TMI Tax Updates - e-Newsletter
October 18, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Form and manner of submission of quarterly return by the composition supplier - Rule 62 of GST Rules, 2017 as amended.
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GST:
A banking company or a financial institution or NBFC are allowed to issue single consolidated tax invoice for the supply of services made during a month at the end of the month under GST
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GST:
Single Invoice-cum-bill of supply for supply of taxable as well as exempted goods or services to an unregistered person under GST.
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GST:
Extension of date for filing of option availed for composition levy - Rule 3 as amended
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GST:
Turnover limit for Composition Levy for CGST - Manufacturers of Certain Goods not eligible for benefit of Composition Scheme u/s 10(1) - Notification as amended
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Customs:
SAD refund - Once it is clear that by making a mismatch between the description contained in the original packing list and the description of the goods locally sold, an importer may not be able to claim refund of more than what was paid, then it would follow as a natural corollary that the second objection of the department is merely weaved out of imagination - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2017 (10) TMI 732
Additional depreciation claim @ 20% under Section 32 [1](iia) - machinery purchased before 31st March 2005, but installed after 31st March 2005 ? - Held that:- SLP dismissed. HC order confirmed [2017 (2) TMI 644 - GUJARAT HIGH COURT] saying that the provision of section 32(1)(iia) of the IT Act is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) of the IT Act will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. Under the circumstances, no error has been committed by the learned ITAT in allowing the additional depreciation at the rate of 20% on the plant and machinery installed by the assessee after 31st Day of March 2005 i.e. the year under consideration. No substantial question of law arise. - Decided in favour of the assessee
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2017 (10) TMI 731
Non-speculative business loss of current year and carry forward non-speculative business loss of earlier years - whether can be set off from the income of speculative business of the current years? - ITAT held that non-speculative business loss of current year and carry forward non-speculative business loss of earlier years can be set off from the income of speculative business of the current years - Held that:- There was differentiation in approach towards profits and loss of the speculation business, in as much as, while its profits were taken into account for computation of overall income or loss, its losses were to be examined for the said purpose. The Tribunal while come to the said conclusion, has considered the judgment of the Hon'ble Supreme Court laid down in the case of CIT vs. Jagannath Mahadeo Prasad (1968 (8) TMI 1 - SUPREME Court) as also the similar principles set out by the Bombay High Court in the case of AR Mahadevia vs CIT (1967 (3) TMI 24 - BOMBAY High Court). The appellant is not able to provide any contrary decisions. In our opinion, the impugned order of the Tribunal is based on material facts and is supported by the decisions aforesaid, hence need no interference by this Court.
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2017 (10) TMI 730
Disallowance on the bogus purchases - NP determination - Held that:- Facts on record would show that certain purchase of the assessee would found to be bogus, upon which, the Assessing Officer made addition on the entire amount. Commissioner of Income Tax (Appeals) restricted the addition by adopting the net profit rate of 2% on the basis that in similar trade in the region, the profit rate worked out is 0.5% to 0.75%. The assessee has disclosed profit ratio of 1.10%. The Commissioner of Income Tax (Appeals) increased it to 2%. This view of the Commissioner of Income Tax (Appeals) was confirmed by the Tribunal. No substantial question of law.
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2017 (10) TMI 729
Bogus purchase - Held that:- The appellate authority as well as the Tribunal came to concurrent conclusion that the purchases already made by the assessee from RajImpex were duly supported by bills and payments were made by Account Payee cheque. Raj Impacts also confirmed the transactions. There was no evidence to show that the amount was recycled back to the assessee. Particularly, when it was found that the assessee the trader had also shown sales out of purchases made from Raj Impex which were also accepted by the Revenue, no question of law arises.
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2017 (10) TMI 728
Maintainability of appeal - addition on account of unexplained cash - Revenue relies on the fact that these Tax Appeals arising out of a common judgment of the Tribunal concerning the same assessee for different assessment years and in one such case the tax amount is higher than the minimum limit - Held that:- As perusing the circular dated 10.12.2015 of CBDT it provides Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. We gather that the question which the Revenue wishes to pursue in this Tax Appeal does not arise in any of the Tax Appeals. In view of the above, this Tax Appeal would not be maintainable
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2017 (10) TMI 727
Exemption u/s 12AA denied - Income from micro finance and provision for doubtful debts - Held that:- Prior to adding proviso to section 2(15), the entities which got registration u/s. 12AA engaged in commercial activity claimed exemption on the ground that such activities were for advancement of objects of general public utility in terms of 4th limb of definition to section 2(15) of the Act. We find that the said benefit was taken away by adding proviso to section 2(15) of the Act, wherein it explains that the advancement of any other object, general pubic utility shall not be charitable purpose. In our opinion that the AO and the CIT-A opined that the assessee conducted its activities on commercial line in the nature of trade, commerce or business. Therefore, they rightly denied the exemption by following statutory provisions. We do not find any infirmity in the impugned order of the CIT-A. We find that the ratio laid down by the decisions as relied upon by the ld.AR are not applicable to the facts of this case. We uphold the same. This issue of the assessee is dismissed. Claim of provision for bad & doubtful debts - Held that:- We find that the assessee has shown other receipts of ₹ 70,49,240/- which includes provision for bad and doubtful debt of last year (Schedule 11 & 14) of ₹ 53,60,345/-. The assessee in its written submission stated that cost of recovery is very high and the possibility of bad debt is also high as the loans were advanced without any surety or guarantee. We find from the record that the assessee has shown a provision of bad and doubtful debt in the last year for a sum of ₹ 53,61,345/-, which is more than the amount in the year under consideration and the AO has already deducted the same while computing the income of the assessee for the year under consideration. The assessee, therefore, cannot be said to have any grievance of the assessee on this issue.
