[2015] 60 taxmann.com 473 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'A'
Atotech India Ltd.
v.
Assistant Commissioner of Income-tax
Service tax under reverse charge on works contract service
The works contract service is a taxable service which is defined under clause zzzza of section 65(105) of the Finance Act, 1994, 'as any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams'.
Works contract means a contract wherein transfer of property in goods involved in the execution of works contract is leviable to tax as sale of goods and the service portion in the execution of works contract is liable to service tax. Thus, the consideration for works contract service shall include both the value of material and the value of service provided during execution of the works contract. The manner for determining the value of service portion of a works contract from the total works contract is given in Rule 2A of the Service Tax (Determination of Value) Rules, 2006 as – 'the service portion involved in the execution of Original works is 40% of the total works contract and the service portion involved in the execution of works contract other than original works is 70% of the total works contract.
The works contract service is covered under the reverse charge notification no. 30/2012. The liability of service tax under said service shall be paid equally by the contractor/provider of service and the recipient of the service. That is fifty percent of the service tax liability shall be paid by the contractor and the balance 50% shall be paid by the recipient of the service. In short, the service tax shall be paid at 14% (prevailing rate) on 40% or 70% of the total works contract, as the case may be, by the provider of service and the receiver of the service on equal sharing ratio i.e.50:50 ratio.
In some situation, the recipient of the service supply material free of cost to the contractor to use it in execution of works contract. In such case the contractor only carries out service of execution of works contract. It implies that the invoice raised by the provider of service shall include only the labour/service portion. In such case complication arises as to whether the value of free of cost material should be added to the total works contract for charging service tax as per the provision laid down in the Service Tax (Determination of Value) Rules, 2006. On carefully reading the provision of valuation rule, the value of free of cost material shall also be added to the total works contract service to calculate service tax. The said provision is hardship on the recipient of service and provider of service.
By: ganeshan kalyani
The works contract service is a taxable service which is defined under clause zzzza of section 65(105) of the Finance Act, 1994, 'as any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams'.
Works contract means a contract wherein transfer of property in goods involved in the execution of works contract is leviable to tax as sale of goods and the service portion in the execution of works contract is liable to service tax. Thus, the consideration for works contract service shall include both the value of material and the value of service provided during execution of the works contract. The manner for determining the value of service portion of a works contract from the total works contract is given in Rule 2A of the Service Tax (Determination of Value) Rules, 2006 as – 'the service portion involved in the execution of Original works is 40% of the total works contract and the service portion involved in the execution of works contract other than original works is 70% of the total works contract.
The works contract service is covered under the reverse charge notification no. 30/2012. The liability of service tax under said service shall be paid equally by the contractor/provider of service and the recipient of the service. That is fifty percent of the service tax liability shall be paid by the contractor and the balance 50% shall be paid by the recipient of the service. In short, the service tax shall be paid at 14% (prevailing rate) on 40% or 70% of the total works contract, as the case may be, by the provider of service and the receiver of the service on equal sharing ratio i.e.50:50 ratio.
In some situation, the recipient of the service supply material free of cost to the contractor to use it in execution of works contract. In such case the contractor only carries out service of execution of works contract. It implies that the invoice raised by the provider of service shall include only the labour/service portion. In such case complication arises as to whether the value of free of cost material should be added to the total works contract for charging service tax as per the provision laid down in the Service Tax (Determination of Value) Rules, 2006. On carefully reading the provision of valuation rule, the value of free of cost material shall also be added to the total works contract service to calculate service tax. The said provision is hardship on the recipient of service and provider of service.
By: ganeshan kalyani
ST - VCES - Words 'issued to person' used in sec 106 of FA, 2013 have to be construed as 'served to person' - To be able to decide whether one is disqualified as per law, notice must be put to knowledge of person: CESTAT
BANGALORE : THE appellant had opted for the VCES, 2013 and filed a declaration in respect of tax dues for the period December 2009 to November 2012. They also deposited 50% of the admitted tax liability of Rs.47,84,597/ - before 31.12.2013 as required under the Scheme.
A SCN came to be issued on 31.12.2013 proposing rejection of the declaration citing the second proviso to Section 106(1) of the Finance Act, 2013 on the ground that a Show Cause Notice No. 28/2013-ST dated 22.02.2013 had already been issued to the appellant, demanding service tax of Rs. 40,01,067/- for the period April 2009 to December 2011, and therefore, the appellant cannot avail the option of VCES.
In reply, it was submitted by the assessee that the SCN dated 22.02.2013 was not received by the appellant before 01.03.2013, and hence the disqualification, as proposed,cannot be made applicable.
Perhaps, determined that the applicant should be evicted from the ST Voluntary Compliance Encouragement Scheme, come what may, another Show Cause Notice No. 19/2014-ST (VCES) dated 17.01.2014 was issued by the Assistant Commissioner proposing for rejection of the declaration on the ground envisaged in the main provisions of Section 106(1) of the Act.
Both the above referred Show cause Notices (dated 31.12.2013 and 17.01.2014) were adjudicated by the Assistant Commissioner vide Order-in-Original No. 12/2014-ST (VCES) dated 31.01.2014, holding that the declaration of tax dues filed by the appellant attracted disqualifications envisaged in the main part, as well as those contained in the proviso to Section 106(1) of the Finance Act, 2013.
The Commissioner (Appeal) followed the chartered course - uphold the order of the adjudicating authority.
And so, with a heavy heart the assessee is before the CESTAT.
Take a look at section 106(1) of the FA, 2013 -
Person who may make declaration of tax dues.
106. (1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013:
Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return:
Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.
The appellant submitted that the show cause notice dated 22.02.2013 was not served to the appellant before 01.03.2013, and thus, the disqualification in terms of the main provision as well as the second proviso to Section 106(1) of the Finance Act, 2013 cannot be applied.
It is further emphasised that the SCN dated 22.02.2013 having been issued under Section 73 of the FA, 1994, which mandates that the notice has to be "served" on the person for recovery of the service tax not levied or paid, non-service of such notice within the stipulated time frame, cannot take away the substantive right of the appellant to avail the benefits under the VCES.
Inasmuch as since the SCN was not received by the appellant before 01.03.2013, the benefits provided in the VCES cannot be denied to the appellant on the ground that notice was 'issued&# 39;.
The AR, while reiterating the finding recorded in the impugned order further submitted that since the SCN was sent through postal department, that date of sending the notice is to be interpreted as the date of giving of notice and therefore, the SCN dated 22.02.2013 having been issued prior to 01.03.2013, that issuance of notice is sufficient compliance of service of notice. Suffice to say that the appellant is not entitled for the benefits of VCES, 2013 as per the embargo created in Section 106(1) of the Finance Act, 2013, the AR emphasised.
The Bench observed -
+ The only question to be considered is whether the date of the show Cause Notice or the date on which it was served on the parson, has to be taken into consideration for interpreting the provisions of Section 106 of the Act, which places an embargo to the effect, that no declaration shall be made for the tax dues where the notice has been issued to the person before 01.03.2013.
+ It is an admitted fact on record that the Show Cause Notice No. 28/2013 ST dated 22.02.2013 issued under Section 73 of the Finance Act, 1994 has not been received by the appellant before 01.03.2013. Section 73 of the Act mandates that in cases, where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve notice on the parson chargeable with service tax which has not been levied or paid.
+ The law contained in Section 73 of the Act, makes it abundantly clear that the Show Cause Notice has to be served on the person concerned and mere 'issuance&# 39; of the same is not enough. In other words, if the Show Cause Notice was issued and posted by registered post before last date but received/served after the last date, then the demand notice under Section 73 of the Act is not sustainable, as it was not served within time.
+ The intention for incorporating such an embargo in Section 106 of the Finance Act, 2013 is to dissuade persons against whom proceedings have been initiated, from taking the shelter of VCES. A person who wants to avail the option/benefit of VCES should not be disqualified to make a declaration as laid in the said provisions of law. To be able to decide whether one is disqualified as per the law, the notice/order must be put to the knowledge of the person.
+ Any notice, which is merely 'issued&# 39; but not 'served&# 39; cannot be said to be within the knowledge of the person against whom it is 'issued&# 39; but not 'served&# 39;. In essence, if law prohibits a person with a particular disqualification from filing a declaration, then such disqualification should be established to be within the knowledge of the concerned person. To impute such knowledge, mere issuance of notice is not sufficient. The notice has to be served as provided under section 73 of Finance Act, 1994. Therefore, the words 'issued to a person' used in section 106, in my opinion, have to be construed as 'served to a person'.
Observing that the SCN dated 22.02.2013 issued u/s 73 of FA, 1994 has not been served on the appellant before 01.03.2013 and, therefore, the impediment of Section 106 of the Finance Act, 2013 regarding non-filing/non- consideration of declaration under VCES would have no application; and since the appellant otherwise fulfills the criteria , the Bench held that benefits envisaged therein for availing the waiver of interest and penalties would be available to the appellant.
The order passed by Commissioner( A) dismissing the VCES-1 declaration filed by the appellant was set aside and the appeal was allowed with consequential relief.
In passing: Ease of doing business…the harshest & hardest way!
BANGALORE : THE appellant had opted for the VCES, 2013 and filed a declaration in respect of tax dues for the period December 2009 to November 2012. They also deposited 50% of the admitted tax liability of Rs.47,84,597/ - before 31.12.2013 as required under the Scheme.
A SCN came to be issued on 31.12.2013 proposing rejection of the declaration citing the second proviso to Section 106(1) of the Finance Act, 2013 on the ground that a Show Cause Notice No. 28/2013-ST dated 22.02.2013 had already been issued to the appellant, demanding service tax of Rs. 40,01,067/- for the period April 2009 to December 2011, and therefore, the appellant cannot avail the option of VCES.
In reply, it was submitted by the assessee that the SCN dated 22.02.2013 was not received by the appellant before 01.03.2013, and hence the disqualification, as proposed,cannot be made applicable.
Perhaps, determined that the applicant should be evicted from the ST Voluntary Compliance Encouragement Scheme, come what may, another Show Cause Notice No. 19/2014-ST (VCES) dated 17.01.2014 was issued by the Assistant Commissioner proposing for rejection of the declaration on the ground envisaged in the main provisions of Section 106(1) of the Act.
Both the above referred Show cause Notices (dated 31.12.2013 and 17.01.2014) were adjudicated by the Assistant Commissioner vide Order-in-Original No. 12/2014-ST (VCES) dated 31.01.2014, holding that the declaration of tax dues filed by the appellant attracted disqualifications envisaged in the main part, as well as those contained in the proviso to Section 106(1) of the Finance Act, 2013.
The Commissioner (Appeal) followed the chartered course - uphold the order of the adjudicating authority.
