TMI Tax Updates - e-Newsletter
October 13, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Leasing of vehicles purchased and leased prior to 1st July, 2017 would attract GST at a rate equal to 65% of the applicable GST rate (including Compensation Cess)
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Income Tax:
TDS u/s 194H - Merely because in the financial statement assessee has debited the amount as commission it cannot be treated so without looking at the real nature of the transaction. The AO must bring on record material to establish that there is a principal agent relationship existing
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Income Tax:
TDS u/s 194C - reimbursement of expenses - no good reason or evidence on record to hold that the expenditure incurred by the Assessee- AOP in the present fact situation would partake the character of income or profit, liable to tax deduction at source by the payer
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Income Tax:
Addition u/s 68 - SEBI’S order heavily relied upon by the AO - the allegation that the assessee and/or Ashita Stock Broking Ltd. getting involved in price rigging of KAFL shares fails.
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Service Tax:
Refund claim - Rule 5 of CCR, 2004 - refund cannot be denied merely on the ground that in the Service Tax Returns, the Cenvat credit column was shown as ‘Nil’.
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Service Tax:
BAS - appellants are rendering services of air travel agent to their customers - the consideration received for said services will be chargeable to service tax under ‘Business Auxiliary Services’.
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Service Tax:
Classification of services - Commission received from other IATA agents - the services rendered by sub-agent is also the same and it cannot be different from that of air travel agent services
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VAT:
The import of goods from any territory outside India comes to an end when the goods enter into the custom frontiers of India and are released for home consumption - Levy of Entry tax confirmed - SC
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VAT:
The insurance charges and carrying charges do not form part of the sale price for the reason that the sale was completed at the point of spot delivery and the insurance and carrying charges were incurred thereafter - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (10) TMI 542
Reopening of assessment - Held that:- Department had invoked Section 148 of the Act of 1961 in respect of three assessment years as against the petitioners. The Department has also supplied the reasons for such invocation. The petitioners had replied thereto. It was incumbent upon the authorities to consider and decide the objections raised by the petitioners before proceeding to assess the reopened assessment years. In the present case, the Assessing Officer did not dispose of the objections raised, but proceeded to pass an order of assessment after reopening the assessment under Section 148. Such a procedure, in my view, is not available to the Assessing Officer. The Assessing Officer ought to have disposed of the objections raised by the petitioners by a reasoned order prior to the Assessing Officer passing an order of assessment after reopening the assessment under Section 148 of the Act of 1961. In such circumstances, the impugned order of assessment cannot be sustained. The same is set aside. All consequential steps taken pursuant to in terms of impugned order of assessment including notice under Section 271 of the Act of 1971 are also set aside.
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2017 (10) TMI 541
Deemed dividend u/s 2(22)(e) - advances made in the course of bonafide trade transactions - According to the Assessing Officer advances made in the course of bonafide trade transactions are covered by section 2(22)(e) - whether lending of money was substantial part of the business of the company? - Held that:- CIT-(A) while adjudicating the issue in dispute has relied on the decision of the Hon’ble Bombay High Court in the case of Parley Plastic Limited (2010 (9) TMI 726 - BOMBAY HIGH COURT), wherein the Hon’ble High Court has held that the expression “substantial part” does not come out an idea of being the “major part” or the part that constitute majority of the whole. The Hon’ble High Court held that the legislature had deliberately used the word “substantial” instead of using the word “major” and/or specifying any percentage of business or profit to be coming under the lending business of the lending the money for the purpose of clause (ii) of section 2(22) of the Act. Ld. Sr. DR did not bring before us any contrary decision of the jurisdictional High Court or the Hon’ble Supreme Court. In view of above facts and circumstances, we do not find any infirmity in the finding of the Ld. CIT-(A) on the issue in dispute and accordingly, we uphold the same - Decided against revenue
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2017 (10) TMI 540
Addition u/s 68 - Held that:- It is an admitted fact that assessee did not attend at many assessment proceedings despite service of notices. However, some proceedings were attended, but adjournment was sought. No explanation was filed with any documentary evidence to explain the cash deposited by assessee in his bank account maintained with ICICI Bank Ltd., The A.O. therefore, passed ex-parte order under section 144 of the I.T. Act. It is, therefore, the duty of the Ld. CIT(A) before granting relief to the assessee that whatever contention was raised by the assessee before him should be confronted to the A.O. The A.O. should have been given an opportunity of being heard at the appellate stage in such circumstances, before passing the appellate order. Therefore, the order passed without giving opportunity to A.O. to rebut the claim of assessee, the order cannot be sustained in law As assessee did not raise any such plea of peak credit before A.O. and no factual foundation have been laid out for claiming benefit of peak credit either before A.O. or before Ld. CIT(A). The assessee admitted before Ld. CIT(A) that cash flow statement is cooked-up document. In view of the above, we find that the matter requires re-consideration at the level of the Ld. CIT(A). In view of the above discussion, we set aside the impugned order of the Ld. CIT(A) and restore the appeal of the assessee to the file of Ld. CIT(A) with a direction to re-decide the appeal of assessee in accordance with law, by giving reasonable, sufficient opportunity of being heard to the assessee as well as A.O.
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2017 (10) TMI 539
TDS u/s 194H - disallowance under section 40(a)(i) for non deduction of tax on payment of commission - whether the payment made by the assessee to the distributor is a commission or cash discount? - Held that:- Referring to documents as a whole along with the terms and conditions of the agreement entered into between the assessee and the distributor in respect of talk time card is essential to determine the true nature of the transaction whether the transaction entered into between the assessee and the distributor relates to discount or commission. The TDS provisions are applicable under section 194H in case it is held that the nature of the transaction entered into between the assessee and the distributor is that of commission but in case if it is decided that the nature of transaction is not commission but discount given on sales it cannot be regarded to be commission which is hit by the provisions of Section 194H of the Income Tax Act. We, therefore, in the interest of justice and fair play to both the parties set aside this issue and restore it to the file of the AO with the direction that the AO shall redecide this issue afresh in accordance with law after going though the agreement which the assessee has entered into with the distributor as well as the sample subscription application form, whether the amount represents the expenditure incurred by the assessee towards commission or whether the said amount represents cash discount given by the assessee to the distributor for sale of talk time card - Appeals filed by the assessee are statistically allowed. Disallowance under section 14A r.w. Rule 8D - Held that:- As noted that the assessee has not earned any exempt dividend income during the impugned assessment year. Since the assessee has not earned any exempt income no disallowance under section 14A of the Income Tax Act can be made in view of the decision in the case of Principal CIT vs. Ballarpur Industries Ltd. [2016 (10) TMI 1039 - BOMBAY HIGH COURT ] following the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT]took the view that provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of the case as no exempt income was received or receivable during the relevant previous year by the assessee - Decided in favour of assessee TDS u/s 194C OR 194J - expenses on customer support services, CAS, Middleware and SMS charges - Held that:- As decided CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] where tax was deducted by the assessee, though under a bonafide wrong impression under wrong provisions, the provisions of Section 40(a)(ia) could not be invoked and if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be an assessee in default under section 201 but no disallowance could be made invoking the provisions of Section 40(a)(ia). No infirmity or illegality in the order of the CIT(A) in holding that provisions of Section 40(a)(ia) will not be applicable in the case of the assessee as there is nothing in the section to treat the assessee as defaulter where there is shortfall in deduction of TDS. We, therefore, affirm the CIT(A) and dismiss the grounds taken by the Revenue in both the appeals
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2017 (10) TMI 538
Imposition of penalty under section 271(1)(c) - no satisfaction recorded by AO - Held that:- As noticed that the Assessing Officer has simply mentioned “penalty proceedings under section 271(1)(c) of the I.T. Act are initiated separately”. There is no satisfaction recorded by the Assessing Officer whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Even, in the show cause notice issued under section 274 of the Act on 22nd December 2010, which is in printed format the Assessing Officer has not specified which limb of section 271(1)(c) of the Act he intends to apply for imposing penalty by striking off inappropriate words or paragraph. In that view of the matter and applying the ratio laid down in the decisions relied upon by the learned Authorised Representative, we hold that imposition of penalty under section 271(1)(c) of the Act in the instant case is not justified. Accordingly, we delete the penalty. Penalty under section 271AAA - no show cause notice under section 274 as mandated under sub–section (4) of section 271AAA was issued to the assessee - Held that:- When the provision contained under section 271AAA mandates issuance of notice under section 274 of the Act before imposition of penalty, the statutory authority being bound by such statutory provision has to act accordingly and cannot deviate therefrom. In our considered view, non–issuance of notice under section 274 is a serious lapse and jurisdictional error as in the absence of such notice, the Assessing Officer could not have proceeded to impose penalty under section 271AAA of the Act. Therefore, the defect arising from non–issuance of notice under section 274 r/w section 271AAA is not a curable defect as provided under section 292B. In view of the aforesaid, we delete the penalty imposed under section 271AAA of the Act.
