TMI Tax Updates - e-Newsletter
October 31, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Transitional Credit - validity of period of limitation under GST - The statute in any manner do not violate Article 14 or 19(1)(g) of the constitution
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GST:
Classification of supply - The entire gamut of the activities of the appellant can be considered as composite supply of the intermediary services and accounting services, of which the intermediary service is the principal service.
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GST:
Classification of suppy - The supply of Electro Ink supplied along with consumable is a mixed supply as defined u/s section 2 (74) of the GST Act and is also a continuous supply of goods as defined u/s 2 (32) of the GST Act.
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Income Tax:
Diversion of income under a revocable transfer or arrangement - section 60 - transfer of "income" without the "transfer of the asset" - the arrangement was made to avoid incidence of tax in AHR’s hands - additions confirmed.
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Income Tax:
Failure to file return of income of company - Offence u/s 276CC read with Section 278B of IT Act - criminal complaint - the directors are also equally responsible for furnishing of return on behalf of the company as is the case of the managing director.
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Income Tax:
MAT - Interest u/s 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB.
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Income Tax:
Income on betting - Set-off of busniss loss against betting and gambling income - Total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated u/s 115BB
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Income Tax:
Revision u/s 263 - denial of claim of exemption U/s 11 - payments of rent in violation of Section 13(1)(c) - income of the medical shop from the hospital premises - issues for denial of exemption were was also considered by the ld. CIT(E) as in violation of Section 13(1)(c) for refusing the registration U/s 12AA - Revision no allowed.
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Income Tax:
Exemption u/s 11 - claim of set off of brought forward expenses and carry forward of current year expenditure incurred in excess of its income for setting off against income of the succeeding years and claim it as application of income in the succeeding years - claim allowed.
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Customs:
Valuation of imported goods - Revenue neutrality - the liability to pay would arise at the time of import but the said credit can be used only after the plant is installed and production starts. Thus, it is not a revenue neutral situation.
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Customs:
Refund of SAD - The refund claim of additional duty due to the exemption flowing out of N/N. 102/2007 has to be filed within one year - Commissioner(Appeals) has committed an error while giving an expanded interpretation qua limitation to favour assessee
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Customs:
Restriction on duty free import - Once the imported goods are covered under the description, quantity as mentioned within the overall CIF value allowed in the DFIA, irrespective of the ITC (HS) Nos, there is no necessity to satisfy the requirement of Para 4.1.15 of FTP- (2009-14) and notification No.90 dated 21.08.2014
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Corporate Law:
Relaxation of additional fees and extension of last date of in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013- - reg
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Corporate Law:
Winding up petition - failure to pay the debts - The attempt of the respondents to claim that there is a bona-fide dispute regarding the payment payable for the singur project appears to lack bona fide.
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Corporate Law:
As admittedly the winding up proceedings has been admitted and ordered for winding-up of the respondent- ‘Corporate Debtor’, we hold that the question of initiation of ‘Corporate Insolvency Resolution Process’ against same ‘Corporate Debtor’ does not arise
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Service Tax:
Classification of services - The moment the nature of services as mentioned herein are provided without the said technical consultancy, the service comes out of the ambit of interior decoration services.
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Service Tax:
Scope of SCN - The mention of this activity as BAS in the final para of show cause notice is nothing more than a typographical error as the show cause notice is discussing about the features of Business Support Service - Confirmation of demand under BAS instead of BSS is incorrect.
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Central Excise:
Scope of amendment - what would be the meaning of the word 'substitute' - the 'substitution' of rule by way of an amendment - the said amendment is retrospective in nature.
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Central Excise:
Demand of differential Duty - Revenue has only wasted its energy when there is no revenue loss and therefore, unjustifiably extended the larger period of limitation, for nothing.
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Central Excise:
CENVAT credit - capital goods taken on lease - whether the appellant being the lessee of the capital goods, was eligible to avail CENVAT Credit? - Held Yes
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Central Excise:
CENVAT Credit - inputs - cement - Without filling of the ore pits the appellant was statutorily, not in position to extract the ore, i.e. the final product thus the use of cement was very much in relation to the manufacture which was extraction of ore - credit allowed.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2018 (10) TMI 1517
Classification of supply - supplies made to overseas clients known as Foreign Ship Owners (FSO) - principal supply is consultancy service - composite supply or not - export of service or not - bundled service or not - appellant was treated as bundled service of Consultancy Service and Support Service, wherein Consultancy Service was the principal service giving essential characteristics to MCS - place of provision of services - applicability of Rule 3 of Place of Provision of Service Rules, 2012 - whether the place of provision of service was the place of FSO, which was outside India.
Held that:- It is conspicuously evident that the Appellant is acting as an intermediary for the FSO. Though the Appellant is insisting that they are not having formal contracts with any of the potential charterers of the vessels, this is not the requirement or criterion for supply of the intermediary services, as can be seen from the definition of the intermediary.
The Appellant, in their appeal submissions, have also been highlighting the industrial practice, wherein a FSO avails Consultancy Service and Support Service bundled together as Marine Consultancy Service from the same supplier for it increases effectiveness and helps in cost economization. However, from the study of market practices or trends in vessels chartering industry available on the website bearing address general cargoship.com/charter-markets.html, it has come to our notice that the ships are normally “fixed” on charters with the assistance of the shipbrokers, who may be the FSO’s brokers or charterers brokers. Here the FSOs’ brokers are those, who find and arrange employment for their principals’ ships and charterers’ brokers are those who find ships to carry out their principals’ requirements.
The Appellant is actually facilitating the supply of the main services i.e. chartering of the vessels by the FSO to their clients i.e. charterers, thereby clearly acting as an intermediary, as the chartering of the vessels is not the main service of the Appellant, but their principal i.e. the FSO. Appellant are performing all these services on behalf of their principal i.e. the FSO, thus acting as an intermediary - The above said intermediary services can be classified under the Service Accounting Code 999799, which is “Other Miscellaneous Services”, as per the Annexure to the Notification 11/2017 -C. T. (Rate) dated 28.06.2017 as the intermediary activities cannot be classified in any other service head/group of the above mentioned Annexure.
In addition to the intermediary activities, they are obliged to perform the other administrative activities like examination of lay time calculation, voyage account reconciliation for eventual settlement with the charterers, which can be classified under the service head /group ‘accounting services’ bearing the SAC 998222.
The entire gamut of the activities of the appellant can be considered as composite supply of the intermediary services and accounting services, of which the intermediary service is the principal service.
Ruling:- The entire gamut of services performed by the Appellant are in fact of the composite supply of the intermediary services, classified under the Service Accounting Code 999799, which is other miscellaneous services, and the accounting services under the SAC 998222, of which the intermediary service is the principal supply.
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2018 (10) TMI 1516
Levy of GST - Job-work - supply or not - supply of Re-gasified Liquefied Natural Gas (RLNG), de-mineralized water (DM Water), Hydrogen Rich off Gas and raw water etc - applicability of Section 143 of GST - buy back of Hydrogen, Nitrogen and Steam (Industrial Gases) without payment of GST.
Held that:- It is settled position of law job work is activity which may or may not tantamount to manufacture. A job worker may undertake manufacturing of goods on account of others from the inputs supplied to him free of cost, and realize job work charges on return of the goods so manufacture or processed. In such a scenario the job worker alone has the liability to pay tax on the job work charges realized.
The essential requirement to be fulfilled to establish a transaction as job work is the treatment or process undertaken on the goods belonging to another. Section 143 of GST Law explain the procedure to be followed in the case job work transaction. A registered taxable person may, under intimation send any inputs without payment of tax to a job worker [or Job-work and bring back Inputs after completion of job work or otherwise, within one year of their being sent out, to any of the place of business without payment of tax.
In the present case, the industrial gases are produced out of the major materials or inputs supplied by the applicant. The job worker uses some minor, ancillary goods to complete the process. The application of minor items by the job worker would not detract it being a job. Therefore the processing undertaken by M/s. Prodair Air Products on the goods belong to the applicant, another registered person qualifies as job work even if it amounts to manufacture - The transport of the inputs from principal for processing through pipe lines to the premises of job worker as well as return of processed goods after job work to the principal can’t be treated as taxable supply.
Ruling:- The activity of the applicant of sending Regasified Liquefied Natural Gas (RLNG), De-Mineralized Water (DM Water), Hydrogen Rich off Gas and Raw water free of cost to M/s. Prodair Air Products Pvt. Ltd. For manufacture of Hydrogen, Nitrogen and Steam manufactured out of its amount to ‘job work’ as defined under Section 2(68) read with Section 143 of the CGST/ KSGST Acts.
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2018 (10) TMI 1521
Transitional Credit - validity of period of limitation - CENVAT credit of excise duty paid on capital goods which were in transit as on 01.07.2017 - inputs/capital goods - Vires of of Article 14 and 19(1)(g) of the Constitution of India - Gujarat Goods and Service Tax Act - IGST Act.
Held that:- Subsection (5) of section 140 allows a registered person, credit of eligible duties and tax in respect of inputs or input services which were received on or after the appointed day but on which the tax was paid earlier. In absence of any matching provisions pertaining to capital goods, in a situation where the duty had been paid on purchase of goods prior to the appointed day but the goods were received on or after the appointed day, there would be no possibility of availing credit on such tax under the GST regime.
The legislature made a clear and conscious demarcation between capital goods and inputs when it comes to availing credit of the duties paid on the goods which are in transit. When the entire tax structure was being replaced by the GST provisions, there would arise a need for making transitional arrangements.
In the present case, the source of the petitioner's grievance or dissatisfaction is that the inputs and capital goods are treated differently. When we find that the inputs and capital goods form different and distinct classes, the question of subclassification or artificial demarcation would not arise - it appears that the suggestion of the respondents is that unlike inputs, the capital goods which can be in the nature of plant and machinery including highly sophisticated specially designed and manufactured machines, may take much longer time for delivery and installation after the orders are placed by the manufacturers and the legislature was not inclined to keep the issues of migration of tax credits and pending claims open for indefinite period of time.
If it is accepted that there is no time period for claiming input tax credit as contained in section 19(11), the provision would become too flexible and would give rise to large number of disputes including of verification of claim of input credit. Taxing statutes contained self contains scheme of levying computation and calculation of tax. The time under which a return is to be filed for the purpose of assessment of tax cannot be dependent on the will of a dealer.