And so, with a heavy heart the assessee is before the CESTAT.
Take a look at section 106(1) of the FA, 2013 -
Person who may make declaration of tax dues.
106. (1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013:
Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return:
Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.
The appellant submitted that the show cause notice dated 22.02.2013 was not served to the appellant before 01.03.2013, and thus, the disqualification in terms of the main provision as well as the second proviso to Section 106(1) of the Finance Act, 2013 cannot be applied.
It is further emphasised that the SCN dated 22.02.2013 having been issued under Section 73 of the FA, 1994, which mandates that the notice has to be "served" on the person for recovery of the service tax not levied or paid, non-service of such notice within the stipulated time frame, cannot take away the substantive right of the appellant to avail the benefits under the VCES.
Inasmuch as since the SCN was not received by the appellant before 01.03.2013, the benefits provided in the VCES cannot be denied to the appellant on the ground that notice was 'issued&# 39;.
The AR, while reiterating the finding recorded in the impugned order further submitted that since the SCN was sent through postal department, that date of sending the notice is to be interpreted as the date of giving of notice and therefore, the SCN dated 22.02.2013 having been issued prior to 01.03.2013, that issuance of notice is sufficient compliance of service of notice. Suffice to say that the appellant is not entitled for the benefits of VCES, 2013 as per the embargo created in Section 106(1) of the Finance Act, 2013, the AR emphasised.
The Bench observed -
+ The only question to be considered is whether the date of the show Cause Notice or the date on which it was served on the parson, has to be taken into consideration for interpreting the provisions of Section 106 of the Act, which places an embargo to the effect, that no declaration shall be made for the tax dues where the notice has been issued to the person before 01.03.2013.
+ It is an admitted fact on record that the Show Cause Notice No. 28/2013 ST dated 22.02.2013 issued under Section 73 of the Finance Act, 1994 has not been received by the appellant before 01.03.2013. Section 73 of the Act mandates that in cases, where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve notice on the parson chargeable with service tax which has not been levied or paid.
+ The law contained in Section 73 of the Act, makes it abundantly clear that the Show Cause Notice has to be served on the person concerned and mere 'issuance&# 39; of the same is not enough. In other words, if the Show Cause Notice was issued and posted by registered post before last date but received/served after the last date, then the demand notice under Section 73 of the Act is not sustainable, as it was not served within time.
+ The intention for incorporating such an embargo in Section 106 of the Finance Act, 2013 is to dissuade persons against whom proceedings have been initiated, from taking the shelter of VCES. A person who wants to avail the option/benefit of VCES should not be disqualified to make a declaration as laid in the said provisions of law. To be able to decide whether one is disqualified as per the law, the notice/order must be put to the knowledge of the person.
+ Any notice, which is merely 'issued&# 39; but not 'served&# 39; cannot be said to be within the knowledge of the person against whom it is 'issued&# 39; but not 'served&# 39;. In essence, if law prohibits a person with a particular disqualification from filing a declaration, then such disqualification should be established to be within the knowledge of the concerned person. To impute such knowledge, mere issuance of notice is not sufficient. The notice has to be served as provided under section 73 of Finance Act, 1994. Therefore, the words 'issued to a person' used in section 106, in my opinion, have to be construed as 'served to a person'.
Observing that the SCN dated 22.02.2013 issued u/s 73 of FA, 1994 has not been served on the appellant before 01.03.2013 and, therefore, the impediment of Section 106 of the Finance Act, 2013 regarding non-filing/non- consideration of declaration under VCES would have no application; and since the appellant otherwise fulfills the criteria , the Bench held that benefits envisaged therein for availing the waiver of interest and penalties would be available to the appellant.
The order passed by Commissioner( A) dismissing the VCES-1 declaration filed by the appellant was set aside and the appeal was allowed with consequential relief.
In passing: Ease of doing business…the harshest & hardest way!
Served From India Scheme - Only 'Indian brands' are eligible - Bombay HC differs with Delhi HC order in Yum Restaurants case - Upholds denial of the benefit to 'Non-Indian brands'
MUMBAI : THE issue pertains to interpretation of the provisions of FTP - 2009-14 in relation to Served From India Scheme. The Petitioners are multinational brands like Johnson And Johnson and Thyssenkrupp , engaged in export of services. In a batch of Writ Petitions filed before the Bombay High Court, they challenged the order passed by the Secretary, Department of Commerce and Industry, Government of India holding that the Petitioners are not entitled to the Duty Credit scrip under the Served From India Scheme as they are not promoting Indian Brands.
Before the High Court, the Petitioners contended inter alia that:
A Status Holder shall be eligible for privileges as spelt out Clauses in 3.10.4 and 3.11.1 denotes as to for why "Served from India" scheme has been promulgated. The objective is set out in clauses 3.12.1 to 3.12.2. It does not mean that the scheme, is inapplicable to the Petitioner. Clause 3.12.3 referring to the ineligible services does not include the Petitioner&# 39;s services. Further, the Petitioner fulfills the entitlement criteria as set out in clause 3.12.4 of Chapter 3 of FTP. Eventually the objective is to ensure that foreign exchange reserves are augmented by export of goods and services. The objection that the Petitioner does not promote Indian brand or is not engaged in service which is expected to create a powerful and unique 'Served from India brand' instantly recognized and respected world over, is of no substance. In the circumstances, it is submitted the order of the Secretary in the Department of Commerce and Industry should be set aside.
After hearing both sides, the High Court held:
A perusal of the relevant paras in FTP would denote that object of SFIS is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand,' instantly recognized and respected worldwide.&# 39; We are in agreement with counsel for respondents that the object which is sought to be achieved would be only by encouraging those entities and conferring benefits and giving incentives to such companies who create an Indian brand. This is therefore, apparent. By referring to the identity of share holders and the nation they belong, the policy makers are not trivializing the issue. That reference is to highlight the object of accelerating growth in export of services so as to create a powerful and unique 'Served from India' brand instantly recognized and respected world over. One must appreciate the object properly and completely. The role that Indian Suppliers are expected to play in creating such a brand is underlined by making a reference to the person and Nationality of shareholders and directors. The brand created should be served from India and must get recognition and respect world over. It is not the soil or piece of land which is important but the involvement of Indian suppliers, which is predominant. Their engagement and involvement is therefore primarily referred and throughout the scheme which is a duty credit entitlement. Eventually the eligibility criteria has been framed and evolved for the purpose of Indian Service Providers and who provide services listed in Appendix 41 of HBP Volume 1, who have free foreign exchange earning of at least Rs.10 lakhs in current financial year. They will be eligible for Duty Credit Scrip. For individual Indian Service Providers, the minimum criteria is free foreign exchange earning of Rs . 5 (five) lakhs. Such service Providers and who are Indian service providers are therefore mentioned in 3.12.2 and they will be eligible for duty credit scrip. 'Served from India' brand is thus granting an incentive to those eligible service providers who fulfill the eligibility criteria. The Petitioner cannot claim a vested right in matters of duty credit or exemption from payment of a duty or tax. None can say that the mandate of Article 19 (1) (g) of the Constitution of India is violated merely because at certain time and on certain occasions, the concessions and benefits were given or there is exemption from payment of duty and taxes imposed by laws of Parliament. The traders or citizens to whom the benefits and facilities are granted on fulfillment or requirement of a distinct eligibility criteria stand apart from others. Those not granted the same cannot claim any parity. Hence, in the absence of a vested right and only on the strength of a particular treatment of such cases in the past, no plea of violation of constitutional mandate enshrined in Articles 14 and 19 (1) (g) can be accepted.
As rightly urged by respondents, the intention is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand ' instantly recognized and respected world over.' That cannot be achieved by permitting those who are not creating a powerful and unique 'Served From India' brand instantly recognized and respected world over. The entity establishing a foreign brand of service and prior to entry in India therefore, will not qualify and cannot be held eligible for FSIS benefit. The brand of such an entity is already created, existing and established. It may not be unique much less served from India exclusively. That does not get instantly recognized and respected world over as Indian brand.
With regard to the ratio of Single Judge order of Delhi High Court in Yum Restaurant&# 39;s case, the High Court observed:
With greatest respect to the learned Single Judge of the Delhi High Court he has construed the policy narrowly. The complete picture of the policy, its objects and purpose was not placed before him. With great respect, we disagree with the learned Single Judge. The learned Single Judge failed to note that parties like the Petitioner do not have a vested right in seeking or claiming incentives and benefits under what we call as Duty Credit Scrips. It is only when they fulfill the criteria and the provisions of the nature carved out that they would be entitled to the benefits. It is not possible for us to agree with the view recorded in paragraphs 12 to 16 of the judgment. The learned Judge has construed the expression "Indian Service Providers' narrowly. He has not construed it in the backdrop of the policy measures and by interpreting them in a holistic manner. The learned Judge, once again, with great respect reads the paragraphs in the policy in isolation. We are not persuaded to agree with the views of the Delhi High Court and the challenge cannot be construed to be arising in the backdrop of section 5 of the Foreign Trade Act.
With regard to benefits already granted for earlier periods, the High Court held that it will not be permissible for the authorities adjudicating the claims or issues arising therefrom to recover the SFIS benefits granted till 2007-08. They are clearly falling within earlier policy framework and to that extent all petitions succeed. Any recoveries that are proposed for the period after 2007-2008 under FTP 2009-2014 will have to be made in accordance with law by the authorities competent to do so.
(See 2015-TIOL-2090- HC-MUM-EXIM + Also see video headnote of Yum Restaurant) eply to sender . Reply to group . Reply via Web Post . All Messages (1) . Top ^
MUMBAI : THE issue pertains to interpretation of the provisions of FTP - 2009-14 in relation to Served From India Scheme. The Petitioners are multinational brands like Johnson And Johnson and Thyssenkrupp , engaged in export of services. In a batch of Writ Petitions filed before the Bombay High Court, they challenged the order passed by the Secretary, Department of Commerce and Industry, Government of India holding that the Petitioners are not entitled to the Duty Credit scrip under the Served From India Scheme as they are not promoting Indian Brands.
Before the High Court, the Petitioners contended inter alia that:
A Status Holder shall be eligible for privileges as spelt out Clauses in 3.10.4 and 3.11.1 denotes as to for why "Served from India" scheme has been promulgated. The objective is set out in clauses 3.12.1 to 3.12.2. It does not mean that the scheme, is inapplicable to the Petitioner. Clause 3.12.3 referring to the ineligible services does not include the Petitioner&# 39;s services. Further, the Petitioner fulfills the entitlement criteria as set out in clause 3.12.4 of Chapter 3 of FTP. Eventually the objective is to ensure that foreign exchange reserves are augmented by export of goods and services. The objection that the Petitioner does not promote Indian brand or is not engaged in service which is expected to create a powerful and unique 'Served from India brand' instantly recognized and respected world over, is of no substance. In the circumstances, it is submitted the order of the Secretary in the Department of Commerce and Industry should be set aside.
