Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 27, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Central Excise
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25/2014 - dated
25-8-2014
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CE (NT)
Seeks to amend Cenvat Credit Rules, 2004
Customs
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F.No.437/92/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Mortex (India), Room No.1A, 3rd Floor, 20 British India Street, Kolkata
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F. No.437/94/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Vedika Metals Private Ltd., 201, Annapurna Building, Shyam Kunj Complex, 12A, Lord Sinha Road, Kolkata
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F. No.437/91/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Rohit Ferro Tech Ltd., SKP House, 132A, S.P. Mukherjee Road, Kolkata
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F. No. 437/98/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Vidres India Ceramics Private Limited, 306, Sarthik Square, Nr. Pizza Hut, S.G. Road, Ahmadabad, Gujarat
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F. No. 437/90/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Gayson & Co. (P) Ltd., 18-D Everest, 46C Chowringhee Road, Kolkata
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F. No. 437/12/2014-Cus IV - dated
25-8-2014
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Cus (NT)
Appointment of Common Adjudicating Authority - M/s Sun Infonet (P) Ltd., 3/31 West Patel Nagar, New Delhi
Service Tax
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19/2014 - dated
25-8-2014
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ST
Seeks to amend the Service Tax Rules, 1994 - Service Tax (Second Amendment) Rules, 2014
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18/2014 - dated
25-8-2014
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ST
Seeks to notify the date on which Clauses A, B, C of the section 114 of the Finance (No.2) Act 2014 becomes effective.
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment u/s 147 The chronology of events prove in unequivocal terms that if somebody had erred it was the AO and not the FAA - He has tried to improve upon his case lately in form of grounds of appeal filed before us - AT
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Deduction u/s 80IB(2)(iii) - assessee received sales tax VAT incentives is the first degree and it is Govt. benefit and it is not industrial undertaking benefit, it is not a profit derived from eligible business - AT
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Assessee society cannot be regarded to be a primary co-operative bank as all the three conditions are not complied with and it is not a co-operative bank and the assessee is not hit by the provision of section 80P(4) - AT
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Registration expenses deleted - payments made under the heads consultancy fees, bank charges and other expenses cannot be held to be not incurred for the business for year - AT
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Addition u/s 68 - justification for collection share premium - The onus on the assessee it of course cannot be required to prove a negative, would depend on the facts and circumstances of the case - AT
Customs
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Revocation of CHA License - The forfeiture of security deposit shall remain. The appellant has to furnish fresh security deposit as per law for resuming work as CHA. - AT
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EXIM - Shipping bill - Conversion from Advance Licence to DEPB Scheme - Request made after more than one year of export - conversion allowed - AT
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Period of limitation issuance of SCN or Delivery of SCN - the expression notice is given does not logically translate to the conclusion that notice must be issued within the stipulated period - HC
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Transaction value of goods - as the invoice price at the relevant time has not been disputed by the revenue that same is not correct as per prevailing market price during that time, the transaction value cannot be rejected. - AT
Wealth-tax
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Value of the land for Wealth Tax - Exemption u/s 2(2ea)(ii) - t if on a plot of land construction of a building is not permissible under any law then the said plot of land could not form part of urban land or the asset to be taxed under the Act - AT
Service Tax
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CENVAT Credit - General Insurance Services provided by the agents in Jammu and Kashmir - not taxable as reverse charge - CENVAT Credit taken by the appellant is nothing but refund of the service tax paid by them - allowed - AT
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Classification of service - computerised reservation system - Business Auxiliary Service - air travel agent service - stay granted partly. - AT
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Issuance of SCN and levy of penalty where service tax with interest paid before issuance of show cause notice - authorities are precluded from issue of show-cause notice - HC
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C&F agent service - mere procuring or booking orders for the principal by an agent on payment of commission would not amount to providing C&F Agent Service. - AT
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Business Auxiliary Service - services relating to Procurement of goods or services, which are inputs for the client - Once the appellant falls within the scope of exemption, a liberal construction has to be adopted. - AT
Central Excise
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Exemption under Exemption Notification No. 6/2002-CE - There is thus no doubt that the machines Relax Drum Machine (Relax Drum washer) is not a drying machine - AT
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CENVAT Credit - Once the CENVAT Credit itself is not taken, in respect of inputs utilized for exempted goods totally, and if this fact is coming out from the records, naturally there would be no need to maintain separate records - AT
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Valuation of goods - subsidy received by fertilizer companies from the Government - the subsidy cannot be considered as an additional consideration - AT
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Cenvat Credit - removal of goods as such versus Trading activity - reversal of credit is not disputed by the department - demand set aside - AT
Case Laws:
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Income Tax
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2014 (8) TMI 767
Restriction of 1/5 VRS payment u/s 35DDA VRS expenses added to income of assessee Held that:- CIT(A) has rightly decided the issue in accordance with the amended provisions of section 35DDA, w.e.f. 01/04/2001 i.e. AY 2001-2002 - the assessee has made payment of ₹ 1,35,47,324/- on account of VRS and the AO has allowed deduction to the extent of 1/5th i.e. ₹ 27,09,465/- and made the disallowance of ₹ 1,14,89,040/- because the assessee has claimed deduction for the entire amount on such VRS amount of ₹ 1,35,47,324 - the disallowance made by the AO and confirmed by the CIT(A) is in accordance with the provisions of section 35DDA Decided against Assessee. Entitlement for 100% depreciation on electric vehicles CIT(A) remanded matter for verification - Whether electric vehicles falls under the head "Renewed Energy Saving Devices" irrespective of the period to which it is put to use Held that:- CIT(A) has rightly directed the AO to examine and verify the claim of the assessee and to disallow 50% claim of the assessee for depreciation in respect of those items which were used for less than 180 days in the present year - Regarding the opening balance also, he has directed the AO to verify the record of the assessment year 2001-02 and recompute the depreciation allowable by allowing 100% depreciation on opening WDV arrived at as on 01.04.2001 - The directions of the CIT(A) are in line with the provisions of 2nd proviso to clause (ii) of sub section (1) of section 32 of the Act Decided against Assessee. Payment of gratuity under LIC scheme u/s 43B Invocation of section 40A(7) Held that:- Deduction is allowable if the provision is for the purpose of payment of a sum by way of any contribution towards approved gratuity fund relying upon Shree Sajjan Mills Ltd. Vs Commissioner of Income-tax [1985 (10) TMI 2 - SUPREME Court] - the amount paid was nothing else but gratuity and merely because the scheme had been mentioned as Gratuity Insurance Assurance Scheme, it does not make any difference and the provisions of section 40A(7) would be attracted as the fund had not been recognized by the Department - the deduction is not allowable u/s 36(1)(v) either and the same is not allowable u/s 36(1)(v) also because deduction is allowable u/s 43B of the Act - the assessee could not show that payment of premium to LIC is payment to approved gratuity fund Decided against Assessee. Grant of electric vehicle sanctioned on 30.3.2002 Held that:- Grant of ₹ 100 lac was sanctioned on 21/08/2001 but only ₹ 50 lac was disbursed initially and balance was to be disbursed on utilization of the first ₹ 50 lac and on furnishing of utilization certificate duly audited - It is noted by CIT(A) that on receipt of utilization certificate, the balance amount was disbursed as per letter dated 10/04/2002 and the draft was received by the assessee on 15/04/2002 - A grant which was received in the next AY cannot be utilized in the present year and as per the matching principle, this grant should be considered as income in the next year the order of the CIT(A) is set aside Decided in favour of Assessee. Crystallization of liability - Salary & Wages & Bonus and Power & Fuel prior paid expenses or not Held that:- The issue has been decided by CIT(A) on the basis that the liability has crystallized in the present year and allowable in the present year revenue could not controvert the finding of CIT(A) and it is settled position that if liability relating to earlier year has crystallized in the present year then the same is allowable in the present year Decided against Revenue. Policy followed relating to Prior Period Adjustment A/c ignored Held that:- The assessee is claiming expenses for the year solely on the grounds the vouchers concerned were passed in the current year and he has also given a finding that in none of the cases, it can be said that the liability arose in the year under consideration - it could not be shown by assessee assessee that these liabilities have crystallized during the present year Decided against Assessee. Interest subsidy on house building loans Expenses incurred wholly for business purpose or not Deletion of benevolent expenses - Held that:- Following the decision in Shahzada Nand & Sons v. CIT [1977 (4) TMI 4 - SUPREME Court] - the disallowance was made by the AO on the basis that the interest subsidy cannot be allowed as business expenditure - the interest subsidy to the employees is for maintaining harmonious relationship and welfare of the employees, which is nothing but business expenditure the order of the CIT(A) is upheld Decided against revenue. Bad and Doubtful Debts, Advances and others written off u/s 36(1)(vii) Held that:- CIT(A) rightly decided that in addition to writing off the debt, the assessee has to establish that the amount of debt was taken into account in computing the income of the assessee of the previous year in which it is written off or of an earlier year as the assessee could not establish that the amount was considered as income by the assessee in the previous year or in any earlier year - as per sub section (2) of section 36, deduction is not allowable to the assessee u/s 36(1)(vii) of the Act Decided against Assessee.
