TMI Tax Updates - e-Newsletter
January 7, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Carry forward of the loss - loss as claimed by the assessee treating the same as excess application of loss u/s.11 - set off allowed - AT
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Income Tax:
AO has to satisfy at the time of initiation of penalty proceeding and issuing notice U/s 274 of the Act that whether penalty is for concealed particulars of income or furnishing of inaccurate particulars of income. - AT
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Income Tax:
It will be unjustified to impose penalty u/s 271(1)(c) as the assessee had only committed an undoubtful bona fide error and it certainly had no intention of concealing any income or furnishing inaccurate particulars of income - AT
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Income Tax:
TPA - in the event it is held that aggregation is permissible in the facts of this case, the findings of the Revenue authorities and the Tribunal that the TNMM method was warranted, would not be disturbed. - HC
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Income Tax:
Merely because assessee had claimed expenditure which was not accepted or not acceptable to Revenue that by itself would not attract a penalty u/s 271(1)(c) - AT
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Income Tax:
Disallowance of bad debts - the balance of the parties in assessee’s books were not tallying with the books of the respective parties - here were infirmities in the balance / accounts - claim not allowed - AT
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Income Tax:
Disallowance of deduction u/s. 80P(2)(c) - there is not even a remote link between the interest income earned on deposits with nationalized banks and the activities of the assessee - deduction not allowed - AT
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Income Tax:
Interest income - new source of income - to be taxed as income from other sources and not as business income - AO rightly denied the application of provisions of section 44AF - Further the assessee has not satisfied the conditions of section 57(iii), so interest expenditure is not to be allowed as deduction - AT
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Income Tax:
Interest charged u/s.234B - advance tax - the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the A.O. to that extent - AT
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Customs:
Classification of Graphistone-Love - metal piece printed with a motif on a crystal - articles made of glass - classification under Chapter 701890 as done by authorities below is approved and that under Chapter 49 is rejected - AT
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Customs:
Micro SD/Mine storage cards are classifiable under CTH 8523.51 as non-volatile storage devices and the assessees are entitled to the benefit of exemption Notification No. 6/2006 - AT
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Customs:
Imposition of ADD - Purified Terephthalic Acid - The dumping margin in the case of China is 20 to 30% and the quantum of export is above 3%. The subject goods imported from China are in direct competition with the like articles made in India. As such, the conditions for commutations are met. - AT
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Customs:
It is not clear that the boric acid imported have been used for insecticidal purpose. In such circumstances, importation of boric acid may not require registration from the concerned authorities under the Insecticide Act, 1968. - AT
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Service Tax:
The premises of the SEZ is to be construed as “the port of export” - refund benefits allowed to the appellant on the GTA services utilized for transportation of goods to the SEZ Unit - AT
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Service Tax:
When classification for services was not questioned by the revenue, the denial of refund of service tax paid by them is only thwarted attempt to deny legitimate rights of the respondent for which respondent is correctly entitled to - AT
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Service Tax:
BAS - service tax is not leviable on the commission earned by the distributor on the basis of the volume of the purchases made by the group of second level of distributors appointed by FSL on being sponsored by the distributor - AT
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Central Excise:
Valuation - Rule 9/10(a) are not applicable to interconnected undertakings being related persons, therefore, the proceedings initiated against the appellants are not sustainable - AT
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Central Excise:
CENVAT credit - retention of part of invoice as performance guarantee - in case of any amount retained or discounted after the invoices were issued, the credit need not be changed and full credit of service tax paid to the service provider will be eligible for credit - AT
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Central Excise:
Price escalation clause - provisional assessment - appellant is owned and managed by the Government of India - the exemption provided therein for non-execution of Bond and payment of Bank Guarantee for clearance of goods on provisional basis should be available to the appellant - AT
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Central Excise:
CENVAT credit - fake invoices - non-existent dealers - In fact when the goods were procured by the assessee, the dealer was registered with the department - credit allowed - AT
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Central Excise:
Whether the appellant is entitled to avail cenvat credit on capital goods which are installed outside the factory or not? - Benefit of Cenvat Credit allowed - AT
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Central Excise:
CENVAT credit - area based exemption - N/N. 50/2003-C.E - respondents are not required to reverse the credit already availed by them - AT
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Central Excise:
Valuation - selling of goods through depot - The short payment of duty has been calculated based on the details of clearances effected from the factory gate to the depots and those effected further from the depot - demand confirmed - AT
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VAT:
Lease line charges - VAT or service tax - since a subscriber of a lease line does not become the owner of the line either by control or by possession and hence such charges are only for services rendered and there is no element of sale therein - No VAT - HC
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VAT:
SIM replacement charges - VAT or service tax - once it has been held that no sales tax can be charged for providing a SIM, the question of charging it on replacement of a SIM, does not arise - HC
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VAT:
Input tax credit - If the selling dealer has not deposited the amount in full or a part thereof, it would be for the Revenue to proceed against the selling dealer. But thereby the benefit of input tax credit cannot be deprived to the purchaser dealer. - HC
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VAT:
Levy of differential tax - Merely mentioning by the AO that exemption certificate was wrongly allowed, is no reason to reopen the case - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (1) TMI 395
Carry forward of the loss - loss as claimed by the assessee treating the same as excess application of loss u/s.11 - carry forward of excess expenditure of earlier years for set off in the subsequent years - Held that:- Finding and directions of the learned CIT(A) is in accordance with the decision of the Hon’ble Bombay High Court in the case of Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court] wherein held that income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. - Decided against revenue
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2017 (1) TMI 393
Disallowance of unexplained liability - Held that:- We find that T&C had categorically stated that outstanding amount was ₹ 6.58 lakhs and not ₹ 20.90 lakhs, that the assessee had not brought on record to prove that there was advancement of loan on behalf of T&C to Saif Steel. In these circumstances, we are of the opinion that direct issue by FAA need no interference from our side.Confirming the his order, we decide the ground against the assessee.