The statute in any manner do not violate Article 14 or 19(1)(g) of the constitution - petition dismissed.
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2018 (10) TMI 1520
Extension of time for filing GST TRAN-1 - input tax credit - transition to GST Regime - Held that:- Respondents submitted that Notification No. 48 dated September 10, 2018 has been issued for amending the Central Goods and Services Tax Rules, 2017 giving power to the Commissioner for extension of time for submission of declaration form GST TRAN-1 upto March 31, 2019. The power can be exercised by the Commissioner on the recommendation of the Council - petition disposed off.
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2018 (10) TMI 1519
Release of detained goods - furnishing of bank guarantee for the tax and penalty imposed - Held that:- The appellate authority has already been constituted under Section 107(1) of the CGST/SGST Act; the petitioner may file the statutory appeal in time - the authorities are restrained from invoking the bank guarantee till the petitioner exhausts the statutory remedy or till the appeal gets barred by limitation - petition disposed off.
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2018 (10) TMI 1518
Release of detained goods - Bank Guarantee - Held that:- The petitioner has already filed a statutory appeal. It will suffice if this Court recalls its judgment under review and dispose of the writ petition with a direction to the respondent authorities not to encash the Bank guarantee until the statutory appeal is disposed of.
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2018 (10) TMI 1515
Classification of goods - Valuation - ElectroInk supplied along with consumables under GST - composite supply/principle supply - naturally bundled supplies - Determination of time and value of supply of ElectroInk with consumables under the indigo press Contract - Continuous supply - POT Rules MSGST Act.
Classification of ElectroInk supplied along with consumables under GST - Held that:- Under the GST Law the taxable event is supply of goods or services or both. The tax is payable on every supply unless otherwise exempted. The law notifies individual supply of goods and services with applicable rate of tax. Where supply consists individually of goods and services there is no confusion or problem. But with the advent of different models of business certain supplies consist of combination of goods or services or both. It is therefore required to be ascertained to apply the correct rate of tax - there is no doubt to conclude that the impugned transaction consists of two or more taxable supplies of goods and also the goods are supplied in conjunction. Thus the ingredients of the definition of composite supply are satisfied.
Whether these supplies are naturally bundled? - Held that:- The supply of ElectroInk with consumables by the applicant to the distributor/reseller constitute bundled supply which involves more than two taxable supplies of goods.
The dictionary meaning of the word 'Naturally' with reference to supply implies that it should be in the natural manner or is happing or existing as a part of nature and not made or done by the people - In the present case and per the terms of the HP's agreement with reseller / customer which provides that "Reseller may elect to purchase Supplies for the different Indigo Press Product Lines under different programs, provided that Reseller shall purchase all of the Supplies required by it for each Indigo Press Product Line under the same Supplies purchase program." This clause of the purchase agreement assume significance of the factual background that there exists a notable difference between the conventional offset and HP Indigo Digital offset Printing Technology. The terms of the contract as mentioned above clearly indicate that the recipient of the supply has no option to select individual supply but to accept it as bundled supply. Thus the transaction of supply of ElectroInk with consumables cannot be considered as Naturally bundled Supply but a compulsory supply - the transaction cannot be said to be naturally bundled supply.
The applicant has submitted the consumption pattern of Electro ink along with consumables supplied to authorised reseller. From this consumption pattern it is noticed that if the requisite quantity of ink and other consumables are supplied to the printing machine for first time, the other consumables are not required to be supplied compulsorily. Assuming that the ink is required to be replaced after thousand clicks, the blanket or photo imaging plate is required to be replaced after approximately 3000 and 3300 clicks respectively - the goods are mandatorily supplied in conjunction. Thus the consumption of supplies has its own pattern. Each of such supplies can be supplied separately as they are not dependent on each other and the identification of the principal supply therefore cannot be drawn from and among the supplies which gives one of the essential character of bundle supplies to the suppliers in the present case.
The supply of Electro Ink along with consumable cannot be considered as a composite supply as defined under section 2(30) of the GST Act.
Mixed Supply or not? - Held that:- There is no dispute that applicant's supplies consist of two or more than two supplies. It is also not in dispute that the supplies are made in conjunction with each other and made for a single price - it is noticed that each of the supplies can be supplied separately as they are not dependent on each other and one supply of goods does not occasion the supply of other goods.
As the transaction satisfies all the ingredient of 'mixed supply' the transaction would come and fall under 'mixed supply' as defined in clause 74 of section 2 of the GST Act.
Determination of Time and Value of supply of ElectroInk with consumables under the Indigo press contract - Held that:- The supply of goods in the present case fulfil the basic tenets of 'continuous supply' and therefore the impugned supply is 'continuous supply of goods 'as defined in clause 32 of section 2 of the GST Act.
The goods are supplied by the applicant on regular or periodic basis where successive statements of account are raised within 15 days from the end of each calendar month with respect to supplies made in the preceding month. Section 31 (4) is the relevant section where provisions are made for issue of invoice in case of continuous supply of goods.
Time of supply - Held that:- The applicant has to raise invoice on or before 15th day from the end of each calendar month with respect to supplies made in the preceding month. Thus the time of supply in the present case will be the earliest date between the date of invoice or the date of payments with respect to impugned supply as per the provisions of section 12(2) of the GST Act.
Vlues of supply of ElectroInk with consumables under the Indigo Press Contract - Held that:- The impugned transaction is a mixed supply with nature of supply as continuous supply of goods for single price and therefore the Value of supply of goods as per section 15 of the GST Act shall be the transaction value as reflected in the invoice issue by the applicant.
Ruling:- The supply of Electro Ink supplied along with consumable is a mixed supply as defined u/s section 2 (74) of the GST Act and is also a continuous supply of goods as defined u/s 2 (32) of the GST Act.
The time of supply of Electro Ink supplied along with consumables under the indigo press contract would be the earliest date between the date of invoice or the date of receipt of payment. As regards the value of supply of Electro Ink supplied with consumables under the Indigo Press Contract would be the transactions value as reflected in the invoice issued u/s 31(4) of the GST Act.
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Income Tax
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2018 (10) TMI 1504
TPA - services provided through emails - ALP determination - as per TPO no uncontrolled enterprise would have paid any amount for services which do not tantamount to Intra group services with demonstrable benefits - assessee is one of the leading developers and suppliers of innovative identification and decorative solutions for businesses and consumers worldwide - Held that:- Commercial prudence cannot be questioned while making transfer pricing adjustment.
In so far as the evidences furnished by the assessee in support of the services received from its AEs are concerned, the counsel has furnished a detailed chart of 12 pages giving details of the documents furnished in support of its claim of receiving services. The evidences are in respect of each and every service received by the assessee. These plethoras of evidences have been rubbished by the TPO/DRP only on the ground that these are of very general in nature and are nothing but emails and correspondences. We do not find any merit in the action of the lower authorities.
In the present days, such businesses are mostly done through emails and service provider, who is providing service through emails and electronic media. None of the lower authorities have made any adverse comment in respect of services provided through emails. Moreover, such is the practice since A.Y 2007-08 and in earlier A.Ys, the same has been accepted. Above all, composite contract/agreement is same and there is no change in the business profile of the assessee. The assessee has made payments in accordance with the written agreements which are supported by detailed evidences regarding receipt of services. Since the payments have been made in pursuance to written agreements, in our considered opinion, the same should be a reasonable basis to confirm that payments are legitimate.
As in the case of Abhishek Auto Industries [2010 (11) TMI 730 - ITAT, DELHI] has held that legally, an agreement entered into between parties cannot be disregarded without assigning cogent reasons. In our considered view, the services, by their very nature, are intangible and therefore, the evidences regarding availing such services and benefits received as a result of availing such services can be best demonstrated by narration and descriptions as evidenced by supportive emails. Considering the facts of the case in the light of the past history of the assessee we do not find any merit in the transfer pricing adjustment made by the Assessing Officer. We accordingly, direct for deletion of the same. Substantive grievance of the assessee is allowed.
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2018 (10) TMI 1503
Payments made to assessee outside India - Amount received by the assessee towards fee for mobilization/demobilization of the rig/s outside India, is to be included in the gross receipts u/s 44BB - gross revenue - Held that:- Issue to be covered against the assessee by the order of the ITAT Delhi Bench in assessee’s own case for assessment year 2008-09 wherein in Para 6, the issue has been dealt with and the Coordinate Bench of the Tribunal has followed the order in the case of Sedco Forex International Drilling Ltd.(2007 (9) TMI 196 - UTTARAKHAND HIGH COURT).
Gross receipts u/s 44BB - amount received by the assessee from its customers as reimbursement of actual expenses(material and fuel expenses) incurred by the assessee on their behalf - Held that:- Direction of the DRP in holding that the amounts aggregating to ₹ 476,513,071/-, received by the assessee from its customers as reimbursement of actual expenses(material and fuel expenses) incurred by the assessee on their behalf is to be included in the gross receipts u/s 44BB of the Income Tax Act is concerned, we find that this issue is also covered against the assessee by the order of the ITAT in assessee’s own case for assessment year 2008-09 wherein the Coordinate Bench had followed the judgment in the case of CIT vs. Halliburton Offshore Services Inc (2007 (9) TMI 230 - UTTARAKHAND HIGH COURT). It is also to be noted that an identical issue was held against the assessee in assessment year 2007-08 also.
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2018 (10) TMI 1502
TPA - Arm's length price adjustment - international transactions of sale/resale of manufactured goods in export, payments of sales margins, services rendered etc. to its associate enterprises - admission of additional evidence - Held that:- The fact remains that the TPO is already seized of the very issue is earlier assessment years 2011-12 & 2012-13. This consequential adjudication would indeed carry all ramifications in the impugned assessment year as well. We adopt judicial consistency in these peculiar facts and circumstances to restore the impugned ALP adjustment issue back to the TPO for his simultaneous adjudication in all these assessment years. The Revenue's argument strongly supporting the impugned adjustment are rejected to this limited extent at this stage. - Decided in favour of assessee for statistical purposes.