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2017 (10) TMI 726
TDS u/s 194C - Liability to deduct tax at source on payments made to the developers - Held that:- As observed by the AO, the agreement/MOU’s entered into by the assessee society with the other developers/contractors also contain clauses similar to the above. On appeal, the ld CIT(A) on perusal of the aforesaid clauses of the agreements has arrived at the conclusion that the payments for the purchase of the sites was calculated on sq. ft. area of the property and the amount was paid for the purchases of completed property and not for development work carried out. CIT(A) found that the agreements were only for purchase of sites and does not involve any ‘works contract’. In our view, the aforesaid conclusion/finding of the ld CIT(A) cannot be faulted and the same is a correct reading of the scope of the agreements; which has to be treated as a whole and not in piece meal manner. The mere fact that the contractors/developers were required to lay’out roads and undertake other activities before the delivery of the completed sites cannot be either determinative of the facts or need to mean that the agreements entered into by the assessee society is a composite contract and amounts to a works contract. Thus, in our considered opinion, the case of the assessee is squarely covered by the decisions of the Hon’ble Karnataka High Court in the case of Karnataka State Judicial Department Employees House Building Co-operative Society Ltd., (2010 (3) TMI 1211 - KARNATAKA HIGH COURT). We, therefore, uphold the impugned orders of the ld CIT(A) deleting the demands raised by the AO u/s 201(1) and 201(1A) of the Act. - Decided against revenue
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2017 (10) TMI 725
Addition u/s 14A read with Rule 8D - Held that:- Where no exempt income has been earned by the appellant to warrant disallowance as per the provisions laid down u/s 14A rwr 8D, the addition accordingly directed to be deleted. - Decided in favour of assessee.
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2017 (10) TMI 724
Deemed dividend addition u/s 2(22)(e) - proof of business transaction - Held that:- Assessing Officer had accepted the transaction of ₹ 1,20,00,000/- in the hands of B. B. Overseas Pvt. Ltd. as business transaction and therefore not accepting the same transaction in the hands of second party which is assessee is not correct. Therefore we hold that the said transaction of ₹ 1,20,00,000/- was a business transaction and for a business transaction, the addition u/s 2(22)(e) cannot be made as such transactions has been kept out of purview of the section 2(22)(e) vide circular no. 19/2017 dated 12.06.2017. We are in agreement with the arguments of assessee that the said transaction was a business transaction and is therefore out of the purview of section 2(22)(e) of the Act.
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2017 (10) TMI 723
Penalty u/s 271(1)(c) - AO did not strike off the inappropriate portion of the notice - Held that:- The initiation of penalty proceedings has happened by recording of satisfaction in the assessment order and the issuance of notice u/s 274 is thus in continuation of recording of such satisfaction and has thus to be read along with the assessment order and not disjoint of the assessment order. It is not a case where the penalty has been initiated for one limb and finally levied in respect of another limb. The AO has been consistent in his approach and his action doesn’t reflect any non-application of mind. We therefore donot feel there is any infirmity in the initiation of penalty proceedings as contended by the ld AR. The additional ground of appeal is thus dismissed. Where the assessee offers an explanation and substantiate the explanation, the question of imposing penalty would not arise. Even in cases where he fails to substantiate the explanation, but if he proves that explanation offered is a bonafide one and all the facts relating to the same and material to the computation of his total income has been disclosed by him, then, in law, a discretion is vested with the authority not to impose penalty. In penalty proceedings, the assessee vide letter dated 21.04.2014 submitted that during the relevant period, the assessee was suffering from serious diseases of mental disturbance and wife of the assessee under such adverse circumstances without having any specific knowledge about the sale of relevant flat situated at Mumbai, filed his return of income on the basis of adhoc and incomplete information. The assessee in support of his contention submitted the affidavits of his wife and Sh. Rajesh Vijay who filed the relevant return of income. Subsequently, during the course of assessment proceedings, all relevant facts relating to the sale of flat and a revised computation of income determining long term capital gains along with details of taxes and interest deposited thereon was filed. The said explanation of the assessee along with the contents of the affidavits have not been found to be false or controverted by the Revenue authorities. Where the assessee was incapacitated to file his return of income due to his ill-health and incomplete return was filed which was subsequently revised by way of filing revised computation of income along with payment of taxes during the course of assessment proceedings, it shows the bonafide of the assessee and accordingly, cannot be made subject to levy of penalty u/s 271(1)(c) of the Act. Assessee’s appeal is allowed.
