Railway procurement policy inconsistent with competition law but no 'cartelization' between suppliers
CCI rejects Rail Coach Factory's ('Informant') complaint against two Axle Mounted Disc Brake System (AMDBS, used in rail coaches) suppliers ('opposite parties', 'OPs'), alleging cartelization & collusive bidding; Informant had alleged that OPs had colluded with each other to create a cartel in quoting similar price in three Emergency Purchase Tenders in 2011 issued by informant for supply of braking system and Director General ('DG') concluded presence of collusive bidding; However, CCI observes that informant's Tender Committee did not raise any objections on identical prices quoted by OPs and rather, informant went ahead to place supply orders on them for equal quantities; Further notes that informant had informally communicated to OP to quote the negotiated rate to avoid unnecessary delay in negotiation, holds that "given the peculiar facts of the present case, the Commission is of the considered view that the evidence relied upon by the DG to reach the findings in the present case are not sufficient to hold OPs in contravention of the provisions of the Act"; Further observes that procurement policy of Railways was not in harmony with competition law principles; Agrees with DG on this point and states that, "..the procurement policies of the Railways.. contributed to the lack of competition between the suppliers in the present case" & advises Ministry of Railways to modify the said policy to incentivise the present as well as prospective suppliers of braking system:CCI
The Order was passed by Shri. Ashok Chawla (Chairperson), Shri. S. L. Bunker, Shri. Augustine Peter, Shri. U. C. Nahta, Shri. M. S. Sahoo (Members)
Mr. D. K. Kingra argued for informant, while Senior Advocates Guru Krishnakumar, A. N. Haksar, Advocates Nisha Bagchi, Sujeeta Srivastava, Pooja Sharma, Sneha Iyer, S. K. Mongia, Pawan Sharma, Anuj Shah, Chitra Y. Parande argued on behalf of Opposite Parties.
Full bench of Gujarat HC rules that premium received by assessee (a co-operative housing society) upon transfer of plot by its outgoing member not taxable in the hands of society applying principles of mutuality; Rejects revenue's reliance on Bombay HC ruling in Presidency Cooperative Housing Society Ltd. as the principle of mutuality was never pressed nor discussed by the Court; Further, distinguishes Revenue's reliance on SC ruling in Bangalore Club as the issue discussed therein was on taxability of interest earned by AOP upon depositing funds with member banks; Upholds ratio laid down in division bench ruling in Adarsh Cooperative Housing Society Ltd. , Manekbaug Cooperative Housing Society Ltd. by applying principle of mutuality; Bye-laws of the society provided that upon transfer of a plot of land allotted to a member, assessee-society would collect 50% of the excess received (i.e. premium) by such outgoing member; Rejects Revenue's stand that principle of mutuality was not applicable as the receipt would remain in the fund of society in perpetuity and even upon winding-up, it would not be distributed among members; Also applies triple test of 'mutuality' laid down in the Privy Council case of The English & Scottish Joint Cooperative Wholesale Society Ltd. to the facts of present case & rules in favour of the society - Full Bench : Gujarat Hc
Dear All
The honerable court was of the view that the Writ petition filed by us was in the nature of PIL ( public interest litigation ) and should be according filed for which liberty has been accordingly grated.
Regards
Tax Research Foundation
Forwarded as received
The honerable court was of the view that the Writ petition filed by us was in the nature of PIL ( public interest litigation ) and should be according filed for which liberty has been accordingly grated.
Regards
Tax Research Foundation
Forwarded as received
IT : Payer of interest cannot justify non-deduction of tax at source by taking shelter of ultimate tax effects of payee
[2015] 61 taxmann.com 16 (Guwahati - Trib.)
IN THE ITAT GUWAHATI BENCH
Arihant Invest
v.
Income-tax officer,TDS- 2, Guwahati
[2015] 61 taxmann.com 16 (Guwahati - Trib.)
IN THE ITAT GUWAHATI BENCH
Arihant Invest
v.
Income-tax officer,TDS- 2, Guwahati
IT/ILT : Where assessee was only a reseller of software products of a non-resident company in India, since transaction in question was in nature of trade, payment made by assessee to non-resident towards purchase of products did not fall within purview of royalty under section 9(1)(vi)
[2015] 61 taxmann.com 47 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
Assistant Director of Income-tax (Intl. Taxn)- I, Hyderabad
v.
Locuz Enterprise Solutions Ltd.
IN THE ITAT HYDERABAD BENCH 'B'
Assistant Director of Income-tax (Intl. Taxn)- I, Hyderabad
v.
Locuz Enterprise Solutions Ltd.
IT: Where assessee-trust was only running a pre-school by collecting fees for imparting education to children, assessee' s main objects were covered by charitable purposes 'education&# 39; under section 2(15) and it was entitled for registration under section 12AA
[2015] 60 taxmann.com 155 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Life Shines Educational & Charitable Trust
v.
Assistant Commissioner of Income-tax
[2015] 60 taxmann.com 155 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Life Shines Educational & Charitable Trust
v.
Assistant Commissioner of Income-tax
SEBI: Where petitioner director sought for discharge from complaint case filed by SEBI against company for violation of CIS Regulations, petitioner&# 39;s application was to be rejected as petitioner would get opportunity at trial for proving that she was not concerned with affairs of company at time of alleged offence
[2015] 61 taxmann.com 4 (Delhi)
HIGH COURT OF DELHI
Pratima Srivastava
v.
State of NCT of Delhi
[2015] 61 taxmann.com 4 (Delhi)
HIGH COURT OF DELHI
Pratima Srivastava
v.
State of NCT of Delhi
SEBI : Where plaintiff NSE filed an application for injunction in a defamation action against defendants, editors of journal or website moneylife-in, on ground that article published by journal accused NSE of actively permitting illicit trading advantages being afforded to a select few using high-end technology, it was held that, a defamation action should neither be allowed to be used to negate or stifle genuine criticism, nor should it be allowed to choke a fair warning to public if its interest stands threatened in some way and, therefore, no prima facie case being made out injunction sought by NSE was to be declined
• Scams that beleaguered exchanges in past, and those that continue to occupy time of Court have at least in part come to light because of persons like Ms. Dalal (editor of money life) and her fellow travellees - It is not reasonable to propose a legal standard of utter faultlessness in reportage or public comment in relation to such Public bodies or persons
[2015] 61 taxmann.com 161 (Bombay)
HIGH COURT OF BOMBAY
National Stock Exchange of India Ltd.
v.
Moneywise Media (P.) Ltd
• Scams that beleaguered exchanges in past, and those that continue to occupy time of Court have at least in part come to light because of persons like Ms. Dalal (editor of money life) and her fellow travellees - It is not reasonable to propose a legal standard of utter faultlessness in reportage or public comment in relation to such Public bodies or persons
[2015] 61 taxmann.com 161 (Bombay)
HIGH COURT OF BOMBAY
National Stock Exchange of India Ltd.
v.
Moneywise Media (P.) Ltd
IT: Where assessee acquired shares of its own group company at Rs. 40 per share and then sold same to its own group company at a throw away price of 10 paise per share and both transactions being off-market as shares were not listed on any stock exchange in country, entire transaction was not genuine and assessee was not entitled to claim long-term capital loss on sale of shares
IT: Where assessee transacted in shares with other companies and said transactions were off-market transactions and companies whose shares were transacted were group concerns, entire transactions were not genuine and long-term capital loss on transaction in shares could not be allowed
[2015] 61 taxmann.com 72 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'SMC' - I
Deputy Commissioner of Inome-tax, Circle- 4 (1), New Delhi
v.
Leading Line Merchant Traders (P.) Ltd
IT : Where objects of assessee-trust clearly showed that it came int
IT: Where assessee transacted in shares with other companies and said transactions were off-market transactions and companies whose shares were transacted were group concerns, entire transactions were not genuine and long-term capital loss on transaction in shares could not be allowed
[2015] 61 taxmann.com 72 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'SMC' - I
Deputy Commissioner of Inome-tax, Circle- 4 (1), New Delhi
v.
Leading Line Merchant Traders (P.) Ltd
IT : Where objects of assessee-trust clearly showed that it came int
IT : Where objects of assessee-trust clearly showed that it came into existence for providing medical assistance to poor patients and to promote research work on medical site, etc, assessee-trust existed for charitable purpose only and would be eligible for registration under section 12A
[2015] 60 taxmann.com 158 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'B'
Paediatric Pulmonology Programme Trust
v.
