Cash Credits€ ¢â' '´Unexplained€ ¢â' '´Genuineness of transaction an
CHENNAI TRIBUNAL
Cash Credits€ ¢â' '´Unexplained€ ¢â' '´Genuineness of transaction and creditworthiness of depositors€ ¢â' '´Addition€ ¢â' '´Assessee was Pvt. Ltd. Company being a builder€ ¢â' '´During year under consideration, assessee company incurred a loss amounting to Rs.83,961.50 and company filed Return of Income€ ¢â' '´Search was carried out in case of ''X&# 39;' company and assessment u/s 153A(1)(b) r.w.s.144 was framed€ ¢â' '´ While framing assessment, AO made addition on account of unexplained cash credit amounting to R.17,87,000€ ¢â' '´CIT(A) confirmed entire addition of Rs.17,87,000€ ¢â' '´Held, in case of B.S. Corporation vs. ACIT it was held that during relevant accounting year assessee had taken certain loans which were treated as not genuine and additions made€ ¢â' '´Confirmations of depositors were filed before AO who also examined that money was advanced through bank accounts and depositors had disclosed respective amounts in their voluntary disclosure returns€ ¢â' '´AO could not establish any link that amounts in fact belonged to assessee and addition made by AO was not justified€ ¢â' '´Assessee had furnished PANs, addresses, etc. to prove identity, genuineness of transaction and creditworthiness of depositors€ ¢â' '´Assessee filed PANs, addresses, etc. for demonstrating that depositors were assessed to tax€ ¢â' '´AO was directed to delete addition€ ¢â' '´Assessee' s Appeal allowed.
[2015] 60 taxmann.com 168 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Cushman and Wakefield India (P.) Ltd.
CX - S.9/9AA - Demand of duty set aside by CESTAT - Quashing of FIR
NEW DELHI: THE petitioner is before the High Court and seeks quashing of the FIR filed by the department under Sections 9/9AA of the CEA, 1944 on the ground that the demand of duty has been set aside by the CESTAT and so the continuance of proceedings arising out of the complaint in question is an exercise in futility.
It is further submitted that they have appeared before the trial court and pre-charge evidence is in progress and the next date of hearing is 2nd December 2015.
Reliance was placed inter alia upon the decisions in Anil Mahajan & Anr. 2008-TIOL-139- HC-DEL-CUS and Radhey shyam Kejriwal v. State of West Bengal & Anr.[2011] 4 S.C.R. 889 .
The High Court observed that since the petitioners have an alternate and efficacious remedy to seek discharge from trial court by urging the pleas now taken, the Court is not inclined to exercise its inherent jurisdiction under Section 482 of Cr.P.C.
Applying the dictum of the Apex Court in Padal Venkata Rama Reddy (2011) 12 SCC 437), the petition was disposed of with liberty to petitioners to urge the pleas taken herein before the trial court.
The petition and the applications were accordingly disposed of.
In passing: Withdrawal of Prosecution by department - see Board Circular 998/5/2015-CX . dated 28.02.2015
Search and seizure€ ¢â' '´New scheme of assessment in search cases€
DELHI TRIBUNAL
Search and seizure€ ¢â' '´New scheme of assessment in search cases€ ¢â' '´Initiation of proceeding u/s 153C€ ¢â' '´Validity of proceedings€ ¢â' '´Search and seizure action u/s 132 was carried out in cases of X'' and ''Y&# 39;'€ ¢â' '´During course of search at their residential premises, certain documents belonging to assessee, who was individual and proprietor of a concern were seized€ ¢â' '´On basis of the documents so found belonging to assessee, proceedings u/s 153C read with s 153A were initiated against him€ ¢â' '´Notice u/s 153C was issued to assessee by ACIT, requiring him to file return of income within 15 days of service of notice€ ¢â' '´In response to notice u/s 153C, assessee filed return for AY 2003-04 declaring Nil income€ ¢â' '´AO directed assessee to prove its trading activities and to produce sale tax records€ ¢â' '´AO found that except declaration of assessee, there was no independent proof of sale/purchase of goods except bank transactions€ ¢â' '´During course of inquiries, AO found that director/shareholde r was not a man of means and premises were not commercial premise€ ¢â' '´AO observed that in case of assessee, all purchases & sales were in cash and purchases & sales were only out of current year transactions which were held unverifiable and bogus€ ¢â' '´Expenses submitted by assessee company in P&L account were also unverifiable and hence 100% of expenses i.e. Rs.4,43,240 were disallowed€ ¢â' '´CIT (A) partly allowed appeal of assessee€ ¢â' '´Assessee questioned assumption of jurisdiction of AO to initiate proceedings u/s 153C€ ¢â' '´Held, in case of DSL Properties Pvt. Ltd. Vs. DCIT, it was held that if AO was assessing the person searched as well as other person whose assets, books of account or documents were found at time of search, then while making assessment in case of person searched, he had to record satisfaction that money bullion, jewellery or other valuable article or thing or books of account or documents belonged to person other than person searched€ ¢â' '´That copy of this satisfaction note was to be placed in file of such other person and relevant document had to be transferred from file of person searched to file of such other person€ ¢â' '´Further, in capacity of AO of such other person, he had to issue notice u/s 153A read with s 153C€ ¢â' '´That AO of searched person and such other person might be same but those were two different assessees and AO had to carry out dual exercise€ ¢â' '´That such satisfaction must be an objective satisfaction based on an enquiry by the AO to establish that the documents referred to in s 153C which was found during the search u/s 132, which were seized or requisitioned, belonged to a person other than the person searched; and there should be a clear finding to that effect based on which only satisfaction as envisaged u/s 153C can be inferred€ ¢â' '´In this case, exercise of recording satisfaction during assessment proceedings of person searched had not been carried out and satisfaction did not satisfy requirement of Section 153C-- Mention of any seized materials like valuable articles or things or any books of account or documents did not find mention even in impugned assessment orders€ ¢â' '´Thus AO lacked jurisdiction to initiate proceedings u/s 153C against assessee and issuance of notice itself was null and void and therefore quashed- Consequently, impugned assessment order passed u/s 153C was also considered as nullity€ ¢â' '´Revenue' s appeal dismissed