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2017 (10) TMI 722
Income from share holders account - whether to be treated on par with the income from the insurance business under the policy holders account taxable u/s 44 - Held that:- This issue is squarely covered in assessee’s own wherein the tribunal has considered that the shareholders funds constituted an integral and indivisible part of assessee’s Life Insurance Business and assessee’s sole business purpose was to carry on Life Insurance Business as per extant regulations and, hence, these two accounts formed part and parcel of the assessee’s business. Exemption u/s. 10(34) of dividend income - Held that:- We find that the Tribunal consistently is holding that the assessee has already suffered divided distribution tax u/s. 115O of the Act and, therefore, it is exempt u/s. 10(34) of the Act. Disallowance u/s. 14A r/w Rule 8D - Held that:- This issue is covered in assessee’s own case as held that Section 14A disallowance do not apply to insurance companies which are covered by special provisions of Section 44 and hence, dismiss revenue's appeal.
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2017 (10) TMI 721
Denying the benefit of exemption under sections 11 & 12 - Held that:- Undisputedly, in AY 2009-10, the coordinate Bench of the Tribunal vide an order dated 20.08.2014 passed in assessee’s own rejected the appeal filed by the Revenue denying the benefit of exemption under sections 11 & 12 of the Act. It is also not in dispute that there is no change in the facts and circumstances of the case during the year under assessment. In the backdrop of undisputed facts and circumstances of the case, when we examine the assessment order passed by the AO and grounds of appeal raised by the Revenue, it is transpired that present appeal has been filed just for sole reason that “the decisions rendered by the Tribunal in assessee’s own case for AY 2009-10 has not been accepted by the department and appeal has been filed in the Hon’ble High Court.” This trend of filing appeal is not only disappointing but leads to the multiplicity of the litigation because otherwise no substantial illegality or perversity has been pointed out by the Revenue. In view of what has been discussed above and following the order passed by the coordinate Bench of the Tribunal affirmed by the Hon’ble Delhi High Court and the fact that there is no change in the facts and circumstances in case at hand nor there is any change in the objects and activities of the society, we find no illegality or perversity in the impugned order passed by the ld. CIT (A), hence the present appeal filed by the Revenue is hereby dismissed.
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2017 (10) TMI 720
Revision u/s 263 - Held that:- We are of the considered view that in the backdrop of the explanation/objections filed by the assessee during the course of revisional proceedings in respect of certain issues on which the CIT had sought to revise the order passed by the A.O under Sec. 143(3), the CIT had failed to point out as to how the order of the A.O was found to be “erroneous”. We are of the considered view that in the absence of clear observations of the CIT as to how the order of the A.O after considering the explanation/objections filed by the assessee was found to be erroneous in respect of the said respective issues, thus, can safely be held to have failed the fundamental requirement for valid assumption of jurisdiction as per the mandate of law. We are not persuaded to accept the contention of the ld. D.R that as the A.O had passed the assessment order without making inquiries and verifications which he should have made in the opinion of the CIT, therefore, the same rendered the order passed by him amenable for revision under Sec. 263. We thus decline to accept the aforesaid contentions raised by the ld. D.R before us. We thus after giving a thoughtful consideration to the order passed by the CIT under Sec. 263 in the backdrop of the submissions raised by the authorized representatives of both the parties, perusing the order passed by the A.O under Sec. 143(3) deliberating on the judicial pronouncements relied upon by the parties and the material available on record, thus, focusing on the proprietary of the order passed by the CIT by invoking his powers under s. 263, keeping in view the scope of the said statutory provision, are unable persuade ourselves to uphold the order passed by the CIT under Sec. 263 of the ‘Act’. We thus in light of the observations and reasonings recorded hereinabove, set aside the order passed by the CIT under Sec. 263. The appeal of the assessee is allowed.
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Customs
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2017 (10) TMI 719
SAD Refund - N/N. 102/2007-Customs issued on 14-09-2007 - denial on the ground that the timber logs imported by the respondent-assessee were not sold as such by them, but were sold locally after sawning them and cutting them into smaller sizes and also on the ground that the logs cut into smaller sizes could not correlate to the items described in the import packing list - Section 130 A of the Customs Act - The grievance of the appellant/revenue is that a person not entitled to the benefit of exemption notification, cannot walk away with a refund - Whether the CESTAT was justified in placing reliance on Commissioner of Customs vs. M/s. Variety Lumbers Pvt. Ltd., [2013 (11) TMI 1013 - GUJARAT HIGH COURT] where the appellant Department had filed Appeal before the Supreme Court and the same is pending for adjudication? Held that: - It is not indicated anywhere in the notification, that the imported goods should be sold as such, so as to qualify for exemption. All that the notification says is that the imported goods should be sold locally and that the conditions stipulated in para-2 should be fulfilled - the timber logs imported by any one, when cut into smaller logs, do not lose the character of being timber logs. More over, the size of timber logs that could be imported in huge ships, will be so large that they cannot be transported locally