TMI Tax Updates - e-Newsletter
October 5, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
No notice u/s 158BC could be issued to the Petitioner as the condition precedent to issue notice, viz. undisclosed income found during the search proceedings, is not satisfied - Revenue directed to pay cost of ₹ 20,000 to the assessee - HC
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Income Tax:
Levy of fees u/s 234E - Late filing of TDS return - AO is not empowered to charge the fees u/s 234E by way of intimation issued u/s 200A in respect of defaults before 01.06.2015 - AT
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Income Tax:
Transfer pricing adjustment (TPA) - There is no error or infirmity in the computation of the Upward Adjustment as worked out by the First Appellate Authority after giving the benefit of adjustment for raw material “extra ordinary item” - AT
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Income Tax:
Nature of income - The assessee has miserably failed to prove that it was owning any capital rights in the property in question which was purchased by the company - the amount received by the assessee HUF is not in lieu of surrender of any capital rights but its income from other sources - AT
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Income Tax:
The Tribunal has been consistently holding that Government Securities held under HTM category are part of stock-int-rade and allowed the amortization of premium on such Securities held under HTM category. - AT
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Customs:
Imposition of Anti Dumping Duty - aniline - imported from European Union - The assessment by the DA regarding injury and causal link is correct - Anti Dumping duty has been rightly imposed - AT
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Customs:
The car which was imported, was imported first time in India without homologation certificate - restriction rightly imposed - confiscation, redemption fine and penalty justified - AT
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Customs:
Extension of anti-dumping duty in sunset review - metronidazole - if the only producer of subject goods in the country produced only 4%, by a combined reading of Rule 2(b) and Rule 5(3) proviso the said producer is considered as a domestic industry and is entitled to maintain the application for investigation. - AT
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Customs:
Quantification of penalty imposed u/s 114A - The Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order. - AT
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Indian Laws:
Fourth Bi-monthly Monetary Policy Statement, 2016-17
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Indian Laws:
Valuation - whether customs duty is to be added to the value of goods for the purpose of payment of octroi - as far as goods are concerned, they were fully exempted from payment of any customs duty. Therefore, no liability in this respect is either incurred or was liable to be incurred - Octroi paid earlier on such component to be refunded - SC
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Service Tax:
SEZ unit - Service tax liability - BSS - activities carried out by SEZ unit of assessee and availed by units of assessee situated in DTA area - no service tax could be levied not on the principle of mutuality but, as noted, on the ground that service provided carried no actual value. - HC
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Central Excise:
Dehati Buknoo (Hazmi), Milk Masala are classifiable under 09.03 or similar such classification subsequent to 01-03-2005 - Demand of duty set aside - AT
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Central Excise:
Jaljeera is nothing but a Masala packed into packets of different nature - Jaljeera is classifiable under chapter sub heading 09.03 during the period up to 01-03-2005 and the same is classifiable under chapter sub heading 09.10 for period subsequent to 01-03-2005 - AT
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Central Excise:
Refund claim - unjust enrichment - merely because the Excise duty is booked as expenditure in Profit & Loss account, it cannot be said the incidence of duty has been passed on - AT
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Central Excise:
To conclude that the inputs on which cenvat credit has been taken, have not been received in the factory of the assessee, it would be expected from the Revenue to show at least in a few cases, where the inputs have actually been received, if not in the respondent's factory - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (10) TMI 105
Justification to issue the impugned notice under Section 158BC - undisclosed income - Held that:- As no incriminating documents were found during the course of search nor was it found that he was in any manner involved in the bank account with his name in the said Bank. Thus it appears that the Respondentsrevenue took search and seizure proceedings in respect of the Petitioner on account of mistaken identity. In any case the appraisal report would indicate that no notice under Section 158BC of the Act could be issued to the Petitioner as the condition precedent to issue notice under Section 158BC of the Act, viz. undisclosed income found during the search proceedings, is not satisfied. In fact, at the very outset, after a preliminary hearing, we had asked the learned Counsel for the Respondents-Revenue whether the Revenue would still want to persist with the impugned notice under Section 158BC of the Act. On instructions, Mr. Suresh Kumar, learned Counsel for the Respondents-revenue informed us that the Respondents-revenue seeks to press the impugned notice and seek dismissal of the present Petition. In the above view, this is the fit case where costs should be awarded to the Petitioner. The Respondents-revenue i.e the jurisdictional Chief Commissioner of Income Tax (Respondent No.1) is directed to pay the costs of ₹ 20,000/to the Petitioner within four weeks from today.
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2016 (10) TMI 104
Levy of fees under section 234E in intimation issued under section 200A(1) - Late filing of TDS return - whether any appeal is maintainable against the intimation issued under section 200A of the Act and / or order passed under section 154 r.w.s. 200A of the Act by Assessing Officer in charging the fees under section 234E of the Act? - Held that:- - Held that:- The Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is generated under which, if any amount is found to be payable, then such intimation generated after processing of TDS returns is subject to rectification under section 154 of the Act and / or is also appealable under section 246A of the Act, since the demand issued by the Assessing Officer is deemed to be a notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A of the Act. The CIT(A) has rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued under section 200A of the Act. Further, the CIT(A) has also decided the issue on merits and the assessee is in appeal before us on both these grounds. Vis-à-vis the first issue of maintainability of appeal against the intimation issued under section 200A of the Act, we hold that such intimation issued by the Assessing Officer after processing the TDS returns is appealable. The demand raised by way of charging of fees under section 234E of the Act is under section 156 of the Act and any demand raised under section 156 of the Act is appealable under section 246A(1)(a) and (c) of the Act. Accordingly, we reverse the findings of CIT(A) in this regard. Once intimation issued under section 200A(1) of the Act is appealable order before the CIT(A) under section 246A(1)(a) of the Act, then such appealable order passed by the CIT(A) under section 250 of the Act is further appealable before the Tribunal under section 253 of the Act. Hence, we admit the present appeals filed by the assessee even on this preliminary issue. We have already adjudicated the issue of charging fees under section 234E of the Act by the Assessing Officer while processing returns / statements in the paras hereinabove and in view thereof, we hold that the Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed.