Business Expenditure€ ¢â' '´Interest, commission, brokerage etc to a
CHENNAI TRIBUNAL
Business Expenditure€ ¢â' '´Interest, commission, brokerage etc to a resident€ ¢â' '´Validity of disallowance€ ¢â' '´AO stated that assessee was to deduct tax on amount remaining payable on last date of financial year€ ¢â' '´AO made disallowance of amount accordingly u/s 40(a)(ia)€ ¢â' '´However, CIT(A) stated that since amount of transport charges was already paid, there was no question of disallowance u/s 40(a)(ia)€ ¢â' '´CIT(A) allowed claim of assessee thereof€ ¢â' '´Tribunal by interpreting s 40(a)(ia) held that tax had to be deducted only on amount remaining payable on last date of financial year€ ¢â' '´Since entire amount was already paid, there was no question of deducting any tax u/s 40(a)(ia)€ ¢â' '´Held, It was admitted fact that point of deduction of tax at source was at time of payment or credit of amount to account of payee€ ¢â' '´No provision of Income-tax Act requires assessee to deduct tax at source in respect of amount which was not paid€ ¢â' '´That in respect of amount which remained payable or to be credited, Income-tax Act does not require deduction of tax€ ¢â' '´Therefore, If assessee had not paid or credited any amount to account, then there was no question of deduction of tax under any of the provision of the Income-tax Act€ ¢â' '´However, the contention of the assessee that the tax has to be deducted only on the amount that remains payable on the last date of financial year and the deduction need not be made on the amount already paid, was contrary to provisions of Income-tax Act which required deduction of tax€ ¢â' '´Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who was liable to deduct tax on any interest payable to a resident on which tax was deductible at source, commits default€ ¢â' '´Language of the Section does not warrant an interpretation that it is attracted only if it remains payable on the last day of the financial year€ ¢â' '´Thus, language of Section does not warrant an interpretation that it is attracted only if it remains payable on last day of financial year€ ¢â' '´Thus, Order of CIT(A) allowing claim of assessee was not justified and hence set aside€ ¢â' '´Revenue' s Appeal allowed
SERVICE TAX - TAXABILITY OF LEASE PREMIUM (PART-1)
Renting of immovable property is a taxable service as a declared service. The term € ¢â' '¸Service€ ¢â' '¹ has been defined in clause (44) of the new section 65B inserted by the Finance Act, 2012 as applicable w.e.f. 1.7.2012 and means € ¢â' '³
any activity
for consideration
carried out by a person for another
and includes a declared service.
As per clause (a) of section 66E of Finance Act, 1994, declared services including the activity of 'renting of immovable property.
Charging of Tax
Section 66B states that service tax shall be charged at the rate of 12 % plus both education cesses (upto 31.05.2015) and 14% (w.e.f 01.06.2015) on value of all taxable services i.e. other than those specified in the negative list or exempted services, which are provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.
Section 66B of the Finance Act, 1994 specifies the charge of service tax which is essentially that service tax shall be levied on all services provided or agreed to be provided in a taxable territory, other than services specified in the negative list. Thus, as per charging section 66B, Service Tax shall be applicable on all services except services under negative list or exempt services as per exemption notification.
Clause (m) of section 66D contains an entry in negative list relating to services by way of renting of residential dwelling unit for use as a residence. The condition is that it should be a residential unit and that such unit should also be used as a residence only.
Thus, properties meant of commercial use shall be subject to Service Tax.
Renting of Property
As per clause 41 of Section 65B of the Finance Act, 1994 (as amended), € ¢â' '¸Renting€ ¢â' '¹ means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.
Clause (viii) above is the residual clause which covers all arrangements which may not be covered under first seven alternatives, i.e., right to use, sub-lease, space sharing etc. The meaning of term € ¢â' '¸other similar arrangements€ ¢â' '¹ may be construed as the arrangement of immovable property in which someone is allowed, permitted, granted access and also include the activities which is similar to letting, leasing and licensing of immovable property. Leasing would include all types of leasing including a sub-lease.
'Renting of Immovable Property' is defined under rule 2(1)(f) of the Service Tax Rules, 1994 as follows:
€ ¢â' '¼renting of immovable property€ ¢â' '½ means any service provided or agreed to be provided by renting of immovable property or any other service in relation to such renting.