in trucks on roads. What the department had done, is to read one more condition into the exemption notification, which is not found in the notification itself. It is not the case of the department that goods falling under one classification are entitled to exemption and the goods falling under another classification are not entitled to exemption. What is claimed is only the refund of the special additional duty. The special additional duty is payable on the goods that fall under the First Schedule to the Customs Tariff Act 1975, in terms of Section 3 (5) of the Act. The fact that the imported logs fall under the First Schedule to the said Act and the fact that as a consequence special additional duty was paid and the importer became entitled to refund, are all not denied. It is not the case of the department that round/square logs falling under Heading 4403 alone are entitled to exemption and that sawn woods falling under Heading 4407 are not entitled to exemption. Both of them fall under the First Schedule. Therefore, the argument sought to be advanced is completely meaningless. Circular No.15/2010, dated 29-06-2010 has virtually amended the exemption notification. It is needless to point out that by a Circular or executive fiat, an exemption notification issued in exercise of the statutory power, cannot be amended. Hence, the reliance placed upon the circular is unfounded. No importer can claim refund of special additional duty that was not paid by him. No importer can claim refund of SAD (special additional duty) paid on the imported logs, by showing the sale of locally purchased wood logs. This is in view of the fact that the imported timber logs may have to be sold in any case in the local market. If the Government of India wanted the importers of timber not to have the benefit of the exemption notification, if they indulged in the sale of smaller pieces, the Government could have said so in the notification itself - Once it is clear that by making a mismatch between the description contained in the original packing list and the description of the goods locally sold, an importer may not be able to claim refund of more than what was paid, then it would follow as a natural corollary that the second objection of the department is merely weaved out of imagination - decided against Revenue. Whether the CESTAT was justified in allowing the respondent’s appeal and declaring that the respondent is eligible for refund of SAD relying on the judgment in Commissioner of Customs Vs. M/s. Variety Lumbers Pvt. Ltd., without imposing any condition to protect the interests of the appellant and thereby departing from the order of the Supreme Court wherein the Supreme Court imposed a condition that the respondent should furnish bank guarantee security for half of the amount to the satisfaction of the appellant department’s Assessing Officer? - Held that: - the orders-in-original, out of which all the present appeals arise, were passed long after the interim order of the Supreme Court dated 24-11-2011. Therefore, the Jurisdictional Customs Officer, instead of showing great valour in challenging the ratio laid down by the Gujarat High Court, could have simply allowed all the refund claims with a brief order to the effect that the refund claims are allowed (i) subject to the outcome of the appeal before the Supreme Court and (ii) subject to the further condition that a bank guarantee is furnished for half of the amount claimed as refund. The Original Authority did not adopt such a course of action - As a matter of fact, if the adjudicating authority had passed orders-in-original incorporating the same conditions as found in the interim order of the Supreme Court in Variety Lumbers Pvt. Ltd., incorporating a condition that the refund was ordered subject to the outcome of the decision before the Supreme Court, the department would have been better of. If the original authority had passed such an order, the department would have become entitled to recover the amount of refund, in the event of their success before the Supreme Court in Variety Lumbers Pvt. Ltd. The department let go this opportunity and invited an order on merits from the Tribunal - the Tribunal was right in rejecting the Miscellaneous Applications - decided against the appellant/revenue. Appeal dismissed - decided against Revenue.
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2017 (10) TMI 718
Pre-deposit - demand of 50% of pre-deposit - Misdeclaration of imported goods - under-declaration - the case of the respondent-revenue is that the goods imported were under declared and custom duty was paid on declared value. The amount corresponding to the declared value was being paid to the supplier through normal banking channels. It is alleged that the additional amount being the difference between the actual transaction value and the declared value was being sent through Hawala transaction or through telegraphic transfers from the places like Singapore etc. Held that: - Only because certain contentions were not raised by the appellants, an order of remand cannot not be made - the impugned order dated 6th June 2014 is just and fair. No modification is warranted. No substantial question of law arises in these appeals. Though we had shown inclination to extend the time granted to deposit the amount, under the said order, the learned senior counsel for the appellants stated that the appellants are not in a position to comply with the said order - appeal dismissed - decided against appellant.
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2017 (10) TMI 717
Classification of imported goods - probat Roasting unit Model I-P from M/s. Probat-Weke, Germany - to be classified under CTH 85167990 or under CTH 841981.90? - N/N. 21/2002 dt. 01/03/2002 - Held that: - the Commissioner(Appeal) has held that the same cannot be considered as electro thermic appliances and therefore cannot be classified under the heading 8516 and accordingly he classified the impugned goods under Chapter 8419 - there are no infirmity in the impugned order which has been passed by the Commissioner(Appeals) - appeal dismissed - decided against appellant.
