WIPRO GE HEALHCARE PVT. LTD vs.DEPUTY COMMISSIONER OF INCOME TAX
BANGALORE TRIBUNAL
Transfer Pricing—Computation of Arm's Length Price—Assessee company which was engaged in the business of manufacturing and trading in medical equipments, also provided software services in technology solutions to its parent company for products manufactured worldwide—Assesee had filed its return of income declaring total income and book profits of u/s 115JB—Subsequently, the assessee had filed revised return of income declaring total income in order to claim additional TDS credit and foreign tax credit—During the assessment proceedings u/s 143(3), the AO observed that the assessee had entered into international transactions with it's AE and the value of such transactions exceeded the prescribed limit—AO had made a reference to TPO for determination of the arms length price u/s 92CA—TPO had determined Rs.74,23,34, 767 as total adjustments to the ALP u/s 92CA—AO in the draft assessment proceedings had added back the said adjustment to the taxable income and brought it to tax along with the other disallowances and additions—Assessee filed its objections to the draft assessment order before the DRP which had confirmed the draft assessment order—consequently, the AO had passed the final assessment order—Hence assessee appeal—Held, both the TPO as well as the DRP have failed to consider the elaborate contentions raised by the assessee before them which amounts to violation of principles of natural justice—In the assessee's own case for the earlier A/Y 2006-2007 , Tribunal had remitted back the issue to the TPO, for reconsideration on merits—Assessees appeal allowed.
BANGALORE TRIBUNAL
Transfer Pricing—Computation of Arm's Length Price—Assessee company which was engaged in the business of manufacturing and trading in medical equipments, also provided software services in technology solutions to its parent company for products manufactured worldwide—Assesee had filed its return of income declaring total income and book profits of u/s 115JB—Subsequently, the assessee had filed revised return of income declaring total income in order to claim additional TDS credit and foreign tax credit—During the assessment proceedings u/s 143(3), the AO observed that the assessee had entered into international transactions with it's AE and the value of such transactions exceeded the prescribed limit—AO had made a reference to TPO for determination of the arms length price u/s 92CA—TPO had determined Rs.74,23,34, 767 as total adjustments to the ALP u/s 92CA—AO in the draft assessment proceedings had added back the said adjustment to the taxable income and brought it to tax along with the other disallowances and additions—Assessee filed its objections to the draft assessment order before the DRP which had confirmed the draft assessment order—consequently, the AO had passed the final assessment order—Hence assessee appeal—Held, both the TPO as well as the DRP have failed to consider the elaborate contentions raised by the assessee before them which amounts to violation of principles of natural justice—In the assessee's own case for the earlier A/Y 2006-2007 , Tribunal had remitted back the issue to the TPO, for reconsideration on merits—Assessees appeal allowed.
RAMESH KUMAR JAIN vs.DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)
BOMBAY TRIBUNAL
Penalty u/s 271(1)(b)—Failure to comply with notice—Validity—Pursuant to search and seizure action u/s 132 against the assessee, AO had issued number of notices—AO had levied penalty u/s 271(1)(b) on grounds that assessee had not complied with the said notices—Held, when the notice u/s 142(1) was issued for the hearing, then the assessee's representative had submitted the explanation that the representative of the assessee would be unable to appear before him because he was pre- occupied with tax audits and subsequently, the assessment was completed u/s 153A/143(3) in the presence of assessee's representative—Facts shows that the assessee had filed the details before the AO and thereafter the assessment order was finalized which can be considered as sufficient compliance and the default committed, if any, earlier has been ignored by the AO—There was no failure on the part of the assessee which attract the penalty u/s 271(1)(b)—Order of the AO as well as CIT(A) was set aside—Assessees appeal allowed
BOMBAY TRIBUNAL
Penalty u/s 271(1)(b)—Failure to comply with notice—Validity—Pursuant to search and seizure action u/s 132 against the assessee, AO had issued number of notices—AO had levied penalty u/s 271(1)(b) on grounds that assessee had not complied with the said notices—Held, when the notice u/s 142(1) was issued for the hearing, then the assessee's representative had submitted the explanation that the representative of the assessee would be unable to appear before him because he was pre- occupied with tax audits and subsequently, the assessment was completed u/s 153A/143(3) in the presence of assessee's representative—Facts shows that the assessee had filed the details before the AO and thereafter the assessment order was finalized which can be considered as sufficient compliance and the default committed, if any, earlier has been ignored by the AO—There was no failure on the part of the assessee which attract the penalty u/s 271(1)(b)—Order of the AO as well as CIT(A) was set aside—Assessees appeal allowed
COMPANY CASES Volume 192 Part 4 (Issue dated 25-9-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Winding up --Realisation of assets--Auction sale--Confirmation of sale--Subsequent higher offer not valid ground for refusing confirmation of sale or offer already made-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. . . . 285
----Realisation of assets--Auction sale--Confirmation of sale--That property became more valuable in view on subsequent development not relevant consideration in determining legality of order in favour of highest bidder--Order of confirmation by court--Mere absence of expression “that the sale is confirmed†not determinative- -No stakeholders objected to offer of highest bidder on ground of inadequate consideration- -Sale not to be set aside on ground that value of property escalated substantially in view of developments subsequent to confirmation order-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. . . . 285
HIGH COURTS
Winding up --Realisation of assets--Auction sale--Confirmation of sale--Recall of order--Company court--Inherent powers--Confirmatio n of sale for inadequate consideration- -Substantial increase in price of property within four months--Court to see that property fetches best price--No error in exercise of inherent jurisdiction by company judge in recalling its order--Companies (Court) Rules, 1959, r. 9-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. (Guj) . . . 228
IT : No "transfer" of capital asset takes place in the ordinary sens
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Winding up --Realisation of assets--Auction sale--Confirmation of sale--Subsequent higher offer not valid ground for refusing confirmation of sale or offer already made-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. . . . 285
----Realisation of assets--Auction sale--Confirmation of sale--That property became more valuable in view on subsequent development not relevant consideration in determining legality of order in favour of highest bidder--Order of confirmation by court--Mere absence of expression “that the sale is confirmed†not determinative- -No stakeholders objected to offer of highest bidder on ground of inadequate consideration- -Sale not to be set aside on ground that value of property escalated substantially in view of developments subsequent to confirmation order-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. . . . 285
HIGH COURTS
Winding up --Realisation of assets--Auction sale--Confirmation of sale--Recall of order--Company court--Inherent powers--Confirmatio n of sale for inadequate consideration- -Substantial increase in price of property within four months--Court to see that property fetches best price--No error in exercise of inherent jurisdiction by company judge in recalling its order--Companies (Court) Rules, 1959, r. 9-- Vedica Procon P. Ltd. v. Balleshwar Greens P. Ltd. (Guj) . . . 228
IT : No "transfer" of capital asset takes place in the ordinary sens
IT : No "transfer" ; of capital asset takes place in the ordinary sense of the word 'transfer&# 39; or even within the extended meaning given to the term 'transfer in section 2(47)(vi) when the plant and machinery along with land and building is leased out for a limited period of 10 years giving limited right to the lessee to hold and possess the facilities leased to it with further restriction on sub-letting it or transferring any right or interest therein to anyone without the permission of the lessor and with the lease agreement making it explicit that at the end of the lease period the facilities leased would revert to the lessor-assessee. This is in view of Explanation1 to section 2(47) which incorporates reference to section 269UA(d) for which purposes 'transfer&# 39; has been defined to section 269UA(f)(i) to include lease for a period of not less than 10 years
• No "transfer" ; of capital asset takes place within the meaning of section 2(47) when the plant and machinery along with land and building is leased out for a limited period of 10 years giving limited right to the lessee to hold and possess the facilities leased to it with further restriction on sub-letting it or transferring any right or interest therein to anyone without the permission of the lessor and with the lease agreement making it explicit that at the end of the lease period the facilities leased would revert to the lessor-assessee.