Valuation
Service Tax is levied on value of the taxable service as determined in term of provision of section 67 of the Finance Act, 1994. As per section 67 of the Finance Act, 1994 the gross amount charged in respect of provisioning of taxable service shall be chargeable to Service Tax. As per section 67(1)(i) of the Finance Act, 1994, if the entire consideration received in money then the gross amount charged shall be such consideration.
Without 'consideration& #39;, an 'activity&# 39; cannot be said to be a 'service&# 39;. € ¢â' '¸Consideration€ ¢â' '¹ means something in return. € ¢â' '¸Consideration€ ¢â' '¹ for a service provided or agreed to be provided by service provider means anything which the service receiver or any other person has done or abstained from doing, or does or abstain from doing, or promises to do or to abstain from doing for receiving the service.
In simple terms, € ¢â' '¸consideration€ ¢â' '¹ means everything received in return for a provision of service which includes monetary payment and any consideration of non- monetary nature as well as deferred consideration.
Any amount received against provisioning of the taxable service shall be the gross amount charged and shall be chargeable to Service Tax. But if any amount is received from the service receiver which is not in relation to provision of taxable service, then such amount shall not be chargeable to Service Tax. Valuation is only a measure of tax whereas incidence of tax is on taxable event, i.e., rendering of service.
In Federation of Hotel and Restaurant Association of India v. Union of India (1989 (5) TMI 50 - SUPREME Court, it was held that the subject of a tax is different from the measure of the levy. The measure of the tax is not determinative of its essential character or of the competence of the legislature. Following this, in Tamil Nadu Kalyana Mandapam Owners' Association v. Union of India and Others 2001 (4) TMI 26 - MADRAS High Court Madras High Court held that there can be no dispute that section 67(1) is nothing but the measure of the tax which cannot be considered while considering the true nature of the tax.
Delhi High Court in Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India (2012) 12 TMI 150;, has held that what is to be taxed is the gross amount charged by the service provider € ¢â' '¸for such service€ ¢â' '¹. The words € ¢â' '¸such service€ ¢â' '¹ are important for taxation. It is only the value of € ¢â' '¸such service€ ¢â' '¹ which can be taxed and nothing else. The value of service, to be taxed, can, therefore, never exceed the gross amount charged by the service provider for such service provided.
It is often seen that the lessor charges to the lessee a consideration called rent, rental charges, lease charges etc which could be annual or monthly or based on any other term. In certain cases, a lump-sum amount is also received at the beginning known as 'lease premium' or 'one time premium' or 'salami&# 39; or 'pagdi&# 39;. These are generally non-refundable and are payable in case of long term leases. While rentals / lease changes are taxable for sure, there is a doubt or confusion on taxability of one time lease premium. While the revenue intends to levy and collect Service Tax on the same, assessees are contesting such demands on the plea that it is not a consideration for service rendered.
(To be continued€ ¢â' ¦â' ¦â' ¦.)
By: Dr. Sanjiv Agarwal
SEBI Board Meeting
The SEBI Board met in Mumbai today and took the following decisions:
A. FMC € ¢â' '³ SEBI merger € ¢â' '³ Proposals for commodity derivatives exchanges and their members
(1) The Board approved the draft amendment to the regulations to be notified on September 28, 2015 pursuant
to the proposed repealing of the Forward Contracts Regulation Act, 1952 (FCRA) making way for merger of Forward
Market Commission with SEBI. These regulations will enable functioning of the commodities derivatives market and
its brokers under SEBI norms and integration of commodities derivatives and securities trading in an orderly
manner.
(2) The draft regulations provide for compliance of Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) Regulations, 2012 (SECC Regulations) which are currently required to be complied with by
stock exchanges.
(3) The major compliances include norms related to net-worth, shareholding norms, composition of board,
corporatisation and demutualisation and setting up of various committees, turnover, infrastructure etc. To ensure
non-disruptive transition, SEBI has prescribed following timelines for aligning to the different provisions of SECC
Regulations:
(i) Corporatization and demutualization of regional commodity derivatives exchanges € ¢â' '³ 3 years from the date of
merger.
(ii) Availing services of a clearing corporation € ¢â' '³ 3 years from the date of merger. Till then, clearing may continue
with the current arrangement. However, the Commodity Exchanges shall ensure guarantee for the settlement of
trades including good delivery.
(iii) Net-worth - timeline as provided by FMC, i.e. May 05, 2017, for national commodity derivatives exchanges
and within 3 years from the date of merger for regional ones.
(iv) Shareholding - timeline as provided by FMC, i.e., May 05, 2019, for national exchanges and within 3 years
from the date of merger for regional exchanges.
(v) Governing board norms - within 1 year from the date of merger for national exchanges and within 3 years
for regional exchanges.
(4) The proposed norms also emphasize on strengthening of risk management of the exchanges. Further,
investor protection norms similar to the equity markets would be provided by strengthening the arbitration
mechanism and investor grievance redressal mechanism.
