Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 14, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Allowability of set off business loss against income from house property u/s 70 – assessee has not carried on any business activity – assessee's claim that all the expenses should be set off against the house property income is not acceptable as it will amount to allowing double deduction to the appellant - HC
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Reopening of completed assessment – Once a query is raised, replied, it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised - HC
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Deemed dividend u/s 2(22)(e) – - a beneficial owner of shares whose name does not appear in the Register of shareholders of the Company cannot be stated to be a shareholder - HC
Customs
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Valuation - import of drawings, designs and documents separately from import of plant and machinery - Once the goods (drawing and designs) were not books, the notification benefit claimed by appellant is also deniable and adjudication was not time barred - AT
Corporate Law
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Jurisdiction of Court - office against cheque bounced - Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured - SC
Central Excise
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Interest demand - Commissioner (Appeal) set aside the demand - Tribunal confirmed the demand - Appellants are liable to pay interest, if any, after three months from the date of the Tribunal's final order in terms of Section 11AA of the Central Excise Act, 1944 - AT
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Automobile Cess - an independent body builder building body on the chassis received from chassis manufacturers on which cess has been paid, would not be liable to pay Automobile Cess once again. - AT
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Requirement for claiming remission of duty - clearance of defective finished goods as Waste/scrap goods - once goods entered into RG-1 registered, it is necessary that a remission application be filed - AT
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CENVAT Credit - assessee is not entitled to take CENVAT credit which were used for erection of supporting structure which were embedded to the earth - AT
Case Laws:
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Income Tax
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2014 (8) TMI 393
Deduction u/s 80IB(10) – Project not completed within stipulated time - Held that:- Assessee have not completed the project within stipulated time i.e. on or before 31 March 2010 and therefore, they are unable to qualify for deduction u/s 80IB (10) of the Act - the issue of certificate is of the local authority and conclusion is a matter of interpretation of Section 80IB of the Act - Section 80IB (10) of the Act does not state that the Certificate of the Gram Vikas Adhikari i.e. local authority is conclusive in nature – Decided against Assessee.
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2014 (8) TMI 392
Allowability of set off business loss against income from house property u/s 70 – Held that:- Assessee evidently has stopped its manufacturing activity and rented out the entire factory premises to other party - Still, it is showing huge repair expenses to the factory in its books of accounts – also, it is showing three transactions of sale in order to show that it still carrying on business activity - these three transactions are only a device to claim huge expenses being debited in the profit and loss account and which are not allowable as a deduction in computation of income from house property – assessee has not carried on any business activity – assessee's claim that all the expenses should be set off against the house property income is not acceptable as it will amount to allowing double deduction to the appellant, i.e. one in the form of standard deduction and another in the form of actual deduction from the income from house property - There is no error committed by the Tribunal in disallowing the claim of set off claimed by the assessee from the rental income from the house property claimed u/s 71 of the Act – there is no reason to interfere with the order of the Tribunal – Decided against Assessee.
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2014 (8) TMI 391
Commission expenses u/s 40A(2)(b) – Held that:- The assessee paid total commission and disallowed considering it to be excessive - CIT(A) deleted the addition by judgment and order the Tribunal has restricted the disallowance - Tribunal has restricted the disallowances - Restrictions of disallowances are absolutely on appreciation of evidence and as based on factual aspects – thus, no question of law arises for consideration – Decided against Revenue.
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2014 (8) TMI 390
Reopening of completed assessment – Power of the AO u/s 147 and 148 of the Act – Held that:- Following the decision in Aroni Commercials Limited Versus The Dy. Commissioner of Income Tax And Another [2014 (2) TMI 659 - BOMBAY HIGH COURT] - The power to reassess cannot be exercised on the basis of mere change of opinion i.e. if all facts are available on record and a particular opinion is formed, then merely because there is change of opinion on the part of the Assessing Officer notice under Section 147/148 of the Act is not permissible - Once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment - It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised - If an AO has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the AO to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. The notice u/s 147 of the Act seeking to reopen the AY and the order rejecting the petitioner's objection to reopen the assessment are not sustainable in law - The entire proceeding for reopening the assessment had emanated only on account of change of opinion on the part of the AO – thus, the assessment order set aside - there was no reason for the AO to have had a reasonable belief that income chargeable to tax has escaped assessment –thus, the Notice issued u/s 148 of the Act also set aside – Decided in favour of Assessee.