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2018 (10) TMI 1501
Revision u/s 263 - denial of claim of exemption U/s 11 - payments of rent in violation of Section 13(1)(c) - income of the medical shop from the hospital premises - issues for denial of exemption were was also considered by the ld. CIT(E) as in violation of Section 13(1)(c) for refusing the registration U/s 12AA of the Act - Held that:- Both the issues which were subject matter of denial of registration U/s 12AA of the Act has been considered by the Tribunal while passing the order dated 28/09/2018 in the appeal against the order of denial of registration U/s 12AA of the Act. He has further submitted that even otherwise Smt. Kamla Ranwa finally donated the entire stock of medicines to the assessee’s society and the ld. CIT(E) has not disputed this fact that on 30/11/2011, the medicines stock of medical shop in question was donated to the assessee society. Therefore, invoking the provisions of Section 263 of the Act by the ld. CIT(E) based on the order passed U/s 12AA(1)(b) of the Act and consequential impugned revision order are not valid and liable to be quashed.
Thus, in view of the order of the Tribunal dated 28/09/2018 in the appeal filed by the assessee against the order passed U/s 12AA(1)(b) of the Act, the impugned order passed by the ld. CIT(E) U/s 263 of the Act would not survive. Even otherwise once the registration U/s 12AA of the Act was directed to be granted then the Assessing Officer has to consider the issue of exemption U/s 11 and 12 of the Act while passing the giving effect order and therefore, the impugned order passed by the ld. CIT(E) becomes infructuous. - decided in favour of assessee.
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2018 (10) TMI 1514
Rectification of mistake - Diversion of income under a revocable transfer or arrangement - accrual of income - CIT(A) and ITAT confirmed the additions invoking section 60 - transfer of "income" without the "transfer of the asset" - Held that:- It is evident that the agreement is not indefinite; it confers a right to receive rentals, for which a consideration of ₹ 75 crores was paid. The agreement could be rescinded, after 3 years, by giving back the deposit; the arrangement could not exceed 10 years in all. Clause 4 stated, significantly, that AHR’s tenants were deemed to be that of ADI.
In this case, the express terms of the agreement clearly showed that the arrangement was finite and also revocable (by one year’s notice and refund of deposit). Pertinently, the judgments that the petitioner now relies on, apart from Dalmia [1999 (4) TMI 4 - SUPREME COURT](i.e Rungamatee Tea & Industries [1991 (7) TMI 9 - CALCUTTA HIGH COURT], Poddar Cement[1997 (5) TMI 2 - SUPREME COURT], Arvind Narottam [1988 (8) TMI 2 - SUPREME COURT]) were all cited and considered by the CIT (A) after the AO’s order, on remand in the earlier round. This court is also of the opinion that like in Dalmia, the facts in Rungamatee, clearly showed that the transaction by which the assets were handed over possession were not just for their management, but preparatory to their sale. The purchaser took possession of the assets from the owner and managed them till conveyance, the subsequent year.
This court is of opinion that the main judgment of the ITAT took note of the authority in Poddar Cement (supra). The ITAT also had before it, the reasoning of the CIT (A) who had noticed all the judgments cited by the assessees – which found place in the written note submitted to the ITAT in their appeal. Therefore, it cannot be said that the tribunal ignored or overlooked material facts or law. Furthermore- perhaps crucially, the lower authorities concurrently found that ADI, despite reporting the lease income in its hands, declared loss for the year under consideration in its return whereas AHR declared profits. In these circumstances, their view was that the arrangement was made to avoid incidence of tax in AHR’s hands. No infirmity in the impugned orders of the ITAT,
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2018 (10) TMI 1513
Addition u/s 68 - unexplained cash credit - absence of documentary evidence - Tribunal instead of endorsing it fully and dismissing the Revenue's appeal in its entirety deems it fit and proper to send the matter back to the AO so as to verify and examine whether indeed there is any repayment - Held that:- Once it was satisfied with regard to the essential ingredients of the section and the manner in which the whole case was approached by the Commissioner, then, with regard to the assertion of repayment and styling it as a subsequent development relevant and germane to the case in hand, the Tribunal deemed it fit and proper to send the matter back to the Assessing Officer. That is to make it doubly sure as to whether indeed there was a repayment of the amount borrowed and claimed as advances from these parties.
We do not think that we should entertain a further appeal to this Court for it is not possible to re-appreciate and reappraise such factual findings. They are not demonstrably perverse nor vitiated by any error of law apparent on the face of the record.
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2018 (10) TMI 1512
Revision u/s 263 - the contents of the order u/s 263 were not related to the said show cause notice issued in this regard - Held that:- The issue raised before us has been answered by the Hon'ble Supreme Court in the case of Amitabh Bachchan[2016 (5) TMI 493 - SUPREME COURT] wherein an identical contention as advanced by the learned counsel for the appellant herein was advanced before the Hon'ble Supreme Court contending that no show cause notice was given prior to the order passed under Section 263 of the Act and that the reasons stated in the order passed under Section 263 of the Act were totally different.
The above decision of the Hon'ble Supreme Court in the case of Amitabh Bachchan would squarely apply to the facts and circumstances of this case, that the Commissioner of Income Tax was not denuded of his powers to decide the matter as detailed in the order dated 30.3.1998 and that there was no requirement of issuance of any show cause notice. - Decided against assessee.
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2018 (10) TMI 1511
Addition u/s 69 - loose slips were recovered in search which showed several entries pertaining to cash and cheque transactions - Held that:- t. For the first time, before the Commissioner of Income Tax (Appeals), the assessee took a stand that the slips are only dumb sheets and there was no connection with the purchasing of residential property and further, the assessee sought to explain the notings to mean as monthly instalments and arranging of funds and not for payment. The Commissioner of Income Tax (Appeals), after considering the said statement, has given reasons as to why the statements of the assessee are not tenable. In fact, the assessee in no uncertain terms has accepted in his statement that the slip represents payment made for the purchase of property in question. The retraction is vague and a clear afterthought.
The case on hand is not a simple case of relying upon some scribbling and notings, but a case where the entries, which were clear and legible, were taken into consideration by the Assessing Officer. The correctness of which was examined by the Commissioner of Income Tax (Appeals) and further examined by the Tribunal. Thus, we find the assessee has not made out any good ground to interfere with the order of the Tribunal. - Decided against assessee.
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2018 (10) TMI 1500
Nature of income - Income from house property or busniss income - determination of ALV of the unsold units (both residential / commercial) - charging notional income as income from house properties in respect of unsold units (both residential / commercial), which were held by the appellant as its stock in trade - Held that:- Keeping in view the consistent stand of this Tribunal and respectfully following the same, we hold that if a immovable property in the shape of flats / shops is held as stock-in-trade, then it becomes part of trading operations for the assessee and as a natural corollary, any income derived there-from would be Business Income and not Income from House Property. Resultantly, the impugned additions as confirmed by first appellate authority stand deleted.
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2018 (10) TMI 1499
Addition of sum received towards refund of loan as undisclosed income - the same amount used in purchase of diamonds and the sales proceeds of the said diamonds was declared as income u/s. 132(4) by the appellant and paid taxes thereon - double deduction - Held that:- We of a strong conviction that the assessee had merely in the guise of the disclosure made as regards the unaccounted sale value of the diamonds tried to wriggle out of the incriminating notings appearing on the seized document. We are of the considered view that in the backdrop of the aforesaid facts, it can safely be concluded that the cash loan of ₹ 30,00,000/- advanced by the assessee to M/s Vijay Gruh Nirman Pvt. Ltd. was not returned by the said party. We thus, finding ourselves to be in agreement with the view taken by the CIT(A), uphold his order and sustain the addition of ₹ 30,00,000/- in the hands of the assessee. - Decided against assessee
Addition of “on money” for purchase of property - assessee as observed by the CIT(A), from the very beginning had been claiming that the said amount was paid for purchase of diamonds - Held that:- We though are in agreement with the A.O that the “receipts” under consideration viz. Annexure A-11 – Page 30-31 did not make any mention that the amounts were paid by the assessee for purchase of diamonds, but then, we cannot also remain oblivious of the fact that the said” receipts” also did not make any such mention from which it could be safely concluded that the amount was paid by the assessee for purchase of property. We may further observe, that the” Affidavit” and the confirmation filed by Sh. Vikram Singh Shekhawat also substantiates the fact that the amount was paid by the assessee for purchase of diamonds. We thus, not being able to persuade ourselves to subscribe to the view arrived at by the A.O on the basis of the seized documents viz. Annexure A-11 – Page 30-31,thus uphold the order of the CIT(A) and confirm the deletion of the addition of ₹ 42,21,000/- made by the A.O. - Decided against revenue.
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2018 (10) TMI 1510
Entitlement to benefits u/s 80HHB - how the project executed by the assessee requires to be interpreted for being entitled or otherwise to the benefits under Section 80HHB - 'profits derived' from the business - Held that:- The expressions "business of execution of a foreign project" or work forming part of it or the 'profits derived' from the business, take in all aspects of a business involving the activities referred to in Sub-Section (2)(b) of Section 80HHB of the Act together with all activities, commitments and obligations ancillary and incidental thereto and the profits flowing therefrom. It was also held that the definition cannot be restricted to the mere physical activity or putting up the superstructure, machinery or plant, but should be understood to take within its fold all utilization of technical knowledge or rendering of technical services necessary to bring about the construction, assembly and installation.
Bearing in mind the above legal principle, if we examine the nature of work done by the assessee in the foreign country, we fully subscribe to the factual finding recorded by the CIT (A) after going through the terms and conditions of the agreement and the drawings, etc. The Tribunal lost sight of the most important factor pointed out by the assessee before the CIT (A) that the term 'shut down' does not denote repairs and maintenance and that it is a technical term, which is peculiar to the industry in question. Therefore, if the Tribunal had to come to a different conclusion, it should have reappreciated the factual position and then rendered a finding, which it has failed to do so. Rather, the Tribunal sought to adopt a very narrow approach by referring to the dictionary meaning of the words 'assembly' and 'installation'.
It has to be borne in mind that Section 80HHC of the Act is a provision, which grants incentive to the assessee for growth and development and as held by the Hon'ble Supreme Court in several decisions, such provision should be liberally construed, as it will promote economic growth of the country.