Commissioner of Income-tax
[2015] 60 taxmann.com 158 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'B'
Paediatric Pulmonology Programme Trust
v.
Commissioner of Income-tax
Cus - Royalty can be added to price of goods only if same is condition of sale of imported goods - Interestingly, there is no import of goods on value of which amount of royalty is sought to be added: CESTAT
MUMBAI : THIS is a Revenue appeal against the order of Commissioner( A).
The dispute has arisen from the Agreement for the 'Licensing of Technology and Processes' between the appellant and M/s. Eagle Industry Company Ltd., Japan. The agreement provides for one-time lump sum payment of USD 1,25,000/- for obtaining license of technology, processes, technical know-how, drawings etc. and royalty payment of 2% commencing from the commencement of sale of Eagle products. Under the Agreement only technical know-how is provided for the said payments. The appellant are required to maintain manufacturing standards equivalent to that maintained by Eagle in its own manufacture.
Both the lower authorities held that the payment of royalty is related to indigenous manufacture of mechanical seals and parts thereof and there is no obligation to procure the mechanical seals from the collaborators who are a related person.
After considering the submissions, the CESTAT, at the outset, remarked that the ground of appeal is very weak as the same states that the importer had imported parts from their collaborator to manufacture goods of foreign collaborator&# 39;s brand name.
Inasmuch as the the Bench justified this by observing -
"…Interestingly, we find that in the present case there is no import of goods on the value of which the amount of royalty is sought to be added. There is no evidence of actual import in the appeal papers. In any case we note that in terms of Rule 10(1)(c) of the Customs Valuation Rules, royalty may be added to the price of the goods only if the same is a condition of the sale of the imported goods being valued. This is established law as held in various judgments of the Apex Court including the case of Commissioner of Customs Vs. Ferodo India Pvt. Ltd. - 2008-TIOL-28- SC-CUS. Revenue has not established that the royalty is paid as a condition of the sale of goods being valued."
The Revenue appeal was dismissed.
(See 2015-TIOL-1920- CESTAT-MUM )
ST - Consulting Engineer - Appellants are experts in shipping & were called upon by Lakshadweep to aid them in finalising kind of ship that may be required for movement of men & material from island to mainland - ST not payable during material period as appellant not an engineering firm: CESTAT
MUMBAI : THE appellant rendered the services of finalising acquirement of ship for Union Territory of Lakshadweep and also overseeing the activity of procurement, monitoring other agencies for progress of construction of vessels, conducting shop trials for main engine and to supervise model test at Danish Maritime Institute. For these services, the appellant charged the Union Territory of Lakshadweep.
This, the Revenue says, amounts to providing 'Consulting Engineer Service' and the appellant is liable to pay Service tax.
The lower authorities confirmed the demand.
Before the CESTAT, the appellant submitted that they helped the UT of Lakshadweep to procure the vessel for movement of men and material between Lakshadweep and mainland. Further, since they are a company incorporated under the Companies Act, they cannot be considered as a 'Consulting Engineer' as per the definition during the relevant period 26/02/1999 to 26/01/2004. It is also submitted that the issue is now squarely covered by the decision of the Delhi High Court in the case of Simplex Infrastructure and Foundry Works - 2013-TIOL-441- HC-DEL-ST and the High Court of Karnataka in Turbotech Precision Engineering Pvt. Ltd. - 2010-TIOL-498- HC-KAR-ST wherein the definition of 'consulting engineer' , as it stood during the relevant period and post its amendment, were considered and a view was taken in favour of the appellant.
The AR stuck to the departmental stand.
After reproducing the definition of 'Consulting Engineer' as appearing during the material period, the Bench,while mentioning that it was not convinced with the arguments put forth by the AR and the lower authorities, observed -
+ …it has to be noted that the 'consulting engineer' means a professionally qualified engineer and would also include an engineering firm. We find that, subsequently in 2006 an amendment was carried out and the definition of 'consulting engineer' was changed to include 'any body corporate' or any other firm.
+ The appellant herein is not a consulting engineer. They are experts in the shipping business and were called upon by the Union territory of Lakshadweep to assist them in finalising the kind of a ship that may be required for movement of men and material from island to mainland.
+ Secondly, a similar issue, as to whether a private limited company registered under the Companies Act gets covered under the definition of 'consulting engineer' during the period in question was decided (in favour of assessee) by the Hon'ble High Court of Delhi in the case of Simplex Infrastructure and Foundry Works (supra) …
Holding that the issue involved in the case on hand is squarely covered in favour of the appellant by the aforesaid decision, the impugned order which upheld the service tax liability with interest and penalties was set aside and the appeal was allowed with consequential relief.
(See 2015-TIOL-1921- CESTAT-MUM )
MUMBAI : THE appellant rendered the services of finalising acquirement of ship for Union Territory of Lakshadweep and also overseeing the activity of procurement, monitoring other agencies for progress of construction of vessels, conducting shop trials for main engine and to supervise model test at Danish Maritime Institute. For these services, the appellant charged the Union Territory of Lakshadweep.
This, the Revenue says, amounts to providing 'Consulting Engineer Service' and the appellant is liable to pay Service tax.
The lower authorities confirmed the demand.
Before the CESTAT, the appellant submitted that they helped the UT of Lakshadweep to procure the vessel for movement of men and material between Lakshadweep and mainland. Further, since they are a company incorporated under the Companies Act, they cannot be considered as a 'Consulting Engineer' as per the definition during the relevant period 26/02/1999 to 26/01/2004. It is also submitted that the issue is now squarely covered by the decision of the Delhi High Court in the case of Simplex Infrastructure and Foundry Works - 2013-TIOL-441- HC-DEL-ST and the High Court of Karnataka in Turbotech Precision Engineering Pvt. Ltd. - 2010-TIOL-498- HC-KAR-ST wherein the definition of 'consulting engineer' , as it stood during the relevant period and post its amendment, were considered and a view was taken in favour of the appellant.
The AR stuck to the departmental stand.
After reproducing the definition of 'Consulting Engineer' as appearing during the material period, the Bench,while mentioning that it was not convinced with the arguments put forth by the AR and the lower authorities, observed -
+ …it has to be noted that the 'consulting engineer' means a professionally qualified engineer and would also include an engineering firm. We find that, subsequently in 2006 an amendment was carried out and the definition of 'consulting engineer' was changed to include 'any body corporate' or any other firm.
+ The appellant herein is not a consulting engineer. They are experts in the shipping business and were called upon by the Union territory of Lakshadweep to assist them in finalising the kind of a ship that may be required for movement of men and material from island to mainland.
+ Secondly, a similar issue, as to whether a private limited company registered under the Companies Act gets covered under the definition of 'consulting engineer' during the period in question was decided (in favour of assessee) by the Hon'ble High Court of Delhi in the case of Simplex Infrastructure and Foundry Works (supra) …
Holding that the issue involved in the case on hand is squarely covered in favour of the appellant by the aforesaid decision, the impugned order which upheld the service tax liability with interest and penalties was set aside and the appeal was allowed with consequential relief.
(See 2015-TIOL-1921- CESTAT-MUM )
IT : Where assessee engaged in business of providing mobile telephone services, sold prepaid vouchers to its distributors at a rate lower than its face value, difference between face value and selling price of prepaid voucher could not be regarded as commission requiring deduction of tax at source under section 194H
[2015] 60 taxmann.com 214 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'A'
Vodafone Essar Gujarat Ltd.
v.
Assistant Commissioner of Income-tax, TDS Circle, Ahmedabad
[2015] 60 taxmann.com 214 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'A'
Vodafone Essar Gujarat Ltd.
v.
