TMI Tax Updates - e-Newsletter
August 7, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Power to conduct Audit -Parliament did not intend to provide for a general audit that 'every assessee' may be subjected to, 'on demand' -Rule 5A struck down -HC

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Articles

1. GTA vs GTO – Service Tax Liability

   By: Smitesh Desai

2. DETERMINATION OF RATE OF EXCHANGE

   By: Dr. Sanjiv Agarwal

3. DISTINCTION AND SCOPE OF SECTIONS 110(2) AND 124 OF CUSTOMS ACT, 1962

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Countervailing Duty Imposed on Export of Carbon Steel Flat Products by the US

2. Long Term Vision for Making India A Major Player in World Trade

3. Anti-Dumping Duty on Imported Solar Modules

4. Setting up of NIMZs

5. Functioning SEZs

6. Investigations by US International Trade Commission

7. Protection of Textile Industry from Cheap Imports

8. Study on Impact of FTAs on the Manufacturing Sector

9. Setting up of Export Promotion Mission

10. Easing of Norms for Exporters

11. Investments in Industry

12. Government Approves Fourteen (14) Proposals of Foreign Direct Investment (FDI) Amounting to about ₹ 1528.38 Crore

13. RBI Reference Rate for US $ and Euro

14. RBI cancels Certificate of Registration

Notifications

Income Tax

1. 34/2014 - dated 5-8-2014 - IT

Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - Malta

Circulars / Instructions / Orders

VAT - Delhi

1. 07/2014-15 - dated 5-8-2014

Regarding Amnesty Scheme

2. 05/2014-15 - dated 4-8-2014

The reconciliation return in CST Form 9

3. 06/2014-15 - dated 4-8-2014

Processing of Refund claims

DGFT

4. 68 (RE-2013)/2009-2014 - dated 6-8-2014

Deferment in the date of effect of implementation of bar-coding on Mono-carton as Secondary Level Packaging on export consignment of pharmaceuticals and drugs for tracing and tracking purpose.

Highlights / Catch Notes

Income Tax

• Court Rules Incidental Profits Don't Disqualify Educational Entities from Tax Exemption u/s 10(23C)(vi.

  Case-Laws - HC : Exemption u/s 10(23C)(vi) – mere existence that there is some profit does not disqualify the petitioner if the sole purpose of existence was not profit making but educational activities - HC
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• Non-resident agent services deemed assistance for export commitments, not technical service fees under tax laws.

  Case-Laws - HC : The services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services - HC
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• Petitioner Earned No Interest Income from Sold Securities to Hindustan Steel, Clarifying Tax Obligations.

  Case-Laws - HC : No income as interest on account of securities has been earned by the petitioner in respect of the interest received on the securities which were already sold to Hindustan Steel. - HC
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• Unsecured Loan Conversion to Shares: No Interest Income Accrues on Investment After Share Allotment.

  Case-Laws - AT : Assessment of accrued interest on investment – when the amount of unsecured load is converting into share application money and shares have been allotted, no interest income would accrue - AT
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• Taxpayer Denied Deduction Claim in Reassessment for Unrelated Escaped Income; Deduction Not Permissible.

  Case-Laws - AT : Deduction now being claimed by the assessee is not in relation to the escaped income sought to be taxed by the AO in reassessment proceedings and the assessee cannot be allowed to claim deduction of the amount in reassessment proceedings - AT
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• Shares Sale Profit Classified as Long-Term Capital Gains u/s 49(1) of Income Tax Act; Donations Viewed as Gifts.

  Case-Laws - AT : Profit on sale of shares as LTCG instead of STCG – donation is to be construed as a form of gift - Since the shares constitute a capital asset, it is but natural that on their transfer, the provisions of section 49(1) would be attracted - AT
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• AO Must Prove Need Before Rejecting Accounts or Applying Rule 8D for Exempt Income Disallowance u/s 14A.

  Case-Laws - AT : Disallowance u/s 14A r.w. Rule 8D - until and unless this is proved or established by the revenue, the AO does not have any power to reject the accounts of the assessee and take the shelter of Rule 8D for computing the disallowance out of the exempt income - AT
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• Section 14A & Rule 8D: Investment in Private Company Shares Restricted from Trading for Tax Deduction Compliance.

  Case-Laws - AT : Restriction of disallowance u/s 14A r.w. Rule 8D - a person can only invest in shares of a Private Limited Co. and cannot trade in the shares of a Private Limited Company - AT
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• Taxpayer Entitled to Section 80IB(10) Deduction Even if Two Adjacent Flats Are Combined into One Unit.

  Case-Laws - AT : Deduction u/s 80IB(10) cannot be denied to the Assessee on the ground that two flats as per approved plan lying adjacent to each other have been combined into one flat and owned by one owner or jointly with some of the members of his family - AT
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Customs

• Red Bull Energy Drink classified under customs law as 22029090, covering caffeinated, mineral, and aerated waters.

  Case-Laws - AT : Classification of goods - Import of Red Bull Energy Drink Proprietary Food -this product contains of caffeinated beverage, mineral water and aerated waters, therefore, the appropriate classification is 22029090 - AT
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• Customs House Agent Must Deposit Additional Rs. 4.25 Lakhs Security for License Renewal After Previous Forfeiture.

  Case-Laws - AT : Suspension of CHA license - additional security to issue fresh license - earlier the security was forfeited - appellant has to deposit an additional amount of ₹ 4.25 lakhs for allowing him to continue his activity as a CHA - AT
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• CHA License Suspension Overturned Due to Delay in Proceedings; Board's April 2010 Circular Enforced for Timely Resolution.

  Case-Laws - AT : Suspension of CHA license - As per Board's circular dated 8.4.2010 proceedings against CHA is required to be completed within 9 months of the date of receipt of offence report - appellants are entitled for relief - AT
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Service Tax

• High Court Strikes Down Rule 5A of Service Tax Rules, 1994; Limits Broad Audit Powers Over Assessees.

  Case-Laws - HC : Power to conduct Service Tax Audit – Validity of Rule 5A of Service Tax Rules, 1994 - Parliament did not intend to provide for a general audit that “every assessee” may be subjected to, “on demand” - Rule 5A struck down - HC
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• Appellate authority confirms extended limitation period can't apply if penalty is set aside in rent-a-cab tax case.

  Case-Laws - AT : Extended period of limitation - rent-a-cab service - bondafide belief - once penalty stands set aside by the appellate authority, the longer period cannot be said to be available to the Revenue for raising the demand. - AT
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• Legal Due Diligence Not Taxed as Management Consultancy; Correct Classification Ensures Proper Tax Treatment.

  Case-Laws - AT : Legal due diligence services - legal services cannot be taxed under the category of management consultant services - AT
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• Food on Shatabdi, Rajdhani, and express trains classified as sales, not services, impacting service tax application.

  Case-Laws - AT : Outdoor catering service - Service of providing food items to the passengers travelling by Shatabdi/Rajdhani and mail/express trains - prima facie view the said activity is one of sales and not of service - AT
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• Appellate Authority's Admission of Additional Evidence Violates Rule 5; Case Remanded for Further Review.

  Case-Laws - AT : Admission of additional evidence by the commissioner (appeals) - This action of the appellate authority is clearly in breach of Rule 5 ibid. - matter remanded back - AT
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Central Excise

• Revenue Lacks Evidence of Link Between Job Worker and Supplier, Rule 8 of Excise Valuation Rules Not Triggered.

