TMI Tax Updates - e-Newsletter
August 19, 2014

Case Laws in this Newsletter:

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

Articles

• COMPANY LAW SETTLEMENT SCHEME, 2014

Highlights / Catch Notes

Income Tax

• Rectification of order - Tribunal has tried to consider the issue on merits which was already considered by the Tribunal earlier while deciding the appeal – the Tribunal has materially erred in exercise of powers u/s 254(2) - HC
  Visit to Get Source

  ---

• Recovery steps initiated - taking into account the fact that appeal is pending before the FAA - a major portion of the demand has now been satisfied, there shall be no further recovery steps initiated till the appeal is disposed of - HC
  Visit to Get Source

  ---

• Since the admitted tax liability has been paid at the time of filing the return u/s 139(5) of the Act, the provisions of sub-section (3) of section 140A of the Act cannot be invoked for imposing penalty u/s 140A - AT
  Visit to Get Source

  ---

Service Tax

• Extended period of limitation - Business Auxiliary service - merely because the authorities subsequently change their view that does not justify invoking the larger period of limitation - AT
  Visit to Get Source

  ---

• Waiver of pre deposit - C&F Agent - The amount received as destination charges which are in respect of clearance of goods at the destination by the foreign service provider is the component that could not have been taken for the purpose of service tax liability - HC
  Visit to Get Source

  ---

Central Excise

• Since the products, in question, are the resins specifically covered by sub-heading no.3909, prima facie, goods are correctly classifiable under Heading no.3909 and hence being in the negative list of the notification no.50/2003, would not be eligible for exemption - AT
  Visit to Get Source

  ---

• Mega Power projects - international competitive bidding (ICB) - even if the General Fabrication Structures, Auto welded Beams and Boxes cleared by the appellant are meant to be used as Supporting Structure for some machinery, the same would have to be treated as component parts of that machinery - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2014 (8) TMI 492
  Registration u/s 12A – Promotion of education among poor – Held that:- The authority has got power to subsequently satisfy itself about the activities of such trust or institutions as to whether it is genuine or not and whether the trust is being conducted in accordance with the objects of the trust and the authority has got the power to pass an order cancelling the registration of the trust or the institution - the provision enables the authority to monitor the activities of the charitable trust and if it finds that its activities are not in the best interest of the trust and to sub serve the interest of the trust, then it is open to the authority to cancel the registration of the trust or the institution - There was no reason as to why the Commissioner had rejected the registration of the Trust when there is ample power under law to rectify any error to cancel the registration of the trust or institution if there is breach of the objects of the trust in the discharge of its charitable objects as propounded in the trust deed – Decided against Revenue.

  ---

• 2014 (8) TMI 491
  Estimation of appeal - Rejection of books of accounts u/s 145(3) – Held that:- The net profit rate has already shown at the rate 3.25% which appears reasonable, which is higher in comparison to the previous and subsequent assessment years - during the assessment under consideration, the assessee has suffered a loss in respect of Sada-Gwalior Project and Bareilly-Badaun Project - The net profit rate shown by the assessee, which is higher in comparison to the earlier and subsequent assessment years, appears reasonable and is to be accepted. Applicability of section 44AD – Held that:- Section 44AD is not applicable as the turnover is more than 40 lacs - The accounts were properly audited – there was no reason to interfere with the orders passed by both the appellate authorities – Decided against Revenue.

  ---

• 2014 (8) TMI 490
  Genuineness of payments – payments made to job workers or employees/workers – CIT (A) admitted the additional evidences - Held that:- Till 16th December, 2010, the issue regarding disallowance u/s 40(a)(ia) was not specifically raised or questioned - No specific noting in the order sheet raising the issue is brought to attention - CIT(A) has gone into the question and examined payment sheets, details of machinery etc. and has decided the question in favour of the assessee - the question of disallowance u/s 40(a)(ia) was not specifically raised and confronted to the assessee - Section 40(a)(ia) was not specifically mentioned in the order sheets - No specific reply and answer was sought – CIT(A) after examining the remand report, admitted additional evidence and allowed the appeal of the assessee – Decided against Revenue.

