Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 15, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Entitlement for depreciation on cinematographic films @ 100% - rights are integral and form and represent rights of a film distributor - deduction of full claim allowed - HC
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Re-computation of interest payable u/s 201(1A) - liability for interest would be only for the period commencing from the date of such tax was deductible to the date on which tax was actually paid by the deductee - HC
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Nature of rental income - assessee has not leased out the property merely as a land and building, but also with further conditions as to how the business of the lessees/franchiees should be conducted with regard to the hotel industry only - taxable as business income - HC
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TDS - it is immaterial as to whether the tax deducted at source has been paid to the Central Government or not - the bar u/s 205 of the Income Tax Act prevents the department from demanding the tax deducted at source from the assesee who has suffered a deduction - HC
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Cancellation of registration granted u/s 12AA Nothing has been brought on record to show that obtaining of loans from the two private companies is in detriment to the objects of the trust or they are for the benefit of the trustees or their relatives - AT
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In the year of redemption of the 2% RCPS, the transactions cannot be presumed to be sham or bogus merely because it has resulted into long term capital loss - AT
Customs
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Reduction in the quantum of redemption fine and penalty - There is no statutory prescription that the penalty should not be reduced by the appellate authority - HC
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Levy of Additional Customs Duty u/s 3(1) of CTA - CVD - Where no process of manufacture or production has taken place the imported articles cannot be subjected to the levy of additional duty - HC
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Cancellation of licence as Customs House Agent - Tribunal relied only on the record produced by the respondent and not by the adjudicating authority - matter restored before the CESTAT - HC
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Condonation of delay in filing appeal - sufficient reason - e Tribunal did not render any finding to whether the reason assigned is either false or incorrect or the reasons smacks of mala fide or it is a dilatory strategy. - delay condoned - HC
Service Tax
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Business Transfer Agreement - Service Tax liability which has already been discharged, cannot be again recovered from the appellant, who has taken-over the business from a particular day. - AT
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Renting of immovable property - Notional interest on interest free security deposit cannot be added to the rent agreed upon between the parties for the purpose of levy of service tax on renting of immovable property - AT
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Levy of service tax on SIM Cards - tribunal held that where service provider voluntarily paid sales tax on the value of SIM cards no service tax would be levied - with regard to extended period of limitation, order of tribunal sustained - HC
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Challenge to the issue of Show Cause Notice - when the present petition is against the show cause notice and the petitioner has yet to respond to the same, present petition is not entertained and the same is dismissed. - HC
Central Excise
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Waiver of pre-deposit - Tribunal has proceeded to decide the matter extraneously without recording any satisfaction relating to the existence of a prima facie case, irreparable loss and injury, balance of convenience and inconvenience and undue hardship, which are some of the illustrative ingredients for consideration of the said application - HC
Case Laws:
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Income Tax
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2014 (9) TMI 437
Entitlement for depreciation on cinematographic films @ 100% - Reliance placed upon Rule 9B of the Income Tax Rules, 1962 - AO observed that the assessee did not purchase any cinematographic films for consumption but what was purchased were broadcasting/exhibition rights, satellite rights etc. and, therefore, in terms of Section 32 of the Income Tax Act, 1961, depreciation should be allowed @ 25% instead of 100% depreciation as claimed. Held that:- CIT(A) had specifically noted and recorded that the films were sold - films had been sold to different Doordarshan Kendras as also to National Film Development Authority, which are independent third parties and not closely related to the respondent assessee - These were also sales to other parties - There is no finding in the assessment order that the purchase and sale had not taken place and, therefore, Rule 9B(2)(a) relied upon by the assessee was not applicable - what was purchased and sold by the assessee were the distribution rights - The right would include and consist of acquisition and transfer of rights to exhibit, broadcast and satellite rights - These rights are integral and form and represent rights of a film distributor - Even otherwise, if Rule 9B would not be applicable, purchase and sale of the film would result in a business transaction i.e. sale consideration received less purchase price paid Decided against revenue.
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2014 (9) TMI 436
Unexplained share application money and loans u/s 68 Creditworthiness of transaction Held that:- The assessee has shown receipt of share money amounting to ₹ 75 lacs from 15 persons - the assessee has also shown receipt by way of unsecured loans from 19 agriculturists - The A.O. has was of the view that the Directors have sold their agricultural land in the year 2003 and out of such sale-proceedings, share application money was paid - Tribunal has passed the order in the absence of the revenue, who in his written submission states that even if Khatauni have been provided, there is no reconciliation/record of land, no sale-deed record owned by the person in whose names sale of potatoes have been credited - There is also no proof of cultivation of potatoes or storage of such potatoes in the cold storage - the mystery pertaining to the creditworthiness remained unsolved thus, the matter is remitted back to the Tribunal for fresh adjudication Decided in favour of revenue.
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2014 (9) TMI 435
Nature of transaction Investment or trading - Whether the transaction was rightly held by the Tribunal to be in the nature of investment and not in the nature of trade Held that:- Tribunal has noted that the assessee in the balance-sheet had treated the mutual funds as investments and never classified its investment in securities as stock-in-trade - The assessee company was not an investment company - The objective of the assessee company do not include activities relating to purchase or sales of shares rather, permitted to investment and deal with the money not immediately required in such a manner as may from time to time be determined Tribunal has not taken into consideration the facts as noted by the AO and also CIT(A) Tribunal was required to determine the cumulative effect of all the facts, including whether any dividend had been received on the units, the frequency of 26 transactions and volume of the transactions - Entries in the books of account, would normally reflect treatment given by the assessee - the actual intention and manner in which transaction of sale and purchase is to be concerned - Intention has reference to practical and empirical side of the de facto and functional aspects thus, the matter is to be remitted back to the Tribunal for fresh adjudication relying upon Commissioner of Income-Tax Versus Rewashanker A. Kothari [2006 (1) TMI 80 - GUJARAT High Court ] Decided in favour of revenue.