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2014 (8) TMI 389
Revaluation of securities - Reduction in closing stock on loss – Held that:- Securities held by the assessee-bank are the stock-in-trade of the business of the assessee-banks and the notional loss suffered on account of the revaluation of the said securities at the close of the year is an allowable deduction in the computation of the profits - The tribunal had rightly following the decision Commissioner of Income Tax Vs. The Nedungadi Bank Ltd. [2002 (11) TMI 29 - KERALA High Court] was of the view that the securities so retained should be and have to be treated as stock-in-trade of the assessee - reduction in market price of the securities held as stock in trade has to be taken on record and in the books – no question of law arises for consideration – Decided against revenue.
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2014 (8) TMI 388
Deemed dividend u/s 2(22)(e) – Purpose of enactment of provisions for deemed dividend – Taxability of deemed dividend - Whether deemed dividend to be taxed in the hands of the shareholder only and not in the hands of the concern - Held that:- Following the decision in THE CHIEF COMMISSIONER OF INCOME TAX-III & ANR. VS. M/S. SARVA EQUITY PVT. LTD. [2014 (4) TMI 788 - KARNATAKA HIGH COURT] - a beneficial owner of shares whose name does not appear in the Register of shareholders of the Company cannot be stated to be a shareholder - He may be beneficially entitled to the share but he is certainly not a shareholder - it is only the person whose name is entered in the Register of the shareholders of the Company as the holder of the shares who can be said to be a shareholder qua Company and not the person beneficially entitled to the shares - it is only where a loan is advanced by the Company to the registered shareholder and the other conditions set out in Section 2(22)(e) of the Act are satisfied, that amount of loan would be liable to be regarded as deemed dividend – Decided against Revenue. Amendment to section 80IB prospective in nature – Form No. 10CCB not filed – Held that:- The provision came on the statute book by Finance Act 2004, with effect from 1/4/2005 - The plan which is sanctioned is of 16/3/2004 ie., prior to the provision coming into force – the provision is prospective in nature and it has no application to house products which was approved by the local authority prior to 1/4/2005 - the benefit u/s 80 IB cannot be denied to the assessee on the ground that he does not comply with the terms of Sec.80 IB(10) - The Tribunal has recorded a finding that the building was completed within the stipulated period and the certificate issued by the Panchayat after the building is completed, the assessee is entitled to the benefit – Decided against Revenue.
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2014 (8) TMI 387
Admission of appeal – Issue not raised before any Assessment authority - Re-computation of book profits – Held that:- Assessee contended that the addition is not justified in the assessment order u/s 153A, as no incriminating material was found concerning the addition u/s 115 JB – the contention of the assessee cannot be accepted – as per section 153A, the additions need not be restricted or limited to the incriminating material, which was found during the course of search - There cannot be multiple assessments, once Section 153A of the Act is applicable - determination in the orders passed u/s 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income – the issue was not raised before the AO, CIT(A) or Tribunal – thus, the contentions of the assessee cannot be accepted – Decided against Assessee. Denial of set off of book loss unabsorbed depreciation as per clause (iii) of Explanation 1 to section 115JB – Held that:- As per the clause (iii), the brought forward losses or unabsorbed depreciation, whichever is less, is to be set off - in the last AY 2003-04, book profit of ₹ 413 lakhs was set off from balance forward losses of ₹ 910 lakhs, giving a balance figure of ₹ 497 lakhs, which has been carried forward as unabsorbed loss - The applicable figure for this year would be ₹ 497 lakhs i.e. the available book loss and unexpired depreciation of ₹ 1079 lakhs – no substantial question of law arises for consideration – Decided against Assessee.
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2014 (8) TMI 386
Rejection of declaration of settlement of disputes – Object of the KVS Scheme - Held that:- The object of the KVS Scheme 1998 was to settle tax arrears locked in litigation at a substantial discount - any tax arrears could be settled by declaring them and paying the prescribed amount of tax arrears and it offered benefits and immunities from penalty and prosecution to the assessee who opted for it - The object of the scheme was to put an end to all the pending disputes in the form of appeals, reference, revisions and writ petitions under the Act - Following the decision in Commissioner of Income-Tax Versus Shatrushailya Digvijaysingh Jadeja [2005 (9) TMI 24 - SUPREME Court] - there is nothing to prevent a party from filing an appeal which may ultimately be found to be time barred - the mere fact that it may finally be concluded that the appeal is not maintainable, would not prior to such a finding, lead to a conclusion that no appeal was pending - Designated Authority under the KVS Scheme 1998 is directed to accept the assessee’s declaration filed for AY 1989-90 to 1993-94 under KVS Scheme 1998 – Decided in favour of Assessee.