After hearing both sides, the High Court held:
A perusal of the relevant paras in FTP would denote that object of SFIS is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand,' instantly recognized and respected worldwide.&# 39; We are in agreement with counsel for respondents that the object which is sought to be achieved would be only by encouraging those entities and conferring benefits and giving incentives to such companies who create an Indian brand. This is therefore, apparent. By referring to the identity of share holders and the nation they belong, the policy makers are not trivializing the issue. That reference is to highlight the object of accelerating growth in export of services so as to create a powerful and unique 'Served from India' brand instantly recognized and respected world over. One must appreciate the object properly and completely. The role that Indian Suppliers are expected to play in creating such a brand is underlined by making a reference to the person and Nationality of shareholders and directors. The brand created should be served from India and must get recognition and respect world over. It is not the soil or piece of land which is important but the involvement of Indian suppliers, which is predominant. Their engagement and involvement is therefore primarily referred and throughout the scheme which is a duty credit entitlement. Eventually the eligibility criteria has been framed and evolved for the purpose of Indian Service Providers and who provide services listed in Appendix 41 of HBP Volume 1, who have free foreign exchange earning of at least Rs.10 lakhs in current financial year. They will be eligible for Duty Credit Scrip. For individual Indian Service Providers, the minimum criteria is free foreign exchange earning of Rs . 5 (five) lakhs. Such service Providers and who are Indian service providers are therefore mentioned in 3.12.2 and they will be eligible for duty credit scrip. 'Served from India' brand is thus granting an incentive to those eligible service providers who fulfill the eligibility criteria. The Petitioner cannot claim a vested right in matters of duty credit or exemption from payment of a duty or tax. None can say that the mandate of Article 19 (1) (g) of the Constitution of India is violated merely because at certain time and on certain occasions, the concessions and benefits were given or there is exemption from payment of duty and taxes imposed by laws of Parliament. The traders or citizens to whom the benefits and facilities are granted on fulfillment or requirement of a distinct eligibility criteria stand apart from others. Those not granted the same cannot claim any parity. Hence, in the absence of a vested right and only on the strength of a particular treatment of such cases in the past, no plea of violation of constitutional mandate enshrined in Articles 14 and 19 (1) (g) can be accepted.
As rightly urged by respondents, the intention is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand ' instantly recognized and respected world over.' That cannot be achieved by permitting those who are not creating a powerful and unique 'Served From India' brand instantly recognized and respected world over. The entity establishing a foreign brand of service and prior to entry in India therefore, will not qualify and cannot be held eligible for FSIS benefit. The brand of such an entity is already created, existing and established. It may not be unique much less served from India exclusively. That does not get instantly recognized and respected world over as Indian brand.
With regard to the ratio of Single Judge order of Delhi High Court in Yum Restaurant&# 39;s case, the High Court observed:
With greatest respect to the learned Single Judge of the Delhi High Court he has construed the policy narrowly. The complete picture of the policy, its objects and purpose was not placed before him. With great respect, we disagree with the learned Single Judge. The learned Single Judge failed to note that parties like the Petitioner do not have a vested right in seeking or claiming incentives and benefits under what we call as Duty Credit Scrips. It is only when they fulfill the criteria and the provisions of the nature carved out that they would be entitled to the benefits. It is not possible for us to agree with the view recorded in paragraphs 12 to 16 of the judgment. The learned Judge has construed the expression "Indian Service Providers' narrowly. He has not construed it in the backdrop of the policy measures and by interpreting them in a holistic manner. The learned Judge, once again, with great respect reads the paragraphs in the policy in isolation. We are not persuaded to agree with the views of the Delhi High Court and the challenge cannot be construed to be arising in the backdrop of section 5 of the Foreign Trade Act.
With regard to benefits already granted for earlier periods, the High Court held that it will not be permissible for the authorities adjudicating the claims or issues arising therefrom to recover the SFIS benefits granted till 2007-08. They are clearly falling within earlier policy framework and to that extent all petitions succeed. Any recoveries that are proposed for the period after 2007-2008 under FTP 2009-2014 will have to be made in accordance with law by the authorities competent to do so.
(See 2015-TIOL-2090- HC-MUM-EXIM + Also see video headnote of Yum Restaurant) eply to sender . Reply to group . Reply via Web Post . All Messages (1) . Top ^
ASSISTANT COMMISSIONER OF INCOME TAX vs.KIRAN INDUSTRIES PVT. LTD.
AHMEDABAD TRIBUNAL
Reassessment—Income escaping assessment—Addition on account of Unutilized CENVAT credit—Assessee-company was engaged in business of manufacturing of dyed yarn, knitted fabrics and dying of fabrics on job work basis—Assessee originally filed return of income showing total income at Rs. Nil under normal provisions and Rs. 1,17,88,590 under MAT—Assessment was framed u/s 143(3) and total income was determined under normal provisions and of Rs. 1,17,88,590 under MAT—Thereafter notice u/s 148 was issued and case was re-opened for reason that unutilized CENVAT credit was not taken into consideration while working out closing stock and thus value of closing stock was under-stated—Subsequently assessment was framed u/s. 143(3) r.w.s. 147 vide order dated 16.11.2011 by making addition of Rs. 18,84,923 to closing stock u/s 145A of the Act—CIT(A) restricted addition made as per s 145A—CIT(A) partly confirmed action of AO in sustaining addition u/s 145A—Assessee submitted that it follows exclusive method of accounting of excise for the valuation of stock—That the aforesaid submission of the Assessee had not been controverted by Revenue by placing any contrary material on record—Further in similar issue, the Co-ordinate Bench of Tribunal in the case of Asiatic Industries (supra) had decided the issue in favour of the Assessee—Held, Co-ordinate Bench of Tribunal in case of Asiatic Industries considered case of Snehal Pharma Chem whereby excise duty was paid but not included in purchases shown in balance sheet on ground that excise duty receivable could not be reason to make any addition in income of Assessee—High Court of Telengana and Andhra Pradesh in case of CIT vs. Pacts Securities and Financial Services Ltd. (2015) 374 ITR 681 (T & A.P) noted that merely because Central Government had not notified in Official Gazette "accounting standards" to be followed by any class of Assessees or in respect of any class of income, it could not be stated that Accounting Standards prescribed by Institute of Chartered Accountants of India or Accounting Standards reflected in "guidance note" could not be adopted as accounting method by Assessee—Notwithstanding fact that opinion of the Chartered Accountants of India was expressed in 'guidance note", that had not attained mandatory status, it would not be ground to discard books of accounts of Assessee or method of accounting followed—Hence, no addition on account of unutilized CENVAT Credit was called for—Appeal of Revenue was dismissed 4
AHMEDABAD TRIBUNAL
Reassessment—Income escaping assessment—Addition on account of Unutilized CENVAT credit—Assessee-company was engaged in business of manufacturing of dyed yarn, knitted fabrics and dying of fabrics on job work basis—Assessee originally filed return of income showing total income at Rs. Nil under normal provisions and Rs. 1,17,88,590 under MAT—Assessment was framed u/s 143(3) and total income was determined under normal provisions and of Rs. 1,17,88,590 under MAT—Thereafter notice u/s 148 was issued and case was re-opened for reason that unutilized CENVAT credit was not taken into consideration while working out closing stock and thus value of closing stock was under-stated—Subsequently assessment was framed u/s. 143(3) r.w.s. 147 vide order dated 16.11.2011 by making addition of Rs. 18,84,923 to closing stock u/s 145A of the Act—CIT(A) restricted addition made as per s 145A—CIT(A) partly confirmed action of AO in sustaining addition u/s 145A—Assessee submitted that it follows exclusive method of accounting of excise for the valuation of stock—That the aforesaid submission of the Assessee had not been controverted by Revenue by placing any contrary material on record—Further in similar issue, the Co-ordinate Bench of Tribunal in the case of Asiatic Industries (supra) had decided the issue in favour of the Assessee—Held, Co-ordinate Bench of Tribunal in case of Asiatic Industries considered case of Snehal Pharma Chem whereby excise duty was paid but not included in purchases shown in balance sheet on ground that excise duty receivable could not be reason to make any addition in income of Assessee—High Court of Telengana and Andhra Pradesh in case of CIT vs. Pacts Securities and Financial Services Ltd. (2015) 374 ITR 681 (T & A.P) noted that merely because Central Government had not notified in Official Gazette "accounting standards" to be followed by any class of Assessees or in respect of any class of income, it could not be stated that Accounting Standards prescribed by Institute of Chartered Accountants of India or Accounting Standards reflected in "guidance note" could not be adopted as accounting method by Assessee—Notwithstanding fact that opinion of the Chartered Accountants of India was expressed in 'guidance note", that had not attained mandatory status, it would not be ground to discard books of accounts of Assessee or method of accounting followed—Hence, no addition on account of unutilized CENVAT Credit was called for—Appeal of Revenue was dismissed 4
MANNUR MEGHANA REDDY vs.DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) HYDERABAD TRIBUNAL Deduction on account of cost of acquisition—Computation of long term capital gain—Exemption u/s 54EC—Disallowance—Assessee-non- resident individual filed her return declaring total income—Though, Assessee had computed capital gain, but claimed exemption u/s 54EC—During assessment proceeding, it was noticed by AO that Assessee sold house property for certain consideration, however, in computation of total income filed along with return, Assessee computed LTCG after claiming deduction towards cost of acquisition and cost of improvement—Assessee also claimed exemption of capital gain having made investment u/s 54EC—Alleging that Assessee failed to produce any evidence to substantiate claim of construction, AO ultimately disallowed Assessee's claim towards cost of acquisition and cost of construction after indexation—LTCG after allowing deduction u/s 54EC was computed—CIT(A) observed that as Assessee failed to produce any evidence to show incurring of any expenditure towards improvement of property apart from normal repair, no deduction on that account could be allowed and thus confirmed computation of capital gain by AO—Held, Assessee's grand-father bequeathed a property in favour of Assessee—However, Assessee's father, without knowledge of Assessee, sold property to third party—Subsequently, to maintain cordial relationship within family, Assessee's father made deed of settlement—As per terms of deed of settlement, property given by father of Assessee to her was out of natural love and affection and without any monetary consideration—It could not be said that property was not gift so as to come within purview of section 49—Though, property might have been given to Assessee under document termed as deed of settlement, but, recitals in deed to effect that property was given out of natural love and affection and without monetary consideration suggest that it was in nature of gift by father to daughter—Cost of acquisition to previous owner i.e. father would be deemed to be cost of acquisition to Assessee in terms of section 49—As per mode of computation of capital gain provided u/s 48, income chargeable under head 'capital gain' should be computed after deducting therefrom expenditure incurred wholly and exclusively in connection with such transfer of asset and cost of acquisition of asset along with cost of any improvement thereto—Therefore, unless there was cost of acquisition, computation provision as per section 48 would fail—Disallowance of cost of acquisition by AO, was not permissible in law—Assessee's claim of cost of acquisition allowed—Appeal of Assessee allowed.