• This is in view of Explanation1 to section 2(47) which incorporates reference to section 269UA(d) for which purposes 'transfer&# 39; has been defined to section 269UA(f)(i) to include lease for a period of not less than 10 years.
• This is especially so when assessee-lessor has claimed depreciation on plant and machinery leased out and the facilities indeed did revert back to assessee-lessor at the end of the 10 years lease period and assessee-lessor did indeed sell these facilities to another party and was assessed for long-term capital gains on such sale.
• The mere fact that the Assessee may have applied under Section 230A of the Act to seek permission of the Department cannot be held against it as far as the correct legal position is concerned. In other words the fact that certain columns in the concerned form were filled by the Assessee to imply that there was a transfer of leasehold/ownership rights cannot be read to constitute a waiver by the Assessee of the legal defences that flow from a correct interpretation of the clauses of the lease agreement and from a correct reading of Section 2 (47) with Section 45 of the Act.
• The lease agreement had to form the fundamental basis for understanding what the transaction in effect was. The relationship between the parties could not be re-configured on the basis of surmises and conjectures.
• The AO and CIT (A) appeared to have proceeded on the basic suspicion that the lease agreement was a tax avoidance device and this prevented them from objectively viewing the transaction for what it in effect was.
• There has to be an extinguishment of ownership rights in order that a transaction can be said to be a 'sale' . Here, the lessee does not even have the right of sub-letting the facilities. The leasehold right is only for a period of ten years and at the end of that period the leased facilities revert to the owner.
[2015] 61 taxmann.com 350 (Delhi)
HIGH COURT OF DELHI
Teletube Electronics Ltd.
v.
Commissioner of Income-tax, Delhi-VI
• No "transfer" ; of capital asset takes place within the meaning of section 2(47) when the plant and machinery along with land and building is leased out for a limited period of 10 years giving limited right to the lessee to hold and possess the facilities leased to it with further restriction on sub-letting it or transferring any right or interest therein to anyone without the permission of the lessor and with the lease agreement making it explicit that at the end of the lease period the facilities leased would revert to the lessor-assessee.
• This is in view of Explanation1 to section 2(47) which incorporates reference to section 269UA(d) for which purposes 'transfer&# 39; has been defined to section 269UA(f)(i) to include lease for a period of not less than 10 years.
• This is especially so when assessee-lessor has claimed depreciation on plant and machinery leased out and the facilities indeed did revert back to assessee-lessor at the end of the 10 years lease period and assessee-lessor did indeed sell these facilities to another party and was assessed for long-term capital gains on such sale.
• The mere fact that the Assessee may have applied under Section 230A of the Act to seek permission of the Department cannot be held against it as far as the correct legal position is concerned. In other words the fact that certain columns in the concerned form were filled by the Assessee to imply that there was a transfer of leasehold/ownership rights cannot be read to constitute a waiver by the Assessee of the legal defences that flow from a correct interpretation of the clauses of the lease agreement and from a correct reading of Section 2 (47) with Section 45 of the Act.
• The lease agreement had to form the fundamental basis for understanding what the transaction in effect was. The relationship between the parties could not be re-configured on the basis of surmises and conjectures.
• The AO and CIT (A) appeared to have proceeded on the basic suspicion that the lease agreement was a tax avoidance device and this prevented them from objectively viewing the transaction for what it in effect was.
• There has to be an extinguishment of ownership rights in order that a transaction can be said to be a 'sale' . Here, the lessee does not even have the right of sub-letting the facilities. The leasehold right is only for a period of ten years and at the end of that period the leased facilities revert to the owner.
[2015] 61 taxmann.com 350 (Delhi)
HIGH COURT OF DELHI
Teletube Electronics Ltd.
v.
Commissioner of Income-tax, Delhi-VI
Direct Tax Basket
2015-TIOL-1518- ITAT-BANG
M/s Multitech Software Systems India Pvt Ltd Vs Dy.CIT
Whether the telecommunication charges and travel expenses incurred by the assessee in foreign currency are to be excluded from both export turnover as well as total turnover while computing the deduction u/s 10A - YES: ITAT - Assessee' s appeal allowed : BANGALORE ITAT
2015-TIOL-1517- ITAT-AHM
M/s Indu Nissan Oxo Chemical Inds Ltd Vs DCIT
Whether when assessee has not placed any material on record suggesting that those payments were made to 3rd parties on account of calls in arrears and share premium as there is no mention of the names, addresses, etc. of the parties to whom the assessee was liable to pay calls in arrears and share premium, addition is correctly made u/s 68 - Whether in order to invoke provisions of section 40A(2)(b), the AO has first to determine the reasonableness or excessiveness having regard to the fair market value of the services rendered - Whether when the PF/ESIC contribution was deposited before the due date of filing of return, the same is allowable - Whether for claiming the amount as non recoverable, the assessee should also prove that the debt has become had in that particular year. - Assessee' s appeal is partly allowed : AHMEDABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2032- CESTAT-DEL
Air India Ltd Vs CST
ST - Franchisee service - Assessee had a house magazine 'Swagat&# 39; published through Media Transasia India publication - Said magazine is published only for use of Indian Airlines/Air India to be kept in aircraft for passengers - Its contents and advertisements are approved by assessee and it does not pay any amount to publisher - However, Media pays them a monthly amount - Nothing on record to indicate whether limb 4 of definition of franchise as it stood prior to 16.6.2005 is satisfied and therefore demands up to period 15.6.2005 prima facie may not be sustainable - As regards the period from 16.6.2005, issue involved is interpretational and therefore assessee' s contention that there was no wilful mis-statement or suppression of fact on their part and they genuinely believed that the amount was not taxable has some merit and as a consequent prima facie extended period may not be invocable - Stay granted: CESTAT - Stay granted : DELHI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2031- CESTAT-MAD
Jarmaaks Soft Tex Pvt Ltd Vs CCE
Central Excise - Deemed Export - Appellants are manufacturer of textile products and procured cotton yarn without payment of duty under Notification No.43/2001 CE (NT) dt. 26.6.2001 - The appellants have manufactured terry towel fabrics and supplied to 100% EOU who in turn exported them - The adjudicating authority in his order dt. 26.9.2003 dropped the proceedings; same reversed by Commissioner (Appeals) on appeal by Revenue, and agitated herein.
Held: Commissioner (Appeals) admitted the fact that terry toweling fabrics supplied to the EOU have been exported after undertaking further processing into garments and also they have submitted proof of export - appellant has supplied terry towel fabrics to another EOU for further processing - The only condition in the notification 43/2001-CE(NT) is that appellant has to produce proof of export of the final product - Impugned order has clearly brought out that there is no dispute that the goods have been cleared to EOU and appellants have produced proof of export through EOU - Following the Tribunal ruling in the Jansons clothing case, impugned order set aside. [Para 4, 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-2030- CESTAT-MAD
CCE & ST Vs M/s Sakthi Sugars Ltd
Central Excise - CENVAT credit - input services credit availed on (a) services used in the co-generation plant, which in turn used for generation of electricity (exempted goods); (b) ineligible documents and (c) construction of ancillary buildings, roads, drains, compound walls, Bachelors' quarters, Officers' quarters, fencing etc. denied in adjudication - same agitated before Commissioner (Appeals) who remanded the case, mentioning (a) and (c) within the scope of remand - Revenue agitates non reference to (b) in the findings as well as the appellate Commissioner&# 39;s power to remand.