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2016 (10) TMI 103
Transfer pricing adjustment - working of the PLI by the assessee and by the TPO/AO - bone of contention is the fluctuating price of aluminium - main contention of the assessee is that since it had a fixed price contract with its USA based AE and which contract has been accepted by the revenue authorities, it is not proper to give effect to the extra ordinary items of cost due to higher cost of raw material i.e. “Aluminium” - Held that:- We find that if the adjustment for raw material i.e. higher cost of aluminuim during the year under consideration is taken as extra ordinary item for the computation of PLI, then the margins of the assessee are within the range of ± 5% with the PLI of the comparable companies. It is also an admitted fact that the profit margin of the assessee is directly affected by the price of the aluminium during the year under consideration. Since, the assessee is having a fixed price contract with its AE, it cannot be increase the sale price whereas the margins of the comparable companies are not restricted by fixed sale price. Therefore, the margin of the assessee company will definitely be less due to increase in the price of aluminium qua the sale price. Therefore, the adjustment in respect of the substantial increase in the cost of raw material i.e. “aluminium” has to be made for the working of correct PLI. We, therefore, do not find any error or infirmity in the computation of the Upward Adjustment as worked out by the First Appellate Authority after giving the benefit of adjustment for raw material “extra ordinary item”. We decline to interfere. Appeal filed by the Revenue is accordingly dismissed
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2016 (10) TMI 102
Nature of income - capital gain or income from other sources - nature of possession in the property - assessee HUF has claimed that it has got capital rights in the shape of tenancy rights in the premises in question and that it has got the consideration of ₹ 50 lakhs for surrender of those tenancy rights and hence the income in the hands of the assessee was in the nature of capital gains - Held that:- As put a specific query to the Ld. A.R. whether there was any evidence to show that the assessee was inducted as a tenant in the premises but the Ld. A.R. could not show us any such evidences. Further, a query was raised whether the assessee had ever paid any rent to M/s. Carlton Coats Pvt. Ltd. but the Ld. A.R. has been fair enough to admit that there was no evidence of any payment of rent by the assessee to M/s. Carlton Coats Pvt. Ltd. The Ld. A.R. has also failed to explain as to what was the nature of the rights of the assessee in the property in question. He simply has stated that the same was occupancy rights. However, there is no evidence on the file as to under what circumstances and under what right or contract the assessee has come into possession of the property in question. It is pertinent to note here that the karta of the assessee HUF namely Mr. Amol C. Shah is also the director of the payer company M/s. Carlton Coats Pvt. Ltd. along with another director Mr. Milind C. Shah. The entire stress of the assessee has been on the copy of memorandum of understanding vide which the company has agreed to pay ₹ 50 lakhs to Mr. Amol C. Shah (HUF) wherein it has been mentioned that the said Mr. Amol C. Shah (HUF) claims share right title and interest on certain portions of the said property. It has also been mentioned that the assessee HUF is in the possession of the property in question since the original purchase of the property by M/s. Carlton Coats Pvt. Ltd. There is nothing mentioned in the copy of the agreement that what was the nature of possession in the property in question of the assessee HUF and how or under what rights the assessee HUF come into the possession of the property. We have perused the copies of the income tax returns and have found that the assessee had shown certain income from the activity of stacking/cutting/cloning of papers at Apti Khalapur. However, it is not sufficient to prove that the said address is of the property in question at Apti Khalapur. There may be any other property being used by the assessee HUF at Apti Khalapur. In the absence of any evidence to show that the assessee had ever been a tenant in the said property or the nature of rights and possession in the property in question; the assessee at the most can be said to be the licensee in the said property who has to vacate the premises at the will of the licensor. No capital rights under such circumstances can be held to be owned by the assessee in this respect. Even otherwise as observed above, the karta of the assessee HUF is the director of the payer company and under such circumstances the heavy burden is cast upon the assessee to prove that the above transaction is not a sham transaction. The assessee has miserably failed to prove that it was owning any capital rights in the property in question which was purchased by the company. Under such circumstances, we do not find any infirmity in the order of the Ld. CIT(A) in upholding the additions made by the AO.In our view, the amount received by the assessee HUF is not in lieu of surrender of any capital rights but its income from other sources. - Decided against assessee
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2016 (10) TMI 101
Disallowance on depreciation claimed on valuation of Government Securities “Held to Maturity” (HTM) category - Held that:- The issue raised by the Department in the appeals is no more res integra. The Tribunal has been consistently holding that Government Securities held under HTM category are part of stock-int-rade and allowed the amortization of premium on such Securities held under HTM category. The Hon'ble Jurisdictional High Court has upheld the findings of Tribunal in the case of Commissioner of Income Tax Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] - Decided in favour of assessee
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2016 (10) TMI 100
Reopening of assessment - Addition u/s 68 - Held that:- Assessing Officer cannot without there being anything further on record, reopen the assessment of the same assessee for an earlier year on the same grounds. His attempt to tax income for the assessment year 2007-2008 by passing order of assessment and his action of reopening the assessment of the same assessee on the same ground for the assessment year 2006-2007, would be incongruent. It may be that the Tribunal upheld the order of the Commissioner(Appeals) on two ground. Firstly, on the ground of additions and also fleetingly on the question of correct year under which the same could be done. This would neither expand the scope of the order passed by the Commissioner(Appeals) nor convert the proceedings into one in which the higher authority could be seen to have held that the additions though justified were made in a wrong assessment year. Secondly, even on merits, the Tribunal has finally concluded against the Revenue that in facts of the case, section 68 cannot be invoked in case of the bank, a view with which we have a strong prima facie agreement. If at all, it was a transaction of depositing the amount by individual depositors, the source of such deposits being M/s. Radhe Finance. Whether such a transaction was genuine, whether the source was properly explained and the creditworthiness of the depositors was also established, are the issues which we fear may not be open for the Revenue to verify in case of the bank. In any case, this issue is not before us since the Revenue, we are informed by counsel that the appellant has not carried the judgement of the Tribunal in appeal.
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2016 (10) TMI 99
Revision u/s 263 - whether industrial undertakings of the assessee were eligible for deduction under Sections 80HH and 80I ? - Held that:- For multiple reasons the notice for revision cannot be sustained. As noted, the issue in the past had traveled through various stages and ultimately, before the High Court also the question in case of this assessee came to be settled. Such issue was examined by the High Court concerning earlier assessment year. The question considered by the High Court was whether the Tribunal was right in holding that the assessee which was engaged in the business of bidi was entitled to deduction under Section 80HH and 80I of the Act. By dismissing Revenue's appeal and confirming the decision of the Tribunal by a judgement dated 28.11.2005, Division Bench of the High Court rejected such a question on the ground that in case of this very assessee for the earlier assessment year 1989- 90, the Revenue has accepted the Tribunal's decision on this point. Tribunal discarded assessee's contention that having been registered as small scale industrial unit, the assessee fulfilled the requirement of being an industrial undertaking. Having done that, we find it somewhat incongruent whether the Tribunal directed the Assessing Officer to examine whether the unit was an industrial undertaking and also to examine whether it was registered. In plain terms, therefore, the second requirement imposed by the Tribunal was not germane. The third condition of the unit satisfying other requirements has been duly recorded by the Assessing Officer in the order of assessment. Even the Commissioner in the impugned notice has not objected to non-fulfillment of this requirement. This leaves us with the first requirement cast by the Tribunal viz. of the unit being an industrial undertaking. We have proceeded on the basis that in the process, the Tribunal desired that the Assessing Officer should verify whether the assessee itself is carrying on manufacturing activity. In this context, the Assessing Officer referred to the materials on record including the decision of the High Court in case of Prabhudas Kishordas Tobacco Products P. Ltd. (2006 (1) TMI 68 - GUJARAT High Court ) in which, under similar circumstances, the Revenue's contention that the assessee did not carry on itself the activity came-up for consideration.It can thus be seen that the decision of the Assessing Officer upon remand by the Tribunal was based on materials on record and the law laid down by the High Court in similar cases. Under the circumstances, the Commissioner's both the objections to the exercise of assessment carried out by the Assessing Office must fail. The Assessing Officer had not relied merely on the certificate of registration of the industry to come to the conclusion that the assessee was an industrial undertaking. The Commissioner's objection that the Assessing Officer did not verify the registration of the industrial unit was equally erroneous. We have already noted that the Tribunal's insistence on such verification itself was contrary to the documents on record and, in any case, it is not even the case of the Revenue that the units were not registered. Before concluding, we may deal with the Revenue's preliminary objection to the High Court entertaining a writ petition at show cause notice stage. Firstly, the petition was admitted long back. We would not therefore, summarily dismiss the same without examination of merits of the case. Secondly, we find that the Commissioner had recorded completely impermissible and erroneous reasons to assume jurisdiction for taking the order of assessment in revision. Under the circumstances, the fact that the petitioner had approached at the stage of show-cause notice would not preclude us from striking down the same. -Decided in favour of assessee.