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2014 (9) TMI 434
Dividend on income disallowed u/s 14A - Whether the Tribunal was right in deleting the disallowance u/s 14A holding that no dividend income was earned by the assessee ignoring the provisions u/s 14A Held that:- The Tribunal rightly observed that there was a contradiction in the submissions made by the revenue that the assessee had acquired shares for earning of dividends relying upon Additional Commissioner of Income-tax, Circle 1(1) Versus Spray Engineering Devices Ltd. [2012 (7) TMI 587 - ITAT CHANDIGARH] - Income exempt u/s 10 in a particular AY, may not have been exempt earlier and can become taxable in future years - whether income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent AY LTCG on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax - assessee is an investment company and had invested by purchasing a substantial number of shares and thereby securing right to management. The entire or whole expenditure has been disallowed as if there was no expenditure incurred by the assessee for conducting business - CIT(A) has positively held that the business was set up and had commenced - Expenditure had to be also incurred to protect the investment made - genuineness of the expenses and the fact that it was incurred for business activities was not doubted by the AO and has also not been doubted by the CIT(A) Decided against revenue.
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2014 (9) TMI 433
Re-computation of interest payable u/s 201(1A) - Whether the Tribunal was correct in law in directing the AO to recompute the interest payable by the assessee u/s 201(1A) after taking into consideration the advance tax and self-assessment tax paid by the employees concern Held that:- Following the decision in Commissioner of Income Tax Versus M/s. Babcock Overseas Project [2014 (9) TMI 320 - DELHI HIGH COURT] - the foreign employees of the respondent/assessee had paid tax in India either by way of advance tax or self assessment tax - the AO had himself not levied interest commencing from the period of deductibility of tax till the end of the Financial Year - levy of interest u/s 201(1A) is neither treated as penalty nor has the said provision been included in Section 273B to make reasonableness of the cause for the failure to deduct a relevant consideration - Section 201(1A) makes the payment of simple interest mandatory - The payment of interest under that provision is not penal - There is no question of waiver of such interest on the basis that the default was not intentional or on any other basis. If the employees (i.e. payee) had paid taxes as per the individual return/assessment, no amount as tax would be payable to that extent and the liability for interest would be only for the period commencing from the date of such tax was deductible to the date on which tax was actually paid. - Decided against revenue.
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2014 (9) TMI 432
Penalty u/s 271(1)(c) Sale purchase in nature of investment or business income - Held that:- Assessee was investing in shares and securities and also dealing in purchase and sale of securities - the assessee had brought forward long term capital loss and the short term capital gains were sought to be set off from the long term capital loss - This is indicative of the fact that in the earlier years, the assessee had sold or transferred certain shares held as an investment and suffered long term capital loss - assessee was certainly holding shares as investment - assessee held certain shares of group companies as investment - it must be shown that the conditions u/s 271(1)(c) must exist before the penalty is imposed - everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income no substantial question of law arises for consideration Decided against revenue.
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2014 (9) TMI 431
Assessment of rental income from lease/finance Business income of House property Held that:- The assessee has not leased out the property merely as a land and building, but also with further conditions as to how the business of the lessees/franchiees should be conducted with regard to the hotel industry only - The Special conditions of contract make it clear that the name of the assessee should clearly indicated in the name Board and the name of the franchisee should be below the name of TTDC, making it clear that the TTDC continues to be operating their business through their franchisees - the Special conditions make it clear that the assessee corporation continues to be in the business of tourism activities, though not directly but through the franchisees and has received income as franchisee fee and that cannot be lost sight of while determining the nature of income. Tribunal rightly was of the view that the properties let out by the assessee are business assets of the assessee corporation, as they have not treated the leased out properties as non-business assets of the assessee-corporation - the assessee has given a special right or privilege to the franchisees to undertake a particular business in the property of the assessee on receipt of franchisee fee - the income is clearly in the nature of business income and not income from house property thus, the order of the Tribunal is upheld Decided against assessee.
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2014 (9) TMI 430
Validity to grant refund u/s 93 of KVSS Correctness of depreciation - Whether the Tribunal was right in not holding that correct depreciation allowed by the AO dates back to the original Assessment Held that:- Once an assessee voluntarily invokes the KVSS, 1998 and had paid the tax liability in terms of the provisions of the KVSS, 1998, he should abide by the provisions of the KVSS, 1998 - He is not entitled to resile from such determination and seek refund it runs counter to Section 93 of the KVSS, 1998, which emphatically states that amount paid shall not be refundable under any circumstances - assessee claims refund of the amount, which claim is barred - assessee proceeded to opt for the KVSS, 1998 and paid the tax as determined to conclude the lis between the assessee and the department - it will not lie in the mouth of the assessee to turn around and claim refund referring to earlier assessment years - in terms of Section 93 of the KVSS, 1998, the assessee cannot seek refund of amount paid under the KVSS, 1998 Decided against assessee. Revision u/s 263 Requirement to fulfill conditions Held that:- As it has been already held that u/s 93 of the KVSS, 1998, the assessee cannot seek refund of amount voluntarily paid under the KVSS, 1998, the order passed u/s 154 of the Act by the AO is erroneous and prejudicial to the interest of the Revenue - The twin conditions stipulated u/s 263 of the Act for invocation of provision by the Commissioner are fulfilled as the order of the AO is erroneous and prejudicial to the interests of the Revenue, as it runs counter to Section 93 of the KVSS, 1998 Decided against assessee.
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2014 (9) TMI 429
Interest Tax - Scope of definition u/s 2(5A) of 2(5B) According to AO assessee is a financial corporation advancing loans to other institutions for earning interest - Whether the Tribunal was right in holding that the assessee does not fall within the definition in either Section 2(5A) or 2(5B) of the Interest Tax Act Held that:- Though principally the assessee company is embarked in the promotion of industries in the State of Tamil Nadu, it assists and finances any industrial undertaking, project or enterprise; and also grants or guarantees loans or advances to any company, association or concern engaged in any industry - CIT(A) rightly was of the view that the assessee company would come within the purview of financial company in terms of Section 2(5A)(iv) of the Interest Tax Act, which is more fully defined under Section 2(5B) of the Interest Tax Act, is justified. The Tribunal has misdirected itself to conclude that the primary intention of the assessee company is to promote development of industries and not financial company - the facts culled out by the CIT(A) and the claim made by the assessee u/s 36(1)(viii) of the Act make it clear that the character of the assessee company is also a financial company , as defined u/s 2(5B) of the Interest Tax Act - the nature of business conducted by the assessee and the transaction of finance, for which interest has been received for all the assessment years running to several crores of rupees, establishes that the assessee is also engaged in the business of financial company - the interest earned by the assessee company is liable to tax under the provisions of the Interest Tax Act - the assessee is a credit institution falling within the definition of financial company u/s 2(5B) of the Interest Tax Act Decided in favour of revenue.
