Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 16, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
Highlights / Catch Notes
Income Tax
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Whether the process of drawing wire of thinner gauge from wire or rods of thicker gauge, followed by finishing processes like annealing would amount to manufacture or production or consequently whether the assessee was eligible for deduction u/s 80IC - held yes - HC
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Penalty u/s 271FA Protection u/s 273B - Proper information not furnished by assessee delay in furnishing the requisite AIR information by the appellant - bonafide ignorance - penalty confirmed - HC
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Valuation report u/s. 142(A) the basic pre-requisite of sec.142A is satisfaction of the AO - When the AO makes a reference at the behest of the CIT(A), the valuation report so obtained has no legal validity and has to be ignored - AT
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Computation of STCG in reassessment proceedings transactions for sale of land as well as the sale of super built up area - The working made by the learned first appellate authority is scientific and based on logic - AT
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Rectification of mistake u/s 154 Withdrawal of interest u/s 244(1A) the issue dealt by the AO in the rectification order u/s. 154 of the Act cannot be said to be a mistake apparent from record as it was arrived after due application of mind - AT
Customs
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Whether for the purpose of importing toys, the representative samples are to be sent to testing laboratory and if found to be in conformity with the requirement of law, the toys can be allowed to be imported - Held yes - HC
Service Tax
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Availing cenvat credit while availing benefit of abatement notification no. 1/2006-ST - appellant agree to reverse the entire cenvat credit taken with respect to common services used for providing services under Notification No. 1/2006-ST. - AT
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Waiver of penalty u/s 80 - penalty imposed u/s 78 for short payment - Further no bonafide could be proved as no reasonable ground could be shown by the respondent. - penalty confirmed - AT
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Valuation of service - the value of goods used for repair would not be includible in the assessable value of service - HC
Central Excise
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Power driven pump - What is driven by the power is the parts of the bowl assembly. The column and shaft assembly and discharge head assembly remains stationary and are therefore accessories and not machine - HC
Case Laws:
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Income Tax
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2014 (9) TMI 502
Deduction u/s 80IC Process amounts to manufacture or not - Whether the process of drawing wire of thinner gauge from wire or rods of thicker gauge, followed by finishing processes like annealing would amount to manufacture or production or consequently whether the assessee was eligible for deduction u/s 80IC of the Income Tax Act Held that:- Following the decision in India Cine Agencies vs. Commissioner of Income Tax [2008 (11) TMI 15 - SUPREME COURT] extracting granite from quarry and cutting it to various sizes and polishing should be considered as manufacture or production of any article or thing and the assessee's business activity must be considered as an industrial undertaking for the purpose of granting reliefs u/s 32A and 80-I of the Income tax Act. Wire manufactured can no longer be regarded as the original commodity In fact, the final product is recognized in the trade as a new and distinct commodity - the wire rod having undergone various mechanized and chemical based processes like annealing, galvanizing etc. results into manufacture of wire with distinct name, character and use - The name of the raw material, originally is wire rod before processing and after processing, it becomes wire of different types, say paper/enamel insulated wires or strips or barbed wire, GSS/Stay Earth wire, chainlink, etc. - Therefore, it is commercially distinct commodity with a distinct name - The wires so produced are used for power cables, industrial control cables, electric motors, transformers, etc. but wire rod as a raw material cannot be used as such - even qualitative changes effected in the raw material through heating, also amounts to a 'manufacturing activity'. The qualitative changes effected in the raw material by various means like annealing, quenching, acid pickling and flux application, galvanizing and following the zinc hot dip, definitely amounts to manufacture - There is a complete transformation of raw materials into a new and different article having a different identity, characteristic and use - The series of changes transform the commodity into a different commercial commodity whereby it can no longer be regarded as the original commodity but recognised as a new and distinct article - the Appellate Tribunal was justified in concluding that the paper insulated wires and strips of copper and aluminium being manufactured/processed by the assessees were commercially different from its raw material and further it is commercially known different in the market - the assessees were engaged in the manufacture of the product were entitled to the deductions claimed u/s 80IC of the Act Decided against revenue.
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2014 (9) TMI 501
Classification of income - Income from business and profession or income from house property Held that:- Section 22 clearly indicates that income from house property would be chargeable to income tax under the head "income from other sources" - The intention of the legislature in making rent from property chargeable under the heading income from other sources is apparently clear relying upon Universal Plast Ltd. Versus Commissioner of Income-Tax [1999 (3) TMI 15 - SUPREME Court] - only the building was leased out along with a lift, tubewell and electrical fittings - This cannot be treated as plant and machinery but would be treated as amenities, which are necessary for the use of any building - the assessee had not placed any material on record to show that the building had peculiar amenities with which the building could be treated as a "plant" and not a building simplicitor - No material has been brought on record to indicate that the building had peculiar amenities, which could be commercially exploited such as facilities of sterilization of surgical instruments and bandages or an operation theatre - The Tribunal was rightly of the view that the building which was leased out by the appellant was nothing else but a building simplicitor and was not a building, which was equipped with specialized plant and machinery assessee is not running the business of a hospital and has only let out the building - the income derived was from the ownership of the building and not from the personal exertion, which is necessary to treat the income as a business income thus, the income derived by the assessee from the leasing out of its property was an income from house property and not a business income Decided against assessee.
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2014 (9) TMI 500
Allowability of depreciation and interest Flat rate of net profit applied Held that:- Following the decision in Commissioner of Income Tax vs. Chopra Bros. India (P) Limited [2001 (9) TMI 90 - PUNJAB AND HARYANA High Court] - in a case where the assessee makes a specific claim for depreciation and gives the information as required u/s 32 of the Act, the assessing officer is bound to take the claim of the assessee into consideration thus, the assessee is entitled to deduction on account of depreciation from receipts while applying net profit rate on the gross receipts - Decided in favour of assessee. Deduction on interest paid on borrowed capital Held that:- Following the decision in Commissioner of Income Tax, Patiala vs. M/s Gian Chand Labour Contractors Khanauri District Sangrur [2007 (11) TMI 300 - PUNJAB AND HARYANA HIGH COURT] - application of net profit rate takes into consideration all factors and the deductions which are referred to u/s 29 of the Act are deemed to have been taken into consideration while making such estimate Decided against assessee. Application of net profit @ 10% - Held that:- CIT(A) was of the view that there were certain defects in the wages registers maintained by the appellant, estimated the net profit at 9% of the receipts Tribunal has estimated the net profit rate of 10% of the receipts and further noticed that the Tribunal in similar cases had been adopting the net profit rate of 10% - No illegality or perversity could be pointed out warranting interference thus, the net profit rate of 10% adopted by the Tribunal is just and reasonable Decided against assessee.