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2017 (10) TMI 537
Income from sale of shares - nature of income - Business income OR STCG - as per revenue intention of the assessee was not to invest in shares, but to earn profit from sale of shares - Held that:- We find that during the year, the assessee has purchased and sold the shares of ₹ 22.03 crores and odd and ₹ 24.12 crores and odd respectively. Some of the shares of Axis Bank were purchased in the previous year, out of which some were sold and balance has been shown as on 31.03.2009. On examination of the tables reproduced above, we observe that the assessee has made purchase of shares 57 times and sale of shares 59 times. There are several instances when the assessee has purchased the shares and sold them either the same day or after a few days. In most of the cases, the assessee has done intraday transactions. From the above part of the balance sheet, it is clear that there is no change in the shares of some companies, which remained as it is in F.Y. 31.03.2009 and 31.03.2010. In case of other shares – K.K. Securities, the assessee had value of shares at ₹ 1,71,62,647/- as on 31.03.2009 but up to the impugned year, the assessee has sold all the shares. On perusal of the computation filed by the assessee and the capital account, the assessee has not received any dividend during the year. The assessee has received only dividend of ₹ 350/- in F.Y. 31.03.2009. In view of the characteristics of share transactions undertaken by the assessee, we do not find any justification to discard the findings reached by the authorities below on this issue. See MANOJ KUMAR SAMDARIA Versus COMMISSIONER OF INCOME TAX-I [2014 (5) TMI 229 - DELHI HIGH COURT] - Decided against Assessee. Non accepting Jobbing Losses as Business Loss/Short Term Capital Gains - Held that:- Assessing Officer has noted that there is net speculation loss on jobbing transactions of ₹ 2,13,007/- which has not been allowed to the assessee for carry forwarding in the next year because the assessee has filed the return on 20.03.2011 and the ld. CIT(A) has upheld the action of the Assessing Officer which, in our opinion, does not call for any interference. The return of income has been filed belatedly. Therefore, the loss cannot be carried forward as per provisions of the Income-tax Act. Therefore, the ground taken by the assessee for carry forward of the speculation loss is also dismissed.
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2017 (10) TMI 536
Disallowance of interest to beneficiaries - Held that:- There is some error in presenting the account, and therefore, the ld.AO instead of strictly going through the entries shown in the books, ought to have verified the contentions of the assessee with other details. In the grounds, the assessee has specifically pointed out as to how the benefit meant for the beneficiaries have been accumulated and not paid to them over a period of time. These undistributed benefits have been treated as capital of the beneficiaries in the trust, which has been used for the purpose of business. There are various other aspects also namely, the ld.DR pointed out that the assessee has been using PAN of a firm, whereas it should have a separate account number. All these aspects have confused the ld.AO. There may be certain short coming in maintaining the accounts or availing PAN but these are not so major which can persuade the AO to disallow the claim. Therefore, taking into consideration other details, we are of the view that the assessee has undistributed benefit of the beneficiaries which has been construed as capital balance, and as per the decision taken by the trust, interest has been provided on such capital balance of the beneficiaries. Therefore, the deduction ought to be allowed to them. - Decided in favour of assessee. Disallowance of the commission payment - assessee failed to demonstrate nature of services rendered by these concerns - addition u/s 40A - Held that:- We find that in the Asstt.Year 2007-08, the Tribunal has followed order of the ITAT in the Asstt.Year 2008-09 in deleting the addition as observing Trust has availed the services of these persons, therefore the commission was legitimately paid on the business brought by them. Resultantly ground raised by the assessee is allowed - Decided in favour of assessee.
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2017 (10) TMI 535
Transfer pricing adjustment towards Advertisement, Marketing and Promotion expenses - Held that:- In light of the non-sustainability of the objections taken by the Ld. AR and following the earlier view taken by the ITAT in assessment year 2010-11 in the case of the assessee, we set aside the impugned order and remit the matter to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the light of the relevant judicial position, after allowing a reasonable opportunity of being heard to the assessee. As further clarified that if a situation for determining the ALP of AMP expenses arises, then no transfer pricing adjustment should be made by applying the Bright Line Test because the Hon’ble Jurisdictional High Court has not approved the application of the bright line test in several decisions.
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2017 (10) TMI 534
Non declare income from operations carried out outside India - reasoning for non deceleration that the income arising from operations carried outside India is not attributable to the Permanent Establishment (PE) in India in terms of India-Australian treaty and hence the same is not taxable in India - gross receipts relating to ‘inside India’ operations - rejection of books of accounts and also in upholding the decision of the AO in assessing income relating to Indian operations u/s 44BB(1) - Held that:- The receipts relating to operations carried outside India is not required to be considered. Now we have held that the receipts relating to operations carried outside India is required to be considered. Accordingly the foreign exchange gain relating thereto is also required to be taken into account for determining the income of the assessee. Accordingly we confirm the view taken by the AO on this issue. The revenue has also taken a ground in not considering the foreign exchange gain as part of gross receipts. We notice that the Ld CIT(A) did not adjudicate the same, since he had held that the receipts relating to operations carried outside India is not required to be considered. Now we have held that the receipts relating to operations carried outside India is required to be considered. Accordingly the foreign exchange gain relating thereto is also required to be taken into account for determining the income of the assessee. Accordingly we confirm the view taken by the AO on this issue.
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2017 (10) TMI 533
Addition on account of liabilities of sundry creditors as ceased to exist u/s 41(1) - Held that:- For invoking the provisions of Section 41, there must be two conditions fulfilled (i) there should be cessation/remission of liability and (ii) it should be ceased during the previous years relevant to assessment year under consideration. Even when the amount remained unclaimed for considerable period but it remains to be payable then there is no cessation or remission of such liability. Further it is also not established that the assessee was not having intention to repay these liabilities. These liabilities were clearly reflected in the accounts of the assessee thus the assessee continued to acknowledge the liability payable by him. Therefore, merely on the fact that the liability is outstanding for many years shall not amount to cessation or remission of the liability. Liabilities in question were subsisting during the relevant period and only because payments were not made against these liabilities, therefore, provisions of Section 41(1) of the Act - Decided in favour of assessee.
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2017 (10) TMI 532
Disallowance u/s 14A - whether assessee has not earned any exempt income? - Held that:- From the assessment order or even the order of the CIT(A) it is not forthcoming whether this particular factual aspect was at all examined. In case the assessee has not earned any exempt income during the relevant previous year no disallowance can be made under section 14A of the Act. We direct the AO to examine this fact and if upon such examination it is found that in the relevant previous year the assessee has not earned any exempt income, by way of dividend or otherwise, no disallowance under section 14A can be made. In any case of the matter, exclusion of investments not yielding exempt income would arise only if the provisions of Section 14A is applicable in the event of assessee earning any exempt income in the relevant previous year. In the absence of such income section 14A itself is inapplicable. Accordingly, ground raised is allowed. Disallowance under section 40(a)(ia) - non deduction of tax under section 194H on the payments made to Restricted Money Changers (RMCs) - Held that:- RMCs are free to sell foreign currency bought from tourists to assessee, RBI or any other person authorised by the RBI to deal in foreign currency. It is also to be noted that both the RMCs as well as the assessee have shown foreign currency as their stock in trade. The assessee has no relationship with the persons from whom the RMCs purchase foreign currency and the assessee is no way connected to the concerned tourists. Therefore, in our view the transaction between the assessee and the RMCs is on principal to principal basis and there is no principal agent relationship existing between them. Merely because in the financial statement assessee has debited the amount as commission it cannot be treated so without looking at the real nature of the transaction. The AO must bring on record material to establish that there is a principal agent relationship existing between the assessee and the RMCs. No enquiry has been made by the AO with the RMCs to find out the real nature of transactions between them. Further, assessee’s contention that in no other place in India such premium paid has been disallowed requires to be taken note of. It is also relevant to observe, even in respect of premium payment in Goa, except, the impugned assessment year in no other assessment year such disallowance under section 40(a)(ia) has been made. That being the case, we are inclined to delete the addition made by the AO. Disallowance u/s 40(a)(ia) - short deduction of tax at source - Held that:- A plain reading of section 40(a)(ia) would also make it clear that disallowance under such provision can be made only if there is no deduction of tax at source or the assessee has failed to pay to the government account the TDS amount after deducting the same. In any case of the matter, as brought to our notice by the learned A.R. the payee has offered the amount paid by the assessee as income in the relevant assessment year. Therefore, in terms of the second proviso to section 40(a)(ia) no disallowance can be made. In view of the aforesaid, we delete the addition made by the AO and affirmed by the CIT(A). Grounds are allowed
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2017 (10) TMI 531
Eligibility for claim of depreciation - AO clearly mentioned that the activity of the assessee is re-drying and threshing tobacco for trading purpose. The raw material and the end product are tobacco only - Held that:- We find that the facts of this case are similar to the case already been considered by the coordinate bench of the tribunal and therefore by following the decision of the coordinate bench of the tribunal in the case of Maddi Lakshmaiah & Co. Ltd. (2017 (10) TMI 476 - ITAT VISAKHAPATNAM) and also in the case of Premier Tobacco Packers Pvt. Ltd. (2006 (2) TMI 101 - MADRAS High Court), we hold that assessee is eligible for additional depreciation as per the provisions of section 32(iia) of the Act, accordingly we direct the Assessing Officer to allow additional depreciation claimed by the assessee. - Decided against revenue.
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2017 (10) TMI 530
Addition u/s 40(a)(ia) - obliged to deduct tax at source on the payments made to sub-contractors as per provisions of section 194C - CIT-A treating the impugned payments as reimbursement - nature of payment - Held that:- No justification to dislodge the findings reached by the ld. CIT(A) in the impugned order. It is not in dispute that both the parties to whom the impugned payment was made by assessee-AOP were the Joint Venture Members of the assessee-AOP. It is notable that as per clause 9.1 of the Joint Venture Agreement entered between the assessee-AOP and the Northern Railway, both GC and RITES have incurred the costs on manpower in the project of Northern Railway, which was reimbursable to them as per above contract entered with the main contractee to execute the project. The ld. CIT(A) has properly examined the details of employees assigned and cost incurred by both the Joint-Venture Members, i.e., GC and RITES and has clearly found that the amount actually incurred by them towards the manpower cost, was reimbursed to them by the assessee-AOP. Therefore, the ld. CIT(A) has rightly observed that it was not any payment made under any sub-contract, as imagined by the AO without any evidence on record. There is no good reason or evidence on record to hold that the expenditure incurred by the Assessee- AOP in the present fact situation would partake the character of income or profit, liable to tax deduction at source by the payer - Decided against revenue
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2017 (10) TMI 529
Bogus purchases - assessee has availed hawalas entries - Held that:- As find that the assessee has availed hawalas entries in respect of purchases to the tune of ₹ 2,91,48,000/-. But in such type of cases, the assessee purchases good from gray market at cheaper rates thus gets additional benefit by avoiding VAT, and other in levies. The assessee has already declared GP 18.21% during the year. Under these circumstances we are of the considered opinion that the addition sustained at the rate of 22% of the total purchases is excessive and unreasonable and keeping in nature of business of the assessee and GP declared by the assessee during the year and also the decisions of the Coordinate Benches wherein the additions are sustained to the tune of 5% to 12.5% there should be some reasonable disallowance. To maintain the consistency with the orders passed by the Tribunal earlier, we are inclined to sustain 12.5% of the total purchases. The assessee gets relief of 12.5%. The appeal of the assessee is partly allowed.