Held: Commissioner (Appeals) observed that the same adjudicating authority took divergent stand on the issue regarding input services used in co-generation plant in an earlier order - While remanding the case, the appellate authority also clearly stated that the adjudicating authority failed to give due valid grounds for denying credit on other services related to construction activities - No doubt, appellate authority has not discussed the third issue in the impugned order - Considering the overall facts and also that the case is already remanded to the adjudicating authority, there is no infirmity in the impugned order - it is directed that the adjudicating authority while deciding the denovo proceedings shall take into consideration of the input service credit denied on the ineligible documents and decide afresh. [Para 5] - Appeal partly allowed : CHENNAI CESTAT
2015-TIOL-1518- ITAT-BANG
M/s Multitech Software Systems India Pvt Ltd Vs Dy.CIT
Whether the telecommunication charges and travel expenses incurred by the assessee in foreign currency are to be excluded from both export turnover as well as total turnover while computing the deduction u/s 10A - YES: ITAT - Assessee' s appeal allowed : BANGALORE ITAT
2015-TIOL-1517- ITAT-AHM
M/s Indu Nissan Oxo Chemical Inds Ltd Vs DCIT
Whether when assessee has not placed any material on record suggesting that those payments were made to 3rd parties on account of calls in arrears and share premium as there is no mention of the names, addresses, etc. of the parties to whom the assessee was liable to pay calls in arrears and share premium, addition is correctly made u/s 68 - Whether in order to invoke provisions of section 40A(2)(b), the AO has first to determine the reasonableness or excessiveness having regard to the fair market value of the services rendered - Whether when the PF/ESIC contribution was deposited before the due date of filing of return, the same is allowable - Whether for claiming the amount as non recoverable, the assessee should also prove that the debt has become had in that particular year. - Assessee' s appeal is partly allowed : AHMEDABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2032- CESTAT-DEL
Air India Ltd Vs CST
ST - Franchisee service - Assessee had a house magazine 'Swagat&# 39; published through Media Transasia India publication - Said magazine is published only for use of Indian Airlines/Air India to be kept in aircraft for passengers - Its contents and advertisements are approved by assessee and it does not pay any amount to publisher - However, Media pays them a monthly amount - Nothing on record to indicate whether limb 4 of definition of franchise as it stood prior to 16.6.2005 is satisfied and therefore demands up to period 15.6.2005 prima facie may not be sustainable - As regards the period from 16.6.2005, issue involved is interpretational and therefore assessee' s contention that there was no wilful mis-statement or suppression of fact on their part and they genuinely believed that the amount was not taxable has some merit and as a consequent prima facie extended period may not be invocable - Stay granted: CESTAT - Stay granted : DELHI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2031- CESTAT-MAD
Jarmaaks Soft Tex Pvt Ltd Vs CCE
Central Excise - Deemed Export - Appellants are manufacturer of textile products and procured cotton yarn without payment of duty under Notification No.43/2001 CE (NT) dt. 26.6.2001 - The appellants have manufactured terry towel fabrics and supplied to 100% EOU who in turn exported them - The adjudicating authority in his order dt. 26.9.2003 dropped the proceedings; same reversed by Commissioner (Appeals) on appeal by Revenue, and agitated herein.
Held: Commissioner (Appeals) admitted the fact that terry toweling fabrics supplied to the EOU have been exported after undertaking further processing into garments and also they have submitted proof of export - appellant has supplied terry towel fabrics to another EOU for further processing - The only condition in the notification 43/2001-CE(NT) is that appellant has to produce proof of export of the final product - Impugned order has clearly brought out that there is no dispute that the goods have been cleared to EOU and appellants have produced proof of export through EOU - Following the Tribunal ruling in the Jansons clothing case, impugned order set aside. [Para 4, 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-2030- CESTAT-MAD
CCE & ST Vs M/s Sakthi Sugars Ltd
Central Excise - CENVAT credit - input services credit availed on (a) services used in the co-generation plant, which in turn used for generation of electricity (exempted goods); (b) ineligible documents and (c) construction of ancillary buildings, roads, drains, compound walls, Bachelors' quarters, Officers' quarters, fencing etc. denied in adjudication - same agitated before Commissioner (Appeals) who remanded the case, mentioning (a) and (c) within the scope of remand - Revenue agitates non reference to (b) in the findings as well as the appellate Commissioner&# 39;s power to remand.
Held: Commissioner (Appeals) observed that the same adjudicating authority took divergent stand on the issue regarding input services used in co-generation plant in an earlier order - While remanding the case, the appellate authority also clearly stated that the adjudicating authority failed to give due valid grounds for denying credit on other services related to construction activities - No doubt, appellate authority has not discussed the third issue in the impugned order - Considering the overall facts and also that the case is already remanded to the adjudicating authority, there is no infirmity in the impugned order - it is directed that the adjudicating authority while deciding the denovo proceedings shall take into consideration of the input service credit denied on the ineligible documents and decide afresh. [Para 5] - Appeal partly allowed : CHENNAI CESTAT
Direct Tax Basket
2015-TIOL-2238- HC-DEL-IT + Story
CIT Vs Harsh Dhir
Whether the AO can simply proceed on the assumption that since there is an opening debit balance in the account, it should be treated as an outstanding loan and that every payment thereafter made by the Assessee should be taken to be in the nature of repayment of the loan - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2237- HC-MUM-IT
M/s Monika India Vs ITO
Whether if the taxation authorities have looked at the surrounding circumstances to find out the reality of the affairs on the test of human probabilities, the High Court, without any cogent basis, can intervene in that decision of the lower authorities - NO: HC - Assessee' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2236- HC-KAR-IT
JCIT Vs M/s Dell India Pvt Ltd
Whether extraordinary jurisdiction of court can be availed to examine the notice issued u/s 148 of the Act, if it is challenged on the ground of jurisdictional error - YES: HC - Revenue' s appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-2235- HC-KERALA- IT
CIT Vs M/s Muthappan Enterprises
Whether in case the High Court has decided a case against the assessee, the favorable appellate order obtained by that assessee in an appeal filed by them, entitling them for assessment treating the firm as a registered one, remains valid till the time the higher authority invalidates the same by specifically mentioning about the same - YES: HC - Revenue' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-1516- ITAT-PUNE
ACIT Vs Mudhol Land Holding Pvt Ltd
Whether once the rental income from the property is treated as "business income" and the character of the asset remains as commercial establishment or commercial complex as envisaged in sub-section 5 of clause (i) of section 2(ea) of the Wealth Tax Act, the same can be brought into the ambit of Wealth Tax Act - NO: ITAT - Revenue' s appeal dismissed : PUNE ITAT
2015-TIOL-1515- ITAT-PUNE
ACIT Vs M/s Ambarwadikar And Co
Whether the assessee can be allowed to value the WIP at a reduced figure merely on receipt basis where the assessee follows mercantile system of accounting, has debited all the expenditure to the profit and loss account during the impugned assessment year, has valued the WIP at a particular figure, got its accounts audited and filed the return of income belatedly and the assessee himself has shown in the belated original return of income the figure of WIP as per the bills raised by it on the Government department and the assessee has not incurred any further expenditure on such amount received in subsequent year. - Revenue appeals allowed : PUNE ITAT
2015-TIOL-1514- ITAT-KOL
Calcutta Cycle Co Vs DCIT
Income Tax - Whether having a second thought on the same material and omission to draw the correct legal presumption during the original assessment warrant the initiation of a proceeding u/s 147. - Assessee' s Appeal Allowed : KOLKATA ITAT
2015-TIOL-1513- ITAT-BANG
M/s Ahad Builders Inc Vs ACIT
Whether addition made treating the loans received from the four persons as unexplained cash credits was justified when the assessee was prevented by reasonable and sufficient cause from presenting the details, sought to be filed and admitted as additional evidence, since it had no opportunity to do so before the AO and was not allowed to do so before the CIT (A). - Case remanded : BANGALORE ITAT
2015-TIOL-1512- ITAT-AHM
My Home Developers Vs ITO
Whether once the project was eligible for deduction u/s 80IB(10), the deduction is to be allowed for 100% of the profit from such housing project even if the receipt from the sale of flat was not properly recorded in the regular books of accounts - Whether there was any justification for the AO to hold that the sum of Rs.76,25,000/ - was the income from other sources and not the income from House project when the sum found recorded in the diary was accepted to be the noting relating to receipt of on-money for the booking of flat. - Assessee' s Appeal partly Allowed : AHMEDABAD ITAT
2015-TIOL-1511- ITAT-HYD
ACIT Vs M/s Reliance Medicare Ltd
Whether TDS u/s 194J is to be deducted in respect of payment made to a doctor where the doctor was a consultant with the assessee-hospital and there was no master and servant relationship between the assessee-hospital and the doctor. - Revenue' s appeal dismissed : HYDERABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2234- HC-MAD-ST
CCE & ST Vs M/s Mrf Ltd
Service Tax - Utilisation of CENVAT Credit for payment of Service Tax on Goods Transport Agency Service - Revenue in appeal against the order of the Tribunal allowing the payment from CENVAT Credit.