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2014 (8) TMI 385
Deduction u/s 80HHC - exclusion of service charges - Whether the Tribunal was right in law in holding that service charges to be excluded from the total turnover of the assessee while computing deduction u/s 80HHC – Held that:- Following the decision in Commissioner of Income-Tax v. Kadri Mills Ltd. [2013 (11) TMI 428 - MADRAS HIGH COURT] – 90 per cent of the sum has to be reduced from the gross total income, to arrive at the business profits - since the processing charges was an important component of the business profits, it has to be included in the total turnover in the formula to arrive at the business profits for computing deduction under clause (baa) of Explanation to Section 80HHC of the Act - service charges would be included in the total turnover and 90% of the service charges shall be excluded from the gross total income for arriving at the profits of the business for calculating the deduction u/s 80HHC of the Act – Decided against Revenue.
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2014 (8) TMI 384
Tax effect below prescribed limit - monetary limit for filing an appeal - Held that:-As per CBDT Instruction no.3 of 2011, dated 9th February 2011, the appeal before the Tribunal can be filed by the Revenue, when the tax effect exceeds the monitory limit of ₹ 3,00,000. - The appeal has been filed after 9th February 2011 - in the latest instruction, the CBDT has raised the limit of tax effect for filing of appeal before the Tribunal at ₹ 4 lakhs – following the decision in CIT v/s Madhukar K. Inamdar (HUF) [2009 (7) TMI 145 - BOMBAY HIGH COURT] - circulars are applicable on pending appeals also – thus, the tax effect is less than ₹ 3 lakhs, therefore, the appeal of the revenue is dismissed as non–maintainable – Decided against Revenue.
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Customs
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2014 (8) TMI 396
Valuation - import of drawings, designs and documents separately from import of plant and machinery - drawings, designs and technical documents classifiable under Customs Tariff Heading 98.03 were imported through courier without payment of duty - Suppression of value at the time of import - Held that:- Normally, "books" mean, text books or reference books meant for reading by general public, professionals and students. The imported goods were meant for sole purpose of the appellant, which cannot be regarded as "book" not being meant for reading by general public. Those were technical literature relating to the plant and machinery imported by appellant to bring such plant and machinery into existence and carry out manufacture using the technology agreed to be imparted. Perusal of the copy of the collaboration agreement throws light that the drawings, designs and documents came through courier are all attributable to the plant and machinery imported according to technical collaboration agreement. That formed part of the entire supply contract and does not leave any doubt to treat technical collaboration agreement to be independent of divisible contract of supply and service. The drawings, designs and technical documents are no doubt goods being integrally connected with the plant and machinery and not classifiable under CTH 49.01. In the present case, those were inevitable necessity of the capital goods to come into existence. Inseparability of each other was their virtue. Therefore it does not appeal to common sense to treat the import consignment independent of plant and machinery to be called "book". When it transpires that the entire contract of supply of plant and machinery (capital goods) and supply of drawing and design were integrally connected with each other that shows allocation of part of value of contract towards drawings and designs to escape duty on capital goods. Such division brings the case to the purview of section 28 of Customs Act 1962. Once the goods (drawing and designs) were not books, the notification benefit claimed by appellant is also deniable and adjudication was not time barred. Even the alternate claim of the appellant that the import of drawing and design shall fall under the Tariff Heading 99.10 is inconceivable because those were not specimens, models, wall pictures nor diagrams for instructional purpose as is specified by that entry. Appellant fails to succeed on merit as to the claim that the imported drawings, designs and technical documents were books. Exemption benefit of the notification claimed by it is not admissible to it since the drawings and designs are not books classifiable under the CTH claimed by the appellant. Thus appeal on this count is dismissed - However, penalty is reduced - Decided partly in favour of assessee.
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2014 (8) TMI 395
Denial of refund claim of cess paid - Exemption of cess under Notification No. 451/2001 dated 30.6.2001 for payment of cess on export of marine products by the EOUs and the units in the Export Processing Zones and Special Economic Zones - Held that:- refund claim was filed on the basis of the exemption Notification No. 451/2001 dated 30.6.2001 which would be governed by Section 27 of the Customs Act, 1962. Accordingly, both the authorities below had rightly rejected the refund claim on the ground of time limit and unjust enrichment. However, there is a subsequent development in this matter as decided by Hon'ble High Court and the Tribunal that Prawns and Shrimps are not fish and is not covered to the Schedule of the said Cess Act, 1940. In my considered view, this issue should be examined by the lower authority in the interest of justice - Following decision of COMMISSIONER OF CUSTOMS, TUTICORIN Versus EDHAYAM FROZEN FOODS [2008 (7) TMI 117 - HIGH COURT MADRAS] - Matter remanded back - Decided in favour of assessee.