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2017 (10) TMI 528
Registration u/s. 12A - no activities of the Trust were started - Held that:- The law is now well-settled that while granting the registration to the charitable institution or trust, if it is at the commencement stage, the powers of CIT, with whom the application is filed by such trust/institution, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature. A perusal of the object ives sought to be achieved by the assessee Trust is undisputedly carrying of charitable activity. It should be kept in mind that at the stage of commencement of institution/ assessee Trust, it is not relevant to decide whether the Trust has actually carried out the charitable activities because in this case it is in the nascent state only ie, within four months of its incorporation the relevant applications were moved by the appellant. So long the objects of the trust are charitable in nature; registration cannot be refused, if the trust is genuine. - Decide in favour of assessee.
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2017 (10) TMI 527
Cancelling the registration granted to the assessee trust u/s 12AA - registration certificate u/s 12AA cancelled merely on the basis of the statement furnished by the managing trustee of the GRGCT obtained during the course of survey u/s 131 wherein as admitted by the managing trustee of the GRGCT that it is involved in bogus donations - non opportunity to cross examine - Held that:- The name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT. Therefore in such situation the opportunity of cross examination was very much required in the presence of assessee and managing trustee of GRGCT as well as the middle man namely Shri Gaurav Agarwal. Thus the ld. CIT(Ex) in the instant case erred in not giving the opportunity of cross examination There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation given by the assessee to GRGCT was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (2017 (5) TMI 1486 - ITAT KOLKATA) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. Apart from the above, the grounds for cancellation for registration u/s 12AA(3) of the Act is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. We therefore are of the view that the cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed - Decided in favour of assessee.
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2017 (10) TMI 526
Non deduct tax at source u/s 194A on the interest on “Flexi Fixed Deposit Schemes” - Proceedings u/s 201(1) and 201(1A)- Held that:- On the perusal of the order of the Assessing Officer as well as the Learned CIT(Appeals), nowhere it is borne out, how the Assessing Officer had satisfied himself as to whether the deductee/payee has failed to pay taxes directly. It is only when a finding is arrived in the case of the deductee/payee that he has failed to pay tax directly, then only deductor, i.e., the present assessee can be deemed to be the assessee-in-default in respect of such tax and then only proceedings u/s 201(1) and 201(1A) can be initiated. Assessing Officer has nowhere given any finding that the deductee/assessee has failed to pay taxes directly and without such finding the Assessing Officer cannot treat the deductor that is, the present assessee as assessee-in-default. The proceedings u/s 201(1)/201(1A) has not been validly initiated and therefore, the impugned order u/s 201(1) read with section 201(1A) is bad in law and same is quashed. In the result the appeal of the assessee is allowed.
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2017 (10) TMI 525
Reopening of assessment u/s 148 - receipt of share application money and addition u/s 68 - Held that:- Instead of referring in the reasons recorded to the specific facts of assessee's case for justifying the assumption of jurisdiction, the AO addresses the legal position on what would constitute information. Even on merits, it is seen that the AO has proceeded selectively. No justification has been given why share application on a premium is considered not questionable for two concerns when the facts and circumstances of assessee's case remained identical i.e. if the assessee company was worth investing into on a premium in a specific year by two other concerns why only for M/s Genesis Fashions Pvt. Ltd., the share application money on a premium is questioned. The existence of M/s Genesis Fashions Pvt.Ltd. at the very same address by itself, we hold, does not give cause to any infirmity. On the contrary, the existence in-fact stands proved. The documents in support of the transactions, we note, have not been rebutted. Considering the law as it stands and the provisions of the Act, neither assumption of jurisdiction can be upheld nor the addition made on the basis of suspicions, surmises and conjectures. The statement of the Director by itself recorded u/s 133A having no evidentiary value in the face of the documentary evidence on record in the peculiar facts of the present case cannot be brushed aside by the tax authorities on the basis of suspicions and surmises. Accordingly, we allow relief to the assessee both on the jurisdictional issue addressed in Ground No. 1 and 2 and on merits addressed in Ground Nos. 3 to 5 - Decided in favour of assessee.
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2017 (10) TMI 524
Registration u/s 12AA denied - no activity was carried out by a trust - Held that:- Even otherwise if no activity was carried out by a trust or institution, still registration can be granted by the CIT(E) and even otherwise it is not the case of the Revenue that at the time of consideration of application of the Assessee, the assessee has carried out many activities and their genuineness were in doubt but in the instant case grievance of the CIT(E) is only that there was no activity carried out by the assessee. Although form the documents submitted before us positively reflects that the Assessee trust has carried out many activities in furtherance of objects of the trust, however because the same activities have not been carried out and documents were also not submitted before the LD. CIT (E ) till the date of adjudication of Application, hence we are not taking into consideration the said documents and facts, however in overall consideration of the judicial interpretation, peculiar facts and circumstances and situation, in our considered opinion the Ld. CIT(A) was under obligation to consider the objects of the trust which are available in the trust deed itself. Even otherwise, the concerned Revenue Authority was empowered to withdraw the registration already granted or cancel the said registration if he came across that factually trust has not conducted any charitable activities. Hence, we direct the Ld. CIT(E) to grant the registration u/s 12A of the Act to the assessee and it is clarified in case, the assessee does not qualify/satisfy the objects of the trust and/or not involved in genuine activities, then the concerned authority shall be at liberty to withdraw or to cancel the registration u/s 12A of the Act.
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2017 (10) TMI 523
Bogus purchases - G.P. determination - Held that:- When sales are not doubted hundred percent disallowance for bogus purchase is not possible. This has been so held by honourable jurisdictional High Court in the case of Nikunj Eximp enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT]. However we also note that facts of the case before the jurisdictional High Court were different from that in the present case. Facts of the present case clearly indicate that assessee has engaged in transaction in the grey market. Making transactions in the grey market gives the assessee savings of taxes etc at the expense of Exchequer. In similar situation following the honourable Gujarat High Court decision in the case of Simit P Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) disallowance of 12.5% of the bogus purchase has been found to be meeting the end of justice in a number of cases at the Mumbai tribunal. Accordingly, we modify the order of learned CIT-A and hold that the disallowance in this case should be made at the rate of 12.5% of the bogus purchase
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2017 (10) TMI 522
Addition u/s 68 - sale proceeds of shares of Kailash Auto Finance Limited (KAFL) treating the same as income from undisclosed sources - rejecting the assessee’s claim of long term Capital Gains (LTCG) on sale of those shares - claim of exemption u/s 10(38) - Held that:- SEBI order did mention the list of 246 beneficiaries of persons trading in shares of KAFL, wherein, the assessee and/or Ashita Stock Broking Ltd’s name is not reflected at all. Hence the allegation that the assessee and/or Ashita Stock Broking Ltd. getting involved in price rigging of KAFL shares fails. We also find that even the SEBI’S order heavily relied upon by the Id AO clearly states that the company KAFL had performed very well during the year under appeal and the P/E ratio had increased substantially. Thus we hold that the said orders of SEBI is not evidence against the assessee. Much less to speak of direct evidence. The enquiry by the Investigation wing and/or the statements of several persons recorded by the Investigation Wing in connection with the alleged bogus transactions in the shares of KAFL also did not implicate the assessee and/or his broker. It is also a matter of record that the assessee furnished all evidences in the from of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the AO to be false or fabricated. The facts of the case and the evidences in support of the assessee’s to be false or fabricated. The facts of the case and the evidences in support of the assessee’s case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the AO was not justified in rejecting the assessee’s claim of exemption under section 10(38) of the Act. AO was not justified in assessing the sale proceeds of shares of KAFL as undisclosed income of the assessee u/s 68 of the Act. - Decided in favour of the assessee. Unexplained expenditure u/s 69C - assessee must have incurred commission expenses @ 5% of the LTCG - Held that:- As already held that the transactions relating to LTCG were genuine and not the accommodation entries as alleged by the Id AO. Consequently the addition u/s 69C of the Act is hereby directed to be deleted. We accordingly hold that the reframe question no. 2 raised hereinabove is decided in the negative and in favour of the assessee. Disallowance u/s 14A - Held that:- AO did not record any satisfaction in terms of section 14A of the Act, We also find that Demat expenses were not claimed by the assessee in the return filed. We hold that the Id AO ought to have recorded primarily his satisfaction as mandated in terms of section 14A(2) of the Act and Rule 8D(1) of the Rules and without resorting to the same, he ought not to have proceeded directly as per Rule 2D(2) of the Rules. Only if the test provided in Rule 8D(1) of the Rules fail, the Id AO is authorized in law to proceed with the computation mechanism provided in Rule 8D(2) of the Rules. In view of this we hold that the Id AO was not justified in invoking the provisions of section 14A of the Act read with Rule 8d of the Rules, the disallowance made by the Id AO directed to be deleted - Decided in favour of assessee.