Held: In the case of Cheran Spinners, identical questions of law was answered in favour of the assessee and against the Revenue (para 9)
The decision relied on by the Tribunal in R.R.D. Tex case 2007-TIOL-645- CESTAT-MAD, was also upheld in Commissioner - Vs - R.R.D. Tex Pvt. Ltd. 2007-TIOL-891- CESTAT-MAD. (para 10)
Substantial question of law answered in favour of the assessee and against the revenue. - Appeals dismissed : MADRAS HIGH COURT
2015-TIOL-2027- CESTAT-MAD
CST Vs M/s Dell International Services India Pvt Ltd
Service Tax - Rebate - Respondent&# 39;s rebate claim of CENVAT credit denied in adjudication; relief granted by Commissioner (Appeals) and agitated by Revenue herein.
Held: Commissioner (Appeals) has only printed the headlines from ELT and passed the order without examining the evidence and material fact in respect of each claim of CENVAT credit - Under section 35A(4) of the Central Excise Act, 1944 which is applied to Finance Act, 1994 Commissioner (Appeals) is required to decide an appeal clearly stating the points for determination, the decision thereon and the reasons for the decision - Unless the material facts are tested by evidence and law, there shall not be any decision in the eyes of law; it shall be an empty formality - Apex Court in the case of Joint Commissioner of Income Tax, Surat Vs. Saheli Leasing & Industries Ltd laid down guidelines as to the manner how an order is to be written - Commissioner (Appeals) has to take up each and every item of claim of CENVAT credit and discussing the material facts in respect of the claim of the assessee, test the same on the touch stone of law and then shall pass appropriate order - Respondent shall get reasonable opportunity of hearing in the course of disposal of appeal; Upon testing the veracity of claim of CENVAT credit, the rebate claim made by the respondent shall deserve consideration [Para 4, 5] - Matter remanded : CHENNAI CESTAT
2015-TIOL-2026- CESTAT-MAD
M/s Industrias Del Recambio India Pvt Ltd Vs CST
Service Tax - Condonation of delay - tax demand under reverse charge adjudicated and agitated belatedly before Commissioner (Appeals) with prayer for condonation of delay of 172 days - first appellate authority dismissed the same on the ground that it was filed beyond the condonable limit prescribed in Sec 85(3A) of the Finance Act 1994; and agitated herein.
Held: Supreme Court in the case of Singh Enterprises Vs. CCE, Jamshedpur categorically held that Commissioner (Appeals) and the Tribunal has no power to condone the delay beyond the stipulated period - ratio of the ruling squarely applicable to the present case; the lower appellate authority has rightly dismissed their appeal as time barred and there is no merit in the appeal filed by the appellant. [Para 4, 5] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2025- CESTAT-MAD
Sri Sabarey Enterprises Vs CCE
Service Tax - Clearing & Forwarding Agency Service - short issue relates to demand of service tax on the commission received by the appellants under Clearing & Forwarding Agency Service for the period September 1999 to March 2004 - The adjudicating authority confirmed the demand with penalty; Commissioner (Appeals) granted relief on penalty under Sec 78; primary tax demands are agitated herein.
Held: Under the agreement between the appellant and their principal manufacturer, appellants are to market and sell the goods as per the value fixed by the principal manufacturer and are entitled to a commission of 5% on the remittance amount - In the present case, appellant' s principal activity is sale and marketing of goods on behalf of the principal manufacturer and also for carrying out storage and distribution - In view of definition and Explanation to Section 65 (19) of the Finance Act 1994, it is clear that appellant' s principal activity is sale and marketing of the goods for their principal manufacturer, eventhough they may handle the goods for storage and distribution and forwarding of goods - The Apex Court upheld the Tribunal ruling in an identical issue in the case of CCE Vs Transasia Sales Syndicate holding that service rendered by the assessee do not fall under Clearing & Forwarding service but as "Commission Agents" – Following the same, the service tax demand confirmed under C&F service in the instant case is unsustainable; impugned orders are set aside. [Para 5, 7] - Appeals allowed : CHENNAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2232- HC-ALL-CX
M/s Sharp Carbon India Vs CCE
Central Excise - Demand of duty under extended period on account of unaccounted clearances - Appeal against the order of Tribunal confirming duty and extended period.
Held: The concurrent findings of fact recorded by the fact finding authorities, clearly attracted the proviso to Section 11-A(1) of the Act. Removal of goods in the name of dummy unit and unestablished purchases were clearly the result of suppression of facts and fraud by the appellants and, therefore, the Adjudicating Authority has not committed any error of law to invoke the extended period of limitation under the proviso to Section 11A(1) of the Act. (para 18)
No force in the submission of the appellants that the impugned order of the Tribunal is bad since it was passed after several months of the hearing. On merit the impugned order of the Tribunal does not suffer from any error of law or facts. (para 20)
The Adjudicating Authority as well as the Tribunal have well considered the relevant evidences and materials with regard to the alleged trading activity. The appellants were afforded several opportunities of being heard and there was no breach of principles of natural justice - No error in the order of the Tribunal. (para 21) - Appeal dismissed : ALLAHABAD HIGH COURT
2015-TIOL-2231- HC-MAD-CX
M/s Mohan Breweries & Distilleries Ltd Vs CCE
Central Excise - CENVAT Credit of additional duty of customs debited in DEPB scrips under Notification No.34/97-Cus. dated 7.4.1997 - Appeal against the order of Tribunal disallowing the credit - Held: No error in the order of Tribunal - Under the Exemption Notifications, if the importers produced DEPB scrip and availed the exemption for clearance of goods, the goods become non-duty paid goods. The value of DEPB scrip, once used, gets extinguished and hence there would be no question of seeking Cenvat Credit thereafter. (paras 16 & 17)
The Commissioner (Appeals) as well as the Tribunal relied upon a Larger Bench decision of the CESTAT in ESSAR Steel Limited v. Commissioner - 2004-TIOL-807- CESTAT-DEL- LB. The said decision is not overruled so far by any High Court - Question of law answered against the appellant assessee. (para 19) - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2230- HC-DEL-CX
Flevel International Vs CCE
CX - There is no attempt made by the Department to substantiate the allegation of manufacture of as many as 606 ACs by the Appellant - No evidence has been produced to show that the basic raw materials required for manufacturing such a large number of ACs was procured by the Appellant – Demand of Rs.58,44,825/ - set aside: High Court [para 56, 57, 59] - Appeal disposed of : DELHI HIGH COURT
2015-TIOL-2229- HC-KERALA- CX
CCE Vs M/s Apollo Tyres Ltd
Central Excise - Accumulated CENVAT Credit of Additional Excise duty under GSI Act, 1957 paid on Nylon Tyre Cord Fabric prior to 01.04.2000 utilised for payment of Additional Excise duty on Dipped Nylon Tyre Cord Fabric - Appeal by revenue against the order of Tribunal - Held: Credit of AED paid on or after 01.04.2000, is permitted to be utilized towards payment of duty of excise leviable under the first schedule or the second schedule to the Excise Tariff Act - Restriction introduced by the explanation was only in the utilization of the accumulated credit of AED towards payment of duty under the schedules of Excise Tariff Act. This means that this restriction applied only in the payment of BED and SED, which alone is payable under the Excise Tariff Act and not to AED payable under Section 3 of Act 58 of 1957. Therefore, this contention raised by the appellants cannot be accepted. (para 14)
Issue covered by the order of Tribunal in case of M/s CEAT Ltd and M/s Goodyear (India) Ltd - The appellants contended that the order passed by the Delhi Tribunal which was confirmed by the High Court of Punjab and Haryana, was challenged before the Supreme Court and that while dismissing the SLP on the ground of delay, the question of law raised was kept open. When dismissing the SLP, if the question of law raised is kept open by the Apex Court that does not mean that the conclusion of the Tribunal or the principles laid down by the High Court, are set at naught - No merit in revenue appeal. (para 15) - Appeal dismissed : KERALA HIGH COURT
2015-TIOL-2028- CESTAT-DEL
M/s Manwani Industries Ltd Vs CCE & ST
CX - Shortage of finished goods viz. bars and rods of 36.830 MT and excess stock of 2100 ltrs of Furnace oil - authorized signatory explaining the shortage as due to removal of the said goods clandestinely removed without preparation of invoice / gate passes and usage of parallel invoices of same number – duty demand confirmed with imposition of equivalent penalty on company and personal penalty on Director – appeal to CESTAT.
