TMI Tax Updates - e-Newsletter
January 28, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Nature of loss - assessee had asked for refund of the amount, which was paid for acquisition of the capital asset. Forfeiture or deduction made by the HSIDC while refunding the amount would be a capital loss and not a revenue expenditure.
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Income Tax:
Revision u/s 263 - revision of return waiver of interest on loan availed from Government of India - period of limitation for filing revised return - The book profit as per the revised computation was negative - Hence, there was no tax payable even under Section 115JB for the said year. - Decided in favor of assessee.
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Income Tax:
Exemption u/s 10(26BBB) - income is not to be included in total income - "any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India" - assessee failed to satisfy the conditions - No exemption.
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Income Tax:
Exemption u/s 11 - the trust could be entitled to claim excessive carry forward of deficit which resulted after making an allowance of 15% of gross receipts u/s 11(1)(a) and then claiming the application of income to the extent of expenses incurred on the objects of trust.
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Income Tax:
Deduction of interest u/s 37(1) or 36(1)(iii) - the aforesaid interest paid by the assessee under protest, was nothing but the money kept in trust before the revenue and the expenditure in that respect could not be said to have even crystallized during impugned AY - Claim not allowed.
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Income Tax:
Deduction of expenses u/s 37(1) - any interest paid on account of late payment of TDS could not be linked to the Income Tax of the assessee and therefore, the deduction thereof was available to the assessee.
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Income Tax:
Adhoc disallowance made on account of expenses under the heard vehicle maintenance, interest on car loan, telephone expenses, travelling expenses and depreciation on car - personal element cannot be ruled out.
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Customs:
Classification of vessels - The navigation indeed, is the primary function of the vessels and dynamic positioning system helps to perform this function efficiently. Similarly, loading or unloading goods or embarking or disembarking personnel are incidental to the transportation. - the vessels in question are rightly classifiable under Customs Tariff Heading 8901 9000
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Customs:
Penalty on CHA - the CHA having no contract/agreement with the client and without verifying the antecedents and identity of his client provided the services for export of prohibited goods namely Red Sanders - Penalty confirmed.
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Corporate Law:
Penalty for wrongful withholding of property - After he had resigned from the Board of directors he was obliged in law, particularly on demand being made to such effect (as is alleged), to return the said moveable property to its original owner and failure to do so would prima facie constitute the offence of criminal breach of trust.
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IBC:
Initiation of Corporate Insolvency Resolution Process - the moment there is existence of a dispute the operational creditor gets out of the clutches of the Code. - the application fails and rejected.
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Service Tax:
Jurisdiction to arrest a person without issuing SCN - default in service tax - it is mandatory to follow the procedure contained in Section 73A(3) and (4) of the said Act before going ahead with the arrest of a person under Sections 90 and 91
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Service Tax:
GTA Service - reverse charnge - it was alleged that appellants are required to discharge service tax liability in respect of services from GTA as they were a partnership firm - Held No
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Service Tax:
Classification of services - Management, Maintenance or Repair service or otherwise? - Activity of operation and maintenance of power plants - monitoring plant equipment performance, operation planning, coordinating with the State Electricity Board, breakdown maintenance and repairs of all transformers, switchgears, breakages, motor control centres, etc. - Cannot be classified as MMR sevice.
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Service Tax:
CENVAT Credit - utilization in excess of 20% - The appellant would be required to discharge interest on the excess utilization of the cenvat credit in a particular month at the applicable rate - there is no justification in imposing penalty or directing recovery of the credit.
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Service Tax:
Refund of CENVAT Credit - even if ST-3 return for a particular period do not show any unutilized balance of cenvat credit, the refund still is to be granted on the basis of cenvat credit available in cenvat credit account and not on the basis of closing balance of cenvat credit shown in ST-3 return.
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Service Tax:
Export of services or not - Receiving Overriding Commission (ORC) in Indian currency - RC amounts received from foreign airlines even if it be Indian currency will have to be treated as Export of Service and therefore would not be exigible to service tax liability
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Service Tax:
Liability of service tax has been confirmed on the basis of mere omission to give correct information is not suppression facts unless it was deliberate to stop the payment of duty - the Department was not entitled to invoke the extended period of limitation.
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Central Excise:
CENVAT Credit - The provisions of Rule 3 (4), will apply in favour of the appellant which discusses about the eligibility to avail CENVAT credit on capital goods if they are used for manufacturing of dutiable as well as exempted goods
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Central Excise:
Demand of Interest and penalty - it is hard to say that the reversal of CENVAT Credit under Rule 3(5) by the appellant of the proportionate amount of credit taken on the inputs used for purposes other than the manufacture, amounts to incorrect availment of CENVAT Credit, as conceived under Rule 14 of CCR 2004. - Demand set aside.
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Central Excise:
Refund of excess Excise duty paid - unjust enrichment - finalization of provisional assessment - adjustments at the time of finalization of provisional assessments would be permissible without putting the excess duty paid to the test of unjust enrichment.
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VAT:
Condonation of delay - the petitioner has slept over the matter for a long time and thereafter filed these writ petitions only when auction notice was issued against them. So long as the orders of assessment are passed and when the petitioner has not questioned the same immediately, the Assessing Officer cannot be found fault with in issuing the other impugned proceedings viz., the auction notice.
Articles
Notifications
Customs-
05/2019 - dated
24-1-2019
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ADD
Sekks to impose anti-dumping duty on "Metaphenylene Diamine" originating in or exported from China PR.
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04/2019 - dated
24-1-2019
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ADD
Seeks to rescind notification No. 11/2014-Customs (ADD) dated 11th March, 2014.
GST - States-
1897-F.T. - 24/2018-State Tax (Rate) - dated
1-1-2019
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West Bengal SGST
Seeks to amend notification No 1125-F.T. dated 28.06.2017 to change GST rates on goods as per recommendations of the GST Council in its 31st meeting held on 22.12.2018.
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32/2018–C.T./GST - 78/2018 – State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to extend the due date for furnishing FORM ITC-04 for the period from July, 2017 to December, 2018 till 31.03.2019
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31/2018–C.T./GST - 72/2018 – State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No. 21/2018–C.T./GST (44/2018– State Tax)to extend the due date for filing of FORM GSTR - 1 for the newly migrated taxpayers having aggregate turnover above ₹ 1.5 crores rupees
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30/2018–C.T./GST - 70/2018 – State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to further extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081-F.T., dated 06.08.2018) taxpayers till 31.03.2019 [Amends notification No. 17/2018-C.T./GST dated 10.08.2018 (34/2018 – State Tax)]
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29/2018–C.T./GST - 69/2018 – State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to further extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081-F.T. , dated 06.08.2018) taxpayer still 31.03.2019 [Amends notification Nos.11-C.T./GST dated 18.09.2017 (35/2017 – State Tax) and 04/2018-C.T./GST dated 23.03.2018 (16/2018 – State Tax)]
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28/2018–C.T./GST - 68/2018 – State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to further extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081-F.T., dated 06.08.2018) taxpayers till 31.03.2019 [Amends notification Nos. 04-C.T./GST dated 08.08.2017 (21/2017 – State Tax) and 18-C.T./GST dated 15.11.2017 (56/2017 – State Tax)]
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1900-F.T. - 27/2018-State Tax (Rate) - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No 1135-F.T. dated 28.06.2017so as to notify GST rates of various services as recommended by the GST Council in its 31st meeting held on 22.12.2018
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1899-F.T. - 26/2018-State Tax (Rate) - dated
31-12-2018
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West Bengal SGST
Seeks to exempt State tax on supply of gold by nominated agencies to exporters of gold jewellery
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1898-F.T. - 25/2018-State Tax (Rate) - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No 1126-F.T. dated 28.06.2017 to exempt GST on goods as per recommendations of the GST Council in its 31st meeting held on 22.12.2018.
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1896-F.T. - 77/2018-State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No. 2311-F.T. dated 29.12.2017 fully waive the amount of late fees for GSTR-4 for the period from July, 2017 to September, 2018
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1895-F.T. - 76/2018-State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to specify the late fee payable for delayed filing of FORM GSTR-3B and fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-3B for the period July, 2017 to September, 2018 in specified cases
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1894-F.T. - 75/2018-State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No. 118-F.T dated 24.01.2018 so as to fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-1 for the period from July, 2017 to September, 2018 in specified cases
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1893-F.T. - 74/2018-State Tax - dated
31-12-2018
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West Bengal SGST
West Bengal Goods and Services Tax (Fourteenth Amendment) Rules, 2018
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1892-F.T. - 73/2018-State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No. 1344-F.T. dated 13.09.2018 so as to exempt supplies made by Government Departments and PSUs to other Government Departments and vice-versa from TDS
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1891-F.T. - dated
31-12-2018
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West Bengal SGST
Seeks to amend notification No.1341-F.T. dated 13.09.2018 to extend the time limit for furnishing the details of outward supplies in FORM GSTR-1 for the newly migrated taxpayers having turnover upto 1.5 crore rupees
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1890-F.T. - 67/2018-State Tax - dated
31-12-2018
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West Bengal SGST
Seeks to extend the time period specified in notification No. 1081-F.T. dated 06.08.2018 for completing migration of taxpayers who received provisional IDs but could not complete the migration process to furnish the requisite details to the jurisdictional nodal officer of the Central Government or State Government on or before 31st January, 2019 and the requisite details by email to GSTN by 28th February, 2019
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1874-F.T. - dated
27-12-2018
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West Bengal SGST
Amendment to Notification No. 1639-F.T. dated 14.09.2017 regarding State Committee of Anti-Profiteering
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1873-F.T. - dated
27-12-2018
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West Bengal SGST
Corrigendum to Notification No. 1570-F.T. dated 02.11.2018
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27/2018–C.T./GST-66/2018 – State Tax - dated
29-11-2018
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West Bengal SGST
Extension of the due date for filing of FORM GSTR – 7 for the months of October, 2018 to December, 2018 till 31/01/2019
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (1) TMI 1287
Provisional attachment of Bank Accounts - section 83 of the Central Goods and Services Tax Act, 2017 - attachment order passed on the concerned banks without furnishing copy of any such order to the concerned supplier - Held that:- he general practice of the department is to issue provisional attachment order on the concerned banks without furnishing copy of any such order to the concerned supplier. It is difficult to comprehend as to how the supplier whose property is attached would be in a position to file objection under sub-rule (5) of rule 159 if a copy of such order is not furnished to such supplier. Issue Notice and Notice as to interim relief returnable on 29th January, 2019. Direct service is permitted today.
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2019 (1) TMI 1286
Grant of Bail - allegations that they were involved in generation of fake invoices by floating dummy companies/firms in the name of poor persons/third persons and of passing on the input tax credit to unscrupulous persons/firms/companies without actual supply of goods - Held that:- In the present case, there are serious allegations against the applicant. Vide detailed order dated 22.12.2018, the application for cancellation of bail of applicant was allowed by Sh. Satish Arora, Id. ASJ, New Delhi and this order was affirmed by the Hon’ble High Court. No ground for bail is made out - Bail application is dismissed.
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2019 (1) TMI 1285
Grant of Bail - allegations that they were involved in generation of fake invoices by floating dummy companies/firms in the name of poor persons/third persons and of passing on the input tax credit to unscrupulous persons/firms/companies without actual supply of goods - Held that:- In the present case, there are serious allegations against the applicant. Vide detailed order dated 22.12.2018, the application for cancellation of bail of applicant was allowed by Sh. Satish Arora, Id. ASJ, New Delhi and this order was affirmed by the Hon ble High Court. No ground for bail is made out - Bail application is dismissed.
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Income Tax
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2019 (1) TMI 1284
Reopening of assessment - additional ground raised - validity of reasons recorded by the Assessing Officer - Held that:- SLP dismissed.
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2019 (1) TMI 1283
On-money received on sale of flats - addition based on loose papers - Held that:- No good ground to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed.
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2019 (1) TMI 1282
Income from the transfer of property by way of distribution of assets on retirement of the two partners - long term capital gains OR short term capital gain - assessee is a partnership firm - period of holding - Held that:- In view of the development agreement, the assessee retained remaining 50% of the land with use of FSI available on such land. Under the development agreement, therefore, the assessee can be seen to have divested itself of a portion of the land with the rights attached to such land and having retained the remaining portion. This development agreement under no circumstances, can be seen to have given rise to acquisition of the land or rights therein by the assessee on the date of agreement. Consequently, therefore, when two partners representing 50% share in the profit as well as the assets of the firm retired, the assessee distributed 50% of the rights in land which remained with the assessee upon execution of the development agreement and offered the notional value to long term capital gain, which the Tribunal correctly approved. No question of law, therefore.