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2017 (10) TMI 716
Classification of imported goods - crude palm oil - to be classified under CTH 1511000 or under heading 15119090 - N/N. 21/2002 - Held that: - the test on the samples taken were conducted after more than 10 days of the drawing of the samples and further we do not have the evidence to the fact that the sample of the goods were stored in ideal condition - also, the basis of various scientific data that the beta carotenoid content in crude palm oil decreases with the passage of time if the same is not stored in proper temperature. In the case of Ruchi Soya Industries Ltd. [2008 (4) TMI 711 - CESTAT BANGALORE], this Tribunal has held that the carotene value changes over a period of time borne out by scientific opinion. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 715
Penalty u/s 114 of CA, 1962 - mis-declaration - export of iron ore having Fe content above 64% - the exporter has declared the Fe content of the goods covered under the shipping bill is less than 64% - Held that: - in the present case, when shipping bills were filed, the Fe content, as per the Certificate of Quality issued by accredited laboratory, was less than 64% in the consignment and when the same was tested by the Chemical Examiner of the Customs Laboratory, it was above 64% and therefore the Revenue has come to a conclusion that it is in violation of the Policy - the report of the Chemical Examiner is based only on dry basis without showing the moisture content and without applying the correction factor for moisture content. The sample was drawn on 10/05/2005 and was tested on 22/08/2005 which is beyond the period of one month and with the lapse of time, Fe content does not remain constant due to evaporation. Reliance placed in the case of UNION OF INDIA Versus GANGADHAR NARSINGDAS AGGARWAL [1995 (8) TMI 73 - SUPREME COURT OF INDIA], where it was held that if the percentage of iron content is determined after ignoring the moisture the percentage would not be relatable to the lumpy iron ore weighed at the relevant point of time for the purposes of charging duty. Penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 714
Classification of imported goods - ILP 45 Professional LCG Monitors of Sharp brand - importers classified the goods under CTH 85285100 - The department was of the view that the goods would fall under CTH 85285900 - Whether it is a Computer monitor or a TV/ Video monitor? - Held that: - as rightly pointed out by the learned counsel for appellant, the Commissioner (Appeals) has taken assistance of the Board Circular, dated 10.09.2007. A Computer chart is furnished in the Circular comparing TV monitor with that of Computer monitor. On a close perusal of this comparison, we do not find any disagreement with the view taken by Commissioner (Appeals) who has held that on the basis of description produced by appellant, the scales favor the classification under Computer monitor (CTH 85285100) rather than TV monitor - appeal dismissed - decided against Revenue.
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2017 (10) TMI 713
Confiscation - penalty - import of Irony Aluminium Scrap - it was alleged that the importer attempted to import hazardons plastic and other waste materials by mis-declaring the cargo as Irony Aluminium scrap, thereby violating the provisions of the Environment Protection Act, 1986 - Held that: - as per the report of the TNPCB some extraneous plastic items were found in the consignment. There is nothing in the said report to reflect upon the quantum of such waste materials, neither is there any observation by the said authorities so as to arrive at the conclusion that the goods imported by the appellants are hazardous - Nobody would import plastic carry bags or used seals, electronic waste etc., which is much cheaper material in a consignment of iron and aluminum. The presence of municipal waste in the cargo could be the result of heavy rains in the region thus exposing the containers to flood like situation. The said fact is beyond the control of the assessee and cannot lead to confiscation of the goods or for imposition of any penalty upon them. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 712
Condonation of delay of 1010 days in filing appeal - case of appellant is that after receipt of the impugned order the same was misplaced in their office in Kanpur and though efforts were made to file the appeals, it did not fructify and thus there was omission in filing appeals within time - Held that: - In many judgements, the Hon’ble Apex Court as well as various High Courts, has held that in every case of delay there may be some lapse on the part of the litigant concerned. That this alone is not enough to turn down his plea and to shut the door against him - the appellant has to be given a chance to contest his appeal - delay condoned subject to appellant paying costs as mentioned - appeal allowed in part.
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2017 (10) TMI 711
Benefit of N/N. 6/2006-CE dated 1.3.2006 - import of combo drives - demand of CVD, cess and additional import duty - Held that: - there are no reference in the vast literature available in the public domain on the internet that a combo drive would have to contain of microprocessor or USB flash memory or for that matter a floppy disc drive or hard disc drive. It appears to be absurd to suggest that a combo drive should contain a microprocessor and USB flash memory - there are no ground to interfere with the finding of fact recorded by the lower appellate authority that the combo drives are eligible for concession of duty as per N/N. 6/2006 - benefit of notification allowed - appeal dismissed - decided against Revenue.
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Service Tax
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2017 (10) TMI 710
Classification of services - Commercial Coaching or Training services - scope of term commercial - whether Educational Institution other than colleges/institutes not recognised under the law would otherwise be within the ambit of the taxable service of Commercial Training or Coaching Service? - Section 65 (27) of the Finance Act, 1994. Held that: - the commercial training or coaching for imparting skill or knowledge or lessons on any subject or field are covered under commercial training or coaching centre. The exclusion is provided from the ambit of this service with regard to sports activity and preschool coaching and training centre or any institute or establishment which issued any certificate, diploma, degree of any educational qualification recognized by law for the time being in force. As per the facts of the present cases, the service of both the appellants are squarely covered in the first limb of definition. Since imparting of skill knowledge or lessons is not on the sports and the education is not related to preschool coaching and training also the establishment does not issue certificate, diploma, degree or any educational qualification which was recognized by law, the training or coaching provided by the appellants do not fall under the exclusion category of the definition therefore squarely covered under the definition of commercial training or coaching centre. Identical issue decided in the case of M/s GREAT LAKES INSTITUTE OF MANAGEMENT LTD & OTHS Versus CST, CHENNAI & OTHS [2013 (10) TMI 433 - CESTAT NEW DELHI - LB], where it was held that except training or coaching falling in the exclusion category of all training or coaching falls under the definition of commercial training or coaching service, hence the same is taxable - the demand confirmed by the lower authority on merit is sustained. Extended period of limitation - Held that: - the appellants have suppressed the fact as well as contravened the provisions of this Chapter of the Act or of the Rules made under with intent to evade payment of service tax therefore the extended period was rightly invoked. Quantification of demand - various deductions such as certain amount was not received during the impugned period, certain fees, such as postal s, mess/sale of goods etc. - includibility - Held that: - once the appellant made a claim in their defence for deduction of taxable value. It is incumbent on the Commissioner to consider it, non-consideration of the same is violation of the principles of natural justice - the submission of the appellant challenging the quantification should have been properly dealt with by the adjudicating authority. CENVAT credit - input service - Held that: - matter remanded as regard quantification of demand in the case of MIT Institute of Design to the adjudicating authority for re-quantification on verification of all the documents/information/to be produced by the appellant - matter on remand. Penalty u/s 76,77 & 78 - Held that: - the appellants have neither taken the registration nor filed the ST-3 return. It is also observed from the finding in Para 23 of the order-in-original as reproduced above, the appellants have contravened the provisions of Chapter of Finance Act, 1994 and Rules made there under with intent to evade payment of service tax. They could not make out a case of reasonable cause was not discharging the service tax - penalty rightly imposed. Part matter on remand and partly decided against appellant.