MILK CHILLING: WHETHER MANUFACTURE ?
Meaning of Manufacture
Under Central Excise Act, 1944, 'manufacture' has been defined differently u/s 2(f) of the said Act. According to Section 2(f) of the Central Excise Act, 1944, "Manufacture" includes any process-
incidental or ancillary to the completion of a manufactured product;
which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture; or
which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.
and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.
The definition under section 2(f) of Central Excise Act, 1944 is an inclusive definition and it should be construed in its natural meaning and interpretation which will include any process incidental or ancillary to the completion of manufacture of a product. The manufacture should result in change of raw material and finished goods must be different from the goods that existed just before the process of manufacture. There must be transformation of a product and a new and different article must emerge having distinct characteristics.
This definition of manufacture also gets explained by some judicial decisions. In Union of India v. Parle Products 1993 (1) TMI 100 - SUPREME COURT OF INDIA, it was held that processes could not amount to manufacture unless at the end of it a commercially new and distinct article emerges. Supreme Court in Union of India v. DCM 1962 (10) TMI 1 - SUPREME COURT OF INDIA observed that manufacture used as a verb means to bring into existence a new substance and does not mean merely to produce some change in a substance. In other words, the produce which arises out of the process must be commercially a distinct commodity different from that out of which it is processed. Whether or not something results in manufacture would depend on the facts of the case. It is well settled that a question as to when a manufacture of product takes place within the meaning of Section 2(f) of the Act is a mixed question of law and fact. The nature and the extent of processes may vary from case to case. When a change takes place and a new and distinct article comes into existence known to the consumers and the commercial community as a commercial product, which can be no longer regarded as the original commodity, such a change constitutes manufacture.
Milk Chilling
The activity of milk chilling does not get covered under the definition of manufacture as defined under section 2(f) of the Central Excise Act, 1944. There are two reasons due to which the chilling activities are not covered under the scope of manufacture.
As the milk is highly perishable in nature and shelf life of the milk is very short, therefore, milk has a limitation of being transported to distant places. To overcome such situation and to prolong the shelf life of milk so as to transport it to distant places, the process of chilling of milk is inevitable as to make it marketable.
According to section 2(f) of Central Excise Act, 1944, any process which is required for any goods to make it marketable covered under the scope of manufacture. Without chilling of milk and its subsequent transportation for distribution, the milk is not marketable and therefore, the process of chilling is to be considered as an integral part.
Chilling of milk cannot be said to be processing of milk as there is nothing to establish that chilling is done for some purpose other than storage purpose. A process is carried out on some goods for the purpose of production / manufacture of some goods or at least to carry out some change in the goods. The chilling being done by dairies on their own milk, is not for the purpose of production of some goods or to carry out any change in the milk and thus chilling of the milk cannot be said as processing of milk.
In Mewar Foods Pvt. Ltd. v. CCE, Jaipur 2014 (1) TMI 355 - CESTAT NEW DELHI, it was held that, prima facie, the process of pasteurization is a process necessary to make milk marketable to the consumer and is covered by the Chapter 6 and Chapter 4 of the Central Excise Act, 1985, therefore, stay was granted.
In similar cases, at first appeal stage, it has been held by the Commissioner (Appeals), Jaipur in few cases that the chilling units provide facilities for chilling of milk. As per the contract, they provide only infrastructure (chilling plant). It cannot be said that the such unit has processed goods (milk) for, or on behalf of, the client in as much as no goods (milk) has been supplied by dairy but dairy has itself undertaken the chilling activities by utilizing the infrastructure/ manpower provided by the chilling unit. It was thus held that the facilities/ services provided by the chilling units are not covered by sub-clause (v) of clause 19 of section 65 of the Finance Act, 1994 as business auxiliary services.
It may thus be inferred that chilling activities in relation to milk may not be subject to levy of Service Tax. However, taxability may differ on the basis of scope of agreement depending upon whether it is only chilling or processing/producti on of goods or only a cold storage facility.
By: Dr. Sanjiv Agarwal
Service Tax : "Credit card, debit card, charge card or other payment
Service Tax : Merchant/Merchant Establishment (ME) is "a customer" in the context of credit card services and an acquiring bank is "a customer" of an issuing bank. However, ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to ME does not amount to consideration received "in relation to" credit card services.
• The various issues involved and their answer is as follows :
Issue Larger Bench's order Whether the introduction of the new, comprehensive definition of "credit card, debit card, charge card or other payment care service" vide Section 65(33a) read with Section 65(105)(zzzw) by the Finance Act, 2006, is substantive and seeks to levy all the transactions covered by use of Credit/Debit/ Charge Card or is in continuation of the levy under Section 65(10) or (12), as the case may be, as held in ABN Amro decision in so far as credit card services are concerned? Introduction of a comprehensive definition of "credit card, debit card, charge card or other payment service" in Section 65(33a) read with Section 65(105) (zzzw), by the Finance Act, 2006 is a substantive legislative exertion which enacts levy on the several transactions enumerated in sub-clauses (i) to (vii) specified in the definition set out in Section 65(33a); and all these transactions are neither impliedly covered nor inherently subsumed within the purview of credit card services defined in Section 65(10) or (12) as part of the BOFS; Whether the sub-clause (iii) in the definition of taxable service viz. "credit card, debit card, charge card of other payment card service" in Section 65(33a) can be said to be applicable retrospectively, i.e., from 16 July 2001 when section 65(72)(zm) became effective? Sub-clause (iii) in Section 65(33a) is neither intended nor expressed to have a retroactive reach i.e. w.e.f. 16.07.2001. Services enumerated in these sub-clauses are not implicit in the scope of credit card services; Can 'merchants/ merchant establishments&# 39; be considered 'customer&# 39; as envisaged in Section 65(72)(zm) of the Finance Act, 1994 as it stood prior to 1-5-2006? Merchant/ Merchant Establishment is "a customer" in the context of credit card services enumerated in Section 65(72)(zm), subsequently Section 65(105)(zm) and an acquiring bank is "a customer" of an issuing bank. Whether Merchant Establishment Discount can be said to be 'received in relation to' credit card services when in fact in a particular transaction, the Acquiring bank receiving ME Discount may not have issued that particular credit card at all? ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does not amount to consideration received "in relation to" credit card services.
[2015] 61 taxmann.com 115 (New Delhi - CESTAT) (LB)
CESTAT, NEW DELHI BENCH (LARGER BENCH)
Standard Chartered Bank
v.
Commissioner of Service Tax, Mumbai-I
recent case laws
2015-TIOL-2083- HC-DEL-IT + Story
CIT Vs Smt Priyanka Singhania
Whether assessment proceedings could have been initiated against the assessee u/s 153A, in case the search warrant in terms of Section 132 read with Rule 112 of the Income Tax Rules 1962, was issued in the name of her father and not the assessee - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2082- HC-DEL-IT
CIT Vs Sanjay Kumar Garg
Whether if an assessment is pending either by way of original assessment or by way of reassessment proceedings, the AO has the power to issue a notice u/s 148 - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2081- HC-DEL-IT
Fast Booking (I) Pvt Ltd Vs DCIT
Whether it is open to the assessee to seek support of the order of the CIT(A) on the ground which was not urged before the CIT(A), as long as it is not going to be adverse to the case of the Revenue - YES: HC - Case remanded : DELHI HIGH COURT
2015-TIOL-2080- HC-ALL-IT
CIT Vs M/s J K Synthetics Ltd
Whether when the original demand was satisfied and the amount was duly paid by the assessee, interest could be recovered from the assessee with effect from the original date of demand, even if order u/s 154 was passed and dues were levied subsequently - NO: HC - Revenue' s appeal dismissed : ALLAHABAD HIGH COURT
2015-TIOL-2079- HC-AHM-IT
Karnataka Jewels Ltd Vs JCIT
Whether in case the assessee has failed to appear before the Tribunal during the course of hearing of an appeal, the Tribunal could dispose of the appeal on merits without even hearing the assessee as per the provisions of rule 2 - NO: HC - Assessee' s appeal allowed : GUJARAT HIGH COURT
2015-TIOL-2078- HC-P&H-IT
CIT Vs M/s Rashtriya Vikas Party
Whether when the Tribunal, being a fact finding authority, has not passed a speaking order giving the detailed reasons dismissing the appeal except mentioning the fact that it finds no infirmity in the findings of the CIT (Appeals), the order so passed is legal as per law - NO: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2077- HC-KERALA- IT
M/s Asianet Satellite Communications Ltd Vs CIT
Whether where an order passed by the CIT u/s 263 satisfies the requirement of 'prejudice to the revenue' , the said order requires no interference - YES: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-2076- HC-KERALA- IT
M/s Nileswar Range Kallu Chethu Vyavasaya Thozhilali Vs CIT
Whether in order to grant exemption in respect of cooperative society u/s 80P, it is only the collective disposal of a disposable commodity over which the society has to keep a control - YES: HC
Whether if the income of the society has nothing to do with the collective disposal of the labour of its members, but is entirely out of the price realised by it for the sale of of a product through the society' s own shops, it can be said that the sum referred to in section 80P(1) entitling the society for deduction is generated out of the collective disposal - NO: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-1427- ITAT-INDORE
Mahendra Builders & Developers Vs ACIT
Whether reopening of assessment is justified where the reassessment was based on new material that came into knowledge of the Assessing Officer during the assessment proceedings for subsequent assessment year 2006-07 - Whether assesse is entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessee - Whether where the assessee claims a deduction under section 80IB(10), the assessee is required to comply with such a condition only if it is on the statute book on the date of the approval of the housing project - Whether Clause (d) of section 80IB(10) being a condition linked to the date of the approval of the housing project would not apply to any housing project that was approved prior to 31st March, 2005 - Whether deduction u/s 80IB(10) can be denied to assesee on the ground that the assessee did not have completion certificate where the assessee had given notice of completion but if it has not been issued by the Municipal Corporation - Whether assessee can be held to be a mere contractor where in none of the projects, the assessee had acted for fixed price for executing the work and the assessee has not only constructed the houses but it had developed the roads, electrical work and also water connection system in whole of the project. - Assessee' s appeals allowed : INDORE ITAT