Assistant Commissioner of Income-tax, TDS Circle, Ahmedabad
Direct Tax Basket
2015-TIOL-2116- HC-MUM-IT
CIT Vs V S Dempo And Co Pvt Ltd
Whether when in case of a non resident assessee, the receipts attributable to electronic data process and professional services would be in the nature of income, provisions of section 195 can be applied if the net is positive income. - Revenue' s appeal al lowed : BOMBAY HIGH COURT
2015-TIOL-2115- HC-KAR-IT
CIT Vs Prakash B Nichani
Whether if the reasons given by the Tribunal for condoning the delay in filing an appeal by an assessee do not find any irregularity as such, an order of remand has to be passed by the High Court on the basis that the matter has been pending for a substantial length of time - YES: HC - Case remanded : KARNATAKA HIGH COURT
2015-TIOL-2114- HC-ALL-IT
Late Ramesh Chandra Bajpai Vs PR CIT
Whether if the provisions of Income Tax Act provide to release the balance amount after satisfying the liability, the Revenue officials were justified to retain the same under the executive Instructions - NO: HC - Assessee' s appeal allowed : ALLAHABAD HIGH COURT
2015-TIOL-2113- HC-KERALA- IT
K K J Foundations Vs ADIT
Whether rectification merely means correction of an error which was apparent from record and not decision on a matter over and again on merits, the rectified order does not supersede the original order but continues with the incorporated changes - YES: HC
Whether in case the findings entered by AO was based clearly on facts which was susceptible to an appeal, is it correct on the part of the assessee to file an application u/s 154 to point out an error apparent from the record - NO: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-2112- HC-P&H-IT
CIT Vs Joneja Bright Steel Pvt Ltd
Whether in case the Tribunal merely relied on the detailed enquiry made by AO by issuing summons u/s 131 to the vendors and also on the enquiry made from the bank authorities, which establishes that the purchases made were not genuine, the Tribunal' s order can be considered as an order passed various aspects of the case - NO: HC
Whether merely because the vendor immediately withdrew the amount paid by assessee, would lead to the conclusion that the transactions between the assessee and the vendors were fictitious - NO: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2111- HC-KAR-IT + Story
ACIT Vs Mookambika Associates
Whether when pursuant to search operations, an assessee has not made payments immediately thereafter but did so only after coercive steps were taken by attaching its Bank accounts and property, his petition for waiver of interest u/s 220(2) has to be entertained - NO: HC - Assessee' s appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-2110- HC-AHM-IT
DCIT Vs Gujarat State Fertilizer And Chemicals Ltd
Whether an order of reassessment can be quashed by the Tribunal on the basis that AO has reopened the assessment on the same material which were in the records during the course of the original assessment proceedings, without appreciating the law - YES: HC - Revenue' s appeal dismissed : GUJARAT HIGH COURT
2015-TIOL-2109- HC-DEL-IT
PR CIT Vs Groz Engineering Tools Pvt Ltd
Whether when it is clear that the royalty payable by assessee on per unit basis was clearly linked to sales, there was no concealment on behalf of the assessee to furnish the required agreements, the same can be considered as of capital in nature on estimate basis - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2108- HC-DEL-IT
CIT Vs Atma Ram Properties Pvt Ltd
Whether when the assessee himself has accepted the decision of Tribunal for a certain assessment year and had expressed no objection to the Revenue' s appeals for the said period, the same questions in further year, if arise, has to be answered in favour of the Revenue - YES: HC - Revenue' s appeal allowed : DELHI HIGH COURT
2015-TIOL-1445- ITAT-HYD
Ratna Infrastructure Projects Pvt Ltd Vs DCIT
Whether when the payee has declared the corresponding amounts received from the assessee as their income and had paid taxes thereon, then assessee cannot be treated as in default under S.201(1) for the same amount of taxes, which have already been paid by the payee - YES: ITAT - Assessee' s appeal partly allowed : HYDERABAD ITAT
2015-TIOL-1444- ITAT-CHD
Mohinder Singh Dhindsa Vs ITO
Whether the CIT(A) was justified in dismissing the Appeal of the Assessee on the ground of limitation when the demand notice / penalty notice etc. has been duly served upon the assessee by registered post on 31/12/2009 and there were no sufficient reasons for the inordinate delay in filing the appeal almost after one and half years. - Assessee' s appeal dismissed : CHANDIGARH ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2119- HC-KAR-ST
Eblitz Inc Vs ADDL CST
ST – Delay in filing appeal before Commissioner( A) - Except self serving statement of petitioner there is no material whatsoever available to arrive at a conclusion that order in original dated 31.01.2012 came to be served on petitioner on 11.09.2012 so as to exclude the period from date of order till date of service – In the absence of any proof being tendered, petitioner cannot be heard to contend that the High Court in exercise of power under Article 226 of Constitution of India can condone such delay - When the statue prescribes the period of 90 days as the limitation to file an appeal and there being no provision under the Finance Act, 1994 to condone the delay by first appellate authority, question of entertaining such application for condonation of delay will not be in the domain of appellate authority - since the express provision has stipulated for filing of appeals by fixing the limitation, it would override the provision of Limitation Act, 1963 which is the general law and hence even if there is sufficient cause for condonation of delay beyond six months (in the said case) such delay cannot be condoned – No merit in petition, hence dismissed: High Court [para 4] - Petition dismissed : KARNATAKA HIGH COURT
2015-TIOL-2118- HC-MUM-ST + Story
Damco India Pvt Ltd Vs UoI
ST - Matters which raise essentially disputed questions of fact cannot be decided by High Court - entertaining petition would amount to scuttling the inquiry and delaying the adjudication - it cannot be assumed that the petitioner will necessarily be served with an adverse order - Petition dismissed: High Court [para 6, 7] - Petition dismissed : BOMBAY HIGH COURT
2015-TIOL-1923- CESTAT-AHM
CST Vs Viral Makers Ltd
ST - Agreement is not that of a Commission Agent but a Depot Agreement between the Company and the Assessee - It is clearly evident that the activities of the Assessee would be termed as Sales Depot of the Company - The Assessee as a Depot Manager, shall handle the goods and also would cause the sale of the goods - definition of "Clearing and Forwarding Agent" covers any service either directly or indirectly connected with clearing and forwarding operations in any manner - expression "in any manner" has wide amplitude - we find that the appointment of the Assessee is not as a Commission Agent, but for Depot Manager, and therefore, it would be covered under the definition of "Clearing and Forwarding Agent" - It is well settled that the principle of res judicata would not apply in the taxation matter – submission that the Appellants were registered under "Business Auxiliary Service" which was accepted by the Revenue and therefore, Revenue cannot change their stand is not acceptable – Appeal rejected: CESTAT [para 8, 11, 12] - Appeal rejected : AHMEDABAD CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2127- HC-AP-CX
CC & CE Vs M/s Panyam Cements And Minerals Industries Ltd
Central Excise - Refund under Section 11B - recovery of wrong refund - whether demand under Section 11A mandatory - 'No' , rules High Court - Revenue Appeal Allowed : ANDHRA PRADESH HIGH COURT
2015-TIOL-2126- HC-MAD-CX
CCE Vs Spic Pharmaceuticals Division
Central Excise - Modvat credit - Entitlement - Input buyer of goods held not entitled to modvat credit when input supplier evidently did not pay duty - Duty paying documents issued earlier by input supplier reflecting duty payment particulars in the circumstances held irrelevant - Demand is sustainable as modvat credit availed by assessee was clearly not based upon valid duty paying documents - Admitted facts on record not properly considered by CESTAT in proper perspective while rejecting Revenue' s appeal hence the order is set aside and remanded to CESTAT for de novo consideration of issue in question - Appeal by Revenue is allowed and the matter is remanded to CESTAT for De Novo consideration. (Para 13 - 15) - Remanded : MADRAS HIGH COURT
2015-TIOL-2125- HC-MAD-CX
Rupa And Co Ltd Vs CESTAT
Central Excise - Disallowance of Transitional Cenvat credit - Sustainability -Small percentage of loss of quantity and value of inputs is inherent in every manufacturing process - Total quantity of inputs that went into the making of the finished product thus represents the inputs of such products in entirety - Credit of duty paid by manufacturer of garments on entire quantity and value of yarn that had gone into the making of fabric, including 5% of quantity and value of inputs lost during manufacturing, allowed.
The pertinent questions before the High Court is should Rule 9A purport be interpreted such a way that every manufacturer has to pay excise duty on the entire quantity and value of inputs consumed in the making of a finished product despite the fact that whose weight will never be equivalent to the sum total of the weight of all the inputs. Or whether a manufacturer isentitled to make a claim for CENVAT credit, with reference to the total quantity and the value of the inputs that went into the making of the finished product notwithstanding incidental losses incurred during manufacturing process.