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Corporate Laws
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2014 (8) TMI 417
Jurisdiction of Court - office against cheque bounced - Interpretation of Section 138 of the NI Act - Harman transacted business out of Chandigarh only, where the Complainant also maintained an office, although its Head Office was in Delhi. Harman issued the cheque to the Complainant at Chandigarh; Harman had its bank account in Chandigarh alone. It is unclear where the Complainant presented the cheque for encashment but it issued the Section 138 notice from Delhi - Whether sending of notice from Delhi itself would give rise to a cause of action for taking cognizance under the NI Act - Held that:- The Explanation to that Section is important; it prescribes that a corporation shall be deemed to carry on business at its sole or principal office, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Since this provision primarily keeps the Defendant in perspective, the corporation spoken of in the Explanation, obviously refers to the Defendant. A plain reading of Section 20 of the CPC arguably allows the Plaintiff a multitude of choices in regard to where it may institute its lis, suit or action. The marginal note of Section 138 of the NI Act explicitly defines the offence as being the dishonour of cheques for insufficiency, etc., of funds in the account. Of course, the headings, captions or opening words of a piece of legislation are normally not strictly or comprehensively determinative of the sweep of the actual Section itself, but it does presage its intendment - Accordingly, unless the provisions of the Section clearly point to the contrary, the offence is concerned with the dishonour of a cheque; and in the conundrum before us the body of this provision speaks in the same timbre since it refers to a cheque being “returned by the bank unpaid”. None of the provisions of the IPC have been rendered nugatory by Section 138 of the NI Act and both operate on their own. It is trite that mens rea is the quintessential of every crime. Place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located. The law should not be warped for commercial exigencies. As it is Section 138 of the NI Act has introduced a deeming fiction of culpability, even though, Section 420 is still available in case the payee finds it advantageous or convenient to proceed under that provision. An interpretation should not be imparted to Section 138 which will render it as a device of harassment i.e. by sending notices from a place which has no casual connection with the transaction itself, and/or by presenting the cheque(s) at any of the banks where the payee may have an account. It is also now manifest that traders and businessmen have become reckless and incautious in extending credit where they would heretofore have been extremely hesitant, solely because of the availability of redress by way of criminal proceedings. It is always open to the creditor to insist that the cheques in question be made payable at a place of the creditor’s convenience. Today’s reality is that the every Magistracy is inundated with prosecutions under Section 138 NI Act, so much so that the burden is becoming unbearable and detrimental to the disposal of other equally pressing litigation. We think that Courts are not required to twist the law to give relief to incautious or impetuous persons; beyond Section 138 of the NI Act. An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank - Cognizance of any such offence is however forbidden under Section 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause (c) of proviso to Section 138. Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured. - decided against Appellants.
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2014 (8) TMI 416
Transfer, sale and encumbrance of properties - Repayment of outstanding loan Deposited with SEBI - Conditional Bail application of Subrata Roy Sahara - Held that:- To the experience that Saharas have had with the sale of properties in Ahmedabad which fetched more than three times the circle rates prescribed for the same, we are of the view that the actual market value of the property held by Saharas is many times more than the circle rates for such property. This is evident not only from the sale transaction relating to Ahmadabad property but also the fact that Saharas have themselves estimated the value of the properties much higher than the circle rates for the same. In the circumstances, we see no difficulty in clarifying that the sale of the remainder of the properties which we have permitted to be sold by our order dated 4th June, 2014 shall not be lesser than the estimated value of the properties given by Saharas less by no more than 5% of such estimated value. In case the offer(s) received is/are less by more than 5%, prior approval of the Court will have to be sought. There is nothing before us to show that Shri Subrata Roy Sahara suffers from any serious medical condition. At any rate, we expect the jail doctors to keep a check on his medical condition and provide necessary medical aid as and when required. The alternative ground urged for the grant of parole also does not stand closer scrutiny. There is, at present, no concrete proposal with Saharas for sale of the properties situate in India or abroad that may call for any negotiation by Shri Subrata Roy Sahara. While it may be true that such negotiations cannot be said to be advisable when properties of such magnitude as in the instant case are sought to be sold, yet it is premature for us to make any arrangement to facilitate any such negotiations either by directing release of Shri Subrata Roy Sahara on parole or otherwise - Decided against Appellant.