  Case-Laws - AT : Valuation of goods - Job work - No evidence has been introduced by the Revenue as to how job worker and the raw material supplier are related persons for the purpose of attracting Rule 8 of the Central Excise Valuation Rules 2000 - AT
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• Missile Supply Valuation Excludes Training Costs; Training is a Post-Sale Activity per Central Excise Rules.

  Case-Laws - AT : Valuation of goods - supply of missiles and other products - Training or training aids cannot be considered as an activity undertaken in relation to sale of goods being valued. This is definitely a post sale activity. - AT
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• Assessee Entitled to CENVAT Credit for Paid Duty, But Can't Take Suo Motu Credit Without Refund Claim Contest.

  Case-Laws - AT : Denial of refund claim - Suo moto credit - assessee held as entitled to take CENVAT Credit of duty already paid - without challenging the rejection of refund claim, the respondents are not entitled to take suo motu credit - AT
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VAT

• Tax Exemption Dispute: Case Remanded to Verify Tax Payment on Frames, Glasses, and Spectacles.

  Case-Laws - HC : Manufacture and sale of frames, glasses and spectacles - Assessee claimed exemption on tax - matter remanded back to verify whether the assessee has paid the tax on glasses and frames - HC
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Case Laws:

• Income Tax

• 2014 (8) TMI 172
  Exemption u/s 10(23C)(vi) – Requirement of approval under Rule 2BC – Gross receipts to be lower than Rupees one crore – Held that:- In American Hotel & Lodging Association, Educational Institute Vs. Central Board of Direct Taxes [2008 (5) TMI 17 - SUPREME COURT OF INDIA] it has been held that the petitioner society is running an educational institution - Merely because there are other objects of the society does not mean that the educational institution is not existing solely for educational purpose - The emphasis of the word "solely" is in relation to the educational institution, which is running not for the purpose of making profit and is not in relation to the objects of the society - the authority is required to consider the nature and genuineness of the activities - mere existence that there is some profit does not disqualify the petitioner if the sole purpose of existence was not profit making but educational activities - the threshold conditions are actual existence of an educational institution and approval of the prescribed authority for which every applicant has to move an application in the standardized form in terms of the first proviso - Director General of Income Tax (Investigation) had misdirected itself in not considering the conditions mentioned u/s 10(23C)(vi) of the Act – the order of the DGIT(Investigation) is set aside – Decided in favour of assessee.

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• 2014 (8) TMI 171
  Notice for reopening of assessment u/s 148 – Proper sanction from appropriate authority not taken - Held that:- After hearing the parties and the issues raised with regard to jurisdiction, i.e. of not obtaining sanction from the appropriate authority as well as there being a change of opinion appear to be substantial - It would be appropriate for the AO considers the assessee's further communication and also objections made earlier including the issue of sanction by the appropriate authority to issue the notice at the earliest – assessees undertake to file a consolidated objection within a period for two weeks from today before the AO – the order is set aside and the matter is remitted back to the AO for adjudication – Decided in favour of Assessee.

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• 2014 (8) TMI 170
  Payment towards overseas agents commission – Commission paid to non-residents u/s 40(a)(i) – TDS not deducted u/s 195 - Agent’s service u/s 9(1)(vii) r.w section 9(2) – Held that:- The plea of the revenue cannot be accepted that commission paid by the assessee to the non-resident agent would come under the term fees for technical services - for procuring orders for leather business from overseas buyers wholesalers or retailers, the non-resident agent is paid 2.5% commission on FOB basis - The opening of letters of credit for the purpose of completing export obligation is an incident of export and the non-resident agent is under an obligation to render such services to the assessee, for which commission is paid - The non-resident agent does not provide technical services for the purposes of running of the business of the assessee in India - The services rendered by the non-resident agent can at best be called as a service for completion of the export commitment - the commission paid to the non-resident agent will not fall within the definition of fees for technical services. The non-resident assessees did not carry on any business operations in the taxable territories - They acted as selling agents outside India - The receipt in India of the sale proceeds of tobacco remitted or caused to be remitted by the purchasers from abroad does not amount to an operation carried out by the assessees in India as contemplated by cl. (a) of the Explanation to s. 9(1)(i) of the Act - The commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be deemed to be incomes which have either accrued or arisen in India - relying upon Commissioner of Income-Tax, AP Versus Toshoku Limited (and Another Appeal) [1980 (8) TMI 2 - SUPREME Court] - the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services - Section 9 of the Act is not applicable to the case on hand and section 195 of the Act does not come into play – Decided against Revenue.

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• 2014 (8) TMI 169
  Interest income from sale of securities - Accrual of interest income received as a transferor for Hindustan Steel - Held that:- It was as far as back as on 2 January 2001 that the petitioner had made an application to the CBDT seeking condonation of delay and consideration of its application for refund of the TDS of Rs. 32,71,118/-, on merits - petitioner had clearly pointed out the complete nature of the transaction including the fact that the gross amount (including TDS amount) had been paid over by them to Hindustan Steel - The application before the CBDT is still pending - there is no interest income earned by the petitioner on the sale of securities - the interest income which belongs to Hindustan Steel cannot be brought to tax in the hands of the assessee - petitioner has not earned the income as owner and/or holder of securities which had been already sold to Hindustan Steel - The petitioner had received the interest amount in its capacity as a registered holder and/or as a transferor for Hindustan Steel - no income as interest on account of securities has been earned by the petitioner in respect of the interest received on 8 June 1996 on the securities which were already sold to Hindustan Steel. Notice for reopening of assessment u/s 148 - Time-barred notice – Held that:- Notice has been issued beyond the period of 4 years from the end of the relevant AY - where the assessment which is completed u/s 143(3) of the Act is sought to be reopened beyond the period of 4 years, from the end of the relevant AY, then AO acquires jurisdiction to issue notice for reopening only on the satisfaction of the conditions - interest income received on the securities on 8 June 1996 was never claimed as the petitioner's income is also borne out by its communication dated 2 January 2001 to the CBDT in its application u/s 19(2)(b) of the Act, the occasion to disclose the same never arose - there was no occasion for the petitioner to disclose receipts which was not its income and therefore, not necessary for its assessment – it cannot be said that there was failure on the part of the petitioner to make a full and true disclosure for the purposes of its assessment – there could be no reason to believe that income chargeable to tax has escaped assessment – the order is set aside – Decided in favour of assessee.

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• 2014 (8) TMI 168
  Exemption u/s 80P - Interest from investment voluntary reserve – Whether the income is income from banking business or not – Held that:- Following the decision in Mehsana District Co-operative Bank Ltd. Versus Income-Tax Officer [2001 (8) TMI 15 - SUPREME Court] - the assessee shall be entitled to the exemption under Section 80P(2)(a)(i) of the Act - if, the investments are made in the security, which is permissible mode of investment, the assessee shall be entitled to the special deduction - Section 80P(2)(a)(i) of the Act requires a Co-operative Society, and not a Co-operative Bank to be engaged in carrying on business of banking it is not possible to restrict the scope of the business to the definition of 'Banking' under section 5(b) of the Banking Regulation Act - Even otherwise, a banking company including a co-operative society, may accept deposits for the purpose of lending or investment - The definition does not stipulate that investment has to be only to the extent provided either by the Gujarat Cooperative Societies Act or the Banking Regulation Act - when investments are made in securities, which are a permissible mode of investment, income arising therefrom would be attributable to the business of banking and the assessee would be eligible for deduction in terms of section 80P(2)(a)(i) – Decided in favour of Assessee.