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2014 (9) TMI 428
Computation of deduction u/s 80HHC on export profits - cash compensatory support, duty draw back and profit on sale of import entitlement licences that insurance, machinery hire charges, interest on deferred payment on export and interest on inter-corporate loans forms part of turnover or not Held that:- The findings of the Tribunal is erroneous in view of Finance Act, 1991 w.e.f. 1.4.1991, where clause (ba) of Explanation to Section 80HHC was inserted and made it clear that the expression 'total turnover' shall have its effect, as if it also excluded any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28, on or after 1.4.1991 and not before - if the assessee is able to establish that amount is not relatable to freight or insurance attributable to the transport of the goods or merchandise beyond the customs station, then only the assessee will be entitled to move before the Assessing Authority and establish it as a matter of fact and claim the benefit thus, the matter is remitted back to the AO Decided in favour of revenue.
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2014 (9) TMI 427
Rejection of books of accounts u/s 145(3) Adoption of GP @ 20% against 40% - Held that:- The assessee had suppressed sales and had also suppressed the expenses - once the books of accounts of the assessee are rejected, a fair estimate of the profits needs to be made Tribunal rightly held that the adoption of net profit rate by the CIT(A) was not justified once the books of accounts were rejected CIT(A) could not have applied the net profit rate while computing the gross profits - the Tribunal on the basis of the self same material has estimated the gross profit at 20% - the gross profit has been determined on the basis of estimate - The estimate to be made in a particular case is largely a question of fact the order of the Tribunal is upheld Decided against revenue.
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2014 (9) TMI 426
Interest u/s 43B disallowed - nature of loan - term loan or not - Terms of agreement and character of transaction appreciated or not Held that:- The Tribunal rightly held that the loan was for a term - it was secured by a mortgage of the assets and properties of the Assessee borrower does not mean that the clauses or terms and conditions incorporated in the sanction letter can be ignored - the loan was for a term and it was secured in the manner set out by the Deed no substantial question of law arises for consideration Decided against assessee. Treatment of loan received Term loan or not u/s 43B Held that:- It is not in dispute that the Explanation has been brought into force with effect from 1st January 1989 - the Tribunal did not commit any error in relying on the same thus, no substantial question of law arises for consideration Decided against assessee.
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2014 (9) TMI 425
Liability to pay tax by assessee - provision of section 205 - Failure of non-issuance of TDS certificates by the tenant - Whether Section 205 of the Income Tax Act would apply and is the Appellant liable to pay tax to the extent to which tax has been deducted Held that:- Tax was deducted at source by the tenant Union Motors Services Limited and they have issued some Certificates which have been given credit to by the Department - the mandate is on the tenant to deduct tax at source and remit the amount to the Government and also issue certificate to the assessee relying upon Yashpal Sahni vs Rekha Hajarnavis, Asst. CIT (Bom.) [2007 (7) TMI 7 - HIGH COURT , BOMBAY] - Once it is established that the tax has been deducted from the salary of the employee, the bar u/s 205 of the Act comes into operation and it is immaterial as to whether the tax deducted at source has been paid to the Central Government or not, because elaborate provisions are made under the Act for recovery of tax deducted at source from the person who has deducted such tax - the bar u/s 205 of the Income Tax Act prevents the department from demanding the tax deducted at source from the assesee who has suffered a deduction - the liability rests with the Official Liquidator Decided in favour of assessee.
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2014 (9) TMI 424
Cancellation of registration granted u/s 12AA Loans taken from the two private companies detriment to the objects of the trust or not - Held that:- DIT(E) was of the view that the assessee has invested in purchase of equity shares of M/s. Matrix Laboratories Ltd. which is in violation of objects of trust deed and loans were obtained from two private companies which is in contravention of the trust deed Held that:- DIT(E) cannot reopen the issue again for the purpose of cancellation of registration, more so, after the order of the ITAT - it appears from the reply to show-cause notice, assessee has not referred to the order of the Tribunal, however, on a reference to the order of ITAT it is clear a copy of the order was also marked to the DIT(E) - in spite of such order of the ITAT holding that there is no violation by the assessee of the provisions contained in section 11(5) r.w.s. 13(1)(d) of the Act, the action of the DIT(E) in cancelling registration on the issue of investment in shares cannot be appreciated. Regarding receiving unsecured loans from M/s. Vanpic Projects (P) Ltd. and M/s. Vanpic Ports (P) Ltd., it is clear that in respect of the loans also there is no violation of the provisions contained under the trust deed - clause 5 of the trust deed empowers the trustees to obtain loan from banks and financial institutions, it cannot be construed in a manner to suggest that the said clause restricts the trust/ trustees from obtaining loans from private parties - Even raising of loans is not coming under the object clauses of the trust deed - There is nothing brought on record by the DIT(E) to show that funds have not been applied for achieving the objects of the trust - DIT(E) can cancel the registration of a trust or institution if he is satisfied that the activities of the trust are not genuine or not in accordance with the objects of the trust - neither in the order of the DIT(E) nor from any other facts and materials on record, it is established that the activities of the trust are not genuine or are not in accordance with the objects of the trust - The grounds on which the DIT(E) has cancelled the registration are neither germane nor relevant for the purpose of section 12AA(3) of the Act - Nothing has been brought on record to show that obtaining of loans from the two private companies is in detriment to the objects of the trust or they are for the benefit of the trustees or their relatives - cancellation of registration by the learned DIT(E) u/s. 12AA(3) of the Act is legally unsustainable Decided in favour of assessee.