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2017 (1) TMI 390
Penalty u/s 271(1)(c) - disallowance of depreciation of show room building - Held that:- From going through the judgment of Price Waterhouse Coopers Pvt. Ltd. vs. CIT [2012 (9) TMI 775 - SUPREME COURT] we find that it is squarely covered in favour of assessee by the above judgment as the assessee which is a limited company declaring total income of ₹ 11.43 crores (approx.) and having no mens rea of claiming excess depreciation of just ₹ 7,80,826/- rather it was claimed in the regular course and with the firm belief that it is legally allowable which was further supported by the statutory audit report. It was only the Revenue’s contention that the depreciation cannot be allowed on the show room building as it could not be deemed to be put to use on 5.3.2007 as claimed by the assessee but was put to use on 31.5.2007 after the completion of Bath Studio. Certainly in such circumstances it will be unjustified to impose penalty u/s 271(1)(c) of the Act as the assessee had only committed an undoubtful bona fide error and it certainly had no intention of concealing any income or furnishing inaccurate particulars of income. We are, therefore, of the view that assessee should not be visited with penalty u/s 271(1)(c) - Decided in favour of assessee
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2017 (1) TMI 387
Penalty proceedings u/s 271(1)(c) - disallowance of interest as not eligible for deduction u/s 43B(e) - Held that:- There is no dispute to the fact that the amount of ₹ 44,19,194/- was paid towards interest towards preceding Asst. Years 2004-05 and 2005-06 at ₹ 21,10,019/- and ₹ 23,09,175/- respectively and this amount which was capitalized in the preceding years was transferred to construction account and proportionate amount was transferred to profit and loss account on the basis of area sold. We will not like to go into the issue of actual interest expenditure claimed by the assessee as it was ₹ 8,63,435/- as submitted by assessee or ₹ 44,19,194/- as alleged by ld. Assessing Officer which was the figure taken by him from perusal of the construction account in which interest amount of ₹ 44,19,194/- was transferred and was not fully claimed in the year. We just confine to adjudicate as to “whether in these circumstances assessee should have been visited with penalty u/s 271(1)(c) of the Act.” In the given circumstances there has been a claim made by the assessee treating it to be a bona fide claim but not accepted by the Revenue authorities. We observe that Hon. Supreme Court in the case of CIT vs. Reliance Petro Product Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that if the assessee had furnished all the details of its expenditure as well as income in the return, which were not found to be inaccurate particulars or concealment of income, it was upto to the authorities to accept its claim in the return or not. Merely because assessee had claimed expenditure which was not accepted or not acceptable to Revenue that by itself would not attract a penalty u/s 271(1)(c) of the Act. Also see Price Waterhouse Coopers (P) Ltd. vs. CIT [ 2012 (9) TMI 775 - SUPREME COURT ] - Decided in favour of assessee
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2017 (1) TMI 386
Disallowance of bad debts - the balance of the parties in assessee’s books were not tallying with the books of the respective parties - Held that:- As observed by the learned CIT(A), the AO had disallowed the assessee’s claim for write off of bad debts of the four parties only to the extent that there were differences / discrepancies in the account balance of these parties vis-à-vis the books of accounts of the assessee, and to the extent these differences could not be explained away with any material evidence in this regard. That there were infirmities in the balance / accounts of these four parties vis-à-vis the books of accounts of the assessee is also admittedly not denied by the assessee. Since the assessee has failed to bring on record any material evidence to controvert the finding recorded by the learned CIT(A) on this issue, and finding no merits in the grounds raised by the assessee - Decided against assessee
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2017 (1) TMI 388
Claim of depreciation on AFS and HFT investments - A.O observed that the depreciation of HFT and AFS securities is to be allowed to the extent provided in the books of account, and since the assessee has not made any provision for the depreciation of HFT and AFS securities in its books for the relevant A.Ys, he disallowed the claim of depreciation on these securities - Held that:- Hon'ble jurisdictional High Court in assessee's own case ( 1984 (7) TMI 66 - ANDHRA PRADESH High Court) held that main business of the banking company being to accept deposits to advance loans to appropriate persons, money constitutes its stock in trade. The amount required to kept in India as per section 24 of the Banking Regulation Act, 1949 in the form of cash, gold and unencumbered securities is part of stock in trade of the assessee. While identical issue of claim of depreciation on HTM securities came up before the Income-tax Appellate Tribunal in assessee's own case for the assessment year 2003-04 the Income- tax Appellate Tribunal following the ratio laid down by the jurisdictional High Court in State Bank Of Hyderabad Versus Commissioner Of Income-Tax, AP -I, Hyderabad [1984 (7) TMI 66 - ANDHRA PRADESH High Court ] and CIT V/s. Nedungadi Bank Ltd (2002 (11) TMI 29 - KERALA High Court ) held that when there is no distinction between the three categories of securities viz.,HTM, AFS and HFT. The assessee can provide for depreciation in all the securities on the same footing. In view of the ratio laid down by the co- ordinate bench of this Tribunal, we do not find any reason to interfere with the finding of the CIT (A) on this issue in allowing claim - Decided in favour of assessee. Disallowance of claim of broken period interest paid on purchase of securities - Held that:- As decided in assessee's own case CIT(A) allowed the claim on the ground that the same was in stock in trade and hence the interest for the broken period is an allowable deduction. Issue is covered by the decision of the Mumbai Bench in the case of JCIT Vs. Dena Bank [2013 (3) TMI 326 - ITAT MUMBAI] - Decided in favour of assessee. Disallowance of proportionate expenditure on exempted income u/s 14A - CIT(A) restricted the disallowance to two months salary of the treasury benches as directed by the tribunal in the assessee’s own case for the earlier assessment years - Held that:- We find that in the assessee’s own case for the assessment year 2009-10 no infirmity in the order passed by the CIT(A) on this issue. After introduction of Rule 8D into the Income Tax Rules from A.Y. 2008-09 disallowance of expenditure relating to earning of exempted income under section 14A of the Act, has to be determined as per the method provided under Rule 8D. In fact, as can be noticed from para 7.4 of the CIT(A) Order, the assessee itself during the proceeding before the CIT(A) has worked out the disallowance to be made in terms with Rule 8D(2) which has been accepted by the CIT(A). In these circumstances, we do not find any reason to interfere with the order of the CIT(A) in this regard. - Decided against revenue Claim towards bad and doubtful debts under section 36(1)(vii) in respect of non rural branch advances and deduction under section 36(1)(viia) in respect of rural branch advances - Held that:- We find that this issue is covered by the decision in the case of the State Bank of Patiala Vs CIT cited (2004 (5) TMI 12 - PUNJAB AND HARYANA High Court ), wherein it has been held that the claim u/s 36(1)(viia) can be allowed only to the extent of provision made by the assessee in its books of accounts. The formula on the limit prescribed under section 36(1)(viia) is the maximum provision which can be allowed and is not a standard deduction as claimed by the assessee. We find that the CIT(A) has therefore, restricted the claim u/s 36(1)(viia) to the extent of provision made by the assessee in its books of account. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. Further, as rightly pointed by the ld DR, the A.O has already allowed the claim of deduction u/s 36(1)(vii) of the Act, and there can be no other grievance of the assessee and therefore the ground of appeal No. 6, raised by the assessee before the CIT(A) is without any basis and the CIT(A)’s observation at Page – 9 of her order is also not warranted.
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2017 (1) TMI 396
Levy of penalty u/s 271(1)(c) - Concealed particulars of income or furnished inaccurate particulars of income - as per AO assessee has willfully concealed its income and has given inaccurate particulars of income by taking bogus bills - as per CIT(A) AO initiated the penalty u/s 271(1)(c) under both the limbs i.e. concealed the particulars of income and furnished inaccurate particulars of income and at the time of notice u/s 274 he simply has ticked in prescribed proforma concealed particulars of income or furnished inaccurate particulars of income without deleting either limb of penalty Held that:- It is observed that assessment proceedings and penalty proceedings are two separate proceedings. The addition made during assessment proceedings does not lead to conclusion that the assessee was having some undisclosed income or concealed the particulars of income. The addition in assessment order may be because of some technical reasons which do not mean that the assessee had concealed income. Therefore, for imposing a penalty, the AO had to prove that the assessee was having concealed income. The penalty u/s 271(1)(c) of the Act is not automatic and for imposing penalty u/s 271(1)(c) of the Act, the AO had to brought on record any positive material to show that the assessee concealed his income. Hon’ble Karnataka High Court in the case of CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors.(2013 (7) TMI 620 - KARNATAKA HIGH COURT) held that sending printed form where all the grounds mentioned in section 271 would not satisfy the requirement of law. The assessee should know the ground which he has to meet specifically, otherwise, the principle of natural justice is offended on the basis of such proceedings, no penalty could be imposed to the assessee. As in the case of Tej Bhan Cotton Ginning & Pressing Factory Vs. CIT, Rohtak (2010 (12) TMI 110 - PUNJAB AND HARYANA HIGH COURT ) has held that the Assessing Officer in assessment order has satisfied himself regarding initiation of penalty proceedings, which was tantamount to satisfaction have recorded to the fact on the basis of addition made by the Assessing Officer for concealed income in assessment order. The Hon’ble Court has confirmed the penalty even penalty proceedings initiated by the Assessing Officer by mentioning penalty proceeding for concealing/furnishing of inaccurate particulars of income. The Hon’ble Punjab & Haryana High Court has expressed different view on initiation of penalty proceedings even notice U/s 274 issued by putting oblique between concealing and furnishing of inaccurate particulars of income whereas the Hon’ble Karnataka High Court has held that the Assessing Officer has to satisfy at the time of initiation of penalty proceeding and issuing notice U/s 274 of the Act that whether penalty is for concealed particulars of income or furnishing of inaccurate particulars of income. There were two opinions of the Hon’ble Courts. The Hon'ble Supreme Court has held that in case of two views of the court, favorable view of the assessee would be taken as held in the case of CIT Vs Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) and a recent decision in the case of CIT Vs. Vatika Township P Ltd. (2014 (9) TMI 576 - SUPREME COURT ). Therefore, we are of the considered view that initiation of penalty proceedings is not as per law and Assessing Officer did not have any jurisdiction to impose penalty U/s 271(1)(c) of the Act. - Decided in favour of assessee
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2017 (1) TMI 394
Penalty u/s 271(1)(c) - unexplained sundry advance addition - Held that:- As during the year the assessee was not having any source of concealed income. The Department carried out intensive search over the assessee and no cogent material was found to show that the assessee was having any concealed source of income during the year under consideration. It is also noted in the assessment order that sundry debtors created to generate cash was utilized for gift to Shri Murari Lal Mittal in assessment year 2007-08 was without bringing any adverse positive material. No any positive material was brought in penalty proceeding to show that the assessee had made willful attempt to conceal the income or to furnish inaccurate particulars of income. The assessment proceedings and penalty proceedings are two separate proceedings. The addition made during assessment proceedings does not lead to conclusion that the assessee was having some undisclosed income or concealed the particulars of his income. It is observed that assessment proceedings and penalty proceedings are two separate proceedings. The addition made during assessment proceedings does not lead to conclusion that the assessee was having some undisclosed income or concealed the particulars of income. The addition in assessment order may be because of some technical reasons which do not mean that the assessee had concealed income. Therefore, for imposing a penalty, the AO had to prove that the assessee was having concealed income. The penalty u/s 271(1)(c) of the Act is not automatic and for imposing penalty u/s 271(1)(c) of the Act, the AO had to brought on record any positive material to show that the assessee concealed his income. There must be independent finding. See Vaibhav Tulsyan Versus I.T.O Ward 29 (4) , Kolkata [2016 (11) TMI 1030 - ITAT KOLKATA] wherein allowed the appeal of the assessee on the issue of penalty u/s 271(1)(c) of the Act.- Decided in favour of assessee
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2017 (1) TMI 384
Applicability of provision of section 50C - adoption of value as per stamp duty valuation - Held that:- We find that in the earlier assessment year the AO has held that the asessee’s income from sale of land was income from business. Despite this submission the authorities below have chosen to ignore this aspect on the plea that the assessee has submitted the return of income in Form ITR-2. In our considered opinion this is not at all a cogent reasoning. In the preceding scrutiny assessment the Revenue has held that the assessee’s transaction in sale and purchase of land was a business income. If this be so, there is no question of applying the provisions of section 50C. Further more even if the same is not treated as business asset, it is incumbent upon the AO to refer the matter to the valuation cell if the assessee objects it. Further more the assessee’s plea of submission of books of accounts has also not been entertained. We find that the Revenue having held that in earlier years the assessee was engaged in the business of purchase and sale of land cannot make an about-turn and hold that the assessee was not engaged into the same merely because the return of income has been filed in Form ITR-2. Hence on this anvil interest of justice would be served if the matter is remitted to the file of the AO. The AO is directed to decide afresh after taking into account the result of earlier years assessment and the Hon’ble Apex Court exposition as mentioned above. Needless to add the assessee should be granted adequate opportunity of being heard.
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2017 (1) TMI 389
Segregation of the transaction including inter alia royalty and fee for technical services - TPA - Held that:- There can be no strait jacket or inviolable rule in this regard. The recent judgment of this Court in Sony Ericsson Mobile Communication India (P) Ltd. vs Commissioner of Income Tax (2015 (3) TMI 580 - DELHI HIGH COURT) stated that aggregation of such transaction is permissible and relied upon the OECD Commentary in this regard. At the same time the observations are not in fact determinative or conclusive. The Court was careful to leave the issue open for examination having regard to the facts of each case. In other words, as to whether the assessee’s claime that aggregation is essential in a given case is an entirely fact dependent exercise to be viewed having regard to the nature of the transaction and the surrounding circumstances. The assessee contends that the amounts paid under the royalty license and technical support agreements had to be viewed along with all other expenses and, therefore, aggregated. The Revenue’s contention, however, is to the contrary. The entire issue as to whether aggregation is warranted in the circumstances, should be gone into afresh in view of the law declared in Sony Ericsson (supra) and clarified in Magneti Marelli (2016 (11) TMI 123 - DELHI HIGH COURT) wherein held if the transactions are, in the opinion of the TPO, not at arm's length, the required adjustment has to be made, as provided in the Act, irrespective of the fact that the expenditure is allowable under other provisions of the Act. There can conceivably be various reasons not to subject such payments, such as for instance, if no similar data exists at all; or that sectional data for such payments is absent. Quite possibly, this may also be a general pattern of expenditure which AEs may insist to part with technology; further, similarly, other models of payment- deferred or lump sum, along with royalty or inclusive of it, may be discerned in comparable transactions. As far as the issue of most appropriate method is concerned, this Court is of the opinion that no definitive ruling ought to be given at this stage. As to whether in the event of de-segregation the CUP method is the most appropriate rather than TNM method should in our opinion be left open for consideration depending on the determination of the issue of aggregation/ de-segregation itself. In other words, that whether in the event of de-segregation, which would be the appropriate method, should be left to the TPO to decide, after hearing counsel for the parties. However, we clarify that in the event it is held that aggregation is permissible in the facts of this case, the findings of the Revenue authorities and the Tribunal that the TNMM method was warranted, would not be disturbed.
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2017 (1) TMI 392
Interest charged u/s.234B - advance tax - CIT(A) deleted the interest charged u/s.234B relying on the decision in the case of Ajay Prakash Verma [2013 (1) TMI 140 - JHARKHAND HIGH COURT] - Held that:- Find that no mistake in the order of the ld CIT(A) could be pointed out by ld D.R. It is admitted by ld D.R. that the SLP filed before the Hon'ble Supreme Court is still pending for disposal. Hence, as on date the decision of Hon'ble Jurisdictional High Court is valid and binding. Find that the Hon'ble Jharkhand High Court in the case of Ajay Prakash Verma [supra] where following the decision in case of Smt. Tej Kumari (2000 (9) TMI 52 - PATNA HIGH COURT) that the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the A.O. to that extent. - Decided in favour of assessee
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2017 (1) TMI 397
Addition on account of dividend income - AO made the addition on the basis of letter dated 12.01.1999 allegedly received by auditors from Mazda Industries and leasing ltd. as observed that Mazda Industries and Leasing Ltd declared dividend for the year ending 31 March 1992 - Held that:- The said dividend income was received in the subsequent year. We have noticed that the letter written by Special Auditor was not confronted to the assessee. The date of declaration of dividend by M/s Mazda Industries and Leasing Ltd was also not brought on record. We noticed that Section 8 provides a legal fiction for taxing the dividend on the date of declaration of dividend. Since, facts relating to the issue were not brought on record. We are of the view that the issue require fresh examination. Accordingly, we restore this issue to the file of AO for his fresh consideration. The assessee should provide with all the material on which the AO place reliance. Thus this Ground of appeal is allowed for statistical purpose.