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• 2014 (8) TMI 167
  Deduction on sales tax payment – Application of net profit rate without estimation of income – Held that:- While making the assessment of income on the basis of net profit rate, the deductions towards depreciation, interest, remuneration to partners and payment to third parties have definitely been allowed - CIT(A) cannot be said to have committed any fundamental error in directing deduction towards payment of sales tax too after verification of the amount paid - in case of rejection of accounts and estimate of net profit, relevant expenses could be worked out and allowed – thus, the order of the Tribunal for allowing deduction towards payment of sales tax cannot be said to be unjustified or taking away the reasonableness of estimate of income of the assessee – Decided against Revenue.

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• 2014 (8) TMI 166
  Opportunity of being heard – Attachment of movable and immovable property under Rule 48 – Notice u/s 226(3)(x) – Held that:- The order passed under Rule 86 of the Act is not an appealable order under the Act - it is the last chance for the assessee to ensure that all facts are brought on record in the correct perspective taking into account the context - the normal practice appears to be to grant personal hearing before deciding the appeal - This fact cannot be lost sight of while holding that in cases such as granting of personal hearing would alone satisfy the requirement of natural justice – thus, the order is set aside and the CIT is directed to give personal hearing to asssessee – Decided in favour of Assessee.

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• 2014 (8) TMI 165
  Penalty u/s 271(1)(c) - Additional income declared – Held that:- The entire basis of the penalty u/s 271(1)(c) of the Act is the additional income declared by the assessee in her return of income filed in pursuance to the notice issued u/s 153C of the Act – the additional income offered was on the basis of the amount mentioned in the promissory notes seized during the search and seizure operation in the case of assessee’s husband Dr. Bhaskara Rao - there is no reference to the assessee in the promissory notes - the amount was advanced by him, only because he offered it at the hands of his wife, the assessee, it cannot be concluded that assessee has concealed her income or furnished inaccurate particulars of income - penalty cannot be imposed u/s 271(1)(c) of the Act against the assessee – Decided in favour of Assessee.

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• 2014 (8) TMI 164
  Assessment of accrued interest on investment – Held that:- It was advanced towards share application money and the promissory notes were obtained only as a safety measure since company has not allotted shares to the assessee - if the amount advanced by the assessee was converted to share application money in March 2008 and ultimately shares were allotted to the assessee, then the amount cannot be treated as unsecured loan post conversion to share application money, consequentially there cannot be any accrued interest on amount - the AO is directed to verify the books of account of M/s Amareswara Agrotech Pvt. Ltd. to ascertain the date on which unsecured loan given by the assessee was converted to share application money and accordingly assess the interest income till such FY – thus, the matter is remitted back to the AO for verification – Decided in favour of Assessee. Claim of deduction on interest on borrowed capital u/s 24 – Held that:- The claim of deduction towards interest payment was disallowed primarily for the reason that the assessee could not substantiate such claim by producing documentary evidence/proof - there is no reason why it should be disallowed in the subsequent year – thus, the matter is remitted back to the AO for fresh adjudication - assessee is also directed to furnish documentary evidence, to substantiate her claim - If on verification assessee’s claim is found to be correct then deduction claimed has to be allowed – Decided in favour of Assessee.

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• 2014 (8) TMI 163
  Ex-parte order - Deferred revenue expenses added - deferred revenue expenditure of Rs. 49,79,000/-, which was reduced from the profit of Rs. 28,34,000/- to show ‘nil’ income the AO disallowed the deferred revenue expenditure - Held that:- CIT(A) has granted several opportunities to the assessee to represent his case, which assessee has not availed, though, considering the nature of dispute and in the interest of justice, one more opportunity is allowed to the assessee to represent his case before the CIT(A) –thus, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Assessee. Condonation of delay – Affidavit not furnished before CIT(A) – Held that:- Assessee has filed the appeal before the CIT(A) with a delay of 12 days - assessee has explained the cause of delay and requested for condoning the delay - The affidavit has been filed for the first time and was not filed before the CIT(A) before whom the delay has occurred – thus, the matter is to be remitted back to the CIT(A) for the purpose of considering condonation of delay and hearing the appeal on merit – Decided in favour of Assessee.

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• 2014 (8) TMI 162
  Reopening of assessment u/s 147 - Deduction of waiver of interest – Interest granted by Board – Whether the deduction now being claimed by the assessee in appellate proceedings is connected with this escaped income or not - Held that:- Reopening was made only for the escapement of income on account of income accrued on the advance made because the assessee was following mercantile system of accounting and this income on advance was not offered for tax - there is no co-relation between the escaped income and this extra claim being made by the assessee in course of reassessment proceedings – relying upon Commissioner of Income-tax Vs Sun Engineering Works P. Ltd. [1992 (9) TMI 1 - SUPREME Court] - the matter not agitated in the concluded original assessment proceedings, cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as escaped income - the deduction now being claimed by the assessee is not in relation to the escaped income sought to be taxed by the AO in reassessment proceedings and the assessee cannot be allowed to claim deduction of the amount in reassessment proceedings – Decided against assessee. Reopening of assessment u/s 147 r.w section 148 – Held that:- In the absence of copy of letter submitted by the assessee before the AO requesting the AO to consider the return already filed by the assessee on 02/05/2005 as the return filed in compliance to this notice - the assessee has submitted chronology of relevant dates and events and the original return of income was filed on 02/05/2005 but the same was treated as non-est - even the original return filed by the assessee on 02/05/2005 was treated as non-est and non est return cannot be considered as a valid return at any point of time – the return of income filed by the assessee in compliance to notice issued by the AO u/s 148 has to be treated as not in conformity with law and non est and the AO was not required to issue notice u/s 143(2) of the Act – Decided against Assessee. Contribution made to LIC under Group Gratuity Insurance Scheme – Scheme not approved by CIT – Held that:- There is specific provision for deemed approval u/s 12AA(2) that the order in respect of the application for registration u/s 12AA should be passed before the expiry of six months from the end of the month in which the application was received u/s 12A (1) of the Act - the payment is not to an approved gratuity fund - the provision of section 37(1) is in respect of those expenditure, which are not covered by section 30 to 36 of the Act - The payment in respect of gratuity is duly covered by section 36(1)(v) of the Act and it cannot be covered u/s 37(1) of the Act - none of the contentions raised by the assessee is acceptable and there was no reason to interfere in the order of the CIT(A) – Decided against Assessee. Applicability of section 14A r.w. Rule 8D – Held that:- Own interest free funds were more than the investment, no disallowance is justified out of interest expenditure but still some disallowance is justified out of administrative expenses - Out of administrative expenses, the disallowance was made by the AO as per Rule 8D but CIT(A) has confirmed the disallowance of Rs. 1 lac and it is in respect of administrative expenditure in respect of managing the income accrued from the shared held as investment - the disallowance of Rs. 1 lac is not excessive and the order of the CIT(A) is upheld – Decided against Assessee. Claim u/s 80IA – Income income with relation to Tronica city project – Held that:- CIT(A) has held that these receipts have direct nexus with the assessee's business - CIT(A) has noted down the amount of receipts in respect of only one project i.e. Greater Noida Export Promotion Industrial Park and he has not noted the receipts of similar nature in respect of other project i.e. Tronica City, Industrial Model Town, Loni - Since the receipts of both the projects are of similar nature, it could not held that as to how the receipts of one project is allowable for deduction and similar receipts of other projects is not allowable – the AO is directed to exclude the receipts of both the projects in the business profit for the purpose of computing deduction allowable to the assessee u/s 80IA of the Act – Decided in favour of Assessee. Deduction u/s 80 IA(4) - Receipts under "interest" form part of eligible profit or not – Held that:- Earning of interest on installments granted may be said to have some link with business but such receipts cannot be said to be income derived from such eligible business since it has no first degree nexus with the eligible business - The eligible business of the assessee is infrastructure development by way of development of industrial area or plot for providing the same to entrepreneurs for setting up of industrial unit for the industrial development of the city - earning of interest income is not an eligible business of the assessee company. The assessee company has mixed its both the activities by way of granting installments in respect of premium, such interest income cannot be considered as income of eligible business for the purpose of computing deduction allowable to the assessee u/s 80IA of the Act - interest income is not an income derived from the eligible business and the provisions of sub section 1 of section 80IA - only profit derived from developing and operating and maintaining industrial park is eligible for deduction and interest income cannot be said to be an income on account of development or operation or maintenance of industrial park/ Special Economic Zone - Interest income is in respect of making available the finance and the assessee company is engaged in the business of financing also and the assessee has mixed its both the activities and thereby claiming deduction u/s 80IA in respect of interest income of financing activity which is not eligible for such deduction – Decided against Assessee.