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2014 (9) TMI 499
Penalty u/s 271FA Protection u/s 273B - Proper information not furnished by assessee delay in furnishing the requisite AIR information by the appellant - bonafide ignorance - Limitation u/s 275(1)(c) Held that:- The plausible explanations in terms of Section 273B of the Act in the cases of Sub Registrar, Talwandi Saboo, Sub Registrar, Lambi, Sub Registrar, Malout, Sub Registrar, Maur Mandi, Sub Registrar, Doda and Sub Registrar, Rampura Phul are also similar and therefore, the levy of penalty under Section 271FA of the Act cannot be faulted. The Joint Sub Registrar is also the prescribed authority for the sub-district in terms of sections 6 and 7 of the Registration Act, 1908. In the absence of any factual foundation having been laid before the Assessing Officer, the CIT(A) and the Tribunal regarding the levy of penalty on the Joint Sub Registrar, Sangat, the said plea raised for the first time before the High Court would not be permissible. Equally, the plea of no notice having been issued under Section 285BA(4) of the Act in ITA No.47 of 2014 to Sub Registrar, Malout loses significance in the absence of such contention having been raised before the authorities below. Assessee relies upon Price Waterhouse Coopers (P.) Ltd. Versus Commissioner of Income-tax, Kolkata [2012 (9) TMI 775 - SUPREME COURT] - There was also no question of the assessee furnishing any inaccurate particulars. It was further noticed that the action of the assessee was bonafide and due to inadvertent error for which no penalty under Section 271(1)(c) of the Act could be imposed. The factual matrix being different in the present appeals, the learned counsel for the appellant cannot derive any benefit therefrom. - Decided against assessee.
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2014 (9) TMI 498
Commission on purchases treated as bogus Held that:- CIT(A) has examined the issue in great detail - he has made enquiry from the suppliers as well as the party to whom commission was paid by the assessee in respect of purchases - the assessee's business was mainly dependent on the supply of goods from Auchtel Products Ltd. and therefore, the assessee had to pay the amount of commission on purchases - the assessee had agreed with the terms and conditions of the company and to compulsorily part with certain amount by way of commission to the sister concern of the supplier company which in the opinion of the CIT(A) was nothing but part of the sale consideration payable by the assessee company to the supplier company thus, the order of the CIT(A) is upheld Decided against revenue. Commission paid on sales and remuneration paid to Directors disallowed Held that:- No commission was paid to M/s Klassic Enterprises Prop. Subash Bhagat in AY 1999-2000 and the amount of commission paid in AY 2000-2001 was only ₹ 2,94,387/- as against current year of ₹ 10,72,720 - When the assessee company was effecting sales to these customers in AY 1999-2000 also, when no commission was paid to M/s Klassic Enterprises Prop. Subash Bhagat, it cannot be said that these parties were introduced by this commission agent to the assessee - few parties are new to whom no sales was effected in AY 1999-2000 but when in majority cases, the claim of commission payment is found bogus, in respect of these few new parties also, it cannot be said that any service was rendered by this person to the assessee company because it is not possible to say that commission is to be compulsorily paid for effecting sale to a party for the first time and therefore, commission paid to him is allowable as business expenditure in the hands of the assessee even when the assessee is not able to establish that services were rendered by the agent Decided against assessee. Although the AO has invoked the provisions of section 40A(2) of the Act but he has not established that the increase in remuneration to the directors is excessive or unreasonable. In the present case, the AO has compared the remuneration paid to these lady directors with the maximum salary paid to employees and has noted that the maximum salary given to one of the employees is ₹ 60,000/- p.a. and the salary of remaining employees is in the range of ₹ 30,000/- p.a. and he held that the salary payable to these directors can be allowed up to ₹ 50,000/- p.a. - to the third director i.e. Shri V. K. Duggal, remuneration was paid to the extent of ₹ 1,50,000/- and the same was allowed by the AO also - The AO also noted in the assessment order that a few vouchers have been signed by these lady directors also - the disallowance made by the AO out of the directors remuneration on the basis of comparison of salary paid to the employees of the assessee is not justified Decided against assessee.
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2014 (9) TMI 497
Nature of receipts - Dharmarth Receipts OR not Whether the provisions of Section 50C of the Act are applicable to the case of a purchaser also - Held that:- The income under the head "capital gains" is applicable to the sale of immovable property, and not to "purchase" - the provisions of Section 50C(1) of the Act are not applicable to the case of a purchaser - the legislature chooses its words with utmost care - When the words of a particular provision are explicit, clear and unambiguous, there is no room for interpretation and the legislative intent qua such a provision is not required to be gone into, as has been wrongly done by the CIT(A) in the present case - The section talks of 'consideration received or accruing'. Period. 'Consideration paid' cannot be imported, when the legislature has itself not deemed it fit to incorporate anything to such effect in the section - the addition made u/s 50C of the Act and order of the CIT(A) is cancelled Decided in favour of assessee.
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2014 (9) TMI 496
Valuation report u/s. 142(A) Reference made by AO - Estimated understatement of cost of construction Held that:- The AO had not accepted the assessee's valuation of plots owned by it but had made an estimate of the same and on appeal, the assessee urged that the WTO should be directed to refer the valuation of the said property to the valuation cell - CIT(A) accepted the contention of the assessee and directed the AO to get valuation done by the valuation cell u/s. 16(A) r.w.s. Rule 3D - CIT(A) erred in directing the AO to refer the matter to the valuation cell the CIT(A) himself could have referred the valuation of the building to the valuation cell - the AO made the assessment u/s 143(3) after elaborate discussion of the cost of construction - She referred to comparable cases and finally made addition of ₹ 15 lakhs - it was not permissible for even the administrative CIT to invoke his jurisdiction U/S 263 on the issue because of a valuation report obtained subsequently - If the administrative CIT could not exercise jurisdiction U/S 263, relying upon Girdhar Gopal Gulati vs Union Of India And Anr. [2004 (4) TMI 45 - ALLAHABAD High Court] the CIT(A) had no jurisdiction in appeal proceedings to call for a valuation report, which is the exclusive prerogative of the AO. Reference u/s 142A is not allowed after assessment or re-assessment - The AO has no jurisdiction to invoke section 142A after assessment or re- assessment - the CIT(A) also ceases to have any jurisdiction to press sec. 142A into service either himself directly or indirectly through the AO -the basic pre-requisite of sec.142A is satisfaction of the AO - When the AO makes a reference at the behest of the CIT(A), the valuation report so obtained has no legal validity and has to be ignored - as the assessment is already completed, the AO has no jurisdiction to make the reference u/s. 142A of the Act - the CIT(A) has clearly overstepped his jurisdiction and hence the order of enhancement by the CIT(A) has no legal sanction Decided in favour of assessee. Undisclosed investment determined by AO Amount added to cost of construction of hospital building - Held that:- Identity of the creditor, the creditworthiness of the creditor and genuineness of the transaction are proved by the assessee and the assessee has discharged her onus - Relying upon RB. Mittal Versus Commissioner Of Income-Tax [2000 (8) TMI 54 - ANDHRA PRADESH High Court] the addition is to be deleted as the assessee had satisfactorily proved.