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2014 (8) TMI 766
Provision of repairs and maintenance of office building Proper evidences not shown Provisions to be treated as contingent liability Held that:- The assessee had made a claim under the head provision for repairs and maintenance, that the bills for repairs were received by it in the succeeding year, that the AO had disallowed the expenditure - Neither before the AO nor before the FAA, the assessee had furnished the basic document that could prove that repairing work was actually carried out during the year - The assessee has not led evidence that could prove that finding arrived at by the officers of the department was factually incorrect - the order of the FAA does not suffer from any legal infirmity. Relying upon M/s. Rotork Controls India (P) Ltd. Versus Commissioner of Income Tax, Chennai [2009 (5) TMI 16 - SUPREME COURT OF INDIA] - provision can be made an allowed in certain conditions - Deductions are not permissible for anticipated losses or contingent liabilities, even if they are inevitable - Merely because an expense is claimed to be relating to a transaction of a particular year, it does not become a liability payable of that year unless and until it is established that the liability was determined and crystallized in the year on the basis of maintaining accounts on the mercantile basis - incurring of expenditure for repairing was not established by the assessee for the year under appeal and so-called provisions made by it does not fall under the criteria as laid down by the courts for allowing provisions , the contentions raised by assessee rejected Decided against Assessee.
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2014 (8) TMI 765
Reopening of assessment u/s 147 Jurisdiction of AO to issue notice u/s 148 Mere change of opinion - Reopening based on audit objection Held that:- No new material or information has come into the possession of the AO which may be called as reason for the belief of the AO that income of the assessee has escaped assessment - Mere change of opinion cannot be said to be reason to belief for the AO that income of the assessee has escaped assessment relying upon Asian Paints Ltd. Vs. DCIT [2008 (7) TMI 237 - BOMBAY HIGH COURT] - The reopening was done by the AO based on the same facts and circumstances especially on the basis of letter which was submitted by the assessee itself at the time of assessment proceedings u/s 143(3) of the Act and was duly considered and reproduced in the original assessment proceedings - it was a merely change of opinion of AO and cannot be said to be a valid reason, information material or belief which would justify reopening thus, reopening of assessment was bad in law and is liable to be set aside Decided in favour of Assessee.
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2014 (8) TMI 764
Reopening of assessment u/s 147 Full and true disclosure not made by assessee Held that:- The FAA had noticed certain discrepancies in the reassessment proceedings, so, he had directed the AO to send his comments - the AO did not comply with his directions and in spite of getting more than one opportunity he did not submit his comments to the FAA, so, that he could take an informed decision - the FAA was left with no alternative but to decide the matter on merits - From January to July 2012, the AO did not send his report to a judicial authority for the reasons best known to him only - FAA is very senior officer of the department and entrusted with a responsibility of carrying out judicial work Non-cooperation with him is not only beyond our comprehension but also against the departmental discipline - The matter does not end here only. When the FAA decides the appeal on merits the same AO challenges it alleging that the FAA has erred - The chronology of events prove in unequivocal terms that if somebody had erred it was the AO and not the FAA - He has tried to improve upon his case lately in form of grounds of appeal filed before us the order of the FAA should have been accepted gracefully and the administrative approval should not have been given to file the second appeal - thus, the order of the FAA does not suffer from any legal or factual infirmity Decided against revenue.
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2014 (8) TMI 763
Reopening of assessment u/s 147 Preconditions for initiation of proceedings satisfied or not Held that:- The AO himself has mentioned that the assessee has invested as share capital in M/s Isher Dass Sahni and Bros. Pvt.Ltd. But the accounts of the assessee did not reflect this investment - the assessee has disclosed the fact of investment in shares of M/s Isher Dass Sahni and Bros. Pvt.Ltd.- the investment is made by the third party - part of the investment which is made directly by the assessee is by cheque and some part is paid by the third party following the decision in ACIT and Others Vs. ICICI Securities Primary Dealership Ltd. [2012 (8) TMI 754 - SUPREME COURT] - the assessee had disclosed the full details in the return of income with regard to dealing in stock and shares - the assessment was reopened on the ground that the loss incurred by the assessee from the sale of shares was a speculation loss and not business loss - The assessee also explained the source of investment in shares - nothing new has come to the notice of the Revenue but the assessment is being sought to be reopened on a mere relook of the matter already available on record - thus, the reopening of assessment by the AO u/s 147 was not valid - the notice issued u/s 148 beyond the period of four years from the end of the relevant assessment year is set aside Decided in favour of Assessee.
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2014 (8) TMI 762
Blending and bottling amounts to manufacture or not u/s 80IB(2)(iii) - Held that:- As decided in assessees own case, it has been held that the activity carried on by the assessee are manufacturing activity eligible for deduction u/s 801B of the Act - the finding of the CIT(A) in allowing the deduction u/s 801B is upheld Decided against Revenue. Sales tax incentives duty drawback or not Eligibility for the benefit of section 80IB Held that:- The assessee has received sales tax incentive from the Commercial Tax Department as VATD-NPV-CPS2005 appearing in the Profit and Loss account under the head other income Relying upon Liberty India vs. CIT [2009 (8) TMI 63 - SUPREME COURT] - immediate source of income is to be looked into while allowing the deduction under 80IA deduction - assessee received sales tax VAT incentives is the first degree and it is Govt. benefit and it is not industrial undertaking benefit, it is not a profit derived from eligible business the issue is does not have any direct linkage to the eligible undertaking thus, the order of the CIT(A) is set aside and the assessee is not eligible for deduction u/s 80-IB in respect of interest on FDR and Sales Tax incentive Decided in favour of Revenue.
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2014 (8) TMI 761
Reopening of assessment u/s 147/148 No application of mind - Held that:- Following the decision in Commissioner of Income Tax - III Versus M/s Suren International Pvt. Ltd. [2013 (5) TMI 414 - DELHI HIGH COURT] - the AO except preparing the table of accommodation entries from the details claimed to have been received from the Investigation Wing, has not at all applied his mind - assessee rightly contended that there was no failure on the part of the assessee to disclose all material facts because in the documents attached to the return of income, all primary facts were disclosed - the contention of the assessee is that the AO issued the notice u/s 148 mechanically simply on the basis of information alleged to have been received from the Investigation Wing without application of mind - the reasons recorded without any application of mind cannot be said to be a proper belief with regard to escapement of income the order of the CIT(A) is upheld Decided against Revenue.