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• 2014 (8) TMI 161
  Profit on sale of shares as LTCG instead of STCG – Whether the shares were received by the assessee as gift - Held that:- Relying upon Nirmala Keshawlal A/P of late Parvatibai P. Dabrai vs. Controller of Excise Duty [1982 (7) TMI 81 - BOMBAY High Court] - gift and donation are not mutually exclusive and donation is only a type of gift - the donation is to be construed as a form of gift - there can be no question of treating the receipt of shares by the assessee as donation independent of gift - shares of Nicholas Piramal India Ltd. were acquired by the donor in 1997 which were transferred to the assessee by means of donation in December, 2005/January, 2006 - Since the shares constitute a capital asset, it is but natural that on their transfer, the provisions of section 49(1) would be attracted - If such provisions are applied, the resultant gain would partake of the character of long- term capital gain and, exempt u/s 10(38) of the Act – Decided against Revenue.

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• 2014 (8) TMI 160
  Disallowance u/s 14A r.w. Rule 8D - Income from business of share trading as well as dividend income – Held that:- Following the decision in SESA GOA LTD Versus JCIT RANGE - 1, PANAJI [2013 (9) TMI 233 - ITAT PANAJI] - before making any disallowance u/s 14A, the AO is required to record a satisfaction, having regard to the accounts of the assessee, that claim of assessee that expenditure incurred is not related to the income forming part of the total income is incorrect - Such satisfaction must be arrived at on the objective basis - the AO before rejecting the disallowance computed by the assessee must give a clear cut finding having regard to the accounts of the assessee how the other expenditure claimed by the assessee out of non-exempt income is related with the exempt income - the onus to prove in this regard lies on the AO - until and unless this is proved or established by the revenue, the AO does not have any power to reject the accounts of the assessee and take the shelter of Rule 8D for computing the disallowance out of the exempt income - whether to invest or not to invest is a very strategic decision and top management involve in taking the decisions – Relying upon Godrej & Boyce Mfg. co. Ltd. Vs. DCIT & another [2010 (8) TMI 77 - BOMBAY HIGH COURT] - the disallowance made u/s 14A r.w. Rule 8D is set aside – Decided in favour of Assessee.

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• 2014 (8) TMI 159
  Condonation of delay - CIT(A) dismissed appeal in limine - Financial inability to engage professionals – Held that:- it is clear that the explanation furnished by the assessee for delay in filing the appeal has been substantiated by the AO itself by treating the cash sales of M/s. Deluxe Karran Imports Pvt. Ltd. Though there is an inordinate delay in filing the appeal before CIT(A) however the reasons explained by the assessee are not found as malafide or a device to cover up ulterior purpose. - Delay condoned. Estimation of income - Held that:- CIT(A) has not decided the appeal of the assessee on merits as it was dismissed in limine on the ground of limitation - the matter requires a fresh examination in view of the fact that same amount has already been treated by the AO as cash sales belonging to M/s. Deluxe Karran Imports Pvt. Ltd. and an income @ 6% has been assessed in the hand of M/s. Deluxe Karran Imports Pvt. Ltd. – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Asseessee. Penalty u/s 271(1)(c) – Held that:- Since the matter in quantum appeal has been set aside to the record of AO, the penalty would not survive - the penalty levied u/s 271(1)(c) is set aside – Decided in favour of Assessee.

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• 2014 (8) TMI 158
  Non payment of advance tax on MAT u/s 115JB - Rectification of order u/s 154 – Levy of Interest u/s 234B and 234C – Held that:- For the relevant AY and up till the end of the FY as on 31/03/2007 the assessee was not required to pay advance tax in respect of book profit u/s 115JB as per the decision in Commissioner Of Income-Tax Versus Kwality Biscuits Limited [2006 (4) TMI 121 - SUPREME Court] - no advance tax was payable on minimum alternate tax computed u/s 115JB and accordingly interest u/s. 234B and 234C cannot be levied for non-deposit of advance tax on minimum alternate tax for the yea - the impossibilities cannot be thrust upon the assessee when there was no requirement under the existing law at that point of time for payment of advance tax in respect of minimum alternate tax u/s 115 JB - the levy of interest u/s 234B and 234C in respect of tax liability on book profit u/s 115JB is set aside.

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• 2014 (8) TMI 157
  Levy of interest u/s.234D - Retrospective amendment to the provision – Held that:- The Revenue could upon retrospective amendment, move a rectification u/s.154 – Relying upon Ester Industries Ltd. vs. Union of India [2013 (4) TMI 489 - DELHI HIGH COURT] - the Revenue cannot proceed de hors and in disregard with the established law, the decision by a higher appellate authority being binding on the subordinate authority - the law itself has intervened to provide a clear and unambiguous answer to the legal issue decided by the tribunal, which the assessee seeks to be given effect to, besides having been clarified by the high court – Decided against Assessee. Disallowance u/s 14A r.w. Rule 8D – Held that:- The entire disallowance is under rule 8D(2)(iii), i.e., at 0.5% of the average value of the investment, reckoned at one half of the book value of investments (yielding tax-exempt income), as at the beginning and the close of the year - there is not much difference between the opening and the closing value of the investment and the bulk of the tax exempt income arising by way of interest on tax-free bonds – Revenue ought to have required the assessee to substantiate its claim of the working of suo motu disallowance u/s.14A with reference to its accounts, and which would include the underlying vouchers as well –relying upon Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] – the matter is remitted back to the Ao for fresh adjudication – Decided in favour of Assessee.

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• 2014 (8) TMI 156
  Unaccounted payment for land – Evidentiary value of seized documents - Whether the consideration paid by the assessee for the purchase of Boricha land is Rs. 71 lakhs or Rs. 51 lakhs – Held that:- The amount under the column ‘Spent Till date’ not only includes the amount which is actually paid, but it also includes the amount of liability which is incurred but not yet paid - the amount was on account of construction expenses alone, which is an ongoing and continuous expense for the company, for which the construction work is done by the contractor and bill for the same is to be raised by him - the amount is known by the assessee to be paid to the contractor but since the bill is not raised, the amount is not recorded in the books of accounts - no undisclosed cash has been found on the basis of which the AO could have inferred that the assessee company keeps unaccounted cash from which it makes payments which are not recorded in its books of accounts - the amount of difference is only due to an actual liability of 51 lakhs which has not actually been paid but is to be paid subsequently – there was no reason to make the addition by invoking section 69C of Act – Decided in favour of Assessee.