The Statute has clearly circumscribed as to what is a foreign project and we agree with the factual findings recorded by the CIT (A) that the scope of work done by the assessee will fall within the meaning of the expression 'foreign project' as defined under Sub-Section (2)(b) of Section 80HHB of the Act. Accordingly substantial questions of law are answered in favour of the assessee.
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2018 (10) TMI 1509
Reopening of assessment - non-deduction of tds on Interest accrued on non-performing assets - Held that:- It could not be disputed by the learned counsel for the revenue that the similar issues came up before this Court in The Principal Commissioner of Income Tax-3, Ludhiana v. The Ludhiana Central Co-Op. Bank Ltd., Ludhiana [1986 (1) TMI 1 - SUPREME Court] dismissed the appeal filed by the revenue.
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2018 (10) TMI 1508
Failure to file return of income of company - Offence u/s 276CC read with Section 278B of IT Act - criminal complaint - petitioners (shown in the array of accused) willfully committed breach of the requirements of Section 139(1) by failing to file return of the income of company in respect of the assessment year (AY) 2011-12 by the stipulated date i.e. 30.09.2011, the default having been also committed vis-a-vis the compliance required with the notice under Section 142 (1) which was issued later - person responsible for furnishing the return of income of the company
Held that:- The prime responsibility of furnishing the return of income of the company is of the managing director of such company. But then, it is not correct to read the above provision so as to conclude that it is always or invariably the responsibility of the managing director alone and of no other. In a situation where the managing director may not be in a position to verify or submit the return of income, this on account of numerous reasons which may be presented as “unavoidable” and in case of such difficulties for the managing director to abide by the requirements of law on behalf of the company, the responsibility of other directors – the provision noticeably uses the expression “any director thereof” – cannot be ignored.
In the reply dated 03.11.2014 in answer to the show cause notice, there was no explanation offered for failure on the part of the managing director to furnish income-tax return. Whether or not there was any difficulty on the part of managing director would be a matter of his defence at the trial. It cannot be assumed at this stage that such would be his defence, but if such defence were to be presented, it would be the responsibility of the directors to explain the default. Be that as it may, there is no escape from the conclusion that the directors are also equally responsible for furnishing of return on behalf of the company as is the case of the managing director. The petitions are found devoid of substance.
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2018 (10) TMI 1498
Exemption u/s 11 - claim of set off of brought forward expenses and carry forward of current year expenditure incurred in excess of its income for setting off against income of the succeeding years and claim it as application of income in the succeeding years - Held that:- In Govindu Naicker Estate VS. ADIT [1998 (10) TMI 4 - MADRAS HIGH COURT] held that the income of the trust has to be arrived at having due regard to the commercial principles, that s. 11 is a benevolent provision, and that the expenditure incurred on religious or charitable purposes in earlier year or years can be adjusted against the income of the subsequent year.
The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income.
So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. - Decided against revenue.
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2018 (10) TMI 1497
Addition u/s 68 - Addition on account of receipt of share application money from N R Vincom Pvt Ltd merely on the ground that Notice sent to share applicant company was returned unserved - no proper enquiry and verification - Held that:- CIT (A) has observed that the failure on the part of the assessee to give the correct address has rendered the entire information submitted as unverifiable. We find that when the assessee has subsequently brought the correct address on record and to the knowledge of the AO as well as the CIT (A), then the verification of the evidence submitted by the assessee could have been done by issuing the notice under section 133(6) at the correct address provided by the assessee. Accordingly we set aside this issue to the record of the AO for conducting a proper enquiry and verification by considering the correct address furnished by the assessee.
Appeal of the revenue is dismissed as not maintainable and appeal of the assessee is allowed for statistical purposes.
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2018 (10) TMI 1496
Reopening of assessment - non disposing of objections of the assessee against the reassessment proceedings by passing a speaking order. Held that:- As AR submitted that non-disposal of the objections by passing a speaking order by the Assessing Officer was a clear violation of the directions of the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs ITO (2002 (11) TMI 7 - SUPREME COURT] and it made the reassessment illegal and invalid and on an inquiry from the Bench, AR had no objection to the file being restored to the office of the Assessing Officer with a direction to dispose of the objections of the assessee against reassessment proceedings. DR also had no objection if the Assessing Officer was directed to dispose of the objections of the assessee against the reassessment proceedings by passing a speaking order.
Restore the issue to the file of the Assessing Officer with the direction to dispose of the objections of the assessee by passing a speaking order. - Decided in favour of assessee for statistical purposes.
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2018 (10) TMI 1495
Revision u/s 263 - assessment u/s 153A - Non recoverable parts of sundry balance written off (nature not specified) - Non recoverable parts of sundry balance written off (nature not clear) - Held that:- We note that in this case since there was no incriminating material unearthed during the search, the Assessing Officer has not made any additions in his assessment order dated 31.03.2016, based on incriminating material since there was none unearthed.
We take note that it is not the case of Principal CIT that AO failed to made any additions/disallowances based on incriminating material seized/unearthed during search. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3) dated 31.03.2016 as erroneous.
In relation to the years whose assessment is completed, it is laid down by law that in such situations of completed assessment, assessment u/s 153A of the Income Tax Act, 1961 however shall be to the extent of undisclosed income which is found during the course of search with reference to the valuable articles or things found or documents seized during the search which are not disclosed in the original assessment. The power given by the 1st proviso of section 153A of the Income Tax Act, 1961 to ‘assess’ income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. Items of regular assessment cannot be added back in the proceedings u/s 153A when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. A search assessment under section 153A should be evidence based. - Decided in favour of assessee.
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2018 (10) TMI 1507
MAT - levy of interest u/s 234B and 234C in the computation u/s 115JA - Held that:- The substantial questions of law raised in this appeal are squarely covered by the decision of this Court in the case of M/s.Tamilnadu Magnesite Ltd. V. The Joint Commissioner of Income Tax, Special Range, Salem [2018 (4) TMI 1606 - MADRAS HIGH COURT] wherein held Section 115JB is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act.
Interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT has no application. - Decided against assessee.
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2018 (10) TMI 1506
Deduction u/s 80I - Income derived from the business for the purpose of deduction - interest and Miscellaneous receipts - Held that:- The income put under the head “other income” was treated as business income for the earlier assessment years also and the Tribunal pointed out that it was not a peculiar feature for the assessment year 1992-1993 alone.
Confronted with this factual situation, department's representative accepted the same as business receipt.
The department had accepted before the Tribunal that the interest and other miscellaneous receipts qualify for deduction under Section 80I of the Income Tax Act, 1961. As the department themselves have treated the same as business receipts for all the previous years and they also accepted for the year under consideration, it should be treated as business receipt. Thus, the Tribunal was fully justified in holding that they do not want to deviate from the consistency adopted by the Commissioner of Income Tax (Appeals) for the year under consideration as was done for the previous years. No substantial question of law.
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2018 (10) TMI 1505
Income on betting - Set-off of busniss loss against betting and gambling income - whether only the net income is to be taxed under Section 115-BB? - Held that:- Identical question of law, for the assessment year 1998-99, was considered by the Division Bench of this Court in CIT Vs. Dr. M.A.M.Ramaswamy [2015 (1) TMI 439 - MADRAS HIGH COURT] as held not inclined to accept the view as propounded by the Tribunal and the Commissioner (Appeals), as Section 115BB of the Act is a standalone special provision, which makes it clear that income of an assessee, not being income from activity of owning and maintaining race horses, would fall under Section 115BB of the Act.
Total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. - Decided against assessee.
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2018 (10) TMI 1494
Estimation of income - contracts for transportation of goods - contract receipt based on TDS certificates - AO estimated @ 6% or CIT(A) reduced it to 2% of receipts - no books were maintained - Held that:- The income that admittedly stands brought to tax in assessment is that arising to the assessee-AOP out of the contract receipt from different contractee-companies.
The receipt arises to the assessee on the basis of transportation work undertaken by it, and which it does through its members, paying them a sum which, in the absence of any record, led to the estimation of its income in the first place.
There is no question of two additions, i.e., on account of surplus (Rs.2.83 lacs) and the other as a percentage of the contract receipt. The AO, who estimated the same at 6% of the contract receipt, accordingly, had rightly not included the admitted surplus, which stands therefore wrongly included by the ld. CIT(A) by inferring its exclusion by the AO to be a mistake.
The assessee has reported two other incomes, i.e., interest on tax-refund and sale of scrap. No issue in their respect, as apparent from the orders as well the grounds raised before the first appellate authority, stands raised before the Revenue authorities; the only issue being qua the addition made in assessment. The same, in any case, arising from outside oneself – as is contract receipt, the quantum of income from which source is the subject matter of dispute, is income, as indeed it would be for any other person. Reference in this regard may be made to the decision in Banglore Club v. CIT [2013 (1) TMI 343 - SUPREME COURT] reiterating the settled position of law in the matter with reference to several judicial precedents. We decide accordingly.
Assessee’s appeal is partly allowed.
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2018 (10) TMI 1493
Rectification of mistake u/s 154 - reconciliation of total turnover as per TDS certificate and as per books of account - Held that:- The present AO has examined all the TDS certificates and claimed that they are not matching with the figures of books of account. Undoubtedly, the present AO at this juncture, has raised a completely different issue before the Hon’ble Bench, that is the income relating to all the other TDS certificates , which was neither the issue raised by the AO in the original assessment order nor was the issue for adjudication before the CIT(A) and before the Tribunal. Therefore such a different issue which has no connection with the issue cannot be a matter of miscellaneous application as filed by the revenue u/s 254(2) of the Act. We note that the ld. DR has tried to raise a new issue which neither was before AO nor was the issue for adjudication before the Bench.
Therefore considering these facts we do not think that there is a mistake apparent on record.
It is a well settled position of law that in order to be a “mistake apparent from the record” of the case, it must be an error apparent, obvious and glaring.