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2014 (9) TMI 423
Long term capital loss disallowed Redemption on preference shares Whether the whole transaction can be said to be sham transaction with the sole purpose of transferring funds from one company to another and generating huge long term capital loss so as to avoid the tax - Held that:- The assessee had advanced huge sums from time to time to JPL - the loan was advanced at least six years before the redemption of RCPS during the year - The assessee as well as JPL both are regularly assessed to income tax and in the years in which loan was advanced, the genuineness of the loan was never doubted by the Revenue either in the case of the assessee or in the case of JPL - no significant event took place except the redemption of 2% RCPS - The AO has not brought on record an iota of evidence in holding the transaction to be a sham transaction or bogus transaction relying upon McDowell And Co. Limited Versus Commercial Tax Officer [1985 (4) TMI 64 - SUPREME Court] - there is nothing on record to hold the series of the transactions as not genuine - all the transactions of the series have been accepted by the Revenue as genuine business transactions - in the year of redemption of the 2% RCPS, the transactions cannot be presumed to be sham or bogus merely because it has resulted into long term capital loss which may be adjusted against the long term capital gain, if any, arising in future to the assessee - the AO is directed to accept long term capital loss and carry forward the same Decided in favour of assessee. Exemption u/s 14A disallowed Held that:- Rule 8D is applicable for and from AY 2008-09 and not for earlier years relying upon GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - there is no infirmity in the order of CIT(A) holding that Rule 8D was not applicable - the AO is required to examine the assessee's claim with regard to incurring of no expenditure or with regard to the amount of expenditure claimed to have been incurred by the assessee for earning of exempt income - Such expenditure is to be determined in accordance with such method as may be prescribed - the assessee has worked out the disallowance u/s 14A - The AO did not record any satisfaction that such working is wrong - for AY 2007-08, Rule 8D was not applicable and therefore, disallowance need not be computed as per Rule 8D - The AO has not recorded any satisfaction with regard to any mistake in the working of disallowance u/s 14A by the assessee - there was no justification to interfere with the order of CIT(A) Decided against revenue.
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Customs
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2014 (9) TMI 448
Waiver of predeposit of duty - Classification of goods - technical grade pesticides for insecticidal use or Boric Acid - Classification under Chapter 29 or Chapter 38 - Held that:- perusal of the Bills of Entry filed by the appellants makes it clear that except one commodity, namely, Methyl Parathion, which falls under Heading 29201100, all other commodities imported are claimed under general heading Others - 29420090. Relying on the said circular, the appellants pleaded that they will be able to justify that each one of the imported goods is separate chemically defined compound and, therefore, it will fall under Chapter Heading 29 and not under Heading 3808. However, this circular has not been taken note of by the Commissioner of Customs (Appeals) or by the Tribunal. This Circular has been issued post the Supreme Court decision in Pesticides Manufacturing and Formulations Association of India, referred [2002 (10) TMI 95 - SUPREME COURT OF INDIA], and it is relatable to imports. It is not justified to give a ruling as to whether the goods fall under Heading 38.08 or 29, except to observe that the appellants in this case on the basis of the Circular No.34/2007-Cus, dated 17.9.2007 have made out at least a probable case for consideration as to whether the goods are separate chemically defined compounds falling under Chapter Heading 28 or 29 and not Chapter Heading 38, albeit the decision of the Supreme Court in Pesticides Manufacturing and Formulations Association of India, referred supra, will having a bearing on this case. In the present case, duty at 7.5% has been paid at the time of import. It is the difference of duty that is demanded. Hence, interest of the importer and the department can be taken note of for securing the ends of justice. - amount of pre-deposit order by tribunal modified - Decided partly in favor of assessee.
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2014 (9) TMI 442
Import of old and used digital multifunction printing machines - confiscation - Section 112 - Commissioner (appeals) reduced the quantum of redemption fine and penalty - tribunal refused to enhance the quantum of redemption fine and penalty - Held that:- Tribunal in the present case has relied upon the various decisions including that of the decision of this Court in the case of Sai Copiers [2008 (1) TMI 402 - HIGH COURT OF JUDICATURE AT MADRAS] only to come to a prima facie conclusion that the case does not deserve enhancement of redemption fine and penalty. With regard to the calculation of margin of profit, taking into consideration the various parameters required under Section 125 of the Customs Act, 1962 and in the absence of any market enquiry conducted by the Department, the Tribunal came to the conclusion that the value has been fixed by the Chartered Engineer's at the behest of the Department and therefore, no fault could be attributed to the assessee. The maximum that could be levied is only prescribed. There is no statutory prescription that the penalty should not be reduced by the appellate authority. - Decided against the revenue.
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2014 (9) TMI 441
Levy of Additional Customs Duty u/s 3(1) of CTA - Countervailing duty (CVD) - importer prayed to declare the heading No.89.08 of the Central Excise Tariff Act, 1985 (5 of 1986) as unconstitutional and ultra vires Entry No.84 of the Union List - import of old discarded and un-seaworthy ships for breaking up of such old and scrap ships at Sosiya, Alang. - Held that:- Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Versus Union of India, [1999 (5) TMI 29 - SUPREME COURT OF INDIA] ruled that on a correct interpretation of the relevant provisions of the two Acts, additional duty which is leviable under section 3(1) of the Tariff Act is independent of the Customs Duty which is leviable under section 12 of the Customs Act. It is further observed and held that the observations in Khandelwal Metal & Engineering Works [1985 (6) TMI 178 - SUPREME COURT OF INDIA] seems to suggest that even no process of manufacture or production has taken place the imported articles can still be subjected to the levy of additional duty, does not appear to be correct inasmuch as the measure for levy of additional duty is the quantum of excise duty leviable on a similar article under the Excise Act. Applying the ratio of the law laid down by the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Versus Union of India, [1999 (5) TMI 29 - SUPREME COURT OF INDIA], referred to hereinabove to the facts of the case on hand, and with respect to the additional duty sought to be levied under heading No.89.08 at the rate of 15% on the vessels and other floating structures for breaking up which are not manufactured in India and therefore, no excise duty is leviable on "vessels and other floating structures for breaking up". No additional duty can be levied under section 3(1) of the Tariff Act on the "vessels and other floating structures for breaking up". Under the circumstances, aforesaid heading 89.08 which provides levy of additional duty at 15% on the vessels and other floating structures for breaking up would be contrary to and/or ultra vires to section 3(1) of the Tariff Act and therefore, we are of the opinion that the vessels and other floating structures imported into India for breaking up, additional duty under section 3(1) of the Customs Tariff Act is not liable to be levied. - decided in favor of assessee.
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2014 (9) TMI 440
Cancellation of licence as Customs House Agent - according to revenue the role played by the said agent in misdeclaration of goods under export in respect of a shipping bill - revenue aggrieved by order of tribunal - Held that:- the matter was decided by the Tribunal in most unsatisfactory and hasty manner. The respondent approached the Tribunal requesting that the order impugned in the appeal preferred by it should be stayed. It is that limited request which has to be considered by the Tribunal. In considering that request the Tribunal thought that the matter involves very short point and can be conveniently disposed of at the stage of admission. It proceeded to dispose of the same finally. It is clear that when the appeal was being decided finally, the Tribunal relied only on the record produced by the respondent and not by the adjudicating authority. Thus, the complete record and proceedings were never called for. Secondly, the Tribunal if satisfied that principles of natural justice have been violated, then should have restricted its finding and conclusion only to that issue. The Tribunal then was not competent to express any final opinion on the merits of the charges. The Tribunal in doing that has clearly exceeded its jurisdiction. Order of the tribunal quashed - appeal restored to file of the Tribunal for being decided afresh - Decided in favor of revenue.