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2014 (8) TMI 394
Dishonour of cheque - offence punishable under Section 138 - proof of hand loan - Held that:- Accused appellant deals with sale and purchase of landed properties and the respondent-complainant works as a Lorry Driver under him with a salary of ₹ 2,500/- p.m. and ₹ 20/- per day towards miscellaneous expenses (bhatta). Admittedly, the Cheque in question was for ₹ 5,00,000/- and all the way the stand of the complainant was that he had given a hand loan of ₹ 1,75,000/- to the accused-appellant. We find no material on record in support of the claim of the complainant giving hand loan to the accused-appellant. There was also no calculation of account or stipulation of any interest on the alleged loan amount to show as to how the amount of ₹ 5,00,000/- was figured, in return of a hand loan of ₹ 1,75,000/-, if at all taken by the appellant from the complainant. In the absence of any authenticated and supporting evidence, we cannot believe that the complainantrespondent who is employed under the appellant-accused, has raised an amount of ₹ 1,75,000/- that too by obtaining loan of ₹ 1,50,000/- from a Bank, only to give hand loan to his employer. As the complainant himself admitted that his net savings in a year comes to about ₹ 10,000/-, it is not trustworthy that he was in a position to extend hand loan of such big amount to the appellant. - Looking at the corroborative evidence adduced by the defence witnesses and more particularly, in the absence of any material evidence in support of the claim of the respondent-complainant, we cannot uphold the impugned judgment - Appeal allowed with costs.
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Service Tax
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2014 (8) TMI 415
Availment of CENVAT Credit - construction of factory shed services - Revenue contends that service is not a input service - Held that:- There is no dispute that the services availed are the construction services used for setting up of factory for manufacture of finished products - From the plain reading of definition of ‘input services’ during the period of dispute, it is seen that the definition of input service specifically included the services used in relation to setting up, modernisation, renovation or repairs of the factory or an office relating to such factory. In view of clear provisions of Cenvat Credit Rules, 2004 during the period of dispute, we are of prima facie view that the service, in question, was eligible for Cenvat credit and impugned orders does not appear to be correct. In view of this, the requirement of pre-deposit of Cenvat credit demand, interest thereon and penalty is waived for hearing of the appeal and recovery thereof stayed till the disposal of the appeal - Stay granted.
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2014 (8) TMI 414
Erection, commissioning and installation service - Service done by the foreign persons who did not have office in India - Notification No. 19/2003-S.T., dated 21-8-2003 and Notification No. 1/2006-S.T., dated 1-3-2006 - Held that:- There is only one contract between the appellant and the foreign supplier, which relates to the value of textile machinery supplied by him. Such supply of textile machinery includes the work of installation, erection and commissioning. There is no separate payment for the said job, reflected in the contract. The appellants have paid the customs duty by treating the entire value as the value of textile machinery. Once the appellant has paid Customs duty on the entire value, which according to the Revenue includes the value of erection, commissioning, it is not proper to artificially segregate the said value into two parts i.e. value of the machinery and value of services. Further the adoption of the notf. in question for arriving at the artificial deemed value of the services is also not proper inasmuch as the said notification provided option to assessee to seek abatement of 67% in the value of services for payment of Service Tax. These notifications are applicable to the accepted and admitted service providers and grants option to them. The same have no applicability to the facts of the present case. - Prima facie case in favour of assessee - Stay granted.
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2014 (8) TMI 413
Demand of service tax - Agreement for marketing country liqour - Held that:- Appellants are the manufacturer of country liquor under the brand name “Pahili Dhar” which is a registered trade name of the appellant themselves. The appellants are having the agreement with M/s. Talreja Trade (HUF) for marketing this liquor. Therefore, it cannot be said that the appellant are the job workers for Talreja Trade. Further, if at all any demand of service tax could have been made, that could have been made against only Talreja Trade as they are the selling agents of the appellants. With these observations, we find that the appellant are not liable to pay service tax under “Business Auxiliary Service” on the above mentioned activity - Decided in favour of assessee.
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2014 (8) TMI 412
Waiver of pre deposit - Clearing and Forwarding Agents - Held that:- Appellant are engaged in the activity of marketing and selling of the products manufactured by their principal by procuring purchase orders for their principal. The goods are being dispatched by their principal directly to their customers and for introducing the customers to their principal-manufacturer they were getting commission. The said activity is not covered under the category of ‘Clearing and Forwarding Agents Service’ during the impugned period, 2000 to 2003. Therefore, the show cause notice as well as the adjudication order impugned, were not warranted - Decided in favour of assessee.