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2014 (8) TMI 760
Status of assessee Co-operative society or not type of co-operative societies not specified - Eligibility for deduction u/s 80P(2)(a)(i) Held that:- If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society, will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilities to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to co-operative societies in respect of business relating to its members. The deposits accepted are used by the Assessee co-operative society for lending or investment - Even out of the deposits so received, the loans have been given to the members of the society in accordance with the objects Thus it cannot be said that the Assessee society was carrying on banking business as it was not accepting deposits from the persons who were not members - it is not necessary that the co-operative society should have a banking licence as per the definition under the Income Tax Act it has to be seen as to whether the nature of the business carrying on by the assessee is a banking business or not - the paid up share capital and reserves in the case of the Assessee is more than ₹ 1 lac also, Sec. 20 of The Karnataka Souharda Sahakari Act, 1997 permits admission of any other co-operative society as a member - in case the rules and bye-laws of the other co-operative society provides otherwise, the co-operative society may not be admitted as a member of the co-operative society - the assessee society cannot be regarded to be a primary co-operative bank as all the three conditions are not complied with and it is not a co-operative bank and the assessee is not hit by the provision of section 80P(4) and asessee is entitled for deduction u/s 80P(2)(a)(i) - the order of the CIT(A) is upheld and the AO is directed to allow deduction to the assessee u/s 80P(2)(a)(i) on the income generated for providing banking or credit facilities to its members Decided against Revenue.
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2014 (8) TMI 759
Penalty u/s 271AAA Proper evidences to substantiate the undisclosed income not furnished by assessee Held that:- As per CIT(A)s observation, the AO has accepted the explanation as no further corroborative adverse material was in the possession of the AO - The books of accounts stands vetted - the AO was required to form an opinion and further it must be reflected in substance for initiation of penalty proceedings - It is also not a case where specific questions were raised on the issue which could not be satisfactorily explained by the assessee - he proceeded to initiate penalty u/s 271AAA - The AO after accepting the contentions/surrender of the assessee has therefore erred in initiating the penalty and consequently levying the penalty u/s 271AAA - The overt action of the AO clearly revealed that the manner of having earned the income was accepted - Assessee has honoured the surrender made u/s 132(4) and paid the taxes thereon being part of the total surrender, which is not in dispute - The position is alike in respect of the 'surrender on account of furniture and fixtures and on account of misc. income - CIT(A) has rightly directed the AO to delete the penalty levied of ₹ 50,50,000 thus, the order of the CIT(A) is upheld Decided against Revenue.
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2014 (8) TMI 758
Addition of credit balance u/s 68 - Genuineness of transactions Held that:- The AO was of the view that there are certain contradictions between the statement of the assessee and that of the creditors and the creditor has not proved the credit-worthiness of the person from whom he has borrowed the funds - assessee has demonstrated that the amount was repaid in cash, and another amount was paid through M/s. Sunil Castings Ltd. through M/s. Maheswari Brothers - From the relevant account copies from the books of M/s. Sunil Castings Ltd., and that of M/.s Maheswari Brothers, it could be find out that the assessee has stated the facts correctly. Non-appearance of ₹ 4,50,000 Assessee claimed that it has been paid by cheque trough IOB Held that:- The payment has been made to M/s. Singareni Collieries on behalf of M/s. Nasreen Old Iron Traders - the person who has advanced the money, namely, Shri Jani Miya, is a man of substance, as he has bid for a tender of ₹ 8 crores, and is having a OD limit of ₹ 20 lakhs - his creditworthiness is beyond doubt - as far as the assessee is concerned, the source for the credit has been established, by discharging the onus of proving the identity of the creditor, his credit worthiness and also the genuineness of the transaction - there is no justification for any addition in the hands of the assessee, and if at all, any addition is warranted, that has to be examined in the hands of the creditor of the assessee, viz. Shri Jani Miya - Decided against Revenue.
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2014 (8) TMI 757
Assessment made u/s 143(3) r.w. Section 153A Income from salary as well as commission earned from pearls business Failure to furnish name/address of any other firm on whose behalf commission business in pearls was claimed - Held that:- Following the decision in Anil Kumar Bhatia [2012 (8) TMI 368 - DELHI HIGH COURT] - determination of income in the orders passed in terms of S.153A would be similar to the orders passed in any re-assessment, where the total income determined in the original assessment order and the income that escaped are clubbed together and assessed as total income - As for the quantum of additions sustained by the CIT(A), as for the air-fares, it is based on the fares of the relevant time, the CIT(A) found no justification to tinker with the additions made by the AO on that count - there is no justification for any further relief from out of the additions sustained by the CIT(A) on account of daily expenditure incurred by the assessee for the days spent abroad in each of these years the order of the CIT(A) is upheld and the grounds of the assessee on the issue of unexplained expenditure incurred on foreign trips are rejected. Addition of unexplained investment in property Held that:- There is no evidence as to the person in whose hands the unexplained investment was assessed on substantive basis, the CIT(A) treated the protective addition made in the hands of the assessee, as a substantive one - It is settled principle of law that any income has to be assessed in the hands of right person - the land on which the building was constructed as in the name of assessees mother, right person to be assessed in respect of unexplained investment in the construction, was assessees mother and not the assessee, and it on this ground only that the AO, has made only protective addition in the assessment of the assessee - merely because the assessee is in exclusive possession and enjoyment of the property, it cannot be said that he is the person in whose hands substantive addition is due - on purchase bills and other papers, often, for the convenience of delivery of material, easy identification etc., instead of exposing the woman, names of head of family or other prominent male members of the family are mentioned. Revenue has not brought on record any clinching evidence, to conclude that the unexplained investment has indeed been made by the assessee only - the view taken by the CIT(A) cannot be upheld in treating the addition made on protective basis by the AO into a substantive one and in confirming the same - If at all, any addition on account of unexplained investment is warranted, it would lie in the assessment of assessees mother, who is the actual owner of the land and the constructed property, and not in the hands of the assessee Decided in favour of Assessee.
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2014 (8) TMI 756
Reopening of assessment u/s 147 treated as invalid Assessment reopened after previous sanction of the CIT u/s 151 Change of opinion - Held that:- The assessee had made full and true disclosure of its income - The AO has issued notice of reopening u/s 148 after expiry of four years - The AO has not recorded any reasons that escapement of any income chargeable to tax was on account of failure on the part of the assessee to file return or to disclose fully and truly all material facts necessary for making assessment of the relevant A.Y - Even if the reasons are properly recorded and approval of the CIT is obtained u/s 151 of the Act, limitation provided in the Act cannot be increased - Notice u/s 148 is found to be clearly beyond four years of the completion of the regular assessment order - no new material or information has come to the knowledge of the AO. The interest of the bank is not outstanding liability in the balance sheet of the assessee - The entire exercise undertaken by the A.O amounts to change of his opinion which law does not permit him to do so relying upon Banswara Syntex Ltd. Versus Assistant Commissioner of Income-Tax [2004 (3) TMI 13 - RAJASTHAN High Court ] - if the escapement of income believed by the AO is not attributable to any failure on the part of the assessee in filing return u/s 139 or 148 or to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the proceedings for assessment or reassessment of any AY cannot be initiated after expiry of four years from the end of the AY for which assessment or reassessment is sought to be made u/s 147 of the Act Decided against Revenue.