  ---

• 2014 (8) TMI 489
  Initiation of block assessment u/s 158BD r.w. section 158BC – Benami transactions - Held that:- The group concerns of Shri Rajendra Goayl i.e. Goyal Industries Ltd., Goyal Synthetics Pvt. Ltd. and Foremost Finvest Pvt. Ltd. made fictitious sales to the concerns namely (i) Raju Fabrics (ii) Gunjan Exports,and (iii) Aditya Yarn Pvt. Ltd. were received from benami concerns of Goyal Industries Group - the source of credit either by cheque or cash in the benami accounts to the extent of ₹ 92,01,74,261/- remains unexplained - The accounts have been detected by virtue of inquiry in the cheques found from the locker of Shri Pursottam Mundra, employee of Shri Surajnath Sidh, who is involved in the business of cheques discounting - it cannot be said that the AO has committed any error and/or any illegality in initiating the block assessment proceedings u/s 158BD. When the subjective satisfaction has been arrived at by the AO for initiation of the proceedings u/s 158BD of the Act on the basis of the material collected during the course of search/inquiry, it cannot be said that satisfaction arrived at by the Assessing Officer while initiating proceedings under section 158BC of the Act has been vitiated in any manner - There is ample material on record in the satisfaction note against the respective petitioners and Goyal Industries Ltd and another - even the Rajendra Goyal is the Director of Goyal Industries Ltd. and the Company i.e. Goyal Industries Ltd. is run through its Director/Manager/employees etc. - no error or illegality has been committed in issuing notice u/s 158BD – Decided against the assessee.

  ---

• 2014 (8) TMI 488
  Notice for reopening of assessment u/s 148 – Held that:- There was no reason to interfere with the order of the Tribunal particularly, having regard to the fact that the petitioner had at the time of hearing of the appeal withdrawn its challenge to the reopening of assessment u/s 147/148 of the Act - Once the appellant have withdrawn the challenge on a particular issue by not pressing it before the ITAT, it is as good as no appeal on that ground is before the ITAT for consideration - the order of the Tribunal was passed on 5 June 2009 recorded the fact that the issue relating to reopening of assessment was not pressed by the applicant – Decided against Assessee.

  ---

• 2014 (8) TMI 487
  Power to tribunal to consider Miscellaneous application - rectification of order - Whether the Tribunal is right in entertaining the assessee’s miscellaneous application again when once the MA has been considered and rejected by the same authority – Held that:- Following the decision in Commissioner of Income-tax v.Pearl Woolen Mills [2009 (11) TMI 48 - PUNJAB AND HARYANA HIGH COURT] – when the first rectification application was rejected by the Tribunal, the second rectification application on the same issue was not maintainable at all – the Tribunal has materially erred in entertaining the second rectification application and passing the impugned order of re-calling its earlier order in exercise of powers u/s 254(2) of the Act - once the second rectification application on the same issue was not maintainable, the Tribunal erred in entertaining the application and allowing the same - the Tribunal is justified in allowing the second rectification application on merits and re-calling the order passed in an appeal is as such not required to be considered - the Tribunal has gone beyond the scope and ambit of section 254(2) of the Act - only when it is found that there was an error apparent on the face of the record, then and then only powers under sec. 254(2) of the Act can be invoked – the Tribunal has tried to consider the issue on merits which was already considered by the Tribunal earlier while deciding the appeal – the Tribunal has materially erred in exercise of powers u/s 254(2) of the Act by passing the order and the Tribunal has gone beyond the scope and ambit of the powers of section 254(2) of the Act – Decided in favour of Revenue.

  ---

• 2014 (8) TMI 486
  Interpretation of section 40A(3) - Cash payment – Genuineness of purchases - Whether the Tribunal was justified in confirming the addition despite the evidence placed on record that the payments were made only at the instance of the vendor when the genuineness of purchases is proved and the identity of payee is also established – Held that:- The purpose of Section 40 of the Act fell for consideration and interpretation by the Supreme Court in Attar Singh Gurmukh Singh v. Income-tax Officer [1991 (8) TMI 5 - SUPREME Court] - Section 40A(3) must not be read in isolation or to the exclusion of rule 6DD. The section must be read along with the rule - Genuine and bona fide transactions are not taken out of the sweep of the section - It is open to the assessee to furnish to the satisfaction of the AO the circumstances under which the payment in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty to the payee - It is also open to the assessee to identify the person who has received the cash payment - Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule - section 40A(3) and rule 6DD that they are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions. There existed some justification for the traders, at least at the relevant point of time, in insisting the payment of amounts, in cash - The reason is that the banking activity was not that prominent and popular, and instances of cheques issued by agencies or persons, in the course of business being bounced, were not infrequent - The delay in receiving the consideration for any material supplied by a trader would have its own cascading effect on the business activities - It is only when both the parties to the contract are known to each other so intimately, and the seller is very confident not only of the solvency of the purchaser, but also his business ethics, that he would be inclined to receive the consideration through cheque. The Assessing Authority has taken a hyper-technical view and failed to discern the spirit underlying the relevant provisions - the Appellate Authority exhibited an element of objectivity, it was only in a limited aspect - The Tribunal has ignored the purport of the relevant provisions of law and refused to grant any relief to the assessee - once the assessee has placed the proof of payment in cash for its transaction to the seller, and the latter admitted the payment, there is no question of disallowing amount by the Assessing Authority – Decided in favour of Assessee.