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2014 (9) TMI 439
Import of poppy seeds - importer contended that he was unaware of the fact that the final guidelines have been issued by the Government of India - on 14 February 2014, guidelines have been issued by the Government of India, Ministry of Finance, Department of Revenue for the registration of import contracts for import of poppy seeds into India - Held that:- Since the guidelines have been issued just over a fortnight ago, we consider it appropriate not to find fault with the fourth respondent, but would expect that the fourth respondent shall perform its duties and obligations for the enforcement of the obligations cast upon it, as explained in the judgment of this Court [2014 (9) TMI 288 - ALLAHABAD HIGH COURT] and as has now been formulated in the binding guidelines dated 14 February 2014. The guidelines, which have been formulated on 14 February 2014, shall apply both to the current financial year, i.e. 2013-14, for which affirmative duties and obligations have been cast upon the fourth respondent and for the succeeding financial years. CBN will ensure that it discharges its duties and obligations cast upon it by virtue of the guidelines so as to obviate a situation where any illegal import of poppy seeds takes place into India even during the current financial year. - Petition disposed of.
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2014 (9) TMI 438
Condonation of delay in filing appeal - sufficient reason - Duty Entitlement Pass Book Scheme (DEPB) - misdeclaring the value by over invoicing in order to get higher benefits under DEPB - Held that:- In the instant case, the Tribunal observed that it is not satisfied with the reason given in the application filed for condonation of delay. However the Tribunal did not render any finding to whether the reason assigned is either false or incorrect or the reasons smacks of mala fide or it is a dilatory strategy. In the absence of any such finding and by applying the law laid down by the Honble Supreme Court in N. Balakrishnan v. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT OF INDIA] to the facts of this case, this Court is inclined to accept the explanation offered by the petitioner. As observed earlier, the petitioner does not stand to gain by filing the appeal, belatedly, more so when a heavy penalty has been imposed on the petitioner. It is not the case of the second respondent that the delay is uncondonable, though it may be not for a very long period. As held by the Honble Supreme Court the primary function of the Court is to adjudicate the dispute between the parties and to advance substantial justice. This Court is of the considered view that ends of justice would be met only if the delay in filing the appeal is condoned and the Tribunal is directed to consider the application for pre-deposit at the first instance and thereafter, the appeal on merits. - delay condoned - decided in favor of assessee.
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Service Tax
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2014 (9) TMI 462
Business Transfer Agreement - appellant herein received the outstanding debts of Essar Projects Ltd by virtue of Business Transfer Agreement, this amount is being held by the Adjudicating Authority as an amount received for provision of taxable services and tax liability arise. - Held that:- Essar Projects Ltd had undisputedly discharged the Service Tax liability which is confirmed against the appellant. - Departmental audit team has confirmed this fact - the audit officers have held that an amount of ₹ 9,96,14,733/-has been paid by Essar Projects Ltd which they need not have to pay. It can be seen from the impugned order that the Adjudicating Authority has confirmed the exact amount to the last rupee. Service Tax liability which has already been discharged, cannot be again recovered from the appellant, who has taken-over the business from a particular day. This would amount to double taxation on the same service which is not contemplated in law. - Decided in favor of assessee.
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2014 (9) TMI 461
Renting of immovable property - Valuation - inclusion of Notional Interest on Security - revenue contended that notional interest @ 18% of the deposit should be added to the rent received and service tax should be demanded on the notional interest on the security deposit - Held that:- there is not even an iota of evidence adduced by the Revenue to show that the security deposit taken has influenced the price i.e. the rent in any way. In the absence of such evidence, it is not possible to conclude that the notional interest on the security deposit would form part of the rent. We also do not find any reason for adopting a rate of 18% per annum as rate of interest, which is neither the bank rate of interest for deposits or loans or the market rate of interest. Adoption of such an arbitrary rate militates against the concept of valuation. Notional interest on interest free security deposit cannot be added to the rent agreed upon between the parties for the purpose of levy of service tax on renting of immovable property. - Decided in favor of assessee.
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2014 (9) TMI 460
Levy of service tax on SIM Cards - tribunal held that where service provider voluntarily paid sales tax on the value of SIM cards no service tax would be levied - Telephone services - extended period of limitation - Held that:- In view of decision of Supreme Court in the case of Idea Mobile Communication [2011 (8) TMI 3 - SUPREME COURT OF INDIA], the entire value of the transaction i.e., value of activation charges plus value of SIM cards could be subjected only to Service Tax and not to Sales tax. Although the decision of the Apex Court practically concludes the issue therein, nevertheless, the appellant raised a plea of limitation levying demand on the assessee. Since it is pure question of fact, we feel that there could be no inhibition to confirm the demand order of the Customs, Excise and Service Tax Appellate Tribunal. - Decided against the revenue.
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2014 (9) TMI 459
Challenge to the issue of Show Cause Notice - renting of equipment with or without without transferring right - Business of leasing out equipments of Air Separation Plant to customers which produce the industrial gases - sub-section (zzzzj) of Section 65(105) of the Finance Act, 1994 - petitioner submitted that the petitioner is paying Value Added Tax and service tax is payable on this activity - Held that:- when the present petition is against the show cause notice and the petitioner has yet to respond to the same, present petition is not entertained and the same is dismissed. However, it is observed that all the defences which may be available to the petitioner under the law are kept open which the authority is bound to consider the same in accordance with law and on merits at the time of adjudication. - Petition dismissed - Decided against the assessee.
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2014 (9) TMI 458
Waiver of pre-deposit - tribunal dismissed the appeal when appellant failed to deposit the amount as directed by the Tribunal - assessee contended that once the Tribunal has granted a full waiver in similar cases, it would not be proper to take a different view in other cases. - Held that:- In view of decision rendered by the Larger Bench [2011 (11) TMI 5 - BOMBAY HIGH COURT] confirming earlier judgment of the Division Bench in the matter of Orange City Alloys Pvt. Ltd. [2011 (10) TMI 440 - BOMBAY HIGH COURT], we are of the view that appellant is liable to comply the directions issued by the appellate Tribunal regarding deposit of Service Tax amount. In the facts and circumstances of the case, we deem it appropriate to grant further opportunity to appellant to deposit balance amount with appellate Tribunal and further direct the Tribunal to take decision in the matter on its own merit and in accordance with provisions of law.