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2014 (8) TMI 755
Cash received for booking/sale of land from identified parties or not - Held that:- AO as well as CIT(A) examined the record and found that the entries appearing in the names of Shri Abrar Ahmed, Saagir Ahmed and Mugahid Sahid were also made available before the AO on 6.3.2009 and 17.12.2009 - The amounts represent the payment made to the persons towards purchase of land and duly recorded in the books of the assessee there was no infirmity in the conclusion drawn by the CIT(A) Decided against Revenue. Receipt of cash on different dates Held that:- CIT(A) has examined the record and the facts that Mr. Sujoy Mukherjee in the proprietor of M/s S. M. Financial & Management Services - It was brought to the notice by the assessee that the assessee made the surrender at the time of survey and offered for taxation - The surrendered was made on account of unaccounted cash received as well as profit on the same - The claim of the assessee is that the surrendered amount includes entire unaccounted cash receipts of ₹ 1,75,60,980/- and also estimated profit of ₹ 64,94,020/- and thus, total surrendered amount is ₹ 2,40,55,000 - AO was rightly directed to delete the addition of ₹ 22 lacs made on the basis of entries Decided against Revenue.
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2014 (8) TMI 754
Claim of exemption u/s 54/54F Income from salary and property AO was of the view that assessee own more than two houses at the time of capital gains Held that:- Assessee received a total of ₹ 75,00,000 - even though the cancellation deed was entered presumably for saving the stamp duty, the intention of the assessee seems to be selling the plot No.19 purchased three years back for a consideration of ₹ 75,00,000 as can be seen from the terms of agreement of sale through which assessee acknowledges receipts of ₹ 11,00,000 - assessee has originally admitted the capital gain correctly treating the re-transfer/re-conveyance of the plot as a transfer thereon and claimed deduction under section 54F - CIT(A) order in treating the amount as breach of contract seems to be devoid of facts - What assessee actually intended from the citations of the documents on record is to resell the plot to the original vendor at a consideration of ₹ 75,00,000/- and assessee claimed indexation benefit on the cost of the purchase of plot in 2005 - Decided in favour of Revenue. Admission of additional grounds Held that:- Admission of additional grounds by the CIT(A) involved examination of facts which are not on record - there is no dispute with reference to capital gains being offered by the assessee relying upon CIT Vs. S.A. Builders Ltd. [2006 (12) TMI 76 - SUPREME COURT OF INDIA] - if the facts are not available on record, additional ground cannot be raised on any legal issue - the facts on the issue of capital gains are obviously not examined by the AO as the assessee himself offered the capital gains - CIT(A) entertained additional ground which involve examination of fresh facts which is not permitted under Law - thus, CIT(A) erred in admitting additional grounds of appeal and also not given the opportunity to the AO to examine under Rule 46A Decided in favour of Revenue.
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2014 (8) TMI 753
Deposits treated as unexplained income - Income from salary and interest free partnership Held that:- The bank account is a joint account of the assessee with her husband in the ICICI Bank and the same has been confirmed by the bank authorities, to the effect that the transactions in the Joint Bank account during the period 01.04.2008 to 31.03.2009 belong to the assessees husband Mr. V. Raja Reddy alone and further affidavits had been furnished in this regard by both the assessee and Mr. V. Raja Reddy - Since the assessee has not maintained books of accounts, disclosing the bank account to the department does not arise revenue should have made further enquiries which would reveal the fact that whether the receipts belong to Mr. V. Raja Reddy or not, especially when Mr. V. Raja Reddy belong to the same Ward as that of the assessee - assessee is deriving income from salary and interest from partnership firm concerned along with commission on marriage bureau, which is not a substantial amount the order of the CIT(A) is upheld that the entire addition made in the hands of the assessee cannot be sustained Decided against Revenue.
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2014 (8) TMI 752
Disallowance of interest expenses - Held that:- AO had disallowed interest expenditure that the assessee had advanced IFL of ₹ 2. 70 Crores to APL, that it had paid interest to the partners on the debit balance, that certain pieces of information were given by the assessee during the appellate proceedings only, that before the AO it was admitted that it did not have business relation with APL, that the AO had agreed with the assessee that the loan given to APL was because of business expediency, that the FAA had partly deleted the interest expenditure and had partly upheld the order of the AO - the assessee itself had stated during the assessment proceedings that there was no business connection with APL - without affording a chance to the AO to rebut/confirm the stand of the assessee, the FAA had given relief to the it He has given certain calculation as on 31. 03. 1997and 31. 03. 2007 for part disallowance of interest expenditure - AO did not have benefit of the submissions of the assessee made during appellate proceedings - the matter needs further verification, thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Registration expenses deleted Held that:- FAA had not deleted the addition of ₹ 10.22 lakhs, as mentioned in the ground of appeal - While deciding the appeal the issue before him was the expenditure of ₹ 7.87 lakhs only - Out of the total expenditure of ₹ 22. 29 lakhs, incurred by the assessee, the foreign principals had reimbursed ₹ 14.42 lakhs - the commission income received from sale of products supplied by the foreign suppliers was offered to tax by the it - the expenditure was incurred wholly and exclusively for business purposes - an increase in the expenditure cannot be basis for disallowing it - Without registration of the product with appropriate authority at Delhi, it was not possible for the assessee to earn income - payments made under the heads consultancy fees, bank charges and other expenses cannot be held to be not incurred for the business for year - All the expenses had direct nexus with earning of the income offered for taxation - Genuineness of the expenditure is not in doubt and the assessee had also deducted tax at source on those payments - the FAA was justified in deleting the addition of ₹ 6. 22 lakhs Decided against revenue.
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2014 (8) TMI 751
Admission of additional grounds Held that:- The assessee neither at the stage of assessment nor before the CIT(A) has raised any issue with regard to validity of proceeding initiated u/s 147 of the Act - considering the fact that the issue being raised is a purely legal and jurisdictional issue going to the root of the matter and can be decided on the basis of facts available on record, the additional grounds are admitted following the decision in NTPC Vs. CIT [1996 (12) TMI 7 - SUPREME Court]. Jurisdiction of AO u/s 147 validity of proceeding u/s 147 - Application of section 50C Held that:- The assessee has tried to justify sale consideration mentioned in the sale deed by stating that though the area of land as per the document was 623 sq.yds. but land physically available was only 580 sq.yds. - due to severe vaastu defect area of 125 sq.yds. was not usable for construction purposes and the buyer has also spent an amount of ₹ 30 lakhs towards leveling and construction of retention wall - though the DVO has accepted certain specific issues raised by the assessee in this regard, he has not properly given discount towards the same - the value of the property on the date of sale of comparable cases cannot be applied to the assessee's property, which was sold on 29/09/2006 - assessee's objection is valid. If at all the DVO is to consider comparable sale instances, then, he has to consider the sale instances of the relevant date when the assessee sold property or dates proximate to that date - considering the appreciation in value of the property as per the SRO guide line the discount given by the DVO on backward calculation is not fair - the value determined by the DVO cannot be treated as the fair market value of the property - the sale consideration shown by the assessee in absence of adequate evidence cannot be accepted - As it appears neither any physical verification has been done at any stage to ascertain the exact extent of land nor any conclusive evidence has been brought on record to establish such claim thus, the matter is to be remitted back to the AO for ascertaining the fair market value of the property as on the date of sale Decided partly in favour of Assessee.