Appellant, a manufacturer of knitted fabric garments, claims that about 5% of the quantity and value of yarn is lost while making it into a fabric and that therefore, is entitled to take credit for the entire quantity and value of input that had actually produced the fabric that was lying in store and not of credit only in respect of the physical content of the inputs in process, as decided by CESTAT in terms of the provisions of Rule 9A and 2(g) of the CENVAT Credit Rules, 2002.
The expression 'inputs of such finished product' contained in finished products' cannot be looked at theoretically with its semantics. It has to be understood in the context of what a manufacturing process is. If there is no dispute about the fact that every manufacturing process would automatically result in some kind of a loss such as evaporation, creation of by-products, etc., the total quantity of inputs that went into the making of the finished product represents the inputs of such products in entirety. To say that what is contained in finished product is only a quantity of all the inputs of the same weight as that of the finished product would presuppose that all manufacturing processes would never have an inherent loss in the process of manufacture.
The record before the court reveals that right from the stage of issue of show cause notice up to the stage of the order of the Tribunal, the claim of the appellant that they incurred a manufacturing loss to the extent of 5% of the total quantity of the finished product, has not been disputed by the Department. In cases where the quantum of manufacturing loss claimed at 5% by the appellant is never disputed by the Department from the stage of issue of the show cause notice up to the stage of the order of the Tribunal, the interpretation given to Rule 9A cannot be accepted. Appellant therefore was right in making a claim for CENVAT credit, with reference to the total quantity and the value of the inputs that went into the making of the fabric. CESTAT not justified in disallowing incidental manufacturing loss and therefore appellant is entitled to and as such is allowed credit on entire quantity and value of inputs consumedin making of finished goods including inherent percentage of manufacturing loss. (Para 13 - 16) - Decided in favor of assessee : MADRAS HIGH COURT
2015-TIOL-2124- HC-AHM-CX
Ronak Shipping Vs UoI
Central Excise - Evasion of duty - Condonation of delay - Appeal dismissed under section 35 for being beyond condonable period of limitation, no bar under specified circumstances to invoke writ jurisdiction to challenge order-in-original on merits.
The question before the court is that when statutory remedy to file appeal under Section 35 is barred by law of limitation whether in a Writ Petition under Article 226 of the Constitution of India, an order passed by the original adjudicating authority can be challenged on merits?
The Larger Bench has already clarified the issue affirmatively and held that a writ petition under Article 226 of the Constitution is maintainable and can be preferred to challenge the order passed by the original adjudicating authority ONLY in the following specified circumstances, namely; that
1. The authority has passed the order without jurisdiction and by assuming jurisdiction which does not exist, or
2. The authority has exercised the power in excess of the jurisdiction and by overstepping or crossing the limits of jurisdiction, or
3. The authority has acted in flagrant disregard to law or rules or procedure or acted in violation of principles of natural justice where no procedure is specified.
Consequently the action of the authority has to result in failure of justice or gross injustice.
Appellant who was alleged to have been suppressing vital information from the department about the taxable services rendered under the category of supply of tangible goods service which was eventually unearthed when a raid was conducted in the premises in question, is guilty of committing fraud, collusion, willful misstatement and suppression of facts with an intent to evade payment of tax. Such non payment of tax would not have come to the notice of the department if the same was not detected during a search / raid against the appellant. Revenue thus clearly established that the appellant had deliberately suppressed the material facts of providing taxable services from the department, with malafide intention to avoid the payment of service tax. Non-payment of service tax, at any point of time during the period under consideration shows their malafide intention of evading the payment of service tax. Because the appellant failed to file ST-3 returns for the period in dispute though very well aware of the legal provisions requiring payment of tax and as suppression of facts with an intent to evade payment of tax has been established, the case is clearly covered u/s 78 of the Finance Act and does not fall under any of the clarifications made by Larger Bench warranting condonation of delay in filing appeal. Penalty under Section 78 thus is liable to be imposed and is correctly imposed and requires no interference. Through written submissions the appellant though tried to establish that some amount of demand was paid, no supporting document however was produced to substantiate the claim. Further more, since appellant is found guilty of suppression of material information and non-payment of service tax, decisions relied upon are not applicable to the facts of the case. Therefore the writ petition is liable to be dismissed hence is dismissed. (Para 10, 11, 12) - Writ Petition dismissed : GUJARAT HIGH COURT
2015-TIOL-2123- HC-MAD-CX
CCE Vs Entex Pvt Ltd
Central Excise - Production capacity based duty - Closure of Stenter and Abatement of duty - Annual Capacity determination Rules - Compounded Levy Scheme of Rule 96ZQ of the Central Excise Rules, 1944 - Whether the CESTAT is justified in dismissing appeal and not holding that duty has to be paid first then abatement claim de hors Rule 96ZQ (7) (e) -Whether the CESTAT is justified in holding revenue neutral situation de hors Rule 96ZQ of the Central Excise Rules, 1944 which is in the nature of imposing mandatory penalty - Held that in view of the Madras High Court decision in the M/s. Beauty Dyers v. Union of India where in The Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 were held to be ultra vires of erstwhile section 3A of the CEA, 1944 because Rules framed under did not have acceptable method to arrive at the capacity of production, which is absolutely necessary to levy and collect duty of excise under Section 3A of the Act; the questions raised have become academic - No infirmity in the impugned orders of the CESTAT and of the Appeals Commissioner holding that an independent textile processor claiming abatement of duty for any period of non-operation of stenter (being not less than 7 days) cannot be compelled to pay duty first and then claim abatement - CMAs are accordingly closed. (Para 7, 8) - Civil Miscellaneous Applications closed : MADRAS HIGH COURT
2015-TIOL-2122- HC-KAR-CX
CST Vs United Pizza Restaurant Pvt Ltd
Central Excise - Appellate Commissioner cannot impose penalty that was dropped by adjudicating authority absent ingredients to impose penalty under section 78 - Said order rightly set aside by CESTAT - Hence revenue appeal is dismissed.