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2016 (10) TMI 98
Validity of reopening of assessment - period of limitation - expiry of issue of notice - Held that:- The petitioner filed a return of income on 21.08.2007. As per the then prevailing proviso to section 143(2), the Assessing Officer could not serve the notice on the assessee after expiry of twelve months from the end of the month in which the return was furnished. The outer limit as per this provision worked out to 31.08.2008. This proviso was, however, substituted w.e.f. 01.04.2008 which provided that no such notice could be served after expiry of six months from the end of the financial year in which the return was furnished. Thus, from computing the period of limitation from the end of the month during which the return was filed it was shifted to a period of six months from the end of financial year in which the return was furnished thereby bringing a greater uniformity of the last date for issuing the notice in case of commonly placed class of assessees. Whatever be the legislative philosophy for making such a change, one thing that cannot be denied is that the substitution had to take effect from 01.04.2008. We may record that the Finance Act 2008 received assent of the President on 10.05.2008 and was published in official gazette on the same day. By 10.05.2008 therefore, this provision formed part of the statute and was given effect of 01.04.2008. For two reasons the contention of the petitioner cannot be accepted that such a provision cannot be applied to the petitioner. Firstly, on the date when such notice was being issued, the amended provision had already come into force. More particularly, this amendment was made effective from 01.04.2008 by the law which was passed on 10.05.2008 and thus, both the events took place long before the last date for serving of notice in case of the petitioner as per the unamended provision. We may recall, as per the unamended provision such a notice could be served latest by 31.08.2008. Long before that, the statutory provision underwent a change by virtue of which such a notice could be served latest by 30.09.2008. The Assessing Officer was, thus, authorized to issue such a notice as per the amended provision. He was not bound by the unamended provision since the same had already been amended long before the final date for serving of notice even as per the unamended provision had expired. This is therefore, not a case where a vested right is being taken away by amendment in the statute. The notice under section 143(2) of the Act had not yet become time barred by the time amendment in the statute took place. - Decided against assessee
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2016 (10) TMI 97
Double addition made over and above the income offered and taxable under any of the provisions of the Income Tax Act - sworn statement recorded from the assessee during survey operations - Held that:- In the instant case, the statement of the assessee during the survey operations, no doubt, could have been made due to duress or stress of the very operations, but however, the circumstance which could be taken note therefrom is that there are no registers or records maintained by the assessee insofar as the expenditure incurred by him up to that point. Only sales and purchase details are maintained in the computer. Therefore, the sudden booking of huge expenditure in a month's time, that too, after survey operations were carried out, would lead any reasonable and prudent man to an inference that the same was deliberately booked to neutralise the obligation to report additional income of ₹ 15 lakhs over and above the normal income. When expenditure in cash is incurred, receipts/vouchers have got to be maintained accurately and the same will have to be produced for acceptance of the assessing officer. No explanation is forthcoming as to why an expenditure to the tune of ₹ 6 lakhs, has been shown to have been incurred for the first time during the relevant assessment year towards the payment of commission, while similar expenditure was not reflected at all in the preceding four years, particularly, when there was no change in the line of business activity of the assessee, all these years. Therefore, the inference drawn by the assessing officer cannot be construed to be perverse, and on the other hand, it is a reasonable deducible inference and that is exactly what the Tribunal has subscribed to.
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2016 (10) TMI 96
Reopening of assessment - assessee company had borrowed huge loans - Held that:- There is a thin line between the disclosure which disguises a material fact and therefore would be in terms of the proviso read with explanation 1 would amount to failure of disclosure and one where it would be the duty of the Assessing Officer on the basis of primary facts disclosed by the assessee to draw further inferences on facts and or in law. Significantly, explanation 1 refers to discovery by the Assessing Officer while exercising due diligence. In the present case, what formed part of the record was that the assessee company had borrowed huge loans from said two persons. What did not form part of the record was whether on such loans any interest was paid or not, a fact which could not have been evident or visible to the Assessing Officer unless he had made further inquiries. Undoubtedly, the Assessing Officer could have made further inquiries and ascertained for his satisfaction whether on such borrowings any interest was paid or not and had he done so, as is referred to in explanation 1 to Section 147, he would have discovered a material fact viz. of the company not paying interest on sizeable borrowings. In fact, the fact that the said two lenders were the Directors of the Company is not appearing in the annexures `D' and `E to the audit report where the figures of loans are mentioned. Thus, the assessing officer would have to correlate different documents only upon which, if at all, he would learn that the two directors had advanced huge loans to the company. Thus, this case clearly fell within the scope of explanation to Section 147 of the Act. This would not therefore prevent the assessing officer from reopening the assessment beyond a period of four years from the reign of assessment year. - Decided against assessee
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2016 (10) TMI 95
Reopening of assessment - petitioner company is not entitled to claim any deduction after the lapse of 10 years under section 80IB - Held that:- If we examine the stand of the petitioner with respect to its set up and commencement of manufacturing process, the documents attached to the petition compilation reveal that with respect to single piece and foldable lens manufacturing, the eligible business set up in the assessment year 2001-02, and therefore, the tenure of 10 years to be commenced for the purpose of eligibility from 2001 onwards and therefore there appears to be justification in stand of the petitioner which is further elaborated with cogent material to be dealt with hereunder. In view of settled position of law without disturbing earlier years authority can't deny exemption, the preceding year's solitary circumstance can't be made a subject matter of reopening of assessment which was been scrutinized and accepted. With respect to another contention of Revenue, the total investment of the unit in question is not more than ₹ 1 crores, but the fact of that has already been explained by the petitioner vide communication dated 30.11.2006, precisely in para 2 of the said communication, and therefore, this issue is already been a part of the record and therefore, the conditions which are laid down in section 80IB appears to have not been violated in terms of aforesaid explanation. Learned counsel for the petitioner has submitted that on earlier occasion as well as in subsequent years, the exemption has been permitted and therefore, it is not open for the respondent authority can't make attempt to deprive the said exemption benefit in the mids of the year which has already been considered and granted, under the guise of reopening. Thus clear from the record that on prior period to 2005-06, the benefit of section 80IB was already granted to the petitioner unit and after the year 2005-06 also, the said benefit has been granted and recognized and therefore, learned counsel rightly pointed out that it is not open for the authority to pick up in between period and to disturb the benefit which has already been considered and for that purpose relying upon the decision in case of Saurashtra Cement & Chemical Industries Ltd. v. Commissioner of Income Tax GujaratV [1979 (2) TMI 21 - GUJARAT High Court ] It appears that since the authority cannot take up an in between period to deny the benefit, the reopening for period for which has been granted is not permissible. It is also prevailing on record that with respect to these years, right from 2001-02 onwards except in assessment year 2005-06, an opinion was already formulated that the petitioner unit is entitled to exemption and deduction under section 80IB, such opinion may not be allowed to be changed. There is no tangible material additionally available with the authority which would permit it to reopen the assessment to seek the reopinion for the assessment year 2006-07. If this be allowed, the same would be based upon a mere change of opinion - Decided in favour of assessee.
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2016 (10) TMI 94
Receipt of interest - nature of income - “Income from Business” or “Income from other sources” - Tribunal holding that receipt of interest from the New Mangalore Fort Trust loans, Interest on TDRs and interest on dues from Oil Coordination Committee is liable to tax under the head “Income from Business” and not under head “Income from other sources” as held by the Assessing Officer - Held that:- Normally, we do not entertain an appeal from an order of the Tribunal which merely follows its own earlier order on an identical fact situation particularly when the earlier order has not been subject to challenge before this Court. However, in this case, one Mr. Joseph Rodrigues, Assistant Commissioner of Income Tax has filed affidavit dated 17th June, 2016, pointing out that an appeal had been filed to this Court from the order dated 11th December, 2003 for Assessment Year 1999-2000. We were informed by Mr. Kotangle, learned Counsel for the Revenue states that no attempt was made. Therefore, it is evident that the Revenue has accepted the order dated 11th December, 2003 passed in Respondent Assessee's own case in respect of Assessment Year 1999-2000. Nothing is stated in the affidavit nor any submission is made as to why in spite of the Revenue, having accepted the order dated 11th December, 2003 for Assessment Year 1999-2000, the appeal for the impugned order is being filed and persisted with. In the aforesaid circumstances, we see no reason to entertain this appeal.