Held: Burden lies on the appellants to prove contrary which appellants have failed to do so - allegation made against the appellants found justified by the Adjudicating Authority in the impugned order - demand amounting to Rs. 39,87,886/-on clearances relating to 1st June 1996 and 31.10.96 as well as demand of Rs.67,255/- on the shortage found are upheld: CESTAT [para 10]
Penalty on assessee - provisions of procedure of section 11AC are applicable from 28.09.1996 and the amount of demand relating to the period October 1996 having been quantified as Rs.4,08,866/ - - therefore, penalty reduced from Rs.40,54,893/ - to Rs. 4,08,866/- on the appellant company: CESTAT [para 11]
Penalty on Director - Obligation of the Director relating to the overall performance activities of the company are well defined under the provisions of the Companies Act, and therefore, the plea of ignorance cannot be accepted - claim of Director that the entire activities like production, clearance were being looked after by authorized signatory is also not acceptable inasmuch as Shri Joshi, authorised signatory, has stated he has acted as per the direction of the Directors - Penalties are justified, however, considering the entire facts and circumstances, penalty reduced to Rs.1 Lakh only: CESTAT [para 12] - Appeal disposed of : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2233- HC-P&H-CUS
Broadway Overseas Ltd Vs CESTAT
Cus - Redemption fine - Tribunal had recorded that as per the provisions of the licensing notes, the secondary/defective HR Coils could be imported only at the ports of Mumbai, Chennai or Kolkata – therefore, import of goods at ICD, Ludhiana by the assessee was contrary to the licencing note No.4 of Chapter 72 of the ITC (HS) and, therefore, the goods had been rightly confiscated - Tribunal, however, waived the penalty on the appellant u/s 112(a) of the CA, 1962 and reduced the quantum of redemption fine from Rs. 3,00,000/- to Rs. 1,00,000/- - Merely because the Tribunal had taken a lenient view, it would not give any substantive right to the appellant to get the redemption fine of Rs. 1,00,000/- set aside on the ground that once penalty has been waived, no redemption fine could be sustained especially when the appellant had violated the provisions of the licencing note – no question of law arises – appeal dismissed: High Court [para 5, 6] - Appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2029- CESTAT-MUM + Story
CC Vs Lenze Mechatronics Pvt Ltd
Cus - Decision of the adjudicating authority is an apology of an Order and is not a speaking Order - even if similar goods sold to the unrelated buyer are taken as the basis of value of impugned goods in terms of Valuation Rules 4 & 5, adjustments have to be made on account of such factors as stated in proviso to Rule 3 (3) (b) of the Valuation Rules - AA has not even touched upon the Valuation Rules, which provide the legal basis of arriving at the correct assessable value - no reason to reject the order of Commr.(A) - Revenue appeal rejected: CESTAT [para 4.2, 5] - Appeal rejected : MUMBAI CESTAT
2015-TIOL-2238- HC-DEL-IT + Story
CIT Vs Harsh Dhir
Whether the AO can simply proceed on the assumption that since there is an opening debit balance in the account, it should be treated as an outstanding loan and that every payment thereafter made by the Assessee should be taken to be in the nature of repayment of the loan - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2237- HC-MUM-IT
M/s Monika India Vs ITO
Whether if the taxation authorities have looked at the surrounding circumstances to find out the reality of the affairs on the test of human probabilities, the High Court, without any cogent basis, can intervene in that decision of the lower authorities - NO: HC - Assessee' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2236- HC-KAR-IT
JCIT Vs M/s Dell India Pvt Ltd
Whether extraordinary jurisdiction of court can be availed to examine the notice issued u/s 148 of the Act, if it is challenged on the ground of jurisdictional error - YES: HC - Revenue' s appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-2235- HC-KERALA- IT
CIT Vs M/s Muthappan Enterprises
Whether in case the High Court has decided a case against the assessee, the favorable appellate order obtained by that assessee in an appeal filed by them, entitling them for assessment treating the firm as a registered one, remains valid till the time the higher authority invalidates the same by specifically mentioning about the same - YES: HC - Revenue' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-1516- ITAT-PUNE
ACIT Vs Mudhol Land Holding Pvt Ltd
Whether once the rental income from the property is treated as "business income" and the character of the asset remains as commercial establishment or commercial complex as envisaged in sub-section 5 of clause (i) of section 2(ea) of the Wealth Tax Act, the same can be brought into the ambit of Wealth Tax Act - NO: ITAT - Revenue' s appeal dismissed : PUNE ITAT
2015-TIOL-1515- ITAT-PUNE
ACIT Vs M/s Ambarwadikar And Co
Whether the assessee can be allowed to value the WIP at a reduced figure merely on receipt basis where the assessee follows mercantile system of accounting, has debited all the expenditure to the profit and loss account during the impugned assessment year, has valued the WIP at a particular figure, got its accounts audited and filed the return of income belatedly and the assessee himself has shown in the belated original return of income the figure of WIP as per the bills raised by it on the Government department and the assessee has not incurred any further expenditure on such amount received in subsequent year. - Revenue appeals allowed : PUNE ITAT
2015-TIOL-1514- ITAT-KOL
Calcutta Cycle Co Vs DCIT
Income Tax - Whether having a second thought on the same material and omission to draw the correct legal presumption during the original assessment warrant the initiation of a proceeding u/s 147. - Assessee' s Appeal Allowed : KOLKATA ITAT
2015-TIOL-1513- ITAT-BANG
M/s Ahad Builders Inc Vs ACIT
Whether addition made treating the loans received from the four persons as unexplained cash credits was justified when the assessee was prevented by reasonable and sufficient cause from presenting the details, sought to be filed and admitted as additional evidence, since it had no opportunity to do so before the AO and was not allowed to do so before the CIT (A). - Case remanded : BANGALORE ITAT
2015-TIOL-1512- ITAT-AHM
My Home Developers Vs ITO
Whether once the project was eligible for deduction u/s 80IB(10), the deduction is to be allowed for 100% of the profit from such housing project even if the receipt from the sale of flat was not properly recorded in the regular books of accounts - Whether there was any justification for the AO to hold that the sum of Rs.76,25,000/ - was the income from other sources and not the income from House project when the sum found recorded in the diary was accepted to be the noting relating to receipt of on-money for the booking of flat. - Assessee' s Appeal partly Allowed : AHMEDABAD ITAT
2015-TIOL-1511- ITAT-HYD
ACIT Vs M/s Reliance Medicare Ltd
Whether TDS u/s 194J is to be deducted in respect of payment made to a doctor where the doctor was a consultant with the assessee-hospital and there was no master and servant relationship between the assessee-hospital and the doctor. - Revenue' s appeal dismissed : HYDERABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2234- HC-MAD-ST
CCE & ST Vs M/s Mrf Ltd
Service Tax - Utilisation of CENVAT Credit for payment of Service Tax on Goods Transport Agency Service - Revenue in appeal against the order of the Tribunal allowing the payment from CENVAT Credit.