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2017 (1) TMI 391
Addition on account of interest income - new source of income - to be taxed as business income or income from other sources - Assessing Officer denying application of provisions of section 44AF - Held that:- The provisions of section 44AF of the Act are attracted where the total turnover is less than ₹ 40 lakhs. In case the assessee claims that the interest income received by him was income from business, then the total receipts from business would exceed ₹ 40 lakhs i.e. sales of ₹ 37,21,126/- and business/interest income of ₹ 11,92,477/-, then the provisions of section 44AF would not apply. In any case the CIT(A) has held that the turnover is less than ₹ 40 lakhs i.e. only sales of ₹ 37,21,126/- is to be taken as total turnover for the year on which the business income is to be computed @5%. Once, the said order of CIT(A) has been accepted by the assessee, it cannot now claim that the business receipts for application under section 44AF of the Act would also include the interest income, where the funds utilized for earning interest income were business funds. May be the fund are utilized out of business funds for earning the interest income but that itself would not make the interest income as income from business. The perusal of details of interest income reflects the assessee to have the received interest on Union Bank FDRs of ₹ 3,92,936/-. Further interest received on Union Bank Flex A/c is ₹ 47,048/- and interest on Saving Bank Account was ₹ 378/- and interest on Income Tax Refund was ₹ 2,180/-. In addition the assessee had received interest on advances made to different parties for earning interest. The nature of the interest income received by the assessee clearly establishes that the same is to be assessed under the head “income from other sources”. Where the Assessing Officer in the assessment order has rejected the claim of the assessee and observed that the income declared by the assessee also includes income from other sources of ₹ 11,92,477/-, which has been so assessed by the CIT(A), the claim of the assessee that it is a new source of income is incorrect. The said fact was noted by the Assessing Officer and has been assessed by the CIT(A) does not establish the case of the assessee that the enhancement carried out by the CIT(A) amounts to assessment of new source of income. The business income was directed by the CIT(A) to be assessed under section 44AF of the Act by taking the turnover at ₹ 37,21,126/-. The balance receipts of ₹ 11,92,477/- were taxed as income from other sources by the CIT(A) and same were also treated as such by the Assessing Officer but no separate addition was made, by the Assessing Officer, where he had denied the claim of the assessee under section 44AF of the Act. In the totality of the facts and circumstances we find no merit in the grounds of appeal Nos. 1 and 2 raised by the assessee. Further the assessee has not satisfied the conditions of section 57(iii) of the Act, so interest expenditure is not to be allowed as deduction.- Decided against assessee Disallowance made under section 40A(3) - Held that:- CIT(A) had assessed the income in the hands of the assessee under section 44AF of the Act and after such assessment no disallowance is to be made under section 40A(3) of the Act. Thus find support from ratio laid down in DCIT Vs. Shri Kashmir Singh [2012 (5) TMI 738 - ITAT CHANDIGARH], relating to assessment year 2006- 07, which in turn, relying on the decision in the case of M/s Amrit Sugar Company [2010 (12) TMI 953 - Himachal Pradesh High Court], has also laid down the said proposition. Accordingly, the claim of assessee is allowed.
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2017 (1) TMI 385
Disallowance of deduction u/s. 80P(2)(c) - interest income from deposits with the nationalized banks - assessee is a housing Co-operative society - Held that:- In the present case we observe that the assessee is claiming deduction on interest income earned on funds deposited with nationalized banks. The interest income on deposits with nationalized banks neither falls in clause (d) nor it partakes the character of profits and gains ‘attributable’ to the activities of the assessee to fall within the ambit of clause (c) of section 80P(2). The assessee is a Co-operative housing society, therefore, interest income on bank deposits cannot be considered as income ‘attributable’ to the activities of the assessee. To be eligible to claim deduction u/s. 80P(2)(c) the assessee has to show direct or proximate connection of the earnings/income with the activities of the society. It is not the case of assessee where the deposits with the nationalized Bank were made to comply with statutory condition. Had it been so, the assessee would have got the benefit of section 80P(2)(c) in the light of decision in the case of CIT Vs. Co-operative Cane Development Union Ltd.(1979 (2) TMI 91 - ALLAHABAD High Court ). In the present case we observe that there is not even a remote link between the interest income earned on deposits with nationalized banks and the activities of the assessee. Thus, in the facts and circumstances of the case we do not find any infirmity in the impugned order and the same is confirmed. - Decided against assessee
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Customs
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2017 (1) TMI 341
100% EOU - Drawback claim - recovery on the ground that the appellant is a 100% EOU and as per N/N. 26/03-Cus(NT) dated 10.4.03, as amended, a 100% EOU is debarred from claiming the benefit of notification - Held that: - There is no dispute that the materials used by them were of duty paid and the fact that appellant has not availed any credit of duty so paid is also admitted by the Revenue. Denial of draw back is on the sole ground that same would not be available to 100% EOU as against the express provisions of section 75 as also of the draw back Rules - reliance was placed in the case of Karle International [2012 (10) TMI 652 - KARNATAKA HIGH COURT] wherein identically worded N/N. 67/98 Cus (NT) laying down that all India Industrial rates of drawback would not be available if finished goods are exported by 100% EOU, was held inapplicable inasmuch as the same run counter to section 75 of Customs Act, 1962 and the benefit given therein cannot be taken away by way of notification - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 347
Classification of imported goods - Graphistone-Love - classified under CTH 49119990 or CTH 701890? - chapter 49, which deals with the printing material and Chapter 70, which covers articles made of glass - Held that: - The nature of the product is such that it finds use primarily in ornaments and is made essentially of glass. It is evident that printing is only incidental to the use of the product in jewellery. Consequently, we rule out classification of the product under Chapter 49. Rule 3(b), which covers classification of mixtures, and composite goods consisting of different materials or made up of different components. This requires classification to be made as though the composite goods consists only of material which gives them their essential character - In the present item, the goods are made of a metal piece printed with a motif on a crystal which can be seen with the help of a lens. The essential character of this composite article is that of glass. Consequently, the classification under chapter 70 would be most appropriate. The classification under Chapter 701890 as done by authorities below is approved and that under Chapter 49 is rejected. Appeal dismissed - decided against appellant.
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2017 (1) TMI 339
Implementation of order dated 30.11.2015, passed by the Commissioner of Customs (Appeals), Chennai - jurisdiction of revisional authority - Held that: - the rank of the revisional authority would be upgraded to a level higher than that of the Commissioner of Customs (Appeals) - The revisional authority, upon ascertaining the veracity of the bank certificate, will allow the petitioner to re-export the subject goods, i.e., gold, upon payment of redemption fine and penalty imposed by the appellate authority, i.e., Commissioner of Customs (Appeals), vide order dated 30.05.2015 - matter on remand.
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2017 (1) TMI 345
Imposition of ADD - Purified Terephthalic Acid - import from China PR, Iran, Indonesia, Malaysia and Taiwan - wrongful exclusion of Reliance Industries Ltd. (RIL) from the purview of domestic industry - principles of natural justice - Held that: - the related company of RIL, located in Malaysia, is exporting substantial quantity to India. We find that the DA's findings on this ground cannot be assailed. Correctness of considering MCPI as a domestic industry for injury analysis in view of the fact that the said unit is sick and is under BIER - Held that: - MCPI suffered technical problems in their plant but that is not the only cause of injury. The DA found that the imports had adversely affected the profits, cash flow, return on investment of MCPI. The injury of domestic industry has been properly analysed and we find no reason to disagree with the DA on this account. The dumping margin in the case of China is 20 to 30% and the quantum of export is above 3%. The subject goods imported from China are in direct competition with the like articles made in India. As such, the conditions for commutations are met. Principles of natural justice - Held that: - though originally the IOCL was only supporting the petitions filed by the other domestic industry, later they have provided some data regarding production, sales and profitability of subject goods during the POI, on confidential basis. We note that the DA has not considered the said data for injury analysis and investigation. This has been clearly recorded in para 155 (vi) of the Final Findings by the DA. As such, we find no ground to sustain the plea of the appellant regarding violation of principles of natural justice. Separate analysis and investigation for Malaysia and other subject countries - Held that: - injury on account of dumping of the subject goods from various countries is to be determined in respect of the domestic industry only. As already noted, RIL has been disqualified as an eligible domestic industry for the reason of their related company situated in Malaysia producing and exporting the subject goods to India. We find no justification on legal basis for a separate investigation with reference to Malaysia and other countries. Appeal rejected - decided against appellant.
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2017 (1) TMI 340
Rejection of refund claim - rejection on the ground that the assessment of bill of entry has not been challenged by the appellant - Held that: - I find that the letter dated 16/11/2005 is a simple letter requesting refund of Customs duty and there is no request for re-assessment whatsoever. In these circumstances, where the original assessment has not been challenged by the importer refund cannot be granted - reliance placed in the case of PRIYA BLUE INDUSTRIES LTD. Versus COMMISSIONER OF CUSTOMS (PREVENTIVE) [2004 (9) TMI 105 - SUPREME COURT OF INDIA] - appeal allowed - decided in favor of REVENUE.