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2019 (1) TMI 1281
Grant of interest u/s 244A - when the amount of refund became due for the first time because of the order of the appellate authority and was delayed for reasons attributable to the assessee - Held that:- The assessee's claim for refund arose out of an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. While giving effect to the CIT(A) order, since the Assessing Officer did not grant the interest under Section 244A of the Act on such refund, the assessee had approached the Commissioner by filing a petition for revision under Section 264 of the Act in which the Commissioner had directed payment of interest. In view of said order of Commissioner, the Revenue could not have argued that the interest was not payable. Appeal is dismissed.
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2019 (1) TMI 1280
Reopening of assessment - no proper opportunity to object to the reasons recorded - Held that:- The Respondent has now filed Affidavit in reply dated 16th January, 2019 to the Petition. In the above reply, the Respondent has annexed a fully copy of the reasons recorded by the Assessing Officer before issuing the impugned notice. The same is annexed to the reply at Exh. 'B' thereto. In support of the Petition seeks liberty to file objections to the full copy of the reasons recorded for issuing the impugned notice dated 21st March, 2018, now received by the Petitioner. This for consideration of the Assessing Officer while disposing of the objections. As the Petitioner was not given a proper opportunity to object to the reasons recorded, the request of the Petitioner is reasonable. This request on behalf of the Petitioner is also in accord with the decision of the Supreme Court in GKN Driveshaft (2002 (11) TMI 7 - SUPREME COURT). Therefore, in the circumstances, without disturbing the impugned notice dated 21st March, 2018, it would be appropriate to set aside the order dated 7th December, 2018 of the Assessing Officer disposing of the objections. This to enable the Petitioner to file its objections afresh and the Assessing Officer to dispose of the objections after due consideration.
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2019 (1) TMI 1279
Reopening of assessment - notice issued beyond four years from the end of the relevant assessment year - sale of house property - Held that:- Petitioner had made full and complete disclosure during the regular Assessment Proceedings of the sale of its house property and the consideration of ₹ 10 lakhs in the aggregate paid by the Petitioner to his wife and father out of a total consideration received while determining his capital gains during the regular Assessment Proceedings. In view of the fact that the impugned notice is issued beyond four years from the end of the relevant assessment year in respect of an assessment completed under Section 143(3) of the Act, where all material facts were disclosed would made the notice bad, in view of the proviso to Section 147 of the Act. There has been complete disclosure of material facts truly and fully as is evident from the fact that the Assessing Officer does not rely on fresh material in the reasons recorded in the impugned notice to reopen the Assessment. - decided in favour of assessee.
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2019 (1) TMI 1278
Review petition - Right given to a partner to file an appeal under Section 247 - no appearance for the respondent - Held that:- Single Judge noticed that the Revenue had already approached the Tribunal against the order of the first appellate authority in the appeal filed by the Partner and, hence, directed the Tribunal to consider whether the appeal was maintainable before the first appellate authority. The Tribunal considered the appeal filed by the Revenue, by Annexure-J order dated 06.01.2012. As noticed from Annexure-J, the date of hearing was 03.01.2012. We see from the order of the Tribunal that though an objection was raised with respect to the maintainability of the appeal by the Revenue before the Tribunal, on the very same grounds as raised in the Review Petition, the Tribunal refused to consider the same since the High Court had already directed consideration on merits. It is unfortunate that the Revenue did not place the order of the learned Single Judge in the Review Petition passed six years prior, before the Tribunal. The learned Senior Counsel, Government of India (Taxes) would submit that since the CIT (Appeals) at the second instance had acted without jurisdiction, the order is non est in law. No reason to hold so in an appeal since the Revenue has not raised such contentions before the first appellate authority or before the Tribunal nor even before this Court in the Review Petition. The original demand as is revealed from Annexure-C was only ₹ 15,02,720/-, which is far lesser than that prescribed in the litigation policy. The appeal is one of the year 2012 and though the appeal stood admitted in 2012 itself, there was no appearance for the respondent since notice was not served. Paper publication was taken out only in 2018. We are of the opinion that this is a fit case to be rejected on the ground of litigation policy
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2019 (1) TMI 1277
Reopening of assessment - unaccounted cash receipts - validity of notice - non independent application of mind by AO - Held that:- It emerges from the record that the Assessing Officer has merely acted upon the information submitted to him by the investigation wing that there is material to suggest that Mudra had paid cash amount to AB&D whereas, the material collected during the survey against Mudra prima faice suggests such cash payment to AD. This would demonstrate total lack of application of mind on the part of the AO. If he had perused the material supplied to him by the investigation wing, he would have immediately noticed that material referred would suggest cash payment to AD and not AB&D i.e. the present petitioner. Even in a case where the return filed by the assessee is accepted without scrutiny, as per the settled law, the Assessing Officer can issue a notice of reopening of assessment provided he has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer cannot proceed mechanically and also on erroneous information that may have been supplied to him. In fact, we note that in the present case the Assessing Officer had issued a notice to a wrong person. The impugned notice is, therefore, set aside. - Decided in favour of assessee
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2019 (1) TMI 1276
Addition of as remission of trading liability u/s 41(1) - book entry passed by the assessee by reducing the creditor's balance and increasing the assessee's capital balance - gift from the maternal uncle - Held that:- The confirmation letter as produced by the assessee can only be treated to be an afterthought insofar as absolving the liability under Section 41(1). We hence, uphold the assessment under Section 41(1) and we hold that existence of adverse business situation is not a requirement under Section 41(1) to find remission of trading liability. We answer the questions of law in favour of the Revenue and against the assessee; but, however notice that the assessee had raised a contention that the liability as seen from the account of M/s.Veeriah Reddiar cannot be fully considered as a trading liability. It is also to be noticed that the remission of trading liability can be deemed to be an income arising from the profit and loss accounts only to the extent of the actual credits outstanding in the creditors account wiped off on the basis of the book adjustments made by the assessee. The question whether there is any liability other than a trading liability insofar as the outstanding credits found in the account of M/s.Veeriah Reddiar also has to be verified by the AO. Though we find the assessment made under Section 41(1) to be proper, we remand the matter to the AO for the limited purpose of limiting the addition under Section 41(1) to that of the trading liability wiped off from the account of M/s.Veeriah Reddiar. The assessee shall produce sufficient material to substantiate the liability having arisen other than under trade between the two. Appeal allowed with a remand to the limited extent of ascertaining the actual quantum to be made addition of as remission of trading liability under Section 41(1).
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2019 (1) TMI 1275
Deduction u/s 80IB - income not directly ‘derived from’ the manufacturing activity of the assessee - exclude the interest income from the profits eligible for deduction - assessee argued that disallowance of interest income for such deduction should be the net of the interest and not gross - Tribunal by the impugned judgment accepted the assessee’s contention holding that the disallowance from the deduction of interest can be only be of the net of the interest income - Held that:- No error in the view of the Tribunal. It is undisputedly that the interest income earned by the assessee cannot be said to have been derived from its export business. However, when the question of disallowance comes, the revenue cannot ignore the assessee’s interest expenditure and disallow the entire interest earned by the assessee without netting if to off. Revenue cannot give different treatment to interest income and interest expenditure. Income earned by the assessee on account of foreign exchange rate fluctuation - revenue submitted that income cannot be stated to have been derived from the assessee’s export business - Held that:- CIT Appeals while granting the relief to the assessee had recorded that the additional income earned by the assessee on account of the fluctuation of foreign exchange rate was out of its receipts for exported goods. This is not a case where the assessee after completing the exports and receipt of the sale consideration, realized the same in rupee turns after a gap of time and in the meantime, the foreign exchange rate having fluctuated favourably, the assessee earned additional income. We are therefore, of the opinion that the Tribunal correctly confirmed the view of the CIT appeals and granted the benefit to the assessee. Claim of deduction of income arising out of sale of scrap - revenue argues that such income cannot be stated to have been derived from the assessee’s export business - Held that:- we notice that the Commissioner appeals while granting the relief to the assessee had come to factual finding that the assessee was engaged in manufacturing activity. During the course of such manufacturing activity scrap was generated out of use of various raw materials till the finished goods are produced. Such scrap was sold which generated receipts which in turn reduced the costs of manufacturing. It can thus be seen that scrap was generated in the course of assessee’s manufacturing activity and the income generated out of sale of such scrap was adjusted to the cost of manufacturing of the product itself. Such additional income thus was clearly derived out of the assessee’s activity of manufacturing and export of such manufactured goods. Claim of deduction pertaining to benefits of DEPB and duty drawback - Held that:- Upon perusal of the impugned judgment of the Tribunal, we notice that the assessee had raised an alternative contention of disallowance of net of the benefits and not gross. The Tribunal while upholding revenue’s objection to the assessee’s principal claim of deduction accepted the alternative contention and held that such disallowance would be restricted to the net of the benefit and not gross. Here also we do not find any error in view of the Tribunal. Even if the benefits of the DEPB and duty drawback were to be excluded from the purview of deduction for the assessee’s export business, the costs incurred for receiving such benefits must be accounted for. Addition on account of setting off the loss - computation of claim of deduction under Section 80IC - Held that:- Question to be concluded against the revenue by virtue of the judgment of this Court in case of Hercules Hoists Ltd.(2017 (6) TMI 1125 - BOMBAY HIGH COURT) as allowing the deduction of the profit u/s 80IB(5) of the Act without deducting the losses of the earlier years. In the result, all the tax appeals are dismissed.
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2019 (1) TMI 1274
TDS u/s 194J - Addition in respect of transaction charges - tds liability - Held that:- This issue now stands concluded in favour of the assessee and against the revenue by virtue of the decision of the Supreme Court in CIT Vs. Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT]. In the above decision it is held that no tax is deductible on the transaction charges under Section 194J of the Act. Transfer pricing adjustments - determination of ALP - Additional interest earned by the Assessee while computing the brokerage income earned by the Assessee by rendering brokerage services to its AEs - Held that:- The impugned order of the Tribunal while agreeing with the orders of the lower authorities held that an adjustment on account of interest earned on the margin money deposited by the AE should be factored in to determine the ALP. However, it held that instead of determining it on the basis of turnover of AE's and unrelated parties, it should be done on the basis of interest earned on the margin money placed by AE's and unrelated parties with the respondent. Thus, restored the issue to the Assessing Officer to determine the ALP on the above basis. The Revenue has not pointed out any reason why the above methodology adopted by the Tribunal is bad or does not give the correct ALP as compared to the turnover basis adopted by the TPO. We find that the view taken by the Tribunal on these facts is a reasonable view, being directly linked to the interest earned on the margin money deposited by the AE's and unrelated parties while engaging the services of the respondent as a broker in future and option trade. Rejecting Keynote Corporate Services Limited as a comparable on the ground of it being undergone an amalgamation during the year - Held that:- If merger/amalgamation have taken place and it is not a normal event then such a company would cease to be comparable. This ofcourse is subject to the Revenue being able to show that amalgamation/merger did not have any effect of the profitability of the company. This has not been shown by the Revenue either to the Tribunal or before us. Therefore, this issue stands covered by the decision of this Court in Aptara Technology Pvt. Ltd. (2018 (4) TMI 404 - BOMBAY HIGH COURT) and PTC Software (I) Pvt.Ltd. (2018 (4) TMI 1002 - BOMBAY HIGH COURT) in favour of the respondent. This more particularly in view of the absence of the Revenue even attempting to show that the merger and amalgamation that took place in the case of comparable M/s Keynote Corporate Securities Limited was such that it would not have any impact on its profitability. Exclude Khandwala Securities Limited from the list of comparables to determine the ALP of its merchant banking services rendered by Assessee to its AEs - Held that:- Services are rendered by M/s Khandwala Securities Limited being different from the service rendered by the respondent to its AE's, the exclusion of M/s Khandwala Securities Limited from the list of comparison cannot be disturbed. This in the absence of the respondent pointing out how function of the two are similar. The mere fact that the respondent had included M/s Khandwala Securities Ltd as a comparable, would not bar the respondent from contending otherwise. The object and purpose of the entire exercise of determining the ALP is by having proper comparables. Thus, there is no merit in the above objection taken by the Revenue.
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2019 (1) TMI 1273
Nature of loss - loss of money of the appellant caused by forfeiture of advance/deposit towards proposed purchase of plot - capital loss or Revenue loss - Held that:- Once and for all, fixed capital or an enduring benefit test should be applied to differentiate between purchase of capital asset and stock-in-trade, which demarcate the distinction between capital and revenue expenditure. In the said case, as capital asset was not capable of being exploited as a business asset, payment of compensation in respect thereof for not executing the agreement was considered as capital expenditure. We agree with the aforesaid reasoning. In the present case the loss incurred was in the transaction relating to and for acquisition of a capital asset. For some reason, the attempt made by the appellant-assessee to acquire land/plot as a capital asset did not fructify. Hence, the appellant-assessee had asked for refund of the amount, which was paid for acquisition of the capital asset. Forfeiture or deduction made by the HSIDC while refunding the amount would be a capital loss and not a revenue expenditure. - Decided against the assessee.