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2014 (9) TMI 457
Renting of immovable property - contractual obligation - Service tax to be born by the tenant or landlord - Arbitrator has interpreted Clause 7.1 of the lease deed to mean that the Service Tax liability in respect of the renting of the premises would be that of the Petitioner (landlord) - Held that:- In a given case, a service provider may well decide to undertake the burden of Service Tax itself without passing it on to the service recipient. What the intention of the parties in that regard is can be determined only by examining the relevant clause in the agreement they execute. Even Section 64A of the Sale of Goods Act (SGA) is useful in understanding the importance of the contract governing the parties. It opens with the words unless a different intention appears to the terms of the contract. Therefore it is the contract, and not the nature of the levy, which will determine which party, the service provider or recipient, is liable to bear the burden of service tax. In the present case, the wording of Clause 7.1 of the lease reflects the intention of the parties that it is the Petitioner who would bear the incidence of all taxes. In light of the decision in Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran [2012 (4) TMI 457 - Supreme Court of India], the view of the learned Arbitrator that in terms of Clause 7.1 of the lease deed, the Service Tax liability is that of the service provider, i.e. the Petitioner, is a plausible one. - Decided against the petitioner.
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2014 (9) TMI 449
Jurisdiction u/s 73 - GTA service - Bar of limitation - Whether the show cause notices issued to the respondents, seeking to recover service tax under Section 73(1A) of the Finance Act, 1994, as amended with effect from 10.9.2004, for failure to pay service tax and file return as required by the proviso to Section 68(1) and 71A of the Finance Act, 1994, read with Rule 7A of the Service Tax Rules, 1994, could be sustained as within the period of limitation - Held that:- Following decision of Commissioner of Central Excise v. Customs, Excise and Service Tax Appellate Tribunal and another [2014 (1) TMI 459 - MADRAS HIGH COURT] - it is held that the Revenue has necessary jurisdiction under Section 73 of the Finance Act, particularly with reference to the limitation prescribed thereunder and the show cause notice issued on the second respondent/assessee is valid. However, the penalty imposed on the second respondent/assessee stands deleted and the prayer for cancelling the levy of interest stands rejected - Decided partly in favour of Revenue.
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Central Excise
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2014 (9) TMI 451
Cenvat / Modvat Credit - extended period of limitation - Whether allowing of Modvat Credit by the Customs, Excise & Service Tax Appellate Tribunal on inputs which were used in repairing of old transformers and which did not suffer any Central Excise Duty is correct as per Cenvat Credit Rules, 2004 - Held that:- A show cause notice was issued to the assessee on 3 May 2005 invoking the extended period of limitation for the recovery of the balance amount of CENVAT credit which had been utilised by the assessee on the use of transformer oil. The pure finding of fact is that the matter had been taken up for audit in 2002. The show cause notice which was issued on 3 May 2005 was clearly barred by limitation when the relevant facts were to the knowledge of the Department, as stated in the order of the Tribunal. That apart, the Tribunal noted that in the grounds of appeal, the findings of the Commissioner (Appeals) have not been displaced. We have extracted in the earlier part of this judgment the question of law as framed by the revenue. Even in the present appeal, the revenue has not framed a proper question of law, since the only issue which arose was in regard to the applicability of the extended period of limitation. Be that as it may, we see no reason to interfere in the order of the Tribunal - Decided against Revenue.
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2014 (9) TMI 450
Cenvat Credit - reasonable steps before availing credit - original manufacturer of fabrics were alleged to be fictitious - endorsed invoices - period of limitation - Whether the department can escape its liability to find out a person who was registered with them and to pursue him for payment of duty - Held that:- Following decision of PRAYAGRAJ DYEING & PRINTING MILLS PVT. LTD. Versus UNION OF INDIA [2013 (5) TMI 705 - GUJARAT HIGH COURT] - appeal is allowed, by clarifying that in case larger period of limitation as prescribed in section 11(A)(1) of the Central Excise Act has not been invoked, the matter can proceed in terms of the order impugned.
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2014 (9) TMI 447
Waiver of pre-deposit - Goods destroyed in fire - Remission application dismissed - demand of duty confirmed - Tribunal held that as remission of duty was dismissed therefore, demand is sustainable - Held that:- From the recording made by the Tribunal relating to the submissions advanced by the respective parties, it appears that the petitioner took a specific plea that the order passed on an application for remission of duty and the order passed on confirmation of the demand is different, separate, distinct and cannot be mingled - On perusal of the provisions contained under Rule 21 of the Central Excise Rules, 2002, this Court finds that the consideration for the said application is different and, therefore, the said order cannot be linked to the order passed on confirmation of the demand. Furthermore the consideration for application seeking waiver of the pre-condition deposit is well recognized, as in such case the authorities must record their satisfaction relating to the undue hardship and while doing so shall also take into account the interest of the Revenue. Tribunal has proceeded to decide the matter extraneously without recording any satisfaction relating to the existence of a prima facie case, irreparable loss and injury, balance of convenience and inconvenience and undue hardship, which are some of the illustrative ingredients for consideration of the said application - Matter remanded back - Decided in favour of assessee.
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2014 (9) TMI 446
Review petition - Merger of appeals - Held that:- In the case of Pearl Drinks Ltd. [2010 (7) TMI 10 - SUPREME COURT OF INDIA], the Apex Court did not opine that the doctrine of merger does not apply. What had happened in that case was that the assessees appeal, which was heard and disposed of by the Tribunal, concerned only two out of the eight heads. Whereas the admissibility of the deduction in respect of the balance six heads was questioned in an independent appeal filed by the Department. It is in these circumstances that Their Lordships held that the order disposing of the appeal of the assessee could not preclude the hearing of the appeal filed by the Department. That situation was altogether different. original order dated June 4, 2010 against which the review was sought, was no longer in force after the appellate order was passed on September 21, 2010, issued on September 28, 2010 - Matter remanded back - Decided in favour of assessee.