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2017 (1) TMI 342
Confiscation of imported goods - Requirement of certificate of registration from Central Insecticide Board or Certificate of end use from the concerned Ministry/ department of Government of India - import of boric acid - classification of goods - classified under CTH 2810 or CTH 3808 - Held that: - as per ITC (HS), the boric acid is specifically classified under CTH 2810, which is freely importable. End use of product relevant to determine whether registration certificate required or not? - it can be seen in the committee meeting of Krishi Bhawan in chairmanship of Agricultural Commissioner that the concerned Ministry is of the opinion that if boric acid is used for non-insecticidal purpose, no registration is required under the Insecticide Act, 1968. In other case, however, it may necessary to obtain registration. In the instant case, the imports have been made by the Traders and it is not clear that the boric acid imported have been used for insecticidal purpose. In such circumstances, importation of boric acid may not require registration from the concerned authorities under the Insecticide Act, 1968. Confiscation and penalty not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 337
Absolute confiscation - Baggage rules - Imposition of penalty u/s 112 of the Customs Act, 1962 and section 117 of the Act - reason for imposition of penalty on appellant was that consignment received by the postal authorities bore the name of the appellant along with his address. Held that: - The appellant in his very statement has denied his connection with the said goods. There is virtually no other evidence brought by the Revenue to show that it was the appellant who had ordered for the said goods. As rightly pointed out by the appellant, post parcels are delivered as window delivery and anybody could have got the clearance of the same. It is common fact that in such type of contrabaned goods, the importers do not give their own name and address and use the name and address of other others non related parties. As such, we are of the view that the appellant is entitled to benefit of doubt inasmuch as Revenue has not produced any evidence to show any connection of the imported goods with the appellant. Penalty set aside - absolute confiscation upheld - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 338
Revocation of CHA licence - forfeiture of security deposit - failure to observe the time limits strictly prescribed under CBLR, 2013 - Held that: - Regulation 20(1) contemplates issue of Show Cause Notice to the customs broker by the Commissioner within a period of 90 days from the date of receipt of Offence Report. The issue of Show Cause Notice is to be followed within a period of 90 days by submission of Inquiry Report by Asst. Commissioner /Dy. Commissioner and ultimate passing of the order by the Commissioner within a period of 90 days from the date of submission of Inquiry report - perusal of the records of the present case reveals that the initial Show Cause Notice under Regulation 20 has been issued only on 12.05.2014 even though the licence was suspended on 26.03.2013. Hon'ble Madras High Court has emphasised the observance of time limits strictly under the CHALR, 2004/CBLR, 2013 in the case of Saro International Freight System Vs. CC, Chennai [2015 (12) TMI 1432 - MADRAS HIGH COURT] - the time limits prescribed are to be mandatorily followed. The order of the lower authority which was issued without adhering to the time schedule is liable to be set aside on these grounds - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 348
Old and Used Tyres - permission of Ministry of Environment and Forest required for clearance of consignment of ‘Old and Used Tyres’ or not? - Held that:- Central Board of Excise & Customs vide instruction issued vide F. No. 528/109/2011-STO(TU), dated 12-7-2013 in Para 5 has clarified that “imports of retreaded or used tyres are allowed subject to compliance of provisions of Foreign Trade Policy, and requirement of consent/permission from Ministry of Environment and Forest as stipulated in Hazardous Wastes (Management Handling and Transboundary Movement) Rules, 2008 - appeal dismissed - decided against assessee.
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2017 (1) TMI 343
Benefit of N/N. 39/90-Cus., dated 20-3-1990 - import of Ethyl Glycol - denial on the ground that ethyl glycol imported by them is rightly classifiable under Heading 29.09 and not under Heading 29.05 - Held that: - both the sides are not disputing that ethyl glycol is classifiable under Heading 29.09. We find that the heading mentioned in entry No. 8 under N/N. 39/90-Cus. is 29.05. In these circumstances, if the view taken by Revenue is accepted, the entry No. 8 itself will become redundant. The facts that the Heading 29.05 was replaced by Chapter 29 vide Notification No. 144/91-Cus., points to the fact that there was an error, which was corrected on a later date - the benefit of Notification No. 39/90 cannot be denied to the appellant - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 346
Benefit of N/N. 6/2006 - classification of imported memory cards - whether classified under CTH 8523 51 00 as Solid State Non-volatile Storage Devices or under CTH 8523 52 20 as memory smart cards - Held that: - the issue involved in the present appeals has been clarified by the Board by issuing Circular No. 12/2012, dated 1-5-2012 vide which the Board has clarified that Micro/Mini SD Cards are correctly classified in Sub-heading 8523.51 as Semiconductor media, solid-state, non-volatile data storage devices by application of General Rules for Interpretation of Import Tariff (GRIs) 1 - Micro SD/Mine storage cards are classifiable under CTH 8523.51 as non-volatile storage devices and the assessees are entitled to the benefit of exemption Notification No. 6/2006 - appeal dismissed - decided against Revenue.
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2017 (1) TMI 344
Natural justice - whether the respondent is justified in rejecting the request made by the petitioners to cross-examine the three persons whose names have been mentioned? - Held that: - statements have been recorded by the respondent from those three persons under Section 108 of the Customs Act, 1962 and the matter is at the threshold. Therefore, while adjudicating the show cause notices, if the respondent propose to rely any of those statements, the petitioners should be given fair opportunity, because the show cause notices appear to be solely based upon the statements recorded from those three persons. Therefore, in my view, the facts of the present case would require opportunities to the petitioners to cross-examine those three persons, in the event the respondent proposes to rely upon their statements. If the respondent does not propose to rely upon those statements while adjudicating the show cause notices, then the question of affording an opportunity of cross-examination would not arise - opportunity to cross examine provided - petition allowed - matter on remand.
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Service Tax
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2017 (1) TMI 383
Refund - GTA services - supply of goods to the SEZ Unit in terms of Notification No.40/2007-ST dated 17.09.2007 - denial on the ground that service tax paid on freight from place of removal (factory gate) to the SEZ Unit is not admissible to the appellant - whether, supply of goods to SEZ Unit should be considered as “port of export”? - Held that: - Sub-section (2) of Section 53 ibid mandates that SEZ shall be deemed to be a port under Section 7 of the Customs Act, 1962. On a conjoined reading of the provisions contained in Section 2 (m), 51 and 53 ibid, it reveals that goods supplied by a manufacture located in the Domestic Tariff Area (DTA) to the SEZ Unit / Developer should be considered as export and the premises of the SEZ is to be construed as “the port of export” - refund benefits allowed to the appellant on the GTA services utilized for transportation of goods to the SEZ Unit - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 378
Business Auxiliary Services - Commission earned - Held that: - reliance placed in the decision of the case Surendra Singh Rathore [2013 (8) TMI 149 - CESTAT NEW DELHI] - the demand of service tax under Business Auxiliary Service stands confirmed and it is held that service tax will be chargeable on the commission received by the distributor (such as “the appellant”) on the products purchased by his sales group. However, it has been held that the service tax is not leviable on the commission earned by the distributor on the basis of the volume of the purchases made by the group of second level of distributors appointed by FSL on being sponsored by the distributor. Extended period of limitation - Held that: - when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11 A(1) cannot be invoked - demand has been restricted to the normal time limit. The issue is remanded to the Original Adjudicating Authority for restricting the demand strictly in terms of the observations and directions in this order - penalty set aside - appeal allowed by way of remand.
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2017 (1) TMI 377
Composite works contract - construction contract - time limitation - Held that: - the issue of leviability of service tax on such works contract is decided by Hon’ble Supreme Court in the Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] case. In line with the categorical decision of the Apex court, the demand for service tax cannot survive upto 31/03/2007. For the period w.e.f. 01/06/2007, the activities of the appellant would be covered under Works Contract Services - taking a final view about the grant of the benefit of the composition scheme, the relevant contracts executed by the appellant would need to be gone into. For this purpose, we consider it necessary to remand the matter to the original Adjudicating Authority who will re-decide the matter - matter on remand. Extended period of limitation - Held that: - The appellant have also received payments to the tune of ₹ 48 lakhs in 2006-2007 and ₹ 49 lakhs in 2007-2008 on which service tax liability arises. However, they have failed to file ST-3 returns nor obtained service tax registration. But for the fact that the Department noticed such activity from the service recipient, the liability for payment of service tax would have gone unnoticed. Hence, we have no hesitation to hold that the appellant has suppressed the material facts from the Department - extended period of limitation rightly imposed. Appeal disposed off - matter on remand.