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Customs
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2017 (10) TMI 521
Smuggling - Gold - contraband item - Whether in the facts and circumstances of the case the findings imposing penalty rendered by the Commissioner of Customs-Respondent No.1, and CESTAT are perverse as they are based on the statements of three eye witnesses to the incident, viz., Vincy, Baptista and Sebastian, who were not allowed to be cross-examined by the Appellant? Held that: - Section 111 of the Act lists the goods liable to confiscation. Section 112(a) of the Customs Act, set out above, speaks of an act or such omission that results in the goods liable to confiscation. Section 112(b)(i) stipulates a penalty not exceeding the value of the goods or ₹ 5000. Without cogent material of the contraband itself, its value, weight and purity, there is simply no basis for the penalties imposed. The CESTAT confused the issues of relevance and proof. A statement may be relevant, but it yet needs to be proved. The fact that a statement is made and recorded, and is statutorily said to be relevant, does not mean it is proved. That statement, like all testimony, must be subjected to the rigours of cross-examination, to be drawn into the evidentiary pool to form a basis for reasoning or conclusion. Section 138B does not say, and could not say, that statements can be taken as proved even without cross-examination. This, however, is how the CESTAT has misunderstood the section. All that the section says is that for want of production of a witness, his Section 108 statement does not automatically cease to become relevant. Questions of relevancy and proof are yet determined by the Indian Evidence Act, and the CESTAT wholly failed to take these into account. The contention of the Learned Counsel for the Appellants that Section 138(B) of the Customs Act applies only to prosecution of offences under the Customs Act and not to departmental adjudication proceedings is not well-founded. A bare perusal of Section 138(B)(1) (set out above) tells us otherwise. It is not possible to hold that the word ‘proceeding’ excludes departmental adjudication proceedings. Indeed, even the CESTAT did not think so, and we see no reason to consider this plea now - Consequently, if there were gaps, retractions and inconsistencies, and even if the Section 108 statements of the three witnesses (Vincy, Sebastian and Baptista) were relevant, those statements demanded proof and corroboration. They could not, on their own, and without the witnesses being made available for cross-examination, survive the tests we demand of proof. There is no substitute for evidence and proof, and no amount of pungent story-telling can make up for it; nor is it permissible to borrow selectively and out-ofcontext from one order while ignoring another that is much closer to the issues at hand, or to misread and misunderstand the purport of a statute. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 520
Classification of goods - girls tight - The department was of the view that the correct classification of the item will be as “girls trouser” and not as “girls tight” - Held that: - From a perusal of Chapter 61 and 62 of the Customs Tariff, it is noted that Chapter 61 covers only “articles of apparel and clothing, accessories knitted or crocheted” and same is clearly specified under Chapter Note 1 to Chapter 61. On the other hand, Chapter 62 covers the same items when not knitted or crocheted. It stands admitted that the disputed goods are made of woven fabric. Consequently, the classification under Chapter 61, as claimed by the appellant is ruled out and the classification under Chapter 62046990 is upheld. Appeal dismissed - decided against appellant.
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2017 (10) TMI 519
Rectification of Mistake - Held that: - The Tribunal has no powers to review its order but can only rectify an error which is apparent in the order. An error apparent on the face of record means, an error which strikes on mere looking and does not require long drawn out process of reasoning on points where there may be conceivably two opinions. Such error should not require any extraneous matter to show its incorrectness - The error that has been put forth by the respondent counsel in the present application, in our view, is not one which is patent and can be easily discovered and attended to. The entire appeal would require to be reheard - ROM application dismissed.
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2017 (10) TMI 518
Valuation - enhancement of value - Rule 12 of the Customs Valuation (Determination of Value of Imported Good) Rules, 2007 - Held that: - the ld. Commissioner (Appeals) has allowed the appeals of the respondent on the ground that no valid reasons were assigned by the assessing authority in rejecting the declared value furnished by the respondent herein. Further, he has also held that the order dated 30.09.2013 passed by the Commissioner (Appeals) has not been appealed against by Revenue and thus, has attained finality. Therefore, he held that as per the direction contained in the order dated 30.09.2013, the Department should have granted refund to the respondent. On going through the impugned order, the stand taken by the ld. Commissioner (Appeals) in allowing the appeal of the respondent is in confirmity with the statutory provisions - appeal dismissed - decided against Revenue.
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2017 (10) TMI 485
Maintainability of petition - grave urgency - The application has been filed by the petitioner recently on 11th August 2017 before the Appellate Tribunal. If the urgency for immediately taking up the said pending application for hearing is pointed out by the petitioner, we are sure that the Appellate Tribunal will give necessary priority to the hearing of the said application - As the Appellate Authority is seized of the matter, at this, we are not inclined to entertain this petition under Article 226 of the Constitution of India - petition dismissed being not maintainable.
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Insolvency & Bankruptcy
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2017 (10) TMI 517
Corporate Insolvency Resolution Process - Whether the present CP is maintainable since the Petitioner has already resorted proceedings for recovery of the debt in question - Held that:- It is not the case of the Petitioner that the Respondent is unable to pay debt or it is insolvent for the same. While demanding to pay the loan in question, the petitioner is filing cases as stated supra, to prevent the respondent to pay the debt, after selling flats in question and, it is also not accepting the registration of Flats in its favour or it nominee. Admittedly, each flat in question is worth ₹ 40 lakhs at market value and there is absolutely no difficulty for the Respondents to pay the amount. However, the Petitioner for the reason best known to him is not interested to get the money back but only interested to initiate malicious litigations by way of filing civil suit, criminal cases and also case under NI Act as mentioned above. There is no question of insolvency involved in this case as mentioned above and thus, there cannot be any resolution of insolvency process. The present petition is filed for purpose other than the resolution of insolvency as mentioned in Section 65. Therefore, the present proceedings must be held to be a maliciousone and it is liable to be dismissed with cost. It is to relevant to mention here that as per Section 63 of IBC, 2016, no civil court or authority has jurisdiction to entertain any suit or proceedings in respect of any matter on which NCLT or NCLAT has jurisdiction under this Code. Knowing very well that IBC came to force, and only single cause of action arise in the instant case, i.e. Payment of short term loan of ₹ 2.5 Crore, the petitioner has resorted to civil and criminal course of action as stated supra. The instant Company petition is not maintainable and it is liable to be dismissed.
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2017 (10) TMI 516
Corporate Insolvency Resolution Process - Corporate Debtor under Insolvency & Bankruptcy Code, 2016 - Held that:- Operational Creditor that a statutory notice dated 12.8.2015 was issued under the erstwhile provisions of the Companies Act, 1956 for winding up the company on the grounds of inability to pay its debt and even though the said notice was received, no reply was forthcoming on the part of the Corporate Debtor. Despite subsequent reminders, the Corporate Debtor was not paying the balance sum due and hence, the Operational Creditor, it is stated caused a notice dated 9.2.2017 to be issued under the relevant provisions of IBC, 2016. Subsequent to the receipt of notice, the Corporate Debtor through its Advocate, it is stated to have caused a reply to be sent to the notice sent by the Operational Creditor dated 28.2.2017. However, it is contended by the Operational Creditor that in the reply, no dispute had been raised against the claim of the Operational Creditor nor any intimation regarding payment made in relation to the debt/default due has been specified and in the circumstances, the present application seeking for initiation of the Corporate Insolvency Resolution Process (CIRP) has been filed against the Corporate Debtor.
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2017 (10) TMI 515
Corporate insolvency procedure - Held that:- Form and manner of the application has to be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is further evident that if the application is incomplete as per the requirement of Section 7(2) of the Code then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7(5) of the Code postulates that before rejecting the application on the ground that it is incomplete in terms of Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect in his application. The defect in the application needs to be removed within seven days from the date of receipt of notice. For the reasons, aforementioned this petition is admitted. Shri Rajesh Samson who is duly registered with Insolvency and Bankruptcy Board of India (IBBI/IPA-001/IP-P00240/2017-18/10469) has been proposed as an Interim Resolution Professional. He is hereby appointed as an Interim Resolution Professional. He has filed his certificate of registration with Insolvency and Bankruptcy Board of India. He has also filed his written communication dated 04.08.2017 in connection with the application to initiate Corporate Insolvency Resolution Process. The disclosure has been made in the letter dated 04.08.2017. In pursuance of Section 13(2) of the Code we direct that public announcement shall be made by the Interim Resolution Professional within the statutory period with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code
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Service Tax
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2017 (10) TMI 514
Taxability - outstanding dues - whether the amount shown as outstanding in the books of accounts of the Assessee as on 10th May 2008 would be amenable to service tax by virtue of the amendments? - amendment made in Explanation (c) to Section 67 of the FA 1994 - an explanation was added to sub-rule (1) under Rule 6 of the STR, 1994 by N/N. 19/2008/ST dated 10th May 2008 - The CESTAT has, in the impugned order, held that the amendment was made to Section 67 of the FA 1994 as well as Rule 6 of the ST Rules only with effect from 10th May 2008 and not retrospectively. It was noted that the explanation to Rule 6 being prejudicial to the interest of the AE would, therefore, not apply retrospectively. Held that: - As a consequence of the above amendments, service tax was required to be paid on taxable service provided to AEs even where the consideration of such tax and services had not actually been received but had been shown in books of accounts as “outstanding”. Although the intention behind the insertion of the above Explanation to Rule 6 of ST Rules corresponding to the amended Explanation (c) to Section 67 of the FA was to bring amounts receivable from the AEs of the Assessees to tax, the intention was not to make it retrospective, i.e. to tax the transactions that have taken place prior to 10th May 2008. Admittedly, the amount shown outstanding in the books of accounts of the Assessee pertained to the transactions that had taken place prior to 10th May 2008. As per Rule 6, it is the date when the amount is credited/debited that is relevant and not the fact that the amount remains in the books. Any contrary interpretation would result in the provision being made retrospective, which was not the intention. The Court is satisfied that no error has been committed by the CESTAT in answering the issue in favour of the Assessee, viz., that the aforementioned amendments to the FA 1994 as well as the ST Rules cannot be made retrospective - appeal dismissed - decided against Revenue.