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2014 (8) TMI 750
Addition u/s 68 - justification for collection share premium - Opportunity of being heard Burden to prove Held that:- There has been complete non-discharge by the assessee of the burden of proof on it - The shares are subscribed to in private placement, and therefore not in response to a public offering - even with regard to the creditor-subscribers other than the six companies qua which representation was sought by the Revenue from the assessee, as it becomes clear, that they were subject to investigation consequent to a search action by the Revenue, no materials except, as it appears, confirmations and share certificates, have been furnished by the assessee, which rather confirm the factum of the credit and not of it being genuine - It is, given the prescription of s. 68, which is a rule of evidence, statutorily mandated, the truth of those documents or of the same as representing genuine transactions, that is to be established - But for s. 68, the principle that what is apparent is real would obtain, so that the onus to disprove it with evidences - would be on the person alleging it as not so, i.e., the Revenue - The onus on the assessee it of course cannot be required to prove a negative, would depend on the facts and circumstances of the case the material is considered to be part of the record relying upon Hukumchand Mills Limited Versus Commissioner Of Income-Tax, Central, Bombay [1966 (9) TMI 38 - SUPREME Court] thus, the matter is to be remitted back to the CIT(A) for fresh adjudication.
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Customs
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2014 (8) TMI 773
Revocation of CHA License - Knowledge of anything contrary to the restrictions imposed - employees of the appellant did wrong acts without appellant s knowledge - Held that:- Appellant is not contesting the order on merits but argues the case on leniency as they have not knowingly done anything contrary to the restrictions imposed and has already suffered a lot in the past two years. It was argued by the advocate on behalf of the appellant that the employees of the appellant did wrong acts without appellant s knowledge. It was his case that a penalty of suspension/ revocation of appellant CHA licence for two years may be considered as sufficient penalty as appellant is jobless and does not have any other source of income. It is observed from the findings of the adjudicating authority in paras 19.4 and 19.5 of the OIO dated 17.09.2013 that Shri Piyush Gohel and Shri Ramesh Makupalli carried out the clearance work of M/s. Oswal without the knowledge of the appellant. However, adjudicating authority holds that appellant has to be held responsible for all the acts and omissions of his employees as per Regulation 19(8) of the CHAL Regulations, 2004. The order of the adjudicating authority for suspension/ revocation of appellant s CHA licence is therefore justified. The forfeiture of security deposit shall remain. The appellant has to furnish fresh security deposit as per law for resuming work as CHA.
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2014 (8) TMI 772
EXIM - Shipping bill - Conversion from Advance Licence to DEPB Scheme - Request made after more than one year of export - Request rejected on the ground that Circular No. 36/2010-Cus., dated 23-9-2010 permitted conversion within three months from the date of Let Export order and no documentary evidence produced by the exporter which existed at the time of export to support the request - whether the appellants application for conversion of Shipping Bills from DFIA to Drawback scheme needs to be allowed or otherwise, when such application filed on 20-07-2013 is made after the goods have been exported, no imports are made against such DFIA and cancellation of such DFIA on 10-07-2013 by DGFT - Held that:- Circular being beneficiary in nature, issued consequently to a number of Tribunals decisions holding that amendment of shipping bill after export is governed by proviso to Section 149 of Customs Act, 1962, which prescribes no time-limit for such conversion and if the documentary evidence available at the time of export is produced such conversion needs to be allowed - appellant s exports are not in any dispute as regards description, quality, quantity, value, BRC etc., having no import against DFIA the substantial benefit on such exports now available need not be denied - Following decision of Diamond Engg. (Chennai) P. Ltd vs CC [2013 (3) TMI 46 - CESTAT CHENNAI] - Decided in favour of assessee.
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2014 (8) TMI 771
Period of limitation issuance of SCN or Delivery of SCN - alleged that SCN given to the petitioner beyond the period of six months whether mere dispatch of a notice under Section 124(a) of the said Act would imply that the notice was given within the meaning of Section 124(a) and Section 110(2) of the said Act - Held that:- Gujarat High Court had clearly held that mere dispatch of a notice to the address of a person does not complete the giving of a notice and that the same would only have been completed if the notice had reached the person concerned or after having been tendered to him had been refused by him. We may say at this juncture itself that we are in full agreement with the decision of the Gujarat High Court in the case of Ambalal Morarji Soni (1971 (7) TMI 156 - GUJARAT HIGH COURT) and are, therefore, of the view that the notices in the present petition had not been given before the terminal date specified in Section 110(2) of the said Act. Show cause notices under Section 124(a) of the said Act bears the dates which happens to be either the last date or the penultimate date of the stipulated period under Section 110(2) of the said Act. It cannot be expected that a document sent by registered post would be delivered on the very same day or even the next day in the ordinary course of post. Furthermore, Section 27 of the General Clauses Act is qualified by the words unless a different intention appears. That different intention is discernible from the expression informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. While the Madhya Pradesh High Court was right in observing that the object of Section 110(2) and Section 124(a) of the said Act read together was to apprise the concerned person of the grounds on which the confiscation of the goods or imposition of penalty was proposed, with respect, it was wrong when it concluded that when the legislature had used the words notice is given it would obviously mean that the notice must be issued within six months of the date of seizure. In our view, the expression notice is given does not logically translate to the conclusion that notice must be issued within the stipulated period. none of the petitioners reviewed the notices under Section 124(a) of the said Act within the time stipulated in Section 110(2) thereof - Following decision of CCE., INDORE Versus RAM KUMAR AGGRAWAL [2012 (9) TMI 112 - MADHYA PRADESH HIGH COURT] and Ambalal Morarji Soni vs. Union of India and Ors [supra] - Decided in favour of assessee.
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2014 (8) TMI 770
Transaction value of goods - Adjudicating Authority has doubted on the transaction value on the ground that initially the goods were imported @ USD 938 PMT, therefore it was doubted that when the goods were imported in India @ 938 PMT the value declared by the appellants is not correct - whether the transaction value declared by the appellants is acceptable or not - Held that:- goods were imported by the appellants in the month of November 2008 through a contract dated 06.11.2008 on the prevailing international market price at that time. These facts are not in dispute. Therefore, the value adopted by the Adjudicating Authority to assess the goods in question is not correct as the value of the imported goods at the time of importation by the appellant is lower than the price at which the Adjudicating Authority has relied. The transaction value will be the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. Therefore, the words used in this provision are having the importance to ascertain the transaction value. The words neither sale' nor delivery' are defined under the Customs Act, 1962 but the same are defined under the Sale of Goods Act, 1930 - there is no doubt that there was no transfer of possession from the shipper to the earlier consignee to arrive at the decision that goods were delivered. As the documents of title were returned back by the earlier importer to the supplier accepted and unpaid, the agreement to sale could not become sale as per Section 4(4) of the Sale of Goods Act, 1930. Therefore, the said price was neither paid nor payable. In these circumstances, the said price cannot be said to be the price of the goods in question. As per Rule 10(1 )( e) of the Valuation Rules, 2007, the amount which paid over and above the invoice price is required to be added to assessment. As discussed above also, the transaction value is the price actually paid or payable to the supplier. In this case, the transaction value is the price paid by the appellant to the supplier plus the demurrage charges till 06.11.2008 paid by the appellant on behalf of the supplier for importation of the goods in question. Therefore, the transaction value in this case is invoice price plus demurrage charges accumulated till 06.11.2008 i.e. date of contract. It is very much clear that the value is to be the transaction value which is paid or payable for import of goods in India when sold for delivery at the time and place of importation. Therefore, sale, time of delivery and place of importation are necessary ingredients to determine the value of the goods. All the three ingredients have to be read in conjunction. There must be a sale for delivery at the time and place of importation and contemporaneous prices of the time cannot be ignored. In this case, the time of entering into contract by the appellants with their foreign supplier is very much relevant to determine the transaction value of the goods. Therefore, as the invoice price at the relevant time has not been disputed by the revenue that same is not correct as per prevailing market price during that time, the transaction value cannot be rejected. Appellant approached to the Settlement Commission for settling the issue and Settlement Commission held that the real assessable value shall be the invoice price plus demurrage charges accumulated on the goods till 06.11.2009. But the revenue is of the view that, such demurrage charges are not includable in the assessable value. Although, the revenue does not want to include demurrage charges in the transaction value, but as per Section 14 of the Customs Act, 1962, in the facts and circumstances of this case, the correct assessable value is invoice Price plus demurrage charges accumulated till 06.11.2008. Therefore, we hold that the correct assessable value is invoice Price plus demurrage charges accumulated till 06.11.2008. - Decided in favour of assessee.