In the assessee’s case under consideration the Tribunal has considered the submissions of ld. DR for Revenue, as well as the ld. AR for assessee. Submissions made by Revenue has been considered by the Tribunal wherein Ld. DR argued that “ on verification of the TDS certificate submitted by the assessee it is found that the amount credited to ₹ 1,80,01,850/- against the TDS claimed of ₹ 1,00,991/- was not credited into the profit and loss account, therefore, the AO has rightly added back ₹ 1,80,01,850/- to the total income of the assessee.” Therefore, the subject matter of the Miscellaneous Application had already been considered by the Tribunal, hence there should not be any “mistake apparent from the record”. Miscellaneous Application filed by the Revenue is dismissed.
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2018 (10) TMI 1492
Interest on share capital paid to the members of the Bank - Held that:- As observed from the order of the AO that the interest on share capital was related to the year 2010-11 which is relevant for the assessment year 2011-12, but not the impugned year. Neither the CIT(A) nor the AO has given a clear finding with regard to the correct assessment year in which the interest was accrued. Therefore, we remit the matter back to the file of the AO to examine the issue with regard to the accrual of liability as per the system of accounting followed by the assessee and decide the issue afresh on facts and merits. The appeal of the revenue on this issue is allowed for statistical purpose.
Provision for bad debts under the head ‘provision for standard assets’ - AR submitted that the said amount was not representing the provision for standard assets, it was in fact a bad debt, incurred over and above the provision made by the assessee u/s 36(1)(viia) - Held that:- It appears from the discussion of the AO as well as the Ld.CIT(A) that the issue was not properly verified by the lower authorities. The assessee also did not furnish the required information before the lower authorities. It was also not clear, whether the assessee has claimed the said deduction u/s 36(1)(viia) or not. Therefore, we are of the considered opinion that the issue needs detailed verification, hence, in the interest of justice, we remit the matter back to the file of the AO to examine the issue in detail and decide the issue afresh on merits after giving due opportunity to the assessee. Accordingly, this ground of the assessee in CO is allowed for statistical purpose.
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2018 (10) TMI 1491
Nature of expenditure - legal and professional charges paid to Reach (Registration, Evaluation, authorization and Restrictions of Chemicals) which is the European Regulatory Authority - revenue or capital expenditure - Held that:- In the instant case, the assessee has also incurred similar type of expenses for marketing his product in European Countries after getting the certification from Reach and after making the necessary payment to the said association as well as making the payment to the firm who assisted for the registration in the Reach. Both the expenses are correlated with each other. These expenses are revenue in nature and in this regard.
Disallowance of 4/5 professional charges paid to M/s. Avalon Consulting - Held that:- There should not be split of revenue expenses accepted some exceptional cases such as amortization etc. The concept of advertisement expenses is also similar to the study mentioned above for the future purpose mentioned above related to the existing business of the assessee. The Hon’ble Madras High Court in the case of CIT Vs. Brilliant Tutorials Pvt. Ltd. (2007 (1) TMI 147 - MADRAS HIGH COURT) and Cox & Kings (2011 (9) TMI 1175 - ITAT MUMBAI) has allowed the claim of the assessee in similar circumstances. Thus claim of the assessee is not liable to be declined. The expenses is also liable to be allowed in the relevant year in accordance with law. Accordingly, this issue is decided in favour of the assessee.
Addition u/s 14A - Held that:- Since, the assessee did not earned the exempt income, therefore, there should not disallowance u/s 14A.
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2018 (10) TMI 1490
Reopening of assessment u/s 148 - unexplained cash deposits - Held that:- Though the cash withdrawals aggregating to ₹ 4,79,000/- made by the assessee during the period 21.07.2004 to 03.03.2005 cannot be held to be available with him, in toto, as such, to explain the cash deposits in his bank account during the year under consideration, but in the absence of any material which could persuade us to conclude that the said funds were totally exhausted by the assessee, therefore, part of the said amount can safely be held to be available with the assessee. We find that our aforesaid view stands fortified by the judgment in the case of Anantharam Veerasinghaiah & Co. Vs. CIT (1980 (4) TMI 2 - SUPREME COURT).
Addition of ₹ 2,75,750/- [i.e ₹ 6,08,250/- (-) ₹ 3,32,500/-] in respect of the cash deposits made by the assessee out of unexplained sources during the aforesaid period. Still further, as regards the cash deposit of ₹ 1,00,000/- made by the assessee on 23.09.2005, after considering the cash withdrawal of ₹ 30,000/- carried out by him a day before i.e on 22.09.2005, the balance investment of ₹ 70,000/- [i.e ₹ 1,00,000/- (-) ₹ 30,000/-] is held to be the income of the assessee as having been made from unexplained sources.
We further find that the assessee had deposited an amount of ₹ 3,54,000/- in his bank account during the period 13.10.2005 to 23.01.2006. We find, that the aforesaid cash deposits are preceded by cash withdrawals aggregating to ₹ 2,32,000/- during the period 26.09.2005 to 22.10.2005. We thus, are of the considered view that the cash deposits of ₹ 2,32,000/- (out of the cash deposits of ₹ 3,54,000/-) stands explained to be have been sourced out of the aforesaid cash withdrawals. We thus, uphold the balance addition of ₹ 1,22,000/- [i.e ₹ 3,54,000/- (-) ₹ 2,32,000/-] in the hands of the assessee.
We thus, in terms of our aforesaid observations substitute the addition of ₹ 11,49,000/- sustained by the CIT(A), by an addition of ₹ 4,67,750/- [i.e ₹ 2,75,750/- (+) ₹ 70,000/- (+) ₹ 1,22,000/-] in the hands of the assessee. - Appeal of the assessee is partly allowed.
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2018 (10) TMI 1489
Disallowance u/s 68 with regard to bogus purchases - CIT-A reducing part addition - none of the party has replied in response to the notice u/s 133(6) - Held that:- The reply from parties was duly filed before the AO prior to the completion of the assessment u/s 143(3) of the Act. But the AO has not considered the same during the assessment proceedings. Similarly, the AO has not commented anything negative about the reply filed during the remand proceedings. Therefore, in the absence of any defect as pointed out by the AO, we are inclined not to interfere in the order of ld. CIT(A).
The provision of Section 68 can be attracted if there is any sum found credited in the books of accounts of the assessee.
There was no cash received by the assessee from the aforesaid parties. The accounts of the parties were credited by the assessee for purchases made from them. Therefore, in our considered view the provision of Section 68 cannot be applied to the case on hand. - Decided in favour of assessee.
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Customs
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2018 (10) TMI 1486
100% EOU - conversion of shipping bills into Drawback shipping bills - petitioner decided to exit from the EOU to function under Export Promotion Capital Goods (EPCG) Scheme - case of Revenue is that till the Exit Letter was issued, the petitioner was permitted to file only EOU shipping bills and therefore, for the reasons beyond their control, they could not claim any Drawback till the Exit Letter was issued - non-speaking order - principles of natural justice.
Held that:- The Technical Officer (Drawback) has not considered the case of the petitioner in a proper manner. The Technical Officer should have considered the case of the petitioner and passed a detailed order - also, the communication dated 13.03.2009 issued by the Joint Commissioner (CCO) was only based on the direction of the Chief Commissioner for the recovery of Drawback amount, which was already sanctioned and disbursed to the petitioner. The order dated 05.05.2009 is a non-speaking order, which cannot be sustained. Since the order passed by the Technical Officer (Drawback) is a non-speaking order, the same is liable to be set aside and the Technical Officer should be directed to decide the matter afresh after taking into consideration the case of the petitioner in accordance with law.
Petition allowed by way of remand.
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2018 (10) TMI 1484
Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - time limitation - sub-section 5 of Section 3 of Custom Tariff Act, 1975 - rejection of claim on the ground that the same has been filed after the prescribed time limit of one year from the date of payment and as such is rejected as being barred by time - Section 3(5) of Customs Tariff Act, 1975.
Whether there is any time limit prescribed by law for filing the refund claim of additional duty of Customs as stands exempted vide the N/N. 102/2007?
Held that:- No doubt, the said Notification is silent about any time period for filing the said claim. But the Notification exempts the goods in first schedule of Customs Tariff Act from being leviable to the additional duty of Customs. However, the Notification itself mandates the deposit of the said additional duty at the time of importation of the goods and thereafter to get the refund. From this perusal, one thing becomes abundantly clear that the importer has the knowledge of his entitlement to file the refund of additional duty of Customs at the time of the payment of said duty itself i.e. at the time, the product being in first schedule (under the exempted category) is imported - for claiming the refund of additional duty nothing else has to happen or to be done by the asseesse after the payment of said additional duty of Customs.
The refund claim of additional duty due to the exemption flowing out of N/N. 102/2007 has to be filed within one year in view of the subsequent N/N. 93/2008-Cus which still holds good and also in view of Section 27 of the Customs Act, 1962 - appeal allowed - decided in favor of Revenue.
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2018 (10) TMI 1483
Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - Time limitation - whether there is any time limit prescribed by law for filing the refund claim of additional duty of Customs as stands exempted vide the N/N. 102/2007?
Held that:- No doubt, the said Notification is silent about any time period for filing the said claim. But the Notification exempts the goods in first schedule of Customs Tariff Act from being leviable to the additional duty of Customs. However, the Notification itself mandates the deposit of the said additional duty at the time of importation of the goods and thereafter to get the refund. From this perusal, one thing becomes abundantly clear that the importer has the knowledge of his entitlement to file the refund of additional duty of Customs at the time of the payment of said duty itself i.e. at the time, the product being in first schedule (under the exempted category) is imported - for claiming the refund of additional duty nothing else has to happen or to be done by the asseesse after the payment of said additional duty of Customs.
The refund claim of additional duty due to the exemption flowing out of N/N. 102/2007 has to be filed within one year in view of the subsequent N/N. 93/2008-Cus which still holds good and also in view of Section 27 of the Customs Act, 1962 - appeal allowed - decided in favor of Revenue.
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2018 (10) TMI 1482
Valuation of imported goods - inclusion of value of know-how license and rights in the assessable value of the goods imported under EPCG scheme - primary defence of the appellant is that technology know-how is merely documentation which has been imported as goods and should be assessed as goods - Revenue neutrality.
Held that:- The technology know-how license agreement is essentially an agreement that permits the appellant to use the Spool Technology (VFY). The machinery imported by them is essentially a machinery which uses Spool Technology and the said machine cannot be used without a license to use the said ‘Spool Technology’.