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2017 (10) TMI 513
Penalty u/r 15(1) of CCR, 2004 - though the SCN proposed penalty u/r 15 but the adjudicating authority has not passed specific order in the operating portion of the order - Held that: - the Adjudicating authority has though recorded submission but not given findings. It also appears that there is error appearing in the order that no order was passed in the operating portion of the order relating to the penalty - matter remanded to the adjudicating authority for passing order on the penalty u/r 15 of CCR, 2004 - appeal allowed by way of remand.
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2017 (10) TMI 512
Interpretation of statute - Section 67 as well as rule 6(1) of Service Tax Rules, 1994 were amended on 10-5-2008 - effective date of amendment - retrospective or prospective effect to amendment? - Held that: - CBEC vide letters No. 334/1/2008 dated 29.02.2008 clarified that service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of accounts, whichever is earlier - reliance also placed in the decision in the case of SIFY TECHNOLOGIES LTD. Versus COMMISSIONER OF C. EX. & ST., LTU, CHENNAI [2010 (11) TMI 232 - CESTAT, CHENNAI], where it was held that no retrospective effect can be given to the changes made in the Rules and in the Finance Act on 10-5-2008 - demand for the period prior to 10-5-2008 cannot be sustained. Moreover demand for period prior to 18-4-2006 cannot be sustain on the appellant on the ground that Section 66A was introduced only on 18-4-2006. Extended period of limitation - Held that: - Tribunal in the case of General Motors India Pvt ltd Vs. Commissioner of Central Exicse, Pune [2015 (9) TMI 1097 - CESTAT MUMBAI], has roughly in similar circumstances set aside the invocation of extended period - extended period not invokable - extended period cannot be invoked in this case. Royalty - taxability - interpretation of statute - Rule 6(1) of Service Tax Rules, 1994 - demand of interest - Held that: - identical issue has been dealt with by the Tribunal in the case of Sify Technologies Ltd. v. CCE & ST, LTU, Chennai, wherein the Tribunal has held that the Explanation added to Rule 6(1) of Service Tax Rules, 1994 cannot be given retrospective effect. The ratio of the above judgment of the Tribunal is squarely applicable to the facts of this case and just on account of use of the words for the removal of doubts in the Explanation to Rule 6(1), this explanation cannot be treated as a clarificatory explanation having retrospective effect - the demand for the interest for alleged delay in discharging service tax liability by the due date is not sustainable. The matter is remanded to the original adjudicating authority for re-calculating the liabilities - appeal allowed by way of remand.
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2017 (10) TMI 511
Rectification of mistake - The applicant submits that it did not claim the benefit of exemption provided in the N/N. 8/2005 dated 01/03/2005 and the job work activities for M/s Hero Motocop Ltd were done in terms of N/N. 214/86 CE - Held that: - Since the Adjudicating Authority has not considered the issue as to whether the benefit of 214/86 dated 25/03/1986 is available to the appellant or not and only confined his findings to N/N. 8/2005-ST dated 1/03/2005, there was no occasion or scope for the Tribunal to discuss the issue regarding eligibility of the benefit of N/N. 214/86-CE dated 25/03/1986 - the ratio adopted for 214/86-CE in respect of Central Excise Duty exemption cannot be applied to N/N. 8/2005-ST to determine the applicability of CCR, 2004. We do not find any apparent error in the Final Order dated 04/05/2017 for rectification as sought for by the applicant - ROM application dismissed.
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2017 (10) TMI 510
Refund claim - Rule 5 of CCR, 2004 - denial on the ground that In Service Tax Returns, the Cenvat credit column was shown as ‘Nil’, therefore, verification of refund claim is not possible - Held that: - refund claim cannot be denied on the ground that the Cenvat credit has not shown in their ST-3 returns - reliance placed in the case of Broadcom India Research Pvt. Ltd. Versus Commr. of S.T., Bangalore [2015 (6) TMI 1030 - CESTAT BANGALORE] - on the ground that the appellant has not shown Cenvat credit in their ST-3 returns, cannot be the ground to deny refund to the appellant - refund allowed. Refund claim - denial on the ground that FIRC submitted by the appellants have no co-relation with the invoices - Held that: - initially the appellant were known as M/s Hemscott India Pvt. Ltd. and with effect from 19.3.2008, the name of the appellant company has been changed to the present name. As the invoices were issued in the earlier name of the company and whereas the some payments were received the new name of the company. In that circumstances, it cannot be held that FIRC are not co relatable - the matter needs examination at the end of the adjudicating authority for correlation of the invoices issued and payment received by them - matter on remand. Refund claim - denial on the ground that Invoices are not addressed to the registered premise of the appellant and invoices were not issued in the name of the appellant - Held that: - it is not disputed that these services has not been used by the appellant and have not paid service tax thereon - the appellant is entitled to the refund claim on these services as they have availed Cenvat credit on this. Moreover, the appellant has availed central registration to rectify the said mistake subsequent to the impugned period, in that circumstances, the refund claim cannot be denied on that reasons - refund allowed. Appeal allowed in part and part matter on remand.
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2017 (10) TMI 509
Benefit of N/N. 1/2006 –ST dated 1.03.2006 - availing Cenvat Credit while availing benefit of abatement - Credit used for payment of tax on GTA Service - Held that: - N/N. 1/2006-ST dated 01.03.2006 provides the exemption from payment of service tax, subject to fulfillment of certain conditions. One of the conditions itemized in the said notification is that no cenvat credit of duty/ service tax paid on inputs, capital goods and input services used for providing the taxable service shall be taken under the CCR, 2004 - Since cenvat credit in the present case has been taken by the appellant, the benefit contained in the notification dated 01.03.2006 is not available for non-fulfillment of the condition mentioned therein - appeal dismissed - decided against appellant.
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2017 (10) TMI 508
Refund of service tax paid - denial on the ground that the appellant had not obtained approval of the list of taxable services required for the authorised operations from the approval committee - Held that: - The appellant has obtained the approval letter dated 23.04.2012 for the list of services used for authorized operations. The refund claim has been filed on 24.10.2012 after obtaining the approval from the approval committee - the appellant has sufficiently complied with the conditions in the notification - refund allowed. Refund claim - denial on the ground that the appellant has contravened the condition which stipulates that appellant shall not take CENVAT credit of the service tax paid on specified services - Held that: - The appellant has reversed the credit and therefore the said condition has been sufficiently complied by the appellant - refund allowed. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 507
Insurance Auxiliary Service - input service credit - common registration - Revenue entertained a view that the input services issued by M/s. Allied Risk Management are not proper eligible inputs for the purpose of availment of credit - Held that: - Both the service provider firms were the proprietary units of one Mr Amit Dhruva and were allotted one common registration Number by Service Tax department. It is in this scenario that both the units were using the same registration number and it is only subsequently, an objection was raised and a separate service tax registration number was allotted to M/s. Allied Risk Management - Otherwise it is not disputed on record that M/s. Allied Risk Management had paid the service tax which was collected by them from the appellants, who have utilized their services - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 506
Business Auxiliary Services - appellants are rendering services of air travel agent to their customers and are registered with service tax department and utilized computer reservation software provided by Galileo for booking of air tickets for their customers - Held that: - there is a special relationship between the appellant and M/s. Galileo whose CRS system the appellant is using. The incentive which has been called by the Department as commission is the consideration for giving certain kind of marketing and promotional support to the software product (CRS / GDS) pertaining to Galileo - any service which is incidental or ancillary to any activity specified in sub clause (i) & (ii) of the definition [which pertain to promotion or marketing or sale of goods produced / provided pertaining to the client or promotion or marketing of services provided by the client (here it is Galileo) would be covered under the definition of ‘Business Auxiliary Services’ and the consideration received for said services will be chargeable to service tax under ‘Business Auxiliary Services’. The Tribunal in the case of D. Pauls Consumer Benefit Consumer Benefit Ltd. Vs. CCE New Delhi [2017 (3) TMI 1019 - CESTAT NEW DELHI] has held that such services as provided by the present assessee / appellant is covered by the category of ‘Business Auxiliary Services’ as defined under section 65 of the Finance Act 1994. Penalty u/s 78 - Held that: - In the present case, the demand confirmed is of ₹ 2,59,195/- whereas the penalty has been imposed of ₹ 3 lakhs, the said penalty therefore, is reduced to ₹ 2,59,195/- - the appellant is given the benefit of option to discharge 25% of penalty on fulfillment of the conditions provided under Section 78 of the Finance Act. Appeal allowed in part.
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2017 (10) TMI 505
Business Auxiliary services - Levy of Service tax - commission received from M/s. Amadeus India Pvt. Ltd. for use of CRS - Held that: - the issue has already been decided by this Tribunal in the case of D. Pauls Consumer Benefit Ltd. Vs. CCE New Delhi [2017 (3) TMI 1019 - CESTAT NEW DELHI], where on similar issue it was held that the service provided by the assessee-Appellants has rightly been covered under the heading “Business Auxiliary Service” as defined u/s 65(19) of the FA, 1994 - demand upheld. Commission received from other IATA agents - submission of the appellant is that they are purchasing the tickets from IATA agents on principal to principal basis and therefore, the commission received falls under the category of Business Auxiliary services - Held that: - In the present facts of the case, the appellant rendered the service to the customers, as air travel agent and received the commission from principal IATA agent, who also renders the same service i.e. air travel agent services - the services rendered by sub-agent is also the same and it cannot be different from that of air travel agent services - similar view taken in the case of Commissioner Vs. Zuari Travel Corporation [2013 (7) TMI 911 - CESTAT MUMBAI] - demand set aside. Appeal allowed in part.