2015-TIOL-1426- ITAT-MAD
Indo Shell Cast Pvt Ltd Vs ACIT
Whether both profit or loss from the share delivery transactions and derivative transactions have the same meaning, so far as sec.43(5) is concerned - YES: ITAT
Whether if both the delivery and derivative transactions are non-speculative as per sec.43(5), it would have the same treatment as far as application of Explanation to sec.73 is concerned, aggregation of the share trading profit and loss from derivative transactions should be done before the Explanation to sec.73 is applied - YES: ITAT
Whether in case the entire transaction carried out by the assessee, is within the umbrella of speculative transaction, is there any bar in setting off the loss arising out of derivatives from the income arising out of buying and selling of shares - NO: ITAT - Case remanded : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1905- CESTAT-BANG + Story
Shri B R Ajit Vs CC, CE & ST
ST - VCES, 2013 - Words 'issued to a person' used in section 106 of FA, 2013 have to be construed as 'served to a person' - Intention for incorporating such an embargo is to dissuade persons against whom proceedings have been initiated, from taking the shelter of VCES - To be able to decide whether one is disqualified as per the law, the notice/order must be put to the knowledge of the person - Appeal allowed: CESTAT [para 9, 12, 13, 14] - Appeal allowed : BANGALORE CESTAT
2015-TIOL-1900- CESTAT-DEL
M/s Classic Constructions Vs CST
ST - Demand of Rs. 52,72,521/- in respect of SCN dated 05.10.2011 and Rs.14,81,645/ - in respect of SCN dated 15.10.2012 - O-I-O has been issued after hearing assessee on 17.10.2011 - No hearing was held in respect of SCN dated 15.10.2012, therefore prima facie demand of Rs.14,81,645/ - has been confirmed in violation of principles of natural justice - As regards the remaining demand of Rs.52,72,521/ -, as per Bhayana Builders (P) Ltd. & Ors. 2013-TIOL-1331- CESTAT-DEL- LB, benefit of abatement is available even when the value of free supplies is not included in assessable value - Thus, assessee is eligible for benefit of abatement rate of 67% under Notfn 15/2004-ST / No.1/2006-ST - Installation of plumbing, drain laying or other installation for transport of fluid is covered under definition of "Erection, Commissioning or Installation Service" (ECIS) - Pre-deposit of Rs.17.5 lakhs along with proportionate interest ordered: CESTAT - Appeal partly allowed : DELHI CESTAT
2015-TIOL-1899- CESTAT-BANG
CST Vs July Systems And Technologies Pvt Ltd
Service Tax - Order in Appeal - Error apparent on record - Sustainability - Show cause notice was issued for demanding reversal of ineligible Cenvat credit utilized along with interest and penalty - Commissioner (A) erroneously considered the entire issue and converted demand of Cenvat into a claim for refund -Commissioner (A) conclusions patently unwarranted hence set aside - Revenue appeal is allowed - Matter is remanded to the Commissioner (A) for fresh decision. (Para 4) - Remanded : BANGALORE CESTAT
2015-TIOL-1898- CESTAT-AHM
M/s Toyota Construction Pvt Ltd Vs CCE & ST
ST - Assessees engaged in business of commercial and industrial construction - First issue is non-inclusion of cost of material received from service receivers in gross value of services provided - Issue is no more res integra in view of decision in case of M/s Bhayana Builders Pvt Ltd 2013-TIOL-1331- CESTAT-DEL- LB in favour of assessee - Demand of ST alongwith interest and penalty set aside: CESTAT
Assessee had took a definite stand before Adjudicating Authority that they have not collected entire amount as alleged in SCN from customers - They have also submitted Annexures in reply to SCN to substantiate their contention - Adjudicating Authority had not given any findings on these issues - He is also required to examine claim of abatement of assessee - Matter remanded: CESTAT - Appeal partly allowed : AHMEDABAD CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2086- HC-MUM-CX + Story
Rakhoh Industries Pvt Ltd Vs UoI
CX - If there was justification for rendering a separate finding in the case of the Petitioner&# 39;s Appeal, then, in the first instance it is not clear as to why it was clubbed along with other Appeals - Tribunal should have formulated the same question even in the case of the Petitioner&# 39;s Appeal and referred all three matters to be decided by a Larger Bench - Order quashed and set aside - Tribunal directed to also include the issue involved in the appeal of the petitioner for reference to the Larger Bench - special Bench of the Tribunal shall call for the records of the Petitioner&# 39;s Appeal and allow the Petitioner to participate in the proceedings/ Reference - Petition allowed: High Court [para 9 to 12]
Notfn 6/2006, 12/2012 - Anchor rings & Load Spreading Plates are used in foundation of wind mill tower - whether can be considered to be part of Wind Operated Electricity Generators - matter is required to be referred to Larger Bench: High Court - Petition allowed : BOMBAY HIGH COURT
2015-TIOL-2085- HC-KAR-CX
M/s Dhariwal Industries Ltd Vs CCE, C & ST
Central Excise - Principles of natural justice - Cross examination of witnesses - Writ Petition against denial of cross examination of officers who conducted surveillance and other witnesses.
Held: If Officers of the Central Excise allegedly conducted surveillance of the factory premises of the petitioner, it is for the petitioner to prove that fact of surveillance by examining the officers and therefore, the question of securing those officers for cross examination by the petitioner, does not arise - In respect of other witnesses, it is open for the petitioner to seek cross examination. (para 8) - Petition disposed of : KARNATAKA HIGH COURT
2015-TIOL-2084- HC-KAR-CX
M/s Smile Electronics Ltd Vs CCE
Central Excise - Appeal against the order of Tribunal directing the appellant to deposit Rs 2.25 crores against demand of Rs 23.88 crores - Demand on account of non-payment of duty on account of process undertaken on components / material supplied by the customers.
Held: The appellant admittedly has not followed the substantive conditions of the Notification No 214/86 CE which require the supplier of the raw material or semi-finished goods to give an undertaking to the proper officer of Central Excise having jurisdiction over the factory of the job worker - No ground to interfere with the impugned order, inasmuch as it is seen that the detailed conditions prescribed in Notification No.214/1986 are substantive conditions, which require fulfillment so as to ensure that the goods manufactured by the assessee suffer duty of excise at the hands of the customer who has supplied the inputs free of cost to the job worker. ( para 4)
The assesse has not pleaded any substantial financial hardship or has produced any documentary evidence to that effect. The Tribunal is justified in directing the assessee-appellant before the Tribunal to deposit an amount of Rs.2.25 Crores collectively within a period of twelve weeks - No interference is called for. ( para 5) - Appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-1903- CESTAT-AHM
M/s Welspun India Ltd Vs CCE & ST
CX - Assessee engaged in manufacture of both dutiable and exempted goods and was also availing benefit credit on inputs under CCR, 2004 - They didnot paid a monthly payment as prescribed, but entire payment of a Financial Year is paid subsequently within specified due date under Rule-6(3A) - Assessee cannot take shelter of Rule-6(3A)(e) to avoid payment of interest - Once a monthly payment mode is prescribed, same is required to be discharged by assessee - By not doing so, interest is payable from that due date of payment till the amount is paid as per provisions of Section 11 AB (upto 30/03/2011) or Section 11 AA of CEA, 1944 - No reason to interfere with order of first appellant authority on merits and appeal to that extent is rejected - Issue of time barred is thus remanded to Adjudicating Authority as no findings have been given by both lower authorities when this point was agitated in assessee' s prayers: CESTAT - Appeal partly allowed : AHMEDABAD CESTAT
2015-TIOL-1902- CESTAT-AHM
M/s Rallis India Ltd Vs CCE & ST
CX - Cenvat credit availed by assessee with respect to ISD invoices issued by their Head Office at Mumbai - On merit, First Appellate Authority had denied credit on the ground that services of 'Professional Fees & Brokerage for sale of Land' is not in relation to manufacturing activity - Period involved is March 2008 when words 'activity relating to business' were existing in definition of input services given under Rule 2(l) of CCR, 2004 - As the period involved in present proceedings is prior to 01.04.2011, therefore, it has to be held that services availed in relation to 'Professional Fees & Brokerage for sale of Land' belonging to assessee are eligible to CENVAT Credit: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-1901- CESTAT-DEL
CCE & ST Vs M/s Bridgestone India Pvt Ltd
CX - Appellant giving cash discounts and quantity discounts/turnover discounts to their dealers -since the request for provisional assessement under Rule 7 of CER, 2002 was refused by revenue, appellant paid duty on the value without deducting the discounts - subsequently when the appellant were able to quantify the cash discounts and quantity discounts they filed 3 refund claims for different periods - vide common order, the refund claims were rejected on merits as well as on the ground of unjust enrichment - on appeal, the Commissioner (Appeals) while allowing deduction of cash discounts ordered for refund holding that there is no unjust enrichment - however, he disallowed the deduction of quantity discounts/turnover discounts - appellant in appeal against disallowing the deduction of the quantity discount/turnover discount - revenue in appeal against finding that there is no unjust enrichment : HELD - quantity/turnover discount is linked to the quantum of goods purchased by the dealers in a month and the rate of quantity discount varies from dealer to dealer depending upon the dealers' obligations to provide certain infrastructure and facilities at the showrooms -since in the present case, the discount policy of the appellant is known prior to the clearance as the rate of discount is mentioned in the appellant' s agreements with their dealers and also from the circulars, it is clear that the deduction of quantity discount cannot be disallowed -however, according to the department, the quantity discount being extended by the appellant is sort of reimbursement to the dealers for maintaining certain infrastructure and service facilities at the showrooms - on going through these agreements with the dealers, it is found that there is nothing in the agreements from which it can be inferred that the quantity discounts being given by the appellant to their dealers are a compensation for the expenses incurred by the dealers for maintaining the showrooms in certain manner and providing certain minimum facilities in the showrooms -revenue' s contention in this regard not accepted - the impugned order disallowing the deduction of the quantity/turnover discount to different dealers is not correct - as regards the question of unjust enrichment, there is no dispute that the discounts have been passed on by the issue of credit notes -once the credit notes are issued by the appellant to its dealers, the invoice price mentioned in the invoices issued earlier would stand reduced to that extent and in such a situation, the burden of proof would shift to the department to establish that the credit notes issued are bogus - no such evidence produced by Department - following the judgement in A.K. Spintex Ltd. - 2009-TIOL-12- HC-RAJ-CX there is no unjust enrichment - appeal of Revenue dismissed - appeal of appellant allowed : CESTAT [para 7, 7.1, 8, 9] - Appeal of Revenue dismissed/Appeal of appellant allowed : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2090- HC-MUM-EXIM + Story
Naman Hotels Pvt Ltd Vs UoI
Served From India Scheme - Writ Petition seeking to set aside the order of Secretary, Department of Commerce and Industry, Government of India holding that the Petitioners are not entitled to the Duty Credit scrip under the Served From India Scheme as they are not promoting Indian Brands.