The facts are akin to the facts in the case of Essar Gujarat Ltd. [1996 (11) TMI 426 - SUPREME COURT OF INDIA]. In the said case, like in instant case, the fee was for right to use the technology embedded in the capital goods. In both cases it was paid to a third party. In both the cases plant could not be made operational without license to use the technology. From the above it is apparent that these may be no express condition to pay for the license know how while purchasing the goods but there is an implicit condition in the facts of the case as the goods cannot be used without a license to use the technology in built into it. Thus, relying on the decision of Hon’ble Apex Court in the case of Essar Gujarat Ltd. the appeal not maintainable on merit.
Revenue neutrality - Held that:- The credit would not be available immediately but over a period as the goods are not inputs but capital goods. Thus, this does not result in an revenue neutral situation. Moreover, the liability to pay would arise at the time of import but the said credit can be used only after the plant is installed and production starts. Thus, it is not a revenue neutral situation.
Appeal dismissed - decided against appellant.
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2018 (10) TMI 1485
Duty Free Import Authorizations (DFIA) Scheme - Restriction on duty free import - import of Whey Powder, Whey Protein Concentrates, Whey Protein Isolates covered under the description of Milk and Milk Products as well as Walnuts covered under the description of Nuts and Nut Products, Dietary Fibre, Flavours - benefit of customs notification No.98/2009-cus dated 11.09.2009 - restriction placed on the ground that the imported goods are not covered by the DFIA and that the imported goods must be actually used in the manufacture of export goods.
Held that:- The issue decided in the case of M/S. GLOBAL EXIM & ANR. VERSUS UNION OF INDIA & ORS. [2018 (10) TMI 174 - MADHYA PRADESH HIGH COURT], where it was held that Once the imported goods are covered under the description, quantity as mentioned within the overall CIF value allowed in the DFIA, irrespective of the ITC (HS) Nos, there is no necessity to satisfy the requirement of Para 4.1.15 of FTP- (2009-14) and notification No.90 dated 21.08.2014.
As the respondents have not disputed the applicability of the aforesaid judgment and this Court has also carefully gone through the aforesaid judgment and the issue stands concluded, the judgment delivered in the case of M/s. Global Exim shall be applicable mutatis-mutandis in the present case also - Petition allowed.
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2018 (10) TMI 1481
Rectification of mistake - It is impressed upon on behalf of the appellant that it was brought to the notice of the Tribunal that vide letter dated 18.02.2009 the post of officials at Jodhpur-ICD against which the exemption was granted vide Ministry's letter dated 23.05.2006 were regularised/encadred - Held that:- We find no infirmity in the Order atleast nothing of the nature which can squarely be covered under the definition of error apparent on record. Even the findings, "it makes no difference if the officers posted were from cadre or outsourced by the Department" cannot be held to be the error apparent on record.
There is no such infirmity in the impugned Final Order which can be called as an error apparent on record to be rectified - application dismissed.
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2018 (10) TMI 1480
Imposition of Cost recovery charges on custodian of Inland Container Depot, Jodhpur - non-fulfillment of target of 7200 TEUs (20 meters length containers) - Held that:- As per the agreement, the assessee-Appellants will have to pay the Cost Recovery Charges of Customs Officers posted at ICD if failed to meet the target. In the past (2009-10), the assessee-Appellants have paid an amount of ₹ 96,00,000/- as Cost Recovery Charges. For waiver, the Board has rejected the application of the assessee-Appellants vide order dated 12.04.2017.
It is for the Department/Board either to waive or recover the Cost Recovery Charges. This is the discretion of the Department. It makes no difference if the Officers posted were from the cadre or out sourced by the Department.
Impugned order sustained - appeal dismissed - decided against assessee-Appellants.
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Corporate Laws
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2018 (10) TMI 1488
Corporate insolvency proceedings - company is under liquidation - seeking appropriate orders for transferring of the present petition to NCLT - Held that:- There are allegations of fraud and misappropriation on the part of the Ex. Directors. AS informed that the Ex. Directors Mr.Sushant Mutreja and Mr.Nishant Mutreja are still in judicial custody pursuant to lodging of different FIRs against them.
Keeping in view the observations in the chargesheet, this court has already ordered investigation by the SFIO. The liquidation proceedings are at an advanced stage. Much time has passed since the order appointing the OL as the Provisional Liquidator was passed. In view of the above, there is no ground made out to transfer the petition to NCLT.
As applicant had pleaded that this fact that this court has admitted this petition and appointed the OL as the provisional liquidator was brought to the notice of NCLT, however, a perusal of the order of NCLT dated 25.05.2018 does not show any reference to the fact that the proceedings are pending in this court.
As admittedly the winding up proceedings has been admitted and ordered for winding-up of the respondent- ‘Corporate Debtor’, we hold that the question of initiation of ‘Corporate Insolvency Resolution Process’ against same ‘Corporate Debtor’ does not arise. Application dismissed.
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2018 (10) TMI 1487
Winding up petition - failure to pay the debts - acknowledgment of debt - Held that:- Keeping in view the clear admission as contained in the communication dated 5.12.2009 and the pleadings and reply filed by the respondents to para 12 of the winding up petition it is manifest that the stated amount remains unpaid. The attempt of the respondents to claim that there is a bona-fide dispute regarding the payment payable for the singur project appears to lack bona fide as in all the communications that have taken place after 5.12.2009 there is no reference to any deficit work regarding the Singur project.
There is no bona fide dispute raised by the respondent. Accordingly, I admit the present petition. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers ‘Statesman’ (English) and ‘Veer Arjun’ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing.
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Insolvency & Bankruptcy
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2018 (10) TMI 1522
Suspension of the voluntary liquidation process initiated by the company - Held that:- What is provided under section 271(a) of the Companies Act is not compulsory liquidation but winding up. It appears to me that in the given set of facts of the case in hand compulsory liquidation or winding up order cannot be passed. Both proceedings are different and the requirements to be meted out are also different. The resolution passed by the members in the EOGM produced is for passing voluntary liquidation.
Being satisfied that voluntary liquidation cannot be passed in this case the prayer for suspension of voluntary liquidation can be allowed so that the Company can take steps to have recourse’s under section 271 of the companies Act, 2013 or can take steps for compulsory liquidation by filing an application under section 10 of I & B Code. This application cannot be converted as prayed for. In view of the above said discussion the application is liable to be allowed limiting the prayer for suspension of the voluntary liquidation.
In the result the voluntary liquidation of the Applicant Company namely Central Inland Water Transport Corporation Ltd. is hereby suspended as per Reg.40(2) of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017. The prayer for conversion to an application under section 271 of the Companies Act, 2013 for winding up and for compulsory Liquidation is rejected.
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Service Tax
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2018 (10) TMI 1479
Levy of tax - Works contract service - Construction of Complex Service - construction of residential houses - demand w.e.f 1.6.2007 - Held that:- The appellant had rendered the services under the heading “Works Contract Service”, for which there is no proposal in the show cause notice for payment of tax.
Held that:- The ld. Commissioner has, for the same activity, held that prior to 1.6.2007, the appellant/assessee is taxable under the category “Construction of Complex Service” and further held that w.e.f. 1.6.2007, the same work will appropriately be taxable under “Works Contract Service” as under all these contracts executed during the disputed period, the transfer of property in goods is involved in the execution of contract and as such the goods were liable to sales tax under the Sales Tax Act and accordingly, the conditions for classifying the goods under the heading “Works Contract Service” were satisfied.
The confirmation of demand for the period post 1.6.2007 under the category of “Works Contract Service” is bad, as there is no proposal in the show cause notice for payment of service tax under this category - the demand in the show cause notice was under the category of “Construction of Complex Service”.
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1478
Classification of services - whether the services rendered by the appellant are in the nature of work contract service or the interior decorator services? - Providing services in relation to partition work, metal glass works, civil works, wood work finishing, flooring, ceiling, false ceiling, hardware fittings, blinds, wall paper fixing, electrical work, plumbing work, AC ducting and other similar services in relation to constructed buildings/ offices etc.
Held that:- The appellant was not to provide services as that of design and technical assistance or consultancy. The moment the nature of services as mentioned herein are provided without the said technical consultancy, the service comes out of the ambit of interior decoration services. These particular findings are sufficient for us to hold that Show Cause Notice has wrongly proposed the demand under interior decorator services and the adjudicating authority below also has been wrong by holding these services as interior decorator services.
The perusal of order under challenge clarifies that the Commissioner himself has acknowledged the services of the appellant when provided to OC-CWG to be in the nature of work contract service. The order is absolutely silent to create any distinction about services being provided by the appellant to the clients other than OC-CWG - The Commissioner is also observed to be wrong while forming an opinion that the activity of the appellant do not fall under any clause i.e. A-E of the definition to works contract services - the demand as confirmed is not sustainable.
Time limitation - Held that:- The period in dispute is w.e.f. 2006-07 to 2011-12. The Show Cause Notice is dated 19.10.2011 - the activity of appellant since is held to be work contract service, the Department is held to have wrongly invoked the extended period of limitation as there remains no evasion of tax on part of appellant what to talk of the intent to so evade. Show Cause Notice is therefore held to be barred by time.
For the demand within the normal period of limitation, the demand is already held not sustainable.
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1477
Condonation of delay in filing appeal - Appeal being filed beyond a period of 90 days - Held that:- The Appeal in hand was filed on 15.03.2013 which is apparently delayed by more than 2 years. Except their own letter of 2012 and a subsequent letter of 2013, there is nothing on part of the appellant as a reasonable justification for this delay - All those letters cannot be denied as an afterthought strategy to overcome the issue of limitation.
Otherwise also, as per Section 37C, it being a statutory provision, the Commissioner(Appeals) has no authority to go beyond the provision. The word ”shall” used therein makes a mandate for Commissioner(Appeal) to not condone the delay of even one day beyond the period of 60 days + 30 days. His discretion being available for the said 30 days only, as a result, there is no apparent infirmity in the Order.
Appeal dismissed - decided against appellant.