(5) The Board has also approved amendments to SEBI (Stock Broker and Sub-Broker) Regulations, 1992 to
provide for registration of the members of the commodity exchanges. The existing members of these exchanges
page: 1 [ www.sebi.gov. in ]
shall be required to make an application for registration with SEBI within 3 months from the date of notification in
this regard. In such a case, they will be allowed to continue their activity unless their application is rejected by SEBI.
(6) The members shall be required to comply with the requirements for registration as members of exchange, as
specified in Securities Contracts Regulation Rules, 1957 and SEBI (Stock Broker and Sub-Broker) Regulations,
1992 such as constitution, number of directors, experience, networth etc. within a period of one year from the date
of notification by the Central Government for the transfer and vesting of rights and assets of the FMC to SEBI.
(7) For the new members, the above regulations will apply ab-initio.
B. Anchor investors in public issues
The Board approved the removal of current restriction on the maximum number of anchor investors (currently 25)
for anchor allocation of above Rs.250 crore public issue. While the requirement of number of anchor investors for
allocation of upto Rs.250 crore remains the same, in case of allocation beyond Rs.250 crore there can be 10
additional investors for every additional allocation of Rs.250 crore, subject to minimum allotment of Rs.5 crore per
anchor investor.
C. Amendments to the SEBI (Share Based Employee Benefits) Regulations, 2014
The Board approved the following proposals to amend the provisions of SEBI (Share Based Employee Benefits)
Regulations, 2014 (€ ¢â' '¼SBEB Regulations€ ¢â' '½) so as to align these with the new rule 19A(4) of the Securities Contracts
(Regulation) Rules, 1957, formulated by the Government of India:
(1) Listed companies with employee benefit Trusts existing as on the date of notification of the SBEB
Regulations shall have to re-classify the shareholding of Trust as € ¢â' '¸non-promoter and non-public€ ¢â' '¹ category and
ensure compliance with the requirement of minimum public shareholding within 3 years (as against 5 years
presently) from the date of notification of the SBEB Regulations.
(2) The time period for exercise of voting rights by employee benefit Trusts, existing as on the date of notification
of the SBEB Regulations, has been increased from 1 year to 3 years after considering the representations of the
market participants.
(3) In line with the amendments to the Companies (Share Capital and Debentures) Rules, 2014, formulated by
the Government of India, employees of € ¢â' '¸associate company€ ¢â' '¹ shall not be eligible as beneficiaries of the employee
benefit schemes framed under the SBEB Regulations.
(4) Pursuant to recent amendments to the SEBI Regulations on takeover, buy-back and delisting, the employee
benefit Trusts will now be allowed to offer shares (under the tender offer route) through the stock exchange
platform, without any requirement of minimum holding period.
D. Clarification on exercise of options / applicability of contra-trade norms, etc. in light of SEBI (Prohibition
of Insider Trading) Regulations, 2015
The Board was apprised of the representations received from industry bodies/ law firms and others on the above
matter. The Board noted the Guidance Note under Regulation 11 of SEBI (Prohibition of Insider Trading)
Regulations, 2015 (Regulations) placed before it.
page: 2 [ www.sebi.gov. in ]
The Guidance Note, inter alia, clarifies that exercise of ESOPs is not considered as 'trading&# 39; for the purpose of the
Regulations, except provisions relating to disclosures. This will remove the difficulties of the designated persons
with regard to exercise of ESOPs and the sale of shares so acquired.
E. Review of policy relating to forfeiture of partly paid-up shares - Amendments to SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011
The Board decided that a discussion paper shall be placed on SEBI website for seeking public comments on the
proposal to provide general exemption from the open offer obligations under SEBI (SAST) Regulations, 2011 in the
cases of increase in voting rights as a result of expiry of call notice period and forfeiture of shares.
F. Report of the expert Committee on Clearing Corporations
SEBI had constituted an expert committee, the 'Committee on Clearing Corporation&# 39; under the Chairmanship of Shri
K V Kamath, to inter-alia examine viability of Single Clearing Corporation or interoperability between Clearing
Corporations and other issues relating to Clearing Corporations (CC).
The committee submitted its final report to SEBI in July 2015 with recommendations on the following issues:
(1) Interoperability between Clearing Corporations.
(2) Investment by Clearing Corporation.
(3) Review of Transfer of 25% profits every year by recognised Stock Exchanges to recognised Clearing
Corporations.
(4) Review of Transfer of 25% profits every year by Depositories to their Investor Protection Fund (IPF).
(5) Liquid assets for the purpose of calculation of Net worth of a Clearing Corporation.
The Board recommended that public comments may be sought on the recommendations of the Committee on
Clearing Corporations.
Mumbai
August 24, 2015
Tue Aug 25, 2015 4:38 am (PDT) . Posted by:
ca.bhupendrashah
IT : Where assessee was bishop/metropolitan of a church and money deposited in bank account of assessee did not belong to him in his individual capacity and he was holding account in his fiduciary capacity, said money had to be considered only in hands of church and there could not be any addition in hands of assessee under section 69
[2015] 60 taxmann.com 172 (Cochin - Trib.)
IN THE ITAT COCHIN BENCH
Income-tax Officer
v.
Most Rev Dr. Joseph Marthoma
[2015] 60 taxmann.com 172 (Cochin - Trib.)
IN THE ITAT COCHIN BENCH
Income-tax Officer
v.