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2019 (1) TMI 1272
Charitable activity - Registration u/s 12A denied - whether activities of Development Authority can be said to be 'charitable' as defined under Section 2(15)? - Held that:- The Tribunal has followed its earlier decisions with regard to two another development authorities whereby the registration was granted under Section 12-AA of the Income Tax Act, 1916. The said decisions have also been upheld by this Court in its decision in Income Tax Appeal [2016 (8) TMI 1305 - ALLAHABAD HIGH COURT] by coming to the conclusion that the respondent-authority had fulfilled the criteria for grant of registration under Section 12-A of the Act. - Decided in favour of assessee.
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2019 (1) TMI 1271
Revision u/s 263 - revision of return waiver of interest on loan availed from Government of India - period of limitation for filing revised return - The book profit as per the revised computation was negative at ₹ 81,97,27,138/-. Hence, there was no tax payable even under Section 115JB for the said year. - Held that:- We find that the assessment for the year 2006- 07 was completed, after the assessment for the earlier year, 2005-06, had been completed accepting the revised return filed by the assessee. The revised return was filed by the assessee within the time provided for the same and there is no contention taken regarding the limitation having worked out against the assessee. In such circumstances on that basis alone the subsequent assessment passed in the year 2006-07 has to be found to be without any authority. The issue arise only if there exists a book profit for the year 2006-07; which would not be there if the revised assessment for the assessment year 2005-06 is permitted to stand. Only if the adjustments for the earlier year were not permitted, the book profit would turn positive by virtue of the credit made to the profit and loss account; of the provision for interest for the two years. We find that there is no question of accrual of interest, especially since the assessee had filed revised return within the time provided for the same; after the interest was waived by the GOI. We, hence, answer the question of law in favour of the assessee
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2019 (1) TMI 1270
Initiating of proceedings u/s 153C - Admission of additional ground - Held that:- Since the assessee has raised a legal ground, which was not before the Ld. CIT(A) and moreover the judgement of the Hon'ble jurisdictional High Court was rendered in the case of CIT Vs. Mechmen [2015 (7) TMI 538 - MADHYA PRADESH HIGH COURT] was not available at the time of passing of impugned order. By way of additional ground, assessee has raised an issue related to jurisdiction for making assessment u/s 153C of the Act by the assessing officer. Therefore, we set aside the impugned order to the file of the Ld. CIT(A) for decision on additional ground. Addition on on money payments - assessee was not granted cross examination - Held that:- Department has recorded the statements and entertained affidavits on the back of the assessee and used the same against the assessee without confronting the same, all the 3 land owners who claimed to have received the alleged on money and the persons who have claimed to have made the alleged on money payments to them may, in the interest of justice, be allowed to be cross examined by the assessee/his counsel. AO may accordingly be directed to facilitate such cross examination of the above witnesses of the Department at the earliest where after the assessee shall furnish his further defence/submissions in the matter failing which, the entire addition made by the learned Assessing officer on account of the alleged on money payments in the assessment years involved deserves to be deleted in toto in the interest of justice - set aside the order of the Ld. CIT(A) as the assessee has not been provided opportunity to cross examination of the person on the basis of whose statement and the affidavit additions were made.
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2019 (1) TMI 1269
Order passed beyond the time limit prescribed u/s 201 (3)- 'assessee in default’ for failure to deduct the tax at any time after the expiry of two years from the end of the financial year in which statement as prescribed u/s 200 - Held that:- In the present case, it could be 31 March 2009 for first three quarters and 31 March 2010 for quarter no four of F Y 2006 – 07. Apparently, the order is made by the AO on 28.03.2011. Section 201(3) also has proviso where the time limit for the financial year commencing of year before first day April 2007 is up to 31 March 2011. Apparently, the order of the AO is made on 28.03.2011. The assessee has also submitted Circular No. 5/2010, which provides that such proviso; apply only in those cases where TDS proceedings are pending before the tax authorities. It is also a fact that this argument raised before the ld CIT(A) have not been adjudicated and it is also not known whether any proceeding are pending before the tax authorities for applicability of proviso to section 201(3) of the Act. In view of this we set aside the ground number 2 of the appeal to the file of the CIT(A) to decide the above argument of the assessee whether the order passed by the ld AO is barred by limitation or not.
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2019 (1) TMI 1268
Denying 12AA registration - registration u/s 12AA originally granted to the assessee was withdrawn - whether activities carried on by the assessee trust are for charitable purposes as defined u/s 2 (15) of the act and not business and profession? - whether the benefit of u/s 11 and 12 of the Act is allowable to the assessee? - Held that:- As assessee is carrying on the activities of medical relief for eradication and education of HIV AIDS patients the assessee is entitled to the registration u/s 12 AA of the income tax act as there is no finding by the learned CIT – exemption that the activities of the assessee are not genuine. Same is not the case of the learned departmental representative also. In view of this we cancel the order passed by the learned CIT – exemption dated 3/10/2017 cancelling the registration already granted to the assessee by passing an order u/s 12 AA (3) of the income tax act 1961 on 3/10/2017 and direct the ld CIT (E) to restore the registration of the trust u/s 12AA - Also grant benefit of section 11 and 12 of the income tax act to the assessee. - Decided in favour of assessee
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2019 (1) TMI 1267
Revision u/s 263 - eligibility for exemption u/s 10(26BBB) - income is not to be included in total income - "any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India" - treating the assessment order as erroneous in so far as it is prejudicial to the interests of the Revenue - Held that:- During the course of arguments, the Learned Counsel for the Assessee was not able to satisfy as to how the assessee satisfied the requirements of Section 10(26BBB) of the I.T. Act and how the Judgments, relied upon by him are applicable to the facts and circumstances of the case. D.R. on the other hand has suggested that both the decisions relied upon by the Learned Counsel for the Assessee support the case of the Revenue. On this reason itself, the assessment order was correctly found to be erroneous in so far as it is prejudicial to the interests of the Revenue. On this reason itself, the appeal of assessee is liable to be dismissed. The assessment order was correctly found to be erroneous in so far as it is prejudicial to the interests of the Revenue. On this reason itself, the appeal of assessee is liable to be dismissed. We may also note briefly that CIT has noted that even the case of the assessee would not fit within the definition of the term “Ex-servicemen” appearing in Section 10(26BBB) on which, no arguments have been made during the course of hearing of the appeal. Since the assessee failed to satisfy the conditions of Section 10(26BBB) and A.O. did not examine this issue at all, therefore, CIT, Delhi was justified in setting aside the assessment order and to enhance the income of assessee by holding that assessee is not entitled for exemption under the provisions of Section 10(26BBB). No infirmity have been pointed out in the Order of the learned CIT. We, accordingly, do not find any error in the Order for interference. The appeal of assessee have no merit and the same is accordingly dismissed. - Decided against assessee.
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2019 (1) TMI 1266
Computations of profit - reasonable rate of profit/commission in such clandestine activities - Notings found in the loose sheets - reliance on statement recorded under oath u/s 132(4) - Held that:- As decided in CBI Vs. V.S. Shukla [1998 (3) TMI 675 - SUPREME COURT] Notings found in the loose sheets would not do any good to the Revenue. The assessee has claimed 25 paise or 0.25% on the strength of the statement of kingpin Shri Tarun Goyal, who in his statement recorded under oath u/s 132(4) of the Income tax Act, 1961 has categorically stated that the rate of commission charged on accommodation entries provided through various companies was 0.25%. The statement of Shri Tarun Goyal recorded u/s 132(4) of the Act can be a good piece of evidence in the case of Shri Tarun Goyal only. The assessee also relied heavily on various decisions of the co-ordinate bench wherein the Tribunal has adopted rate ranging from 0.15 paise to 0.50 paise i.e 0.15% to 0.50%. In such illegal activities, there cannot be any precedence and the rate varies from facts of each case. To put an end to the litigation and in the interest of justice and fair play, in our considered opinion, 0.50 paise or 0.50% should be taken as the reasonable rate of profit/commission in such clandestine activities. We, accordingly, direct the Assessing Officers to adopt 0.50% or 0.50 paise and compute the profit accordingly. We are of the opinion that there cannot be any profit element in intra-group transactions. Direct the AO to consider the transactions with outside parties only and then compute the profit. Thus, the common ground in the case of the appellants is partly allowed.
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2019 (1) TMI 1265
Short deduction and interest on short deduction - directing the AO to recompute the demand after accepting fresh evidence and its verification of documents produced by the assessee - addition made u/s 195 - Held that:- We are of the view that no interference is called for in the matter. Though it is well settled that CIT(A) should not set aside the issue to the AO as per law but in the present case the Tribunal while deciding the appeal of the assessee vide order dated 10/12/2018 has already restored the issue to the file of AO for deciding the issue afresh, therefore, following the order of the Tribunal for the same assessee for same assessment year, no further directions are required in the matter. The Departmental appeal has become infructuous on deciding the appeal of the assessee separately.
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2019 (1) TMI 1264
Stay of demand - recovery proceeding - Held that:- The assessee has already deposited a sum of ₹ 2,18,580/-. The assessee is hereby directed to deposit a further sum of ₹ 1 lacs on or before 31.01.2019 and the balance demand is stayed for a period of 3 months or till disposal of appeal, whichever is earlier. As the hearing in the matter is already scheduled for 11.03.2019. The ld AR has given an undertaking that he shall not seek any adjournment in the matter and where any adjournment is sought without showing reasonable cause to the satisfaction of the Bench, the stay so granted shall stand vacated. The assessee shall submit the necessary challan in proof of payment of the tax demand as directed above to the Assessing officer as well as a copy thereof to the Registry before the next date of hearing.
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2019 (1) TMI 1263
Stay of Penalty u/s 271D - contravention of the provisions of Section 269SS - Held that:- Given the fact that the assessee has already deposited a sum of ₹ 3,50,000/- out of total tax demand of ₹ 10 lacs which is more than 35% of the total tax demand, the balance demand is stayed till 28.02.2019 or till disposal of appeal, whichever is earlier. The hearing in the matter is already scheduled for 12.02.2019. AR has given an undertaking that he shall not seek any adjournment in the matter and where any adjournment is sought without showing reasonable cause to the satisfaction of the Bench, the stay so granted shall stand vacated.
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2019 (1) TMI 1262
Addition in respect of Long Term Capital Gain arising on sale of land - nature of land sold - whether the land was agriculture land or not? - agricultural land situated in rural area or in the urban area - Held that:- Delhi Municipal Corporation with previous approval of the government by notification can declare any portion of the rural areas to form part of the urban area. Ergo, once the Delhi Municipal Corporation Act, 1957 provides powers to the Government to notify and convert any rural area to Urban area, then the entire observation of the CIT (A) that, since Village Chhawla is governed under Delhi Municipal Act, 1957, and therefore, it is an urban land even 10 years prior to the notification. Such an inference is wholly untenable. Accordingly, in view of the government notification, hold that the said land was situated in a rural area, and therefore, sale of such agriculture land falls within the ambit and scope of Section 2(14)(iii) and hence no capital gain can be charged u/s.45. Accordingly, the addition made by the AO stands deleted. - Decided in favour of assessee.
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2019 (1) TMI 1261
Penalty levied u/s 271(1)(c) - Failure to disclose the salary received from M/s HCL Technologies Ltd. and also failed to claim the TDS made by the M/s HCL Technologies Ltd. - reasonable cause on the part of the assessee u/s 273B - Held that:- Had the assessee claimed TDS made by the M/s HCL Technologies Ltd., then we may say that the assessee has concealed part of income or furnished inaccurate particulars of income. The very fact that the assessee has not claimed TDS made by the M/s HCL Technologies Ltd. shows that there was a reasonable cause on the part of the assessee in not disclosing the salary received from M/s HCL Technologies Ltd. Since the TDS was made by M/s HCL Technologies Ltd., the fact of salary received by the assessee from M/s HCL Technologies Ltd. is very much within the knowledge of the Department. This Tribunal is of the considered opinion that there was reasonable cause on the part of the assessee as provided in Section 273B of the Act. Hence, this is not a fit case for levy penalty under Section 271(1)(c) of the Act. - Decided in favour of assessee.