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2016 (10) TMI 93
Disallowance of bad debt claimed by the assessee - establishment of debt - Held that:- Considering the decision of the Apex Court in the case of T.R.F. Ltd. (2010 (2) TMI 211 - SUPREME COURT ), the question, which is raised in the present appeal is required to be answered in favour of the assessee. The Tribunal has erred in reversing the decision of the CIT(A). After the amendment of Section 36(1)(vii) of the Income-tax Act, 1961 with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt in fact has become irrecoverable; it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Accordingly, question raised in the present appeal is answered in favour of assessee and against the revenue
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2016 (10) TMI 92
Levy of fees under section 234E in intimation issued under section 200A(1) - whether any appeal is maintainable against the intimation issued under section 200A of the Act and / or order passed under section 154 r.w.s. 200A of the Act by Assessing Officer in charging the fees under section 234E of the Act? - Held that:- The Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is generated under which, if any amount is found to be payable, then such intimation generated after processing of TDS returns is subject to rectification under section 154 of the Act and / or is also appealable under section 246A of the Act, since the demand issued by the Assessing Officer is deemed to be a notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A of the Act. The CIT(A) has rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued under section 200A of the Act. Further, the CIT(A) has also decided the issue on merits and the assessee is in appeal before us on both these grounds. Vis-à-vis the first issue of maintainability of appeal against the intimation issued under section 200A of the Act, we hold that such intimation issued by the Assessing Officer after processing the TDS returns is appealable. The demand raised by way of charging of fees under section 234E of the Act is under section 156 of the Act and any demand raised under section 156 of the Act is appealable under section 246A(1)(a) and (c) of the Act. Accordingly, we reverse the findings of CIT(A) in this regard. Once intimation issued under section 200A(1) of the Act is appealable order before the CIT(A) under section 246A(1)(a) of the Act, then such appealable order passed by the CIT(A) under section 250 of the Act is further appealable before the Tribunal under section 253 of the Act. Hence, we admit the present appeals filed by the assessee even on this preliminary issue. We have already adjudicated the issue of charging fees under section 234E of the Act by the Assessing Officer while processing returns / statements in the paras hereinabove and in view thereof, we hold that the Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed.
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2016 (10) TMI 91
Addition on account of discrepancy in expenditure incurred by the assessee under the head purchase, advertisement & legal expenses - differences in account balance reflected in the books of accounts of the assessee vis-à-vis in the books of accounts of the two parties - information not forwarded/confronted to the assessee for comments and rebuttal - Held that:- The A.O. issued notices u/s 133(6) of the Act to the two parties i.e. M/s Carat Media Service Pvt. Ltd. and M/s Oglivy & Mather Pvt. Ltd. asking information regarding the services rendered to the assessee. The information were received by the AO but the information obtained by the AO from these two parties were not forwarded/confronted to the assessee for comments and rebuttal.The assessee was prejudiced by the action of the AO as the said information was used against the assessee by the AO without confronting the same to the assessee. The assessee on its part had also failed to produce its books of accounts and purchase bills before the AO for verification. These books of accounts as well purchase invoices were not even produced by the assessee before the learned CIT(A). In our considered view and in the interest of justice, we are inclined to restore the matter to the file of the A.O. to de-novo decide the issue’s on merits and hence we set aside the order of learned CIT(A). The A.O. shall forward to the assessee all the information which was obtained by the AO in pursuance of notices issued u/s 133(6) to these two parties namely M/s. Carat Media Service Private Limited and M/s Ogilvy and Mather Private Limited. The assessee is directed to produce all the relevant evidences and explanations before the AO in its defense to justify and defend its claims and contentions to reconcile the difference. Needless to say proper and adequate opportunity of hearing shall be granted by the AO to the assessee in accordance with principles of natural justice in accordance with law
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2016 (10) TMI 90
TDS u/s 194C or 194J - services rendered by the contractor ULPL to the assessee in providing reachstacker and its operational personnel - short deduction of TDS - Held that:- We find from the order of the Ld. CIT(A) that the CIT(A) has accepted the contentions of the assessee that since the recipient has accounted for the contract receipts received from the assessee, no tax is required to be deducted. He also accepted the contention that owing to the losses by the recipient ULPL no tax is liable to be paid by the recipient and therefore no interest liability could be raised u/s. 201(1A) of the Act on the assessee and he has given a direction to the Assessing Officer to verify and pass necessary orders to delete the interest if the ULPL is found to have filed returns declaring losses. Therefore, we are of the considered view that the assessee has no grievance at this stage as the contention of the assessee were accepted and no liability to tax u/s. 201(1) or interest u/s. 201(1A) are existed. Therefore, we left open the issue of whether the payments made by the assessee to ULPL fall under fees for technical services u/s. 194J or fall under provisions of Sec. 194C of the Act as contract service. The assessee may raise its objections at appropriate stage. - Decided in favour of assessee for statistical purposes.
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2016 (10) TMI 89
Exemption u/s.54EC entitlement - the investment in specified Bonds under section 54EC of the Act was made in two different financial years - Held that:- Respectfully following the decision of the Hon’ble Madras High Court in the case of CIT v. C.Jaichandar (2014 (11) TMI 54 - MADRAS HIGH COURT ) we hold that the language of the provisions of section 54EC(1) of the Act clearly and unambiguously mandate that the assessee can make the investments in two different financial years, provided the investment in a financial year does not exceed ₹ 50.00 lakhs. In the factual and legal matrix of the case on hand, we, therefore, reverse the findings of authorities below and direct the Assessing Officer to allow the assessee exemption of ₹ 1.00 crore under section 54EC(1) of the Act in respect of the investment of ₹ 50.00 lakhs each made by it in specified bonds on 30/9/2008 and 9/4/2009 i.e. in two separate financial years, pursuant to the sale of two properties on 28/4/2008 and 14/10/2008. We hold and direct accordingly. - Decided in favour of assessee.
