TIOL-DDT 2316 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><img width="115" height="125" border="0" align="right" src="image/ddt/10yearsDDT.jpg" alt="" /></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img width="175" hspace="5" height="120" border="0" align="right" src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" /></a></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong><font color="#663399" size="3">TIOL-DDT 2316 </font><br> 19.03.2014 <br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tax Appeals - Waiver of Pre-deposit - High Court Lays down some guidelines </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a recent Order in a writ petition against an Order by a Central Excise Appellate Commissioner directing 50% pre-deposit, the AP High Court referred to the decision of the Supreme Court in <em>Benara Valves Ltd., vs. CCE reported in - </em><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2006/2006-TIOL-156-SC-CX.htm" target="_blank"><strong>2006-TIOL-156-SC-CX</strong></a></font><strong></strong><em><strong>, </strong></em>which explained the legal position as : </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in <em>Siliguri Municipality</em> and<em> Dunlop India</em> cases without <em>analysing </em>factual scenario involved in a particular case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. While dealing with the waiver application, twin requirements of considerations i.e., consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>Undue hardship </em> is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about <em>undue hardship </em> would not be sufficient. Under Indian conditions expression "<em>Undue hardship</em>" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. <em>Undue hardship </em> is caused when the hardship is not warranted by the circumstances. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. For a hardship to be "undue" it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The other aspect relates to imposition of condition to safeguard the interests of the Revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interest of the Revenue. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate conditions as required to safeguard the interests of the Revenue. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court inferred from the above position that if a litigant has got strong prima facie case, then the same can be treated within the fold of undue hardship. But, there are no guidelines in which cases and when undue hardship relatable to prima facie case can be perceived. It depends upon each and every individual case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Without laying down any exhaustive guidelines, the High Court felt that following will be useful for adjudicating the application for waiver of full deposit by the Commissioner as well as the Court. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>i) If on apparent reading of the matter, it is found that the order impugned is passed patently without having any jurisdiction, meaning thereby, if the authority concerned lacks inherent jurisdiction to pass such order, such a case would be termed to be one of the strongest prima facie case and a litigant should not be subjected to suffer with a condition of pre-deposit in a case of this nature till the disposal of appeal and full waiver would be justified. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(ii) When it is found that the impugned order was passed though having jurisdiction but on apparent non-application of appropriate law or mis-application of law, patently contrary to Supreme Court decision or High Court decision on identical issue which has reached finality, it will also be a strongest case where full waiver be justified. In cases where it is found that there has been an arguable case, apparently, without inviting the counter arguments, the matter cannot be decided, the litigant should be subjected to make pre-deposit to some extent. But, where it is found that there is no absolute debatable case, in those cases, appeals may be allowed to be preferred, but, with the full deposit. </em></font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">In this Appellate Republic, more time and money are spent on saving the deposit than winning the case. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTI2MzI=" target="_blank">2014-TIOL-334-HC-AP-CX</a></font></strong></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax - Jurisdiction of AO </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> you are transferred from Dimapur in Nagaland to New Delhi mid-year, who is your Assessing Officer for Income Tax assessment? As long as you pay your tax and file your returns, it really does not matter, but this was a question before the Delhi High Court in a case decided last week. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee was an IAS Officer of Nagaland cadre, who was compulsorily retired in January, 1993. During the period 1971-72 to 1978-79, he had filed income tax returns at Dimapur, Nagaland as he was posted and working there. In July 1978, he was posted to Delhi on deputation in the Ministry of Home Affairs, a position which he continued to hold till 1984. Income tax returns for the assessment years 1980-81 to 1983-84 were filed at Delhi with the Income Tax Officer, Salary Circle. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the assessee, return for the assessment year 1984-85 was filed by him at Dimapur, Nagaland on or about 8th August, 1985. The return was not taken up for scrutiny assessment but was processed on 31st March, 1987 under Section 143(1) of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee was subjected to search by the Central Bureau of Investigation on 27th March, 1987. It is the case of the Revenue that the assessee had acquired <strong>18 commercial properties in Delhi, 370 acres agricultural land in and around Delhi and had substantial unaccounted/undisclosed deposits in form of Fixed Deposit Receipts </strong>. These assets/properties were in names of the assessee and his family members. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1993, the CIT (Appeals) passed an order holding that the orders passed by some AOs were not valid as they were beyond jurisdiction. Against this order, both Revenue and the Assessee went in appeal to the Tribunal. The Tribunal after nine years allowed the appeal of the assessee. Now, the Revenue is before the High Court. The High Court ruled in favour of the assessee and directed the Tribunal to decide the issues on merit without going into the question of jurisdiction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessment is pending for the last nearly twenty years - all for want of clarity on jurisdiction! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see</font></strong> </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTI2MzM=" target="_blank">2014-TIOL-335-HC-DEL-WT</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Make Me a Judge - Writ Petition before High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Writ Petitioner before the Madras High Court in a recent case submitted: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. That he enrolled himself as an Advocate on 11.11.1987 and practised for more than 18 years in this Court; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. That he served as a Notary Public for five years; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. That on 31.10.2005 he was appointed as President of the District Consumer Disputes Redressal Forum at Madurai and served as such for five years, that was upto 30.10.2010 and thus he held the post equal to the cadre of regular District Judge; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. That he rendered 700 judgments and also done some social reforms; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. That he possesses academic qualifications of MA, M.Phil, B.L., and (Ph.D); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. That he belongs to Arunthathiyar (SC) community; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. That no representation for the said community has been given so far. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Petitioner further claims to have given his Bio-Data to some of the Hon'ble Judges and sought for a direction to consider his name for the post of Judge of the Madras High Court in the alleged one remaining vacancy.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed that though the petitioner argued factually, he has not chosen to submit any legal submission for issuing such a direction, particularly deprivation of any enforceable right. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held: Merely because the petitioner has submitted his Bio-data to some of the Hon'ble Judges, he cannot compel the Collegium of this Court or any other authority to consider his name for elevation as Judge of this Court, as there is no enforceable right available to the petitioner. Hence petitioner's prayer to consider his name for inclusion in the list, in the remaining one vacancy of Judge of Madras High Court, is not maintainable.</font></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_tall_issue.jpg" alt="" width="500" height="405" hspace="5" border="0" align="center"></font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Thursday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></font><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Printing of laminated and unlaminated poly films - Whether amounts to manufacture - Matter referred to Third Member for deciding quantum of pre-deposit.: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are engaged in the printing of unlaminated poly films and printing laminated poly films and printing of unlaminated calendars on job work basis. As per the Revenue, the said activity of printing as also of printing and lamination amounts to manufacture and as such, the appellants were required to pay the duty on the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant contended that as per various decisions of the Tribunal, the process of printing on film does not amount to manufacture. In the alternative, even if the printing is held to be amounting to manufacture, the final product would fall under Chapter 49, as a product of printing industry, which attract nil rate of duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Member (J) held that the issue as to whether the process of printing as well as on lamination of printed poly film amounts to manufacture or not has to be considered in the light of different judgements on the issue. However, prima facie it is to be viewed that even if the printing amounts to manufacture, the final product which emerges would be printing under Printing Industries Act, thus classifiable under Chapter 49 which attract nil rate of duty. Taking into consideration that a part of the demand would be within the limitation period and considering that the appellant has already deposited an amount of Rs.40 lakhs, the offer to further deposit of amount of Rs.20 lakhs as fair offer. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether when assessee enters into an MoU with a non-resident consignment agent to reimburse all such costs that are incurred to complete exports sales, such expenses can be allowed as business expenditure - YES: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee company is engaged in the business of manufacturing, food processing and infotech. During assessment, the AO noticed that assessee had claimed certain expenses as “USA office expenses”. When the AO asked the assessee to justify its claim with supporting evidence, in response, the assessee submitted that M/s Global Reliance Inc. deducted the business expenses amounting to USD 343347/- equivalent to Rs.1,51,07,247/- in the course of export sales of the goods on behalf of the assessee in the relevant year. The assessee also enclosed the certificates from M/s Global Reliance Inc. and a certificate in respect of selling and administrative expenses claimed to have been verified by the CPA in the USA. The AO pointed out that in reality the assessee did not maintain any office in the USA. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when the assessee enters into an MoU with a non-resident consignment agent to reimburse all such costs that are incurred to complete the exports sales, such expenses can be allowed as business expenditure. And the answer goes in favour of the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Commercial or Industrial Construction Service - Clause (c) & (d) of Sec 65 (25b) do not specify that they should be undertaken in respect of new building only - finishing services, restoration or similar services provided, whether in respect of ‘new' building or 'old' building would attract ST liability - Penalties rightly imposed: CESTAT by Majority </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>applicant had undertaken interior work at 9th floor, <em>State Bank Bhavan, Nariman Point, Mumbai </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As far as knowledge of the department is concerned, the Service Tax Law and Excise Law are two different laws and are implemented by two different set of officers having their own jurisdictions and enforcing the respective laws. The appellant has not shown any evidence whatsoever that the jurisdictional Service Tax officials were informed about the activities of the appellant and, therefore, they were fully aware about them. The jurisdictional Central Excise officials may be aware of the ongoing litigation but there is no evidence to indicate that the Service Tax officials were aware of appellant's activities. On the contrary, the appellant would be knowing the same and should have approached the Service Tax official for registration and inform of all the facts relating to their activities. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>