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2019 (1) TMI 1260
Claim of exemption u/s 10(23C)(vi) - exemption u/s 11 - 15% of receipts are to be taken into consideration - Held that:- We find that the Hon'ble Supreme Court in DIT Vs. Raghuvanshi Charitable Trust and Ors. [2010 (7) TMI 158 - DELHI HIGH COURT] had held that exemption under section 11(1)(a) i.e. of 15% of income was absolute exemption and application of section 11(2) of the Act does not extend to nullify absolute exemption. As further been held in the case of Programme for Community Organization [2000 (11) TMI 4 - SUPREME COURT] that a charitable trust was entitled to accumulate 15% of the receipts without considering the expenditure and application made on the objects of trust. CIT(A) applying the said proposition has allowed the claim of assessee. We find no merit in the grounds of appeal raised by Revenue in this regard and we uphold the method of computation of deficit applied by CIT(A) in line with the provisions of section 11(1)(a) of the Act. Whether in the instant assessment year the application of income was more than the receipts of the year, can the excess application of income i.e. expenditure in the hands of assessee, be carried forward to the succeeding year? - Held that:- In view of the settled position of jurisdictional High Court, which has been applied by the CIT(A), we find no merit in the issue raised by the Revenue in this regard and the same is dismissed. Once the grounds of appeal raised by Revenue are dismissed, then admittedly, there is no taxable income in the hands of assessee trust. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by Revenue. Since the income of assessee has been held to be eligible for exemption under sections 11 to 13 of the Act, we hold that the alternate claim made by assessee of exemption under section 10(23C)(vi) becomes academic in nature. AR for the assessee stressed that the said deduction has been allowed to the assessee in preceding and subsequent assessment years. We are of the view that in view of our decision with regard to Revenue’s appeal, the grounds of appeal raised by assessee at present become academic and we keep the issue of allowability of deduction under section 10(23C)(vi) of the Act alive, which shall be adjudicated upon at the relevant time, if relevant time arises.
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2019 (1) TMI 1259
Interest charged u/s 234B, u/s 234C and 234D - whether compensatory in nature for use of government dues, as business expenditure u/s 37? - disallowance u/s 40(a)(ii) - Held that:- There could be no quarrel as to the nature thereof since it is settled legal position that the character of such interest payment is compensatory in nature in the sense that it is payable by the assessee to the revenue for delayed payment of its dues. In terms of the provisions of Section 40(a)(ii), the assessee is not entitled to claim any deduction for any sum paid on account of any rate or tax levied. The expressions tax as defined u/s 2(43) means income tax chargeable under the provisions of this act and includes Fringe Benefit Tax. The expression interest as defined in Section 2(28A) means interest payable in any manner in respect of moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the money borrowed or debt incurred or in respect of any credit facility which has not been utilized. Tax and interest has been given specific meaning under the act and the provisions of Section 40(a)(ii) refers only to any rate or tax levied without including therein the expression interest. Therefore, the stand of AO in disallowing the same u/s 40(a)(ii), in our opinion, was not justified. The payment of income tax is personal liability for the assessee and consequential interest paid thereupon for delay is part and parcel of the aforesaid payment only and retain the same color & character. This being the case, the deduction thereof u/s 37(1) could not be allowed to the assessee since it was personal expenditure in nature and the same could not be said to have been expanded wholly and exclusively for the purpose of assessee’s business since payment of taxes or interest could, by no stretch of imagination, be said to be the assessee’s business. For the same reason, the deduction thereof could not be allowed to assessee u/s 36(1)(iii) also which envisages amount of interest paid in respect of capital borrowed for the purposes of business or profession, which is not the case here. We are of the opinion that the aforesaid interest paid by the assessee under protest, was nothing but the money kept in trust before the revenue and the expenditure in that respect could not be said to have even crystallized during impugned AY and therefore, there could be no occasion to consider the question that whether the same was an admissible expenditure during impugned AY. Viewing from any angle, the deduction of this expenditure either u/s 37(1) or 36(1)(iii) could not be allowed to the assessee. We order so. The grounds stand dismissed to that extent. Refund of interest amount as received by assessee in the subsequent AY and offered to tax, could not be brought to tax in that AY since the same was mere refund of the money kept under trust and paid under protest by the assessee. AO is directed to reconsider this plea as to exclusion of interest amount to the extent of ₹ 183.05 Lacs for determining the income for AY 2010-11 after due verification of the fact that said amount was already offered to tax in that AY. The assessee is directed to provide requisite documentary evidences, in this regard, to bolster his claim. The assessee shall get corresponding consequential relief in other AY. Interest paid on account of late payment of fringe benefit tax could also not be allowed to the assessee. However, the amount of tax deduction at source [TDS] represents the amount of income tax of the third parties party on whose behalf the payment was deducted by the assessee & paid to the Government Exchequer. TDS amount do not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. This being the case, any interest paid on account of late payment of TDS could not be linked to the Income Tax of the assessee and therefore, the deduction thereof was available to the assessee. Hence, the deduction of ₹ 9,128/- as claimed by the assessee would be an allowable expenditure.
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2019 (1) TMI 1258
Disallowance of interest on loan availed - surplus funds available from the loan taken from the consortium of Banks were parked by the assessee with the State Government - Held that:- The loan of ₹ 285 crores availed from the consortium of four Nationalised Banks was partly invested by the assessee in FDRs and the balance amount was provided to the Government of Sikkim as per the mutual understanding. In respect of the loan availed from The loan of ₹ 285 crores availed from the consortium of four Nationalised Banks was partly invested by the assessee in FDRs and the balance amount was provided to the Government of Sikkim as per the mutual understanding.he consortium of four Nationalised Banks, the assessee had paid interest of ₹ 27,10,50,225/- and had also incurred processing charges and guarantee fees amounting to ₹ 3,74,20,576/-. As against this total expenditure incurred in respect of the loan availed from the consortium of Banks amounting to ₹ 30,84,70,801/-, the assessee had received interest on investment made in Fixed Deposits out of the said loan to the extent of ₹ 5,48,37,553/ and the balance amount of ₹ 25,36,33,248/- was charged to the State Government as per the mutual understanding/agreement. It was thus a case wherein the surplus funds available from the loan taken from the consortium of Banks were parked by the assessee with the State Government and since the entire expenditure incurred by the assessee in the form of interest and other charges on the loans availed from the consortium of Banks was recovered by the assessee in the form of interest on Bank deposits as well as interest charged to the State Government, we find ourselves in agreement with the CIT(Appeals) that the disallowance made by the AO on account of interest was not sustainable. - Decided in favour of assessee
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2019 (1) TMI 1257
TDS liability on Expenditure incurred on the commission - reimbursement of expenses - payment exceeding permissible limit - Held that:- Except for handling charges, all other payments are nothing but reimbursement of expenses. On reimbursement of expenses, there is no liability for deducting tax at source. In so far as handling charges are considered, same totals to ₹ 41,950/- and as per the provisions of the Act, if total payment during the year does not exceed ₹ 75,000/, there is no liability to deduct tax at source, therefore, agree with the contention of the the assessee. On the given facts, the assessee is not liable for deducting tax at source. Therefore, disallowance made u/s 40(a)(ia) of the Act is uncalled for - Decided in favour of assessee Addition of sales commission - genuineness of the transaction and the purpose of paying sales commission to the two ladies - Held that:- There is no dispute that both the persons are assessed to tax and they have shown the sales commission in their respective return of income. There is also no dispute that the assessee has deducted tax at source as per the applicable rates. Assessing Officer is not the right person to decide which expenditure the assessee should incur in furtherance of his business. Secondly, the statements on oath, recorded by the Assessing Officer, which are placed in the paper book, thus find that both the ladies have specifically and directly explained the nature of transaction on which they have received sales commission form the assessee. When examination of both the ladies clearly established the service they have provided to the assessee, there remains no doubt that the payment is genuine - Decided in favour of assessee Adhoc disallowance made on account of expenses under the heard vehicle maintenance, interest on car loan, telephone expenses, travelling expenses and depreciation on car - AO disallowed 1/8th of the expenses so claimed - CIT(A) who restricted the disallowance to the extent of 1/10th of the expenses - Held that:- As personal element cannot be ruled out as observed by the CIT(A) and the first appellate authority has already given relief to assessee on this count. No interference is called for. - Decided against assessee.
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2019 (1) TMI 1256
Disallowance u/s 40A(3) - expenditure paid in excess of ₹ 20,000/- in cash - Held that:- AO never had an occasion to go into the genuineness of transactions nor the assessee furnished any details with supporting evidences to even look into the same. In fact the ld CITA had dismissed this ground for want of furnishing of details by the assessee. Even before us, except making a bald statement, no evidences were submitted by the assessee for incurrence of the said expenditure. Hence we hold that the ld CIT-A had rightly confirmed the disallowance u/s 40A(3) of the Act in the facts and circumstances of the case. Accordingly, the Ground No.1 raised by the assessee is dismissed. Addition of undisclosed income - Assessee did not disclose TDS and corresponding income received from Food Corporation of India, Krishnagar, Nadia - Held that:- We hold that the sum of ₹ 2,00,568/- actually received by the assessee together with TDS thereon of ₹ 4,649/- is only reimbursement of expenses which had been routed off as a balance sheet item and which account had been squared off in the said ledger during the year, cannot be brought to tax in the hands of the assessee. CIT-A having accepted the fact that the ledger of transport charges recovery account produced by the assessee is squared off account, ought not to have expected the assessee to first claim the expense incurred as an expenditure in its profit and loss account and thereafter credit the same on receipt of reimbursement of expenses. In either case, the effect on the net profits would be the same. Hence we have no hesitation in directing the AO to delete the said addition of ₹ 2,05,217/- in the assessment but correspondingly the AO should disallow the sum of ₹ 4,649/- which was wrongly claimed as discount allowed in the return of income. - Decided partly in favour of assessee. Disallowance towards delayed payment of provident fund - Held that:- The dates of remittance of PF are duly recorded in the assessment order. From the same, it is seen that the PF had been duly remitted before the end of the previous year itself , of course with some delay. This issue has been held in favour of the assessee by the Hon’ble Jurisdictional High Court in the case of Vijay Shree Cement reported [2011 (9) TMI 30 - CALCUTTA HIGH COURT]. Respectfully following the same, we direct the ld AO to grant deduction to the assessee. Decided in favour of assessee.
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2019 (1) TMI 1216
Bogus LTCG - claim of exemption U/s.10(38) denied - addition u/s 68 - Held that:- AR has only come out with the plea that the assessee were not provided with opportunity of cross-examining the witness, the investigation report was not furnished and proper opportunity was not provided of being heard. However we find that all these arguments raised by the AR before us was never alleged before the Revenue Authorities when the matter was before them. In this situation we do not have any other option but to confirm the orders of the Revenue Authorities in the case of all the assessee because the AO as well as the CIT(A) have arrived at their respective decisions after considering the issues in the appeal in detail and there is nothing before us to disturb their findings. Accordingly we hereby confirm the Order of the Ld.Revenue Authorities on this issue. Thus the first ground raised by the assessees herein above in all the appeals are held against the assessee.
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Customs
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2019 (1) TMI 1292
Maintainability of petition - efficacious alternative remedy of appeal - Section 129A of the Customs Act - Held that:- Indeed, the Exts.P3 and P4 spell out the procedure for registration of a shipping agent. They do not in explicit terms refer to the mechanism of revoking the registration. But this seeming lacuna does not detain us any longer. For it is well established that an authority having power to do something has, by implication, unless expressly prohibited, the power to undo it. It is an inherent administrative power, subject to statutory stipulations or limitations. Here, though this Court avoids adverting to the merits, the Company and its employees, prima facie, face a grave allegation of fabricating the documents and falsifying the records. I reiterate it is only an allegation, though. Is that alternative remedy efficacious? - Held that:- The statutory authorities under the Customs Act, notes the Supreme Court in Kothari Filaments [2008 (12) TMI 28 - SUPREME COURT], discharge quasi-judicial functions. Therefore, an adverse order could affect a person's property and that may be through confiscation, redemption fine, personal fine and so on. In other words, a finding of statutory violation results in civil or evil consequences. So the principles of natural justice must be complied with. Kothari Filaments has gone on to observe that the Act, in the first place, does not prohibit the application of the principles of natural justice. It observes that the existence of grounds for confiscating the goods is a sine qua non for the authorities to issue a notice under Section 124. Without the information to the person concerned about the grounds of confiscation, it would be impossible for that person to defend himself. So the notice under Section 124 must satisfy all the statutory ingredients - the petitioners in both the writ petitions were served with show-cause notices replete with information-true or false, though-and were supplied with the documents they had asked for. Petition dismissed.
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2019 (1) TMI 1291
Principles of natural justice - Advance Authorization - specific case of the petitioners is that the first petitioner has imported various components from outside the country, assembled the same in India and supplied the finished product to the second petitioner - Held that:- The respondents have not given any opportunity to the petitioners to establish their case and they have not considered the documents produced by the petitioners - They have unilaterally taken a decision and passed the impugned order at Annexure-A. There is violation of principles of natural justice. To give one more opportunity to the petitioners Annexure-A dated 15.02.2012 is treated as show-cause notice - petition disposed off.