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2014 (9) TMI 495
Restriction of amount of exemption u/s 54EC investment in two financial year totaling ₹ 1 crore - LTCG on sale of factory land - Held that:- The Long Term Capital Gain accrued to the assessee on transfer of Long Term Capital Asset on 01.01.2008 - The assessee invested ₹ 50 lakhs on 29.02.2008 i.e. FY 2007-08 and ₹ 50 lakhs on 30.06.2008 i.e. FY 2008-09 - the assessee invested in ₹ 1 crore in specified bonds which are eligible for deduction u/s 54EC of the Act within six months from the date of the transfer of capital asset giving rise to Long Term Capital Gain in the hands of the assessee - A reading of the Circular No.3/2008 dated 12.03.2008 issued by CBDT shows that the proviso has been inserted to limit the investment in eligible bonds to an amount of ₹ 50 lakhs in a financial year and the proviso does not limit the amount of exemption u/s 54EC in a financial year to an amount of ₹ 50 lakhs - the proviso to section 54EC does not limit the amount of exemption which is available as per provision of section 54EC relying upon Vivek Jairazbhoy v. Dy. CIT [2014 (9) TMI 419 - ITAT BANGALORE] - the lower authorities were not justified in not allowing exemption u/s 54EC to the assessee in respect of investments made in specified capital bonds of ₹ 1 crore which were within the limit of proviso to section 54EC i.e. ₹ 50 lakhs in a financial year and were within the specified period of six months thus, the order of the CIT(A) is set aside and the AO is directed to allow exemption to the assessee u/s 54EC in respect of both the investments i.e. ₹ 50 lakhs on 02.08.2008 and ₹ 50 lakhs on 30.06.2008 Decided in favour of assessee.
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2014 (9) TMI 494
Computation of STCG in reassessment proceedings transactions for sale of land as well as the sale of super built up area - Denial of exemption u/s 54EC since investment made beyond 6 months Held that:- As far as the sale of a property to M/s. Sumanth & Co. under the agreement dated 8.4.2004 is concerned, it was completed in the accounting year relevant to AY 2004-05, because the assessee has surrendered all its rights and entitlements in the undivided share of land to the extent of 43% in favour of the builder - CIT (A) has observed that as per clause iv(b) of the agreement, it was agreed between the parties that on surrender of any built up area, the owner would receive a sum of ₹ 2500/per sq. ft. - value of undivided interest in the land is also embedded - the land value in assessee's share would come to ₹ 60,31,394 - This value was meant for built up area of 5037 sft. He worked out the land value of per sq. ft. and then multiplied with surrendered area of 2278 sq. ft. - CIT (A) observed that the full value of consideration after debiting the value of land, the sale consideration accrued to the assessee is ₹ 29,67,283 - He debited the cost of acquisition of the land from this amount @ ₹ 903/- sft which was valued as cost of construction and in this way worked to ₹ 9,10,249/- is the STCG - The working made by the learned first appellate authority is scientific and based on logic - The rate adopted is the rate accrued between the builder and the assessee for surrender of the constructed area - the assessee cannot dispute that he has not received the amount as worked out by the CIT (A) - there is no error in the order of the CIT (A) in computing the STCG Decided against assessee. The transactions for sale of land was completed in the accounting year relevant to assessment year 2005-06. The assessee has handed over the possession to the builder on 15.06.2004. The assessee itself has disclosed the LTCG in assessment year 2005-06. The investment in REC Board was not made in six months. It was made only on 27.7.2005 i.e. beyond the period of six months. Therefore, the learned CIT (A) has rightly observed that the assessee is not eligible for deduction u/s 54EC. - Decided against the assessee.
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2014 (9) TMI 493
Commission payment disallowed Held that:- The assessee started first year of his business in mobile service/telephone - He did not have any experience in the line of business and also was not conversant to the income tax proceeding - The commission was received from Tata Tele Services Ltd. after TDS, therefore, receipts cannot be suppressed - there is a lapse on part of the assessee to maintain the required evidence for claiming the expenses under the law - The AO also estimated income on the basis of non partial attendance of recipient of commission - he has accepted the income, which was received through account payee cheques after deducting TDS and also number of telephone installed are also available on record from the services rendered by the assessee - 80% commission receipt as business expenses and remaining 20% of commission receipt as income including returned income is allowed Decided partly in favour of assessee. Various other expenses disallowed Held that:- CIT(A) had restricted this disallowance being 50% of total expenses as reasonable on the ground that the assessee was not having proper voucher supporting details and expenses were incurred in cash only it was not fully verifiable under the given circumstances the assessee had closed down his business within four months, thereafter he lost his connection with all the supplier of servicer for which he made the payment, a reasonable amount may please be confirmed the disallowance at ₹ 25,000/- is justifiable Decided partly in favour of assessee.
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2014 (9) TMI 492
Validity of proceeding initiated u/s 147 Reduction in claim of exemption u/s 54 considered in original proceedings - Held that:- It can be seen from the reasons recorded that basis for reopening of assessment is sale of property for ₹ 1,95,00,000/-, on which assessee earlier has claimed exemption u/s 54 of the Act - assessee during the pendency of first reassessment proceeding, in response to a notice u/s 142(1) dated 21/11/2007 has furnished the details with regard to the sale of property and in another letter dated 17/03/2008 has computed capital gain - once the information relating to sale of property on which assessee has claimed exemption u/s 54 was available in the assessment record during the first reassessment proceeding, neither it can be said that there is failure on the part of the assessee in disclosing fully and truly all material facts relating to assessment nor it can be said that the information relating to sale of the property subsequently came to the notice of the AO - information relating to the sale of property was available before the AO at the time of completion of the first assessment u/s 143(3) read with section 147 of the Act, hence there is no reason why the issue relating to reducing the exemption claimed u/s 54 from the cost of acquisition was not considered in the original assessment order passed on 03/06/2008 - when the assessee has furnished all information relating to the sale of immovable property in pursuance to enquiry conducted by department, which forms part of the assessment record at the time of completion of original assessment u/s 143(3) read with section 147 of the Act, reopening of assessment again on the very same issue after expiry of four years from the end of the relevant AY is legally unsustainable as it is against statutory mandate of section 147 - proceeding initiated u/s 147 of the Act is invalid in law and assessment order passed u/s 147 also cannot be sustained Decided in favour of assessee.
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2014 (9) TMI 491
Rejection of registration of society u/s 12A Held that:- DIT(E) rejected the registration on extraneous considerations, but also passed the order very belatedly beyond the time limit provided under the Act - DIT(E) is wholly bent on refusing registration on various extraneous considerations in almost all cases which have come up before him - DIT(E) was exceeding his jurisdiction and not following the jurisdictional High Court direction/ITAT Orders while considering the issues - Even though ITAT directs the DIT(E) to grant registration in many cases, he is making some other conditions applicable which are beyond his purview - This Forum cannot ignore such blatant violations of judicial proprietary - Even though there is a direct jurisdictional High Court judgment in the case of AMCs for grant of registration u/s 12A of the Act, DIT(E) took recourse to the judgment of another High Court decision given in the context of sec.10(23C) so as to deny the registration u/s 12A which was granted to the Seed Certification Agency by the DIT(E) - DIT(E) should be visited with costs for making assessee unnecessarily coming up in appeal Decided in favour of assessee.