Held: In the case of Cheran Spinners, identical questions of law was answered in favour of the assessee and against the Revenue (para 9)
The decision relied on by the Tribunal in R.R.D. Tex case 2007-TIOL-645- CESTAT-MAD, was also upheld in Commissioner - Vs - R.R.D. Tex Pvt. Ltd. 2007-TIOL-891- CESTAT-MAD. (para 10)
Substantial question of law answered in favour of the assessee and against the revenue. - Appeals dismissed : MADRAS HIGH COURT
2015-TIOL-2027- CESTAT-MAD
CST Vs M/s Dell International Services India Pvt Ltd
Service Tax - Rebate - Respondent&# 39;s rebate claim of CENVAT credit denied in adjudication; relief granted by Commissioner (Appeals) and agitated by Revenue herein.
Held: Commissioner (Appeals) has only printed the headlines from ELT and passed the order without examining the evidence and material fact in respect of each claim of CENVAT credit - Under section 35A(4) of the Central Excise Act, 1944 which is applied to Finance Act, 1994 Commissioner (Appeals) is required to decide an appeal clearly stating the points for determination, the decision thereon and the reasons for the decision - Unless the material facts are tested by evidence and law, there shall not be any decision in the eyes of law; it shall be an empty formality - Apex Court in the case of Joint Commissioner of Income Tax, Surat Vs. Saheli Leasing & Industries Ltd laid down guidelines as to the manner how an order is to be written - Commissioner (Appeals) has to take up each and every item of claim of CENVAT credit and discussing the material facts in respect of the claim of the assessee, test the same on the touch stone of law and then shall pass appropriate order - Respondent shall get reasonable opportunity of hearing in the course of disposal of appeal; Upon testing the veracity of claim of CENVAT credit, the rebate claim made by the respondent shall deserve consideration [Para 4, 5] - Matter remanded : CHENNAI CESTAT
2015-TIOL-2026- CESTAT-MAD
M/s Industrias Del Recambio India Pvt Ltd Vs CST
Service Tax - Condonation of delay - tax demand under reverse charge adjudicated and agitated belatedly before Commissioner (Appeals) with prayer for condonation of delay of 172 days - first appellate authority dismissed the same on the ground that it was filed beyond the condonable limit prescribed in Sec 85(3A) of the Finance Act 1994; and agitated herein.
Held: Supreme Court in the case of Singh Enterprises Vs. CCE, Jamshedpur categorically held that Commissioner (Appeals) and the Tribunal has no power to condone the delay beyond the stipulated period - ratio of the ruling squarely applicable to the present case; the lower appellate authority has rightly dismissed their appeal as time barred and there is no merit in the appeal filed by the appellant. [Para 4, 5] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2025- CESTAT-MAD
Sri Sabarey Enterprises Vs CCE
Service Tax - Clearing & Forwarding Agency Service - short issue relates to demand of service tax on the commission received by the appellants under Clearing & Forwarding Agency Service for the period September 1999 to March 2004 - The adjudicating authority confirmed the demand with penalty; Commissioner (Appeals) granted relief on penalty under Sec 78; primary tax demands are agitated herein.
Held: Under the agreement between the appellant and their principal manufacturer, appellants are to market and sell the goods as per the value fixed by the principal manufacturer and are entitled to a commission of 5% on the remittance amount - In the present case, appellant' s principal activity is sale and marketing of goods on behalf of the principal manufacturer and also for carrying out storage and distribution - In view of definition and Explanation to Section 65 (19) of the Finance Act 1994, it is clear that appellant' s principal activity is sale and marketing of the goods for their principal manufacturer, eventhough they may handle the goods for storage and distribution and forwarding of goods - The Apex Court upheld the Tribunal ruling in an identical issue in the case of CCE Vs Transasia Sales Syndicate holding that service rendered by the assessee do not fall under Clearing & Forwarding service but as "Commission Agents" – Following the same, the service tax demand confirmed under C&F service in the instant case is unsustainable; impugned orders are set aside. [Para 5, 7] - Appeals allowed : CHENNAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2232- HC-ALL-CX
M/s Sharp Carbon India Vs CCE
Central Excise - Demand of duty under extended period on account of unaccounted clearances - Appeal against the order of Tribunal confirming duty and extended period.
Held: The concurrent findings of fact recorded by the fact finding authorities, clearly attracted the proviso to Section 11-A(1) of the Act. Removal of goods in the name of dummy unit and unestablished purchases were clearly the result of suppression of facts and fraud by the appellants and, therefore, the Adjudicating Authority has not committed any error of law to invoke the extended period of limitation under the proviso to Section 11A(1) of the Act. (para 18)
No force in the submission of the appellants that the impugned order of the Tribunal is bad since it was passed after several months of the hearing. On merit the impugned order of the Tribunal does not suffer from any error of law or facts. (para 20)
The Adjudicating Authority as well as the Tribunal have well considered the relevant evidences and materials with regard to the alleged trading activity. The appellants were afforded several opportunities of being heard and there was no breach of principles of natural justice - No error in the order of the Tribunal. (para 21) - Appeal dismissed : ALLAHABAD HIGH COURT
2015-TIOL-2231- HC-MAD-CX
M/s Mohan Breweries & Distilleries Ltd Vs CCE
Central Excise - CENVAT Credit of additional duty of customs debited in DEPB scrips under Notification No.34/97-Cus. dated 7.4.1997 - Appeal against the order of Tribunal disallowing the credit - Held: No error in the order of Tribunal - Under the Exemption Notifications, if the importers produced DEPB scrip and availed the exemption for clearance of goods, the goods become non-duty paid goods. The value of DEPB scrip, once used, gets extinguished and hence there would be no question of seeking Cenvat Credit thereafter. (paras 16 & 17)
The Commissioner (Appeals) as well as the Tribunal relied upon a Larger Bench decision of the CESTAT in ESSAR Steel Limited v. Commissioner - 2004-TIOL-807- CESTAT-DEL- LB. The said decision is not overruled so far by any High Court - Question of law answered against the appellant assessee. (para 19) - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2230- HC-DEL-CX
Flevel International Vs CCE
CX - There is no attempt made by the Department to substantiate the allegation of manufacture of as many as 606 ACs by the Appellant - No evidence has been produced to show that the basic raw materials required for manufacturing such a large number of ACs was procured by the Appellant – Demand of Rs.58,44,825/ - set aside: High Court [para 56, 57, 59] - Appeal disposed of : DELHI HIGH COURT
2015-TIOL-2229- HC-KERALA- CX
CCE Vs M/s Apollo Tyres Ltd
Central Excise - Accumulated CENVAT Credit of Additional Excise duty under GSI Act, 1957 paid on Nylon Tyre Cord Fabric prior to 01.04.2000 utilised for payment of Additional Excise duty on Dipped Nylon Tyre Cord Fabric - Appeal by revenue against the order of Tribunal - Held: Credit of AED paid on or after 01.04.2000, is permitted to be utilized towards payment of duty of excise leviable under the first schedule or the second schedule to the Excise Tariff Act - Restriction introduced by the explanation was only in the utilization of the accumulated credit of AED towards payment of duty under the schedules of Excise Tariff Act. This means that this restriction applied only in the payment of BED and SED, which alone is payable under the Excise Tariff Act and not to AED payable under Section 3 of Act 58 of 1957. Therefore, this contention raised by the appellants cannot be accepted. (para 14)
Issue covered by the order of Tribunal in case of M/s CEAT Ltd and M/s Goodyear (India) Ltd - The appellants contended that the order passed by the Delhi Tribunal which was confirmed by the High Court of Punjab and Haryana, was challenged before the Supreme Court and that while dismissing the SLP on the ground of delay, the question of law raised was kept open. When dismissing the SLP, if the question of law raised is kept open by the Apex Court that does not mean that the conclusion of the Tribunal or the principles laid down by the High Court, are set at naught - No merit in revenue appeal. (para 15) - Appeal dismissed : KERALA HIGH COURT
2015-TIOL-2028- CESTAT-DEL
M/s Manwani Industries Ltd Vs CCE & ST
CX - Shortage of finished goods viz. bars and rods of 36.830 MT and excess stock of 2100 ltrs of Furnace oil - authorized signatory explaining the shortage as due to removal of the said goods clandestinely removed without preparation of invoice / gate passes and usage of parallel invoices of same number – duty demand confirmed with imposition of equivalent penalty on company and personal penalty on Director – appeal to CESTAT.