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2014 (8) TMI 769
Waiver of pre deposit - Undervaluation of goods imported - Suppression of facts - Misdeclaration of goods - Difference of opinion - Majority order - Held that:- Though, I (third member) have held that prima facie there is a strong case for the appellant, since I am disposing the issue as a referred member, I have no other option as a third Member, but either to agree with one of the deferring views. - stay granted partly.
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Service Tax
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2014 (8) TMI 788
Cenvat credit - input services - Goods Transport Agency service - whether the Cenvat credit taken for the period April 2008 to March, 2009 be reversed and penalty alongwith interest be imposed - Invocation of extended period of limitation - service tax paid on the transport service from the gate of the factory upto the premises of the consumer - Held that:- In pursuance of the aforesaid powers, the central government has framed Cenvat Credit Rules, 2004 (the Rules). The Rules provide for a procedure for taking credit of the excise duty paid on input goods as well as on input service. Rule 2(l) of the Rules provides 'input services' to mean, apart from other things, the service used by the manufacturer for clearance of the final product upto the place of removal. It further clarifies that input service includes an outward transportation upto the place of removal - There is no provision in the Act or in the Rules or in any circular issued by the Board of Central Excise and Customs, New Delhi (the Board) to hold that in case the duty is charged on the specified rate, then the place of removal will be factory gate. The matter is sent back to the Commissioner-Raipur to re-determine the question as to what is the place of removal: whether it is factory gate of the Assessee; or it is the premises of the consumer. In case it is held that the place of removal is the premises of the consumer, then the Assessee will be entitled to take the Cenvat credit on such service as it will be deemed to be input service - Decided partly in favour of assessee.
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2014 (8) TMI 787
CENVAT Credit - General Insurance Services provided by the agents in Jammu and Kashmir - reverse charge - Held that:- The Section 66A are not directly related to the facts of this case but concept of establishment most directly concerned with the receipt of the service will be equally applicable to the facts of this case and therefore the J & K branches are recipient of the service - it is very much clear that the insurance auxiliary services provided by the agents in the State of Jammu & Kashmir are not taxable. Therefore, the appellants are not liable to pay service tax for the said services of the insurance agents. In these terms, whatever credit is taken by the appellant is nothing but the refund of tax erroneously paid by them - CENVAT Credit taken by the appellant is nothing but refund of the service tax paid by them on the services on which they were not required to pay service tax - Decided in favour of assessee.
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2014 (8) TMI 786
Classification of service - computerised reservation system - Business Auxiliary Service - air travel agent service - Held that:- The reliance placed on the decisions of the hon'ble Madras High Court and this Tribunal, those decisions were rendered in a different context altogether and the issue of transaction between CRS companies and air travel agent was not one of the issues therein. It is a settled position in law that when the facts are different and distinguishable, the ratio of a decision cannot be blindly applied. The decision of the hon'ble apex Court in the case of Al Noori Tobacco products India Ltd. [2004 (7) TMI 91 - SUPREME COURT OF INDIA] refers - Therefore, we are prima facie of the view that the services rendered by the appellant would merit classification under business auxiliary services' as defined in law. As regards the question of time-bar, this is both a question of fact and law and has to be examined in depth after going through the documents available on record, which can be conveniently dealt with at the time of final hearing of the appeal. The demand for the normal period would be ₹ 5.8 crore approximately. The appellant does not plead any financial hardship. In the absence of a prima facie and financial hardship, balance of convenience lies in ordering pre-deposit - stay granted partly.
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2014 (8) TMI 785
Issuance of SCN and levy of penalty where service tax with interest paid before issuance of show cause notice - Business of software development and training to corporate - training in relation to SAP - exemption for 'vocational training services' - Penalties under sections 76, 77 and 78 - Held that:- service tax along with interest is paid before the issue of show-cause notice and it is clearly noted down in the show-cause notice. Further, there is no allegation regarding evasion. Therefore, the subject show-cause notice is not at all valid, hence, on this ground alone the impugned order needs to be set aside. Circular No. 137/167/2006/CX-4 dated October 3, 2007, which provides conclusion of adjudication proceedings including penalty proceedings, when the requirement under section 73(3) is complied with. Therefore, the penalty proceedings under sections 77 and 78 should also be closed on payment of service tax along with interest before the issue of show-cause notice, when there is no wilful suppression/ fraud/collusion. On this ground also, the impugned order needs to be set aside. Sub-section (3) of section 73 of the Finance Act, 1994, provides that, where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by the Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officers of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid. Therefore, it is clear before the issue of show-cause notice the assessee acknowledges the leviability to pay the entire service tax due with interest and pays the same; then the authorities are precluded from issue of show-cause notice - Decided against Revenue.
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2014 (8) TMI 784
C&F agent service - activities undertaked are (i) To source orders (ii) To liase with MUL for timely production (iii) pre delivery inspection and stamp three free service coupon etc. - Held that:- Clearing and Forwarding Agentmeans any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent - It is an accepted fact that one of the crucial elements of C&F agent service is that the C&F agent works on the direction of the principal. But in the present case the respondents are actually taking orders from the Government departments and basically facilitating the supply of cars to them, getting commission from Maruti Udyog Ltd. for so doing. It is seen that in the judgement in the case of Larsen & Toubro (2006 (6) TMI 3 - CESTAT CHENNAI), the CESTAT (LB) held that mere procuring or booking orders for the principal by an agent on payment of commission would not amount to providing C&F Agent Service. In a similar case of CS Suvarna Vs. CCE Mumbai [2007 (1) TMI 48 - CESTAT,MUMBAI] came to same conclusion. Thus, at least this much is undeniable that procuring the order from the Govt. departments was the main stay of the impugned service and any peripheral aspects thereof would not bring it within the scope of C&F Agent Service because at the least the crucial element of C&F agent service is conspicuously missing in this case - Decided against Revenue.
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2014 (8) TMI 783
Business Auxiliary Service - services relating to Procurement of goods or services, which are inputs for the client - exemption under Notification 14/2004-ST dated 10/09/2004 - Held that:- There is no dispute that MKCL is rendering services in the field of computer education and the appellant acts as an authorised lead agency. The functions entrusted to the appellant entail coordination between the authorised training centres (ATCs) and ensure that the courses conducted by the ATCs are as prescribed by MKCL, ensuring adequate infrastructure for conducting the courses, collection of fees, remitting the same to the MKCL and so on. These activities undertaken by the appellant would certainly come within clause (d) of the exemption Notification 14/2004-ST which is a service incidental or auxiliary to any activity specified in clauses (a) to (c) and clause (c) deals with provision of service on behalf of client. It is a settled position in law, as explained by the hon'ble apex Court in the case of Mangalore Chemicals and Fertilisers Ltd. [1991 (8) TMI 83 - Supreme Court of India] that there are two stages of interpreting an exemption Notification. In the first stage, whether the appellant falls within the exemption clause, strict interpretation is required to be made. Once the appellant falls within the scope of exemption, a liberal construction has to be adopted. As the activity undertaken by the appellant is incidental or ancillary to the provision of service by the client, the appellant falls within the exemption; therefore a liberal interpretation has to be given and the various activities undertaken by the appellant would become eligible for the benefit of the exemption. lower appellate authority's order in denying the benefit of exemption to the appellant during the impugned period is unsustainable - Decided in favour of assessee.