Where an Assessing Officer concluded penalty proceedings in favour of assessee and dropped proposal to impose penalty as substantial amount of service tax along with interest was paid long prior to issuance of show cause notice, Appellate Commissioner in appeal, reversing the order of Assessing Officer was rightly set aside by CESTAT as there was insufficiency of grounds for imposing penalty under Section 78. Appeal is accordingly dismissed. (Para 3) - Revenue Appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-1922- CESTAT-DEL
Paramount Communication Ltd Vs CCE & ST
CX - No separate account for input / input services which are being used in manufacturing of dutiable as well as exempted final product - Assessee contends that they were having sufficient balance in their Cenvat Credit account to meet liability of duty confirmed by way of adjudication order - As per Bill Forge Pvt. Ltd. 2011-TIOL-799- HC-KAR-CX, interest is not payable by assessee - As assessee is manufacturing excisable goods and when they are clearing exempted final product from their factory they are required to pay 10% of value of said goods - Penalty under section 11AC is rightly imposed on assessee and same has been reduced by Commissioner to extent of 25% of duty as they have paid entire amount of duty before issuance of SCN: CESTAT - Appeal partly allowed : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2117- HC-P&H-NDPS
Satnam Singh Alias Santa Vs State of Haryana
Whether mere non joining of independent witness itself is a ground to discard the testimonies of prosecution witnesses - NO: HC
Whether a delay in sending the sample to the forensic science laboratory is fatal, where there is evidence that the case property is kept in proper and safe custody - NO: HC
Whether provision of Section 50 of NDPS can be applied to a case, where the recovery has not been effected from the personal search of the accused, but from the bag he is carrying on his head - NO: HC
Whether mere lapse on the part of investigating officer in producing the case property before the Magistrate to comply with the provisions of Section 52-A of NDPS, would vitiate the trial of the accused convicted u/s 15 of NDPS - NO: HC
Whether conviction of an accused for the offence u/s 15 of NDPS deserves to be maintained, where it is established beyond reasonable doubt that 20 kilograms poppy husk was recovered from his conscious possession - YES: HC
Whether such accused deserves reduction in rigorous imprisionment awarded to him, in case he has no criminal background or the recovery effected from the accused is not commercial quantity - YES: HC - Partly in favour of Appellant : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2107- HC-MAD-CUS + Story
Narayan Jain Vs Addl Director
Cus - Cellular phones valued at Rs.11.66 lacs seized in April 2002 - Proceedings dropped in April 2003 - Petitioner seeking release of goods but informed in February 2004 that goods have been disposed and paid Rs.7.29 lakhs - Petition filed for balance amount with interest - To give quietus to issue, HC directing respondents to consider representation & pass order within 4 weeks: HC [para 10] - Petition disposed of : MADRAS HIGH COURT
2015-TIOL-1924- CESTAT-MUM + Story
Abg Shipyard Ltd Vs CC
Cus - Claim of the appellant that the information on the CD is nothing but Information Technology Software merits acceptance as the data on the CD can be manipulated using AUTOCAD software - Designs and drawings contained in CD are correctly classifiable under heading 8523 8020 attracting Nil rate of duty - Appeal allowed: CESTAT [para 7.4 to 7.11, 8] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-2116- HC-MUM-IT
CIT Vs V S Dempo And Co Pvt Ltd
Whether when in case of a non resident assessee, the receipts attributable to electronic data process and professional services would be in the nature of income, provisions of section 195 can be applied if the net is positive income. - Revenue' s appeal al lowed : BOMBAY HIGH COURT
2015-TIOL-2115- HC-KAR-IT
CIT Vs Prakash B Nichani
Whether if the reasons given by the Tribunal for condoning the delay in filing an appeal by an assessee do not find any irregularity as such, an order of remand has to be passed by the High Court on the basis that the matter has been pending for a substantial length of time - YES: HC - Case remanded : KARNATAKA HIGH COURT
2015-TIOL-2114- HC-ALL-IT
Late Ramesh Chandra Bajpai Vs PR CIT
Whether if the provisions of Income Tax Act provide to release the balance amount after satisfying the liability, the Revenue officials were justified to retain the same under the executive Instructions - NO: HC - Assessee' s appeal allowed : ALLAHABAD HIGH COURT
2015-TIOL-2113- HC-KERALA- IT
K K J Foundations Vs ADIT
Whether rectification merely means correction of an error which was apparent from record and not decision on a matter over and again on merits, the rectified order does not supersede the original order but continues with the incorporated changes - YES: HC
Whether in case the findings entered by AO was based clearly on facts which was susceptible to an appeal, is it correct on the part of the assessee to file an application u/s 154 to point out an error apparent from the record - NO: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-2112- HC-P&H-IT
CIT Vs Joneja Bright Steel Pvt Ltd
Whether in case the Tribunal merely relied on the detailed enquiry made by AO by issuing summons u/s 131 to the vendors and also on the enquiry made from the bank authorities, which establishes that the purchases made were not genuine, the Tribunal' s order can be considered as an order passed various aspects of the case - NO: HC
Whether merely because the vendor immediately withdrew the amount paid by assessee, would lead to the conclusion that the transactions between the assessee and the vendors were fictitious - NO: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2111- HC-KAR-IT + Story
ACIT Vs Mookambika Associates
Whether when pursuant to search operations, an assessee has not made payments immediately thereafter but did so only after coercive steps were taken by attaching its Bank accounts and property, his petition for waiver of interest u/s 220(2) has to be entertained - NO: HC - Assessee' s appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-2110- HC-AHM-IT
DCIT Vs Gujarat State Fertilizer And Chemicals Ltd
Whether an order of reassessment can be quashed by the Tribunal on the basis that AO has reopened the assessment on the same material which were in the records during the course of the original assessment proceedings, without appreciating the law - YES: HC - Revenue' s appeal dismissed : GUJARAT HIGH COURT
2015-TIOL-2109- HC-DEL-IT
PR CIT Vs Groz Engineering Tools Pvt Ltd
Whether when it is clear that the royalty payable by assessee on per unit basis was clearly linked to sales, there was no concealment on behalf of the assessee to furnish the required agreements, the same can be considered as of capital in nature on estimate basis - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2108- HC-DEL-IT
CIT Vs Atma Ram Properties Pvt Ltd
Whether when the assessee himself has accepted the decision of Tribunal for a certain assessment year and had expressed no objection to the Revenue' s appeals for the said period, the same questions in further year, if arise, has to be answered in favour of the Revenue - YES: HC - Revenue' s appeal allowed : DELHI HIGH COURT
2015-TIOL-1445- ITAT-HYD
Ratna Infrastructure Projects Pvt Ltd Vs DCIT
Whether when the payee has declared the corresponding amounts received from the assessee as their income and had paid taxes thereon, then assessee cannot be treated as in default under S.201(1) for the same amount of taxes, which have already been paid by the payee - YES: ITAT - Assessee' s appeal partly allowed : HYDERABAD ITAT
2015-TIOL-1444- ITAT-CHD
Mohinder Singh Dhindsa Vs ITO
Whether the CIT(A) was justified in dismissing the Appeal of the Assessee on the ground of limitation when the demand notice / penalty notice etc. has been duly served upon the assessee by registered post on 31/12/2009 and there were no sufficient reasons for the inordinate delay in filing the appeal almost after one and half years. - Assessee' s appeal dismissed : CHANDIGARH ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2119- HC-KAR-ST
Eblitz Inc Vs ADDL CST
ST – Delay in filing appeal before Commissioner( A) - Except self serving statement of petitioner there is no material whatsoever available to arrive at a conclusion that order in original dated 31.01.2012 came to be served on petitioner on 11.09.2012 so as to exclude the period from date of order till date of service – In the absence of any proof being tendered, petitioner cannot be heard to contend that the High Court in exercise of power under Article 226 of Constitution of India can condone such delay - When the statue prescribes the period of 90 days as the limitation to file an appeal and there being no provision under the Finance Act, 1994 to condone the delay by first appellate authority, question of entertaining such application for condonation of delay will not be in the domain of appellate authority - since the express provision has stipulated for filing of appeals by fixing the limitation, it would override the provision of Limitation Act, 1963 which is the general law and hence even if there is sufficient cause for condonation of delay beyond six months (in the said case) such delay cannot be condoned – No merit in petition, hence dismissed: High Court [para 4] - Petition dismissed : KARNATAKA HIGH COURT
2015-TIOL-2118- HC-MUM-ST + Story
Damco India Pvt Ltd Vs UoI
ST - Matters which raise essentially disputed questions of fact cannot be decided by High Court - entertaining petition would amount to scuttling the inquiry and delaying the adjudication - it cannot be assumed that the petitioner will necessarily be served with an adverse order - Petition dismissed: High Court [para 6, 7] - Petition dismissed : BOMBAY HIGH COURT
2015-TIOL-1923- CESTAT-AHM
CST Vs Viral Makers Ltd
ST - Agreement is not that of a Commission Agent but a Depot Agreement between the Company and the Assessee - It is clearly evident that the activities of the Assessee would be termed as Sales Depot of the Company - The Assessee as a Depot Manager, shall handle the goods and also would cause the sale of the goods - definition of "Clearing and Forwarding Agent" covers any service either directly or indirectly connected with clearing and forwarding operations in any manner - expression "in any manner" has wide amplitude - we find that the appointment of the Assessee is not as a Commission Agent, but for Depot Manager, and therefore, it would be covered under the definition of "Clearing and Forwarding Agent" - It is well settled that the principle of res judicata would not apply in the taxation matter – submission that the Appellants were registered under "Business Auxiliary Service" which was accepted by the Revenue and therefore, Revenue cannot change their stand is not acceptable – Appeal rejected: CESTAT [para 8, 11, 12] - Appeal rejected : AHMEDABAD CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2127- HC-AP-CX
CC & CE Vs M/s Panyam Cements And Minerals Industries Ltd
Central Excise - Refund under Section 11B - recovery of wrong refund - whether demand under Section 11A mandatory - 'No' , rules High Court - Revenue Appeal Allowed : ANDHRA PRADESH HIGH COURT
2015-TIOL-2126- HC-MAD-CX
CCE Vs Spic Pharmaceuticals Division
Central Excise - Modvat credit - Entitlement - Input buyer of goods held not entitled to modvat credit when input supplier evidently did not pay duty - Duty paying documents issued earlier by input supplier reflecting duty payment particulars in the circumstances held irrelevant - Demand is sustainable as modvat credit availed by assessee was clearly not based upon valid duty paying documents - Admitted facts on record not properly considered by CESTAT in proper perspective while rejecting Revenue' s appeal hence the order is set aside and remanded to CESTAT for de novo consideration of issue in question - Appeal by Revenue is allowed and the matter is remanded to CESTAT for De Novo consideration. (Para 13 - 15) - Remanded : MADRAS HIGH COURT
2015-TIOL-2125- HC-MAD-CX
Rupa And Co Ltd Vs CESTAT
Central Excise - Disallowance of Transitional Cenvat credit - Sustainability -Small percentage of loss of quantity and value of inputs is inherent in every manufacturing process - Total quantity of inputs that went into the making of the finished product thus represents the inputs of such products in entirety - Credit of duty paid by manufacturer of garments on entire quantity and value of yarn that had gone into the making of fabric, including 5% of quantity and value of inputs lost during manufacturing, allowed.