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2017 (10) TMI 504
SEZ Unit - Refund claim - N/N. 9/2009-ST and 15/2009-ST - Held that: - units operating in Special Economic Zones (SEZs) are not to be charged any duties of Central Excise/Customs or other taxes and wherever any such taxes/duties have been paid, they would be entitled to the refund of the same - the appellant is entitled to the subject refund claims as per relevant provisions of the applicable laws/Notifications. The decision in the case of Reliance Industries Ltd. Versus Commissioner of Central Excise, Mumbai-I [2015 (11) TMI 1048 - CESTAT MUMBAI] referred, where it was held that From the notifications of 2009 issued by Department of Revenue, it is clear that the test of utilization of service for authorized operations is left to the wisdom of the Approval Committee and the satisfaction of the jurisdictional Assistant Commissioner regarding its actual utilization. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 503
Short payment of service tax - telephone/telegraph services - adjustment of tax - Held that: - factually there may not be any short-payment of service tax. This case may only be of adjustment of excess payment for subsequent short-payment relying on Rule 6(3) and 6(4) of Service Tax Rules, 1994 - in view of the provisions of Rule 6(3) of Service Tax Rules, when such adjustment of Service Tax paid in excess is allowed against the tax liability for the subsequent period, the subject matter is remanded to the original adjudicating authority to decide afresh - appeal allowed by way of remand.
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2017 (10) TMI 502
Business Auxiliary Service - services in respect of sale of insurance products - The appellants contention is that MUL is paying service tax, and as such, the dealers are not liable to pay any further service tax on the Maruti Finance Dealer pay outs - Held that: - the appellants are doing the service of promotion or marketing of service viz., issuance of insurance policies on behalf of MIBL. The fact that service tax was being paid by MUL to the insurance company along with the insurance premium will not make any difference, when the assessee-appellants are independently providing the service of promotion or marketing, which is covered by Business Auxiliary Service - the assessee-appellants are liable to pay Service Tax on the services performed by them to M/s. MIBL, a fully owned subsidiary of MUL. Penalties - Held that: - the subject matter involves interpretational issues in respect of law of service tax on the subject, the penalties imposed on the appellants are not sustainable. Decided partly in favor of appellant.
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Central Excise
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2017 (10) TMI 501
Whether the Tribunal is correct in law when the significant document submitted by the assessee corroborated by the conformational statements of the assessee are overlooked and ignored? - Held that: - It can be seen that the entire issue is based on appreciation of evidence of record and essentially one of facts. No question of law arises - appeal dismissed - decided against Revenue.
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2017 (10) TMI 500
100% EOU - Recovery of Refund - input services - N/N. 5/2006-CE (NT) dated 14.3.2006 - As it appeared that the activity carried out by the appellants did not amount to manufacture, thereby taking input credit of service tax paid as incorrect, the appellants were issued with seven show-cause notices proposing to recover the refund erroneously sanctioned - Held that: - Tribunal in the case of M/s. Mineral Enterprises Limited Versus Commissioner of Customs and Service Tax [2017 (5) TMI 99 - CESTAT BANGALORE] has already accepted the appeal of the present assessee by setting aside the Order-in-Appeal No.138/2008 dated 31.10.2008 passed by the Commissioner (A) and has held that the mining activity amounts to manufacture and is liable for payment of excise duty since the iron ore is an excisable goods within the meaning of Section 2(d) of the Central Excise Act, 1944. Also, the department has sought to recover the refund which has already been sanctioned without challenging the order sanctioning the refund, which is not permissible in law. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 499
CENVAT credit - capital goods - Joint Sheet, S. S. Score, Steel Casting, Locktite, Gland Packing, Molyket BR, Ve-Belt, Took Kit Black, H. R. Plate, Aluminium Expansion, Plates, M. S. Plates, etc. - input service - services rendered by commission agent - Held that: - ld. Counsel has relied on various earlier decisions, CBEC Circular & case laws through which the inputs and capitals goods covered by the present proceedings have been accepted as admissible for availment of Cenvat credit - Service Tax paid on Sales Commission is admissible as input service Cenvat credit - credit allowed - appeal dismissed - decided against Revenue.
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2017 (10) TMI 498
Time limitation - whether the appeal before the Commissioner (Appeals) was time bar in the fact that director of the respondent company had acknowledged the order-in-original? - Held that: - it is undisputed fact that when the order was acknowledged by the director of the company the control of the company was not with the director but it was with official liquidator appointed by BIFR, therefore director of the company had no locus standi for dealing with the matter related to the company. In such case even though order was delivered to the director of the company, it can not be said that order was served to the company - the contention of the Revenue that acknowledgment of the order by the director of the company is the date of receipt of the order, accordingly appeal is time bar, is not acceptable, therefore, appeal before the Commissioner was well within the time and same was filed after company received the certified copy of the order from the department. Whether the order dated 28-2-3013 in writ petition No. 1951/13 has any implication in the proceedings of the Commissioner(Appeals)? - Held that: - the said petition was filed to quash the proceedings of recovery of adjudged dues arising out of Order-in-original and same was not for relief on merit. Though the department has filed an affidavit before the Hon’ble Bombay High court wherein issue of service of the order was raised but the high court has not given any findings on that issue and petition was disposed of without granting any relief. The relief sought for was not on the merit which was involved in the appeal which was pending before the Commissioner(Appeals) but from the recovery of the dues. Therefore Hon’ble Bombay high court order dated 28-2-2013 will not come into the way for deciding the appeal by the Commissioner(Appeals). Whether the remand ordered by the Commissioner(Appeals) is proper and legal? - Held that: - as regard the factual aspect the adjudicating authority is the proper authority to verify the facts therefore even if the commissioner appeal has power to remand the matter but this tribunal has the power to remand the matter, accordingly matter is remanded to the original adjudicating authority for passing a fresh order by taking into account the observations of the Commissioner(Appeals) given in the impugned order. Appeal is disposed of by way of remand. Appeal disposed off.
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2017 (10) TMI 497
Clandestine manufacture and removal - Tobacco - 4,91,400 pouches of chewing tobacco on which no brand was mentioned and 8,59,950 pouches of Shiv Baba Brand scented Supari also called Pan Samagri were found in the manufacturing premises and some quantity of raw material and packing material was also available - cross-examination - Two different varying stands have been taken by Revenue with regard to processes applied for manufacturing of chewing tobacco - Contention of the Revenue as put forth in show cause notice is that packing of Unmanufactured tobacco in pouches converts it into manufactured chewing tobacco. Held that: - No evidence has adduced or relied upon in the show cause notice to show that the Appellant ever purchased any kind of spices, perfumes, lime or any other kind of material that could be used for mixing with raw un-manufactured tobacco to render its transformation into manufactured chewing tobacco - The investigating officers have nowhere recorded in the Panchnama discovery of any machine, apparatus, appliances or vessels used for processing of raw un-manufactured tobacco or mixing it with any other material. Contention of Revenue as put forth in show cause notice, that packing of Unmanufactured tobacco in pouches converts it into manufactured chewing tobacco is totally misconceived and highly presumptive. Central Excise Tariff and the exemption notifications issued in relation to Unmanufactured tobacco and Chewing tobacco do not recognize any such proposition. It can be easily seen from 2010 Rules and Notifications issued thereunder that these prescribe the effective rates of duty per packing machine per month both in respect of Unmanufactured Tobacco bearing a brand name as well as for chewing tobacco, with and without lime tube/lime pouches. Thus, mere fact that raw un-manufactured tobacco is packed in pouches on FFS packing machines does not convert such unmanufactured tobacco into a manufactured product such as chewing tobacco - The provisions of 2010 Rules and N/N. 16/2010- C.E dated 27.02.2010 further make it amply clear that the Adjudicating Authority erred in taking the view that unmanufactured tobacco is transformed into manufactured chewing tobacco simply on account of packing in pouches of FFS Machines, irrespective of the nature of tobacco packed in pouches. With regard to the allegation that the Appellant was engaged in clandestine manufacturing and clearance of Shiv Baba Brand Scented Jarda/Chewing Tobacco in pouches bearing 50 Paise per pouch, it was contended that the Original Authority has in the impugned order merely reiterated the allegations leveled in the show cause notice and without discussing any facts and evidences to substantiate the allegation and held the Appellant to be guilty of being engaged in the manufacture of the said Shiv Baba Brand Scented Jarda/ Chewing Tobacco. Hon ble Supreme Court of India in the case of Damodar J. Malpani [2002 (9) TMI 114 - SUPREME COURT OF INDIA] has held that the samples should be first sent for chemical analysis and thereafter the question of classification of the product should be taken up on the basis of the chemical analysis report and other materials. Therefore, we find that it is binding on all to decide the classification of goods on the basis of the report of CRCL laboratory on the chemical composition of the samples which were drawn from the manufacturing premises. CRCL has reported that sample was in the form of brownish bits of leaves and it was containing tobacco and that it did not contain any added lime or flavouring agent. The Original Authority has held that the goods manufactured by the appellant were Shiv Baba Brand scented Zarda chewing tobacco. There are no evidence to establish that during the period of show cause notice any of the 14 pouch packing machines were engaged in manufacture of Shiv Baba brand scented Zarda chewing tobacco by the appellant. There are no evidence in the whole proceedings to establish that during the entire period of show cause notice any of the 14 machines were engaged in the manufacture of Shiv Baba branded scented Zarda chewing tobacco of RSP 50 Paise. On the contrary when the officers visited the manufacturing premises on 14.10.2014 it was noticed that 6 machines put together in two premises were engaged in packing of unbranded unmanufactured chewing tobacco and there was no RSP mentioned nor brand name was mentioned on them and other 8 machines were engaged in packing of Shiv Baba brand scented Supari or Pan Samagri. Therefore, there was no evidence on record to establish that during the entire duration for which the show cause notice was issued any of the 14 machines were engaged in manufacture of Shiv Baba branded scented Zarda chewing tobacco of RSP of 50 Paise per pouch. The goods confiscated were not manufactured in the said raided premises. Hence the confiscation does not sustain - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 496