  ---

• 2014 (8) TMI 485
  Recovery steps initiated - Quantum appeal and stay application pending – Held that:- There is also no extenuating circumstance stated which would effectively defeat the recovery, if delay is caused and the recovery is kept in abeyance till the Appellate Authority considers the stay application – Relying upon KEC International Ltd. v. B.R.Balakrishnan [2001 (3) TMI 32 - BOMBAY High Court] some broad parameters were laid down for regulating the consideration of stay applications, whether it be in a statutory appeal or u/s 220(6). No expedient reason why immediate recovery should be resorted to - assessee is a running institution and there is no threat of it deliberately thwarting recovery and thus causing prejudice - garnishee proceedings were initiated and notice was issued to the assessee u/s 226(3)(iii) of the Act and a major portion of the demand has now been recovered from the assessee - the recovery steps initiated is definitely capricious - the assessee had remedies which they did not avail of and no violation of statutory compliance is discernible - taking into account the fact that appeal is pending before the FAA - a major portion of the demand has now been satisfied, there shall be no further recovery steps initiated till the appeal is disposed of – Decided in favour of Assessee.

  ---

• 2014 (8) TMI 484
  Conditions for admissibility of appeal under Rule 19 of Rules - defects pointed out by the Registry have not been cured by the assessee which needed to be cured - Held that:- The record shows that on the last date of hearing adjournment was moved by the assessee and while granting adjournment it was indicated that the defects pointed out by the Registry have not been cured by the assessee which needed to be cured. The date of next hearing has been noted on the adjournment application, despite this fact neither the defects are cured nor there is any representation. In the afore-mentioned peculiar facts and circumstances, it can be safely presumed that the assessee is not serious in pursuing the present appeal. Rule 19 of the ITAT Rules, 1963 – Following the decision in CIT vs Multiplan (India) Pvt. Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] – Appeal dismissed.

  ---

• 2014 (8) TMI 483
  Penalty u/s 140A(3) – Tax liability not paid but admitted - tax was paid while filing revised return u/s 139(5) - Held that:- When the return is filed u/s 139 of the Act and if any assessee fails to pay the whole or any part of such tax or interest or both, he/she shall be deemed to be in default in respect of the tax or interest or both remaining unpaid and will suffer penalty as per law - though the assessee has not paid admitted tax at the time of filing of the original return, but this return was duly revised within the prescribed period u/s 139(5) of the Act and at the time of filing the return u/s 139(5) of the Act the admitted tax was paid - The revised return also substitutes the original return, as the assessment was framed on the basis of the revised return - the assessee has filed the return u/s 139 of the Act and at the time of filing of the return, the admitted tax liability was also paid - section 140A(3) can only be invoked where the assessee has not paid admitted tax liability while filing the return under section 139 of the Act - Since the admitted tax liability has been paid at the time of filing the return u/s 139(5) of the Act, the provisions of sub-section (3) of section 140A of the Act cannot be invoked for imposing penalty u/s 140A of the Act for non-payment of tax or interest on the income declared in the return - the penalty u/s 140A(3) of the Act cannot be levied – Decided against Revenue.

  ---

• Customs

• 2014 (8) TMI 494
  Waiver of pre-deposit - Demand of differential duty - Maintainability of appeal against the order u/s 129E - Held that:- As per Section 129A of the Customs Act, 1962 the Tribunal has power to entertain appeal against the decision or order passed by the Commissioner (Appeals) as an adjudicating authority under Section 128A of the Customs Act, 1962. In the present case the impugned order is passed under Section 129E of the Customs Act, 1962. Hence we find that the appeal is not maintainable and the same is dismissed as non maintainable - Time granted to make pre deposit - Decided conditionally in favour of assessee.

  ---

• Corporate Laws

• 2014 (8) TMI 493
  Application for sanction to the Scheme of Amalgamation - Held that:- Official Liquidator has filed his report, wherein he has stated that he has not received any complaint against the proposed Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Transferor Company, which is subject matter of dissolution, do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or to public interest as per the 2nd Proviso of section 394 (1) of the Act. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Act. The Petitioner Companies will comply with the statutory requirements in accordance with law - Amalgamation sanctioned.

  ---

• Service Tax

• 2014 (8) TMI 517
  Erection of pole / tower, erection of earthing and other maintenance and repairing work of their clients - activity as claimed by the appellant that they are laying cables but does not reveal from the works order - Held that:- for the purpose of billing the consumer for electricity consumed it is essential to install the electricity meter having capacity to withstand the load provided to the customer; any activity or service like erection, commissioning and installation of transmission towers and meters as also technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver; and such service would be squarely covered under exemption provided under this notification. - referring to the decision in the case of Paschimanchal Vidyut Vitran Nigam [2012 (8) TMI 688 - CESTAT, NEW DELHI], demand set aside - matter remanded back.