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2014 (9) TMI 490
Rectification of mistake u/s 154 Rectification of interest u/s 254D(6A) Withdrawal of interest u/s 244(1A) Held that:- Merely because the AO has wrongly allowed the claim of interest, he intended to re-compute it through rectification proceedings - even if he has granted the above interest wrongly, that will not entitle the AO to form a ground and agitate by means of rectification proceedings u/s. 154 of the Act, unless it can be said that there is a blatant and apparent mistake that has crept in, in the order of the Assessing officer, purely based on material facts on record - the powers conferred by the Statute u/s. 154 on the AO are very limited and are circumscribed by the restrictions mentioned - the earlier assessment was the subject matter of issue before the Settlement Commission and the Settlement Commission passed the order u/s 245D(4) of the Act for which an application was filed by the assessee before the Settlement Commission - the assessment was not completed and the assessment was completed only on 22-03-1991 which is a reassessment - the issue dealt by the AO in the rectification order u/s. 154 of the Act cannot be said to be a mistake apparent from record as it was arrived after due application of mind thus, there is no mistake apparent on record in the earlier order of the AO so as to take up the issues in the proceedings u/s 154 of the Act the order of the CIT(A) is set aside Decided in favour of assessee.
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Customs
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2014 (9) TMI 472
Import of copper scrap - smuggling from Nepal - tribunal allowed the appeal of the accused on finding that there was no evidence to effect that the confiscated goods were of foreign origin and as such confiscation and imposition of penalty could not be sustained. - Held that:- learned Appellate Tribunal has failed to take into consideration the statement of Mohd. Ujair recorded under Section 108 of the Customs Act and the statement of Mohd. Fareed the owner of the truck from which it was established that the bills were subsequently prepared in order to cover up the illegal transportation of the copper scrap and the opinion expressed by M/s Gohania Engineering Works, Kheri was merely an opinion was not definite and is on presumption. The order of the tribunal can not be allowed to stand and is liable to be set aside and the matter be remitted to the Appellate Tribunal for decision afresh with the direction that the appeal be decided afresh in the light of the evidence on record and the observations made in this judgment. - matter remanded back - Decided in favor of revenue.
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2014 (9) TMI 471
Import of toys - need for testing - whether for the purpose of importing toys, the representative samples are to be sent to testing laboratory and if found to be in conformity with the requirement of law, the toys can be allowed to be imported - requirements of DGFT Notification 113 (RE-2008)/2004-2009 dated 16.6.2009. - appellant submitted that the primary document has already been submitted and there is no need for further testing. However, the Department pleaded that there appears to be no co-relation between the goods imported and the requirements as per the provisions of Standards of Weights and Measures (Packaged Commodities) Amendment Rules, 2006, more particularly, Rule -6 and the further plea of the Department is that the goods should be tested by the competent authority. Held that:- The appellant/importer is agreeable for test on sample basis by Indian Institute of Technology. In order to cut short the litigation, the appeal is disposed of directing the respondent herein to send the representative samples of toys to testing laboratories viz., Indian Institute of Technology (IIT), Chennai-36 as per the procedure and on the basis of such report, appropriate action can be taken thereafter. The Indian Institute of Technology has agreed to have the samples tested at a nominal cost to be borne out by the appellant, for which, the appellant has also consented and IIT should submit a report at the earliest to the Customs Department with a copy to the appellant/importer so as to allow the parties to work out the remedies as per law. - Decided in favor of revenue.
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2014 (9) TMI 470
Release of confiscated goods - tribunal fixed the final date of hearing instead of deciding release of goods as prayed in miscellaneous application - import of Monosodium Glutamate an organic food additive, used as flavouring agent in foods - violation of the provisions of the Prevention of Food Adulteration Act, 1954 - Held that:- in view of the fact that the goods imported by the appellant is classified as a food additive, and as they have a limited shelf-life and as they have been found to be fit for human consumption, this Court finds it appropriate to direct the first respondent, to release the goods in question, imported by the appellant, under Bills of Entry Nos. 3618504, dated 26-5-2011, 4324694, dated 10-8-2011 and 4376254, dated 17-8-2011, on the appellant furnishing a Bank Guarantee for a sum of ₹ 30 lakhs, as redemption fine, to the satisfaction of the first respondent, within a period of two weeks from the date of receipt of a copy of this judgment. - On furnishing such Bank Guarantee, the first respondent shall release the goods in question within a period of two weeks thereafter. - Decided in favor of assessee.
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2014 (9) TMI 469
Condonation of delay - delay in filing revision application - Exclusion of time of proceeding bona fide in Court without jurisdiction - Held that:- The Revision Application has been preferred by the petitioner after the period of 2 years, 3 months and 12 days. If the period from 22-9-2009 to 6-8-2010 spent before the Tribunal and thereafter the period spent in pursuing the Tax Appeal, if is excluded, the revision application before the Central Government preferred would be within the period of three months as prescribed under the statute. The order passed by the Joint Secretary to Government of India, Ministry of Finance (Department of Revenue), dated 19-2-2013 deserves to be quashed and set aside. Respondent No. 2 is directed to restore and decide the Revision Application, allowing the exclusion of time spent before the wrong forum including the time spent prosecuting remedy with a bona fide belief before the High Court before filing the revision application. - Decided in favor of assessee.
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2014 (9) TMI 468
Action of confiscated goods - Rejection of successful bid in auction - deception to the prospective purchaser - It is the say of the petitioner that the bid made by the petitioner had been approved for the lots in question by R-3 subject to final approval of R-2 and the petitioner had already deposited the sum of ₹ 64,50,000/- - Held that:- The first aspect which we fail to appreciate is the lowering of the reserve price when the reason for the failure of the auction was not that the bid received was below the reserve price, but on account of non-deposit of EMD. In such a situation, we are of the view that there can be hardly any reason for lowering the reserve price. We fail to see any reason for giving description of the goods as per import as prospective purchaser is not interested in a theoretical analysis of papers, but only what goods had to be bid for. No doubt, this can create an element of confusion as in the bold letters it is mentioned as TEXTILE GOODS while in the small print a description is given of the electrical goods under the heading Commodity as per physical examination. Vast vacillation which has taken place in the price despite the goods not being perishable. No doubt, there has been inordinate delay in rejection of the bid of the petitioner. However, given the situation, it would be appropriate if the goods are put to proper auction post necessary remedial measures before they are sold off. - The amount deposited by the petitioner be returned. We call upon R-3 to stop this practice which is capable of causing deception to the prospective purchaser who is only interested in knowing what the goods are which are sought to be auctioned. Both R-2 and R-3 should interact and frame better guidelines for disposal of the goods which are not capable of causing any confusion and which achieve the purpose in view of our aforesaid observations. Needful be done within four weeks from today.
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Service Tax
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2014 (9) TMI 489
Availing cenvat credit while availing benefit of abatement notification no. 1/2006-ST - appellant is of the view that though the credit on common input services was taken but the same was not utilised while discharging duty liability under Notification No. 1/2006-ST. - Held that:- appellant agree to reverse the entire cenvat credit taken with respect to common services used for providing services under Notification No. 1/2006-ST. - prima-facie, appellant does not seem to have any case on reversal of CENVAT credit on common services. Appellant is, therefore, required to be put to certain conditions before remanding the case to the first appellate authority. It is directed that appellant shall deposit the entire credit taken on common input services utilised for providing taxable services for which benefit of Notification No. 1/2006-ST has been availed. - matter remanded back subject to pre-deposit of amount.