Most Rev Dr. Joseph Marthoma
Tue Aug 25, 2015 4:38 am (PDT) . Posted by:
ca.bhupendrashah
Service Tax : Commission agents' services/marketing services provided to ICICI Bank, using publicity materials provided by ICICI Banks, cannot be regarded as having been provided under brand/trade name of ICICI Bank; said services are eligible for small service provider' s exemption
[2015] 60 taxmann.com 203 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Chandigarh
v.
A.S. Financial
[2015] 60 taxmann.com 203 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Chandigarh
v.
A.S. Financial
Tue Aug 25, 2015 4:38 am (PDT) . Posted by:
ca.bhupendrashah
IT: Refusal by CBDT to condone one day delay in filing of return of income is a failure to exercise of power vested under section 119(2)(b)
[2015] 60 taxmann.com 233 (Bombay)
HIGH COURT OF BOMBAY
Cosme Matias Menezes (P.) Ltd.
v.
Commissioner of Income-tax, Goa
[2015] 60 taxmann.com 233 (Bombay)
HIGH COURT OF BOMBAY
Cosme Matias Menezes (P.) Ltd.
v.
Commissioner of Income-tax, Goa
Tue Aug 25, 2015 4:40 am (PDT) . Posted by:
ca.bhupendrashah
Demand of duty on Fly Ash post 01.03.2011 - Generation of Fly Ash involves no manufacturing process - High Court quashes demand at SCN stage
CHENNAI: WITH effect from 01.03.2011, Central Excise duty at the rate of 1% was imposed on many goods which were hitherto exempted. Fly Ash is found at Sl No 27 of the Notification. Hence, many started to believe that Fly Ash attracts duty with effect from 01.03.2011. A Show Cause Notice was issued to a Thermal Power Station demanding Central Excise duty on Fly Ash and Fly Ash Bricks cleared by them, which is under challenge.
After hearing both sides, the High Court ruled:
Process does not amount to manufacture:
To be subjected to levy of excise duty "excisable goods" must be produced or manufactured in India. For being produced and manufactured in India, the raw material should have gone through the process of transformation into a new product by skillful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture.
It is worthwhile to refer the decision of the Apex Court in "Union of India versus Ahemdabad Electricity Company Limited" - 2003-TIOL-17- SC-CX, wherein, while upholding the view of the High Court of Gujarat, the Apex Court has categorically held the "cinder" which is unburnt part of coal, is not exigible to excise duty since no manufacturing process was involved to produce the same and as such it did not satisfy the test of being manufactured in India as envisaged in the provisions of the Act and that the onus to establish that cinder has gone through the process of manufacture in India was not discharged by the department.
The difference between 'cinder&# 39; and 'fly ash' is that when coal is not burnt fully and leaves pieces behind, is called 'cinder&# 39; whereas, when it is fully burnt and reduced to ash, is called 'fly ash'. Therefore, The ratio decided in the above said decision would squarely apply in the case of 'fly ash' also since the product 'fly ash' also cannot be said to have gone through any manufacturing process.
Waste arising out of exempted goods is exempted under Notification No 89/95 CE:
It is not in dispute that 'electricity&# 39; has been specified in the First Schedule of the Central Excise Tariff under heading 27160000, but it is not subjected to a duty of excise since under the 'rate column' the duty of excise is indicated as 'nil' . Merely, rate of duty is mentioned 'nil' , it cannot be construed that it is non-excisable good. In "CCE, Hyderabad versus Vazir Sultan Tocacco Co.Ltd., - 2002-TIOL-215- SC-CX-LB, the Supreme Court has held that though by virtue of an exemption notification, the rate of duty was nil, this does not mean that they were not excisable goods. They were excisable goods. Nil rate of duty is also a rate of duty. Therefore, electricity is excisable good and can be construed as exempted goods by virtue of the above notification No.89/95-CE, dated 18.05.1995 as it has been clearly clarified in the Explanation that "....for the purpose of this notification, the expression "exempted goods" means excisable goods which are chargeable to "Nil" rate of duty. Therefore, as rightly contended by the petitioner, the exemption Notification No.89/95-CE would squarely applicable to the product 'fly ash', which is a waste arise during the course of manufacture of electricity, which is an excisable good chargeable to "nil" rate of duty.
Fly Ash Bricks dutiable:
As regards "fly ash bricks" , since fly ash does not itself get shaped as bricks unless some manufacturing activity is involved. Since the raw material fly ash undergoes a change since an operation performed on it, resulting into fly ash brick, such operation would certainly amount to processing of the commodity and such commodity is recognized as a new and distinct article, i.e. 'fly ash brick'. Therefore, the good 'fly ash brick', having satisfied the test of being manufactured in India and also marketability, it is leviable to excise duty.
Accordingly, the High Court set aside the demand on Fly Ash and allowed the Writ partly.
CHENNAI: WITH effect from 01.03.2011, Central Excise duty at the rate of 1% was imposed on many goods which were hitherto exempted. Fly Ash is found at Sl No 27 of the Notification. Hence, many started to believe that Fly Ash attracts duty with effect from 01.03.2011. A Show Cause Notice was issued to a Thermal Power Station demanding Central Excise duty on Fly Ash and Fly Ash Bricks cleared by them, which is under challenge.
