amount is not with reference to arrears for the entire credit lying in the account. It is observed that the assessee has to pay excise duty through account current for each consignment at the time of removal. Hence the applicant is required to pay the duty by cash/PLA in respect of duty for the defaulting period. After considering the submission of the learned counsel that the applicant-company is incurring huge loss and it is declared lay off and the partial deposit made by them, applicant directed to make predeposit - Conditional stay granted.
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2014 (8) TMI 362
Clandestine removal - whether the burning loss of 6% and 5.5% as claimed by the appellants gives rise to the loss of Revenue and whether showing such high rate of burning loss there was suppressed quantity manufacture and such quantity clandestinely removal - A wholesale formula was applied by the appellant to claim higher burning loss. - Held that:- burning loss occurs but the magnitude of occurrence depends on different factors and differs in each case therefore without a mechanical formula being applied actual burning loss in each case is determinable. - Unreasonable burning loss gives rise to the scope of clandestine removal of the goods. Financial hardship - Held that:- In the case of Assistant Collector of Central Excise, Chandan Nagar Versus Dunlop India Limited And Other [1984 (11) TMI 63 - SUPREME Court] apex court has analyzed the impact of interim orders on the economy - appellant directed to deposit 15% of the duty demand - stay granted partly.
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2014 (8) TMI 361
Waiver of pre-deposit of duty, interest and penalty - Denial of CENVAT credit availed by the applicant on capital goods - Held that:- As the case law relied on by both the sides are contrary therefore, the applicant has made out a case for waiver of pre-deposit. Accordingly, I waive the requirement of pre-deposit of the entire amount of duty, interest and penalty and stay recovery thereof during the pendency of the appeal - Stay granted.
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2014 (8) TMI 360
Demand of differential duties on withdrawal of inbond movement of petroleum products - Movement of petroleum products through the pipelines - transit loss - Notification No. 17/2004-CE (NT) dtd 4.9.2004 - reconciliation of various petroleum products for the purpose of payment of duty - Held that:- various procedures and reconciliation methods have been prescribed by CBEC from time to time as submitted by appellant. It is also observed from the EXB XII at Page 142 of the current appeal paper book that all the details/statements were submitted by the appellant. No specific findings have been given by the Adjudicating Authority on this reconciliation made as to why reconciliation made by the appellant are not acceptable. It is also observed from the findings in Para 12, 13.3, 13.4 and 13.6 of the impugned OIO dated 8.12.2012 that Adjudicating Authority has simply relied upon the earlier findings in adjudication order dtd 31.12.2008 which was set aide by the order dtd 31.1.2011 passed by this Bench. It is improper to rely upon the findings of an adjudicating order which is no more existing - Matter remanded back - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 373
Detention of goods - Tax already paid - Held that:- The only ground raised by the petitioner in this writ petition is that when the goods detained had already suffered tax, the authorities should not have detained the same. This being a pure question of fact, only the authority had to decide the same - petitioner shall pay the entire tax amount as an one time payment - petitioner shall execute a personal bond for the compounding fee along with the purchaser and shall also give an undertaking that they will appear before the authority concerned and co-operate with the adjudicating process - On compliance of the aforesaid conditions by the petitioner, the respondent is directed to release the goods detained to the petitioner forthwith - Decided partly in favour of assessee.
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2014 (8) TMI 372
Validity of order passed - earlier order passed in favour of assessee - In this proceeding earlier order was not considered by the authority - Revenue contends that no reply was submitted by the assessee - Held that:- even if the petitioner did not give a reply, the authority should have considered the earlier order passed against the same petitioner and should have given a finding. But the authority, without taking into consideration the previous order passed and without even giving an opportunity to the petitioner, passed the impugned order, which is per se illegal - Decided in favour of assessee.
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2014 (8) TMI 371
Estimation of interstate sale Inter state sale taking the one day average - Assessee claims that respondent has proposed to treat the local sales effected by the petitioner as an inter-state sale - Held that:- taking the one day average for estimation is not a scientific method sanctioned by law. It is only a crude method which has no substance. At least in order to arrive at one day sales, either the assessing authority or the Enforcement Wing Officers should have made surveys every month taking into consideration the normal day, auspicious day and inauspicious day. - Following the decision in the case of New Kamaliya Hotel [2006 (3) TMI 689 - MADRAS HIGH COURT] the order set aside - matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 370
Settlement of sales tax dispute - order of Appellate Authority for Industrial and Financial Reconstruction (AAIFR) - Consent order passed - Held that:- In view of the compromise entered in to between the parties before the AAIFR, there is no further order necessary in these writ petitions - The compromise entered in to between the parties on 20.2.2014 before the AAIFR shall form part and parcel of the order of this Court - Petition disposed of.
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