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2018 (10) TMI 1476
Business Support service - appellants being the authorized agents of the MCD for collection of toll - demand of Service Tax - scope of SCN - Time limitation - Held that:- Municipal Corporation of Delhi is a statutory body which is allowed by law to levy certain duties and taxes, toll tax being the one such levy. Seeing from this angle, the function of collecting toll tax is a function sovereign in nature. Hence the activity being done by MCD itself or being delegated to be done by someone else authorized in this respect, the activity still retains the character of it being sovereign in nature. Therefore the element of any Business or commerce cannot be attributed to such an activity - Once this is the finding which is otherwise correct as apparent from record, the question of holding the same as a service i.e. the one meant for any Business or commerce has no sustainability.
Scope of SCN - Held that:- SCN initially made proposal to demand tax under the category of Business Support Service. The mention of this activity as BAS in the final para of show cause notice is nothing more than a typographical error as the show cause notice is discussing about the features of Business Support Service. The authority below has ignored this aspect rather has confirmed the demand under Business Auxiliary Service - This is the law settled that Adjudicating Authority cannot go beyond the scope of show cause notice.
Time Limitation - Held that:- The appellant is not liable to service tax for allegedly rendering Business Auxiliary Service to MCD. He accordingly is held to be under bonafide belief of have no tax liability - Department has otherwise failed to point out any positive act of suppression part of the appellant. No question arises for invoking extended period of limitation - The period in dispute herein is w.e.f. 01/04/2008 to 15/07/2010 show cause notice is dated 30/11/2010. Hence some period is beyond limitation. For the period within one year of show cause notice, the demand has already held non-sustainable.
The Adjudicating Authority below has committed an error while holding sovereign function of MCD when delegated to appellant as the activity of Business Auxiliary Service on part of the appellant - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1475
Principles of natural justice - It has vehemently been argued that the adjudication order for the subsequent period under the impugned Order-in-Original has also been dealt in the similar manner without any application of mind - Held that:- The impugned Order-in-Original has not appreciated and considered the submission made by the appellant properly. All the submissions which have been made by the appellant in their written submissions as well as during personal hearing have not been dealt with properly and legally - it is proper to remand back the impugned Order-in-Original for fresh adjudication - appeal allowed by way of remand.
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Central Excise
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2018 (10) TMI 1473
Demand of differential Duty - Rule 14(ii) of the CENVAT Credit Rules 2004 - allegations of suppression of facts with intent to evade payment of duty on inputs cleared “as such” to the appellant’s ancillary manufacturer for the manufacture of components that were finally used by the appellant in the manufacture of final products on which excise duty was paid by adopting incorrect value - extended period of limitation.
Held that:- The period involved is from 01.09.2010 to 30.11.2014 for which a Show Cause Notice dated 07.10.2015 is issued, admittedly, after invoking the larger period of limitation. On examination of facts, it is found that the allegation is short payment of duty whereas the lacuna appears to be only the adoption of transaction value by which SAD of 4% which have been missed out, but the fact remains that on being pointed out even before the issuance of Show Cause Notice, the appellant made good even the differential CENVAT Credit.
There is no dispute by the authorities below on the issue of revenue neutrality nor have they disputed crucial facts like the inputs cleared as such to one of the appellant’s ancillary manufacturers who in turn is eligible for CENVAT Credit of the duty paid by the appellant; the removal of inputs to its ancillary manufacturer was duly reflected in the periodical ER-1 returns filed regularly and that the Revenue was aware of removal of inputs as such - Revenue has only wasted its energy when there is no revenue loss and therefore, unjustifiably extended the larger period of limitation, for nothing.
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1472
CENVAT credit - capital goods taken on lease - whether the appellant being the lessee of the capital goods, was eligible to avail CENVAT Credit?
Held that:- The jurisdictional High Court has decided an identical issue in the case of Commissioner of Central Excise, Chennai-IV Vs. Ilgin Automotive (P) Ltd. [2013 (9) TMI 94 - MADRAS HIGH COURT], where it was held that There was no ground to disturb the order of the Tribunal, more so in the context of the Central Board's clarification that the job workers were entitled to claim MODVAT credit as per the Board's circular.
Appeal dismissed - decided against Revenue.
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2018 (10) TMI 1471
Scope of SCN - case of appellant is that Original Authority had exceeded jurisdiction in confirming the demand in the de novo proceedings, beyond the scope of the SCN as well as the scope of remand Order by adopting a strange reason alleging insertions or corrections - Held that:- Since the SCN points out that only the photocopy of certain invoices were produced without any reference to corrections or insertions, the same having not put across for rebuttal could be made a ground to raise demand - the adjudicating authority has travelled beyond the Show Cause Notice as well as the Order of remand - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1470
Valuation - increase in the administrative overheads from 12.58% to 15.98% - clearance made to sister unit - revenue neutral situation - Held that:- Undisputedly, the clearances are made to their own sister units and even if the differential duty is paid by the appellants, the assessee units would be able to take cenvat credit of the same. On these grounds, it can be seen that there is no loss to the Government and no gain to the appellant which discloses revenue-neutral situation.
The Hon’ble jurisdictional High Court in the case of CCE Chennai Vs Tenneco RC India Pvt. Ltd. [2015 (7) TMI 342 - MADRAS HIGH COURT] had considered a similar issue and observed that entire exercise is revenue-neutral, the appellant could not have achieved any purpose to evade duty and held the issue in favour of the assessee.
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1469
CENVAT Credit - N/N. 30/2012-ST dated 30.06.2012 - appellant had availed input service credit on Manpower Supply Services rendered by M/s. V. K. Contractors, a proprietary firm who had paid service tax on 100% value of taxable services instead of 25% - Held that:- The issue involved in this case is no more res integra as the same has already been addressed to and answered by this very Bench of the CESTAT in the case of M/s. Superfil Products Pvt. Ltd. Vs. Principal Commr. of C. Ex., Chennai-I [2017 (4) TMI 953 - CESTAT CHENNAI], where it was held that There could no dispute that service tax leviable has been fully paid. This fact will therefore satisfy the requirement of Rule 3 ibid and particularly, when such tax liability has been passed on to the appellant and they have also made payment thereof to the service provider, there can be no denial to them of such cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1468
CENVAT Credit - inputs/capital goods - steel structural items - Rule 2(a) and 2(k) of Cenvat Credit Rules, 2004 - Held that:- The appellant’s case is squarely covered by the Division Bench of this Tribunal in the case of Singhal Enterprises Pvt. Ltd. Vs. CCE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI] wherein it has been held that if the steel items such as MS Angles, Channels, TMT Bar etc. are used in fabrication of support structures for various capital goods - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1467
Clandestine removal - opportunity to the appellants to cross examine the department witnesses declined - principles of natural justice - Held that:- From the panchnama dated 08.08.2011 as prepared during the search of the factory as well as residential premises of the present appellant, it appears that the various records in the form of loose kacha parchi, gutkas, books etc. were recovered. Admittedly, all these documents were showing clearance of bare copper wire. The plea of proprietor of appellant as apparent from his statement that due to stiff market competition pucca record/invoices were not raised is not at all sustainable.
The Department is observed to have been meticulous in examining the records even of the transporters, i.e. the locally available tempos/ rickshaws and even the private vehicles to M/s Reliance Cable Industries and the other customers of the appellant and have concluded the corroboration of alleged clandestine removal of bare copper wire by the appellants. Even the records recovered during search in the premises of M/s Reliance Cable Industries there was apparent corroboration to the values at which the finished goods as well as the raw material was sold by the appellant to them. Not only this, there is the admission in the statement of Shri Lalit Jain that he had been purchasing both accounted and unaccounted bare copper wire from the appellants.
As far as the plea about no opportunity for cross examination of the witnesses as have been relied upon by the Department for confirming the impugned demand against the appellant, it is observed from the record that the appellant requested for the cross examination of three panch witnesses only - Appeal dismissed.
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2018 (10) TMI 1466
CENVAT Credit - inputs - cement used in mines for filling pits after extraction of ore - whether the cement used by the appellant who were asked to extract ore from the proposed ore block but only after conducting stopping operations of the said ore blocks, can be called as input?
Held that:- Without filling of the ore pits the appellant was statutorily, not in position to extract the ore, i.e. the final product thus the use of cement was very much in relation to the manufacture which was extraction of ore - the appellant is entitled to treat the same as input.
The adjudicating authority below has committed an error while denying the credit on cement used by appellant in filling pits for making area fit for ore extraction - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1465
Reversal of CENVAT Credit - credit attributable to inputs and input services used in the manufacture of Bagasse and sold outside the factory - Rule 6 of Cenvat Credit Rules 2004 - Held that:- Both the authorities have held that in spite of the Explanation being attached to Rule 6 w.e.f. 01.03.2015 still the appellants are not liable to reverse 6% of the value of Bagasse sold - further, there is no manufacture involved in the process of bagasse which is a waste product - Appeal dismissed - decided against Revenue.
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2018 (10) TMI 1464
100% EOU - private bonded warehouse - application for de-bonding of indigenous capital goods and raw materials - extension of Warehousing period - Circular No.7/2005-Cus. dated 14.2.2005 - Held that:- Once the warehousing license of the appellant is renewed up to 2014 as shown by the appellants, then consequently as per the Circular, bonded warehousing period has automatically renewed up to 5.7.2014 and at the time of de-bonding, both the licenses were valid and in existence and therefore, demanding the duty and imposing penalty is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1463
Clandestine removal - it was alleged that appellants were clearing the excisable goods without issuing invoices as required under Rule 11 of Central Excise Rules, 2002 as found from Special Audit carried out u/s 14AA of Central Excise Act, 1944 - case of appellant is that the Principal Commissioner has not considered the documents produced by the appellants and has passed the Order merely based on assumptions and conjectures.
Demand on the goods as that of MS angle, MS beam, etc. used by the appellant for construction of civil structure foundation - Held that:- It being an apparent fact that these goods were removed after being dismantled i.e. they were not treated as generated during the course of manufacture. It is appellants case that no cenvat credit was also availed on these goods. Department could not have proved otherwise. It becomes clear that note 8(a) of Section XV of Central Excise Tariff is not relevant to such operations and such items are not liable to duty even in accordance of Section 2(f) and Section 3 of the Central Excise Act, 1944 - demand set aside.