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2016 (10) TMI 88
Addition on account of stock difference declared during the course of survey - Held that:- In absence of any specific reason for fall in gross profit specifically in view of fact that finding of survey was that stock in business of assessee was found to be understated in books. Accordingly, CIT(A) considered that gross profit should be taken at the same rate as it was found on the date of survey i.e. @3.92%. When the same was put as was seen in the chart the difference of ₹ 15,58,139/- was found evident. It means assessee has understated closing stock as on 31.03.2007 by this amount i.e. ₹ 15,58,139/-. However, assessee has already carried forward this value of stock as reflected on 31.03.2007 at ₹ 3,72,36,668/- to 01.04.2007 to the next assessment year as opening stock, same was not disturbed and hence addition to the extent of ₹ 15,58,139/- was made in gross profit. Accordingly, addition to the extent of ₹ 15,58,139/- was rightly sustained out of addition made by Assessing Officer at ₹ 70lacs. This reasoned finding of CIT(A) needs no interference from our side. Disallwoance of renovation expenses - Held that:- Since assessee has already offered an additional amount of ₹ 63,84,565/-, which after considering the gap of ₹ 15,58,139/- on account of difference in gross profit and ₹ 409/- on account of cash was enough (Rs.48,26,017/- to cover amount of ₹ 11 lakhs of renovation expenses as still balance ₹ 37,26,017/- was left with). Same was deleted. This reasoned finding of CIT(A) needs no interference from our side Addition in respect of cash - Held that:- As per that there were withdrawals from the bank on 06.01.2007 of ₹ 2 lacs and ₹ 50,000/- and the balance as on 20.02.2007 was ₹ 4,24,862/-. CIT(A) observed that assessee’s books of accounts were incomplete and not written from January 2007 onwards as found by the survey team in respect of purchases and sales as well. Assessee has submitted that the survey party found cash on hand ₹ 4,25,272/-, whereas cash on hand as per books of accounts was ₹ 4,24,862/- which has wrongly been worked out by survey part at ₹ 24,863/-. This resulted into a difference of ₹ 4 lacs which was added in the income of assessee. As books of accounts were audited and this balance was reflected, same could not have been ignored. Since, entries in the books of accounts had not been found wrong as per which the cash balance was reflected at ₹ 4,24,862/- as mentioned above, only the difference between this and ₹ 4,25,271/- the cash found on the date of survey could be added. The difference between two comes to ₹ 409/- which being an negligible sum was rightly avoided by CIT(A). However, same was taken as unaccounted cash and addition to this extent was sustained. Accordingly, CIT(A) gave partial relief to assessee. This reasoned finding of CIT(A) needs no interference from our side Additional income of assessee - disclosure made during the course of survey - Held that:- The voluntary addition of ₹ 63lacs to the profit of ₹ 51lacs, which was made to cover the shortfall to declare income of ₹ 1.15 Crores, was more than enough to take care of disclosure of unexplained renovation expenditure. No separate addition needed to the income declared by assessee. Assessing officer failed to appreciate these facts and made addition of ₹ 11 lacs to the net profit shown. This addition of ₹ 11lacs was made to separate additions of closing stock and cash on hand. As per said sheet containing explanation for disclosure, assessee’s income during the year was ₹ 51,15,435/-, to purchase peace of mind, assessee claimed to have offered ₹ 1.15 Crores as her income at the same time reserving her right to be assessed at the actual income. It is the duty of Assesisng Officer to assess income at correct figure disregarding the fact what assessee has returned. In fact, it was the case that assessee had returned higher income than her actual income. In view of above, assessee’s income was enhanced due to addition sustained for ₹ 15,58,139/- on account of gross profit and ₹ 409/- on account of difference in cash the income from business only stood at ₹ 78,96,427/- which was more than assessee’s claim of ₹ 62lacs. Along with this, assessee was having capital gain. As discussed above, regarding applicability of Rule 8D, Assessing Officer has to look into the corresponding expenses before disallowing the same. In this background, the alternative plea that income actually is only ₹ 62 lakhs was rightly dismissed by CIT(A). In view of above, we are not inclined to interfere with the finding of CIT(A) who has held that additional income of assessee should be taken at ₹ 63,84,565/- as declared by assessee in her return of income instead of ₹ 85 lacs declared during survey action. Appeal of revenue dismissed.
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2016 (10) TMI 87
Revision u/s 263 - holding the loss to be not a STCL - Held that:- The assessee subscribing to the share warrants or of providing for loss by writing off the amount paid, in the assessment order. Even no material was led before us during hearing to show its’ consideration during the assessment proceedings. The details in its respect called for during the assessment proceedings, which were adverted to during hearing, are towards the payment of the sum as well as the reason for not subscribing to the shares, i.e., qua the quantification and the genuineness of the loss, over which there is no dispute, and neither are the same the subject matter of this appeal, which is qua the nature of the loss arising on the nonexercise or non-trading of the right, if any, arising to the assessee during the current year. The revision stands made by alleging non-verification of the assessee’s claim of STCL by the assessing authority qua which we observe no inquiry or application of mind whatsoever by him. That lack of enquiry, where warranted, gives rise to revision is a part of well settled law The Hon’ble Apex Court in Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME Court ] has laid down a four-way test toward an order being erroneous. Succinctly put, these are: incorrect assumption of facts; incorrect application of law; without applying the principles of natural justice; and without application of mind. It is the fourth category which arises in the instant case, and with which we are therefore concerned with. - Decide against assessee
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2016 (10) TMI 86
Section 80P deduction inter alia on DEMAT charges, special adhesive stamps and interest income derived from loans given to employees - Held that:- A perusal of the section 6(1) of the Banking Regulation Act makes it clear that these demat charges are for maintaining dematerialised form of assessee’s investments made in securities at its customers’ behest. Learned Departmental Representative seeks to cover the same in the “constituents” category hereinabove. We find no merit in this plea since it is not a case of constituents demat charges collection. Hon’ble apex court in Mehsana District Co-operative Bank vs. ITO [2001 (8) TMI 15 - SUPREME Court] allows section 80P deduction in case of safe deposit vaults covered under section 6 extracted hereinabove. We draw support therefrom to observe that the assessee’s demat charges in question are very much covered under the said statutory provision making it entitled to claim section 80P deduction in question. Income on account of special adhesive stamp franking charges as derived @ 1% commission thereupon the paper book contains franking machine authorisation as issued by the Chief Controlling Revenue authorities, Gujarat State, Gandhi Nagar. We notice that this amounts to conferring the assessing authority of an agent of State Government as provided under section 6(1)(b) of the Banking Regulations Act hereinabove. We accept assessee’s arguments by quoting Hon’ble apex Court’s decision hereinabove to hold it entitled for the impugned section 80P deduction. Interest income on loans given to employees - Both the lower authorities hold that the same is not admissible in case of interest earned from employees as per decision in CIT vs. Sirohi SBV Bank Ltd [2008 (9) TMI 112 - HIGH COURT RAJASTHAN ]. They nowhere hold that the said employees are not assessee’s members. The CIT(A) deals with this aspect to observe that the assessee has advanced the impugned loans to its nominal members. We have perused section 25 of the Gujarat State Co-operative Society’s Act 1961 prescribing such nominal members. There is nothing in section 80P of the Act to the contrary so as to decline the impugned deduction. We reiterate that it is a deduction provision to be liberally construed. We conclude in these facts that the assessee has derived the impugned interest income by advancing loans to its nominal members who are also working as its employees. Our view is that the latter status is not significant once the former condition of membership as prescribed under section 80P of the Act is qualified. We reverse both lower authorities’ finding on all three issues. - Decided in favour of assessee
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Customs
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2016 (10) TMI 130
Restriction on import of a car - Homologation certificate - Held that: - the requirement of homologation certificate is mandated for any new type of Car, which is imported first time into India. The car which was imported, was imported first time in India without homologation certificate - restriction rightly imposed - confiscation, redemption fine and penalty justified - appeal rejected - decided against appellant.
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2016 (10) TMI 129
Extension of anti-dumping duty in sunset review - Domestic Industry - metronidazole - whether the investigation on anti dumping should have continued on the domestic industry, being one of the major importer of subject goods? - Held that: - DA has excluded M/s Aarti Drugs from the purview of domestic industry. It was concluded that M/s Unichem Laboratories Constitutes, the domestic industry, being the only remaining producer of the subject goods and satisfy the requirement of Rule 2(b) of the AD Rules. The Hon'ble Madras High Court in Nirma Limited vs. Saint Gobain Glass India Ltd. - [2012 (10) TMI 832 - MADRAS HIGH COURT] held that even if the only producer of subject goods in the country produced only 4%, by a combined reading of Rule 2(b) and Rule 5(3) proviso the said producer is considered as a domestic industry and is entitled to maintain the application for investigation. Calculation of injury margin - Held that: - the Central Government by Notification dated 04.08.2008 had fixed the maximum sales price of subject goods at ₹ 526/ kg. which was applicable during the POI - 01.01.2010 to 31.12.2010. The price was fixed at ₹ 514/ kg. vide Notification dated 01.07.2011 and again at ₹ 588/ kg. Notification dated 16.11.2012. The DA has correctly applied the rate of ₹ 526/ kg. applicable to the relevant time. Establishment of the casual link for likelihood of dumping/ injury in the event of revocation of AD duties - D.A. examined the possibility of intensified dumping in case AD duty is revoked - Held that: - There is continued dumping which may intensify unless AD duty measures are taken. The known capacities available with the Chinese producers (about 24000 MT) and the Indian demand (less than about 2000 MT) indicate the strong likelihood that the entire Indian demand may be met by Chinese producers - DA's finding on this count is well reasoned and backed by clear data and analysis. Appeal dismissed - decided against appellant.