  ---

• 2014 (8) TMI 516
  Extended period of limitation - Business Auxiliary service - Sale of warehoused goods to traders - Appellants while raising the invoices on the purchasers, split the price mentioned in the purchaser orders and issue a separate debit note towards such expenses incurred by the Appellants - Held that:- Notice is issued on 18-4-2013 and demands service tax for the period 1-10-2007 to 5-1-2012. The same is therefore beyond the normal period of limitation of eighteen months prescribed in Section 73(1) of the Finance Act 1994 - Appellants records have been subjected to scrutiny by the department from time to time. It is not in dispute that as many as four audits have been conducted by the department covering the period 1-10-2007 to 5-1-2012. There is no scope for invoking the larger period of limitation. The DGCEI having examined the documents and ascertained the facts and having come to the conclusion that there was no case for demand of service tax and having ordered closure of the inquiry in the year 2010, it cannot be held that there was cause for invoking the larger period of limitation by issuing a Notice in the year 2013. Where the documents were examined and a view was formed in 2010 that there is no case for demanding service tax and accordingly closure of inquiry was ordered, merely because the authorities subsequently change their view that does not justify invoking the larger period of limitation. It has been consistently held that a subsequent change of view by the authorities would not justify invoking the larger period of limitation. Commissioner while dealing with the issue of larger period of limitation, has completely ignored the fact that apart from the Appellants records being audited by the department on as many as four occasions, the DGCEI itself had after examining the documents arrived at a conclusion that service tax was not payable and ordered closure of the inquiry. There is no basis for the Commissioner s finding that the Appellants were aware that the expenses recovered under the debit notes from the traders-purchasers were liable to service tax under Business auxiliary service. Merely because after commencement of the DGCEI inquiry in November 2009, the Appellants started paying service tax in respect of such debit notes from December 2009 would not in itself be a justification for invoking the larger period of limitation particularly when after such inquiry the DGCEI itself ordered closure of the inquiry in August 2010. In the circumstances the larger period of limitation is not applicable in the present case and on this ground itself the impugned order is liable to be set aside. - Decided in favour of assessee.

  ---

• 2014 (8) TMI 515
  Waiver of pre deposit - Clearing and Forwarding Agent - Discrepancy in books of accounts - Held that:- The Appellant prima facie was registered as a Clearing and Forwarding Agent. The returns for service tax were filed. During the audit the difference was noted in the amounts received from the clients in the balance sheet and in the amounts on which service tax was paid as per the statutory returns. The Appellant failed to reconcile this difference, therefore, the demand was confirmed - The component has been bifurcated and the Tribunal was shown that the amount of freight was taken into consideration while confirming the demand and which cannot form a part of taxable service. The amount received as destination charges which are in respect of clearance of goods at the destination by the foreign service provider is the component that could not have been taken for the purpose of service tax liability. If these are destination charges collected from the customers in India and the amount has been taken again while confirming the demand, then, the service which is exfacie not taxable has been brought to tax - the aspect is arguable - amount of pre-deposit ordered by tribunal modified and reduced - decided partly in favor of assessee.

  ---

• 2014 (8) TMI 513
  Services provided to office / unit located abroad - same entity - Company in Japan deputed certain employees to Delhi office and their salary was paid abroad in Japan but shown in the profit and loss account prepared for Delhi unit - appellant submits that for levying Service Tax there should be two different legal entities involved — one providing service to the other - Held that:- Delhi office and the corporate office located at Japan are two offices of the same company. In such a situation, prima facie there cannot be any service by corporate office in Japan to Delhi office. Prima facie the demand is not maintainable. Therefore, there shall be waiver of dues for admission of appeal and stay on collection of dues arising from the impugned order during the pendency of the appeal - Stay granted.

  ---

• 2014 (8) TMI 512
  CENVAT Credit availed belated - This mistake of the branch was found out in their internal audit and later they filed revised returns for the periods April 2008 to March 2009, to take such credit and thereafter transferred such unutilized credit to the Circle office - whether the credits so taken were properly taken by the Branch Office and whether the Circle office was eligible to take such credit and utilize it - Held that:- If the Ludhiana Branch had taken credit before surrendering the license of the branch the branch would have been eligible for taking the disputed credit. There is no time limit on taking of credit with reference to the point of time of the payment of the bill received from service provider claiming reimbursement of service tax. The two appellants involved are two different offices of the same legal entity. where invoice was addressed to one office of a company and credit was taken by another office, that fact by itself is not a reason to deny credit on such tax paid. Thus no case of real revenue loss is made out but some procedural infractions are alleged, that too in a situation of changing from a system of payment of service tax by every branch to a system of paying tax by the Circle office for all branches falling under the circle - Stay granted.

  ---

• 2014 (8) TMI 511
  Business Auxiliary Service - Receipt of commission or trading activity - Held that:- Notwithstanding the claim by the appellants to be a canalizing agent, the transactions between NMDC and the appellants are in the nature of purchase and sale as duly recorded by the Commissioner. This is also the view held by the Sales Tax Department and Income Tax Department. Therefore, we do not, prima facie, treat the profit earned by the appellants as consideration towards service rendered to NMDC - Therefore, there shall be waiver of predeposit of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal - Stay granted.