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2014 (9) TMI 445
Waiver of pre-deposit - CENVAT Credit - Whether the CESTAT was correct in law in passing conditional order on appellants application for stay and waiver of pre-deposit, in spite of the undue hardship that the appellant would suffer by the wrong denial of Cenvat of credit contrary to well established law made out by the appellant - Held that:- there is no scope to argue all the points before the Tribunal as the impugned judgment is also contemporaneous to the judgment and, as such, Tribunal had no occasion to deal with the contentions raised by the appellant and they are raised for the first time before us - Matter remanded back - Decided in favour of assessee.
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2014 (9) TMI 444
CENVAT Credit - Whether in the facts and circumstances of the case, the second respondent Appellate Tribunal is right in holding that the first respondent is entitled to Cenvat credit on the inputs used in the manufacture of exempted goods and which are cleared without payment of duty on job work basis under Notification 214/86-C.E., dated 25-3-1986 - Held that:- Similar question raised have already been decided against the revenue - following the decisions of the Bombay High Court reported in [2008 (8) TMI 783 - BOMBAY HIGH COURT] - Commissioner v. Sterlite Industries (I) Limited as well as the Punjab and Haryana High Court reported in [2011 (2) TMI 152 - PUNJAB AND HARYANA HIGH COURT] - Commissioner of Central Excise, Ludhiana v. Jainsons Wool Coombers Ltd., which were based on the decision of the Apex Court reported in [2004 (8) TMI 106 - SUPREME COURT OF INDIA] - Escorts Limited v. Commissioner of Central Excise, Delhi. - Decided against Revenue.
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2014 (9) TMI 443
Waiver of pre deposit - Held that:- Even as per the balance sheet, which was placed before the Tribunal, the appellant was having an accumulated loss of ₹ 6.74 crores. That apart, the appellant has also complied with the direction given by the Tribunal to give undertaking before the jurisdictional Commissioner to the effect that they shall not dispose of the plant and machinery used by their subsidiary unit till the disposal of the appeal before the Tribunal. Thus, considering the facts and taking note of the financial hardship pleaded by the appellant and the undertaking given by the appellant to the effect that they shall not dispose of the plant and machinery used by their subsidiary unit, we deem it proper that the interest of the Revenue be protected if the appellant is directed to pre-deposit a sum of ₹ 50.00 lakhs instead of ₹ 1.00 crore as ordered by the Tribunal within a period of eight weeks from today - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (9) TMI 456
Detention of goods - vehicle carrying the goods did not carry the documents required under Section 67 of the Tamil Nadu VAT Act, 2006 - offence in terms of Section 72 of the Tamil Nadu VAT Act, 2006 - Held that:- writ petitions are disposed of and the petitioner is at liberty to pay the tax of ₹ 2,29,387/- and ₹ 2,28,686/- respectively and on such payment, the goods detained shall be released forthwith. The petitioner is at liberty to challenge the penalty proceedings by filing revision before the jurisdictional Joint Commissioner - Decided partly in favour of assessee.
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2014 (9) TMI 455
Validity of order - Violation of principle of natural justice - Opportunity of personal hearing not granted - Held that:- The petitioners in their reply, dated 20.12.2013 to the notices dated 30.11.2013 and 18.12.2013 has made a specific request for opportunity of personal hearing on a specific date and time in order to appear in person and once again submit documents relevant to their reply. Admittedly, such opportunity has not been provided to the petitioner. A scrutiny of materials place before this Court would also disclose that the petitioner had fully cooperated with the first respondent, by furnishing the details and documents. Since opportunity of personal hearing has not been afforded to the petitioner, this Court is of the view that they have put to prejudice and hence, on this sole ground, the impugned orders are liable to be interfered with - Decided partly in favour of assessee.
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2014 (9) TMI 454
Rate of tax - Classification of Aluminum foil - Liability of tax @ 4% or concessional rate of 1% - Whether aluminium foil falling in word "sheets", therefore, covered under the notification dated December 31, 1975 and, further, whether the notification dated June 13, 1985 issued by the Revenue is applicable for the purpose of granting exemption for five years commencing from June 13, 1985, the day on which the notification was issued by the Revenue - Held that:- there is no quarrel with regard to adjudication made by the honourable Supreme Court that mere change in the shape by mechanical pressing does not change the commodity and the commodity continues to hold the essential characteristics. Here, in the instant case, specifically a separate notification was issued for aluminium foil because it is used for packing purposes, therefore, if any aluminium sheet after processing created a new purpose for use then the Legislature can prescribe separate tariff for the use of that commodity. Here, in this case, both the aforesaid notifications are separate and distinct. Notification dated December 31, 1975 was issued for the purpose of one per cent tax upon non-ferrous rods, pipes, strips, section, sheets, circles and tubings but aluminium foil was not included in the above commodities and another notification was issued on June 13, 1985 which was not in continuance of aforesaid notification dated December 31, 1975 but it was separate notification granting time-bound exemption in tax upon aluminium foil. Therefore, all the judgments cited by learned counsel for the petitioners do not support the plea taken by the petitioner-assessee for the purpose of taking advantage of notification dated December 31, 1975. With regard to non-applicability of the notification dated June 13, 1985 for the reason that it has not been issued in supersession of the earlier notification dated December 31, 1975, yet another baseless ground has been taken by the petitioner-assessee because the general tax is at the rate of four per cent and exemption is granted for some of the goods as per their use vide notification dated December 31, 1975 purposely; and, later on, for five years the said exemption was granted for aluminium foil vide notification dated June 13, 1985; meaning thereby, the intention of the Legislature is expressive that except for the commodities falling under the entry of notification dated December 31, 1975, general tax will be levied and purposely with regard to aluminium foil exemption for five years was granted while issuing notification dated June 13, 1985, therefore, on this ground also no case is made out for interference. More so, the Tax Board has considered the entire facts and circumstances of the case in right perspective. There is no error in the adjudication made by the Tax Board in holding that "aluminium foil" is different commodity than the aluminium sheet. In my opinion, the claim of the petitioner-assessee to treat aluminium foil as non-ferrous sheets covered under notification dated December 31, 1975 is not sustainable in law in view of the fact that vide a separate notification dated June 13, 1985 time-bound exemption for five years to levy one per cent tax instead of four per cent tax was granted, which is not under challenge, itself is sufficient to hold that aluminium foil is different commodity and use of that commodity is also altogether different than the commodities covered under notification dated December 31, 1975. Therefore, claim of the petitioners for treating aluminium foil as aluminium non-ferrous sheets is hereby rejected. - Decided against assessee.