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2017 (1) TMI 380
Manpower service - demand during the period 17/05/2004 to 02/03/2007 - The main submission of the appellant is that prior to 16/06/2005, as per the definition of manpower service under Section 16/06/2005, as per the definition of manpower service under Section 65 (68) of the Finance Act, 1994, only manpower recruitment was taxable and not manpower supply - Held that: - Having perused the definition of the Section 65 (68) before and after the date of 16/06/2005 we hold that Since, the activity undertaken by them is in the nature of supply of manpower, the same cannot be charged to service tax upto 16/06/2005. For the year 2005-2006, the appellant is liable for payment of service tax for the consideration received for supplying manpower after 16/06/2005. Benefit of N/N. 6/2005-ST dated 01/03/2005 which exempts taxable services of aggregate value not exceeding ₹ 4 lakhs in a financial year from service tax - Held that: - Having gone through the notification, we find the appellant is eligible for the benefit of the notification and would be liable for payment only for any amount of taxable service rendered over and above the same. Appeal allowed - decided partly in favor of appellant.
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2017 (1) TMI 379
Commission paid to overseas agent - Whether the appellant can utilise the Cenvat credit so earned by them for discharge of Service Tax liability in respect of overseas commission agent? Held that: - the Tribunal in the case of Shree Rajasthan Syntex Ltd. Vs. CCE [2011 (8) TMI 265 - CESTAT, NEW DELHI] has held that such utilisation is in accordance with the law inasmuch as the Rule 2(r) of Cenvat Credit Rules conferred status of service provider to an assessee who paid the Service Tax as a recipient of service - Admittedly during the relevant period there was no change in the provisions of Rule 2(r) - the appellant is entitled to utilise the cenvat credit for discharge of service tax for the commission paid to the overseas agents - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 382
Rejection of refund claim - N/N.41/2007-ST dated 06.10.2007 - technical testing and analysis services - Held that: - when classification for services was not questioned by the revenue, the denial of refund of service tax paid by them is only thwarted attempt to deny legitimate rights of the respondent for which respondent is correctly entitled to. In their memo of appeal the revenue again reiterated their stand and has simplicitor observed that the order of the lower authorities does not seem to be legal and proper - refund allowed - appeal rejected - decided against Revenue.
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2017 (1) TMI 381
Interest on delayed refund - Whether the CESTAT fell into error in directing payment of interest upon the delayed refund as required under Section 11B of the Central Excise Act? - Held that: - the Tribunal which we notice had directed refund in a nuance manner for different periods - the law declared in Ranbaxy Laboratories Limited vs. Union of India, [2011 (10) TMI 16 - Supreme Court of India] which was followed by the CESTAT as appropriate and was properly applied - interest on delayed refund rightly demanded - appeal dismissed - decided against appellant-Revenue..
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Central Excise
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2017 (1) TMI 371
SSI exemption - use of brand name of others - Held that: - the appellant did not support their plea in the appeal to the effect that they have not manufactured and cleared goods with the brand name of another person. Overwhelming evidence as recorded by the lower authorities has not been rebutted effectively by the appellant - reliance placed in the case of Meghraj Biscuits Industries Ltd. vs. CCE, U.P. [2007 (3) TMI 5 - SUPREME COURT OF INDIA] where it was held that the burden is on the assessee to satisfy the adjudicating authority that there was no intention of indicating a connection of goods of assessee with another person - appeal dismissed - decided against appellant.
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2017 (1) TMI 359
CENVAT credit - various steel items - Held that: - Tribunal in various decisions held that Cenvat credit on MS items cannot be denied on the ground of their classification or the capital goods when fabricated getting embedded to the earth for operational reasons. In Monnet Ispat & Energy Limited vs. CCE, Raipur [2016 (1) TMI 917 - CESTAT NEW DELHI], it was held that Cenvat credit was taken on the steel items when they are used for fabrication of components, accessories, support items, the credit cannot be denied on the ground that the final product are embedded to earth - in the present case, various disputed items on which credit has been taken were either specifically classified as parts and components of capital goods or specifically included in such category complying with User Test laid down by the Hon'ble Supreme Court in CCE, Coimbatore vs. Jawahar Mills Limited [2001 (7) TMI 118 - SUPREME COURT OF INDIA]. Denial of CENVAT credit not sustainable - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 349
Valuation - selling of goods through depot - Rule 7 of Central Excise Valuation Rules, 2000 - Penalty - Differential duty - Held that: - On merit of the case regarding the non-payment of Central Excise duty on correct value, the same has been admitted by the appellant. Such admission has come about only after detailed investigation and record/ evidences unearthed by the department - We find such excuse is not acceptable when the said short payment continued resulting in huge loss to the Government. The short payment of duty has been calculated based on the details of clearances effected from the factory gate to the depots and those effected further from the depot. The quantum of goods sold was arrived at based on the invoices of the appellants. Appeal dismissed - decided against appellant.
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2017 (1) TMI 372
Denial of cenvat credit - various steel items used for fabrication / manufacture of various capital goods installed in the factory - April, 2008 to September, 2008 - denial on the ground that the same are not confirming to the definition of either capital goods or input for availment of the cenvat benefit - Held that: - Explanation 2 appended to the definition of inputs in Rule 2 (k) ibid provided that the goods used in the manufacture of capital goods which are further used in the factory of the manufacture, should fall within the ambit of input for the purpose of availment of cenvat credit. However, the said explanation was amended vide N/N. 16/09-C.E.(N.T.) dated 07.07.2009, which are to the effect that cement, angles, channels, CTD Bars, TMT and other items used for construction of factory shed, building or laying foundation or making of structure for support of capital goods were excluded from the purview of the definition of input. The issue as to whether the amendment of the definition w.e.f. 07.07.2009 will apply prospectively or will have retrospective application, was the subject matter of dispute before various judicial forums. The Hon’ble Gujarat High Court in the case of Mundra Port and Special Economic Zone Ltd. [2015 (5) TMI 663 - GUJARAT HIGH COURT] have held that the explanation inserted in Rule 2 (k) is not clarificatory in nature and the same is effective from the date, when the same was brought in to the statute book. The disputed goods were procured prior to the date of amendment of Rule 2 (k) ibid, cenvat benefit on the disputed goods cannot be denied to the appellant - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 375
Maintainability of appeal - Held that: - since lower authority had not decided the appeals and had ordered for transfer of the appeals to the call book to be recalled after the matter is decided finally in view of the pendency of the department's appeal before the Hon’ble High Court at that time. Today, when the matter was called, Ld.Counsel appearing on behalf of the Respondent submitted that the said Appeal of the department has already been dismissed by the Hon’ble High Court in their own case. Keeping in view the overall facts and circumstances of the case, as narrated above, this Appeal is also liable to be dismissed - appeal dismissed as not maintainable.
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2017 (1) TMI 376
CENVAT credit - MS angles, channels, bars, TMT bar, MS joist, HR sheet, welding electrodes and industrial gas - denial on the ground that these items have not been used for fabrication of any capital goods - Held that: - These structural items are used in the manufacture of capital goods such as parts of EOT cranes gantries, galleries, furnace cooling and circulation tank, cable trays etc. The welding electrodes and gases have also been used for such manufacture - similar issue decided in the case of Petropole India Ltd. Vs. CCE, Jaipur-I [2016 (9) TMI 125 - CESTAT NEW DELHI], where the credit was allowed - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 350
Reversal of Cenvat credit - Rule 57C & 57A of the CER, 1944 - Held that: - We have perused the entire paper book and found that there is no explanation provided, much less reasonable and plausible by the petitioners for the decision to initially reverse the MODVAT Credit, but later on shifting their stand and refusing to reverse it. It is for that the show cause notices were issued and the explanation was sought - Once they had no application to the facts and circumstances of the petitioners' case, then, we do not think that the concurrent findings in the orders impugned before us to be perverse or vitiated by error of law apparent on the face of the record - Petition fails - decided against the assessee.