  ---

• 2014 (8) TMI 510
  Waiver of pre-deposit of Service Tax - GTA service - Abatement under Notification No. 32/2004-S.T., dated 3-12-2004 - Held that:- Notification No. 32/2004-S.T. and No. 1/2006-S.T. grant abatement of 75% of taxable service. We find force in the contention of the applicant that the clarification issued by Board cannot override the provisions of the exemption notification. We also find that the declaration filed in terms of the aforesaid notification has not been disputed or challenged by the department. The notification does not stipulate any such condition namely that each consignment note should contain the relevant declaration. The circular cannot be mandatory and cannot be used for denying substantive rights. The similar view has been held by the Tribunal and High Courts in the cases cited (supra). In these circumstances the prima facie case is in favour of the applicant. Accordingly the requirement of pre-deposit is waived and recovery thereof is stayed during pendency of the appeal - Stay granted.

  ---

• 2014 (8) TMI 509
  Waiver of pre deposit - benefit of exemption Notification No. 13/2003-S.T., dated 20-6-2003 - Denial of refund claim - exemption of Business Auxiliary Services provided by a commission agent in relation to sale or purchase of agriculture produces from the service tax leviable thereon under Section 66 - Whether the appellants fall within the scope of Notification No. 13/2003-S.T., dated 20-6-2003 - Held that:- Explanation attached to the scope of Notification No. 13/2003-S.T. clarifies the scope of agricultural produce. For availing the benefit of the notification, the various processes on the agriculture produce are required to be done by the cultivators himself. Admittedly, the appellants are not the cultivators of the agricultural produce, but were only rice producers/exporters. As such, at this prima facie stage, we are of the view that the benefit of the notification is not available to the appellant - Conditional stay granted.

  ---

• 2014 (8) TMI 508
  Condonation of delay - impugned order was addressed to assessee's old address at Mathura Road, instead of sending a copy to the new address at Naraina Industrial Area - Held that:- Commissioner (Appeals) was aware of the fact that the appellant has left their Mathura Road, Faridabad premises, that is how the copy was sent to the advocate with a request to serve the same to the appellant. In spite of that, the impugned order stands addressed to the appellant at their Mathura Road, Faridabad address. We also note that the copy of the said order was never addressed to the learned advocate on record. In these circumstances, the appellant’s submission that they never received the impugned order is required to be accepted. According to the appellant, the said order was received by them on 21-10-2010 and the appeal was filed on 29-10-2010 that is immediately on receipt of this order. As such, taking into account overall facts and circumstances of the case, Delay condoned.

  ---

• 2014 (8) TMI 507
  Penalty u/s 78 - Cargo handling service - whether the activity of the appellants as regards the loading and unloading of sugar in the godown amounts to providing cargo handling services or not - Held that:- there are Tribunals decisions holding that such an activity does not amount to cargo handling services. In that case, the imposition of penalty upon the appellants in terms of Section 78 of the Finance Act cannot be, at this prima facie stage, held to be justifiable. We accordingly, dispense with the condition of pre-deposit of penalty, stay the recovery of the same during the pendency of the appeal - Stay granted.

  ---

• 2014 (8) TMI 506
  Denial of benefit of Cenvat credit of service tax - making of concentrate by purification of ores raised by the appellant from its underground captive mines - services used in relation to renovation and repair of factory and activities relating to business are input services - Held that:- Definition of input service is very wide and covers not only services used directly or indirectly in or in relation to manufacture of final products but also various service used in or in relation to business of manufacture whether prior to manufacture or after manufacture. Inasmuch the appellants are unable to use their premises without dismantling, sorting and transporting the scrap from the underground area or service area of the mine, it has to be held, at this prima facie stage, that the activities are relating to the business activity of the appellants - stay granted.

  ---

• 2014 (8) TMI 505
  Waiver of pre deposit - Denial of CENVAT Credit - outward transportation of goods - Held that:- Surprisingly no proceedings were initiated against the appellants on suo motu re-credit by the appellant. That may be probably on the ground that the appellant had originally availed the credit but subsequently debited the same in view of the declaration of law by the Tribunal in the case of Gujarat Ambuja Cement v. CCE [2007 (3) TMI 1 - CESTAT,NEW DELHI]. Again became entitled to avail the same in view of the declaration of law by the Larger Bench decision of the Tribunal in the case of ABB Ltd. [2009 (5) TMI 48 - CESTAT, BANGALORE] As such, throughout the period when the credit remains suspended on account of having made a debit entry, they were entitled to utilize the credit. The Larger Bench of this Tribunal makes the law clear. As such, during the period, for which the credit remained suspended in fact, the appellant was entitled to utilize the same. If that be so, the question of payment of interest does not arise at all. At this prima facie stage, no reason to direct the applicant/appellant to deposit any amount - Decided in favour of assessee.