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2014 (9) TMI 453
Validity of assessment order passed - Denial of refund claim - Bar of limitation - whether it is a "deemed assessment" under rule 14(5A) or assessment under sub-rules (6) and (7), if an assessing officer undertakes assessment on the ground that the turnover escaped assessment to tax, it shall be within the period prescribed under sub-rule (8) - held that:- The patent difference in the language used in the phrase "if no assessment is made within a period of four years from the date of filing of the return" used in sub-rule (5A) and the phrase " within a period of four years from the expiry of the year to which the turnover relates" appearing in subrule (8)(b) make it very clear that an assessment undertaken under rule 14A(8)(b) should be within four years from the expiry of the year to which the turnover relates. In that view of the matter, the submission made by the petitioner that except in regard to the returns filed for the months of March, 2007, the assessment in respect of returns for the months of April 2006-March 2007 is barred by limitation cannot be accepted. The returns for the months of April, 2006 to March, 2007 or the returns relate to the turnover of the financial year 2006-07, and therefore, the assessment order passed on March 30, 2007, is well within the limitation. It is not barred by limitation. The feeble submission that the impugned assessment order was antedated has not been substantiated and therefore, we reject the same. We accordingly hold that the impugned assessment order dated March 30, 2011 is not barred by limitation as per rule 14A(8) of the State Rules. Section 7 of the VAT Act exempts goods listed in the First Schedule from VAT. As per entry 45 it is cotton fabrics which are exempted and not towels. Towels fall under entry 52 of the Fourth Schedule. Therefore whenever a dealer seeks exemption for cotton fabrics as falling under entry 45 of the Fourth Schedule it is for the assessment officer to enquire into the same. In this case, it is neither disputed nor denied by the petitioner that the CTO, Autonagar Circle, Vijayawada, inspected the petitioner's machinery and found that they were producing terry towels. Secondly in their objections filed after receiving show-cause notice the petitioner admitted of effecting sales of cotton terry towels. Further it was found that most of the sales were made to hotels and proposed that the petitioner was converting the fabric into towels and selling them. It is a question of fact and ordinarily in writ jurisdiction, it cannot be interfered with. Further the petitioner had an effective alternative remedy of filing appeal before the Appellate Deputy Commissioner. They waited for four months and chose to file writ petition challenging the impugned order. In this background, we are afraid we do not find any merit in the impugned assessment order. Decided against assessee.
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2014 (9) TMI 452
Constitutional validity of section 4(2)(c)(i) of the Kerala Tax on Luxuries Act, 1976 - Held that:- The petitioner has admitted that the auditorium has fetched per day rental value of ₹ 4,000 as revealed from exhibit P2 receipts bearing Nos. 10146 dated April 18, 2005 and 11167 dated March 14, 2006. As it stands so, the liability to satisfy tax cannot be sought to be eschewed under any circumstance. That apart, there is a specific averment in paragraph 4 of the counter-affidavit filed by the first and second respondents that the second respondent conducted an enquiry on November 20, 2008 by contacting the person in charge of the auditorium, under the guise of advance booking of the auditorium, when it was let known that the daily rent of the auditorium was ₹ 8,500 per day, excluding the dining hall and if the dining hall was also required, it was being separately charged for ₹ 6,000 per day, thus making a total of ₹ 14,500 to be remitted in advance for booking the hall and that the Intelligence Bureau had forwarded the file along with the enquiry report to the first respondent for taking necessary steps for the assessment proceedings under the Act. It is added in paragraph 5 of the counter-affidavit that the petitioner has not produced any bills for verification before the second respondent at any point of time even though notice was issued to produce all the documents as part of the enquiry. The above specific averments have not been rebutted by the petitioner by filing any reply affidavit. case projected by the petitioner that the petitioner is not liable to effect any tax under the Kerala Tax on Luxuries Act, 1976 and that section 4(2)(c)(i) of the Act is ultra vires to the Constitution, is devoid of any merit. Whether the petitioner is entitled to have the benefit of the proviso to section 4(1), which says that the instance of levy under sub-section (1) of section 4 shall not apply to halls and auditorium located within the premises of "place of worship" owned by religious institutions - Held that:- property was lying as a continuous and contiguous block earlier and that the Chittur Road cutting through the property was surrendered by the petitioner, which made the "temple premises" on one side of the road and the "temple ground" on the other side. True, devaswom office and store are situated on the eastern side of the road in the temple ground, comprised in Sy. Nos. 43/4 and 44/7 of the Ernakulam Village. The auditorium is situated towards the north-eastern direction of the said ground, that too, on the other side of "Ayyappankavu East Extension Road", lying in between. Even the petitioner himself has conceded in paragraph 13 of the writ petition that the auditorium is not in any way far away from the temple, but is only hundred metres away from the temple. This by itself shows that the auditorium is not situated within the premises of the place of worship owned by the institution and the fact that the temple feast or "annadanam" is being performed in the auditorium, admittedly situated at least 100 metres away or that the entire income from the auditorium is being utilised for the temple management cannot bring it back to be situated as within the place of worship. The factual position as revealed from the records also does not come to the rescue of the petitioner and the claim for benefit of the proviso to section 4(1) of the Act is thoroughly wrong and misconceived. Whether first respondent is not vested with any power to impose penalty - Held that:- authorities who have been administering the different functions under the KGST Act have been appointed as the respective authorities under section 3 of the KVAT Act, vide SRO No. 318/05 dated March 31, 2005 issued by the Government. It is further pointed out that, pursuant to Notification No. 1/05 dated April 1, 2005, the officers including the assessing authority in the present case are granted functional jurisdiction to carry out all the functions of an assessing authority under the KVAT Act, in addition to the existing functions under various other Acts, which includes the Kerala Tax on Luxuries Act, 1976 as well. As such, the challenge raised in this regard has necessarily to fail. Whether there was any conscious effort on the part of the assessee to defraud the Revenue, so as to sustain the penalty - Held that:- it cannot but be found that there is absolutely no discussion as to why, the penalty as proposed in exhibits P8 to P10 notices was liable to be imposed or as to why the "explanation" given in exhibit P11 was not acceptable to the concerned authority. Though the finding as to the liability to take out registration and to satisfy the tax is beyond challenge, the penalty can be justified only on the basis of a "finding" as to the violation/evasion, which is conspicuously absent. question of penalty requires to be re-considered by the first respondent - Decided partly in favour of assessee.
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