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2014 (9) TMI 488
Condonation of delay - delay of 40 days over and above the condonable period - delay in appeal before Commissioner (Appeals) - according to appellant, the said delay was on account of lapses on the part of counsel to whom the matter was entrusted and there was no deliberate intention. - Held that:- beyond six months from the date of service of the order impugned, Appellate Authority cannot consider application for condonation of delay and there is justification in rejecting such application filed by the appellant. - Decided against the assessee.
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2014 (9) TMI 487
Waiver of pre-deposit - Tribunal has directed the appellant to make pre-deposit of the basic tax component as well as 50% of the penalty under Sec. 78 and discrepancy of ₹ 12.00 lakhs between the petitioners own assessment of tax liability and the adjudicating authoritys determination. - Held that:- when the appeal is admitted for hearing and the order of the assessment is under scrutiny, unless the order of assessment reaches its finality, the question of initiation of penalty proceedings does not and cannot arise. - in view of insertion of the word or the Tribunal cannot ask to make pre-deposit in both at a time. The pre-deposit of the penalty amount will be required when the order of the penalty alone is under challenge. But if there is a composite order namely assessment order, tax component and also penalty order like here, direction for pre-deposit of any portion of the penalty amount would result in injustice as well as hardship. Under this circumstance, we are of the view that the direction for pre-deposit of penalty component of the order has to be deleted and is deleted and the rest portion of the order would remain. - Decided in favor of assessee.
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2014 (9) TMI 486
Waiver of pre-deposit - Held that:- The appeal filed by the petitioner is now pending before the first respondent (CESTAT). It is for the first respondent to take up the appeal on merits. In case, the first respondent is of the view that pre-deposit cannot be waived, necessarily, the petitioner has to deposit the pre-deposit amount. When the appeal is pending before the first respondent, it is not open to the petitioner to challenge the very same order before this Court. - petition dismissed.
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2014 (9) TMI 485
Waiver of pre-deposit and stay of further proceedings for recovery proceedings - Held that:- Keeping in view the submissions advanced by the learned counsel for the parties and considering the provisions contained in Section 35F of the Act, and so also the fact that the petitioner is a statutory body functioning under the Administrative control of the Government of India, Ministry of Commerce and Industries, we are satisfied that the following order shall meet the ends of justice: The petitioner shall deposit the entire amount due demanded within a period of eight weeks from today. Failing which, their appeal shall stands dismissed for non-prosecution. If the amount as aforementioned is deposited within the extended time, the Appellate Tribunal shall decide the appeal on merits in accordance with law.
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2014 (9) TMI 484
Waiver of penalty u/s 80 - penalty imposed u/s 78 for short payment - GTA service - On scrutiny of Service Tax returns, it was observed that the Service Tax was paid on much lesser amount as compared to the amount shown in the head of freight & cartage resulting in short payment of service tax - Held that:- Proper service tax was not paid as lesser amount of service tax was paid resulting in short payment of service tax amounting to ₹ 7,83,266/-. These discrepancies showing short payment of service tax came to surface when anti-evasion wing detected the evasion. Mens rea was manifested as respondents did not deposit the service tax of their own and non-payment of service tax continued for years. Further no bonafide could be proved as no reasonable ground could be shown by the respondent. Bombay High Court judgement in the case of Riya Travels and Tours Vs. Union of India [2010 (7) TMI 774 - BOMBAY HIGH COURT] is in the favour of revenue as omission was not bonafide as it was detected by visiting officers of DGCEI. - invoking section 80 and waiving penalty is not proper - Decided against the assessee.
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2014 (9) TMI 483
Cargo Handling Service - inclusion of the estimated cost of transportation of goods by barges from mother vessel to jetty or vice versa in the value of services rendered. - On the other hand, the main contention of the applicant is that transportation is a separate activity and cannot be considered as Cargo Handling Service. Before 2009 though there was Service Tax on transportation of goods by road, air or railways, but there was no Service Tax for transportation of goods by water ways. - The main issue to be considered in this case is whether the activity of unloading of goods from ship to finally trucks/rails would be considered as a single service or it can be split into two parts. The first one, cargo handling and the second one transportation of the cargo within the port area. Held that:- our prima facie view is that the services provided by them cannot be considered as a port service atleast before the definition was amended w.e.f. 1-7-2010. Nature of services is relating to handling of goods and can be provided in port area as also in place outside port. Prima facie the services provided within the port area if covered by the definition of various services would be covered by that service if the same is not covered by the definition of Port Service/Other Port Service. Even applicant was paying service tax on certain activities under Cargo Handling Services from 16-8-2002 to 30-6-2003. From 1-7-2003, on the same activity, applicant started paying tax under other port service. Applicants have not made out a prima facie case on merits (except in case of transportation from one port to another which forms minor part of the demand) - No financial hardships has been pleaded - stay granted partly.
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2014 (9) TMI 482
Supply of manpower service or not - harvesting of sugarcane and transportation of sugarcane by trucks, tractors, head loads, etc. to the sugar factory - Held that:- the consideration is paid not on the supply of manpower but on the sugarcane supplied on tonnage basis. If an efficient contractor engages less manpower, he will make more profits while an inefficient contractor engaging more manpower would make less profits. In other words, since the consideration is received on the quantity of sugarcane delivered, the essential nature of service is the harvesting and supply of sugarcane. How the service is rendered is not relevant for classification of the service. In view of the decisions of this Tribunal in the case of Amrit Sanjivni Sugarcane Transport Co. Pvt. Ltd. [2013 (8) TMI 58 - CESTAT MUMBAI] and Samarth Sevabhavi Trust [2013 (8) TMI 218 - CESTAT MUMBAI], we hold that the impugned demands are not sustainable in law. - Decided in favor of assessee.
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2014 (9) TMI 480
Valuation of service - Whether abatement of cost of material replaced for repair of transformer as stipulated under Notification No. 12/2003. S.T. dated 20.06.2013 is admissible to the respondent or service tax is liable on gross value of bill charges from customers as laid down under Section 67 of the Finance Act, 1994 - Held that:- in the invoices issued by the assesssee, the value of goods used, such as transformer oil and service charges are shown separately and in respect of the supply of consumables used in providing the service of repair, sales tax or, as the case may be, VAT is paid. The Tribunal, in this factual situation, observed that when the value of goods used was shown separately in the invoices on which sales tax or VAT has been paid, the service tax would be chargeable only on the service/labour component and the value of goods used for repair would not be includible in the assessable value of service. In the grounds which have been formulated by the revenue, the admitted position of fact has not been disputed, as stated in the order of the Tribunal. Hence, the appeal will not give rise to any substantial question of law particularly having regard to the earlier judgment of the Division Bench in Balaji Tirupati Enterprises [2014 (1) TMI 404 - ALLAHABAD HIGH COURT] - Decided against Revenue.