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2014 (8) TMI 411
Exemption from service tax - Commercial Training or Coaching by a Vocational Training institute - Notification No. 09/2003-S.T., dated 20-6-2003 and 24/2004-S.T., dated 10-9-2002 - Held that:- meaning of “vocational training” cannot be restricted to training imparted to persons with low levels of education and the policy statements of Government of India would indicate that training given to relatively more educated persons to take up jobs in specific fields also will be covered by the scope of the exemption. The fact that the BA degree issued by the appellant is not recognized by law will negate any claim for going out of the definition at Section 65(27) but that fact by itself cannot result in denial of exemption under the notifications claimed. The training is not in the nature of personality development or of a type suitable for increasing chance of success of a trainee in any competitive test as discussed in circular dated 28-1-2009 but is for imparting skills required in specific jobs. The fact that after such training jobs are not certain cannot make much difference to the issue at hand. - impugned training is also of the nature of the training imparted by Ashu Export Promoters Pvt. Ltd. in the matter of eligibility for the impugned exemption. Therefore we feel that there is a case for waiver of the dues arising from the impugned order for admission of appeal - Stay granted.
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2014 (8) TMI 410
Levy of penalty where service tax and interest before issuance of SCN - Management, maintenance or repair services - Held that:- A combined reading of paragraphs of Master Circular No. 97/8/2007-S.T., dated 23-8-2007 would show that even Board has no such intention that Show Cause Notice should be served to the assessee, who pays the Service Tax and interest before service of notice - penalty imposed on the appellant cannot be sustained and is required to be set aside - Decided in favour of assessee.
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Central Excise
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2014 (8) TMI 406
Interest demand - Commissioner (Appeal) set aside the demand - Tribunal confirmed the demand - Date of commencement of interest charges - Whether in the facts and circumstances of the case, demand of interest under Section 11AA of the Act, 1944 would be commenced after the three months from Order-in-Original or after three months from Tribunal Final Order - non-payment of Additional Duty of Excise - Held that:- In pursuance of Section 35A(3) of the Act, 1944, the Commissioner (Appeals) is empowered confirming, modifying or annulling the decision or order of demand of duty as determined under Section 11A(2) of the Act, 1944. The word "annal" as per The Chambers Dictionary, 12th Edition means "to make null, to reduce to nothing, to abolish". The word "null" as per Dictionary means "of no legal force, void, invalid, having no significance, amounting to nothing, non-existent. In case, the Commissioner (Appeals) is modifying the demand of duty as determined, the interest is payable as per Explanation I or II of Section 11AA. But, if the Commissioner (Appeals) is annulling the order, demand of duty is non-existent. Division Bench of the Tribunal in the case of LUCAS TVS Ltd. (2009 (12) TMI 828 - CESTAT CHENNAI) rejected the appeal filed by the Revenue on the same issue following the decision of Blue Star Ltd. (2009 (10) TMI 257 - BOMBAY HIGH COURT). In that case, the demands were set aside by the Commissioner (Appeals) vide order dated 20.06.1995. The Tribunal by order dated 24.01.1997 set aside the Order-in-Appeal and remanded the matter to Commissioner (Appeals). The demand was reconfirmed by the Commissioner (Appeals) vide order dated 26.12.2000 - Commissioner (Appeals) set aside the demand by Order-in-Appeal dated 12.05.1998. The Tribunal by final order dated 30 th May, 2003 redetermined the demand and modified the order of the Commissioner (Appeals). Appellants are liable to pay interest, if any, after three months from the date of the Tribunal's final order dated 30.05.2003 in terms of Section 11AA of the Central Excise Act, 1944 - Decided in favor of assessee.
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2014 (8) TMI 405
CENVAT Credit - Whether duty paid on the Furnace Oil used as input could be availed of as credit under Modvat scheme as envisaged under Rule 57B of the erstwhile Rules - Held that:- in terms of Rule 57B as amended, the appellant would be entitled to take credit in respect of Furnace Oil for the amount actually paid on account of specified duty during the period Mar.’97 to Feb.’99. In the present case, the Commissioner (Appeals) following the decision of the Hon’ble Supreme Court in the case of M/s. Jindal Poly Films Ltd. [2006 (4) TMI 129 - SUPREME COURT OF INDIA] rightly allowed the credit for the period 01.03.1997 to 03.05.1997 and upheld the demand for the period 23.07.1996 to 28.02.1997 - Decided partly against assessee.