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Central Excise
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2014 (8) TMI 780
Denial of refund claim - CENVAT Credit - Notification No. 5/94-CE(NT) read with Notification No.14/97-CE(NT), dt.3.5.1997 - whether appellant was eligible to take CENVAT Credit @ 15% of duty paid by the appellant on Naptha or the same was required to be restricted to only 10% of the duty paid as per Notification No.5/94-CE(NT), dt.1.3.1994 as amended by Notification No.14/97-CE(NT), dt.3.5.1997 - Held that:- trade notice that idea of restricting credit to only 10% was that buyer of the concerned inputs had borne the duty incidence of only 10% and the remaining 5% was absorbed by the Public Sector Refineries. In the present proceedings of the appellant Public Sector Refinery has only borne Zero% of the duty and the entire duty incidence on Naptha is borne by the appellant under Rule 196 of Chapter X of Central Excise Rules 1944 for not using the inputs for the intended purpose for which the inputs were procured. The provisions of Notification No.5/94-CE(NT), d.3.5.97, as amended, thus will not be applicable. Appellant was liable to credit of duty paid @ 15% and cannot be restricted to 10% as the provisions of Notification No.5/94-CE (NT), as amended are not applicable to the present facts because the entire duty incidence is borne by appellant as per Rule 196 of Central Excise Rules, 1944 and not the Public Sector Refinery - So far as applicability of unjust enrichment is concerned appellant has relied upon CA s certificates to the effect that duty incidence borne by them is not passed on to the buyers. Such a certificate produced by the appellant cannot be brushed aside in the absence of a contrary view of another expert on the subject as appellant has discharged the initial burden of not recovering the duty for which refund is sought. There is no reason to hold in the present appeal as to why CA's certificate produced by the appellant should not be considered as an evidence of non-recovery of amount from the consumers - appellant is eligible to credit of duty paid on Naptha @ 15% under Rule 196 of Central Excise Rules 1944 - Decided in favour of assessee.
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2014 (8) TMI 779
Clandestine manufacture and clearances of man-made fabrics - Imposition of penalty - Held that:- Though the names of the merchant manufacturers from whom the goods were received for processing or to whom the goods were sold, were not given by the main appellant but the investigating officers traced out such merchant manufacturers. During the statements recorded all these merchant manufacturers admitted to have got goods manufactured/ received from the main appellant without payment of Central Excise duty. Calculation of duty demand on the clandestine removal of the goods has been calculated by the Revenue on the basis of details made available in the private accounts maintained by the main appellant and the job charges recovered. The stock taking of grey fabrics and semi-finished/ finished fabrics lying in the stock of the main appellant during the course of search also show difference in the stock. Proprietor and authorised signatory of the main appellant agreed to the correctness of the Panchnama, duty evasion calculation and clandestine manufacture and clearances made by the main appellant, which have not been retracted - However, penalty imposed is reduced - Decided partly in favour of assessee.
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2014 (8) TMI 778
Exemption under Exemption Notification No. 6/2002-CE dated 01.3.2002, read with list -6 (5), or Notification No. 6/2006-CE dated 01.3.2006 - Whether textile machinery Relax Drum Machine or Relax Drum Washer manufactured by the above textile machinery manufacturers, are eligible for the benefit of serial No. 193 of the table to Exemption Notification No. 6/2002-CE dated 01.3.2002, read with list -6 (5), or Notification No. 6/2006-CE dated 01.3.2006 - Held that:- Manufacturing appellants/ respondents have relied upon the technical opinions given by SAMSIRA, Mumbai and MMTRA, Surat to emphasize the point that both Relax Drum machine and Conveyer Drying machines are different and cover under the impugned exemption notifications. It has been opined by MMTRA that both the Relax Drum Machine/ Relax Drum washer and Conveyer Drying machines are different. There is thus no doubt that the machines Relax Drum Machine (Relax Drum washer) is not a drying machine. Whether the description given in the exemption notifications means only the drying machines or it also covers Relax Drum Machine (Relax Drum washer) manufactured by the assessees - Held that:- functions of Conveyer Drying machine and Relax Drum washer (Relax Drum Machine) is the same i.e. Relaxation of fabrics/fibre. The word Drum dryer has been specified at Sr. No. (v) above. When this description is read with the relaxation function of the activities, it becomes evident that a drying machine, like Drum dryer, exist which performs relaxation. In a further reference made to the Textile expert, it was opined that no machine by the name Relax Drum Dryer has came to their knowledge as per the available literature on the subject. In view of the above when a during machine Drum Dryer exists which does the work of relaxation, the opinion given by MMTRA that Relax Drum Dryer does not exist, on the face of it, appears fallacious. Further, all the machines specified in each of the heading of List 6 or List 2 respectively of Notification No. 6/2002-CE and 6/2006-CE convey only those machine which carried out a specific activity. Accordingly, Sr. No. 6(5) and 2(5) of the relevant exemption notifications has to be considered to be applicable only to the categories of drying machines. As the machine manufactured by the manufacturers is not a drying machine, therefore the benefit of above exemption notifications is not available to the impugned manufacturers. Invocation of extended period of limitation - Held that:- nowhere in the declarations filed/ records maintained, it was given by the manufacturers that the said machine works by washing. Also none of them have ever approached the Revenue to seek any opinion that there is confusion in the interpretation of the relevant entries of exemption notifications. Accordingly, extended period has been rightly invoked in these proceedings by the lower authorities - Decided in favour of Revenue.
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2014 (8) TMI 777
CENVAT Credit - maintenance of separate records - Exemption from tax since MRP of the product is below ₹ 100 per kg - Held that:- as soon as assesse stopped paying duty on the exempted biscuits, they also stopped taking CENVAT credit on the inputs. No doubt they did not maintain separate account of sugar solution which he also confirmed. Separate account is to be maintained for inputs and no doubt the inputs are sugar, glucose, citric etc. Therefore this does not need to an automatic conclusion that assessee did not maintain separate account at all. Nevertheless, when a statement like this is given and when the duty is being demanded on the ground that appellant was not eligible for the benefit of exemption Notification No. 67/1995-CE, it was the duty of the officer to question Shri Mohananand verify the records and ensure that records have been maintained or not maintained and facts are brought out correctly. Once the CENVAT Credit itself is not taken, in respect of inputs utilized for exempted goods totally, and if this fact is coming out from the records, naturally there would be no need to maintain separate records since the very fact that credit has not been availed would be sufficient instead of making further queries and confirming the facts. Straight away proceedings have been initiated against the appellants on the ground that they were liable to pay duty on sugar syrup and it has been held to be marketable because it has a shelf life without carrying out any market enquiry and without collecting any evidence about its marketability and the fact that it has not been sold, proceedings were initiated. It is strange that only selective portion of the statement convenient to the department has been extracted in the show-cause notice resulting in proceedings culminating in confirmation of demand. When a portion of the statement has been used for making out a case, another portion of the statement cannot be ignored or held to be false without any evidence. In view of the above, we come to the conclusion that appellants can be said to have maintained separate records in view of the categorical submission of Shri Mohanan that they stopped taking CENVAT credit in respect of inputs used for exempted goods from 2007 itself - most important part of any investigation i.e. to ascertain facts, apply law to the facts and propose action in accordance with law has not been followed in this case. - Decided in favour of assessee.