  ---

• 2014 (8) TMI 504
  Stay or order - commissioner (Appeals) had decided in favor of assessee - Inclusion of Inspection Expenses in “other income received” and shown in miscellaneous receipts in the Profit and Loss Account - Held that:- Prima facie, the department has not satisfactorily dislodged the finding that the inspection is done in order to ensure bona fide nature of the claim and can at best be called safety measures prior to lending money and thus would not constitute rendering of any service to anyone else except to itself and that it is not the case of the department that the fee collected is excess of actual expenditure incurred for carrying out such inspection or that there is a commission contained in the inspection charges. Similarly, the department has not raised any prima facie argument against the finding that compensatory finance charges and processing fee is not service rendered to anyone else, that the interest received by the assessees is for the delay between date of disbursement of money to the supplier and the date of receipt by the customer and it is not the case of the department that the fee collected is in excess of the actual interest collectable or that there is a commission contained therein. Since no prima facie case has been made out by the Revenue for exercise of the inherent power of the Tribunal to grant stay - Stay denied.

  ---

• Central Excise

• 2014 (8) TMI 499
  Waiver of pre deposit – Area based Exemption – Appellant manufacturer of decorative laminates are located in Uttaranchal and were availing duty exemption under notification no.50/2003-CE dated 10.06.2003 - Revenue denied exemption that resin are classifiable under Heading 3909 - Held that:- Since the products, in question, are the resins specifically covered by sub-heading no.3909, we are of the prima facie view that the goods, in question, are correctly classifiable under Heading no.3909 and hence being in the negative list of the notification no.50/2003, would not be eligible for exemption under this notification. Since the final products-decorative plywood etc. are exempt" from duty under notification no.50/2003-CE, captive consumption exemption under notification no. 67/95-CE would not be available in respect of the resins. The only point of dispute which remains to be decided is as to whether these resins in the form in which the same are cleared for captive consumption, are marketable and hence, excisable. Merely on the basis of shelf life, the marketability of a product cannot be determined. Therefore, the question of marketability of the resins, in question, requires in depth consideration based on the evidence on record which is possible only at the stage of final hearing, and this question cannot be decided only on the basis of shelf life. Therefore, at this stage, it cannot be said that this question is likely to be decided in favour of the Appellants - stay granted partly.

  ---

• 2014 (8) TMI 498
  Mega Power projects - international competitive bidding (ICB) - Exemption under Notification No.6/2006-CE dated 01/03/06 - benefit of exemption denied in adjudication on the ground that in the projects, the requisite quantum of power has been tied up or that the projects has been awarded through tariff based competitive bidding - Held that:- The goods supplied to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project are against international competitive bidding even though in respect of these projects, the contracts were awarded through tariff based competitive biding. During the period of dispute, Sl. No. 91 of the table to the exemption Notification No. 6/2006-CE readwith condition No. 19 and Sl. No. 336 of the table to the Notification No. 12/2012-CE dated 17/03/12 readwith condition No. 41 of this notification, exempted all the goods supplied against international competition bidding from whole of the duty excise leviable thereon and the condition to which this exemption was available was that the goods if imported into India are fully exempt from Customs duty. There is no dispute that the goods, if imported into India, would be exempt from Customs duty in terms of Sl. No. 400 of the Notification No. 21/2002-CUS readwith condition No. 86, as in terms of this condition, the appellant have produced the required certificates from Joint Secretary to the Government of India. When exemption is available to the appellant in terms of two Sl. Nos. 91 as well as 91B Notification No. 6/2006-CE and 336 as well as 338 of the table to Notification No. 12/2012-CE and the appellant satisfy the conditions of the Notification No. 6/2006-CE/(Sl. No. 91) and Notification No. 12/2012-CE (Sl. No. 336), the exemption in terms of this Sl. No. cannot be denied, as exemption under this Sl. No. is available to any good supplied by a manufacturer in India against international competitive bidding. Therefore, the impugned order denying the exemption in respect of the three projects, mentioned above, is not sustainable. Even if the General Fabrication Structures, Auto welded Beams and Boxes cleared by the appellant are meant to be used as Supporting Structure for some machinery, the same would have to be treated as component parts of that machinery as the description of goods against Sl. No. 91B of Notification No. 6/2006-CE, Sl. No. 338 of Notification No. 12/2012-CE covers all components whether finished or not and raw materials for the manufacture of the items of machinery, prime movers, instruments, apparatus, appliances, control gear, transmission equipments etc. In view of this, the impugned order denying exemption to the goods supplied to Prayagraj Super Thermal Mega Power Project is also not sustainable. Decided in favour of assessee.