Held: Objective of the Policy - The object of SFIS is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand,' instantly recognized and respected worldwide.&# 39; The object which is sought to be achieved would be only by encouraging those entities and conferring benefits and giving incentives to such companies who create an Indian brand. The object is to highlight the accelerating growth in export of services so as to create a powerful and unique 'Served from India' brand instantly recognized and respected world over. The brand created should be served from India and must get recognition and respect world over. It is not the soil or piece of land which is important but the involvement of Indian suppliers, which is predominant. Their engagement and involvement is therefore primarily referred and throughout the scheme which is a duty credit entitlement. Eventually the eligibility criteria has been framed and evolved for the purpose of Indian Service Providers and who provide services listed in Appendix 41 of HBP Volume 1, who have free foreign exchange earning of at least Rs.10 lakhs in current financial year. They will be eligible for Duty Credit Scrip. ( para 36)
No vested right - The Petitioner cannot claim a vested right in matters of duty credit or exemption from payment of a duty or tax. None can say that the mandate of Article 19 (1) (g) of the Constitution of India is violated merely because at certain time and on certain occasions, the concessions and benefits were given or there is exemption from payment of duty and taxes imposed by laws of Parliament. The traders or citizens to whom the benefits and facilities are granted on fulfillment or requirement of a distinct eligibility criteria stand apart from others. Those not granted the same cannot claim any parity. Hence, in the absence of a vested right and only on the strength of a particular treatment of such cases in the past, no plea of violation of constitutional mandate enshrined in Articles 14 and 19 (1) (g) can be accepted. ( para 36)
Established Foreign Brand not eligible - The intention is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand ' instantly recognized and respected world over.' That cannot be achieved by permitting those who are not creating a powerful and unique 'Served From India' brand instantly recognized and respected world over. The entity establishing a foreign brand of service and prior to entry in India therefore, will not qualify and cannot be held eligible for FSIS benefit. The brand of such an entity is already created, existing and established. It may not be unique much less served from India exclusively. That does not get instantly recognized and respected world over as Indian brand .( para 36)
Delhi High Court ruling in Yum Restaurants case is not correct - The learned Single Judge of the Delhi High Court has construed the policy narrowly. The complete picture of the policy, its objects and purpose was not placed before him. With great respect, the ruling is disagreed with - The learned Single Judge failed to note that parties like the Petitioner do not have a vested right in seeking or claiming incentives and benefits under Duty Credit Scrips. It is only when they fulfill the criteria and the provisions of the nature carved out that they would be entitled to the benefits. It is not possible to agree with the view recorded in paragraphs 12 to 16 of the judgment. The learned Judge has construed the expression "Indian Service Providers' narrowly. He has not construed it in the backdrop of the policy measures and by interpreting them in a holistic manner. The learned Judge , reads the paragraphs in the policy in isolation. The views of the Delhi High Court are not agreeable and the challenge cannot be construed to be arising in the backdrop of section 5 of the Foreign Trade Act. ( para 39)
Benefits granted till 2007-08 - With regard to benefits already granted for earlier periods, it will not be permissible for the authorities adjudicating the claims or issues arising therefrom to recover the SFIS benefits granted till 2007-08. They are clearly falling within earlier policy framework and to that extent all petitions succeed. Any recoveries that are proposed for the period after 2007-2008 under FTP 2009-2014 will have to be made in accordance with law by the authorities competent to do so. ( para 41) - Petitions disposed of : BOMABAY HIGH COURT
2015-TIOL-2087- HC-DEL-CUS + Story
DGFT Vs M/s Masumi Overseas Pvt Ltd
DGFT - Scope of amendment to Petition already filed - Application under Order VI Rule 17 of CPC to amend the Petition filed by the respondents allowed by the Single Judge - Appeal by DGFT against the order of Single Judge.
Held: It is clear that by the proposed amendment which has been allowed by the impugned order, the nature of the writ petition gets substantially and materially altered and changed from the original writ petition (para 18)
In the context of amendments of pleadings in a suit the legal position is well settled. Amendments which seek to add entirely new cause of actions which virtually amount to substitution of a new plaint or a new cause of action in place of what was originally there, would normally be refused by a Court. (para 19)
The amendment now sought by the respondent has the effect of changing the entire writ petition substantially. New facts and issues are being added to the writ petition. The amended writ petition would virtually tantamount to substitution of an altogether new case when compared to the original case. It is appropriate that the respondent challenges the Show Cause Notice in different proceedings and not mix up the facts and submissions. - Order of Single Judge set aside. (para 23) - Appeal allowed : DELHI HIGH COURT
2015-TIOL-1897- CESTAT-AHM
CC Vs M/s Global Exim
Cus - DFIA was originally issued to M/s.Piramal Glass Ltd. - after completion of the export by the exporter, DFIA was transferred to the respondent by the Licensing Authority for duty free import of goods - the Assessing Officer denied the benefit of exemption notification on the ground that the exporter did not provide the actual quantity of Phosphoric Acid used in the export goods - as per DGFT Notification No.31 dated 1.8.2013 read with Public Notice No.35 dated 30.10.2013 and DGFT Notification No.90 dated 21.8.014, it is mandatory to state the actual quantity of inputs used in the export product to avail DFIA benefit - on appeal, the Commissioner (Appeals) set aside the decision of Assessing Officer and allowed the appeal filed by the respondent - revenue before CESTAT : HELD - Exporter cannot be compelled to furnish any information in respect of the said DFIA, which has already been transferred to the respondent - it is settled law that when the import is against the transferred DFIA (Licence) it is not necessary to establish that the material imported was actually used in the export product unless the resultant product figures in the sensitive list and the theory of broad nexus being settled by Apex Court - moreover, Para 4.2.2(b) of Foreign Trade Policy stipulates that DFIA shall be issued in accordance with Policy and procedure in force on date of issue of Authorisation -the provisions of DGFT Notification No.31 dated 1.8.2013 will not be applicable to such DFIA issued prior to amendment -consequentially any policy circular or public notice, if it seeks to deny the exemption which is otherwise available in the instant imports, will also have no applicability for the same reason - in the present case, Phosphoric Acid is a specific entry mentioned in the DFIA Licence issued as per SION A-3627 in relation to the export goods Glass vials/phials/ ampoules etc. - the DGFT Notification 31 dated 1.8.2013 with Public Notice No.35 dated 30.10.2013 cannot be applicable in the present case -once the license was endorsed for transferability by the licensing authority, the nexus between import goods used in export goods is not required to be established afresh by the transferee as held in various decisions relied upon by the respondent - appeal of Revenue rejected : CESTAT [para 4, 6, 7, 8] - Appeal of Revenue rejected : AHMEDABAD CESTAT
2015-TIOL-1896- CESTAT-MUM
CC Vs Supreme Steel Industries
Cus - Refund - Notification 102/2007-Cus - Imports are prior to 01.08.2008 - Refund claim filed after about 4 years from the date of payment of customs duty including Additional duty of customs - by notification 93/2008-Cus dt. 01.08.2008 the period of limitation as one year was incorporated in the notification 102/2007-Cus - claims rejected on the ground that they were time barred - Commissioner( A) holding that limitation will not apply as imports are prior to 01.08.2008 - Revenue in appeal. Held: Issue is no longer res integra in view of Delhi High Court decision in Sony India Pvt. Ltd - 2014-TIOL-532- HC-DEL-CUS wherein it is held that amending notification must be read down to the extent that it imposes a limitation period - amendment prescribed under notification 93/2008-Cus cannot be held applicable to the imports and duty payment which are made prior to 01.08.2008 - Revenue appeal dismissed - Respondent is entitled to refund: CESTAT [para 6] - Appeal dismissed : MUMBAI CESTAT
recent case laws
015-TIOL-2071- HC-DEL-IT
CIT Vs Goel Bricks Industries
Whether when the assessee and Revenue, both had filed appeals before different Tribunals, and one of the Tribunals had passed an order on merits which had attained finality, then the pending appeal before the other Tribunal is right by not deciding the appeal, assailing the same order of the CIT (A) - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-1422- ITAT-BANG
Shri H Lakshminarayana Vs ITO
Whether penalty under sec. 271(1)(c) is sustainable where the show cause notice issued by AO under sec. 274 is defective as it does not spell out the grounds on which the penalty is sought to be imposed and such a defect cannot be said to be curable under sec. 292BB of the Act. - Assesssee' s appeals allowed : BANGALORE ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1904- CESTAT-BANG
Ugar Sugar Works Ltd Vs CCE, C & ST
Central Excise - Bagasse waste emerged during manufacture of sugar is not dutiable - Following ruling in Balrampur Chini Mills , held no obligation cast on appellant either to reverse Cenvat credit or to pay an amount in terms of Rule 6 of CCR - Impugned order set aside and appeal allowed with consequential relief. (Para 3) - Assessee appeal allowed : BANGALORE CESTAT
CUSTOMS SECTION
DGFT PUBLIC NOTICE
34
Trade in Border Haats across the border in Tripura between Bangladesh and India
CASE LAW
2015-TIOL-2072- HC-DEL-CUS
M/s Ravi Crop Science Vs UoI
Whether bank account of an assessee can be frozen u/s 121 of Customs Act, 1962, if prima facie case is made out that monies in the said account are sale proceeds of smuggled goods - YES: HC
Whether monies, being sale proceeds of smuggled goods, confiscated u/s 121 from the assessee can be allowed to be withdrawn unconditionally by assessee - NO: HC
Whether onus in on an assessee to explain transactions in its bank account to prove that sale proceeds of its imported goods were credited into the bank - YES: HC
Whether mere change in partners will entitle an assessee firm to the monies in its bank account, if the same were otherwise liable to be confiscated - NO: HC
Cus - The appellant was engaged in the manufacture of pesticides/herbicid es - after investigation initiated by DRI against few companies who were importing high value pesticides/insectic ides/herbicides in the guise of sodium bi-carbonate, thionyl chloride and sodium bromide to evade higher customs duty, search and seizure operations were carried out at premises of the appellant and stock including imported insecticides/ pesticides worth more than Rs.2 crores detained/seized for further investigation - investigations revealed that appellant had indulged in transfer of huge amounts to non-existent firms against the purchase of various types of illegally imported pesticides, using an account held in Citibank, Delhi - the said account was frozen under Section 110(3) of the Customs Act - appellant before High Court -the single Judge found that since the freezing of the bank account was not seizure of goods as envisaged under Section 110 of the Customs Act, the appellant was not entitled to de-freezing of the bank account unconditionally and accordingly directed that the amount deposited in the bank account, after the date of freezing the account be released subject to furnishing of a bank guarantee in respect of the amount credited in the account from the date of freezing of the account - appellant before Division Bench of High Court - appellant contended that they did not import anything and thus the Customs Act does not apply to them - that till then, no notice whatsoever had been served on the appellant - thus the condition imposed on the appellant of furnishing a bank guarantee for de-freezing of the bank account was improper.