After hearing both sides, the High Court ruled:
Process does not amount to manufacture:
To be subjected to levy of excise duty "excisable goods" must be produced or manufactured in India. For being produced and manufactured in India, the raw material should have gone through the process of transformation into a new product by skillful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture.
It is worthwhile to refer the decision of the Apex Court in "Union of India versus Ahemdabad Electricity Company Limited" - 2003-TIOL-17- SC-CX, wherein, while upholding the view of the High Court of Gujarat, the Apex Court has categorically held the "cinder" which is unburnt part of coal, is not exigible to excise duty since no manufacturing process was involved to produce the same and as such it did not satisfy the test of being manufactured in India as envisaged in the provisions of the Act and that the onus to establish that cinder has gone through the process of manufacture in India was not discharged by the department.
The difference between 'cinder&# 39; and 'fly ash' is that when coal is not burnt fully and leaves pieces behind, is called 'cinder&# 39; whereas, when it is fully burnt and reduced to ash, is called 'fly ash'. Therefore, The ratio decided in the above said decision would squarely apply in the case of 'fly ash' also since the product 'fly ash' also cannot be said to have gone through any manufacturing process.
Waste arising out of exempted goods is exempted under Notification No 89/95 CE:
It is not in dispute that 'electricity&# 39; has been specified in the First Schedule of the Central Excise Tariff under heading 27160000, but it is not subjected to a duty of excise since under the 'rate column' the duty of excise is indicated as 'nil' . Merely, rate of duty is mentioned 'nil' , it cannot be construed that it is non-excisable good. In "CCE, Hyderabad versus Vazir Sultan Tocacco Co.Ltd., - 2002-TIOL-215- SC-CX-LB, the Supreme Court has held that though by virtue of an exemption notification, the rate of duty was nil, this does not mean that they were not excisable goods. They were excisable goods. Nil rate of duty is also a rate of duty. Therefore, electricity is excisable good and can be construed as exempted goods by virtue of the above notification No.89/95-CE, dated 18.05.1995 as it has been clearly clarified in the Explanation that "....for the purpose of this notification, the expression "exempted goods" means excisable goods which are chargeable to "Nil" rate of duty. Therefore, as rightly contended by the petitioner, the exemption Notification No.89/95-CE would squarely applicable to the product 'fly ash', which is a waste arise during the course of manufacture of electricity, which is an excisable good chargeable to "nil" rate of duty.
Fly Ash Bricks dutiable:
As regards "fly ash bricks" , since fly ash does not itself get shaped as bricks unless some manufacturing activity is involved. Since the raw material fly ash undergoes a change since an operation performed on it, resulting into fly ash brick, such operation would certainly amount to processing of the commodity and such commodity is recognized as a new and distinct article, i.e. 'fly ash brick'. Therefore, the good 'fly ash brick', having satisfied the test of being manufactured in India and also marketability, it is leviable to excise duty.
Accordingly, the High Court set aside the demand on Fly Ash and allowed the Writ partly.
Tue Aug 25, 2015 4:40 am (PDT) . Posted by:
ca.bhupendrashah
NDPS - Non-compliance with Sec 50 of NDPS Act, 1985 - High Court sets aside conviction by trial court
CHANDIGARH: THE appellant was convicted for the offence punishable under Section 20(b) of Narcotic Drugs and Psychotropic Substances Act, 1985 and sentenced to undergo rigorous imprisonment for five years and to pay a fine of Rs. 40,000, in default thereof, to undergo further imprisonment for a period of two years. The order of Trial court is under challenge before the High court on valorous grounds.
Though the High Court rejected the contentions of the appellant on various issues (Contradictions in the statements of prosecution witnesses, Sub-Inspectorbeing complainant was not entitled to investigate the case, Non-joining of independent witness in investigation, Delay in sending the samples to Forensic Science Laboratory and Non-compliance of Section 42 NDPS Act), on the issue of non-compliance with Section 50 of the NDPS Act, the High Court ruled in favour of the appellant by holding that:
The prosecution has failed to meet with the mandatory requirements of Section 50 NDPS Act, which lays down the manner in which search of the person of accused suspected of carrying some contraband is to be effected. Perusal of the notice served upon the appellant under Section 50 NDPS Act shows that he was apprised that he can opt for his search to be conducted by the Investigating Officer SI Ram Chander, some gazetted police officer or some other gazetted officer.
A question which arises for consideration is as to whether the above option is sufficient compliance of provisions of Section 50 NDPS Act. A Constitution Bench of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Gujarat, - 2011-TIOL-51- SC-NDPS-CB examined the scope and width of the provisions of Section 50 NDPS Act and observed that 'we have no hesitation in holding that in so far as the obligation of the authorised officer under sub-section (1) of Section 50 of the NDPS Act is concerned, it is mandatory and requires a strict compliance. Failure to comply with the provision would render the recovery of the illicit article suspect and vitiate the conviction if the same is recorded only on the basis of the recovery of the illicit article from the person of the accused during such search.'