CENVAT Credit - goods sent and received by the appellant to/for job-work - want of evidence for the goods to have been received back/ sent back within 180 days of re-sending / receiving them for the job-work - Held that:- With respect to the goods received by the appellant from principal manufacturers for job-work, Notification No. 214/86 comes to the appellant’s rescue by virtue of which he is not liable for payment of duty on the job- worked goods. Otherwise also, the CA certificate is simultaneously certifying the factum of sending/ receiving goods on/for job-work within 180 days thereof - these documents are sufficient to hold that the demand has wrongly been confirmed by the authority below and thus is liable to be set aside.
Capital goods imported under EPCG Licences which were sent out for repairs to JSPL, Raigarh on returnable basis - demand confirmed for want of evidence of receiving the imported capital goods after repair and of non availment of cenvat credit on the said goods - Held that:- Perusal of record shows that challan for clearance of goods and EPCG license are enclosed herewith alongwith the already discussed CA certificate. Non appreciation of these documents on part of the Adjudicating Authority below is highly unappreciable. The documents once looked into, entitles the appellant as being free from the alleged liability. The demand is therefore set aside.
Goods returned to the suppliers due to discrepancy or defect without availing cenvat credit - demand has been confirmed for want of any evidence - Held that:- The goods for which demand has been confirmed though were cleared on the gate passes but there is ample evidence on record to show that these goods were not manufactured by the appellant and were such on which appellant had not availed any cenvat credit - Confirmation of demand is therefore opined unsustainable.
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1462
CENVAT Credit - inputs/capital goods - MS angles, joists, channels, MS plates/sheets falling used for fabrication of supporting structure for the equipment - the appellants have produced the certificates of the Chartered Engineer before the Commissioner (A) but the Commissioner (A) has refused to consider the same on the ground that the same has not been produced before the original authority - principles of natural justice.
Held that:- It is essential to verify the usage of the impugned goods and for that purpose, I remand all these appeals to the original authority to verify the usage of the impugned goods on the basis of Chartered Engineer certificate and other documents which the appellants may rely upon in order to prove the usage - appeal allowed by way of remand.
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2018 (10) TMI 1461
Clandestine removal - excess stock of finished goods which was cleared without payment of duty - entire case is based on investigation conducted by the Income Tax Authority - Held that:- The entire case is based on the investigation conducted by the Income Tax Authority wherein some excess stock as compared to the book stock was pointed out - the Central Excise Officers have neither carried out any stock verification nor any further investigation to establish that goods said to have been found in excess was cleared clandestinely. In this position the case under Central Excise which is depending on Income Tax investigation cannot sustain.
It is settled that when Central Excise department has not carried out any independent investigation, merely on the basis of material and investigation of other agency, the case under Central Excise Act will not sustain.
Reliance can be placed in the case of Ravi Foods Pvt. Ltd Vs. CCE., Hyderabad [2010 (12) TMI 290 - CESTAT, BANGALORE].
Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 1460
CENVAT Credit - capital goods - manufacture of steel fabricated frames and stainless steel fabrication - case of appellant is that SCN has been issued without proper investigation and the allegations are based on mere assumptions and presumptions - principles of natural justice - Held that:- It is a fact that both the Unit l and Unit ll belong to the appellant. Further, the appellants have transferred the capital asset from their Unit l to Unit ll by issuing an Invoice No. 456 dated 19.08.2011 but both the authorities have considered that it is a sale from the appellant to its another unit.
The Commissioner (Appeals) has not considered the grounds taken by the appellant regarding the limitation as well as revenue-neutral situation as pleaded by the appellant and has merely reiterated and accepted the Order-in-Original - also the decisions relied upon by the appellant regarding the bona fide and honest belief that they are entitled to cenvat credit and there is no intention to evade the duty, both the authorities have not considered these decisions.
This case needs to be remanded back to the original authority for proper adjudication after considering all the grounds taken by the appellant - appeal allowed by way of remand.
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2018 (10) TMI 1459
SSI Exemption - N/N. 08/2003-CE dated 01.03.2003 - crossing of threshold limit - principles of natural justice - Held that:- The learned Commissioner (A) has not given any findings on the merits of the case after observing that merit is not in dispute whereas the appellant has produced the certificate of the Chartered Accountant certifying the trading of goods by the appellant during the period 2014-15 along with copies of invoices but the same has not been considered by both the authorities - this case needs to be remanded back to the original authority with a direction to consider all the documents and the certificate of the Chartered Accountant - appeal allowed by way of remand.
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2018 (10) TMI 1474
CENVAT Credit - common inputs used in manufacture of dutiable and exempt goods - goods cleared to SEZ developers - amendment in rule 6 - effect of amendment - retrospective or prospective - Provisions of the rule substituted.
Whether an amount equal to 10% of the value of the final product cleared by the respondent/assessee, without payment of duty, to developers of SEZ, has to be paid by the assessee in terms of Rule 6(3)(b)/Rule 6(3)(i), since the assessee did not maintain separate accounts and that Rule 6(6) of the Rules does not give any exception to the clearances made to developers of SEZ from operation of Rule 6(3)(b)/6(3)(i) of the said Rules?
Held that:- Identical view was taken by the High Court of Karnataka in the case of Commissioner of Central Excise and Sales Tax, Bangalore vs. Fosroc Chemicals (India) Pvt.Ltd., [2014 (9) TMI 633 - KARNATAKA HIGH COURT]. The question which was framed for consideration was whether the amendment to the Cenvat Credit Rules 2004, by substituting clause (i) of sub-rule (6) of Rule 6 of Cenvat Credit Rules, 2004, by way of notification No.50/2008-C.E.(N.T.), dated 31.12.2008 is prospective in operation or retrospective? - The Substantial Question of Law was answered in favour of the assessee holding that the said amendment is retrospective.
On a reading of the amendment, it is evident that clause (i) of sub-rule 6 of Rule 6 was substituted, thereby, the provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty or either cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorised operations. Thus, the question would be as to what would be the meaning of the word 'substitute' - the 'substitution' by way of an amendment dated 31.12.2008 has to be read to put in place instead of the Rule, which was in existence prior to the said Notification. In other words, it has to be read as a replacement of an existing Rules.
The Substantial Questions of Law framed for consideration are answered in favour of the respondent/assessee - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (10) TMI 1458
Chit transactions - According to the settlement, the fourth respondent has paid a sum of ₹ 50,000/- for the chit amount due to the petitioner for all the three chit transactions, which triggered three orders passed by the first respondent - Held that:- Since the said settlement reached between the parties, i.e., the petitioner and the fourth respondent, the same has been reduced into writing by way of compromise memo.
In view of the settlement reached between the parties, by which the issue has been completely settled between the petitioner and the contesting fourth respondent as full and final settlement, there is no further issue for adjudication in these cases.
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2018 (10) TMI 1457
GVAT Act - recovery proceedings - SARFAESI Act - liability of purchaser of property in auction - Creation of charge on immovable property - Held that:- The petitioner was a purchaser through auction held by lending bank for default of the borrower. Further the charge which is presently created was entered only after the auction was completed, sale price deposited and sale was completed. This charge is not for any assessed dues but is only for possible dues that may arise upon completion of pending assessments. Section 47 of the VAT Act provides that where a dealer after any tax has become due from him creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever of any of his property in favour of any other person with an intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer.
This is not a case where property is transferred after any tax has become due from the dealer. In facts of the case, we are doubtful whether department can also sustain the allegation of such property having been transferred with an intention of defrauding the Government revenue. Sale of the property was a compulsory action initiated by the lending bank and was not an action of volition on part of the dealer.
In the present case, admittedly, before the auction sale or even after that no provisional order of attachment was passed. The petitioner thus purchased the property in auction conducted by the lending bank since the borrowers had failed to repay the loan. At such time, the only outstanding dues of the dealer to the department were ₹ 18,913/.
The action of the respondents in creating the charge over the property in question is found illegal - it is directed that that such charge shall be removed - petition allowed.
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2018 (10) TMI 1456
Validity of assessment order - the Assessing Officer has not afforded an opportunity of personal hearing - principles of natural justice - Held that:- Admittedly, the petitioner has not filed their reply to the said second notice. However, the reason for not filing the reply within the time is explained in the affidavit filed in support of the writ petition, by stating that during the relevant time, the Managing Director/Designated Partner was suffering from advance stage of cancer and her only son viz., other Director/Designated Partner, who was actually in-charge of the business and over all management, was totally pre-occupied with the treatment of his ailing mother, as a result of which the petitioner was unable to file the reply/objections to the notice of proposal.
The petitioner was reasonably prevented from making the reply to the second notice dated 14.11.2017 in time and therefore, such non-filing of reply resulting in passing an adverse order, when found to be with some justifiable cause, this Court is of the considered view that one more opportunity can be given to the petitioner for filing the reply to the said notice dated 14.11.2017, so that the Assessing Officer can pass a fresh order of assessment on merits and in accordance with law, after affording an opportunity of personal hearing to the petitioner.
The matter is remitted back to the Assessing Officer to re-do the assessment - petition allowed by way of remand.
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2018 (10) TMI 1455
Validity of assessment order - time limitation - it is also alleged that the first respondent failed to appreciate the specific stand raised by the petitioner that the business was sold as a whole and there was no sale of plant and machinery - TNGST Act.
Held that:- The respondent, though has referred to the Memorandum of Understanding in the impugned Assessment Order, has failed to render any finding as to the effect of transaction, which has been recorded in the Memorandum of Understanding. The respondent was duty bound to record whether the transaction was akin to a slump sale or a sale of plant and machinery - Without rendering such a finding and without passing a speaking order, the respondent could not have brushed aside the Memorandum of Understanding dated 10.03.2006. Apart from this, when the sworn statement was recorded, the petitioner has elaborately stated about the nature of transaction. This aspect has also been ignored by the second respondent.
Time Limitation - Held that:- The respondents in the counter affidavit would state that the Registration Certificate of the petitioner was cancelled on 31.03.2005. The effect of such cancellation on the petitioner's business has to be considered. While considering the said issue, the point pertaining to limitation for reopening the assessment is also required to be considered.
Since the effect of the Memorandum of Understanding has not been considered by the respondent and not even a finding has been recorded by the respondent in the impugned Assessment Order, the assessment has to be necessarily redone.
The matter is remanded to the first respondent for fresh consideration - petition allowed by way of remand.
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