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2019 (1) TMI 1290
Classification of imported goods - import of vessels Lewek Altair and Lewek Atlas - whether classified under CTH 8905 90 90? - the Commissioner has imposed a meagre amounts of redemption fine under section 112 (a) which is less than 1% of the value of the vessels and this needs to be enhanced - benefit of exemption N/N. 12/2012-Cus, dated 17.03.2012 as amended. Held that:- The vessels in question are meant to support the ONGC s oil drilling platform and were imported as such - As is evident from all available documents that the vessels carry out this function by carrying personnel and equipment from shore to the platform and back. Such a function is essential for the off shore oil drilling platforms which are located far away from the shore. In such a factual matrix, it cannot be held that the navigation of the vessels is not the primary function. The navigation indeed, is the primary function of the vessels and dynamic positioning system helps to perform this function efficiently. Similarly, loading or unloading goods or embarking or disembarking personnel are incidental to the transportation. Therefore, the vessels in question are rightly classifiable under Customs Tariff Heading 8901 9000 as claimed by the appellant. The vessels cannot, by any stretch of imagination, fall under CTH 8905. Consequently the benefit of exemption notification No. 12/2012-Cus is also admissible to the appellant - The demand of duty under CTH 8905 9090 denying the benefit of exemption notification No. 12/2012-Cus, dt. 17.03.2012 by Ld. Commissioner needs to be set aside - confiscation and redemption fine set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1289
Classification of imported goods - Low Aromatic White Spirit (ANYSON-5) in bulk (Laws) - Appellants have claimed the classification under heading 27101990 whereas Revenue has sought them to classify under 27101290 - Held that:- The issue is decided in appellant own case VENUS PETROCHEMICALS (BOMBAY) PVT LTD. VERSUS C.C. KANDLA [2019 (1) TMI 82 - CESTAT AHMEDABAD], where it was held that the product imported by the appellant answers to specifications prescribed under sub heading note 4 and therefore, would fall under the description ‘light oils and preparations’ of sub heading 2710.12. The confiscation of goods upheld but the redemption fine imposed is reduced from ₹ 82,00,000/- (as imposed by the adjudicating authority) to ₹ 40,00,000/- - For various contraventions leading to confiscation of goods appellants have been held liable for penalty under Section 112(a). Ahmedabad Bench has reduced the penalty form ₹ 35,00,000/- (as imposed by the adjudicating authority) to ₹ 25,00,000/- - appeal allowed in part.
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2019 (1) TMI 1288
Penalty on CHA - failure on the part of CHA to discharge his duties - export of goods without receiving authority from his client - Export of prohibited item - Smuggling - Red sanders wrapped in plastic sacks - misdeclaration of imported goods - Held that:- In the instant case the CHA M/s. Evershine Customs (C&F) Pvt. Ltd. has failed to ascertain the identity of the exporter as per provisions of Regulation 11 (n) of Customs Brokers Licensing Regulations, 2013 in as much as proprietor of the exporter M/s. Arihant Logistics is not traceable - Further, the CHA acted on behalf of M/s. Arihant Logistics in customs clearance without having any authorization from his client. Further, they received payment in cash - the CHA having no contract/agreement with the client and without verifying the antecedents and identity of his client provided the services for export of prohibited goods namely Red Sanders. Accordingly, the penalty imposed by the Adjudicating Authority on the CHA (respondent assessee) is upheld - however, the quantum of penalty reduced. Appeal allowed in part.
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Corporate Laws
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2019 (1) TMI 1255
Offense under companies act - - Penalty for wrongful withholding of property - acquiring dominion over the immoveable property - control over the moveable properties of the complainant company lying in the premises though resigned from the Board of directors - offences punishable under Sections 630 of the Companies Act, 1956 and Sections 406/408/441 of Indian Penal Code, 1860 (IPC) - whether a case of “employer-employee” relationship between the complainant company and the first accused can be assumed? Held that:- The first accused Kamlesh Kumar Goel, being a director of the company, would be covered under the description “officer” as used in Section 630 of the Companies Act, 1956 and there is no escape from his accountability to restore and return the property of the company over which he may have had acquired dominion during the period he was associated with it. For the above reasons, the impugned order of the revisional court is found to be wholly erroneous and, thus, must be set aside. At the same time, this court also finds substance in the submissions of the petitioners that the order of summoning passed by the ACMM was also deficient in that in spite of there being sufficient material presented in the pre-summoning inquiry, the summoning order does not cover criminal prosecution for offences of criminal breach of trust or criminal trespass. There is no inhibition in law that if the company seeks prosecution for the offence under Section 630 of the Companies Act, 1956, it cannot invoke the penal provisions under the general law, as provided in the Indian Penal Code, 1860. There is clear evidence adduced in the pre-summoning inquiry indicating that Kamlesh Kumar Goel (the first accused) had acquired dominion over the aforementioned premises of the complainant company on account of he being then a director on its Board. His acquiring dominion over the said immoveable property, and the moveable properties referred to earlier lying therein, initially may have been lawful. But then, they remained property – immoveable and moveables – over which he had no title of his own. They belong to the complainant company. His possession of the premises became unlawful, after he had resigned from the Board of directors, in the wake of which event he was duty bound to restore its possession to the lawful owner. His control over the moveable properties of the complainant company lying in the premises was also in the nature of trust. After he had resigned from the Board of directors he was obliged in law, particularly on demand being made to such effect (as is alleged), to return the said moveable property to its original owner and failure to do so would prima facie constitute the offence of criminal breach of trust. The complainants’ request for summoning order to be passed additionally for offences under Section 408 IPC and 447 IPC should also have been properly construed, considered and granted. The order of the ACMM dated 15.09.2015 declining to pass summoning order for such offences does not set out any reasons worth the name for such disinclination, rendering it vitiated. Thus the petitions are allowed - Order setting aside the summoning order dated 15.09.2015 passed by the ACMM on the criminal complaint of the petitioners is vacated. The order of the ACMM summoning the respondents stands restored with modification to the effect that the respondent Kamlesh Kumar Goel shall also stand summoned additionally on the accusations for offences punishable under Sections 408/447 IPC.
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2019 (1) TMI 1254
Prayer seeking leave to sue under Clause 12 of Letters Patent - whether Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) is attracted? - Duties of resolution profession (RP) - RP Locus standi, authority or power to initiate proceedings assailing the foreign decree of UK Court Held that:- It is for the RP to act on behalf of Corporate debtor i.e., RIPL in this case with third parties and more importantly exercise rights for the benefit of the corporate debtor (second defendant i.e, RIPL in this case) in judicial proceedings. In other words, proposed plaint, which according to the plaintiff is said to be for the benefit of the Corporate Debtor, is a right, which at the highest can be exercised by RP and none else in the light of a conjoint and harmonious reading of Sections 14(1)(a) and 25(2)(b) of IB Code. It is open for RP to initiate suitable proceedings assailing the UK Judgment / decree in tune with the view of NCLAT. In the light of Section 14(1)(a) of IB Code, institution of this suit is prohibited until corporate insolvency resolution process under the IB Code is completed. Though the suit has been styled as a ‘derivative action’, this Commercial Division is unable to accept that the intended suit qua proposed plaint is a derivative action - notwithstanding my conclusion that the intended suit is not a derivative action qua second defendant company, this Commercial Division proceeds with the discussion and deliberation in this regard. the stated position of RP that she does not have locus standi, authority or power to initiate proceedings assailing the foreign decree of UK Court in the light of Section 28 of IB Code and Regulation 25 of IB Code Regulations, is unacceptable. In other words, it is made clear that if the RP were to assail the foreign decree of the UK Court, it will be pursuant to her duty under Section 25(2)(b) of IB Code, which has nothing to do with Section 28 or Regulation 25 of IB Code Regulations. In this regard, it is necessary to mention that this Commercial Division has noticed that there is no mention about Section 25 in the four page counter affidavit of RP dated 27.10.2018 spanning 8 paragraphs. Whether RP can initiate a suit in this Commercial Division assailing the foreign decree of the UK Court in the instant case? - It is the considered view of this Commercial Division that the term/expression 'third parties' occurring in Section 25(2)(b) of IB Code is only to enable RP to interact with any or every other entity on behalf of the corporate debtor without being challenged that the RP does not have statutory backing to do so. As an illustration, if the RP were to take up an issue with a Nationalized Bank on behalf of a corporate debtor, the Nationalized Bank may take the position that it is under no obligation to interact with the RP or interact with the RP as RP does not have legislative backing to embark upon such an action though the RP may have been appointed by NCLT, which is a statutory body. Legislature in its wisdom has brought in the expression ‘third parties’ and built it into Section 25(2)(b) of IB Code as part of adoption of UNCITRAL legislative guide of insolvency, which is the bedrock on which IB Code has been built. As a necessary corollary and inevitable sequitur that RP can act on behalf of corporate debtor against any one. When such an action on behalf of Corporate Debtor runs into the interest of the financial creditor, it necessarily is an issue which has to be looked into, dealt with and decided by NCLT by applying the IB Code. In this regard Section 63 of IB Code kicks in. Once NCLT comes to the conclusion that such a suit has to be filed by RP, the scenario shifts to this Commercial Division without being hit by Section 63 (as rightly held by NCLAT). It is clarified that NCLT will not have to decide about actions of RP in cases where the suit is not against the financial or operational creditor. this Commercial Division deems it appropriate to leave it open to the corporate debtor to assail the stand of the RP that she does not have the locus standi, authority or power to challenge or initiate proceedings before a Court. This can be done by the corporate debtor by taking resort to Section 60(5) of the IB Code. To be noted, the corporate debtor in the instant case is no stranger to Section 60(5) of IB Code, as the corporate debtor has already filed a petition under Section 60(5) being MA 404 of 2018 with regard to the question as to whether guarantee given by RIPL is limited to a particular quantum. This suit is held to be not maintainable, but reserving the rights of corporate debtor (second defendant) to approach NCLT under Section 60(5) of IB Code and further reserving the right of Resolution Professional to file a suit on the same ground with regard to the same issue if the NCLT permits the Resolution Professional to do so.
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2019 (1) TMI 1253
Scheme of Amalgamation - approval of the Scheme of Arrangement - Held that:- Considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, Income Tax Department and the Department of Telecommunication, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 & 232 of the Companies Act, 2013. The Petitioners shall however remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners.
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Insolvency & Bankruptcy
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2019 (1) TMI 1252
Initiation of Corporate Insolvency Resolution Process - pre-existence of a dispute - Held that:- In the present case notice under Section 8 was duly replied within the period prescribed by bringing to the notice of the operational creditor the existence of dispute. There is substance and plausible contention in the replies and notices of the respondent, which necessitates investigation. In fact, the claim of loss and the prayer for its recovery are sub-judice in a court of law. The provisions of Section 9 (5) (ii) (d) of the Code clearly mandates that Adjudicating Authority shall reject the application when notice of dispute has been received by the applicant operational creditor. In the line of aforesaid provisions of the Code held that the moment there is existence of a dispute the operational creditor gets out of the clutches of the Code. For the reasons stated above the application fails and therefore the same is rejected.
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2019 (1) TMI 1251
Initiation of ‘Corporate Insolvency Resolution Process’ - Scheme of Arrangement for Amalgamation sanctioned - proceeding relating to insolvency resolution process was initiated fraudulently in collusion or with malicious intent - Held that:- ‘Dome-Bell Electronics India Pvt. Ltd.’ Pledged 44,38,400 equity shares in ‘Videocon D2H Limited’ and also executed a corporate guarantee by way of further security. He has referred to order dated 27th July, 2017 passed by the National Company Law Tribunal, Mumbai, sanctioning the Scheme of Arrangement for Amalgamation of ‘Videocon D2H Ltd.’ into and with ‘Dish TV India Ltd.’ Due to defaults in repayment of the debentures, the debenture trustee sent a demand notice to ‘Hindustan Oil Ventures Limited’ on 20th December, 2017. All those facts were brought on record but the Appellant has failed to suggest that an application under Section 7 was filed by ‘Invex Private Limited’ fraudulently or with malicious intent, for the purpose of rejecting the application or for imposing penalty under Section 65 of the ‘I&B Code’. Thus in absence of any merit, no relief can be granted. The appeal is dismissed.
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2019 (1) TMI 1250
Corporate insolvency process - existence of financial debt - Held that:- Debt is to be qualified as “Financial Debt” as defined under section 5(8) of Insolvency & Bankruptcy Code, 2016. As a result, the Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Since this is a Petition of “Financial Creditor”, therefore, the Insolvency Process shall commence as prescribed under Section 7 of IBC, 2016. The occurrence of “default” is established. The Financial Debtor had failed to pay the amounts due. Having considered the totality of the facts and circumstances mentioned above that the Debt in question is a ‘Financial Debt’ and that the occurrence of ‘default’ is recognized, hence considering the state of affairs mentioned supra the Petition under consideration deserves to be “Admitted”. The Petitioner/Financial Creditor has proposed the name of the IRP has furnished the requisite Certificate on Form No.2 that no Disciplinary Proceedings is pending. On due consideration, the proposal of appointment of the IRP is hereby confirmed. Upon Admission of the Application and Declaration of “Moratorium” the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of the Code. The appointed IRP shall perform the duties as an Interim Resolution professional as defined under section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench.