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2017 (1) TMI 358
Interest - cenvat credit - various items of structural steel which have been used for fabricating parts of capital goods as well as their supporting structures - Held that: - the issue is no more res integra and stand covered in favor of the appellant. The decisions in the appellant’s own case for a different period [2016 (1) TMI 917 - CESTAT NEW DELHI], where the appellant has suo motu reversed cenvat credits to the extent of ₹ 80,87,465/- and ₹ 14,10,292/-. Since the reversal is not challenged by the appellant, the same is upheld. However, there is no justification to charge interest on such amount from the date of availing credit till the date of reversal, since we are holding that the credit itself is allowable - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 367
Valuation - stock transfer - goods valued at transaction value of similar goods sold to independent buyers - Revenue entertained a view that they should have followed provisions of Rule 8 of Valuation Rules, 2000 - Held that: - When there is an independent sales and transaction value is available there is no application of provisions of Rule 8 to arrive at the valuation during the material period. Extended period of limitation - Held that: - we find no ground to allege suppression, fraud, collusion etc. with an intention to evade payment of duty - extended period not invocable. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 366
Denial of CENVAT credit - house keeping service - rent a cab service - outdoor catering service - design service - advertising service - gardening services - Held that: - I find that under the provisions of Section 11 of the Factories Act a manufacturer is required to maintain the factory neat and clean. As such, services availed by the appellant for keeping the factory neat and clean is a service essential for manufacturing operations and, hence, the same would be covered by the definition of input service. As regards rent a cab service, I find that the cenvat credit in respect of the same is admissible in view of the judgement of Hon’ble Karnataka High Court in the case of Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT ]. As regards outdoor catering service, the same has been availed for providing canteen facility to the workers in the factory and in respect of the same Hon’ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement [2010 (10) TMI 13 - BOMBAY HIGH COURT] has held that the cenvat credit would be admissible. The design and advertising service are also covered by the definition of Input Service. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 370
Price escalation clause - provisional assessment in terms of Rule 7 of the Central Excise Rules, 2002 - whether, the appellant is to be considered as an “undertaking owned and managed directly by the Ministry” for the purpose of getting the benefit of non-execution of the bond and Bank Guarantee before the jurisdictional Central Excise Authorities for clearance of excisable goods on provisional basis? - Held that: - since the appellant is owned and managed by the Government of India through the Ministry of Heavy Industries and Public Enterprises, the case squarely falls under paragraph 6.1 contained in Chapter 14 of the CBEC Manual. Thus, the exemption provided therein for non-execution of Bond and payment of Bank Guarantee for clearance of goods on provisional basis should be available to the appellant - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 360
CENVAT credit - capital goods - denial on the ground that the laboratory in which machine was installed is in other use of the appellant which is a DTA unit and not in the factory premises of the appellant i.e. 100% EOU - whether the appellant is entitled to avail cenvat credit on capital goods which are installed outside the factory or not? - Held that: - although the capital goods has been installed in the outside the factory but the same has been used in manufacture of final product of the appellant - reliance was placed in the case of JAYPEE REWA CEMENT Versus COMMISSIONER OF CENTRAL EXCISE, MP[2001 (8) TMI 1332 - SUPREME COURT OF INDIA], where it was held that the capital goods used in or relation to manufacture of the final product whether directly or indirectly are entitled for cenvat credit - the appellant is entitled to avail cenvat credit on capital goods in dispute - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 363
CENVAT credit - fake invoices - non-existent dealers - Held that: - No investigation was conducted at the end of manufacturer supplier/transporter and the available evidences establish that the assessee has received the goods in the absence of any contrary evidence. On record, the cenvat credit cannot be denied to the assessee merely, on the ground that at the time of investigation, the dealer was non-existent. In fact when the goods were procured by the assessee, the dealer was registered with the department. CENVAT credit allowed - appeal dismissed - decided in favor of assessee.
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2017 (1) TMI 362
Clandestine removal - mis-match in the goods as per records and physical stock - demand of duty, interest and penalty - the case has been booked against the appellants on the basis of kachcha parchies recovered during the investigation and various statements recorded during the course of investigation - Held that: - several points have been raised by assessee, which have not been examined by adjudicating authority, which requires re-examination. Total quantity of 473403.8 kgs of RPP dana received from M/s.A.V.Bobbins (P) Ltd., adjudicating authority has not considered the fact that out of total quantity, a quantity of 199468 kgs RPP dana was covered by invoices for which the invoices are placed on record, the same is required to be considered by the adjudicating authority and the demand is required to be reduced to that extent. The Revenue has failed to examine the mode of transportation, therefore, in the absence of corroborative evidence showing receipt of goods against these katcha parchies by the appellant, the demand on this count, is not sustainable. The appellant has taken the plea that to manufacture plastic spools out of RPP dana and scrap, there is burning loss. The quantum of burning loss is required to be considered by the adjudicating authority as it is also fact that if any goods manufactured from the scrap or reprocessed plastic dana, there is burning loss, this fact is required to be considered while considering the quantity manufactured by the appellant. Matter remanded for re-examination - appeal disposed off by way of remand.
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2017 (1) TMI 361
CENVAT credit - forged documents - denial on the ground that appellant has taken Cenvat credit on paper transactions and has not physically received the goods - Held that: - As per Rule 9(3) of the Cenvat Credit Rules, 2002, the assessee is required to find out while taking Cenvat credit to ensure that the input on which Cenvat credit is taken, the relevant document is accompanied by them or not. Admittedly, in this case the appellant is able to produce the invoice against which appellant has availed Cenvat credit and same has been entered in their RG-23 Register. Therefore, the burden cast on the revenue to prove that this is only a paper transaction and goods have not been received by the appellant at all. To ascertain this fact that appellant has not received the goods, the statement of transporter is very much relevant to find out the truth. The charge against the appellant that they have not received goods and it was only the paper transaction is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 364
Imposition of penalty u/s 11AC of the Central Excise Act, 1944- Rule 6(3) Cenvat Credit Rules, 2004 - whether imposition of penalty justified, when there was no demand of duty made? - Held that: - I have gone through the show cause notice which has been issued only to impose under Section 11AC of the Act. As there is no demand of duty in the show cause notice, therefore, the penalty on the respondent is not imposable in the light of the decision of the Geneva Fine Punch Enclosures Ltd. [2011 (1) TMI 746 - KARNATAKA HIGH COURT] wherein the Hon ble Karnataka High Court has held that the determination of liability to pay duty is a condition precedent for imposing penalty - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (1) TMI 368
Penalty - Rule 26(2) of CER, 2002 - Held that: - In Appeal No.E/55622/2013, the sole contention of the appellant in the matter is that when there was no provision in the statute in Rule 26 (2) to impose penalty on the appellant during the impugned period, therefore, no penalty is imposable on the appellant. Appeals Nos.E/54939-54945/2014 have been filed by the appellants against adjustment of rebate claim sanctioned to the appellant against the penalty imposed on the appellant in Appeal No.E/55622/2013. As the part penalty is not sustainable, therefore the amount of rebate claim is not be adjusted except ₹ 9,048 - Appeal allowed.
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2017 (1) TMI 374
Valuation - interconnected undertaking as per proviso 1(a)(iii) to Section 4 of Central Excise Act, 1944 - related party transaction - Rule 9 read with 10A of the Central Excise valuation Rules, 2000 - Held that: - The provision of Rule 9/10(a) are not applicable to of Section 4(3)(b)(i) of Central Excise Act, 1944 as Rule 9/10(a) are not applicable to interconnected undertakings being related persons, therefore, the proceedings initiated against the appellants are not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 373
CENVAT credit - retention of part of invoice as performance guarantee - denial of credit on amount of money retained - Held that: - the very same issue was the subject matter of clarification by the Board vide Circular dated 30.04.2010. In para 5(b), the situation as per the present case was also covered. It was clarified that in case of any amount retained or discounted after the invoices were issued, the credit need not be changed and full credit of service tax paid to the service provider will be eligible for credit. It is clarified that the invoice would infact stand amended to that extent - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 365
Cigarettes - clandestine removal of the goods - demand of duty, interest and penalty - Held that: - the appellant is under physical control of the Central Excise Department. Therefore, it cannot be alleged that the appellant is engaged in the manufacture of clandestine removal of the goods. In the absence of positive evidence of clandestine removal by the appellant, the demand is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 351
Period of limitation - application before Settlement Commission - Section 32-O(1) of Central Excise Act, 1944 - Held that: - it cannot be said that third application was barred under Section 32-O(1) of Act, 1944. Learned Counsel for petitioner has not been able to show that at any point of time Settlement Commission imposed penalty on the assessee on the ground of concealment of particulars of his duty liability so as to contradict Section 32-O(1) of Act, 1944 - petition dismissed.