Perusal of the notice given under Section 50 NDPS Act as reproduced in para 2 reveals that this notice is short of compliance of the provisions of Section 50 NDPS Act which require to apprise the suspect of his right to get his search conducted before a gazetted officer of any of the department mentioned in Section 42 or nearest Magistrate. The mere fact that the gazetted officer i.e. Tehsildar, who was called at the spot to conduct the search also happened to be an Executive Magistrate, in no manner, fulfill the lacuna left by the Investigating Officer.
As per observations of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Guajarat, the appellant was not informed about the existence of his right to get him searched before a Gazetted Officer or a Magistrate and this has caused prejudice to him, thereby rendering the recovery of narcotic from the possession of appellant as illicit.
Having failed to comply with provisions of Section 50 NDPS Act, in its true spirit, as discussed above, the recovery made from the person of appellant in this case was illicit and vitiate his conviction. This appeal has merits and the same is accepted. Judgment of conviction and order of sentence recorded by the trial Court is set aside. The appellant is acquitted of the charge framed against him.
CHANDIGARH: THE appellant was convicted for the offence punishable under Section 20(b) of Narcotic Drugs and Psychotropic Substances Act, 1985 and sentenced to undergo rigorous imprisonment for five years and to pay a fine of Rs. 40,000, in default thereof, to undergo further imprisonment for a period of two years. The order of Trial court is under challenge before the High court on valorous grounds.
Though the High Court rejected the contentions of the appellant on various issues (Contradictions in the statements of prosecution witnesses, Sub-Inspectorbeing complainant was not entitled to investigate the case, Non-joining of independent witness in investigation, Delay in sending the samples to Forensic Science Laboratory and Non-compliance of Section 42 NDPS Act), on the issue of non-compliance with Section 50 of the NDPS Act, the High Court ruled in favour of the appellant by holding that:
The prosecution has failed to meet with the mandatory requirements of Section 50 NDPS Act, which lays down the manner in which search of the person of accused suspected of carrying some contraband is to be effected. Perusal of the notice served upon the appellant under Section 50 NDPS Act shows that he was apprised that he can opt for his search to be conducted by the Investigating Officer SI Ram Chander, some gazetted police officer or some other gazetted officer.
A question which arises for consideration is as to whether the above option is sufficient compliance of provisions of Section 50 NDPS Act. A Constitution Bench of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Gujarat, - 2011-TIOL-51- SC-NDPS-CB examined the scope and width of the provisions of Section 50 NDPS Act and observed that 'we have no hesitation in holding that in so far as the obligation of the authorised officer under sub-section (1) of Section 50 of the NDPS Act is concerned, it is mandatory and requires a strict compliance. Failure to comply with the provision would render the recovery of the illicit article suspect and vitiate the conviction if the same is recorded only on the basis of the recovery of the illicit article from the person of the accused during such search.'
Perusal of the notice given under Section 50 NDPS Act as reproduced in para 2 reveals that this notice is short of compliance of the provisions of Section 50 NDPS Act which require to apprise the suspect of his right to get his search conducted before a gazetted officer of any of the department mentioned in Section 42 or nearest Magistrate. The mere fact that the gazetted officer i.e. Tehsildar, who was called at the spot to conduct the search also happened to be an Executive Magistrate, in no manner, fulfill the lacuna left by the Investigating Officer.
As per observations of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Guajarat, the appellant was not informed about the existence of his right to get him searched before a Gazetted Officer or a Magistrate and this has caused prejudice to him, thereby rendering the recovery of narcotic from the possession of appellant as illicit.
Having failed to comply with provisions of Section 50 NDPS Act, in its true spirit, as discussed above, the recovery made from the person of appellant in this case was illicit and vitiate his conviction. This appeal has merits and the same is accepted. Judgment of conviction and order of sentence recorded by the trial Court is set aside. The appellant is acquitted of the charge framed against him.
Direct Tax Basket
2015-TIOL-1301- ITAT-HYD
DCIT Vs M/s NSL Renewable Power Pvt Ltd
Whether sale of carbon credits is to be considered as capital receipt and not taxable income - YES: ITAT - Revenue' s appeal dismissed : HYDERABAD ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1934- HC-MAD-CX
Kovaai Silicates Vs CESTAT
Central Excise -Non prosecution - duty demand on Sodium Silicates cleared on job work basis confirmed with interest and penalty in adjudication, upheld by Commissioner (Appeals) and agitated before the Tribunal, who dismissed their appeal for non prosecution - impugned Tribunal order agitated herein.
Held: considering the number of adjournments already granted in the case and the number of occasions on which the case was adjourned at the instance of the appellant/assessee and having regard to the different reasons, which were compelling in nature for which the adjournment were sought for, the Tribunal ought not to have dismissed the appeal for non-prosecution and ought to have considered granting one more opportunity to the appellant/assessee to prosecute its case - no reason to arrive at a conclusion that the assessee was not interested in prosecuting the appeal, depriving the assessee of its right to prosecute the appeal on merits - impugned order set aside and the matter is remanded back for fresh disposal on merits and in accordance with law - The appellant/assessee is directed to co-operate with the Tribunal for earlier disposal of the appeal, without seeking further adjournments [Para 4, 5] - Matter remanded : MADRAS HIGH COURT
2015-TIOL-1773- CESTAT-ALL
CCE Vs M/s Railway Equipment And Engg Works
2015-TIOL-1301- ITAT-HYD
DCIT Vs M/s NSL Renewable Power Pvt Ltd
Whether sale of carbon credits is to be considered as capital receipt and not taxable income - YES: ITAT - Revenue' s appeal dismissed : HYDERABAD ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1934- HC-MAD-CX
Kovaai Silicates Vs CESTAT
Central Excise -Non prosecution - duty demand on Sodium Silicates cleared on job work basis confirmed with interest and penalty in adjudication, upheld by Commissioner (Appeals) and agitated before the Tribunal, who dismissed their appeal for non prosecution - impugned Tribunal order agitated herein.