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PMLA
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2019 (1) TMI 1249
Offence under PMLA - provisional attachments - property purchased as proceeds from crime - inter-se dispute between the two brothers - Held that:- Whatever property Shri Nilesh J. Thakur has purchased on behalf of SPCL or invested money for himself and his associate group of company, the said money is invested by Nilesh Thakur which is received from SPCL. There is no direct or indirect evidence available on the record that SPCL has ever taken the favour of the position of Nitish J. Thakur. No doubt, it appears that there is inter-se dispute between the two brothers. Nitish J. Thakur has been making statements against the SPCL also but from the record, it appears that it was merely the allegation raised by Mr. Nitish J. Thakur in order to save his skin from the various authorities initiated against him, but the fact remains that the entire money is owned by SPCL. The inter-se dispute between two brothers cannot be decided in the present cases. Similarly, the inter-se dispute between the Nilesh J. Thakur and Kalyani Education Pvt. Ltd. and the connected matters, the same can only be determined in other forum in accordance with law. The scope of these cases is very limited as to whether the amount paid by SPCL to Nilesh J. Thakur is tainted amount or it is a proceed of crime. No such evidence is available on record. Even Mr. Atri admits that it is a clean money and is not a proceed of crime and no case is made out against SPCL for prevention of money laundering. There is not even prima-facie evidence produced by the Respondent No. 1 in order to show that the subject properties are proceeds of crime and are liable to be attached under the provisions of the Prevention of Money Laundering Act 2002. The question of money laundering does not arise in the present case. Subject matter is a civil dispute. It has already been decided by the Bombay High Court by passing the Decree. No hindrance of any nature is necessary on the part of ED to frustrate the decree.
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Service Tax
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2019 (1) TMI 1293
Jurisdiction to arrest a person - default in service tax - whether the power of arrest under Section 91 of the Finance Act, 1994 can be exercised without following the procedure as set out in Section 73A(3) and (4) of the said Act? - Held that:- The High Court has decided, after detailed discussion, that it is mandatory to follow the procedure contained in Section 73A(3) and (4) of the said Act before going ahead with the arrest of a person under Sections 90 and 91 - there are no reasons to deviate from such conclusion - appeal dismissed.
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2019 (1) TMI 1248
Liability of service tax - whether in a contract for re-treading of tyres, service tax is leviable on the total amount charged for re-treading including the value of the materials/goods that have been used and sold in the execution of the contract? - Held that:- The Hon ble Apex Court in SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [2017 (1) TMI 1110 - SUPREME COURT] has upheld the service component at 30% and has held that it is the service component comprising of 30%, which is exigible - In that view of the matter, the order in Original case has been passed without noticing the law laid down by the Hon ble Apex Court and in the considered opinion of this Court it is not sustainable and the Original Authority is required to pass appropriate orders after taking into consideration the law laid down by the Hon ble Apex Court - the writ petition is partly allowed. Matter is remitted back to the Original Authority for reconsideration - appeal allowed by way of remand.
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2019 (1) TMI 1247
Principles of Natural Justice - Commissioner (A) has rejected the appeal of the appellant ex parte without giving any findings on merits - CENVAT Credit - certain common input services which were used for both manufactured goods and traded goods - Rule 6(3) of the CENVAT Credit Rules, 2004 read with Rule 6(1) of the said CENVAT Credit Rules, 2004 - Held that:- The impugned order passed by the Commissioner (A) has not considered any of the grounds raised by the appellant in his grounds of appeal along with various case laws relied upon by the appellant. Since the impugned order is passed ex parte and that too not on merits, therefore, the impugned order is set aside and case remanded back to the Commissioner (A) with a direction to decide the appeal on merit after following the principles of natural justice and after giving an opportunity to the appellants for producing the documents - appeal allowed by way of remand.
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2019 (1) TMI 1246
CENVAT Credit - input services - rent-a-cab service - scope of exclusion part of the definition of ‘input service’ under Rule 2(l) of Cenvat Credit Rules, 2004 - Held that:- Tribunal in the case of Marvel Vinyls Ltd. Vs. CCE, Indore [2016 (11) TMI 1126 - CESTAT NEW DELHI] has considered the issue after the amendment in the definition of ‘input service’ after 01.04.2011 and the Tribunal in this case has held that, the motor vehicle will always be a capital goods or otherwise for the person who is providing the services. For service provider falling under the category of renting of motor vehicle the motor vehicle would always be a capital goods. Denying the cenvat credit on rent-a-cab service is not sustainable - Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1245
CENVAT Credit - input service distributor - credit on the strength of invoices which were neither issued in the name of the appellant nor addressed to the registered premises of the appellant nor even appearing the service tax registration of the appellant - Held that:- Tribunal Mumbai in Pipavav Shipyard Limited Vs. CCE & ST Bhavnagar [2015 (8) TMI 58 - CESTAT AHMEDABAD] has held that there is no reason to deny the credit on the ground that the address of ISD was not mentioned in the invoice - Once there is no dispute with regard to the service tax paid the insufficient particulars in the invoice cannot be the ground to deny the credit. Otherwise also, the law has been settled that a substantive benefit cannot be denied due to procedural/ technical infirmity - appellant is entitled to cenvat credit distributing it to the units as received on the basis of the invoices issued in the name of the appellant but addressed to the unit to which services were provided. Liability of service tax - leasing of manufacturing facilities etc. - Held that:- It is apparent from record that panEra is an associate company and the payment transactions are made by the book adjustments. Commissioner(Appeals) has wrongly applied Rule 6(4A) as it is applicable only when the assessee for any reason is unable to correctly estimate on the date of deposit the actual amount payable for any particular month or quarter. This is not the fact for the present Appeal - Herein the appellant had received the payment (on books) however the services for the quarter Oct to Dec 2009 were not provided by the appellant. Thus, the findings of the Commissioner invoking Rule 6(4A) are apparently erroneous. Also the finding that Rule 6(3) would have been applicable had the agreement would be terminated is also patently wrong finding and as such is liable to be set aside - as per Rule 6(3) STR, the appellant was entitled for the impugned adjustment towards subsequent liability. Refund of CENVAT Credit - Reversal of the amount of cenvat credit in respect of trading activity - Held that:- The statute did not have the definition of trading as service for the period before 01.04.2011. The period involved herein is also prior 2011. Since it was not an exempted service for the impugned period question of applicability of Rule 6 of Cenvat Credit Rules, 2004 i.e. about maintaining a separate accounts for providing taxable service alongwith the trading activity exempted service were not required nor was required any option to be exercised by the appellant for the said period. The reversal of cenvat credit as confirmed is therefore held to be a wrong decision and thus is liable to be set aside. Appellant has deposited the proportionate amount of cenvat credit - Appellant is entitled for refund. CENVAT Credit - outward freights - place of removal - goods of the appellant were removed from factory to Mandoli godown to be stored there for further being transported to the distributors or the dealers - Held that:- Though the godown is the part of the definition of the place of removal but the place of distributor / dealer is not included in the said definition hence the GTA service only be to the Mandoli godown is now service eligible for credit GTA beyond godown is inadmissible for credit. Therefore, that Commissioner(Appeals) has rightly denied the cenvat credit in respect of outward freight - credit rightly denied. Sustainability of service tax paid through cenvat and not in cash in import of service - Held that:- For the present issue admittedly the services received by the appellant are from a company based outside India which is not an associated company of the appellant. In the given set of legal provisions and the given circumstances, the appellant had to discharge his liability under reverse charge mechanism and Section 67(4)(c) of the Act equally applies. Thus, payment could be made by any other mode than cash as is mentioned in 67(4)(c) since payment is made from the amount credited. The same is acceptable - findings of the Commissioner qua this issue are therefore set aside. Short payment of service tax - intellectual property service - Held that:- The Commissioner has ignored the documents, the compilations whereof is provided by the appellant at the stage of personal hearing itself - findings about lack of evidence are therefore not sustainable - the issue is set aside. Liability on the figure of Miscellaneous Income shown in the balance sheet - Held that:- SCN dated 22.10.2009 and 29.09.2010 have been issued by the Department for an amount of ₹ 16,99,562/- and ₹ 9,73,807/- received under R&D income for the period 2008-09 and 2009-10. The demand as confirmed for ₹ 4,07,535/- includes both these amounts as is apparent from the acknowledgment in the SCN - the demand under this Head recoverable from the appellant is only ₹ 97,167/-. The findings of the Commissioner under this issue are therefore partially set aside. Time limitation - Held that:- SCN has been issued after a normal period of one year. The entire decision of Commissioner is based on the finding either of lack of evidence or on the applicability of the provision other than the one relied upon by the appellant - Resultantly, there appears no such evidence of any positive act on part of the appellant to have an intention to evade the tax. Liability has been confirmed on the basis of mere omission to give correct information is not suppression facts unless it was deliberate to stop the payment of duty - the Department was not entitled to invoke the extended period of limitation. Resultantly, the SCN as such is held to be barred by time. Appeal disposed off.
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2019 (1) TMI 1244
100% EOU - Refund of unutilized CENVAT Credit - rejection on the ground that premises has not been registered - input services or not - Air Travel Agent Services - Rent-a-Cab Services - Outdoor Catering Services - Guest House Services - Clearing and Forwarding Agent Services - non-production of invoices. Non-production of invoices - Held that:- Appellant are not contesting the rejection of refund to the tune of ₹ 2,80,582/- with regard to the non-production of invoices. The said rejection is therefore upheld. Rejection on the ground that premises has not been registered - Held that:- Subsequently, the appellants have obtained registration for all premises. The jurisdictional High Court in the case of M/s. Visual Graphics Computing Services India (P) Ltd. [2018 (7) TMI 1394 - MADRAS HIGH COURT] had held that refund cannot be rejected - the rejection of refund on the ground that the premises is not registered cannot sustain. Input services - period prior to 01.04.2011 - Air Travel Agent Services - Rent-a-Cab Services - Outdoor Catering Services - Guest House Services - Clearing and Forwarding Agent Services - Held that:- The definition of “input services” during the said period had a wide ambit as it included the terms “activities relating to business” - the rejection of refund claim on these services is unjustified. Appeal allowed in part.
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2019 (1) TMI 1243
Export of services or not - Business Auxiliary services - appellants are a General Sales Agency (GSA) for a number of foreign airlines for passenger and / or cargo and received Overriding Commission (ORC) in Indian currency - export of services or not - Held that:- The issue in dispute is fully covered by the ratio of the decision of this very Bench in Arafaath Travels Pvt. Ltd. [2017 (8) TMI 554 - CESTAT CHENNAI], where it was held that ORC amounts received from foreign airlines even if it be Indian currency will have to be treated as Export of Service and therefore would not be exigible to service tax liability - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1242
Reverse Charge Mechanism - consultancy services received from abroad - payment made by appellant to the consultants situated abroad during the period 1.7.2003 to 31.03.2008 - Held that:- Prior to 18.04.2006, the law is now clearly settled, that no service tax liability arises on the assessee under reverse charge mechanism for the payments made to foreign entities who render services to assessee - service tax liability, interest thereof and penalties imposed for the payments made to foreign consultants prior to 18.04.2006 is not sustainable and liable to be set aside. Service tax liability post 18.04.2006 - Held that:- The provisions of Section 66A of the Finance Act, 1994 are very clear and unambiguous in the case in hand, post 18.04.2006 the service tax liability needs to be discharged by the appellant as per the provisions of law - appellant had discharged the tax liability and on our direction, has also discharged the interest on 14.01.201 - the tax confirmation along with interest upheld. Penalty - Held that:- Appellant being a Government undertaking, would have been under the bonafide impression that tax liability may not arise. It is also to be noted that during the period in question, the law was in a flux situation, inasmuch as various litigations were pending before various Courts and the matter was settled by Hon’ble High Court of Bombay and Apex Court in 2009 - appellant has made out a case for setting aside of the penalties - penalty set aside by invoking section 80. Appeal allowed in part.