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2016 (10) TMI 128
Quantification of penalty imposed under Section 114A of Customs Act, 1962 - whether penalty imposed should be equal to the duty determined plus interest so determined? - Held that: - The Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order. - the decision in the case of Bharathi Airtel Ltd. & Others Vs. C.C., Bangalore [2012 (7) TMI 233 - CESTAT, BANGALORE] relied upon - penalty under Section 114A should be equal to the duty or the interest so determined - appeal rejected - decided against Revenue.
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2016 (10) TMI 127
Imposition of Anti Dumping Duty - aniline - imported from European Union - material injury suffered by domestic industry - Customs Tariff Act, 1975 readwith Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - the performance of HOCL and inclusion of such data in injury analysis - belated submission of information by HOCL - Held that: - The requirement in terms of Rule 2 (b) of the AD Rules for "domestic industry" has been fulfilled. The examination by DA is agreed. Effect on the performance and profitability of HOCL due to various factors - no causal link to the import of subject goods to such adverse situation - Held that: - The appellant relied on certain remarks in the annual reports of HOCL to state the general economic slow down and other issues contributed to adverse results for HOCL. It was emphasized that GNVF has been performing with full capacity and the sales of subject goods has increased. HOCL had low capacity utilization, attributable to other factors and hence there is no injury to domestic industry. - contentions of the appellant rejected - The assessment by the DA regarding injury and causal link is agreed with. Anti Dumping duty rightly has been imposed - appeal disposed off - decided against appellant.
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2016 (10) TMI 118
Prayer for carrying out necessary corrections with regard to the RITC numbers in respect of the shipping bills, and also to send necessary clarifications to the Joint Director General of Foreign Trade on the subject shipping bills within a time frame - Held that: - The Assistant Commissioner of Customs (Exports), has communicated to the Joint Director General of Foreign Trade, that, they have no objection for amendment of the shipping Bills, the details of which have also been stated - part of the prayer complied with - petition disposed off - decided partly in favor of petitioner.
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2016 (10) TMI 111
Condonation of delay of 95 days - Held that: - the Commissioner (Appeals), does not have power to condone the delay beyond 90 days i.e. the statutory limit of 60 days and condonable limit of 30 days. The decision in the case of Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] apply - appeal rejected - decided in favor of Revenue.
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2016 (10) TMI 110
Classification of sunglasses under the Customs Tariff Act, 1975 - the issue involved has been decided in the case of appellant itself [2011 (1) TMI 719 - CESTAT, NEW DELHI] - Held that: - sun glasses have been held to be one variety of goggles - classifiable under sub-heading 9004.90 - benefit of exemption allowed. The issue regarding classification of sunglasses is no more res integra in view of the decision of the Tribunal in the case of appellant itself. Further, the order passed by the Tribunal has been accepted by the Department on 03.08.2012 and no appeal was filed against the said order before the higher Appellate Forum - appeal dismissed - decided against Revenue.
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2016 (10) TMI 109
Quantification of penalty imposed under section 114A of the Customs Act, 1962 - capital goods imported duty free by 100% EOU - Whether the penalty is to be imposed equal to duty or the authority was justified in reducing such penalty? - Held that: - the adjudicating authority had no power to reduce the penalty from the amount equal to the duty. The decision in the case of The Commissioner of Central Excise Versus M/s. Viraj Alloys Ltd. [2010 (10) TMI 1027 - BOMBAY HIGH COURT] relied upon - appeal allowed - decided in favor of Revenue.
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2016 (10) TMI 108
Restoration of CHA license - pendency of inquiry proceedings from almost one year - Held that: - if the inquiry proceeding is not concluded within the overall period of 9 months, the suspension of CB license cannot be allowed to be continued for unlimited period. The decision in the case of M/s Unison Clearing Pvt Ltd Versus Commissioner of Customs (General) Mumbai [2015 (7) TMI 881 - CESTAT MUMBAI] relied upon. CHA licence to be restored - The Revenue is free to continue its inquiry proceedings under CBLR, 2013 - appeal allowed - decided in favor of appellant.
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Service Tax
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2016 (10) TMI 134
SEZ unit - Service tax liability - principle of mutuality - business support services - activities carried out by SEZ unit of assessee and availed by units of assessee situated in DTA area - whether SEZ unit and DTA unit of the assessee should be considered as same or separate persons - Held that:- Section 66 of the Finance Act, 1994, as noted, provides for levy of taxes at the rate of prescribed percentage of the value of taxable services referred to in various clauses of subsection( 105) of Section 65. For applicability of this charging section, therefore, what is needed is to ascertain the value of taxable service. In other words, service tax can be levied only if the service is provided, even if it is otherwise, a taxable service, carries a certain value. If the value of service provided is nil, there would be no occasion for charging the service tax. In essence, thus section 66 aims at collecting service tax when a certain service is provided for a value. To put it conversely, when the service is provided but no value thereof is charged, there would be no question of collecting service tax. Thus the term taxable service has a direct relation to the consideration either paid in cash or by way of deferred payment or by mentioning of any other valuable consideration. This would reinforce our belief that when no charge was collected for providing the service, there would be no question of applying a rate of tax on the value of such service. According to the assessee, providing of service by its SEZ unit to its DTA unit was merely for the purpose of convenience and SEZ unit had not collected any charge for such service from its DTA unit. Though the Assessing Officer in his order has made a brief reference to the SEZ unit receiving consideration for such service, we do not find any basis for such a conclusion. In fact, the case of assessee all along has been that invoices were raised for such services merely for the purpose of convenience and in fact, since promotional programmes were being organised, which would benefit the entire company and its different units, there was no question of charging a particular unit by SEZ unit for such service and that raising of invoices was merely for the purpose of convenience. If that be so, in our opinion, no service tax could be levied not on the principle of mutuality but, as noted, on the ground that service provided carried no actual value.
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2016 (10) TMI 125
Demand - Franchise services - CESTAT held that it is seen that the agreements between the appellant and their franchisees satisfy all the four requisites of the definition of Franchise as provided under Section 65(47) of the Act, so, the appellant is liable to pay service tax on the said services reported in [2011 (4) TMI 242 - CESTAT, Bangalore] - Hon'ble Apex Court dismissed the appeal as the tax effect is negligible, leaving the question of law open
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2016 (10) TMI 122
Auction of an aircraft - protection of bidder - the bid amount falls short of the reserve price to the extent of 81.8% - limitation of 30 days - the Commissioner of Service Tax as also the Board of Excise and Customs have not given their approval to the sale - Held that:- In this case, the bid was dated 18th August, 2016. The validity of the same has expired on 18th September, 2016. The bid is, therefore, no longer valid on the option having been exercised in terms of this clause. These statements, made on instructions, are accepted as undertakings given to this court.