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2017 (10) TMI 709
Refund claim - port services - rejection on the ground that the invoices issued by the Port and Inland Water Transport department, is in the name of CHA and not in the name of the appellant - Held that: - there is no dispute about the payment of service tax on port services and their receipt used by the exporter for export of iron ore fines - the appellant has produced on records, the debit notes issued by the CHA to the appellant and its co-relation with the service tax paid through invoice issued by Port and Inland Water Transport department. In the impugned order, the Commissioner has not given any findings with regard to this co-relation - matter is remanded to the original authority who will consider the documents produced by the appellant to establish co-relation between service tax paid by the exporter to the CHA - appeal allowed by way of remand.
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2017 (10) TMI 708
Club or Association Service - consideration received from members - Section 65(25a) read with sub-clause (zzze) of Clause (105) of Section 65 of Finance Act, 1994 - Held that: - the Tribunal in the case of Federation of Indian Chambers of Commerce and Industry [2014 (5) TMI 183 – CESTAT New Delhi] examined almost similar set of facts and concluded that the appellants are engaged in activities having objectives which amounts to public service and are of a charitable nature and relying in the case of Sports Club of Gujarat Ltd. [2013 (7) TMI 510 - GUJARAT HIGH COURT] held that the service provided by the appellant is not authorized for levy and collection of service tax under club or association service as the Hon’ble High Court held the same as constitutionally invalid - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 707
Voluntary Compliance Encouragement Scheme - rejection of declaration on the ground that in terms of proviso to section 106 (1) of the Finance Act, 2013, where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period - Held that: - pendency of liability for the past period cannot act as a bar for seeking the advantage of the exemption scheme - otherwise also, it is not the Revenue's case that the dispute in the present case as also in the earlier pending case, were similar. The present case deals with non-payment of tax on the Construction Service, whereas, the earlier case is in respect of appellant's liability to service tax on the construction undertaken under Works Contract Service. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 706
Penalty u/s 77 and 78 - It was alleged that neither any return was filed during the period in question nor any service tax was deposited, no intimation was given to the Revenue as regards the assessee's liability and obligation to pay the said amount to service tax - Held that: - there is no dispute on the facts that the assessee is under a legal obligation to file the requisite returns provided under the statute and to discharge its service tax liability accordingly. The appellant in the present case was duly aware of its legal obligations as they were registered with the serviced tax department and were following due procedure prior to the period in question. The appellant's stand that service tax was not being paid on account of financial crunch cannot be appreciated in as much as they were collecting service tax from their customers and instead of depositing the same, it was being pocketed. It is evident that they retained the amount and enjoyed the financial accommodation till such time the department initiated action. Even if it is assumed that tax was not being deposited on account of financial difficulties, nothing stopped the appellant to file the statutory returns disclosing their liability to pay service tax, in which case, it would have been a case of delayed payment and not of non-payment. The fact of non-disclosure and non-filing of returns leads to the inevitable conclusion that the appellant was doing so with malafide intention, in which case, there is clear mandate of law contained in the provisions of Section 78, for imposition of penalties - there is a clear mandate of law provided under Section 78 of the Finance Act, 1994 that any person, who has not paid or short-paid the tax on account of any fraud; collusion; willful mis-statement; or suppression of facts or has evaded any tax provisions with an intent to evade payment of duty would be liable to equal amount of penalty. The appellant's claim of invocation of Section 80 of the Finance Act, 1994 can also not be appreciated in as much as, the said section applies only if the assessee proves that there was reasonable cause" for the failure to deposit and that reasonable cause has to be bonafide. The appellant, in the present case, is a registered service provider and is paying service tax on the value of the service. It is only that such value was not being fully disclosed, with a malafide intention to evade payment of service tax on the same. As such, there was no reasonable cause on the part of the appellant to believe that the service tax was not required to be paid - the said section is also not applicable to them. The appellant's claim to reduce the penalty to 25% in terms of the proviso to Section 78 can also not to be appreciated in as much as, the benefit of reduced penalty can be extended only if the entire service tax along with interest and along with 25% penalty is deposited within 30 days of the passing of the order of determination of service tax. Appeal dismissed - decided against appellant.