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Central Excise
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2014 (9) TMI 481
Power driven pump - Exemption under Rule 8(i) of the Central Excise Tariff Rules - contravention of the provisions of Rule 173-C and 173-F - whether the column and shaft assembly and discharge head assembly is liable for payment of excise duty or whether these components are entitled for exemption being a composite machine to the power driven pump - Held that:- A perusal of the entry indicates that "deep tube-well turbine pumps" comes under the description "power driven pumps designed for handling water", for which the rate of duty is nil, meaning thereby that it is exempted from payment of central excise duty. bowl assembly performs the principal function of lifting the water. The other two components, namely, the column and shaft assembly and discharge head assembly enables the bowl assembly to perform as a vertical turbine pump by lifting the water from the deep tube-well. The function of a pump is to lift the water from one point to another. By a rotating action of the shaft and the impeller, a mechanical energy is converted into kinetic energy and water is forced out by a pressure from the pump itself. This rotating action in the bowl assembly is done when an electrical energy is supplied to the bowl assembly. The column and shaft assembly and the discharge head assembly merely enables the water to pass out from the bowl assembly to the surface. The discharge head and the column and shaft assembly merely keeps the bowl assembly suspended at the appropriate depth so that water could be forced out. What is driven by the power is the parts of the bowl assembly. The column and shaft assembly and discharge head assembly remains stationary and are therefore accessories and not "machine". In a vertical turbine pump, energy is supplied by electricity. The electric motor converts the electrical energy into a mechanical energy which is injected through the parts of the bowl assembly, namely, the vanes of the impellers which converts the mechanical energy into kinetic energy making the water move up under pressure built by the impellers. bowl assembly performs the function of a power driven pump and that the column and shaft assembly as well as the discharge head assembly does not perform the function of a power driven pump. At best, the column and shaft assembly as well as the discharge head assembly only contribute to the effectiveness of the bowl assembly, which by itself is not sufficient to claim exemption as a machine under entry 84.13. - Decided against assessee.
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2014 (9) TMI 479
Waiver of pre deposit - Evasion of Duty - Attachment of property - Revenue was of the view that the assesse manufactured and supplied the components/parts of Railway wagon without payment of duty to different units of Indian Railways showing the said goods as trading items in their books of accounts and thereby indulged in evading the Central Excise duty involved thereon - Held that:- By virtue of the Notification No. 68 of 63, dated 4th May, 1963 issued under Section 12, Section 142 is applicable in case of dues of the Central Excise and its recovery thereof. This Court, therefore, feels that instead of depositing the entire sum of ₹ 70 lakhs the interest of the Revenue can be protected, if the petitioner is directed to deposit a sum of ₹ 20 lakhs and shall keep the said immovable property i.e. the land at Rajarhat attached to the Central Excise departments. Accordingly, the petitioner is directed to deposit a sum of ₹ 20 lakhs within [two months] from date with the Central Excise authority. However, attachment remain sustained - Decided partly in favour of assessee.
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2014 (9) TMI 478
Denial of refund claim - Bar of limitation - Held that:- In order to maintain a claim for refund in terms of Section 11B of the Central Excise Act, 1944, any person claiming refund of any duty of excise and interest, if any, paid on such duty, may make an application for refund of such duty and interest before the expiry of six months from the relevant date, in the manner prescribed and the application should be accompanied by such documents or other evidence to establish that the duty of excise has been paid. Second Proviso to Section 11B(1) provides that the limitation of six months shall not apply where any duty of excise has been paid under protest. On the facts noted above, admittedly, the appellant is not entitled to the benefit of Second Proviso to Section 11B(1). The relevant date for the purpose of this case, is the one as defined under Section 11B(5) Explanation (B)(e), which states that the relevant date shall be, in the case of a person other than the manufacturer, the date of purchase of goods by such person. Thus, the definition of relevant date clearly stares against the case of the appellant and as rightly held by the Tribunal, the claim for refund is only barred by limitation. Accordingly, no ground is made out to interfere with the order passed by the Tribunal. Decided against assessee.
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2014 (9) TMI 477
Irregular use of Cenvat credit - Appellant removed imported capital goods as such and paid excise duty on the capital goods using Cenvat credit - lower authorities found that excise duty was paid using credit wrongly to transfer the same to its sister unit - appellants submitted that the demand was time-barred - Tribunal held claim as time barred - Held that:- Court has scanned the entire order passed by the Appellate Authority and no mention has been made with regard to the said communication dated 6-8-2004. Since no mention has been made in the order passed by the Appellate Authority with regard to communication dated 6-8-2004, this Court is of the view that simply by way of filing return, the Department has had knowledge about the transaction of the respondent. To put it in short, the communication dated 6-8-2004 is very much essential for the purpose of deciding as to whether the show cause notice dated 6-10-2005 is barred by limitation as per actual period of limitation mentioned in Section 11A of the said Act or the appellant is entitled to get extended period of limitation. Therefore for the purpose of deciding the said aspect, the order passed by the Appellate Tribunal is liable to be set aside and the matter is liable to be remitted to the file of Appellate Tribunal. Decided in favour of Revenue.
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2014 (9) TMI 476
SSI Exemption - Notification No. 16/97-C.E. - Whether the CESTAT is right in upholding the Commissioner (Appeals) view and ruling that there is no suppression of facts with intention to evade duty, when mens rea is evident from the two contradictory declaration filed by the manufacturer for the same financial year - Held that:- From the conjoint reading of the orders, which have been challenged in the present Civil Miscellaneous Appeal, it is easily discernible that the respondent has paid excess duty apart from the amount claimed on the side of the appellant. Since the respondent has paid excess duty other than the amount mentioned in the demand notice, it is needless to say that the concurrent orders passed by the authorities referred to above are perfectly correct and the same do not require any interference and the substantial questions of law formulated in the present Civil Miscellaneous Appeal are decided in favour of the respondent and therefore the present Civil Miscellaneous Appeal deserves to be dismissed. Decided against Revenue.
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2014 (9) TMI 475
Legality and validity of the demand notice issued - Circular No. 967/01/2013-CX, dated 1-1-2013 - Circular declared non est by court - Held that:- With the legal position having been concluded by the Court more than 7 months back and in no uncertain terms, this Court having pronounced the Circular in question non est insofar relating to the situation where the stay applications remain pending in the appellate fora, it sounds rather strange that the concerned Superintendent Central Excise has at all chosen to issue the questioned notice on the basis of the same Circular. Prima facie the notice is of a show of total disrespect to and defiance of the order passed by this Court. The order passed by this Court on 1-3-2013, both in its letter as also in its spirit, leaves nothing to doubt or guess that this Court has pronounced the impugned Circular dated 1-1-2013 non est in relation to the situation as obtaining in the present case. Any attempt to yet initiate the coercive proceedings on the basis of the this very Circular gives rise to serious questions on the approach and intentions of the respondents. - Stay granted. A separate suo motu contempt petition be registered - a notice shall be issued to the incumbent of the office of the respondent No. 1 i.e., the Superintendent, Central Excise & Service Tax, Range-I, Gandhi Nagar, Bhilwara to show cause as to why contempt proceedings be not initiated against him for deliberate defiance of the order dated 1-3-2013 passed by this Court.
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2014 (9) TMI 474
Issuance of a writ of certiorari and mandamus - Held that:- As a mere notice has been served, calling upon the petitioner to show cause against the proposed levy of duty, are not inclined to entertain the petition. However, as representations filed by the petitioner regarding classification of PTO shafts is pending consideration before the Central Board of Excise and Customs, New Delhi, the writ petition is disposed of by directing the said authority to decide the representation within one month of receipt of a certified copy of this order. The petitioner, while filing reply to the show cause notices, would be at liberty to pray before respondent No. 3 that adjudication of the notices may await outcome of any clarification, that may be issued by the Central Board of Excise and Customs - Petition disposed of.