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2016 (10) TMI 112
Courier service rendered across the borders of India - entitlement for exemption from payment of service tax - Tribunal held that there was nothing in the Rules to indicate that the consideration for export of services should be received in convertible foreign exchange, for claiming the exemption u/r 4, so, the appellants were not liable to pay service tax as there was no restriction during the relevant time reported in [2007 (12) TMI 47 - CESTAT, CHENNAI] - Appellant seeks to withdraw the present Civil Miscellaneous Appeal, as the monetary limit relating to the matter is less than ₹ 15,00,000/- and want the liberty to be granted to revive the Civil Miscellaneous Appeal, if it is found that it had been withdrawn, inadvertently, even though it falls under the exceptions mentioned in the relevant circular issued by the Central Board of Excise & Customs. Held that:- the present Civil Miscellaneous Appeal stands dismissed, as withdrawn. It is made clear that the questions of law, which may arise for the decision of this Court, in the present Civil Miscellaneous Appeal, are left open to be considered and decided in appropriate cases, in accordance with law. It is also made clear that it would be open to the Appellant/Department to revive the Civil Miscellaneous Appeal, if it is found that it had been withdrawn, inadvertently, even though it falls under the exceptions mentioned in the relevant instructions issued by the Central Board of Excise & Customs, within a period of twelve weeks from today. - Appeal dismissed as withdrawn
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Central Excise
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2016 (10) TMI 133
Classification - Jaljeera - Held that:- the ruling by Hon’ble Apex Court in the case of Commercial Tax Officer Vs. Jalani Enterprises [2011 (3) TMI 311 - SUPREME COURT OF INDIA] has held that Jaljeera is nothing but a Masala packed into packets of different nature. We have also gone through the chapter note 3 of chapter 9 of schedule to Central Excise Tariff Act, 1985 in respect of the law prevailed till 01-03-2005. In respect of the tariff which is with effect from 01-03-2005, the same contents of chapter note 3 of chapter 9, is reproduced in supplementary notes. The said chapter note 3 indicated that chapter sub heading 09.03 covers goods commonly known as Masala and chapter note 3 indicates that Masala is classifiable under chapter sub heading 09.03. Therefore, we hold that Jaljeera is classifiable under chapter sub heading 09.03 during the period up to 01-03-2005 and the same is classifiable under chapter sub heading 09.10 for period subsequent to 01-03-2005. Since in both the impugned orders, duty is confirmed on Jaljeera treating them as classifiable under 21.08 the demand does not sustain. Classification - Dehati Buknoo and Milk Masala - Held that:- the issue is now settled that Dehati Buknoo (Hazmi), Milk Masala are classifiable under 09.03 or similar such classification subsequent to 01-03-2005 and since the impugned orders have confirmed the demand treating Dehati Buknoo and Milk Masala under 21.08, the said demand does not sustain. Demand aolngwith interest and penalty - Gulabjamun Mix - only trading not manufacturing - Held that:- we find that the reliance for issue of Show Cause Notice dated 26-02-2009 is placed on letter dated 23-01-2009 submitted by Shubham Goldiee Masale (P) Ltd, along with Annexure-A and the said Annexure is enclosed to Show Cause Notice indicates that Shubham Goldiee Masale (P) Ltd, had claimed in the said communication that they were not involved in manufacture of Gulabjamun Mix but they were involved in only trading of the same. The reason for not relying on the said statement that it was not manufacturing Gulabjamun Mix is not forthcoming in the Show Cause Notice nor in any of the earlier Show Cause Notices. Therefore, none of the Show Cause Notices involved in the impugned orders are sustainable for demand of duty in respect of Gulabjamun Mix under Central Excise Act, 1944. - Decided partially in favour of appellant
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2016 (10) TMI 132
Refund claim - duty paid under protest - captive consumption of Notional Resin Contents of Wire Enamels formed during the process of manufacture of intermediate product without payment of duty - unjust enrichment - Held that:- this is not the case of Excise duty were directly charged in the invoice for the reason that the duty was paid on intermediate product. In such case the test whether the incidence of the duty is forming the part of the final product or otherwise can be ascertain only on the basis that whether price of final product has been enhanced due to duty burden on the intermediate products. In the present case the stand of the appellant that the price of the final product remained same before and after the payment of the excise duty on the intermediate product. As regard the finding of the lower authorities that the amount of duty paid was not shown as receivable in the books account of appellant and the same was booked under Profit & Loss account, therefore no other proof required that the duty incidence is not included in the value of final product. I do not agree with this contention of the lower authorities for the reason that treatment of duty paid amount in the books of account is not conclusive proof that the incidence has been passed on to some other person. Even if the duty paid booked under expenditure and the same has not been charged any person then the result will be in profit reduction that itself shows that the incidence of such duty has been born by the appellant, hence not passed on to any other person. Therefore merely because the Excise duty is booked as expenditure in Profit & Loss account, it cannot be said the incidence of duty has been passed on. As per the above discussion, I am of the view that considering the peculiar facts of this case if the duty paid by the appellant has not been explicitly charged to their customer and if price of the final product remained same for the period prior to payment of duty and thereafter, it is sufficient to accept that the incidence of Excise duty paid on intermediate product has not been passed to any other person. I therefore direct the adjudicating authority to verify properly the above aspects and if it is found correct then the appellant appears to be prima facie entitled for the refund. - Appeal allowed by way of refund
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2016 (10) TMI 131
Cenvat demand - no manufacturing activity was noticed by the officers at the time of visit to the factory - partner admitted in his statement that no manufacturing activity took place - no material was purchased by him but cenvat credit was taken on the basis of bills mostly issued by M/s. Jagriti Plastics without receipt of accompanied material - Held that:- from the process of manufacture it is easy to see that the item thinner can easily be made by mixing of various solvents, requiring even no electricity connection. Invoices for purchase of inputs as well as supply of thinners to various buyers were found. As such, it can not be concluded with certainty that no manufacture of thinner has happened in the appellant's factory. To establish that cenvat credit has been taken without the receipt of inputs, Revenue is required to produce positive evidence to the effect. 90% of the inputs are said to have been supplied by M/s. Jagriti Plastics. There is nothing on record to show that investigations having been undertaken against M/s. Jagriti Plastics for supply of material and other suppliers. The financial transactions involved in purchasing inputs from M/s. Jagriti Plastics as well as other suppliers have not been looked into. The most pertinent point to investigate would have been to probe cash flow back from the respondent to the supplier, substantiate the fact of non-receipt of inputs. Revenue's case is totally silent about the sale of finished goods by the respondent. Invoices were found indicating sale of finished goods to various buyers. Therefore, to sustain the allegation of no manufacture, Revenue is expected to undertake verification to establish whether the buyers have received such goods. Likewise financial transaction at the end of the finished products would also be relevant. We find that the investigations are not elaborate and are incomplete and inconclusive. To conclude that the inputs on which cenvat credit has been taken, have not been received in the factory of the assessee, it would be expected from the Revenue to show at least in a few cases, where the inputs have actually been received, if not in the respondent's factory. The respondents have taken the cenvat credit on inputs but have also cleared finished goods on payment of duty. Even though there is no discussion in the orders of the authorities below, we would expect that the cenvat credit availed on the inputs would also have been debited for making payment at the time of supply of finished goods. In such a scenario, the cenvat credit taken would also stand paid back, which could lead to revenue neutral situation. Therefore, we find no reason to interfere with the order of the Commissioner (Appeals) in which demand for recovery of cenvat credit has been set aside. - Decided against the Revenue
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2016 (10) TMI 121
Maintainability - appeal before the Commissioner of Central Excise (Appeals), namely, the first appellate authority - directing assessee for executing bond for full value and reducing the bank guarantee to be furnished in the sum of ₹ 12,08,625/- for provisional release of seized goods - Held that:- during the pendency of this appeal, our attention, in all fairness, has been invited to a Larger Bench judgment and order of the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi in the case of Gaurav Pharma Ltd. vs. Commissioner of Central Excise and Service Tax, Rohtak, Delhi 2015 (326) ELT 561. It is conceded that the legal position is enunciated in this Larger Bench judgment and order and in any event, considering the argument before the Customs, Excise and Service Tax Appellate Tribunal, the appeal before the Commissioner of Customs and Excise (Appeals) the first appellate authority was maintainable. - Appeal disposed of