Demand of interest - CENVAT credit taken wrongly - appellant has immediately reversed the CENVAT credit excess taken by them - Rule 3(7)(a) of CCR, 2004 - Held that: - It is a fact on record that the appellant was having sufficient balance in their Cenvat credit account - following the ratio laid down by Hon’ble Karnataka High Court in the case of Bill Forge [2011 (4) TMI 969 - KARNATAKA HIGH COURT], the appellant is not liable to pay the interest - demand of interest set aside. Penalty - Held that: - the appellant immediately reversed the CENVAT credit excess availed by them on pointing out by the department. Therefore, in that circumstances, malafide cannot be attributable against the appellant and no proceedings were required to be initiated against the appellant u/s 11A (2B) of the Act - penalty set aside. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 495
N/N. 6/2000 dated 1.3.2000 - Demand of 8% of the value of goods cleared duty free - non-maintenance of separate set of books - Held that: - it is evident from the report given by Range Supdt. that the appellant has not availed any Cenvat credit on inputs used in manufacture of paper board which has been cleared by availing exemption under N/N. 6/2000 dated 1.3.2000 - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 494
Clandestine manufacture and removal - toothbrushes - average consumption of input that is bristles - appellant has purchased and consumed large quantity of filament yarn than what was required in the manufacture of tooth brushes as recorded in their account of production suggesting in the suppression of the actual quantity of brushes manufactured by them - Held that: - There is no any evidence has been brought on record to allege how the goods have been manufactured by the appellant and how much quantity of which type of brushes has been manufactured by the appellant and what is consumption thereof. Moreover, no evidence has been brought on record how the goods were cleared clandestinely. The case has been made out only on the basis of average uses of input and the statement of the appellants - similar issue came up before Tribunal in the case of M/s Davinder Sandhu Impex Ltd. Shri Baldev Singh, Director Versus Commissoner of Central Excise, Ludhiana [2016 (1) TMI 104 - CESTAT NEW DELHI], where it was held that the charge of clandestine removal is not sustainable merely on the basis of average consumption of inputs and inculpatory statement of the appellant. Revenue has failed to come with any positive evidence on record to allege clandestine removal of goods - the charge of clandestine removal of goods is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 493
CENVAT credit - sub-contract - erection, commissioning and installation service - Held that: - the appellant is entitled to CENVAT credit of service tax paid on erection, commissioning and installation as the said issue is clearly covered in favor of the appellant by the decision in the case of Veena Industries Ltd. [2016 (1) TMI 161 - CESTAT AHMEDABAD], the Division Bench of this Tribunal has held that it is undisputed that the appellant is a provider of taxable service and they provided the same. They are utilizing the input service provided by subcontractors while providing output service, therefore, the appellants are entitled to CENVAT credit of service tax paid on input service provided by subcontractors - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 492
100% EOU - destroyed goods - N/N. 22/2003 CE read with N/N. 52/2003 CUS - manufacture of parts of data projector as overview IU, PU, Interface etc - whether the appellant are liable to pay duty for the raw materials which was acquired duty-free under N/N. 52/2003 CUS read with N/N. 22/2003 CE, duty-free, on the remnants, rejects etc., which were destroyed by them under intimation to the Revenue during the period in dispute from April, 2007 to March, 2014? Held that: - the appellant, as required under the N/N. 52/2003 CUS read with N/N. 22/2003 CE, as amended, read with the Foreign Trade Policy 2004 09 have, following the procedure of law given proper intimation to the Department that certain goods and raw materials, work in progress etc have gone waste, rejects, remnants, etc., and accordingly the same have been written off in the books of accounts and also the goods have been destroyed within the premises of their 100% EOU under prior intimation to the Revenue. Thus, there is no violation either of the Notification or of the Foreign Trade Policy or the provisions of the Central Excise Act or the Customs Act. Once the said raw material etc have been issued for production and when in the course of production on the shop floor such raw material, work in progress, etc., are rejected, the same is equivalent to use in the course of production and does not amount to removal of inputs as such. Accordingly, the goods destroyed were used in connection with the production of the final products of the appellant. There is no clearance of any goods as alleged in the show cause notice and as such, the demand of duty is unsustainable. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (10) TMI 491
Levy of Entry tax - goods imported from different countries and brought into local area of a State - The State legislations are also questioned on the ground that the entry tax legislations do not contemplate levy of an entry tax on goods imported from outside the country - Whether Section 2(d) read with Section 3 of Orissa Entry Tax Act, 1999, Section 2(d) read with Section 2(d) of Kerala Act, 1994 and Bihar Act, 1993 (before its amendment in 2003), never intended to levy any entry tax on the goods, entering into local area of State from any place outside the territory of India? - Held that: - It is well known rule of statutory interpretation that by process of interpretation the provision cannot be rewritten nor any word can be introduced. The expression “any place” before the words “outside the State” is also indicative of vide extent. The words 'any place' cannot be limited to a place within the territory of India when no such indication is discernible from the provisions of the Act - The Entry tax legislations are referable to Entry 52 of List II of Seventh Schedule of the Constitution. Entry 52 also provided a legislative field, namely, 'taxes on the entries of goods into a local area for consumption, use or sale therein'. Legislation is thus concerned only with entry of goods into a local area for consumption, use or sale. The origin of goods has no relevance with regard to chargeability of entry tax - definition clause, Section 2(d) read with Section 3 does not exclude the charging of the entry tax on goods entering into local area for consumption, use or sale from outside the country. In Section 2(d) the word used is 'any place outside that local area or outside the State'. The word 'any' is a word of very wide meaning and use of word 'any' excludes any limitation. We, thus, are of the view that all the three legislations clearly did not exclude goods coming from outside the territory of India and the definition of entry of goods read with charging section clearly included all goods entering into a local area. Thus, the submissions of learned counsel for the petitioners that entry tax legislation did not include imported goods cannot be accepted. Entry 41 & 83 of List I and Entry 52 of List II - Whether Entry Tax Legislations in question intrude into exclusive legislative domain of Parliament as reserved under Entry 41 and Entry 83 List I? - Whether levy of entry tax on goods imported from outside territory of India is legislation trenching the field of “import and export”, “duties of custom” reserved to Parliament? - Held that: - The Constitution of India, Part XI, Chapter I deals with legislative relations, legislative powers of Parliament and State Legislatures are clearly demarcated. Power to tax is an incidence of sovereignty and there is a clear demarcation of taxing field, which has been earmarked to the Parliament as well as to the State Legislatures. Taxing power of both Union and State Legislatures are mutually exclusive and has been clearly demarcated. This is further clear by the fact that in List III, i.e. Concurrent List, no taxing entry is included except the entry of stamp duty & levying of fee in respect of any of the matters in List III but not including fees taken in any Court - The distribution of power between Union and States is done in a mutually exclusive manner as is reflected by precise and clear field of legislation as allocated under different list under the Seventh Schedule. No assumption of any overlapping between a subject allocated to Union and State arises. When the field of legislation falls in one or other in Union or State Lists, the legislation falling under the State entry has always been upheld. The Scheme of distribution of legislative power between Union and States in the Constitution of India relies on the distribution of legislative power between the Federal Government and Provincial Government as contained in Seventh Schedule of the Government of India Act, 1935. The Government of India Act, 1935 has been referred to as Constitution Act by the Privy Council - there is no clash/overlap between entry levied by the State under Entry 52 List II and the custom duty levied by the Union under Entry 83 List I. We have also arrived at the same conclusion in view of the foregoing discussions. We thus hold that entry tax legislations do not intrude in the legislative field reserved for Parliament under Entry 41 and under Entry 83 of List I. - The State Legislature is fully competent to impose tax on the entry of goods into a local area for consumption, sale and use. We thus repel the submission of petitioner that entry tax legislation of the State encroaches in the Parliament’s field. Import and its extent - Whether the importation of goods, imported from a territory outside the India continues till the goods reach in the premises/factory of the importer, during which period State at no point of time is legislative competence to impose any tax? - Held that: - Import and export are concepts which denote trade between different countries. The term “import” signifies etymologically “to bring in”. To import goods into the territory of India means to bring them into the territory of India from abroad - The submissions of the writ petitioners on the strength of Section 5(3) that even first sale after the import should be treated during the course of the import is not supported by the concept as contained in Section 5 of the 1956 Act and the reliance on the said provision is wholly misplaced - taxing event with regard to levy of customs duty by Parliament and levy of entry tax by States under Entry 52 List II are entirely different and separate. The taxing event pertaining to levy of entry tax occurs only after the taxing event of levy of customs duty is over. Thus, the State Legislation imposing entry tax in no manner encroaches upon the Parliamentary Legislation under Entry 41 and Entry 83 - There is no invalidity in levy of entry tax by the States. Original/Unbroken Package Theory - Whether doctrine of unbroken package as evolved by the American Court are to apply with regard to imported goods of the petitioners prohibiting the State from levying any tax till the goods are first sold/dealt by the importer? - Held that: - The Original Package/ Unbroken Package is a theory which was evolved by U.S. Supreme Court in reference to the imported goods. The genesis of the theory is from the Chief Justice Marshall, in the case of Brown Vs. The State of Maryland, 6 L.Ed. 678. State of Maryland has enacted a law that all importers of foreign articles or commodities shall, before they are authorized to sell, take out a license for which they shall pay fifty dollars - it is clear that the U.S. Supreme Court itself has abandoned the Original Package theory and it has been held that imported goods are not immuned from nondiscriminatory ad valorem taxes imposed by the State - Goods imported after having been released from customs barriers are not immuned from any kind of State taxation, which fall equally