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2017 (10) TMI 705
Penalty u/s 76 and 78 - TDS - non-payment of service tax on three installments of TDS - appellant claims that the omission to pay service tax was only because the appellant was not aware of the non-payment of service tax on the TDS amount - Held that: - there was much confusion as to whether the service recipient who is bound to pay the service tax is liable to pay service tax on the TDS portion - Further, since the appellants have discharged the service tax, the penalties imposed are unwarranted. In the case of C. Ramachandran Vs. Commissioner of Service Tax, Chennai [2016 (7) TMI 1036 - CESTAT CHENNAI] the Tribunal has held that in such situation penalties ought to be waived by invoking section 80 of the Finance Act, 1994. Penalty set aside - demand of service tax with interest and penalty u/s 77 upheld - appeal allowed in part.
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2017 (10) TMI 704
Simultaneous Penalty u/s 76 and 78 - outdoor catering service - bonafide belief - Held that: - In various judgments, it has been held that the penalties under both section 76 as well as section 78 cannot be imposed simultaneously and the same was brought into effect by amendment to the sections with effect from 10.5.2008 - In the present case, the demand is made for the period from 6.10.2005 onwards where the services came to be taxable. The appellant has already deposited the service tax along with interest as well as 25% of the penalty - the penalty imposed u/s 76 is unwarranted - demand of service tax, interest thereon and the 25% reduced penalty u/s 78 upheld - appeal allowed in part.
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2017 (10) TMI 703
Refund claim - limitation period - Rule 5 of CCR, 2004 - what is the relevant date to be adopted for the purpose of calculating the limitation period of one year? - Held that: - the issue is no more res integra and stands settled by the Tribunal's decision in the case of M/s. Bechtel India Pvt Ltd. Vs Commissioner of Service tax [2013 (7) TMI 490 - CESTAT NEW DELHI], wherein the relevant date for determining limitation was determined as the date of receipt of foreign exchange - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (10) TMI 702
Grant of new CHA license - application for grant of new custom brokers license rejected on the ground that condition specified in clause (e) of the Regulation 5 is not satisfied - Held that: - If the Applicant, who applies for a license has been convicted by a competent Court for the offences provided in any of the said three enactments, the disqualification in clause (d) will be applicable. If a Criminal Proceeding is pending in which the Applicant is being prosecuted for any such offences, it will also operate as a disqualification under Clause (d). Clause (e) uses the word “penalized” as distinguished from the word “convicted” in clause (d) - Clause (e) will apply when the Applicant who applies for license has been penalised by imposing penalty for any act or omission which attracts imposition of penalty under the said Act, the Central Excise Act, 1944 and the Finance Act, 1994 - the disqualification Clause (d) uses the word “convicted” as distinguished from Clause (e), which uses the word “penalised”. In the facts of the present case, it is an admitted position that an penalty has been imposed on the Petitioners and the order imposing penalty has not been challenged by the Petitioners. Therefore, there is no merit in the challenge to the order passed by the licensing authority rejecting the application for grant of license. Petition dismissed - decided against petitioner.
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2017 (10) TMI 701
Validity of Section 3A of the Central Excise and Salts Act, 1944 - valuation on the basis of Capacity production - It appears that on account of peak hours load restriction of electricity due to paucity of power supply between 4/5 p.m. to 10 p.m. for industries, there was loss of production in the appellant’s industry. The appellant, therefore, wanted to pay excise duty on actual production basis - Held that: - Rule 96 ZO and Rule 96 ZP of the Central Excise Rules provide the procedure to be followed by the manufacturer to pay duty. It also enumerates the manner of calculating and making payment of total amount of duty for the period from 1st day of September, 1997 to 31st day of March, 1998 and thereafter, total amount of duty liability for financial year subsequent to 1997-98. The appellant vide letter dated 10.9.1997 opted to pay excise duty under these Rules on lump sum basis. And it is not in dispute that the total amount of duty liability for the period from 1st day of September,1997 to 31st day of March, 1998 was duly paid. It is to be noted that the actual production of any period can be determined only after that period is over. This position has been admitted in the additional affidavit-in-opposition filed by the Assistant Commissioner, Central Excise Department in WP(C) No.2020/99, wherein it is clearly stated that actual production for 1998-99 i.e. any period, can only be determined after that period is over i.e. on or before 1.4.1999. The Commissioner, Central Excise has also admitted this position in his letter dated 12.4.1999. And in respect to financial year 1998-99, the appellant vide letter dated 1.10.1998 opted only once to pay excise duty on actual production. Also from 1.4.98 to 30.9.98 the appellant did not pay duty under the scheme i.e. on lump sum basis. There is nothing on record to suggest that for that year, the appellant chose to pay excise duty on lump sum basis. There is admittedly no provision which prescribes any particular time for opting out from the scheme of paying excise duty on lump sum basis and to offer for making payment on actual production. Therefore, in our considered view, the Tribunal committed an illegality in holding that option exercised by the appellant vide application dated 1.10.1998 will be available for the year 1999-2000 and not for the year 1998-99 Interest - penalty - Held that: - levying of interest under Rule 96 ZO and Rule 96 ZP of the Rules is not permissible because Section 3A of the Central Excise and Salts Act, 1944, which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for levying of interest - Rule 96 ZO and Rule 96 ZP in so far as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Articles 14 and 19 (1)(g) of the Constitution and are ultra vires the Central Excise Act - reliance paced in the case of Shree Bhagwati Steel Rolling Mills –vs- Commissioner of Central Excise [2015 (11) TMI 1172 - SUPREME COURT] - interest and penalty set aside. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 700
CENVAT credit - Reverse Charge Mechanism - Duty paying documents - applicability of Rule 9 (1)(b) of the CCR, 2004 - Held that: - the said rule is invokable only for Cenvat Credit availed on the strength of supplementary invoices issued by manufacturer or importer of excisable goods for inputs or capital goods. The said rule is not applicable to the services received - admittedly, the issue in the present case is that the appellant has availed Cenvat Credit of Service Tax paid for the services received from a service provider located outside India under reverse charge mechanism in terms of Section 66 of the Finance Act, 1994 - the provisions of Rule 9(1)(b) of CCR, 2004 are not invokable - the appellant has correctly availed the Cenvat Credit - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 699
Demand of interest - suo-moto reversal of CENVAT credit - Restoration of appeal - non-appearance of appellant - Held that: - When the appellant has voluntarily reversed the credit, they ought to have reversed with interest. Once the appellant has come to know of the irregular excess credit they ought to have reversed it along with interest without waiting for a show cause notice. The liability to pay interest is automatic and continuous till the duty is paid. This being so the appellant cannot deliberately abstain from paying the interest on the excess credit and then take shelter that the demand is time-barred - appeal dismissed - decided against appellant.