The pertinent questions before the High Court is should Rule 9A purport be interpreted such a way that every manufacturer has to pay excise duty on the entire quantity and value of inputs consumed in the making of a finished product despite the fact that whose weight will never be equivalent to the sum total of the weight of all the inputs. Or whether a manufacturer isentitled to make a claim for CENVAT credit, with reference to the total quantity and the value of the inputs that went into the making of the finished product notwithstanding incidental losses incurred during manufacturing process.
Appellant, a manufacturer of knitted fabric garments, claims that about 5% of the quantity and value of yarn is lost while making it into a fabric and that therefore, is entitled to take credit for the entire quantity and value of input that had actually produced the fabric that was lying in store and not of credit only in respect of the physical content of the inputs in process, as decided by CESTAT in terms of the provisions of Rule 9A and 2(g) of the CENVAT Credit Rules, 2002.
The expression 'inputs of such finished product' contained in finished products' cannot be looked at theoretically with its semantics. It has to be understood in the context of what a manufacturing process is. If there is no dispute about the fact that every manufacturing process would automatically result in some kind of a loss such as evaporation, creation of by-products, etc., the total quantity of inputs that went into the making of the finished product represents the inputs of such products in entirety. To say that what is contained in finished product is only a quantity of all the inputs of the same weight as that of the finished product would presuppose that all manufacturing processes would never have an inherent loss in the process of manufacture.
The record before the court reveals that right from the stage of issue of show cause notice up to the stage of the order of the Tribunal, the claim of the appellant that they incurred a manufacturing loss to the extent of 5% of the total quantity of the finished product, has not been disputed by the Department. In cases where the quantum of manufacturing loss claimed at 5% by the appellant is never disputed by the Department from the stage of issue of the show cause notice up to the stage of the order of the Tribunal, the interpretation given to Rule 9A cannot be accepted. Appellant therefore was right in making a claim for CENVAT credit, with reference to the total quantity and the value of the inputs that went into the making of the fabric. CESTAT not justified in disallowing incidental manufacturing loss and therefore appellant is entitled to and as such is allowed credit on entire quantity and value of inputs consumedin making of finished goods including inherent percentage of manufacturing loss. (Para 13 - 16) - Decided in favor of assessee : MADRAS HIGH COURT
2015-TIOL-2124- HC-AHM-CX
Ronak Shipping Vs UoI
Central Excise - Evasion of duty - Condonation of delay - Appeal dismissed under section 35 for being beyond condonable period of limitation, no bar under specified circumstances to invoke writ jurisdiction to challenge order-in-original on merits.
The question before the court is that when statutory remedy to file appeal under Section 35 is barred by law of limitation whether in a Writ Petition under Article 226 of the Constitution of India, an order passed by the original adjudicating authority can be challenged on merits?
The Larger Bench has already clarified the issue affirmatively and held that a writ petition under Article 226 of the Constitution is maintainable and can be preferred to challenge the order passed by the original adjudicating authority ONLY in the following specified circumstances, namely; that
1. The authority has passed the order without jurisdiction and by assuming jurisdiction which does not exist, or
2. The authority has exercised the power in excess of the jurisdiction and by overstepping or crossing the limits of jurisdiction, or
3. The authority has acted in flagrant disregard to law or rules or procedure or acted in violation of principles of natural justice where no procedure is specified.
Consequently the action of the authority has to result in failure of justice or gross injustice.
Appellant who was alleged to have been suppressing vital information from the department about the taxable services rendered under the category of supply of tangible goods service which was eventually unearthed when a raid was conducted in the premises in question, is guilty of committing fraud, collusion, willful misstatement and suppression of facts with an intent to evade payment of tax. Such non payment of tax would not have come to the notice of the department if the same was not detected during a search / raid against the appellant. Revenue thus clearly established that the appellant had deliberately suppressed the material facts of providing taxable services from the department, with malafide intention to avoid the payment of service tax. Non-payment of service tax, at any point of time during the period under consideration shows their malafide intention of evading the payment of service tax. Because the appellant failed to file ST-3 returns for the period in dispute though very well aware of the legal provisions requiring payment of tax and as suppression of facts with an intent to evade payment of tax has been established, the case is clearly covered u/s 78 of the Finance Act and does not fall under any of the clarifications made by Larger Bench warranting condonation of delay in filing appeal. Penalty under Section 78 thus is liable to be imposed and is correctly imposed and requires no interference. Through written submissions the appellant though tried to establish that some amount of demand was paid, no supporting document however was produced to substantiate the claim. Further more, since appellant is found guilty of suppression of material information and non-payment of service tax, decisions relied upon are not applicable to the facts of the case. Therefore the writ petition is liable to be dismissed hence is dismissed. (Para 10, 11, 12) - Writ Petition dismissed : GUJARAT HIGH COURT
2015-TIOL-2123- HC-MAD-CX
CCE Vs Entex Pvt Ltd
Central Excise - Production capacity based duty - Closure of Stenter and Abatement of duty - Annual Capacity determination Rules - Compounded Levy Scheme of Rule 96ZQ of the Central Excise Rules, 1944 - Whether the CESTAT is justified in dismissing appeal and not holding that duty has to be paid first then abatement claim de hors Rule 96ZQ (7) (e) -Whether the CESTAT is justified in holding revenue neutral situation de hors Rule 96ZQ of the Central Excise Rules, 1944 which is in the nature of imposing mandatory penalty - Held that in view of the Madras High Court decision in the M/s. Beauty Dyers v. Union of India where in The Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 were held to be ultra vires of erstwhile section 3A of the CEA, 1944 because Rules framed under did not have acceptable method to arrive at the capacity of production, which is absolutely necessary to levy and collect duty of excise under Section 3A of the Act; the questions raised have become academic - No infirmity in the impugned orders of the CESTAT and of the Appeals Commissioner holding that an independent textile processor claiming abatement of duty for any period of non-operation of stenter (being not less than 7 days) cannot be compelled to pay duty first and then claim abatement - CMAs are accordingly closed. (Para 7, 8) - Civil Miscellaneous Applications closed : MADRAS HIGH COURT
2015-TIOL-2122- HC-KAR-CX
CST Vs United Pizza Restaurant Pvt Ltd
Central Excise - Appellate Commissioner cannot impose penalty that was dropped by adjudicating authority absent ingredients to impose penalty under section 78 - Said order rightly set aside by CESTAT - Hence revenue appeal is dismissed.