Held: Burden lies on the appellants to prove contrary which appellants have failed to do so - allegation made against the appellants found justified by the Adjudicating Authority in the impugned order - demand amounting to Rs. 39,87,886/-on clearances relating to 1st June 1996 and 31.10.96 as well as demand of Rs.67,255/- on the shortage found are upheld: CESTAT [para 10]
Penalty on assessee - provisions of procedure of section 11AC are applicable from 28.09.1996 and the amount of demand relating to the period October 1996 having been quantified as Rs.4,08,866/ - - therefore, penalty reduced from Rs.40,54,893/ - to Rs. 4,08,866/- on the appellant company: CESTAT [para 11]
Penalty on Director - Obligation of the Director relating to the overall performance activities of the company are well defined under the provisions of the Companies Act, and therefore, the plea of ignorance cannot be accepted - claim of Director that the entire activities like production, clearance were being looked after by authorized signatory is also not acceptable inasmuch as Shri Joshi, authorised signatory, has stated he has acted as per the direction of the Directors - Penalties are justified, however, considering the entire facts and circumstances, penalty reduced to Rs.1 Lakh only: CESTAT [para 12] - Appeal disposed of : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2233- HC-P&H-CUS
Broadway Overseas Ltd Vs CESTAT
Cus - Redemption fine - Tribunal had recorded that as per the provisions of the licensing notes, the secondary/defective HR Coils could be imported only at the ports of Mumbai, Chennai or Kolkata – therefore, import of goods at ICD, Ludhiana by the assessee was contrary to the licencing note No.4 of Chapter 72 of the ITC (HS) and, therefore, the goods had been rightly confiscated - Tribunal, however, waived the penalty on the appellant u/s 112(a) of the CA, 1962 and reduced the quantum of redemption fine from Rs. 3,00,000/- to Rs. 1,00,000/- - Merely because the Tribunal had taken a lenient view, it would not give any substantive right to the appellant to get the redemption fine of Rs. 1,00,000/- set aside on the ground that once penalty has been waived, no redemption fine could be sustained especially when the appellant had violated the provisions of the licencing note – no question of law arises – appeal dismissed: High Court [para 5, 6] - Appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2029- CESTAT-MUM + Story
CC Vs Lenze Mechatronics Pvt Ltd
Cus - Decision of the adjudicating authority is an apology of an Order and is not a speaking Order - even if similar goods sold to the unrelated buyer are taken as the basis of value of impugned goods in terms of Valuation Rules 4 & 5, adjustments have to be made on account of such factors as stated in proviso to Rule 3 (3) (b) of the Valuation Rules - AA has not even touched upon the Valuation Rules, which provide the legal basis of arriving at the correct assessable value - no reason to reject the order of Commr.(A) - Revenue appeal rejected: CESTAT [para 4.2, 5] - Appeal rejected : MUMBAI CESTAT
ST - Appellant borrowing, by way of 'syndicated loans' for acquisition and capital expansion, from various overseas banks - whether Service Tax is payable under reverse charge on Agent Bank fees paid by appellant-borrower to nominated Agent Bank of lenders - Supplementary questions framed & referred : CESTAT
MUMBAI : THE appellant, borrowed, by way of 'syndicated loans', for their international acquisition and capital expansion, from various overseas banks. In order to find lenders / lender syndicate, the appellant appointed various banks/institutions abroad as Mandated Lead Arrangers (MLAs). The MLAs were paid "arrangement fees" which is essentially a fee paid for arranging lenders/lender syndicate for the appellant borrower.
A SCN was issued demanding ST on reverse charge basis under the head 'Banking and Financial Services' .
In his Order the adjudicating authority mentioned that, because, out of the total amount demanded, Rs.9.74croreswas paid during investigation within due dates or with a short delay of six days and 29 days and for the delay, the appellants paid the interest, no further action including penalties was necessary in respect of this amount of tax already paid. Therefore, in the Order only the balance demand of Rs.8.05crores is discussed. This amount of Service Tax of Rs.8.05crores arises from payments made by appellant on two accounts namely, Arrangement fees (including road show expenses) and Agency fees paid to Mandated Lead Arrangers (MLA) and Agent Banks respectively. Apart from upholding the extended period & confirming the demand, the adjudicating authority also imposed penalties u/s 76 & 78 of FA, 1994. The Commissioner also held that the demand for the period prior to 18.04.2006 is also sustainable in view of CBEC Letter No. 275/7/2010 CX-8A dated 30.06.2010 and Notification No. 36/04-ST dated 31.12.2004 issued under Section 68 (2) read with Rule 2(10(d)(iv) of the Service Tax Rules.
The matter was heard by the Division Bench and the following difference of opinion was referred to the third Member -
(i) Whether in the facts and circumstances of the case, the Arrangement fee and Agent's Bank fee are taxable in the hands of the appellant company in view of the findings recorded by the learned Member (Technical)
Or
Whether the same was not taxable in view of the findings recorded by Member (Judicial).
(ii) Whether in the facts and circumstances of the case, the extended period of limitation is invocable and penalties under Section 76 & 78 are payable as held by the learned Member (Technical)
Or
Whether the extended period of limitation is not invocable in the facts and circumstances of the case as held by the learned Member (Judicial).
We reported this order as 2015-TIOL-1202- CESTAT-MUM.
It seems that the Applicant/Appellant is not pleased with the questions framed for reference and, therefore, have filed a modification application seeking rectification of mistake in this order.
It is submitted that the Judicial-Member has not given findings on the following three issues, which were also before the Tribunal, although Member (Technical) has given his opinion. The issues are as follows:-
(i) Whether the arrangement services were provided beyond the Indian territory and hence on that count also the arrangement services would not be liable for Service Tax.
(ii) Whether the tax demand of Rs. 2,82,88,914/ - for period prior to 18.4.2006 on arrangement fees would not be payable.
(iii) Whether the benefit of Section 80 is not available and hence penalty under Section 76 and 78 are imposable or whether the benefit of Section 80 is available and accordingly the penalties under Section 76 and 78 are not imposable.
The applicant relies on the ruling of the Gujarat High Court in Colourtex vs. Union of India - 2006-TIOL-128- HC-AHM-CESTAT and the decision in Suzlon Infrastructure Ltd. - 2009-TIOL-327- HC-MUM-ST in support of their ROM application.
The Special Counsel for the Revenue opposed this application by citing the decision in Commissioner of Central Excise, Calcutta Vs. ASCU Ltd. - 2002-TIOL-408- SC-CX.
The Member (J) writing for the Bench and who incidentally was the second Member of the Division Bench that referred the matter to the third Member held that the rectification application is maintainable and, accordingly, allowed the same.