HELD : From the SCN dated 29.11.2013 issued to the appellant, a case of the monies in the frozen account being sale proceeds of smuggled goods is made out and the said monies are liable to confiscation under Section 121 of the Customs Act and thus cannot be allowed to be withdrawn unconditionally by the appellant - the appellant has failed to explain the source of the imported goods sale proceeds whereof were credited into the bank account which has been frozen -the onus was/is on the appellant to explain the transactions in the said bank account and to establish that the said transactions were/are not tainted - no endeavour even in that direction has been made - the Bench, at this stage, have thus but to presume that the monies in the bank account which has been frozen, are sale proceeds of smuggled goods - once that is found to be the case, the appellant in any case is not entitled to any discretionary relief under Article 226 of the Constitution of India - as far as the argument of the appellant, of the constitution of the appellant firm having since changed, and on which main reliance was placed, is concerned, mere change in partners will not entitle the appellant firm to the monies in the bank account, if the same were otherwise liable to be confiscated - in this view of the matter, no need felt to refer to the plethora of judgments submitted by both the sides - appeal dismissed : HIGH COURT OF DELHI [para 17, 18, 19, 20, 21, 22] - Appeal dismissed : DELHI HIGH COURT
Order VI Rule 17 of CPC - Scope of amendment to Petition filed - DGF
NEW DELHI : THIS is an appeal by the DGFT against the order of Single Judge. Vide the impugned order, the Single Judge allowed the application filed by the respondent under Order VI Rule 17 of the CPC, a per which a Court may at any stage of the proceedings allow either party to alter or amend his pleading.
The respondent filed a writ petition seeking a Writ of Certiorari for setting aside the communication/ order dated 25.3.2011 issued by the appellant putting the respondent on the Denied Entity List (DEL) issued by the appellant.
During pendency of the writ petition on 27.3.2015 the Additional Director General of Foreign Trade, Mumbai issued a Show Cause Notice to the respondent for having prima facie violated the provisions of The Foreign Trade (Development and Regulation) Act, 1992. The respondent was called upon to show cause why its Importer- Exporter Code No.(IEC) should not be cancelled with immediate effect. Pursuant to receipt of the said Show Cause Notice dated 27.03.2015 the respondent has filed an application under Order VI Rule 17 CPC seeking amendment in the prayer clause of the writ petition for the purpose of adding the Show Cause Notice dated 27.03.2015 in the order/communication sought to be impugned.
The impugned order dated 03.08.2015 of the Single Judge permitted the amendment application holding that the amendment sought will not change the nature of the petition and is formal in nature. This order of Single Judge is now challenged by the DGFT.
After hearing both sides, the High Court held:
A perusal of the new contentions shows that now the respondent seeks to, on facts and law, contend that the contentions as stated by the appellant in the show cause notice dated 27.03.2015 are erroneous and the said show cause notice is liable to be quashed.
It is clear that by the proposed amendment which has been allowed by the impugned order, the nature of the writ petition gets substantially and materially altered and changed from the original writ petition.
In the context of amendments of pleadings in a suit the legal position is well settled. Amendments which seek to add entirely new cause of actions which virtually amount to substitution of a new plaint or a new cause of action in place of what was originally there, would normally be refused by a Court.
The amendment now sought by the respondent has the effect of changing the entire writ petition substantially. New facts and issues are being added to the writ petition. The amended writ petition would virtually tantamount to substitution of an altogether new case when compared to the original case. It is appropriate that the respondent challenges the Show Cause Notice in different proceedings and not mix up the facts and submissions.
Accordingly, the High Court set aside the order of Single Judge and allowed the appeal.
(See 2015-TIOL-2087- HC-DEL-CUS)
CX - If there was justification for rendering separate finding in ca
MUMBAI : THIS case has had a tumultuous journey.
Against the Order-in-Original No.PUN-EXCUS- 001-COM-008- 13-14, Dated: 24.6.2013 passed by CCE, Pune-I, the assessee Rakhoh Enterprises had filed an appeal and in the matter of the stay application the CESTAT had while ordering pre-deposit held -
CX - Appellant is manufacturing anchor rings and load spreading plates and clearing the same without payment of duty on the assumption that the same are covered vide Not. 6/2006 dt.1.3.2006 or under Not. 12/2012 dt. 17.3.2012, as parts of wind-operated electricity generator (WOEG) - Revenue issued SCN on the ground that the same are not parts of WOEG and are chargeable to CE Duty - Demand of Rs.5.36crores confirmed: HELD - the appellant' s products are used in civil foundation on which the tower is erected - prima facie these cannot be considered as part of WOEG though these may be required for providing stability to the tower -appellant has not been able to make out a case - no financial hardship pleaded - appellant directed to deposit 25% of the duty amount : CESTAT
We reported this order dated 17.12.2013 as 2013-TIOL-2032- CESTAT-MUM.
Against this order, an appeal was filed before the Bombay High Court and vide an order dated 25.02.2014 - 2014-TIOL-288- HC-MUM-CX it was ordered thus -
CX - Exemption - whether anchor rings and load spreading plates supplied to company setting up windmills is entitled for exemption under notification 6/2006-CE, 12/2012-CE against the entry 'Wing operated electricity generator (WOEG) its components and parts including rotor and wind turbine controller&# 39; - Tribunal has given a finding that none of the cited decisions relied upon by the appellant are strictly on the point involved in the present case and accordingly ordered a pre-deposit of 25% of the duty amount of Rs.5,36,83,121/ - this is not a fit case for interference with the impugned order of the Tribunal - appellant given more time to make pre-deposit and Tribunal directed to decide appeal expeditiously within 3 months from the payment of pre-deposit as matter of recurring nature - appeal disposed of: High Court.
Incidentally, two other appeals filed by Gemini Instratech in the year 2009 & 2010 were heard along with the appeal filed by the assesse in question, on 13.08.2014.
The Division Bench of the CESTAT in its order dated 25.09.2014, at the outset, commented -
In this order three appeals are being decided together because the issue involved is essentially the same in all cases.
The order passed by the Bench was-
CX - Notfn. 6/2006-CE, 12/2012-CE - Anchor rings and Load Spreading Plates are used in the foundation of wind mill tower and cannot be considered to be part of Wind Operated Electricity Generators - benefit of exemption not available; however in r/o Tower doors since contrary view taken matter referred to Larger Bench: CESTAT
Appeal rejected of Appellant 1/Reference to Larger Bench Appellant 2
We reported this order as 2014-TIOL-2110- CESTAT-MUM.
The long and short of this order was that the appeal of Rakhoh Enterprises was rejected whereas the matter involved in the case of Gemini Instratech was referred to the Larger Bench as in the case of the very same appellant (Gemini Instratech) the Division Bench had vide its order dated 13.02.2013 - 2013-TIOL-738- CESTAT-MUM allowed the benefit of the exemption in respect of Tower doors.
The matter did not end there.
Perhaps to obviate any future confusion and legal complexity, the Tribunal issued a corrigendum on 22.12.2014 and which reads -
CORRIGENDUM
Dated: December 22, 2014
In the above said matter, in Order No. M/1820/14/EB/ C-II dated 13.08.2014/25/ 09/2014 issued on 08.10.2014, in annexure to the preamble appeal No. E/88906/13-Mum may be deleted, for which separate Order is issued i.e. A/791/14/EB/ C-II dated 13.08.2014 issued on 19.12.2014.
In short, Appeal Nos. E/1813/10-Mum & E/407/09-Mum both in respect of Gemini Instratech Pvt. Ltd. are referred to Larger Bench vide Order No. M/1820/14/EB/ C-II dated 13.08.2014/25/ 09/2014 and Appeal No. E/88906/13-Mum of M/s. Rakhoh Enterprises, is decided vide Order No. A/791/14/EB/ C-II dated 13.08.2014 issued on 19.12.2014.
While reporting this order 2015-TIOL-137- CESTAT-MUM we quipped - Hope this solves the impasse.
We were wrong.
A ROM application was filed by Rakhoh Enterprises against the order dated 25.09.2014 - 2014-TIOL-2110- CESTAT-MUM.
While dismissing the application on 01.05.2015, the Bench held - 2015-TIOL-942- CESTAT-MUM -
CX - Duty demand along with interest upheld, however, penalty set aside - Appellant submitting that sine qua non for invoking extended period & imposing penalty u/s 11AC is one & the same, hence there is an error apparent on record. Held - as order was passed after considering all material facts and judgements, no patent mistake exists - ROM dismissed: CESTAT
Obviously, the matter could not have faded into oblivion because, as the assessee put it in his ROM application - It would be travesty of justice where manufacturers across the country are getting relief for supplying similar goods.
And so, the assessee is before the Bombay High Court with a Writ Petition.
The High Court, at the outset, observed -
+ Ordinarily, a Writ Petition would not have been maintainable against such an order, but it is stated that the Tribunal has also passed a further order on an application styled as miscellaneous application for rectification of mistakes. That also has been dismissed by the impugned order on 1st May, 2015. Against that order, an Appeal would not lie is the submission.
+ For the present Petition and its disposal, we do not wish to decide any larger question or controversy. We proceed on the footing that relegating the Petitioner to any other remedy, even if existing, would not be efficacious and expedient, bearing in mind the request of the Petitioner.
The petitioner, after narrating the course chartered by their appeal and two other appeals of the other corporate entity decided together by the Tribunal, submitted - "…if all three Appeals involve the same issue or the essential issue was identical therein, then, the Tribunal should have been consistent in its approach. It should have referred the Question in all three Appeals for opinion and answer by a larger Bench…That is how the interest of justice would have been served. However, singling out only the Petitioner&# 39;s Appeal and deciding it without answering any legal question has prejudiced the Petitioner enormously.. . "
The High Court after considering the submissions made by both sides observed -
++ Prima facie, the Tribunal lost sight of the fact that it has to first conclude that all the products, namely, LSP and Anchor Rings, Tower Doors are foundational parts or not. We do not find a proper reference being made to all individual manufacturers, their products and thereafter what they claim as a part of WOEG. In para 12, the intention of the Government in issuing the Notification has been discussed and reference is made to an interim order in the case of the present Petitioner. Those interim findings and tentative views have been relied upon to distinguish the case of the present Petitioner from that of the others. Thereafter, in para 13, the Tribunal holds that the Counsel has not been able to satisfy that the terms 'windmill&# 39; and 'WOEG' are synonymous or used interchangeably. The guidelines and the forms filed as per requirement of Ministry are referred and on that basis and going by the language of the same, the Tribunal concludes that the Doors, Anchor Rings and LSP do not fall under the phrase 'WOEG' . Then reference is made to the Board letter of 1997, the Notification No.205/1988 dated 25th May, 1988, the judgment in the case of the co Appellants (Gemini) and we find in all matters a common conclusion has been reached that the Notification did not exempt WOEG and their parts. We do not see therefore any scope for the Tribunal then referring to individual facts pertaining to the present Petitioner and upholding the duty demand along with interest….