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2014 (8) TMI 776
Clearance of industrial oxygen without issue of invoice and without payment of excise duty - Interest u/s 11AB - Penalty u/s 11AC - Held that:- SCN dated 23.06.2005 had clearly brought out the total quantity of 4879 cubic metre of industrial oxygen removed without invoices and without payment of duty during the material period. From the documents and the computer data retrieved from the CPU seized from the appellant company and the statements recorded from the Managing Director and from the Manager (Sales), proved beyond doubt that the appellants had cleared the goods without payment of excise duty. It is also admitted by the appellants that the sale value of the impugned goods was received in the guise of transport charges. It is also noticed that the adjudicating authority has duly allowed the SSI exemption benefit under Notification No. 8/2003 and also cum-duty benefit while confirming the demand. The suppression of facts and malafide intention of the appellants to evade payment of duty is established beyond doubt, therefore, I do not find any reason to interfere with the Commissioner (Appeals) order in so far as confirming the duty of ₹ 1,98,830/- and imposition of equivalent penalty on M/s. Senthil Oxygen Pvt. Ltd. and the impugned order is liable to be upeld to this extent. As regards penalty imposed on Directors of Company - Held that:- department has not issued any notice to them alleging involvement and contravention of provisions for imposition of penalty. I find that the Commissioner (Appeals) in his impugned order while rejecting the appeals of both the appellants has not brought out any findings for imposition of penalty. It is well settled law that before imposing any penalty on any person, issue of show cause notice is mandatory and he should be given opportunity to explain his case and in the present case the principle of natural justice has not been complied nor the adjudicating authority has given any hearing to the individuals before adjudication. Therefore, the penalty imposed on both of them are liable to be set aside - Decided partly in favour of assessee.
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2014 (8) TMI 775
Valuation of goods - subsidy received by fertilizer companies from the Government - Introduction of Concession Scheme for decontrolled Phosphatic and Potassic (P & K) fertilizers on adhoc bass w.e.f. 1.10.1992 - Held that:- Circular No.983/7/2014-CX dated 10.7.2014 , the Board has clarified that the subsidy given by the Government is not includable in the assessable value and Central Excise duty is not payable on the subsidy component provided by the Government. The grant of subsidy is given pursuant to an administrative decision taken by Government of India and payment of subsidy to the manufacturer by the Government cannot be regarded as discharge of any liability or obligation by the Government towards the purchasers of the fertilizers. The definition of transaction value' deals with only such elements which otherwise may form part of value which a buyer is liable to pay to the assessee either by reason of sale or in connection with sale himself or on behalf of the assessees. Subsidy paid by the Government cannot be considered as an additional consideration includable for excise duty in accordance with statute - issue is covered by the Board's Circular and in our opinion also the subsidy cannot be considered as an additional consideration - Decided in favour of assessee.
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2014 (8) TMI 774
Cenvat Credit - removal of goods as such versus Trading activity - Interest and equivalent amount of penalty - Held that:- In this case it is no doubt that the appellant has imported HR Carbon Steel Plates. It is also not in doubt that the description while clearing the said goods which the appellant shows is HR MS Plates but the invoice clearly indicates that they have reversed the credit taken on the said goods under Rule 3(5) of the Cenvat Credit Rules 2004. This discrepancy came to the knowledge during the course of audit conducted in the factory of the appellant. When a invoice showing that the assessee has cleared the goods as such by reversal of the Cenvat Credit under Rule 3(5) of the Cenvat Credit Rule 2004, no inquiry has been conducted at the end of the buyer and it has also not ascertained from the records that under which invoice the credit has been taken on the said goods. Further, we find that it is not alleged that the appellant has not reversed the Cenvat Credit availed on the said goods. In these circumstances, the allegation of the department that the appellant has imported the said goods for trading activity and not sought any permission for their trading activity is not acceptable. Therefore, the said goods were cleared as such by reversal of the Cenvat Credit as per Rule 3 (5) of the Cenvat Credit Rules 2004, and the reversal of credit is not disputed by the department. In these circumstances, we hold that the duty paid by the appellant at the time of clearance of these goods by reversal of Cenvat Credit amounts to non availment of the Cenvat Credit of the said goods. Therefore the impugned order is not sustainable - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 782
Levy of Tax on patasa, harda and sakaria - Validity and legality of earlier order passed - tribunal observing that patasa, harda and sakaria are different forms of sugar, and therefore, they are required to be assessed, as if, they are sugar or fall in the category and entry of sugar and consequently the Tribunal has set aside the orders passed by the Assessing Officer, holding that these sales are not at part with the sale of sugar, and therefore, such sales are exempted - Held that:- The fact that by virtue of decision in case of Sakarwala Brothers (1966 (9) TMI 102 - SUPREME COURT OF INDIA), such items are considered as sugar for the purpose of sugar covered under subheading Nos. 1701.10, 1701.20, 1701.31 and 1701.39 of the schedule to the Central Excise Tariff Act,1985, there is no dispute possible in fact, not seriously raised. Such subheadings defined the term sugar' in the same manner as it was done under item no.1 of the First Schedule to the Central Excises and Salt Act, 1944. It is not even the case of the petitioner that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, is exempted. The respondent had pointed out before the tribunal that his vendors pay full additional duty at the point of clearance of goods. State Government however, raised a curious contention namely, that such duty must be paid by the respondent. We do not see any such warrant in condition contained in entry 86. Condition in plain terms is that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, should not be exempted on account of any exemption or drawback. When admittedly, the additional levy of duty is not exempted nor is the case of the petitioner that any drawback is granted, entry 86 would certainly apply. Such condition no where provides that such additional duty must be borne by the dealer. Additional duty of excise would be payable on manufacture of goods and would therefore, be paid by the manufacturer, in the present case the suppliers from whom the respondent dealer would be purchasing such goods. - Decided against Revenue.
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2014 (8) TMI 781
Waiver of pre-deposit - Quashing of earlier order passed - Acceptance of bank guarantee instead of personal bond - Held that:- Writ Petitions are disposed of, with a direction to the petitioner to execute a personal bond, instead of furnishing bank guarantee, as required by the appellate authority as a condition for grant of stay, in each case. Such a personal bond shall be executed within a period of two weeks from the date of receipt of a copy of this order. On receipt of the personal bond, the appellate authority is directed to dispose of the appeal on merits. On execution of the personal bond, the stay granted by the appellate authority shall continue till the disposal of the appeal - Stay granted.
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Wealth tax
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2014 (8) TMI 768
Deletion the value of the land for Wealth Tax - Exempt u/s 2(2ea)(ii) - Whether CWT(A) erred in directing the AO to delete the value of the land for Wealth Tax purposes as being exempt ujs. 2(2ea)(ii) of the W. T. Act, without appreciating the findings of the AO in the assessment order - Held that:- it is clear that if on a plot of land construction of a building is not permissible under any law then the said plot of land could not form part of urban land or the asset to be taxed under the Act. In the case under consideration the certificate issued by the Municipal Authorities demonstrate that the plot of land was a reserved as recreation ground and on the date of assessment the local authorities had not granted permission to construct any building on it. Even till the passing the order by the FAA, permission was not granted to construct building on the plot of land owned by the assesseehad. Before us, also no evidence was produced that prove that permission was granted to the assessee had for construction in the year under consideration. Therefore, considering the factual matrix of the matter and the above mentioned two judgments, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. Confirming his orders we decide first two grounds against the AO. Receivable compensation cannot be taken for valuing an asset on a particular date- especially when it is not certain that the assessee would get compensation or not at the first place. Taxes cannot be levied on hypothetical situations. - Decided against the revenue.
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