  ---

• 2014 (8) TMI 497
  CENVAT Credit - input services being Insurance, Garden Maintenance and Clearing and Forwarding / C&F services - nexus with manufacturing activity - Held that:- the appellants are eligible to avail input services credit on the above three items - Decided in favour of assessee.

  ---

• 2014 (8) TMI 496
  CENVAT Credit on goods procured by the Job worker - allegation that there is no job-working activity undertaken by the vendors as defined under Rule 2(n) of the said Rules - allegation that there is no actual receipt of inputs / goods - Held that:- Once the finished product has correctly discharged the liability there cannot be any leakage of revenue. Cenvat Credit envisages that duty/tax paid on the input/input services will be available for discharge of duty liability on the finished products. It is not in dispute that the inputs were used in the fabrication / assembly of the finished products. Similarly, it is also not in dispute that finished products did emerge at the job-workers' premises. In these circumstances, the conclusion drawn by the adjudicating authority that there is no job work involved in the present case is a contradiction in terms. A job work might amount to "manufacture" or might not amount to "manufacture". In many instances the job work results in production of a new commodity. For example, in the case of textile fabrics, a job-worker undertaking the process of bleaching or dyeing of fabrics, new products namely, dyed/bleached fabrics come into existence. Thus, the activities amount "manufacture". Similarly, in the case of a bus body built on a chassis, the activity amounts to "manufacture". Therefore, it cannot be said that since the activities undertaken result in a new commodity, there is no job-work involved - appellant has made out a strong prima facie case for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.

  ---

• 2014 (8) TMI 495
  Denial of CENVAT Credit - Manufacture of dutiable and exempted goods by using common input Naphtha – separate accounts not maintained – Revenue demands 10% of the value of the exempted goods in terms of rule 6(3) and which amount is ₹ 3.55 crores & ₹ 2.15 crores respectively - Held that:- law was retrospectively amended for providing for reversal of credit attributable to inputs used in the manufacture of exempted goods and if reversal was done along with interest for such delayed reversal, the provisions for demanding amount @ 10% of the value of the exempted goods would not apply. In the present case, the appellant has reversed the credit, though belatedly, in respect of the inputs alleged to have been used in the manufacture of exempted product. There is no doubt that they have done the reversal but they have paid interest @ 13%, which was the prevalent rate at such time. As per the provisions of Finance Act, 2010 the reversal has to be done along with the interest liability @ 24% per annum from the due date of reversal till the actual date of reversal of credit. To that extent, the contention of the Revenue that interest liability should be discharged @ 24% per annum is sustainable. Verification of the quantum of credit - Held that:- If the credit has not been reversed, the same was ordered to be done within a period of four weeks from the date of receipt of communication. The said ratio applies to the facts of the present case also. Even though, the appellant has not filed any application as stipulated in the Finance Act, 2010 in the present case, inasmuch as they have reversed the credit of duty paid on naphtha used in the manufacture of exempted goods, the same benefit should be granted to the appellant subject to terms and condition prescribed thereunder. It is an admitted position that the appellant as reversed the credit. The appellant is directed to discharge interest liability @ 24% per annum from the due date of reversal of credit to the actual date of reversal done by them in accordance with law. The applicant is directed to produce a C.A. certificate certifying the credit required to be reversed and the credit actually reversed along with interest thereon. On submission of such certificate, the adjudicating authority shall reconsider the matter and grant the benefit provided in the Finance Act, 2010 with respect to reversal of credit on inputs used in the manufacture of exempted product. - Decided in favour of assessee.

  ---

• CST, VAT & Sales Tax

• 2014 (8) TMI 503
  Stay application - Challenge to conditional order of stay that directs him to pay 30% of the dues as a condition for the stay - Held that:- On a perusal of the stay order, it is seen that while the Appellate Authority admits that there is a prima facie case established for the grant of a conditional stay, the order does not disclose the basis for insisting on the payment of even 30% of the dues conferred against the petitioner. Quasi judicial authority considering a stay application of an assessee under a taxation statute has to give reasons to support the order directing payment of any amount towards tax/interest pending disposal of the appeal. He has to bear in mind the Constitutional Mandate under Article 265 of the Constitution that there shall be no levy or collection of tax except by the authority of law. In taxation matters therefore, more than in any other matter, reasons must support not only the decision to waive payment of amounts due but also the decision that directs an assessee to make some payments pending consideration of the appeal. No doubt, this would require the adjudicating authority to look into the merits of the matter for the purposes of deciding the extent of waiver from payment that he can grant to an assessee while deciding the conditions for the grant of stay. This, however is a legal requirement that must be read into the exercise of the statutory discretion by the said authority. The requirement of giving reasons, albeit minimal in stay orders, especially in matters of taxation cannot be understated. The duty to give reasons for a decision is one that is conducive to fairness in judicial/quasi judicial/administrative action. Reasons for a decision are required to address the primary concern of an assessee in knowing what weighed with the authority in question while deciding the issue against him. The practice accords with the concept of fairness in action and recognises the dignity of the individual whose rights are affected by the decision in question. The obligation to provide reasons for a decision will also ensure that the decision maker acts within the limits of his discretion and takes into account only those factors as are relevant to the decision making process. - Matter remanded back - Decided in favour of assessee.