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2019 (1) TMI 1241
Refund of CENVAT Credit - export of output service - rejection on the ground that the applicant /appellant has failed to fulfil the condition of the Notification No.27/2012 dated 18.06.2012, for the reason that the details of the Cenvat Credit were not appearing in the ST-3 Return for the period October, 2015 to December 2015 and no concrete evidence was submitted with the claim that cenvat credit is available to them - Held that:- What is to be determined to ascertain the eligibility of refund, is the balance of credit lying with the assessee, as on the last date of quarter as well as on the date of filing of the refund. To check the balance lying with the assessee the relevant documents are the accounts of the assessee in the form of balance sheets, bills & invoices. Though whatever balance is being shown in the accounts of the assessee has to find mention in the ST-3 but due to the said documents being the basis of ST-3 as far as the amounts shown therein as balance is concerned, I am of the opinion that ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter, as is held by the adjudicating authority below. It is apparent from the record that the appellant herein, after it came to his notice that ST-3 return for the impugned period is showing ‘Nil’ balance, had requested the Department vide their letter dated 28.12.2016 and subsequently vide letter dated 16.01.2017 to permit the submission of revised ST-3 return for the impugned period so as to rectify the mistake of cenvat credit figures, but the same has been denied by the Department - In the present case, the ST -3 is showing nil balance, whereas the voluminous documents of the appellant are showing the balance of ₹ 6,43,603/- lying in the account for the impugned period. In such circumstances, Rule 7 B is merely procedural in nature. ST-3 return as the sole document to verify the balance - Held that:- The mistake in ST-3 return was a rectifiable mistake - This Tribunal in the case of Serco Global Services Pvt. Ltd. vs. Commissioner of Central Excise, Delhi-III [2015 (6) TMI 270 - CESTAT NEW DELHI] has held that even if ST-3 return for a particular period do not show any unutilized balance of cenvat credit, the refund still is to be granted on the basis of cenvat credit available in cenvat credit account and not on the basis of closing balance of cenvat credit shown in ST-3 return. The findings of Commissioner (Appeals) are held to lack the appreciation of all the documents as were relied upon by the appellant and based whereupon revision of ST-3 return inadvertently showing balance as nil, was proposed - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1240
CENVAT Credit - appellant availed cenvat credit on various input services , capital goods which were used for providing taxable services as well as exempted services - non-maintenance of separate records - it was also alleged that appellant have utilized credit in excess of 20% of the service tax paid in contravention of Rule 6(3)(c)of the Cenvat Credit Rules 2004. Held that:- Undisputedly, for the period prior to 01.6.2007 the appellant had provided exempted services, namely International roaming charges and interconnect user charges which were exempted from payment of service tax. Since they have used common input services, in providing both taxable as well as exempted services and failed to maintain separate accounts of the said use, the restriction prescribed under Rule 6(3)(c) of Cenvat Credit Rules, 2004 is applicable - It is also an admitted fact that during the relevant period i.e. October 2004 to May 2007, the appellant in certain calendar months utilized excess of the prescribed limit of 20% of Cenvat Credit available, in discharging the service tax liability for that month. Whether Overall utilization of cenvat credit in a financial year ought to be taken into account, for applying the limit of 20% prescribed under Rule 6(3)(c) of the Cenvat Credit Rules,2004 instead of utilisation on month to month basis? - Held that:- On a plain reading of the said provision, it is clear that in case of provider of output service who does not comply with Sub9 rule(2) of Rule 6 of Cenvat Credit Rules, 2004, the procedure required to be followed is prescribed at sub-rule (3) of Rule 6 of CCR, 2004; and under the said rule a restriction on utilization of the amount of Cenvat Credit available is prescribed and it is limited to 20% in discharging the tax liability on the output service. There has been no other provision under the Cenvat Credit Rules about the method, manner or frequency of payment of service tax on taxable output service and also utilisation of cenvat credit. Therefore, the point of time of its utilization and the restriction on utilization of credit should be read harmoniously along with Rules framed under Finance Act 1994, so far as it relates to discharge of service tax liability. Reading both the Rules, that is, Rule 6(3)(c) of CCR, 2004 and Rule 6(1) of Service Tax Rules, 1994, it can safely be inferred that at the time of discharging monthly service tax liability of output service provided, the assessee cannot utilize CENVAT credit more than 20% available in their Books of Accounts. It cannot be at their whims and pleasure to utilize more than 20% of the available credit in one month on the ground that in the previous month they have utilised less than 20% of the credit in discharging their tax liability, even though such credit was available to them. The appellant would be required to discharge interest on the excess utilization of the cenvat credit in a particular month at the applicable rate - there is no justification in imposing penalty or directing recovery of the credit, since the said Clause (c) of Rule 6(3) of Cenvat Credit Rules,2004 restricts utilization of credit to the extent of 20% and not on availing of cenvat credit. The matter is remanded to the adjudicating authority only for the limited purpose to calculate the amount of interest payable by the appellant for excess of the utilization of cenvat credit in a particular month i.e. on month to month basis for the entire period in question - appeal allowed by way of remand.
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2019 (1) TMI 1239
CENVAT Credit - input services - hiring of vehicles and rent-a-cab services - Held that:- The issue has been considered by the Hon’ble Tribunal in the case of Marvel Vinyls Ltd. Vs. CCE, Indore [2016 (11) TMI 1126 - CESTAT NEW DELHI] wherein the Tribunal held that the cenvat credit on car rental is available as input service credit for the service receiver if the cars are capital goods for the car rental service provider - the impugned order denying the cenvat credit on rent-a-cab service is not sustainable in law. Demand of interest of ₹ 77,256/- - Held that:- The same is confirmed as fairly conceded by the counsel for the appellant. Appeal allowed in part.
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2019 (1) TMI 1238
Maintainability of appeal - appeal was dismissed on the ground of time bar holding that the appeal before the Commissioner was filed beyond prescribed period - non-service of order-in-original - Held that:- In the impugned order, the Ld. Commissioner (A) has not considered at all the submissions made by the appellant in their application seeking Condonation of Delay in filing the appeal before him - Further, when the appellant’s accounts were freezed on the basis of Order-in-Original then they came to know about the said order and thereafter, they moved an application for obtaining the order which is alleged to have been served on them on 30.01.2017 but there is no proof of the said service - Further, even the adjudication order was passed without giving sufficient opportunity to the appellant to put up their defence. Matter remanded to the Commissioner (A) to decide the appeal on merits - appeal allowed by way of remand.
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2019 (1) TMI 1237
Refund of accumulated and unutilized CENVAT credit - input services used to provide output services which were exported - import of service under Reverse Charge Mechanism - refund denied on the ground that appellant is not eligible to avail CENVAT credit on service tax paid on import of services under Reverse Charge Mechanism and payment of service tax has been made in the subsequent quarter - applicability of Rule 9(1)(bb) of the CENVAT Credit Rules - Held that:- In the present case, the appellant has availed CENVAT credit of service tax paid on import of services under the reverse charge mechanism on the basis of ST challans in accordance with the provisions of Rule 9(1)(e) which allows the assessee to take CENVAT credit on the basis of challan in case of reverse charge mechanism - Both the authorities have wrongly denied the CENVAT credit by invoking Rule 9(1)(bb) which is not applicable in the present case. Tribunal in the case of Polygenta Technology Ltd. [2018 (2) TMI 804 - CESTAT, MUMBAI], the Mumbai Bench of CESTAT on an identical facts has held that The appellant is paying service tax on reverse charge basis in terms of Rule 2(1)(d) of Service Tax Rules, 1994 and therefore credit can be availed in terms of Rule 9(i)(e) of CCR. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1236
Classification of services - Management, Maintenance or Repair service or otherwise? - appellants had entered into an agreement with various clients like M/s.Thermax India Ltd., Tidel Park, JCT, Tamil Nadu Petroleum Ltd. etc for operation and maintenance of power plants - Department was of the view that charges collected on operation of the plants have got nexus with the Management, Maintenance or Repair of Power Plants and above charges are liable to service tax w.e.f. 16.06.2005 under MMRS - Held that:- The issue as to whether activity of production of electricity in power plant would amount to management of immovable property or otherwise, has been analyzed and discussed by this Bench in the case of Shapoorji Pallonji Infrastructure [2017 (6) TMI 225 - CESTAT CHENNAI] and held in favor of assessee. It was held in the case that management of immovable property does not include operation activities. In addition, it cannot be said that the appellants are doing management service for the reason that the management service is done by appellants to themselves and not to any other person. The appellants are operating the power plant to generate electricity on behalf of the owner for supplying the same to TNEB. Impugned order do not sustain - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1235
Imposition of penalty - Late payment of service tax - Supply of Tangible Goods Service - appellants have pointed out that the delay in discharging service tax liability was only due to Poompurhar disputing the applicability of service tax on the grounds that they were a government owned company - Held that:- SCN mentions that though the assessee obtained service tax registration on 11.7.2008 and had raised invoices on service receiver by charging service tax separately, however they did not pay service tax liability. From perusal of the correspondence submitted by appellant between them and Poompuhar clearly shows to indicate that there was considerable resistance from the latter for paying up the service tax component of the invoices raised by the appellant. It was only vide their letter dt. 25.03.2009 that Poompuhar, finally agreed to process and release service tax payments w.e.f. 16.05.2008 on certain conditions. However, there was still further correspondence on this very dispute even till April 2009. There is reasonable cause for appellant in their failure to discharge tax liability when it was due. In any case, the amount of ₹ 7 crores appropriated by the adjudicating authority is more enough to cover the interest liability that would accrue due to late payment - appellants are entitled to get waiver from penalty under Section 80 ibid - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1234
Broad Casting Services - appellant is earning revenue through SMS from cellular phone operators like M/s Reliance Cellular, Airtel, Hutch, Idea, BSNL - It is the case of the Revenue appellant is broadcasting running scroll at the bottom of the television screen which would fall under the category of broadcasting services - Held that:- It can be seen that the taxable services which is contemplated in the provisions, is that broadcasting services would mean that said services needs to be rendered to a client, by a broadcasting agency or organization in relation to broadcasting, in any manner. In the case in hand, the appellant herein is not rendering any services to individuals who pay for SMS sent by them to telephone service providers - In the case in hand, the television service providers are only scrolling the numbers on which SMS needs to be sent and get paid from telephone services providers. The appellant has a case on limitation also in as much that the audit was conducted by the appellant premises, result was conveyed to the appellant by a letter dated 08.06.2007 indicating this point as one of the objections was raised by the audit party - the show cause notice was issued on 12.12.2008 despite the audit. On limitation also, the appeal succeeds. On merits as well as on limitation, the appeal succeeds - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1233
Works contract services - composite works contract - the appellant claimed that their contracts are in the nature of works contracts which cannot be vivisected to demand service tax on one portion of the contract - extended period of limitation - Held that:- It is not in dispute that the nature of services rendered by the appellant is ‘works contract services’. The specific nature of the activities undertaken by the appellant are not clearly brought out in the show cause notice but were put up by the learned counsel - It has been held by the Hon’ble Apex Court in the case of Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT] that composite works contracts are not exigible to service tax prior to 01.06.2007. The appellant is not liable to pay service tax on such contracts during the relevant period - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1232
Penalty u/s 78 of FA - Failure to take registration - non-payment of service tax - appellant registered as a provider of ‘goods transport agency service’, had, under a contractual agreement with M/s Kudremukh Iron Ore Co Ltd, been acting for the latter in the sale of ‘pig iron’ manufactured by them - classification of services in dispute - Held that:- The appellant had discharged tax liability and interest in full; there was even an excess deposit owing to the benefit of cum-tax computation which the original authority appropriated towards the penalties. The activity of the appellant, as intermediary between M/s Kudremukh Iron Ore Co Ltd and the buyer of ‘pig iron’, was admitted to be classified as ‘clearing and forwarding’ liable to tax under section 65 (105) (j) of Finance Act, 1994 - The straddling of the intermediary between two different services is indicative of the difficulties in specifying the object of taxation. In the circumstances, and in the absence of any evidence of suppression or mis-declaration on the part of appellant, we conclude that the ingredients for invoking section 78 of Finance Act, 1994 does not exist. Penalty u/s 78 set aside - appeal allowed.
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2019 (1) TMI 1231
GTA Service - proprietary concern or partnership firm - it was alleged that appellants are required to discharge service tax liability in respect of services from GTA as they were a partnership firm - Held that:- While there is an allegation that appellants are a partnership firm no cognizance has been accorded to the proof adduced by them. Ld. Consultant has also submitted that even the registration certificate has been issued to the assessee as a proprietary concern - the appellant is not required to discharge tax liability under GTA. Reliance placed in the case of ANDAL MOTORS VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [2017 (9) TMI 1328 - CESTAT CHENNAI], where in a similar situation, it was held that Being a proprietary concern, the appellant as a consignee of GTA services will not fall under the category of corporation, society or cooperative society. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1230
Refund the service tax paid under GTA service - after paying the service tax, later, they were of the opinion that no service tax has to be paid on the freight incurred by M/s. Shiva Cargo Movers Ltd. as the transporter does not qualify as Goods Transport Agency - refund claim was rejected holding that the tax paid is in order and that there is no ground for granting refund - Held that:- The transporter who is entrusted with the duty of transporting the goods of another and who has to issue consignment note or such other documents evidencing the transportation of the goods will fall under the category of GTA as provided under section 65(50b) of the Finance Act, 1994 - In the instant case, M/s. Shiva Cargo Movers Ltd. provides services of transporting of the goods by the appellant in their vehicles by road and also issues documents for evidencing such transport. M/s. Shiva Cargo Movers Ltd. are not owners of the goods. In Commissioner of Central Excise, Guntur Vs. Chebrolu Agro Pvt. Ltd. [2017 (6) TMI 1248 - CESTAT HYDERABAD], it was observed that when tobacco is transported by private truck operators, and even though no consignment note is issued, the assessee being recipient of services is liable to pay service tax. The service tax discharged by the appellant is in order - appellants are therefore not entitled to refund - appeal dismissed - decided against appellant.