Where an Assessing Officer concluded penalty proceedings in favour of assessee and dropped proposal to impose penalty as substantial amount of service tax along with interest was paid long prior to issuance of show cause notice, Appellate Commissioner in appeal, reversing the order of Assessing Officer was rightly set aside by CESTAT as there was insufficiency of grounds for imposing penalty under Section 78. Appeal is accordingly dismissed. (Para 3) - Revenue Appeal dismissed : KARNATAKA HIGH COURT
2015-TIOL-1922- CESTAT-DEL
Paramount Communication Ltd Vs CCE & ST
CX - No separate account for input / input services which are being used in manufacturing of dutiable as well as exempted final product - Assessee contends that they were having sufficient balance in their Cenvat Credit account to meet liability of duty confirmed by way of adjudication order - As per Bill Forge Pvt. Ltd. 2011-TIOL-799- HC-KAR-CX, interest is not payable by assessee - As assessee is manufacturing excisable goods and when they are clearing exempted final product from their factory they are required to pay 10% of value of said goods - Penalty under section 11AC is rightly imposed on assessee and same has been reduced by Commissioner to extent of 25% of duty as they have paid entire amount of duty before issuance of SCN: CESTAT - Appeal partly allowed : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2117- HC-P&H-NDPS
Satnam Singh Alias Santa Vs State of Haryana
Whether mere non joining of independent witness itself is a ground to discard the testimonies of prosecution witnesses - NO: HC
Whether a delay in sending the sample to the forensic science laboratory is fatal, where there is evidence that the case property is kept in proper and safe custody - NO: HC
Whether provision of Section 50 of NDPS can be applied to a case, where the recovery has not been effected from the personal search of the accused, but from the bag he is carrying on his head - NO: HC
Whether mere lapse on the part of investigating officer in producing the case property before the Magistrate to comply with the provisions of Section 52-A of NDPS, would vitiate the trial of the accused convicted u/s 15 of NDPS - NO: HC
Whether conviction of an accused for the offence u/s 15 of NDPS deserves to be maintained, where it is established beyond reasonable doubt that 20 kilograms poppy husk was recovered from his conscious possession - YES: HC
Whether such accused deserves reduction in rigorous imprisionment awarded to him, in case he has no criminal background or the recovery effected from the accused is not commercial quantity - YES: HC - Partly in favour of Appellant : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2107- HC-MAD-CUS + Story
Narayan Jain Vs Addl Director
Cus - Cellular phones valued at Rs.11.66 lacs seized in April 2002 - Proceedings dropped in April 2003 - Petitioner seeking release of goods but informed in February 2004 that goods have been disposed and paid Rs.7.29 lakhs - Petition filed for balance amount with interest - To give quietus to issue, HC directing respondents to consider representation & pass order within 4 weeks: HC [para 10] - Petition disposed of : MADRAS HIGH COURT
2015-TIOL-1924- CESTAT-MUM + Story
Abg Shipyard Ltd Vs CC
Cus - Claim of the appellant that the information on the CD is nothing but Information Technology Software merits acceptance as the data on the CD can be manipulated using AUTOCAD software - Designs and drawings contained in CD are correctly classifiable under heading 8523 8020 attracting Nil rate of duty - Appeal allowed: CESTAT [para 7.4 to 7.11, 8] - Appeal allowed : MUMBAI CESTAT
JURISDICTION OF OFFICIAL LIQUIDATOR TO ADJUDICATE THE CLAIM OF SECURED CREDITOR
In 'Laxmi Fibres Limited V. A.P. Industrial Development Corporation Limited and others' 2015 (8) TMI 434 - SUPREME COURT the official liquidator has taken over the charge of the company by virtue of Section 445 of the Companies Act, 1956. The respondent seized the property of the company under Section 29 of the State Financial Corporation Act, 1959. The respondent sold the company as per conditions imposed by the High Court. One of the conditions to be complied with by the respondent is that the respondent is required to obtain permission of the High Court for finalizing the sale. The Official liquidator inspected the properties and assets of the company. The valuer's report was also placed before the High Court. The report is in respect of the properties that are covered under the mortgage deeds in favor of the respondent Corporation. The respondent also submitted before the High Court to undertake to deposit workmen's dues with the official liquidator as and when quantified by him as per the provisions of Section 529A of the Companies Act, 1956 with interest. The surplus that would remain after the sale and realization of the dues of the secured creditors and the workmen could be made available to the official liquidator for dealing with as per the Act and the Rules.
The High Court, noting the contention of all the parties and found that there was no objection for the sale of the properties either by the second charge holder or by the Official liquidator, confirmed the sale of land, buildings, plant and machinery in favor of Shri Venkateswara Industries for a sum of ₹ 86 lakhs and carding machine in favor of Supreme Associates, Coimbatore for a sum of ₹ 2.45 lakhs. The confirmation of above sales is subject to the following conditions:
Before appropriating the sale proceedings, they should prove their claim before the Official Liquidator;
The proceeds realized through the sale of the properties shall be kept in interest earning deposit till the official liquidator adjudicates and quantifies the claim;
One fourth of the sale proceeds shall be deposited with the Official liquidator to enable him to proceed with the adjudication on the claims of the workmen and for distribution among themselves;
Excess sale proceeds, if any, shall be made over to the official liquidator;
After receiving the entire sale consideration only, the properties are to be handed over the highest bidders and exercise necessary sale papers in their favor.
The respondent corporation filed an appeal before the Division Bench and contended that there could be no question of establishing the claim of the corporation before the Official Liquidator as the corporation was a secured credit.
The Division Bench accepted the above said contentions and held that the Official liquidator does not have jurisdiction to entertain or adjudicate the claim of a secured creditor who has been permitted by the Company Judge to stand outside the liquidation proceedings with liberty to pursue its remedy as per statutory rights available under the State Financial Corporation Act subject to the conditions imposed by the Court.
Against this order appeal was filed before the Supreme Court. The Supreme Court upheld the findings of the Division Bench. The Supreme Court, while coming to the above said conclusion relied on three judgments of Supreme Court as detailed below:
In 'A.P. State Financial Corporation V. Official liquidator' – 2000 (8) TMI 986 - SUPREME COURT OF INDIA the Supreme Court examined the extent of powers available to a Financial Corporation under Section 29 and 46 of the Act in the light of later amendments to the Act incorporating the proviso to Section 529(1) and Section 529 A of the Act through the Amendment Act 35 of 1985. The object of the amendment is to protect the dues of the workmen. The Supreme Court held that the power available to a corporation under Section 29 to sell the property of a debtor company under liquidation is not absolute but is subject to the proviso to Section 529(1) and non obstante clause in Section 529 A of the Act providing for pari passu charge of the workmen.
In 'International Coach Builders Limited V. Karnataka State Financial Corporation' – 2003 (3) TMI 529 - SUPREME COURT OF INDIA the Supreme Court not only followed the view taken in A.P. State Financial Corporation case (supra) but also explain as to how the view adopted would not obliterate the difference between a creditor opting to stay outside winding up and one who opts to prove his debt in winding up. The Supreme Court held that as a result of the amendments made by the Act of 1985 in the Companies Act, 1956, SFCs as secured creditors must seek leave of the company court for the limited purpose of ensuring that the pari passu charge in favor of the workmen is safeguarded by imposition of suitable conditions under the supervision of the company court. If this amounts to impeding their unimpeded rights so be it. This impediment is of a limited nature for the specific purposes of protecting the pari passu charge of the workmen's dues and subject thereto, SFCs can continue to exercise their statutory rights as secured creditors without being reduced to status of unsecured creditors required to prove their debts in insolvency and stand in line with other unsecured creditors.
In 'Rajasthan State Financial Corporation V. Official Liquidator' – 2005 (10) TMI 280 - SUPREME COURT OF INDIA the Supreme Court clarified that the right of a financial institution or of the Recovering Tribunal or that of a financial corporation or the court which has been approached under Section 31 of SFC Act to sell the assets may not be taken away, but the same stands restricted by the requirement of the official liquidator being associated with it, giving company court the right to ensure that the distribution of the assets in terms of Section 529A of the Act takes place.
The proviso to Section 529(1) of the Companies Act, 1956 provides that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favor of the workmen to the extent of the workmen's portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt opts to realize his security-
the liquidator shall be entitled to represent the workmen and enforce such charge;
any amount realized by the liquidator by way of enforcement of such charge shall be applied ratably for the discharge of workmen's dues; and
so much of the debt due to such secured creditor as could not be realized by him by virtue of the foregoing provisions of this proviso or the amount of the workmen's portion in his security, whichever is less, shall rank pari passu with the workmen's dues for the purposes of Section 529A.
Section 529A of the Companies Act, 1956 provides that notwithstanding anything contained in any other provisions of this Act or any other laws for the time being in force, in the winding up of a company-
Workmen's dues; and
Debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to Section 529(1) pari passu with such dues
shall be paid in priority to all other debts. The debts payable shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.
The Supreme Court was of the considered view that the rights of a financial corporation have been impeded by the amendment in Companies Act, only to a limited extend and for the limited purpose of securing the right of the workers for distribution of their wages as pari passu charge. But such limited impediment to their rights will not alter the status of the Corporations as secured creditors and they will not be required to prove their debt which they are entitled to realize under the provisions of SFC Act subject to the right of workers to receive their waves also as secured creditors on pari passu basis.
If the Official liquidator has reasons to be aggrieved by claims made by a financial corporation under SFC act, its remedy would be to initiate appropriate civil proceedings before an appropriate forum and not to assume jurisdiction to sit in adjudication and decide entitlement of the financial corporation when it has opted to stand outside the liquidation proceeding as a secured creditor. The Supreme Court dismissed the appeal.