Held: considering the number of adjournments already granted in the case and the number of occasions on which the case was adjourned at the instance of the appellant/assessee and having regard to the different reasons, which were compelling in nature for which the adjournment were sought for, the Tribunal ought not to have dismissed the appeal for non-prosecution and ought to have considered granting one more opportunity to the appellant/assessee to prosecute its case - no reason to arrive at a conclusion that the assessee was not interested in prosecuting the appeal, depriving the assessee of its right to prosecute the appeal on merits - impugned order set aside and the matter is remanded back for fresh disposal on merits and in accordance with law - The appellant/assessee is directed to co-operate with the Tribunal for earlier disposal of the appeal, without seeking further adjournments [Para 4, 5] - Matter remanded : MADRAS HIGH COURT
2015-TIOL-1773- CESTAT-ALL
CCE Vs M/s Railway Equipment And Engg Works
CX - Classification - Whether Cast Iron Plates for Emery machinery manufactured by assessee will be classified under CH 7325.10 of CETA, 1985 or under heading 8437.00 - Commissioner (A), while holding classification of goods under 8437.00, has relied upon one report from Superintendent of Central Excise, Range Mathura - From report reproduced in order of First Appellate Authority, it is correctly held that goods were classifiable under heading 8437 - If manufacturing unit is lying closed at moment then case of Revenue cannot be decided in their favour because it is responsibility of Department to establish, with documentary evidence, that claim made by manufacturing unit is not acceptable or that other finishing activities were required to be done on cast iron plates for emery machinery - Appeal dismissed: CESTAT - Appeal dismissed : ALLAHABAD CESTAT
CHANDIGARH: THE appellant was convicted for the offence punishable under Section 20(b) of Narcotic Drugs and Psychotropic Substances Act, 1985 and sentenced to undergo rigorous imprisonment for five years and to pay a fine of Rs. 40,000, in default thereof, to undergo further imprisonment for a period of two years. The order of Trial court is under challenge before the High court on valorous grounds.
Though the High Court rejected the contentions of the appellant on various issues (Contradictions in the statements of prosecution witnesses, Sub-Inspectorbeing complainant was not entitled to investigate the case, Non-joining of independent witness in investigation, Delay in sending the samples to Forensic Science Laboratory and Non-compliance of Section 42 NDPS Act), on the issue of non-compliance with Section 50 of the NDPS Act, the High Court ruled in favour of the appellant by holding that:
The prosecution has failed to meet with the mandatory requirements of Section 50 NDPS Act, which lays down the manner in which search of the person of accused suspected of carrying some contraband is to be effected. Perusal of the notice served upon the appellant under Section 50 NDPS Act shows that he was apprised that he can opt for his search to be conducted by the Investigating Officer SI Ram Chander, some gazetted police officer or some other gazetted officer.
A question which arises for consideration is as to whether the above option is sufficient compliance of provisions of Section 50 NDPS Act. A Constitution Bench of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Gujarat, - 2011-TIOL-51- SC-NDPS-CB examined the scope and width of the provisions of Section 50 NDPS Act and observed that 'we have no hesitation in holding that in so far as the obligation of the authorised officer under sub-section (1) of Section 50 of the NDPS Act is concerned, it is mandatory and requires a strict compliance. Failure to comply with the provision would render the recovery of the illicit article suspect and vitiate the conviction if the same is recorded only on the basis of the recovery of the illicit article from the person of the accused during such search.'
Perusal of the notice given under Section 50 NDPS Act as reproduced in para 2 reveals that this notice is short of compliance of the provisions of Section 50 NDPS Act which require to apprise the suspect of his right to get his search conducted before a gazetted officer of any of the department mentioned in Section 42 or nearest Magistrate. The mere fact that the gazetted officer i.e. Tehsildar, who was called at the spot to conduct the search also happened to be an Executive Magistrate, in no manner, fulfill the lacuna left by the Investigating Officer.
As per observations of Hon'ble Supreme Court in case of Vijaysinh Chandubha Jadeja Vs. State of Guajarat, the appellant was not informed about the existence of his right to get him searched before a Gazetted Officer or a Magistrate and this has caused prejudice to him, thereby rendering the recovery of narcotic from the possession of appellant as illicit.
Having failed to comply with provisions of Section 50 NDPS Act, in its true spirit, as discussed above, the recovery made from the person of appellant in this case was illicit and vitiate his conviction. This appeal has merits and the same is accepted. Judgment of conviction and order of sentence recorded by the trial Court is set aside. The appellant is acquitted of the charge framed against him.
__._,_.___
No comments:
Post a Comment