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• 2014 (8) TMI 155
  Restriction of disallowance u/s 14A r.w. Rule 8D - Unsubstantiated purchase price, unsubstantiated sale value of shares as well as the value of investments in shares – Held that:- No details of shares held as investments and shares held as stock-in-trade has been furnished - the assessee has been purchasing and selling shares of Private Limited Companies - a person can only invest in shares of a Private Limited Co. and cannot trade in the shares of a Private Limited Company - no details have been brought on record in respect of shares held as stock-in-trade, there was no error in the computation of the disallowance made u/s. 14A r.w. Rule 8D by the AO – the order of the CIT(A) is set aside. Assessee’s nature of business as claimed is trading in shares - Whatever little details are available from the assessment order show that the assessee is purchasing and selling shares of a Private Limited Company and claiming it to be its business activity – it could not be understood as to how can a person trade in shares of a Private Limited Company - This aspect has not even considered by the AO during the course of the assessment proceedings nor the CIT(A) cared to apply his mind on the nature of activity of the assessee before deleting the addition of Rs. One crore - thus, the matter is remitted back to the AO for verification of nature of business activity – Decided partly in favour of Revenue.

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• 2014 (8) TMI 154
  Claim of deduction u/s 80IB(10) – Two combined units sold to one purchaser – Area exceeds 1000 sq.ft. – Held that:- Following the decision in assessee's own case for the in M/s. Om Trinetri Builders & Contractors Versus The ITO, Ward 20(2) (3), Mumbai [2014 (8) TMI 152 - ITAT MUMBAI] - CBDT has issued a notification dated 3/8/10, whereby it is now notified that any scheme approved under Regulation 33(10) of DCR for Greater Mumbai 1991, and by the SRE for Slum Rehabilitation would be valid for the purpose of Clause- a and b of section 80 IB (10) of the Act - the amended provisions of law will not apply and so long as per the plans approved by the concerned authorities, the built up area of each flat is less than 1000 sq.ft. the deduction u/s 80IB(10) of the Act cannot be denied to the Assessee on the ground that two flats as per approved plan lying adjacent to each other have been combined into one flat and owned by one owner or jointly with some of the members of his family - the rejection of the claim of the assessee for deduction u/s 80 IB(10) on this account cannot be sustained – Decided against Revenue.

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• Customs

• 2014 (8) TMI 176
  Classification of goods - Import of Red Bull Energy Drink Proprietary Food - Classification under CTH 2202 90 90 or under CTH 2202 10 10 - benefit of Notification no. 02/2006-CE(NT) dated 01.03.2006 - Held that:- As this product in question is having caffeine contents, glucose and Vitamins etc. therefore, the said product cannot be classified under 2202 1010 as the scope of that classification is limited i.e mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured. Moreover, the Harmonized Tariff Schedule classified the product in question as 2202 90 90. The FSSAI also held that the said product is caffeinated beverage and not mineral waters and aerated waters. Moreover, the impugned product "Energy Drink" is not recommended for children, pregnant or lactating mothers and persons sensitive to high doses of caffeine. Therefore, it is held that this product contains of caffeinated beverage, mineral water and aerated waters, therefore, the appropriate classification is 2202 90 90 - Following the precedent decision in the case of Waterways Shipyard Pvt. Ltd. (2011 (12) TMI 127 - CESTAT, MUMBAI), more appropriate classification of the impugned Energy Drink is 2020 90 90. In common parlance also it is known as energy drink other than mineral water and aerated water - Decided against Revenue.

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• 2014 (8) TMI 175
  Denial of refund claim - Additional Custom Duty - non-availability of the original document - discrepancy in the description of the goods - Held that:- So far as discrepancy in the description of the goods is concerned, we direct that the description in the respective packing slip, challan and invoices shall be examined with reference to the invoices and discrepancy thereon alleged is to be resolved. The appellant shall cooperate in this regard - Since huge amount of refund is involved in the case, it would be proper that the appellant shall make an application to the ld. Adjudicating authority within a month of receipt of this order to fix appropriate date for the resolution of the dispute. Upon such application, authority shall fix a date of hearing and after due verification of the documents aforesaid and also being satisfied on the description of the goods imported, shall pass appropriate order - Decided in favour of assessee.

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• 2014 (8) TMI 174
  Suspension of CHA license - Demand of additional security to issue fresh license - Held that:- The result of the Commissioner’s order is that the CHA would be entitled to perform CHA service after the period of suspension is over. However as already observed by us above, the security provided by the CHA has to be available with Government when the CHA is performing his obligation since the bank guarantee or security deposit is related with the activity of the appellant as a CHA. Therefore if no security is available because it has been forfeited in this case, Commissioner has to determine the amount of security payable. For determination he has to refer to the regulation. When he has to refer to the regulations, the only regulations available would be CBLR 2013. While renewal of a licence issued under the old CHALR and continuation of a person as a CHA under CBLR 2013 would be automatic even if no fresh licence is granted under CBLR (this is in view of the provisions of Section 159A of Customs Act 1962), the determination of security which becomes not available for any reasons has to be under new CBLR 2013 only. In fact if the Commissioner was to specifically order that appellant has to provide security deposit of Rs. 5 lakhs in the order itself in accordance with new CHALR 2013, it would have been difficult to contest the same. Just because the Commissioner did not mention it in the order, if the legal position requires the appellant to deposit the amount, which is the situation in this case, the revised security is to be deposited - There is no estoppel in law. Therefore in whatever manner we look at the issue, we cannot find fault with the view taken by the Commissioner that appellant has to deposit an additional amount of Rs. 4.25 lakhs for allowing him to continue his activity as a CHA. - ground taken by the appellant that requirement of additional security deposit has to be held as incorrect and suspension to be held as incorrect and therefore the suspension has to be revoked cannot be accepted - Decided against the appellant.

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• 2014 (8) TMI 173
  Suspension of CHA license - After suspension that no proceedings were initiated under Regulation 22 of CHALR, 2004 - Held that:- As per Board's circular dated 8.4.2010 proceedings against CHA is required to be completed within 9 months of the date of receipt of offence report. Admittedly, in this case time has been passed for more than 2 years after receipt of offence report. Therefore, relying on the decision in the case of Vinod Tomar (2011 (6) TMI 645 - CESTAT, NEW DELHI) the appellants are entitled for relief. In these circumstances we revoke the suspension of CHA license No. 01/CHALR/2011 ordered vide impugned order dated 29.9.2011 - Decided in favour of Appellants.

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• Service Tax

• 2014 (8) TMI 200
  Power to conduct service tax audit / Revenue Audit – Validity of Rule 5A of Service Tax Rules, 1994 - instruction of the Central Board of Excise and Customs (“CBEC”) no. F. No. 137/26/2007-CX.4 dated 1.1.2008 - whether special audit can be ordered by recourse to Section 72-A of the Finance Act, 1994 – Held that:- It is apparent that the only type of audit within the contemplation of the statute is that stipulated for in Section 72A, i.e. a special audit when only certain circumstances are fulfilled. The Parliament thus had a clear intention to provide for only a special audit. The fact that Section 72A prescribes the conditions meriting such special audit compels the necessary inference that the Parliament did not intend to provide for a general audit that “every assessee” may be subjected to, “on demand”. - Decided in favour of assessee. Any attempt to include provision for such a general audit through the back-door, such as through the impugned rule, is ultra-vires the rule making power conferred under Section 94(1). Rule 5A(2) must consequently be struck down. - Decided in favour of assessee. Likewise the CBEC instruction dated 1.1.2008, being in furtherance of Rule 5A(2), which rule is ultra-vires the Finance Act, 1994, is void for the same reasons. - Decided in favour of assessee. The Service Tax Audit Manual, 2011 is merely an instrument of instructions for the service tax authorities; it is but obvious that it is not a statutory instrument and has no statutory force. Thus, Rule 5A(2) cannot be sought to be justified as against it. - Decided in favour of assessee.