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2014 (9) TMI 473
Waiver of pre deposit - Clandestine manufacture and clearance of goods - Held that:- Impugned order came to be passed without hearing the petitioner. Under the circumstances, particularly in view of the petitioners plea that the deposit of the amounts as directed in the impugned order would cause undue hardship, we are of the opinion that the matter requires reconsideration after giving an opportunity of being heard to the petitioner - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (9) TMI 467
Taxability of transportation charges - Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the amount of transportation charges from part of the turnover of sale assessable to tax under the Gujarat Sales Tax Act, 1969, for the assessment years 1977-78, 1978-79 and 1979-80 - Held that:- As per the definition of 'sale price', defined under Section 2(29) of the Act, Sale Price include amount of consideration paid or payable to dealer for any sale made including any sum charged for anything done by the dealer in respect of the goods at the time or before the sell thereof. It is submitted that, therefore, in the definition of 'sale price' under Section 2 (29)of the Act, there is no specific inclusion of freight and or transport charges. Shri. Kaji, learned Advocate, has tried to distinguish the decision of the Honble Supreme Court in HINDUSTAN SUGAR MILLS LTD. (1978 (8) TMI 186 - SUPREME COURT OF INDIA) and has relied upon another decision of the Honble Supreme Court in HYDERABAD ASBESTOS CEMENT PRODUCTS LTD. VS. STATE OF ANDRA PRADESH, (1969 (2) TMI 131 - SUPREME COURT OF INDIA). Any amount received and or recovered by the applicant-assessee may be even transportation charges or any other amount received is required to be included in the Sale Price. Identical question came to be considered by the Honble Supreme Court in the case of HINDUSTAN SUGAR MILLS LTD. (Supra). While considering, some what, similar provisions in the Rajasthan Sales Tax Act, the Honble Supreme Court has observed and held that the amount of freight formed part of the sale price within the meaning of the first part of the definition of the term in section 2(p) of the Rajasthan Sales Tax Act and section 2(h) of the Central Act, so includable in the turnover of the assessee. when the applicant admittedly received the amount of transportation charges through pipeline of crude oil that was sold by the assessee to its sole purchaser, i.e. IOC, from IOC the same was required to be included in the Sale Price and is rightly included in the Sale Price. It is, therefore, rightly held that the applicant is liable to pay the tax on the same. Now, so far as the interest charged under Section 47(4A) of the Act on the ad hoc payment made by the applicant-assessee on the ground of subsequent increase in price by the Government of India with effect from 14.09.1981, i.e. the question No.2, is concerned, it is required to be noted that and it cannot be disputed that, as such, the liability to pay the Sales Tax and or eventuality to pay the Sales Tax would be at the time of sell. Therefore, the liability to pay difference in gas price as per the Central Government revised prices on 14.09.1981, would arise from that date i.e. 14.09.1981, and that the dealer was liable to pay the tax on the revised prices on and with effect from 14.09.1981. Under the circumstances, the petitioner is rightly charged with the interest on the revised price / ad hoc amount of gas with effect from 14.09.1981. - Decided in favor of revenue.
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2014 (9) TMI 466
Penalty levied at double the tax - Evasion of duty u/s 17 - whether the qualification in the definition clause (f) of Section 2, being the rent charged per room, per person or per day, would change the character of the levy - Held that:- Petitioner's transaction having been found to be one under the Act of 1976, the next question is with respect to the sustainability of the levy of penalty. The authorities below as also the Tribunal impute contumacious act on the part of the assessee in not obtaining registration, collecting tax from the users, herein the lessee, and paying it to the State. The petitioner, however, asserts a bona fide belief that the transaction, as it is disclosed from the agreements, being not covered under the Act of 1976. It cannot be said that the non-registration of the assessee under the Act of 1976 was bona fide, coming within the legal frame-work of the statute, taking the petitioner out of the coverage under the statute. This Court is of the opinion that the mere fact of existence of two agreements, for the lease and for provision of amenities, cannot by itself take away the petitioner's coverage under the Act. Those agreements were also the result of a composite transaction as revealed from the construction agreement, providing for lease for the purpose of accommodation of trainees and provision for amenities and facilities to such inmates. The fact is that the assessee did not obtain registration despite the transaction being clearly covered under the Act of 1976. Penalty levied at the maximum rate of double the tax evaded, may not be proper in the facts and circumstances of the case. Hence, the penalty imposed for the respective years and the two months in the last year are modified and confined to the extent of the tax liability. There is also considerable force in the argument of the learned counsel for the petitioner that between 1997 and 2002, the measure on which the rate applied is to be decided, per person per day. Hence, the CTO is directed to re-do the assessment for the period upto 31.03.2002, computing the rental charges per person per day, since all the rooms provided in the petitioner's building is of double occupancy. The quantum of penalty levied would have to be as per the directions herein above, if the rent per day per person is above the assessable limit and not at all if found otherwise - Decided partly in favour of assessee.
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2014 (9) TMI 465
Imposition of penalty - inter-state sale of DEPB licences - fraud - Whether, in the facts and circumstances of present case, the Haryana Tax Tribunal, Chandigarh, has correctly passed the present order by holding that the impugned transaction is an inter-State sale when the Department has failed to show movement of goods from one State to another - Held that:- The plea of the appellant that there is no supporting evidence, to disbelieve and reject the registered dealer local sales allegedly made by the appellant and to turn those sales to inter-State sales, is again a misnomer. Not only the Assessing Officer, during reassessment proceedings, but even the first and the second appellate authorities have meticulously evaluated the entire facts and have come to a firm conclusion that sales of the DEPB licences made by the appellant during both assessment years, i.e., 2000-01 and 2001-02 are in fact inter-State sales, notwithstanding colour of RD sales having been given to such sales by the appellant. Even when reappraisal of the facts available on the paper book is made, result is no different. On August 1, 2000, a demand of ₹ 39,017 was raised vide debit note by M/s. Anuj Jain and Sons, (HUF) Delhi on M/s. Samsung Electronics India Ltd., Noida on account of service charges for arranging transfer of first four licences in the table as above. When the information given in the tabular form as above, is evaluated in this context, it transpires that value of these four licences was ₹ 1,30,35,637. Commission of M/s. Anuj Jain and Sons, Delhi in the shape of service charges turns out to be 0.30 per cent. It is, thus, clear that the service provider charged service charges for transfer of first four DEPB licences. So far as other two licences sold to M/s. Laxmi Enterprises, Delhi, are concerned, no particulars of service provider were supplied by the appellant. appellant had not shown any sale having been made by it to those parties from whom it had received these payments. Conversely, no payment had been received from the dealers to whom the sales of licences were alleged to have been made by the appellant - On perusal of the paper book, it becomes apparent that these sales were made by the appellant in fact directly to M/s. Samsung Electronics India Ltd., Noida and M/s. Laxmi Enterprises, Delhi in assessment year 200001 and to M/s. Honda Siel Cars India Limited, Noida in the assessment year 2001-02 and the purchasers shown in the original assessment order, viz., M/s. Krishna Enterprises for the assessment year 2000-01 and M/s. Sai Industries for the assessment year 2001-02 in fact were only names of traders which names were used as camouflage and subterfuge. All the circumstances including the transactions conducted through banking channels reveal that the payments were made direct to the appellant by M/s. Samsung Electronics India Ltd., Noida and M/s. Laxmi Enterprises, Delhi (for the assessment year 2000-01) and M/s. Honda Siel Cars India Limited, Noida (for the assessment year 2001-02) who were located outside the State of Haryana. It is further clear that intermediaries, viz., M/s. Krishna Enterprises and M/s. Sai Industries for the year 2000-01 and 2001-02, respectively had been interpolated by the appellant merely as masks to cover up direct sales made by it with dealers outside the State of Haryana. It may be pointedly noticed that during the reassessment proceedings, the Assessing Officer had found large scale fraud by the appellant. Nonetheless, he confined himself to institution of penalty proceedings in terms of section 8 of the State Act and section 9(2) of the Central Act. When the entire factual matrix with attending circumstances unfolds itself, it turns out to be a case of cheating right from the very beginning in which the appellant had clearly contrived and confabulated with M/s. Samsung Electronics India Ltd., Noida and M/s. Laxmi Enterprises, Delhi as also with M/s. Honda Siel Cars India Limited, Noida, to give colour of registered dealer sales to the inter-State sales by using names of M/s. Krishna Enterprises and M/s. Sai Industries, Faridabad as a subterfuge in defrauding and cheating the revenue. It is also clear that documents such as debit notes and ST-15 forms were contrived as valuable securities when these documents in fact were not even backed by the transactions which these documents projected to be representing. Thus, it is a case of forging of documents to represent non-existent fraudulent transactions, whereas actual transactions were different and distinct from these purported sales and in fact had nowhere been depicted in such documents. Decided against assessee.