  ---

• 2014 (8) TMI 502
  Conditional stay order granted - Reasons for decisions not given - Held that:- The requirement of giving reasons, albeit minimal in stay orders, especially in matters of taxation cannot be understated. The duty to give reasons for a decision is one that is conducive to fairness in judicial/quasi judicial/administrative action. Reasons for a decision are required to address the primary concern of an assessee in knowing what weighed with the authority in question while deciding the issue against him. The practice accords with the concept of fairness in action and recognises the dignity of the individual whose rights are affected by the decision in question. The obligation to provide reasons for a decision will also ensure that the decision maker acts within the limits of his discretion and takes into account only those factors as are relevant to the decision making process. No doubt it could be argued that the imposition of a duty to provide reasons for every decision might lead to stifling or unduly burdening the administration but this is an aspect that has to be weighed against the rights of the person affected. In taxation matters where the Constitution of India itself gives ample indication that the rights of a citizen against arbitrary taxation are zealously guarded, I would think that the requirement of giving reasons to support even a conditional order of stay would not tantamount to unduly burdening the administration - Matter remanded back.

  ---

• 2014 (8) TMI 501
  Challenge to orders of provisional assessment orders under Section 25(1) of U.P. Value Added Tax Act, 2008 - prayer for quashing of the aforesaid two circulars dated 12th November 2013 and 29th of January 2014 passed by the Commissioner, Commercial Tax. U.P. Lucknow - Held that:- It is admitted by the petitioner that the notices were served, however, the petitioner was prevented to appear in their case as one day time is not an adequate opportunity. However, the petitioner instead of taking recourse of remedy of Section 32 of the Act, has rushed to this Court. - Accordingly, in view of availability of an alternative remedy in the form of Section 32 of U.P. Value Added Tax Act, 2008, we are not inclined to entertain this petition. The liberty is given to the petitioner to invoke his right under Section 32 of the Act. If any such application is made by the petitioner within 30 days from today, the same shall be entertained and decided expeditiously after providing a reasonable and adequate opportunity of hearing and of taking all the grounds, pleas and defence which may be available to the petitioner in law. The application, if so moved under Section 32 of the U.P. Value Added Tax Act, 2008, will not be rejected merely on the ground of delay, if any. - Writ petition disposed of.

  ---

• 2014 (8) TMI 500
  Classification of goods - Whether product of revisionist-assessee i.e. "Perforated Steel Sheets" will come within the term "Metallic Jaali" under Entry 92, Schedule-2 of U.P.Value Added Tax Act, 2008 or will be an "unclassified item" - Held that:- it does not appear as to what reason has been assigned by the traibunal to hold "Metallic Jaali" and "Perforated Steel Sheet", being two different items, except of simply referring to the stand taken by Department and thereafter discussing the judgments cited by assessee and holding that the judgments do not help the assessee. - The assessee has also referred to a circular issued by Commissioner Trade Tax dated 12.3.2014 explaining his earlier circular of 2008 wherein it has explained that "Perforated Sheet" is a "Metallic Jaali" are same and has clarified this aspect - Matter remanded back to tribunal to reconsider its decision.

  ---

• Indian Laws

• 2014 (8) TMI 514
  Violation of tender conditions - Tender for leasing of shops - Rejection of bids - Non fulfillment of conditions of requirements of tender - Lack of service tax number - Held that:- A perusal of the written statement of the official-respondents shows that in fact the petitioners have filed such affidavit on November 4, 2011 attested by the Notary Public and not by the Executive Magistrate. The petitioners were called upon to file affidavit vide communication dated November 17, 2011 attested by the Executive Magistrate. Learned counsel for the respondents could not point out any guidelines, instructions or statutory provisions as to why the affidavit is required to be attested only by Executive Magistrate. The Notary Public is authorised with the power of attestation of affidavits under the Notaries Act, 1952. Therefore, we find that affidavit filed by the petitioners attested by the Notary Public within the time of submitting tenders, meets the requirement of the tender conditions. As regard the issue of lack of service tax number by the petitioners, such requirement is not a requirement by statute. The chemists under the Finance Act, 1994 are not required to have registration with service tax authorities. The committee was right in proposing the minor deviation so as to have service tax registration after the finalisation of the bids from the successful bidder. - present is 4th/5th attempt to lease out the shops situated in the medical college/hospital premises. The non-leasing of such shops is causing great inconvenience to the public. Therefore, we deem it appropriate to direct the administration to open the financial bids of the petitioners and process the same in accordance with law - Decided in favour of petitioner.

  ---