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• 2014 (8) TMI 199
  Waiver of pre deposit of Service Tax and CENVAT Credit - Inclusion of value of free issue materials received by the Applicant, in the taxable value - Held that:- Following decision of Bhayana Builders (P) Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI] - Decided in favour of assessee. Whether the services rendered by the Applicant, are in the nature of 'Construction Services' or 'Works Contract Services' for the period, 2004-05 - Held that:- availment of CENVAT Credit by the Applicant on inputs services, which have been used for all the output services i.e. taxable and exempted services, also cannot be said to be not irregular, at this stage, without considering the evidence on record adduced by both sides. In the result, the Applicant could not able to make out a prima facia for total waiver of the dues adjudged relating to demand of CENVAT Credit and rendering of 'Commercial or Industrial Construction Services' for the period, 2004-05 - Conditional stay granted.

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• 2014 (8) TMI 198
  Waiver of predeposit of tax - personal development course - exemption under Notification No.9/2003-ST dated 20.06.2003 and No.24/2004-ST dated 10.9.2004 - Held that:- Tribunal on an identical issue consistently directed the assessee to make a predeposit of above 25% of the tax amount - Following decision of Col's Calibre Vs. CCE, Coimbatore [2011 (6) TMI 361 - CESTAT, CHENNAI] and Ranjana Bagry Vs. Commissioner of Service Tax, Chennai [2013 (10) TMI 250 - CESTAT CHENNAI] - Conditional stay granted.

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• 2014 (8) TMI 197
  Extended period of limitation - rent-a-cab service - bondafide belief - Held that:- while setting aside the penalty, the appellate authority has given a clear finding that there was no mala fide on the part of the appellant. If that be so, I really fail to understand that how the longer period of limitation can be invoked against the assessee, in the absence of any mala fide. - Tribunal in the case of Royal Travels Vs. CCE Vadodara - [2010 (9) TMI 104 - CESTAT AHMEDABAD] has held that once penalty stands set aside by the appellate authority, the longer period cannot be said to be available to the Revenue for raising the demand. - major part of the demand would be barred by limitation - matter remanded back for re-quantification - Decided in favor of assessee.

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• 2014 (8) TMI 196
  Erection, Commissioning or Installation Services - nature of works contract where it has been merely stated that appellants have undertaken fabrication/welding/bending without indicating as to what exactly was fabricated or what was bent or what was welded and what happened to it - Held that:- to make an offence case against the appellant, the department is required to show that the appellant has rendered a taxable service. For this purpose when we see the definition and when we consider the Board s clarification issued, it becomes quite clear that as to what exactly has been erected or installed or commissioned in respect of the work undertaken by the appellants has not been brought out at all. It is not available in the annexure to the show-cause notice and details have not been discussed in the order also - it would be appropriate to enable the appellants to get a clear order and they should have the benefit of the exact nature of taxable services rendered and their liability and for this purpose it would be necessary to remand the matter at this stage itself - matter remanded back - Decided in favour of assessee.

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• 2014 (8) TMI 195
  Waiver of pre deposit - erection commissioning or installation service - commercial or industrial construction services - Availment of CENVAT Credit - Held that:- petitioner availed the cenvat credit on input services utilized for rendition of ECIS and utilized the available credit for remitting the service tax due for the other service namely CICS and after availing abatement of 67% under Notification No.1/2006-ST. The petitioner suppressed the fact of rendition of two taxable services, separately showing the considerations received on each of these services. The petitioner also failed to reveal/justify availment of abatement benefits while availing cenvat credit, in the composite returns filed, in the context of obtaining registration only for providing ECIS - petitioner asserts that the petitioner is under a financial stress and is unable to remit the pre deposit required, there is no material on record to substantiate the plea of financial hardship of the petitioner, except bald assertion - Conditional stay granted.

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• 2014 (8) TMI 194
  Management or business consultancy services - Whether the legal due diligence services provided by Shri Keshwani from China, would amount to providing services falling under the category of ‘management or business consultancy services’ - Held that:- The terms of the contract referred to by the adjudicating authority in the impugned order reveal that the legal due diligence is required to be got done by the appellant. For the said purposes Shri Keshwani, legal consultant located in China was appointed. Bills raised by Shri Keshwani very clearly reveals that the same is towards international legal due diligence. As against the above, Revenue has not placed on record any evidence to suggest that the said legal due diligence service provided by Shri Keshwani was not for legal due diligence but for general due diligence. As such at this prima facie stage, we proceed on the ground that the services provided by Shri Keshwani were for legal due diligence - legal services cannot be taxed under the category of management consultant services - Stay granted.

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• 2014 (8) TMI 193
  Waiver of pre deposit - Outdoor catering service - Service of providing food items to the passengers travelling by Shatabdi/Rajdhani and mail/express trains - Tax on sale of chips, biscuits etc. - Held that:- It is a matter of common knowledge that in trains there is service of serving breakfast, lunch and dinner. There is a separate activity of sale of packaged items like biscuits, cakes, potato chips etc. which activity is distinct from the activity of serving meals. In the latter activity packaged food items are sold at MRP prices and no separate amounts are charged as service charges. In our prima facie view the said activity is one of sales and not of service and service tax is not payable on the value of items sold (after allowing 50% abatement as done in the impugned order). The order-in-original does not demonstrate any facts to rebut the argument of the appellant that the difference in figures of receipts as per their annual financial statements and the value of services on which tax has been paid is on account of such sales is not rebutted by Revenue, though such a stand was taken while replying to the Show Cause Notice. So prima facie we accept the contentions of the appellant and consequently we grant waiver of pre-deposit of dues arising from the impugned order for admission of appeal and stay its collection during the pendency of the appeal - Stay granted.

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• 2014 (8) TMI 192
  Admission of additional evidence by the commissioner (appeals) - Penalty u/s 76 & 78 - Commissioner admitted additional evidence and set aside penalty u./s 76 and reduced demand of tax and penalty u/s 78 - Rule 5 of Central Excise (Appeals) Rules, 2001 - Held that:- Commissioner (Appeals) chose to admit the work orders produced by the assessee as additional evidence without any application of the assessee, without recording reasons for admitting the evidence and without giving any opportunity to the Department to rebut the evidence. This action of the appellate authority is clearly in breach of Rule 5 ibid. For this sole reason order set aside and matter remanded back - Decided in favour of Revenue.

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• 2014 (8) TMI 191
  Waiver of pre-deposit - Intellectual Property service - Technical Collaboration Agreement - transfer of know-how - Right to use Technical information as well as Patents - Held that:- the transfer of know-how as per the Technical Agreement was not on one time basis but was on continual basis and was to be transmitted to enable the applicant to manufacture the products on continual basis. - the principle of law laid down by this Tribunal in the case of Modi-Mundipharma Pvt. Ltd. [2009 (4) TMI 113 - CESTAT, NEW DELHI], is not applicable to the facts and circumstances of the present case. As regards the abatement for R & D. Cess paid for correct computation of the liability, we find that the applicant has not been able to substantiate their claim of incorrect computation of liability. Further, the aspect of limitation of time is a mixed question of fact and law, which will be considered at the time of regular hearing. However, prima facie, we agree with the learned Advocate for the applicant that prior to insertion of Section 66A of the Finance Act, 1994 i.e., with effect from 18-4-2006, Service Tax for the amount of Rs. 31.65 lakh (approx.) is not payable - applicant directed to make a pre-deposit of 25% of the Service Tax amount - stay granted partly.