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Central Excise
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2019 (1) TMI 1229
Clandestine removal - Pipes - demand is based upon the diaries and estimate titled loose papers seized from the factory premises of the Appellant - demand also based on statements of partner and buyers - section 9D of CEA - Held that:- The clearances accepted by the said two buyers were not coming out from their own records or documents and mere statements have been recorded. The clearance value sheet appended to their statement only has amount and date details without name of goods or date/ quantity of clearance of goods. It is not forthcoming from any record as to what such amounts represent or what were the goods and their quantity and when the same were cleared. It is coupled with the fact that both the alleged consignees have refused their statements. Shri Kishorebhai has retracted his statement and Alpeshbhai’s statement and letter stands disputed. There is no independent evidence of manufacture and clearance of goods from the factory of Appellant. Merely on the basis of entries is diaries/ loose sheets which do not have name and quantity of goods apart from the fact that the buyers whose statements were relied upon has negated their statement, the demand does not sustain. Even the statement of the alleged buyers Shri Kishorebhai Mavjibhai Medpara Proprietor of Ms/ Shreenathji Pipe, Shri Dipeshbhai Pravinbhai Nanavati, authorized signatory of M/s Nanavati & Co are not corroborated by any independent corroborative evidence. None of their records, showing the receipt of goods alleged to have been cleared clandestinely, has been relied upon. Moreover it is a third party statement which cannot be relied upon in absence of corroboration - merely on the basis of recovery of exercise note books and certain balance sheets maintained by the assessee and in the absence of any corroborative evidence, the demand cannot be made. In absence of any corroborative evidence, of a tangible nature, clandestine removal cannot be established. Unless there is clinching evidence on the nature of purchase of raw material, use of electricity, sale and mode of flow back of funds, demands cannot be confirmed solely on the basis of diary or loose sheets. Demand set aside - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1228
Refund of excess Excise duty paid - unjust enrichment - finalization of provisional assessment - Section 11B of the Central Excise Act - Revenue has argued that even in the case of provisional assessment finalization, refund can be granted only subject to the test of unjust enrichment - Held that:- This issue is no more res integra and has been settled by various decisions of the Tribunal wherein it has been consistently held that in a case of provisional assessment, doctrine of unjust enrichment is not applicable. Reliance placed in appellant own case C.C.,C.E. & S. T- MYSORE VERSUS JK TYRE & INDUSTRIES LTD., VIKRANT TYRES LTD. [2018 (6) TMI 174 - CESTAT BANGALORE], where it was held that adjustments at the time of finalization of provisional assessments would be permissible without putting the excess duty paid to the test of unjust enrichment. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1227
CENVAT Credit - input services - Courier Agency Service/Goods Transport Agency Service for outward transportation of the finished goods for delivery at the customer’s premises - place of removal - Held that:- The issue arising out of the present appeals is no more open of any debate, in view of the judgment of Hon’ble Supreme Court in the case of Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], wherein the law is well settled that service tax paid on GTA service availed for transport of goods from place of removal to buyer’s premises is not admissible for Cenvat benefit - credit cannot be allowed - appeal dismissed - decided against Revenue.
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2019 (1) TMI 1226
Demand of Interest and penalty - excess availment of CENVAT Credit - excess availed CENVAT Credit reversed prior to its utilisation - removal of inputs as such - Held that:- It is not in dispute that the inputs which were received by the appellant and on which they have taken CENVAT Credit in the first place were for use in manufacture of the final products by the appellant. Therefore, at that stage, it cannot be said that the credit has been wrongly availed. It would have been a different case if they are availed CENVAT Credit on some inputs on which they could not have availed CENVAT credit at all. Such case would have been squarely covered under Rule 14 and Rule 15. The inputs are used for the purposes other than manufacture, without maintaining separate accounts for such inputs but after reversing, a proportionate amount of CENVAT Credit availed on them and this cannot be considered as removal of inputs as such. the term (factory or premises) does not appear to have been defined in this sub rule. Therefore, all that can be concluded is that if inputs on which credit has been taken or removed for other than the purposes for which credit was taken, proportionate amount of CENVAT Credit needs to be reversed. It is undisputed that the appellant in this case has done so. Under these circumstances, it is hard to say that the reversal of CENVAT Credit under Rule 3(5) by the appellant of the proportionate amount of credit taken on the inputs used for purposes other than the manufacture, amounts to incorrect availment of CENVAT Credit, as conceived under Rule 14 of CCR 2004. The amount of credit reversed by the appellant on their own is a reversal under Rule 3(5) of CCR 2004 and not a wrong availment of input credit as contemplated in Rule 14 of CCR 2004 - the demand of interest under Rule 14 and imposition of penalty under Rule 15 in the particular factual matrix, not sustainable and need to be set aside. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1225
Clandestine removal - SSI Exemption - no evidence produced by Revenue to prove clandestine activities - Held that:- The Revenue has not advanced any further evidence to show the clandestine activities of the respondents. It is well settled law that clandestine removal allegations are required to be established by sufficient and positive evidence and the same cannot be upheld on the basis of surmises and conjecture - demand cannot be upheld - appeal dismissed - decided against Revenue.
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2019 (1) TMI 1224
Penalty - it was alleged that the adjudicating authority has levied the penalty on the appellant without issue of show-cause notice and also without providing an opportunity of hearing - principles of natural justice - Held that:- On certain occasion there was a delay in filing the return by the appellant as the appellant was unaware of the requirement of ER-1 returns under the mistaken belief that they were not required to file the same as they were not liable to pay the excise duty on account of the exemption - Further the Superintendent vide the Demand Order dated 21.03.2016 has imposed the penalty for delayed filing of the ER-1 returns without affording an opportunity of hearing and without issuing a show-cause notice which is a mandatory requirement for imposing any penalty. Further the Commissioner (Appeals) has also not considered the violation of the principles of natural justice. The observation of the Superintendent in the Demand Notice that there is no need to pass a speaking order is not tenable in law - the impugned order imposing penalties for late filing the ER-1 return is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1223
CENVAT Credit - Scope of SCN - manufacturing of exempted goods as well as dutiable goods - Rule 6 (1), (2) and (3) of the CENVAT Credit Rules 2004 - denial on the ground that the biscuits which were cleared for export are exempted if they are cleared locally - Scope of SCN - Held that:- The impugned order has traversed beyond the allegations in the show-cause notice, wherein the adjudicating authority was directed for further consequential action under Rule 5 of CENVAT Credit Rules 2004. This part of the order of the adjudicating authority is clearly beyond the scope of the show-cause notice as these were the reasons given for seeking rejection of refund claims. The provisions of Rule 3 (4), will apply in favour of the appellant which discusses about the eligibility to avail CENVAT credit on capital goods if they are used for manufacturing of dutiable as well as exempted goods - Appeal disposed off.
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2019 (1) TMI 1222
Principles of natural justice - evidentiary value of statements that were not validated by cross-examination - first appellate authority discarded the findings in entirety without going into the merit of the conclusions drawn by the original authority - Held that:- It would appear that some of the evidences relied upon by the original authority may not have had any bearing in determining the outcome. A decision of the first appellate authority, in the light of the judgement in re Lampo Computers (P) Ltd, [2014 (4) TMI 1032 - KARNATAKA HIGH COURT] would require enumeration of evidence and the validity of each in having a bearing on the culpability of the appellants. If such was not available, the matter could be resolved only by remand to the original authority. The first appellate authority was, however, not vested with the jurisdiction to do so. Nevertheless, that essential requirement having escaped scrutiny in the decision of the original authority, we propose to remedy that lack of jurisidiction to enable examination of the merits of the submission on substantive grounds. Matter remanded back to the original authority for issue of a fresh order after complying with the principles of natural justice and in conformity with the provisions of law relating to testing of statements - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (1) TMI 1221
Stay on demand of balance part (70%) of the adjudged amount of tax, interest and penalty which arises pursuant to the order impugned order in these appeals - Counsel for the appellant submits that the Bank Guarantees shall be kept alive till the disposal of these appeals - Held that:- His statement is accepted. In the circumstances, during the pendency of these appeals, the demands impugned in these appeals shall remain stayed - application disposed off.
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2019 (1) TMI 1220
Validity of orders of assessment - no personal hearing was given to them - principles of natural justice - Held that:- This Court, by order dated 28.04.2015, allowed those writ petitions and set aside the assessment orders with a direction to the Assessing Officer to give an opportunity of personal hearing. Thereafter, the Assessing Officer issued a personal hearing notice to the petitioner on 17.07.2015 and consequently, upon granting such personal hearing, the impugned orders of assessment were passed as early as on 30.09.2015. I do not think that the present challenge before this Court as against the orders of assessment passed as early as on 24.10.2015 can be entertained solely on the reason of delay and latches. If really the petitioner is aggrieved against the said orders, he should have filed either statutory appeal before concerned Appellate Authority or approached this Court and challenge the same immediately after passing the said order. On the other hand, the petitioner has slept over the matter for a long time and thereafter filed these writ petitions only when auction notice was issued against them. So long as the orders of assessment are passed and when the petitioner has not questioned the same immediately, the Assessing Officer cannot be found fault with in issuing the other impugned proceedings viz., the auction notice. The Writ Petitions are dismissed only on the ground of delay and latches - However, as it is contended that the assessment orders were made only on the reason of belated filing of return and that cannot be the reason for denying the eligibility of the petitioner to claim input tax credit, this Court is of the view that all these contentions can be raised before the next fact finding authority viz., the First Appellate Authority by way of filing an appeal - it is open to the petitioner to challenge the orders of assessment before the Appellate Authority, within a period of two weeks from the date of receipt of a copy of this order.
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2019 (1) TMI 1219
Revision of assessment - jurisdiction of 2nd respondent to frame an assessment - Held that:- Admittedly, the 1st respondent is an Enforcement official, whereas the 2nd respondent is the Assessing Authority. Now, the impugned notice is issued by the 2nd respondent making certain proposals for revision of the assessment. Needless to state that the petitioner can raise all his objection before the 2nd respondent by way of filing a reply to the notice of proposal - Without doing so, the petitioner has filed the present writ petition by challenging the proceedings at the notice stage itself. This Court is, thus, not inclined to entertain the writ petition, at this stage, as any expression made by this Court on the contention raised by the petitioner would prejudice further proceedings before the 2nd respondent. This Writ Petition is disposed of by directing the petitioner to give reply to the notice of proposal by raising all the contentions, within a period of two weeks from the date of receipt of a copy of this order.
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2019 (1) TMI 1218
Principles of natural justice - validity of assessment order - the Assessing Officer, apart from not considering the reply submitted by the petitioner to the notices of proposal, has also failed to give an opportunity of personal hearing, when he has chosen to impose penalty - Held that:- The notices issued to the petitioner on 27.09.2018 has only indicated that the petitioner can appear before the Assessing Officer within 15 days from the date of receipt of the said notices. This Court has already found that such course of providing an opportunity of personal hearing is not an effective personal hearing, since such hearing should be done only after receipt of the reply. Thus, the Assessing Officer has failed to provide opportunity of personal hearing to the petitioner. The matter is remitted back to the Assessing Officer to re-do the assessment, after considering the replies already filed by the petitioner and also after providing an opportunity of personal hearing - appeal allowed by way of remand.
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2019 (1) TMI 1217
Maintainability of petition - Validity of Proviso to Section 20 Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991 - Validity of provisions of Rule 18 of Madhya Pradesh Motoryan Karadhan Rules, 1991 - appeals were dismissed by the Appellate Court for want of pre-deposit contemplated vide proviso to Section 20 of the 1991 Act and Rule 18 of Rules 1991 - principle of constructive res judicata. Held that:- True it may be that the petitioner was not a party to the proceedings in Jabalpur Bus Operators Association [1993 (9) TMI 365 - MADHYA PRADESH HIGH COURT], wherein the constitutional validity of the Adhiniyam, 1991 was questioned. However, equally true it is that the challenge to the constitutional validity was by the Bus Operators Association in representative capacity; and it was open for the Association to have ever questioned the validity of proviso to Section 20 of Adhiniyam which lays down pre-deposit conditions. It is not open for the petitioner to question the validity of proviso to section 20 of Adhiniyam, 1991 and the relevant Rule 18 of the Rules. Since we are upholding the validity of proviso to Section 20 of Adhiniyam 1991 and provisions of Rule 18 of the Rules; and since the appeals preferred by the petitioners were dismissed for non-compliance of condition of pre-deposit, we direct that in case the petitioners deposit the amount contemplated in proviso to section 20 of the Adhiniyam, 1991 and Rule 18 of the Rules, within thirty days from the communication of this order, the Appellate Court shall entertain the appeals, and decide them on merits. Petition disposed off.
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