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2017 (10) TMI 698
Benefit of reduced penalty - Clandestine Removal - availment of irregular credit -payment of duty demand with interest has been done - Held that: - The Hon’ble Supreme Court in the case of CCE Vs. R.A. Shaikh Paper Mills Pvt. Ltd. [2016 (4) TMI 1076 - SUPREME COURT] has observed that the adjudication order must mention about the availability of benefit of first and second proviso of reduced penalty. Admittedly, the appellant has not been given the benefit of reduced penalty - equal penalty imposed has to be reduced to 25% of the duty demand - appeal allowed. Personal penalty on Director, Manager etc - Held that: - no reasons to interfere with the nominal penalty imposed against such persons - penalty upheld - appeal dismissed. Appeal allowed in part.
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2017 (10) TMI 697
CENVAT credit - manufacture of dutiable and exempt goods - non-maintenance of separate set of books - Held that: - the Hon’ble High Court in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II Versus ICMC CORPORATION LTD. [2014 (1) TMI 1646 - MADRAS HIGH COURT] has held that the reversal of credit on common inputs used for manufacturing exempted goods would be sufficient compliance of the provisions envisaged in Rule 6(3) of CCR, 2004 - demand unsustainable - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 696
SSI Exemption - use of Brand Name after dissolution of former entity - assignment of brand name - N/N. 8/2003 dated 01.03.2003 - Held that: - originally the brand name "ASOKA" belonged to M/s. Vijay Chemicals & Toilet Works. Upon dissolution of M/s. Vijay Chemicals & Toilet Works, several units were started by the partners in different jurisdictions and all of them were allowed to use brand name “ASOKA” by addition of the suffix like A,B.C, etc. M/s. Vijay Chemicals & Toilet Works (AP) owned by Shri D.B. Nagandranath Gupta. The present appellant M/S. Vimal Perfumery Co. was assigned the brand name "ASOKA-A" and was allowed to use the said brand name. The Tribunal in the case of Bentex Motor Control Industries Vs. CCE [2001 (10) TMI 152 - CEGAT, COURT NO. II, NEW DELHI], held that the appellant will be entitled to use of the brand name "ASOKA" with the suffix A within the territory allotted to the appellant since such a brand name is used by the appellant only after proper assignment. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (10) TMI 695
Continuation of attachment order - Attachment of stock, bank accounts and fixed assets - section 45 of the VAT Act - By orders dated 07.09.2016 and 08.09.2016, attachment orders were passed - Held that: - Sub-section (2) of section 45 of the Act, in plain terms, ensures that the life of a provisional attachment order does not extend beyond a period of one year. Therefore, unless the order of provisional attachment is withdrawn, recalled, set aside or merges into some final order earlier, the same would cease to have effect at the end of a period of one year - This would ensure that the authority would examine the current position and would take a fresh decision that to protect the interest of Government revenue, it is necessary to pass fresh order of provisional attachment and that the earlier order of attachment would not mechanically continue indefinitely. The impugned orders of attachment were passed on 07.09.2016 and 08.09.2016. In terms of sub-section (2) of section 45, therefore they would become ineffective - petition allowed - decided in favor of petitioner.
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2017 (10) TMI 694
Validity of assessment order - TNVAT Act - petitioner's case is that the pre-revision notice was served on the petitioner and the notice had been returned with postal endorsement left - Rule 19 of the TNVAT Act - Held that: - this Court is of the view that the petitioner can be afforded one more opportunity to go before the Assessing Officer and put forth their objections as the pattern of assessment is identical to all the assessment orders and the revision of assessment itself is based upon report of the Enforcement Wing - the petitioner is to treat the impugned orders as show cause notices and submit their objections within a period of 15 days from the date of receipt of a copy of this order - matter on remand.
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