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2017 (1) TMI 369
Manufacture - Rubber lined Steel Tanks/Pipes - Section 2(f) of the Central Excise Act, 1944 - Held that: - it was already held in number of cases including assessee's own case that the very same process was not manufacturing - petition allowed - decided in favor of petitioner.
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2017 (1) TMI 354
Reversal of credit - Rule 11(2) of Cenvat Credit Rules, 2004 - Held that: - the respondent has, after reversing the amount of ₹ 28,157/- on 23-2-2006, deposited the balance amount through PLA on 11-4-2006. This would mean that the respondent has reversed the entire amount of Cenvat credit attributable to the inputs lying in stock as on 31-3-2006 albeit belatedly, for which, the Department could have charged interest on the respondent. Since in the facts and circumstances of this case, the amount of Cenvat credit availed on the inputs lying in stock as on 31-3-2006 stands reversed, we do not find any merit in the appeal filed by the Revenue - appeal rejected - decided against Revenue.
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2017 (1) TMI 355
Deemed credit in terms of N/N. 6/2002-C.E. (N.T.), dated 1-3-2002 - denial on the ground that these goods, falling under Chapter Heading 5207.20, which were received by them for processing, has not been specified as input in the notification - Held that: - the said Board’s Circular has made implicit the deeming provisions of said notification to the effect that the grey fabrics are manufactured out of duty paid yarn and that the yarn has suffered appropriate duty - the deemed credit availed by the respondent is clearly allowable - appeal dismissed - decided against Revenue.
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2017 (1) TMI 357
Merger of two different units - denial of CENVAT credit on the ground that the said unmerged unit has taken the credit in respect of invoices issued in the name of other merged unit - Held that: - At the material time when the two units were different the objection could have been of any merit, but after the merger of two units into one, this objection cannot sustain. There is no time limit for availing Cenvat credit of inputs. Cenvat credit of inputs received earlier can be availed at a later date - In the instant case, the inputs invoices are dated 5-6-2006 to 31-7-2006 and the appellant have taken credit of the same on 31-1-2008. There is no dispute that the appellant have received the material in one of the two units, who later merged - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 353
Reversal of credit - Rule 6(3) of the Cenvat Credit Rules, 2004 - Whether the respondent is required to reverse an amount of 10% of the value of clearance made to the SEZ developers or not during the period of 18-9-2008 to 26-12-2008? - Held that: - the respondent is manufacturing only and only dutiable goods. The goods are excisable but it is cleared to SEZ developers, therefore, no duty is payable - the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 are not applicable to the facts of this case - appeal dismissed - decided against Revenue.
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2017 (1) TMI 356
CENVAT credit - area based exemption - N/N. 50/2003-C.E., dated 10-6-2003 - whether the assessee has availed the benefit of Notification No. 50/03-C.E. ibid (area based exemption) is required to reverse the credit on the inputs already availed or not? - Held that: - at the time of availing the credit on inputs, the final product was dutiable, therefore, as per Rule 3 of Cenvat Credit Rules, 2004, the respondents have correctly availed the credit on inputs. Later on the respondents have opted to avail the benefit of exemption under N/N. 50/03-C.E., the respondents are not required to reverse the credit already availed by them - appeal dismissed - decided in favor of respondent-assessee.
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2017 (1) TMI 352
Restoration of appeal - Duty deposit - duty imposed along with interest relying in the judgement of Dinesh International Ltd. v. Union of India & Anr.[2009 (12) TMI 137 - SUPREME COURT OF INDIA] - Held that: - If the appellant does not abide by the undertaking made before us today, any deposit after the time offered has to be accompanied with 9% interest from the date of adjudication of the liability since waiver of pre-deposit was not granted to the appellant by the Tribunal - appeal will be restored on duty deposit - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (1) TMI 336
VAT or service tax - activity in the nature of service or sale - SIM replacement charges - lease line revenue - Vires of Sec.2(u) and 2(v) of the MP VAT Act, 2002 - whether the SIM replacement and lease line is selling of goods or providing of services? - Held that: - the amount received by the cellular telephone company from its subscribers towards SIM card will form part of the taxable value for levy of service tax, as the SIM cards are never sold as goods independent from service provided. They are considered to be part and parcel of the services provided and dominant position of the transaction is to provide services and not to sell the material ie., the SIM cards which on its own, but without the services, would hardly have any value at all. Even in the case of replacement of SIM Card, the value of replacement in respect of SIM cards forms part of the activation charges, as no activation is possible without a valid functioning of SIM card and the value of taxable service is calculated on the gross amount received from the operator from the subscriber and, therefore, once it has been held that no sales tax can be charged for providing a SIM, the question of charging it on replacement of a SIM, does not arise. Lease line charges - Held that: - similar issue was decided in the case of Bharti Infratel Ltd., Vs. State of Madhya Pradesh and others [2015 (8) TMI 1289 - MADHYA PRADESH HIGH COURT], wherein the Division Bench of this Court while deciding the issue of infrastructure charges received in respect of mobile towers has held that such charges are of the nature of service charges and are not liable for VAT since the mobile towers all along remain in control and possession of the Company and hence there is no sale. In the case of lease line charges also this very principle applies since a subscriber of a lease line does not become the owner of the line either by control or by possession and hence such charges are only for services rendered and there is no element of sale therein - service tax leviable. Sec.2(u) and 2(v) of the MP VAT Act, 2002 is ultra-vires and void, in so far as it relates to imposition of VAT on SIM replacement charges and lease line revenue, which are merely services - petition allowed - decided in favor of petitioner-assessee.
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2017 (1) TMI 335
Rectification of assessment - Held that: - if, the relevant C Forms and H Forms are filed and the difference in the figures appearing in the audit report (as available in the form WW and the monthly returns) is explained, the respondent could pass a fresh Assessment Order - petition allowed - decided in favor of petitioner.
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2017 (1) TMI 333
Input tax credit - denial on the ground that the selling dealer has not paid the tax - Held that: - Once the purchaser dealer-assessee satisfactorily demonstrates that while purchasing goods, he has paid the amount of VAT to the selling dealer, the matter should end so far as his entitlement to the claim input tax credit - If the selling dealer has not deposited the amount in full or a part thereof, it would be for the Revenue to proceed against the selling dealer. But thereby the benefit of input tax credit cannot be deprived to the purchaser dealer. Petition dismissed - decided in favor of respondent-assessee.
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2017 (1) TMI 334
Levy of differential tax - assessee sought exemption certificate @ 1%, whereas as per the Notification dt 29.3.2001 the exemption certificate was applicable @ 1.5% and since exemption certificate was issued in excess of .5%, a notice u/s 30 was issued - Held that: - AO was satisfied that all the receipts of ₹ 2,17,16,917/- were prior to 29.3.2001 and once this is a finding of fact recorded by both the authorities, as well as the impugned order, in my view the finding reached by the Tax Board is just and proper. Merely mentioning by the AO that exemption certificate was wrongly allowed, is no reason to reopen the case - petition dismissed - decided against Revenue.
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2017 (1) TMI 332
Imposition of penalty u/s 78 (5) - goods were not intended to be delivered in the State of Rajasthan and merely Rajasthan comes on way from Ahemadabad to Delhi - is penalty justified? - Held that: - the vehicle was merely passing through the State of Rajasthan and the documents produced/proved that it was being transported from Ahemadabad to Delhi and once it is a finding of fact recorded by all the 3 authorities, no interference is caused. In my view the Assessing Officer has no jurisdiction to examine further if the vehicle was not intended for this State. Deficiency/discrepancy if any was required to be conveyed to the Assessing Officer of Consignor/ Consignee who could have taken appropriate action - penalty set aside - petition dismissed - decided against petitioner.
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