By: Mr. M. GOVINDARAJAN
In 'Laxmi Fibres Limited V. A.P. Industrial Development Corporation Limited and others' 2015 (8) TMI 434 - SUPREME COURT the official liquidator has taken over the charge of the company by virtue of Section 445 of the Companies Act, 1956. The respondent seized the property of the company under Section 29 of the State Financial Corporation Act, 1959. The respondent sold the company as per conditions imposed by the High Court. One of the conditions to be complied with by the respondent is that the respondent is required to obtain permission of the High Court for finalizing the sale. The Official liquidator inspected the properties and assets of the company. The valuer's report was also placed before the High Court. The report is in respect of the properties that are covered under the mortgage deeds in favor of the respondent Corporation. The respondent also submitted before the High Court to undertake to deposit workmen's dues with the official liquidator as and when quantified by him as per the provisions of Section 529A of the Companies Act, 1956 with interest. The surplus that would remain after the sale and realization of the dues of the secured creditors and the workmen could be made available to the official liquidator for dealing with as per the Act and the Rules.
The High Court, noting the contention of all the parties and found that there was no objection for the sale of the properties either by the second charge holder or by the Official liquidator, confirmed the sale of land, buildings, plant and machinery in favor of Shri Venkateswara Industries for a sum of ₹ 86 lakhs and carding machine in favor of Supreme Associates, Coimbatore for a sum of ₹ 2.45 lakhs. The confirmation of above sales is subject to the following conditions:
Before appropriating the sale proceedings, they should prove their claim before the Official Liquidator;
The proceeds realized through the sale of the properties shall be kept in interest earning deposit till the official liquidator adjudicates and quantifies the claim;
One fourth of the sale proceeds shall be deposited with the Official liquidator to enable him to proceed with the adjudication on the claims of the workmen and for distribution among themselves;
Excess sale proceeds, if any, shall be made over to the official liquidator;
After receiving the entire sale consideration only, the properties are to be handed over the highest bidders and exercise necessary sale papers in their favor.
The respondent corporation filed an appeal before the Division Bench and contended that there could be no question of establishing the claim of the corporation before the Official Liquidator as the corporation was a secured credit.
The Division Bench accepted the above said contentions and held that the Official liquidator does not have jurisdiction to entertain or adjudicate the claim of a secured creditor who has been permitted by the Company Judge to stand outside the liquidation proceedings with liberty to pursue its remedy as per statutory rights available under the State Financial Corporation Act subject to the conditions imposed by the Court.
Against this order appeal was filed before the Supreme Court. The Supreme Court upheld the findings of the Division Bench. The Supreme Court, while coming to the above said conclusion relied on three judgments of Supreme Court as detailed below:
In 'A.P. State Financial Corporation V. Official liquidator' – 2000 (8) TMI 986 - SUPREME COURT OF INDIA the Supreme Court examined the extent of powers available to a Financial Corporation under Section 29 and 46 of the Act in the light of later amendments to the Act incorporating the proviso to Section 529(1) and Section 529 A of the Act through the Amendment Act 35 of 1985. The object of the amendment is to protect the dues of the workmen. The Supreme Court held that the power available to a corporation under Section 29 to sell the property of a debtor company under liquidation is not absolute but is subject to the proviso to Section 529(1) and non obstante clause in Section 529 A of the Act providing for pari passu charge of the workmen.
In 'International Coach Builders Limited V. Karnataka State Financial Corporation' – 2003 (3) TMI 529 - SUPREME COURT OF INDIA the Supreme Court not only followed the view taken in A.P. State Financial Corporation case (supra) but also explain as to how the view adopted would not obliterate the difference between a creditor opting to stay outside winding up and one who opts to prove his debt in winding up. The Supreme Court held that as a result of the amendments made by the Act of 1985 in the Companies Act, 1956, SFCs as secured creditors must seek leave of the company court for the limited purpose of ensuring that the pari passu charge in favor of the workmen is safeguarded by imposition of suitable conditions under the supervision of the company court. If this amounts to impeding their unimpeded rights so be it. This impediment is of a limited nature for the specific purposes of protecting the pari passu charge of the workmen's dues and subject thereto, SFCs can continue to exercise their statutory rights as secured creditors without being reduced to status of unsecured creditors required to prove their debts in insolvency and stand in line with other unsecured creditors.
In 'Rajasthan State Financial Corporation V. Official Liquidator' – 2005 (10) TMI 280 - SUPREME COURT OF INDIA the Supreme Court clarified that the right of a financial institution or of the Recovering Tribunal or that of a financial corporation or the court which has been approached under Section 31 of SFC Act to sell the assets may not be taken away, but the same stands restricted by the requirement of the official liquidator being associated with it, giving company court the right to ensure that the distribution of the assets in terms of Section 529A of the Act takes place.
The proviso to Section 529(1) of the Companies Act, 1956 provides that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favor of the workmen to the extent of the workmen's portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt opts to realize his security-
the liquidator shall be entitled to represent the workmen and enforce such charge;
any amount realized by the liquidator by way of enforcement of such charge shall be applied ratably for the discharge of workmen's dues; and
so much of the debt due to such secured creditor as could not be realized by him by virtue of the foregoing provisions of this proviso or the amount of the workmen's portion in his security, whichever is less, shall rank pari passu with the workmen's dues for the purposes of Section 529A.
Section 529A of the Companies Act, 1956 provides that notwithstanding anything contained in any other provisions of this Act or any other laws for the time being in force, in the winding up of a company-
Workmen's dues; and
Debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to Section 529(1) pari passu with such dues
shall be paid in priority to all other debts. The debts payable shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.
The Supreme Court was of the considered view that the rights of a financial corporation have been impeded by the amendment in Companies Act, only to a limited extend and for the limited purpose of securing the right of the workers for distribution of their wages as pari passu charge. But such limited impediment to their rights will not alter the status of the Corporations as secured creditors and they will not be required to prove their debt which they are entitled to realize under the provisions of SFC Act subject to the right of workers to receive their waves also as secured creditors on pari passu basis.
If the Official liquidator has reasons to be aggrieved by claims made by a financial corporation under SFC act, its remedy would be to initiate appropriate civil proceedings before an appropriate forum and not to assume jurisdiction to sit in adjudication and decide entitlement of the financial corporation when it has opted to stand outside the liquidation proceeding as a secured creditor. The Supreme Court dismissed the appeal.
By: Mr. M. GOVINDARAJAN
HIGH COURT OF KERALA
Rectification—Rectification of mistake—Assessee a trust filed its return of income declaring nil return—Notice u/s 143(2) and u/s 142 (1) was issued—In response to the notice, assessee had appeared and produced the books of accounts and other relevant documents called for—AO had held that the assessee Trust had no corroborative evidence to prove that the donation received by it was a capital donation and therefore the entire receipt of the Trust during the assessment year was treated as its income and the claim of the assessee for exemption u/s 11 was rejected and thereupon the assessment was completed accordingly—CIT(A) allowed the appeal partly holding that the treatment of Rs.1,00,00,000/ - as corpus donation in the hands of the assessee—Tribunal had allowed revenues appeal holding that in case the assessee was aggrieved against the decision of the AO, the remedy de facto did not lie before the AO and there was no mistake apparent from record in the order of the AO so as to seek the rectification u/s 154 and therefore the appeal filed by the Revenue was allowed—Held, rectification u/s 154 was provided in the statute for the purpose of rectification of any mistake which was apparent from the record—By invoking the power of rectification, the ultimate conclusion of a decision cannot be changed—Also, rectification was intended only to correct any mistake and amend the same accordingly—Power u/s 154 can be invoked only to correct an error and not to disturb a concluded finding—Tribunal found that there was no mistake apparent from the record so as to invoke section 154—Question raised for invoking section 154 was a question ought to have been raised in a regular appeal and the same has nothing to do with rectification of any mistake apparent from the record—Findings entered by the Assessing Authority was based clearly on facts which was susceptible to an appeal—High Court does not find any error apparent from the record which enabled the assessee to invoke the said provision—No illegality or other legal infirmities was found in the finding entered by the Appellate Tribunal so as to invoke our jurisdiction conferred u/s 260A—Assessees appeal dismissed
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