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• Central Excise

• 2014 (8) TMI 186
  Valuation of goods - Job work - Revenue argued that assessable value in such cases should be based on the raw material cost plus job charges plus profit of the job worker as per settled position of law - Held that:- Valuation of goods manufactured in the case of a job worker has to be based on the cost of the raw materials supplied plus the job charges which also include the profit of the job worker. That is what has been clarified by the CBEC vide Circular No.619/10/2002-CX, dt.19.02.2002 and respondent has correctly paid duty. No evidence has been introduced by the Revenue as to how job worker and the raw material supplier are related persons for the purpose of attracting Rule 8 of the Central Excise Valuation Rules 2000. Even if any additional duty was payable the same was also available as credit to the recipient of goods. It is an exercise entirely covered by the concept of revenue neutrality, as per the case laws relied upon by the respondent. - Decided against Revenue.

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• 2014 (8) TMI 185
  Clandestine removal of goods - sponge iron - Discrepancy in stock found - Goods cleared without payment of duty - Held that:- Dip reading method adopted by the officers lead to wrong assessment of weight of the sponge iron and the allegation of the clandestine removal cannot be upheld against the assesee. In any case, such shortages detected by the officers come to only 6.40%, which cannot be held to be abnormal. It is well settled law that shortage itself without any other corroborative evidence, cannot lead to the inevitable conclusion of the clandestine removal - As regards the duty demand of Rs. 4,45,352/- in respect of 158.900 MTs of sponge iron based upon computer printout resumed from the appellant’s factory, it is the appellant submission that the same gives details of clearances to be made by them along with vehicle numbers. Vehicle numbers pertain to the contact transporters in order to confirm availability of vehicle. If vehicle is available, the transporter provides vehicle number which is entered in the computer along with quantity of sponge iron to be dispatched. At times on eleventh hour the vehicle is not made available by the transporters or after arrival of vehicle the order dispatched is cancelled and the vehicles leave the factory but the incoming and outgoing time is recorded. Computer printout and respect of which the appellant has already given explanation there is virtually no evidence on record to show clandestine clearance. I really fail to understand that when vehicle numbers were available with the Revenue, no enquiry was conducted. Further, there is no statement of the buyers or no evidence relatable to the procurement of extra raw materials or receipt of payment from the alleged buyers. In such scenario, allegation of clandestine removal cannot be upheld - Decided in favour of assessee.

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• 2014 (8) TMI 184
  Valuation of goods - supply of missiles and other products - Inclusion of documentation expenses, NRE, project management, training and training aids and Hub extension supplied to army - Notification No. 64/95 CE dated 16.03.95 - appellants have claimed that documents supplied are classified under CETH 49.01 and therefore are completely exempted even if they are related to missiles supplied by them - Held that:- Training or training aids cannot be considered as an activity undertaken in relation to sale of goods being valued. This is definitely a post sale activity. Further there is no clear finding as regards the nature of training, place of training, the kind of training etc. According to the counsel, training aids were bought out items. There is no contra finding to this submission. Therefore we have to take a view that this is a post sale activity and unless the missile is ready, produced and ready to fire, there cannot be any training. Therefore we consider that this cannot be included. As regards project management, development for overall coordination activity to be undertaken by the appellant, it is definitely relatable to sale of goods being valued. Therefore it is includible. As regards non recurring expenditure, admittedly this is accepted to be paid to the appellant for research and development and up-gradation of the systems etc. which is definitely related to production of missile and sale of the same. Therefore in our opinion this is also includible. In the absence of exact amount recovered under these heads in detail and the amount of central excise duty payable, the matter has to be remanded to the original authority for quantification of duty payable with interest. Whether the appellant is eligible for the benefit of Sl. No. 3 and 21 in respect of supplies to Navy - Held that:- it would be appropriate to take a view that the appellant is eligible for the benefit especially in view of the fact that the certificate from the officers named in the notification have been produced - all the details are not available to us in view of the secrecy involved which navy would not like to disclose. Therefore conclusions are based on records available and the details available even though they are not to the full requirement. Further we also take a view that in all these cases the Government of India is the consumer and tax is paid by Ministry of Defence that is by the Army and Navy. Extended period could not have been invoked and penalty could not have been imposed in view of the specific provision in the contract itself that taxes and duties would be on the buyer account. Therefore there cannot be any malafide intention to evade tax Government of India being the customer and having agreed to bear the duties and taxes as applicable. Therefore the demand is to be limited to the normal period in the case of supplies to the Army as considered by us above and amounts payable quantified with interest. There can be no question of penalty on the appellant - Decided partly in favour of assessee.

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• 2014 (8) TMI 183
  Waiver of pre-deposit - short payment of duty - difference in the production figures shown in the RT-12 returns and the data reflected in respective balance sheets - Held that:- figures mentioned in the balance sheet were incorrect inasmuch as there was some mistakes in booking the figures by the concerned C.A. In support they have obtained Chartered Accountants Certificate for the said mistakes and placed before the Ld.Commissioner(Appeals) which was not considered. In these premises, we are of the view that the Appellants should be given a fair chance to present their case - while remanding the case the Appellant be put into terms - matter remanded back conditionally.

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• 2014 (8) TMI 182
  Denial of CENVAT Credit - Commissioner remanded matter back as no reason for denial is stated in SCN - Held that:- Tribunal in the case of Honda Seil Power Products Ltd. (2013 (3) TMI 303 - CESTAT NEW DELHI), after considering the decisions of the Hon’ble Supreme Court in the case of MIL India Ltd. (2007 (3) TMI 8 - SUPREME COURT OF INDIA) and the Hon’ble Gujarat High Court’s decision in the case of Commissioner Vs. Medico Labs - [2004 (9) TMI 108 - HIGH COURT OF GUJARAT AT AHMEDABAD] dismissed the Revenue’s appeal - Commissioner (Appeals) had remanded the matter for re-examination of the evidences in respect of registration certificate and other issues. Therefore, after considering the merits of the case as well as the decision of the Tribunal in the case of Honda Seil Power Products Ltd. (supra) - No reason to interfere with the order of the Commissioner (Appeals) - Decided against Revenue.

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• 2014 (8) TMI 181
  Waiver of predeposit of duty - difference between the quantity issued to production and the quantity emerging as finished goods - Held that:- From the SCN that there is variation of percentage of loss year wise. The percentage of loss during the retail packing is inevitable. But there must be consistency on the percentage of loss which would be examined at the time of appeal hearing at length. Prima facie, I find that there is loss of 4.51% in the year 2011-12 which is much higher than the permissible loss as mentioned in the Act - Conditional stay granted.