Accordingly, the following Supplementary findings were recorded by Judicial Member -
Findings:- It is held that the contract for services was entered into outside India, the services have been received outside India and further the resultant loan was also received outside India and its utilization also made outside India. As such, it is held that the Arrangement services were provided beyond the Indian Territory and hence, the arrangement services would not be liable to Service Tax under the Finance Act, 1994.
Findings:- On this issue, I agree with my brother learned Technical Member that the said amount relating to the period prior to 18.4.2006 on Arrangement Fee, would not be taxable under the Finance Act, 1994.
Findings:- In view of my findings recorded in para 22 of the order in appeal wherein I have recorded categorical finding that the transaction on which Service Tax is disputed have been admittedly recorded in the Books of Account maintained in the normal course of business. Further, Revenue had sought details of the overseas payment made towards external borrowing for the three years period i.e. 10.9.2004 on 13.6.2006 vide letter dated 12.7.2007, which was replied by the applicant assessee giving the details including the Arrangement Fees and Agency Fee in question. The revenue have thereafter taken a period of little more than 19 months in making up its mind as to the taxability of the Service Tax on two payments which is the subject matter of the present appeal. Thus, there is no suppression of facts and/or contumacious conduct on part of the applicant-appellant company. Further, the issue is interpretational in nature. Thus, I hold that the benefit of Section 80 is available to the appellant assessee. Accordingly, no penalty is leviable under any of the Sections including Section 76 and 78.
Resultantly, the following supplementary questions were referred to the third Member -
(i) In the facts and circumstances, whether the services have been received by the appellant-assessee beyond the Indian Territory and hence, not liable to Service Tax as held by Member (Judicial)
or
Whether the services have been received within Indian Territory and hence liable to Service Tax as held by Member (Technical).
(ii) Whether in the facts and circumstances and in law, the benefit of section 80 is available to the appellant-assessee and no penalties are imposable as held by Member (Judicial)
or
Such benefit is not available and penalties are imposable under Section 76 and 78 of the Finance Act, 1994 as held by Member (Technical)
(See 2015-TIOL-2036- CESTAT-MUM)
MUMBAI : THE appellant, borrowed, by way of 'syndicated loans', for their international acquisition and capital expansion, from various overseas banks. In order to find lenders / lender syndicate, the appellant appointed various banks/institutions abroad as Mandated Lead Arrangers (MLAs). The MLAs were paid "arrangement fees" which is essentially a fee paid for arranging lenders/lender syndicate for the appellant borrower.
A SCN was issued demanding ST on reverse charge basis under the head 'Banking and Financial Services' .
In his Order the adjudicating authority mentioned that, because, out of the total amount demanded, Rs.9.74croreswas paid during investigation within due dates or with a short delay of six days and 29 days and for the delay, the appellants paid the interest, no further action including penalties was necessary in respect of this amount of tax already paid. Therefore, in the Order only the balance demand of Rs.8.05crores is discussed. This amount of Service Tax of Rs.8.05crores arises from payments made by appellant on two accounts namely, Arrangement fees (including road show expenses) and Agency fees paid to Mandated Lead Arrangers (MLA) and Agent Banks respectively. Apart from upholding the extended period & confirming the demand, the adjudicating authority also imposed penalties u/s 76 & 78 of FA, 1994. The Commissioner also held that the demand for the period prior to 18.04.2006 is also sustainable in view of CBEC Letter No. 275/7/2010 CX-8A dated 30.06.2010 and Notification No. 36/04-ST dated 31.12.2004 issued under Section 68 (2) read with Rule 2(10(d)(iv) of the Service Tax Rules.
The matter was heard by the Division Bench and the following difference of opinion was referred to the third Member -
(i) Whether in the facts and circumstances of the case, the Arrangement fee and Agent's Bank fee are taxable in the hands of the appellant company in view of the findings recorded by the learned Member (Technical)
Or
Whether the same was not taxable in view of the findings recorded by Member (Judicial).
(ii) Whether in the facts and circumstances of the case, the extended period of limitation is invocable and penalties under Section 76 & 78 are payable as held by the learned Member (Technical)
Or
Whether the extended period of limitation is not invocable in the facts and circumstances of the case as held by the learned Member (Judicial).
We reported this order as 2015-TIOL-1202- CESTAT-MUM.
It seems that the Applicant/Appellant is not pleased with the questions framed for reference and, therefore, have filed a modification application seeking rectification of mistake in this order.
It is submitted that the Judicial-Member has not given findings on the following three issues, which were also before the Tribunal, although Member (Technical) has given his opinion. The issues are as follows:-
(i) Whether the arrangement services were provided beyond the Indian territory and hence on that count also the arrangement services would not be liable for Service Tax.
(ii) Whether the tax demand of Rs. 2,82,88,914/ - for period prior to 18.4.2006 on arrangement fees would not be payable.
(iii) Whether the benefit of Section 80 is not available and hence penalty under Section 76 and 78 are imposable or whether the benefit of Section 80 is available and accordingly the penalties under Section 76 and 78 are not imposable.
The applicant relies on the ruling of the Gujarat High Court in Colourtex vs. Union of India - 2006-TIOL-128- HC-AHM-CESTAT and the decision in Suzlon Infrastructure Ltd. - 2009-TIOL-327- HC-MUM-ST in support of their ROM application.
The Special Counsel for the Revenue opposed this application by citing the decision in Commissioner of Central Excise, Calcutta Vs. ASCU Ltd. - 2002-TIOL-408- SC-CX.
The Member (J) writing for the Bench and who incidentally was the second Member of the Division Bench that referred the matter to the third Member held that the rectification application is maintainable and, accordingly, allowed the same.
Accordingly, the following Supplementary findings were recorded by Judicial Member -
Findings:- It is held that the contract for services was entered into outside India, the services have been received outside India and further the resultant loan was also received outside India and its utilization also made outside India. As such, it is held that the Arrangement services were provided beyond the Indian Territory and hence, the arrangement services would not be liable to Service Tax under the Finance Act, 1994.
Findings:- On this issue, I agree with my brother learned Technical Member that the said amount relating to the period prior to 18.4.2006 on Arrangement Fee, would not be taxable under the Finance Act, 1994.
Findings:- In view of my findings recorded in para 22 of the order in appeal wherein I have recorded categorical finding that the transaction on which Service Tax is disputed have been admittedly recorded in the Books of Account maintained in the normal course of business. Further, Revenue had sought details of the overseas payment made towards external borrowing for the three years period i.e. 10.9.2004 on 13.6.2006 vide letter dated 12.7.2007, which was replied by the applicant assessee giving the details including the Arrangement Fees and Agency Fee in question. The revenue have thereafter taken a period of little more than 19 months in making up its mind as to the taxability of the Service Tax on two payments which is the subject matter of the present appeal. Thus, there is no suppression of facts and/or contumacious conduct on part of the applicant-appellant company. Further, the issue is interpretational in nature. Thus, I hold that the benefit of Section 80 is available to the appellant assessee. Accordingly, no penalty is leviable under any of the Sections including Section 76 and 78.
Resultantly, the following supplementary questions were referred to the third Member -
(i) In the facts and circumstances, whether the services have been received by the appellant-assessee beyond the Indian Territory and hence, not liable to Service Tax as held by Member (Judicial)
or
Whether the services have been received within Indian Territory and hence liable to Service Tax as held by Member (Technical).
(ii) Whether in the facts and circumstances and in law, the benefit of section 80 is available to the appellant-assessee and no penalties are imposable as held by Member (Judicial)
or
Such benefit is not available and penalties are imposable under Section 76 and 78 of the Finance Act, 1994 as held by Member (Technical)
(See 2015-TIOL-2036- CESTAT-MUM)
Write a message...
Attachment(s) from
1 of 1 Photo(s)
__._,_.___
No comments:
Post a Comment