on other similar goods and the submission of the learned counsel for the petitioner that immunity from State taxation shall continue till it reaches in the premises where it is to be taken for consumption, sale and use cannot be accepted. Non-inclusion of Custom Duty in purchase value - Whether in the definition of purchase value as contained in Entry Tax Legislations in question, noninclusion of custom duty is indicator of fact that the legislature never intended to levy entry tax on imported goods? - Held that: - From the definition of purchase value given in 2(j) three aspects are noticeable. Firstly, purchase value means the value of scheduled goods as ascertained from original invoice or bill. Secondly, it includes insurance charges excise duty and other charges mentioned therein. And thirdly, other charges incidental to the purchase of such goods. The original invoice or bill of scheduled goods, generally include the entire value including the import duty or custom duty and in any event the inclusion of 'all other charges incidental to the purchase of such goods' has to necessarily mean all charges including custom duty which is incidental to the purchase. Thus, noninclusion of custom duty specifically in definition of purchase value in 2(j) is inconsequential and cannot lead to mean that the legislature never intended to include the imported goods under the entry tax legislation - We thus do not find any substance in the submission of petitioner that noninclusion of custom duty in definition of purchase value leads to conclusion that entry tax is not payable on entry tax. Whether Entry Tax Legislations are not covered by Entry 52 List II since the Entry 52 is in essence entry of levying octroi which can be levied only by local authorities and the State has no legislative competence to impose entry tax under Entry 52 List II? - Held that: - It is well settled that the nomenclature or form of a tax is not a decisive factor to find out the nature of the tax. It is the matter of legislative policy as to how the tax is to be collected. The definition of taxation as given in Article 266 (28) that tax includes general or local tax does not in any manner support the contention of the petitioner that tax under Entry 52 is only a local tax which ought to be collected through local bodies. It is the matter of legislative policy that whether a tax is collected as a general tax or a local tax. The nature of tax, measure of tax and machinery for tax collection are all different aspects. The submission of the petitioner that tax in Entry 52 should be collected by local authorities and State has no legislative competence to levy such tax is fallacious. It is well within the jurisdiction of the legislature to formulate its policy regarding levy of tax and its collection. Entry 52 of List II has to be given its wide and full meaning and no limitation in the legislative power of the State can be read as contended by counsel for the petitioner - Further, any pre-constitutional tax practice cannot put any fetter on Constitution farmers to define any tax, to elaborate the concept of tax or to move away or forward from any kind of earlier levy - taxes which are to be used by the local authorities can be collected by the local authorities as well as by the State Government. It is the matter of legislative policy as to how the tax is collected and distributed. Under List II Entry 5, the State has legislative power to lay down powers of the Municipal Corporation by legislation. It is again legislative policy that as what machinery is to be provided by the State legislature regarding collection of taxes on the entry of goods into a local area for consumption, use or sale. No capital can be made on the submission that since tax is not being collected by local authorities it is beyond the power of the State under Entry 52 List II. - We thus do not find any substance in the submission of the learned counsel for the petitioner that entry tax legislation is not covered by Entry 52 List II. Expression “MACHINERY AND EQUIPMENT” as used in the SCHEDULE OF ORISSA ACT 1999 - Whether a plant, imported in knocked out condition is covered by the Part II of the Schedule of Orissa Act, 1999? - Held that: - The Plant in a knocked out condition is nothing but a collection of machineries. The plant being a wide term including machinery also, we fail to see how a knocked out plant shall not be covered by Item No. 9 of Part II of the Schedule. Machinery and equipments are wide words which shall also cover plant in a knocked out condition. We thus reject the contention of the counsel for the petitioner that a plant which is imported in knocked out condition is not covered by the Part II of Schedule of Orissa Act, 1999 - A plant imported in knocked out condition is fully covered with the definition of machinery and equipment under Part II of Schedule of the Orissa Act, 1999.
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2017 (10) TMI 490
Valuation - Interpretation of Statute - clause (29) of section 2 of the Bombay Sales Tax Act, 1959 and clause (h) of Section 2 of the Central Sales Tax Act, 1956 - insurance charges and carrying charges - includibility - whether insurance charges and carrying charges forms part of sale price - Whether on the facts and in the circumstances of the case and on a true and correct interpretation of clause (29) of section 2 of the Bombay Sales Tax Act, 1959 and clause (h) of Section 2 of the Central Sales Tax Act, 1956, the Tribunal was justified in law in holding that the insurance charges and carrying charges do not form part of the sale price? Held that: - Section 19 of the Sale of Goods Act, 1930, deals with the property passes when intended to pass - The passing of the property in goods depends upon the intention of the parties, as is evident from the terms of the contract, the conduct of the parties, and the circumstances of the case. Under subsection (3) of Section 19, unless a different intention appears, the rules contained in Sections 20 to 24 are the rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. It is thus, the transfer of right to use the goods is deemed to be sale of goods, attracting the incidence of tax. In the present case, passing of the property in goods to the buyer is at the place and time of spot delivery. After the sale is complete, even if the assesseesellor retains the possession of the goods sold and incurs the expenditure of insurance and carrying the goods at the destination of the buyer, he performs these functions in his capacity as a 'bailee', as contemplated by Section 148 of the Indian Contract Act, 1872, who shall be entitled to reimbursement of such expenses from the 'bailor', as specified under Section 158 therein. Such charges of insurance and carrying incurred by the assesseesellor cannot, therefore, constitute a 'sale price' within the meaning of Section 2(29) of the BST Act. The Tribunal was justified in holding that the insurance charges and carrying charges do not form part of the sale price for the reason that the sale was completed at the point of spot delivery and the insurance and carrying charges were incurred thereafter - question is answered in the affirmative - decided against Revenue.
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2017 (10) TMI 489
Attachment of Bank Account - provisional attachment - Held that: - Sub-section (2) of Section 45, however, provides that every such provisional attachment shall cease to have effect after expiry of one year from the date of the order - In the present case, this period of one year is over long back. It is, therefore, declared that the order dated 13.07.2016 is no longer effective. Refund of amount recovered by the respondents from the petitioner's bank account - Held that: - admittedly, no assessment was framed before affecting such recovery. The recovery is also affected without the petitioner's consent and directly from the bank. The respondents shall refund the said sum of ₹ 1,63,000/- at this stage without interest to the petitioner. However, if under the order of assessment any further liability arises, the period during which the amount remained with the department would incur statutory interest in favor of the petitioner. Petition disposed off.
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2017 (10) TMI 488
Re-determination of the turnover in respect of the stock transfer - Form 'F' Declaration - whether such documents can be insisted upon, and what would be the scope of enquiry that could be conducted by the Assessing Officer on submission of Form 'F' Declaration? - Held that: - if a declaration is filed and on an inquiry made pursuant thereto, or in furtherance thereof, the particulars furnished are found to be correct by the Assessing Authority, the result thereof, which is evidenced by the expression ''thereupon'' shall, in view of the legal fiction created, would be a transaction otherwise than as a result of an inter-state sale. Once such a legal fiction is drawn, the same would continue to have its effect, not only while making an order of assessment in terms of the State law, but also for the purpose of invoking the powers of the assessment contained in section 9 (2) of the Central Sales Tax Act. The legal fiction continues to have effect even in relation to the powers of reassessment contained in the State Tax Law. e.g., Section 16 of the TNGST Act, 1959. There is no allegation of fraud, misrepresentation, collusion levelled by the respondent against the petitioner/dealer. In the absence of such allegation, the scope of enquiry cannot be extended to conduct roving enquiry in the matter and such, enquiry, at best, can be conducted only on the ground of fraud, or misrepresentation, or collusion, etc - petition allowed in part.
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2017 (10) TMI 487
Mismatch between the Annexure 1 and Annexure 2 returns filed by the petitioner and the other end dealer - Held that: - the Assessing Officer has taken certain efforts to furnish the invoice numbers and other details, though it may be true in respect of certain transactions, the full details have not been mentioned. In any event, wherever full details have been given, the dealer was bound to give proper explanation. If the dealer wants further information, he should have asked the Assessing Officer by submitting a representation. However, in the instant case, the dealer did not resort to such a procedure, but merely, submitted an objection without giving any proper details. Therefore, substantial part of the fault lies on the dealer. Assuming that the petitioner had furnished all those details, then the Assessing Officer has to embark upon an enquiry reconcile the details furnished by the dealer with that of the information available in the website and then complete the assessment. This Court is of the view that the petitioner can be afforded one more opportunity to explain with regard to the transactions - the Writ Petitions are disposed of, by directing the petitioner to pay 15% of the disputed tax for each of the assessment years, within a period of fifteen days from the date of receipt of a copy of this order.
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2017 (10) TMI 486
Validity of demand notices - case of petitioner is that the amounts mentioned in both the notices are different, and the petitioner is at a loss to understand as to how a demand for the same period, within 15 days can increase from ₹ 60,38,152/- to ₹ 98,34,537/- - attachment of Bank Account - Held that: - The fact remains that the petitioner is yet to file his return for March 2017 and the learned Additional Government Pleader submitted that unless and until, the return is filed, the assessment cannot be completed - learned counsel for the petitioner submits that since the order of attachment of the bank account has already been lifted, he will instruct his client to file the return upto date within one week from today. After the return is filed by the petitioner upto the current period, within the time, the respondent shall issue a show cause notice to the petitioner and the authorised representative of the petitioner shall appear before the respondent, without seeking for any adjournment - petition dismissed.
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