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• 2014 (8) TMI 180
  Denial of CENVAT Credit - input credit on cement received in their factory - difference of weighment shown in the invoice and actually done in assessee's factory - Held that:- Appellant have taken the credit on the basis of invoices issued by the supplier and quantity mentioned therein. There is no allegation against the appellant that the goods have been diverted during the transit or there is any pilferage of the goods during the course of transportation. Further, if the appellant had not weighed the inputs in their factory, they were entitled to take credit on the quantity mentioned in the invoice issued by the supplier. As there is no allegation of diversion or pilferage and considering the fact that in some cases weight is short and weight is excess, it is held that it occurred only due to the various method of weighment of the goods. Moreover, considering the fact that the goods in question is ‘cement', there may be a transit loss of the goods like cement. Therefore, considering the fact that the shortage of input on weighment is found near about 2% of the total quantity and in some cases it was found to be excess, the loss of 2% of cement during the course of transportation is to be held as mirage. In these circumstances, the Cenvat credit cannot be denied. As the appellant has taken the Cenvat credit on the basis of invoice issued by the supplier and the quantity mentioned therein, therefore, the appellant are entitled for the Cenvat credit - Decided in favour of assessee.

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• 2014 (8) TMI 179
  Denial of refund claim - Suo moto credit - assessee held as entitled to take CENVAT Credit of duty already paid - Instead of taking credit assessee filed refund claim - Held that:- In this case, in-spite of opting for taking suo motu credit the respondents field a refund claim and the said refund claim was rejected as time barred which was not challenged by the respondent. In these circumstances, without challenging the rejection of refund claim, the respondents are not entitled to take suo motu credit. - Decided in favour of Revenue.

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• 2014 (8) TMI 178
  Clandestine removal of goods - Discrepancy in stock - non accounting of finished goods in RG-1 register - Held that:- shortage by itself is no indication of clandestine removal. Mere payment of duty, to buy peace with the department, does not lead to the conclusion of clandestine clearance. One such reference can be made to Allahabad High Court decision in the case CCE Vs. Meenakshi Castings (2011 (8) TMI 896 - ALLAHABAD HIGH COURT). Appellants have been unable to give any explanation for such a huge quantity of Kraft paper, which was not recorded in their RG-I register - in the absence of any evidence to show that the raw material for the excess found goods were reflected in the raw material account, the said fact goes against him. This clearly shows that the raw material for the excess Kraft paper was not entered in the raw material account. Otherwise also the appellants have not taken any ground before the authorities below that the said excess found goods were manufactured out of the duly accounted for raw material, in which case it is recorded in the statutory records and cannot escape duty - Penalty and redemption fine upheld - Decided partly in favour of assessee.

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• 2014 (8) TMI 177
  Imposition of penalties - Violation the provisions of Rule 8 of Central Excise Rules, 2002 - Held that:- Appellant-assessee has paid the amount through PLA along with interest. If the said duty liability which has been fastened on him for making payment through PLA is discharged along with interest, the provisions of Rule 8(3) have been more or less complied with - in the case of Kalp Corporation - [2013 (8) TMI 208 - CESTAT AHMEDABAD], this Bench has clearly recorded that if there is a default of payment duty, penalty can be imposed only under Rule 27 of Central Excise Rules, 2002, as has been decided by the Hon'ble High Court of Gujarat in the case of CCE Vs Saurashtra Cement Ltd. - [2010 (9) TMI 422 - GUJARAT HIGH COURT]. No reason to deviate from such a view already taken. Accordingly, the appeal filed by the appellant-assessee is allowed to the extent it is challenging imposition of penalty under Rule 25 of Central Excise Rules, 2002 and appellant is also liable to be penalized under Rule 27 of Central Excise Rules, 2002 which during the period was maximum Rs. 5,000 - Decided partly in favour of assessee.

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• CST, VAT & Sales Tax

• 2014 (8) TMI 190
  Suppression of sales - Assessee originally assessed on self assessment basis - After some time surprise inspection conducted - difference in turnover between the Trading Account and the Sales turnover reported in the monthly returns filed - Held that:- petitioner herein is directed to pay a sum of Rs. 16,00,000/- (Rupees Sixteen Lakhs Only) towards arrears of tax, within a period of four weeks from the date of receipt of a copy of this order. On making such payment, the petitioner is at liberty to file an appeal before the Appellate Authority within a period of one week from the date of making such payment, and if the papers are in order, the Appellate Authority shall entertain the appeal without insisting upon limitation point and dispose the same on merits and in accordance with law, as expeditiously as possible - Decided conditionally in favour of assessee.

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• 2014 (8) TMI 189
  Seizure of bank accounts - Non filing of returns - Deduction of cost of the land from the turnover of sale - Held that:- respondents have also attached as many as 33 flats, which the counsel for the petitioner stated on instructions, are fully constructed. He further stated that such flats are neither sold, nor assigned or booked by any customer. Such properties are also otherwise free from any encumbrance. No bank loan or any other borrowing is made against such flats. In other words, these flats have a clear marketable title, which vests in the petitioner. 17 of these flats have constructed area of 575 sq. mtrs, 16 of these flats have constructed area of 790 sq. mtrs. If we adopt an average price of these flats at Rs. 12 lakhs each, the total value of such flats comes of Rs. 3.96 crores (to be rounded of to Rs. 4 crores). According to the respondents, possible tax and penalty liability could be Rs. 4.58 crores. Bank accounts to be released conditionally - Decided partly in favour of assessee.

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• 2014 (8) TMI 188
  Tax liability - manufacture and sale of frames, glasses and spectacles - Assessee claimed exemption on tax - Held that:- two things are clear that tax is leviable on sale of glasses and frames even if they are sold in the form of spects and second is whether the assessee has paid the tax on such sale is a question of fact and that factual enquiry can be conducted only by the Assessing Authority to find out whether the assessee has paid the tax on glasses and frames which used in the spects and sold by the assessee - The impugned orders of the Tax Board are set aside and the matter is remanded to the Assessing Authority who may hold an enquiry about the tax liability of the petitioner in relation to the commodities sold by the assessee by fixing the glasses in frames and treating the spects themselves as not a new commodity but treating the glasses and frames used in the preparation of the spects as taxable commodity - Following decision of ACTO v. Mehta Opticians [2007 (2) TMI 628 - RAJASTHAN HIGH COURT] - Matter remanded back - Decided in favour of Revenue.

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• 2014 (8) TMI 187
  Liability of Company - recovery from the director of Company - Attachment of property of petitioner for liability of Company - Petitioner contends that he was a Director of the Company from 1996 and as he is not the proprietor, he is not personally liable for the liability of the Company that too for the period anterior to his becoming Director of the Company - Held that:- Under Section 14 of the Karnataka Sales Tax Act, a partner of the Firm can be proceeded against the dissolved firm or the firm which is ceased to continue its business. However, in respect of a Company, the liability of its Directors would be restricted. There is no provision under the Act so as to fasten the entire liability on any one of the Directors of the company to recover the amounts due in respect of the erstwhile assessee-Company Petitioner was only a Director of the Company and as such, proceedings initiated for mutating the revenue records in the name of 1st respondent that too without issuing notice to the petitioner would be in complete violation of principles of natural justice. Such action of respondent Nos.1 and 2 cannot be sustained. The ends of justice would be met if 1st respondent is directed to consider the claim of the petitioner and thereafter take appropriate steps to recover the amount in accordance with the provisions of the Act and also by taking note of the fact that petitioner is a Director of a Company incorporated under the Companies Act and if it comes to the conclusion that petitioner was not the Director of the Company for the period in question, it would be needless to state that liability cannot be fastened on the petitioner. However, if the 1st respondent-authority were to find on facts otherwise, he would be at liberty to proceed against petitioner in accordance with law - matter remanded back - Decided in favour of assessee.

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