++ The Tribunal was aware of the controversy, the issue before it and stated to be common to all the Appellants. If there was justification for rendering a separate finding in the case of the Petitioner&# 39;s Appeal, then, in the first instance it is not clear as to why it was clubbed along with other Appeals. If all three Appeals involve similar question and issue, then, it is not clarified as to what distinguishes only the present Petitioner&# 39;s case from the other two Appeals. If the issue was of the Exemption Notification, its construction and interpretation, the intention of the Government in granting the exemption, then, it is common to all the Appellants. In the circumstances, we do not find any support for the argument of Mr.Mishra that the Tribunal' s order is neither erroneous nor illegal.
++ We have found that there was a common thread and flowing throughout the order up to the discussion on the facts pertaining to the Petitioner&# 39;s case. We do not find that there was any feature or aspect of the Petitioner&# 39;s case which demonstrated and proved it to be a distinct or a different matter. No light has been thrown by the Tribunal or by the Revenue before us nor any distinguishing features, save and except noted above by us, are appearing from the record. The Tribunal, rather than deciding the issue and construing and interpreting the Exemption Notification, has thought it fit to refer the same to a larger Bench. For, it thought that it may be arising in future cases. If the question or issue is of general public importance, requiring an authoritative pronouncement, then, we have not found any reason, much less cogent and satisfactory for leaving out the Petitioner from the Reference. The Petitioner&# 39;s case also requires interpretation of the same Notification and its construction is also an issue in the Petitioner&# 39;s case. Therefore the Tribunal should have formulated the same question even in the case of the Petitioner&# 39;s Appeal and referred all three matters to be decided and by a larger Bench.
++ This mistake and which was apparent could have been rectified in the rectification proceedings, but the Tribunal failed to exercise its powers and the jurisdiction vested in it by law.
The Tribunal' s order dated 25th September 2014 - 2014-TIOL-2110- CESTAT-MUM was quashed and set aside.
The High Court directed that in the case of the present Petitioner M/s. Rakhoh Industries Pvt. Ltd. as well the issue and inter alia framed in para 20 shall be referred for decision by a larger Bench.
And that, after the larger Bench renders a decision or answers it or opines on the issue referred to it, the Tribunal shall decide all the three Appeals in accordance with law in tune with the construction and interpretation of the Notification and the answer of the larger Bench.
The Writ petition was allowed.
(See 2015-TIOL-2086- HC-MUM-CX)
IT/ILT : In case of assessee, rendering IT enabled back office servi
[2015] 60 taxmann.com 425 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
CSAV Group (India) (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Ward 3 (1), New Delhi
IT: Where assessee an electricity board collected electricity duty from customers but did not remit to Government within stipulated time under Kerala Electricity Duty Act, provisions of section 43B would be applicable
IT: Provisions of section 43B would not be applicable to electricity surcharge paid by assessee to Government, disallowance made was unjustified
IT: While making assessment, section 115JB could not be made applicable against Electricity Boards which were totally owned by Government
[2015] 60 taxmann.com 474 (Cochin - Trib.)
IN THE ITAT COCHIN BENCH
Assistant Commissioner of Income-tax
v.
Kerala State Electricity Board
IT: While making assessment, section 115JB could not be made applicable against Electricity Boards which were totally owned by Government
[2015] 60 taxmann.com 474 (Cochin - Trib.)
IN THE ITAT COCHIN BENCH
Assistant Commissioner of Income-tax
v.
Kerala State Electricity Board
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CCI issues guidelines for economic-legislations' assessment to address adverse effect on competition
CCI issues guidelines to assess select economic legislations / bills from the perspective of competition, effective from January 1, 2016; Legislations / bills identified by (i) CCI's Advocacy Division (ii) Any Government Agency, including regulators, iii) CCI, shall be taken up for assessment; CCI shall maintain a panel of 5-7 reputed institutions (having expertise in law, economics, finance or management, selected by selection committee constituted by CCI) to carry out initial competition assessment of economic legislations /bills referred to them; As soon as a legislation / bill is identified by CCI for competition assessment, it will be assigned to (i) an institution in the Panel depending on its interest, expertise and experience, or (ii) an in-house team of officers; Competition assessment shall carry findings, observations and suggestions for modification of the legislation / bill along with rationale for the same which shall be examined by CCI's Advocacy Division; The institution must give its assessment within 15 days of its receipt and shall exercise full care and diligence to ensure that its assessment is of very high quality; Assessment should address if the legislation / bill has any provision which could: (i) cause appreciable adverse effect on competition in the relevant market in India, (ii) humble any of the salient features of a competitive market, (iii) restrict freedom of players in the market and choices of consumers, or (iv) be in disharmony with the objectives of the Competition Act, 2002: CCI
Holds Ramalinga Raju's family as 'insider'; Directs disgorgement of Rs. 1800 cr unlawful gains
Pursuant to SEBI order dated July 15, 2014 whereby Satyam Computer's top management was restrained from securities market for deliberately projecting a grossly false picture of Stayam's financials, directs 10 entities including members of Raju family to disgorge around Rs 1,800 cr of unlawful gains; Directs Mr. B. Ramalinga Raju and Mr. B. Rama Raju to jointly and severally disgorge Rs. 56.16 crores which they had earned by sale/transfer of shares held by them in Satyam Computers; Rejects contention that certain family members of Raju family were not insiders, peruses definition of 'relative', 'connected persons' under PIT Regulations, holds Ramalinga Raju's mother, brother, son, brother's wife as 'deemed to be connected persons'; Also holds related entities namely, Chintalapati Holdings Pvt. Ltd, SRSR Holdings Private Limited & IL&FS Engineering and Construction Company Limited (formerly known as Maytas Infra Limited) as 'insiders' holding 'unpublished price sensitive information' during the relevant period :SEBI
The ruling was delivered by Shri Rajeev Kumar Agarwal, Whole Time Member, SEBI.
NEW DELHI, SEPT 10, 2015: THE bone of contention before the Bench is - Whether assessment proceedings could have been initiated against the assessee u/s 153A even if the search warrant in terms of Section 132 read with Rule 112 of the Income Tax Rules 1962, was issued in the name of her father and not the assessee. NO is the answer.
Facts of the case
The assessee is an Individual. A search warrant notice u/s 132 was issued against Mr. Raj Kumar Singhania, the father of assessee who was unmarried at the relevant time. The Court had been shown a copy of the panchnama drawn on the date of the search, which showed that the warrant was issued in the name of Mr. Raj Kumar Singhania and the place to be searched indicated as 104, New Rajdhani Enclave, Delhi. The search commenced at 8.15 am and concluded at 5.15 pm on that very date. During the course of the search, certain keys of bank lockers were found in the said residential premises. One of the keys pertained to locker No.111, Canara Bank, Laxmi Nagar, Delhi in the name of assessee. On that date itself the said locker was not opened by the raiding party Thereafter on 7th July 2006, the Department in the presence of both Mr. Raj Kumar Singhania and assessee opened the said locker and drew up a panchnama. This panchnama showed that the warrant was in the case of "Raj Kumar Singhania and Priyanka Singhania, locker No. 111, Canara Bank, Laxmi Nagar, Delhi." The panchnama, drawn contains the signatures of assessee with the date of 7th July 2006, stating that she had received a copy thereof along with key of the locker which by then had been opened. It was also stated in the panchnama in an endorsement across the page that "locker found vacant/empty". Therefore, nothing was found in the locker belonging to assessee.On appeal, both the CIT(A) and the Tribunal held that this issue was specifically raised by the assessee throughout the proceedings. It was for this reason that on the previous date, the HC held that the contention of the counsel for the assessee was that in terms of Section 153A read with Rule 112 it was incumbent on the Revenue to demonstrate, by producing the relevant file that there was a separate search warrant issued in the name of Assessee u/s 132. Assessee submitted that it was not sufficient that only a Panchnama showing the name of assessee along with the name of her father, in whose name the search warrant was issued was produced.
Held that,
++ on the first date of hearing, the Revenue had produced a copy of the panchnama drawn on 7th July 2006 and not the warrant of search, if any issued in the name of assessee. The Court therefore proceeds on the basis that there is no search warrant issued in the name of assessee. It is evident from Rule 112 read with Form 45 that the search warrant has to be issued in the name of the person. The search warrant will also have to indicate the place of search. The documents placed on record by assessee shows that while there was search warrant in the name of Mr. Raj Kumar Singhania, the father of assessee, there was no separate search warrant in his name. The panchnama dated 7th July 2006 with reference to search of locker No. 111 of the assessee, refers to the said proceedings being in continuation of the earlier search proceedings which took place on 23rd June 2006. The search proceedings on 23rd June 2006 was on the basis of the search warrant issued in the name of the father of assessee and not the assessee. As already noted, the Revenue has been unable to produce till date any record to show that there was any search warrant issued in the name of assessee. HC is of the view that the assessee's contention is correct that with the Department not having proceeded to search the locker No. 111 on 23rd June 2006 itself and having completed the search proceedings on that date by 5.15 pm, if it thereafter proposed to search locker No. 111 belonging to assessee, it ought to had issued a separate search warrant in her name, specifying the place of search that was undertaken on 7th July 2006. Alternatively, if the Department wanted to continue with the search warrant issued on 23rd June 2006 in the name of Mr. Raj Kumar Singhania and proceed to open locker No.111, then they could not have instituted separate proceedings against the assessee u/s 153A without there being any separate search warrant in her name. It is another matter that if anything incriminating had been found against the assessee when the locker was opened on 7th July 2006, the proceedings could have been initiated against her u/s 153C. However, there was no occasion in the present case to do so since nothing was found in the locker. Consequently, the Court is satisfied that apart from other reasons mentioned in the impugned order of the ITAT, the proceedings u/s 153A against the assessee was itself without the authority of law. No substantial question of law arises from the impugned order of the ITAT. The appeal is dismissed.
(See 2015-TIOL-2083-HC-DEL-IT)
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