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2014 (8) TMI 404
Automobile Cess - mounting of body on chassis supplied - Held that:- In terms of the Board's Circular No.11/88 dt.31.08.88 which has been issued after consulting the Ministry of Industry, there was no intention to charge Automobile Cess on the activity of the independent body builders and that when an independent body builder builds body on the chassis received by him made from chassis manufacturer and on which Automobile Chassis has been paid by the chassis manufacturer, the body builder would not be liable to pay the Cess. Based on this Circular, the Tribunal in the case of Harish Industries (1999 (10) TMI 203 - CEGAT, NEW DELHI) has held that an independent body builder building body on the chassis received from chassis manufacturers on which cess has been paid, would not be liable to pay Automobile Cess once again. In view of this we are prima facie view that appellant have strong prima facie case in their favour and, therefore, the requirement of pre-deposit of Automobile Cess demand, interest thereon and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.
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2014 (8) TMI 403
Demand of interest on differential duty - Section 11AB - Escalation in prices - Held that:- Supreme Court in the case of CCE Pune Vs SKF India Ltd. held that interest is payable on payment of differential duty at later date on retrospective revision of price. On the similar issue, the Hon'ble Supreme Court in the case of CCE Vs International Auto Ltd. following the earlier decision passed in the case of SKF Ltd. (2009 (7) TMI 6 - SUPREME COURT) allowed the appeal filed by Revenue. In view of that, I do not find any infirmity in the order of the Commissioner (Appeals) - Decided against assessee.
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2014 (8) TMI 402
Clandestine removal of goods - Discrepancy in stock - Excess stock of Raw material and shortage of finished goods coupled with seizure of un-accounted cash at the residential premises of Director - Duty Evasion - Held that:- Allegation of duty evasion of ₹ 1,98,10,357/- against the appellant company is not merely based on oral evidence but is also based on the documents recovered from factory premises of PBPL and also from the premises of their raw-material suppliers and their customers. Though the appellant plead that certain clearances have been counted twice and that a number of persons have retracted their statement and there is denial of natural justice, all these factors can be considered only at the stage of final hearing. - Partial stay granted.
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2014 (8) TMI 401
Availability of Cenvat credit - service of grass shifting / cutting work and water removing outside the factory - Held that:- maintenance of garden is an essential requirement under the Pollution laws. Similarly, as the appellants are engaged in the manufacture of soaps and soap noodles, which require use of water and accordingly removal of collected water from the drainage system etc. is a requisite condition for the manufacture of their final product. Demand is duly hit by bar of limitation. Admittedly, the appellant was availing the credit by reflecting the same in their statutory records. In fact the demand was raised on audit objection, which found the above fact from the records maintained by the appellant. As such, there can be no question of any suppression on the part of the appellant, in which case, the demand raised beyond the normal period of limitation would be hit by the bar of limitation - Following decision in the case of Brakes India Ltd. vs. CCE Mysore [2010 (1) TMI 301 - CESTAT, BANGALORE]; ISMT Ltd. vs. CCE [2009 (12) TMI 124 - CESTAT, MUMBAI ]; and Semco Electrical Pvt. Ltd. vs. CCE [2009 (12) TMI 143 - CESTAT, MUMBAI] - Decided in favour of assessee.
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2014 (8) TMI 400
Requirement for claiming remission of duty - clearance of defective finished goods as Waste/scrap goods - Held that:- Commissioner (Appeals), has recorded a different finding that the defective goods are Arc carbon which were later hammered/crushed to convert into waste and scrap and removed from the factory without payment of duty. It is his observation that after completion of manufacturing processes, when defective arc-carbon emerged, the same ought to have been entered into RG-1 for discharging duty liability at the time of removal and in case it is found unfit, it is necessary that a remission application be filed under Rule 49 of erstwhile Central Excise Rules, 1944 - No reason to interfere with the said order which is in consonance with the principle of law laid down - Decided against assessee.
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2014 (8) TMI 399
Denial of CENVAT Credit - rent-a-cab services - logistical support given by the assessee to transport the employees from their residence to the factory and vice versa for which they have engaged transport contractor who has raised the bill and paid the Service Tax - Held that:- issue is covered by various decisions of the Tribunal, one of them being CCE Vadodara Vs Haldyn Glass Gujarat Ltd - [2009 (1) TMI 188 - CESTAT, AHMEDABAD]. Since the issue seems to be prima facie covered in favour of the assessee, the application for waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.