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2014 (9) TMI 464
Imposition of penalty - Detention of trucks - Non availability of declarations in form No. 75 - Held that:- petitioner was not having declaration form No. 75 which is required as per sub-section (5) of section 45A of the Act of 1994. A bare reading of the aforesaid provisions of section 45A would show that under sub-section (1) every person transporting such goods as may be notified by the State Government in this behalf shall carry with him an invoice, bill or challan or any other document, by whatever name called, issued by the consignor of the goods giving such particulars as may be prescribed. Under sub-section (5) every transporter shall, before crossing any check-post or barrier set up or erected under sub-section (1), deliver to the check-post officer a declaration duly signed by the consignor in such manner, in such form and containing such particulars as may be prescribed. No declaration in relation to goods to be delivered in Madhya Pradesh shall be accepted if the consignee in Madhya Pradesh is shown or described as "self" unless the particulars and address of the person who delivery of the goods at the declaration in Madhya Pradesh and furnished. A bare reading of two provisions would show that the intention of the Legislature is to make them mandatory. Therefore, after, the enforcement of section 45A it is mandatory for every person or transporter who is transporting the goods to deliver to the check-post officer a declaration duly signed by the consignor as has been prescribed. Irregularity that was detected when both the vehicles were checked. It is not in dispute in both the writ petitions that the declaration required under form Nos. 75 and 85 were not produced by the transporter when the goods were seized that being so, the check-post was well within his right in taking action. However, while taking action the competent authority of the check-post the revisional authority proceeded on an assumption that the declaration under form Nos. 75 and 85 was not produced and the intention to facilitate evasion of tax was presumed due to non-production of this statutory form in the check-post. The presumption was drawn in the matter of evasion of tax without taking note of the circumstances that were existing in the present case. It is not the case of the assessing authority or revisional authority that the documents produced at the time of checking showed any difference in the matter. Record indicates that all the material particulars and information which were required were available in the documents produced at the time of checking of the vehicle and no mala fides are proved or established and the nexus to the act of non-production of documents and the intention to evade tax is not proved. Under these circumstances, the question is can penalty be imposed merely because some documents were not produced at the time of checking of the vehicle or because instead of declaration of form No. 75, declaration of form No. 85 was produced by the petitioner. The bona fide reason given by the company explaining the circumstances in the matter of non-availability of from No. 75 is not at all considered by the authorities concerned while imposing the penalty. Imposition of penalty has penal consequence. Penalty is a measure of punishing a wrong doer and the discretion for imposing penalty has to be exercised judiciously after considering all the relevant facts and circumstances in a given case. Merely, because the law empowers an authority to impose penalty that by itself is not a reason for imposing penalty. Deliberate defiance of law, guilty conduct and dishonest intention are the necessary ingredients which should be available for imposing penalty. Merely, because some technical or venial breach of a statutory provision is established that by itself is not a reason for imposing penalty. Court holds that the imposition of penalty in the facts and circumstances of the case is not a proper exercise of the discretion by the authority concerned. The authority who has passed the orders has not acted in accordance with law and exercised its discretion in the manner which cannot be approved. Considering the totality of the facts and circumstances of the case and keeping in view the principles, which governed the imposition of penalty as indicated hereinabove, both the petitions are liable to be allowed. Decided in favour of assessee.
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2014 (9) TMI 463
Cancellation of registration - discrepancies found in the orders of assessment for the assessment years 2004-05 to 2006-07 - differences noted in the turnover reported in the petitioner's returns and in the supply vouchers provided by the Indian Oil Corporation - order passed without providing sufficient time to the petitioner to submit its objections - Held that:- registration granted in favour of the petitioner ought not to have been cancelled by the respondent, either by his earlier, order dated February 23, 2010, or by the subsequent order, dated August 27, 2010. It is clear that the respondent had exceeded his jurisdiction by cancelling the registration granted in favour of the petitioner, without affording a reasonable opportunity of personal hearing to the petitioner. An alternative remedy is available to the petitioner, under section 45 of the Puducherry Value Added Tax Act, 2007, to challenge the order of the respondent cancelling the registration, in cases where the principles of natural justice are violated, this court can exercise its powers, under article 226 of the Constitution of India, to grant the relief to the petitioner, by setting aside the impugned order, especially, when a fundamental right of a person to carry on its trade, occupation or business is infringed. It is not open to the respondent to claim that his impugned order, dated August 27, 2010, is only a statement of the factual position, as it existed on the date of the passing of the said order. It is also noted that the petitioner had requested for the renewal of registration, for the year 2011-12, by paying the necessary fee. It is also seen that the petitioner had made a request for renewal of the registration by a representation, dated April 29, 2011, along with the fee payable for such registration, by way of a demand draft. However, the renewal of registration had not been granted to the petitioner, till date. By an order, dated September 16, 2010, the Deputy Commercial Tax Officer (Registration), Puducherry, had stated that the registration made in favour the petitioner is active. Therefore, the petitioner was permitted to file the return and to pay the tax. It had also been stated that there was no instruction or order for the deactivation of the registration certificate in the computer system and therefore, the petitioner can carry on its regular business, based on the interim stay granted by this court, in M.P. No. 1 of 2010, in W.P. No. 3904 of 2010. As such, the claim of the respondent on the request of the petitioner for the renewal of the petitioner, for the year 2011-12, cannot be countenanced - Decided partly in favour of assessee.
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