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2014 (8) TMI 398
Denial of CENVAT Credit - Credit on capital goods - Whether on the impugned items, the assessee is entitled to take CENVAT credit which were used for erection of supporting structure which were embedded to the earth or not - Held that:- Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) it was held that credit is not available. In these circumstances, relying on the decision of Vandana Global Ltd. (supra) I deny the CENVAT credit on these items. Further I find that the whether the appellants are entitled to take credit or not was in dispute till the decision of Vandana Global Ltd. (supra). It was decided by the Tribunal only on 30.04.2010. Therefore, in these circumstances at the time of taking credit it cannot be said that the appellant has taken wrong credit with malafide intentions. Accordingly, penalty imposed under Rule 13 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 is not impossible. Accordingly, the impugned order is modified to the extent that the demands of duty and interest are confirmed and the penalty is waived - Decided partly in favour of assessee.
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2014 (8) TMI 397
Recalling of order - earlier appeal was dismissed for Non prosecution of case - Held that:- applicant submits that the counsel who had to argue the matter was not available in the town and another counsel was directed to appear and seek adjournment. However, the proxy counsel also could not cause appearance. He submits that appellants could not be made to suffer on account of lapse on the part of the advocate - no justifiable reason as advanced on behalf of the appellants, but in the interest of justice, we would like to give another chance to the appellant to argue the matter on merits. We accordingly, allow the ROA application and restore the appeal to its original number and fix the same for final disposal - Appeal restored.
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CST, VAT & Sales Tax
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2014 (8) TMI 409
Sealing order made under Section 60(2) of the Delhi VAT Act, 2004 - Attachment of bank accounts - Despite the lapse of about two weeks, the respondents have not taken any action on the repeated representations for the removal of the seals from the premises - Held that:- The power to carry out search of the premises, is conditional upon the existence of reasonable grounds to believe that any person or dealer is attempting to avoid or evade tax. This foundation of opinion would also have to exist whilst exercising the power under Section 60 (2) of the Act and, more particularly sub-clause (f), which empowers the Commissioner or his delegate to seal the premises. Continued sealing of the premises, as in the present case, is arbitrary as it impeaches the normal functioning of any business or commercial enterprise. In the circumstances of the case, the respondents should have visited the premises and taken into custody all the relevant material or books of account as were necessary in their opinion to complete their assessment. Not having done so, the respondent cannot use the power to seal the premises as an indefinite weapon to oppose and threaten an assessee. Respondents are hereby directed to open the seals of the premises within 48 hours. In case they wish to take into custody any books of accounts or other material, it is open for them to do so, in the light of the representation made by the petitioner on 16.05.2014. If any such documents are taken into custody, copies thereof shall be handed over to the petitioner; likewise, an inventory of such material shall be prepared in accordance with the rules.A further direction is issued to ensure that attachment of the petitioners bank accounts are lifted/rescinded, within the same period of 48 hours. - Decided in favour of assessee.
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2014 (8) TMI 408
Validity of assessment order passed - Assessment completed before expiry of assessment year - Held that:- Admittedly, the respondent has passed the impugned assessment order without considering the monthly returns - Writ Petition is allowed and the impugned order dated 28.3.2014 is set aside. This matter is remitted back to the respondent. The petitioner is directed to pay 20% of the tax amount on or before 09.7.2014 to the respondents and on such payment, the respondent shall pass fresh orders in respect of the assessment year 2013-2014, after giving sufficient opportunity to the petitioner, on merits and in accordance with law, as expeditiously as possible. It is made clear that if the petitioner fails to pay the amount as stated above, the respondent is at liberty to pass appropriate orders in accordance with law - Decided conditionally in favour of assessee.
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2014 (8) TMI 407
Issue of writ of certiorari - Call for records - Assessee contends that impugned proceedings is challenged only on the ground that even though it is termed as show cause notice, in the penultimate paragraph the respondent had directed the petitioner to pay the demanded tax within a period of seven days from the date of receipt of the said notice - Held that:- A mere reading of the impugned notice would clearly show that it is not a final order as the authority themselves had directed the petitioner only to file their objections to the notice within a period of seven days from the date of receipt of the said notice. In view of the above, it is hereby clarified that the petitioner shall treat the aforesaid notice as show cause notice and file their objections within one week from today, without waiting for the copy of this order and on receipt of such objections/reply, the authority shall pass appropriate orders on merits and in accordance with law.
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