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2016 (10) TMI 120
Seeking deletion of adverse remark from order dated 29th October, 2014 - "It is a clear case of suppression and misdeclaration of facts with intent to evade duty" - Central excise duty, interest component and equal penalty has been paid by the petitioner under the impugned order - petitioner had not disclosed the value of dies/fixtures in the declared value of parts/components - Held that:- we do not think that there was any need to record a finding that there is a suppression and mis-declaration of facts with intent to evade duty. The Settlement Commission, in this case, took the application for settlement on record and adjudicated it in accordance with law. The very purpose was to provide an opportunity to parties like the petitioner to come clean by readily accepting the calculations and computation. Precisely, that has been done and there is no challenge to the order of the Settlement Commission on merits. The findings that the disclosures are honest and yet there is suppression and mis-declaration of facts cannot be reconciled. We, therefore, delete that part of the order. The petitioner will not derive any benefit in the form of refund of duty, interest and penalty already paid under the order of the Settlement Commission. - Decided in favour of petitioner
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2016 (10) TMI 119
Restoration of appeal - Tribunal dismissed the appeal for non-prosecution and restored it to file on the condition of deposit of ₹ 6 lacs with a direction to dismiss the appeal for non-prosecution or non-compliance of the provisions of section 35F of the Central Excise Act, 1944 - Held that:- in the light of the wording of the provision and when that provision did not empower the tribunal to dismiss the appeal without adjudication on merits that we have set aside the impugned order to the extent it dismisses the appeal without adjudication on merits. If the appellant/assessee before the tribunal now desires that Appeal No. E-841 of 2012 should be heard on merits and in accordance with law, then, it must deposit a sum of ₹ 6 lacs within a period of two weeks from today. If that condition is complied with and compliance is reported, the tribunal shall restore the appeal of the assessee to its file and decide it in accordance with law. In the event this condition is not complied with, the tribunal's order stands and the assessee will not have any opportunity of hearing of the appeal on merits. - Appeal disposed of
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2016 (10) TMI 113
Whether the Hon'ble CESTAT was right in holding the supplies made from DTA unit to SEZ developer/promoter as 'exports' entitled for the exceptions provided under Rule 6 (6) of the CENVAT Credit Rule 2004, Whether the Tribunal was right in applying the overriding effect of Section 51 of the SEZ Act, 2005 to hold the impugned goods as ''exports'' and at the same time ignoring the provisions of (c) of sub section (1) of Section 26 of SEZ Act, according to which the supplies by domestic units to the units in SEZs/ Developers of SEZ are exempted from payment of Central Excise Duties and Whether the Hon'ble CESTAT was correct in holding that the amendment to Rule 6(6)(i) of Cenvat Credit Rules, 2004 vide Notification No.50/2008 CE (N.T) dated: 31.12.2008 shall be applicable with retrospective effect, when the Ministry/Board vide its Circular No. 267/52/2008-CX dated: 07.01.2009 has clarified that the amendment is prospective in nature and would apply to supplies cleared from the date of the notification only. Held that:- as the issue raised in the present appeal has already been gone into by three different High Courts and the opinion expressed is against the revenue and in favour of the assessees, for the reasons assigned in those judgments, we deem it appropriate to follow the same to maintain consistency as the Central Excise Act is a Central Statute. Accordingly no substantial question of law arises. - Decided against the Revenue
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2016 (10) TMI 107
Invokation of extended period of limitation - Demand and recovery of Cenvat credit - removal of credit availed shrink packing machine which was received by them from their another unit to their own third unit without reversal of Cenvat credit. intention to evade payment of duty - Held that:- I find that within the parameters of the law laid down by Hon'ble High Court at Allahabad as ruled in the above stated case of Commissioner of Central Excise and Service Tax Vs. Triveni Engineering & Industries Ltd., Tirunelveli if the show cause notice is to be issued for extended period the intention to evade payment of duty has to be established. The impugned show cause notice has not established the intention to evade duty since the contentions of the appellant covered by pronouncement in the case of Madura Coats Pvt. Ltd. was brought to the notice of the department before the issue of show cause notice. Therefore, I hold that the show cause notice is hit by limitation. - Decided in favour of appellant
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2016 (10) TMI 106
Section 35 B of Central Excise Act, 1944 - amount of duty involved is less then ₹ 50,000/- - Reversal of Cenvat credit - Cenvat credit taken on MS Plate, Channels, Angles etc. treating the same as capital goods - used for repair and maintenance of Plant and Machinery - Held that:- the provisions of Section 35 B of Central Excise Act, 1944 provide that the Tribunal in its discretion can refuse to admit an appeal where duty or differential duty or fine or penalty is less than ₹ 50,000/- (Fifty thousand). I do not use such discretion in this case. The contention of the ld. Commissioner (Appeals) is that the impugned goods are treated as capital goods by the appellant at the time of taking of credit and that the claim about use of inputs for maintenance is only a general claim. The Department also relied as ruling of this Tribunal that when the use of inputs cannot be substantiated in repair and maintenance of machines then the credit has to be denied. I find that the impugned goods do not satisfy the definition of Capital Goods in said Cenvat Credit Rules 2004 and merely by such mention in the books of account, they do not loose the substantive eligibility to be treated as inputs. Further, I find that the original authority has gone through the material requisition slips and found as to where the impugned goods are used for maintenance and repair of machinery. Therefore, I do not find the two observations of ld. Commissioner (Appeals) to be sustainable. - Decided in favour of appellant
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CST, VAT & Sales Tax
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2016 (10) TMI 124
Release of detained goods - Rice Bran Oil - goods transported from Andhra Pradesh to Mangalore - absence of TIN number - place of delivery not mentioned - Form LL - transit pass - Held that: - in view of the contract between the petitioner and the buyer at Karnataka and their supplier at Andhra Pradesh and after perusing the Invoice dated 18.09.2016, wherein the name of the petitioner has been shown and the place of delivery is shown as Mangalore, via Bangalore, and also considering Form-LL dated 19.09.2016, it is a fit case where the respondent has to take note of these documents and release the goods. Respondent directed to take note of the Forms and Documents produced by the petitioner, verify the same and release the goods - petition allowed - decided in favor of petitioner.
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2016 (10) TMI 123
Condonation of delay in filing the appeal before the Appellate Authority under Section 31 of the TNGST Act - holding company, holding 100% share of subsidiary company, Annamalaiar Textiles (P) Ltd. - transfer of old machinery and generator to subsidiary company without payment of tax - penalty imposed under section 12(5) of the TNGST Act - is the delay of 4709 days condonable holding that the delay was genuine? - Held that: - TNGST Act is the self-contained statute and Section 31(1) and the first proviso of the Act provide a period of limitation (30 days + 30 days) and, any period exceeding 60 days cannot be condoned either by the said Appellate Authority or by the Court in exercise of jurisdiction under Article 226 of the Constitution of India. The petitioner is also guilty of delay and laches and even at the time of disposal of T.P.No.136 of 1997 by the Tamil Nadu Taxation Special Tribunal, Chennai, on 03.07.1997, has failed to place the relevant and necessary facts and therefore, the Tribunal on misconstruing the facts, had passed the order as if the objections have not been submitted. Petition dismissed - delay not condoned - decided against petitioner.
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2016 (10) TMI 117
Validity of order passed by Joint Commissioner of Commercial Taxes-III, exercising his power of suo motu revision under section 34 of the TNGST Act, 1959 - powers conferred on the Appellate Authority and the powers conferred on the Revisional Authority who has exercised the power of suo motu Revision - Held that: - the Statute gives very wide powers to the Appellate Authority in terms of sub-section (3) of Section 31 of the TNGST Act. The Appellate Authority can revise and re-write the order of assessment and whatever discretion which has been conferred on the Assessing Officer as well. The power of suo motu Revision conferred on the Joint Commissioner is exercisable for the purpose of safeguarding the interest of the Revenue under section 34 of the Act. The order passed by the Revisional Authority solely based upon the report of the Inspecting Officers could not have been a basis for disbelieving the stand taken by the petitioner before the Appellate Authority, which decision was arrived at based on the facts placed before the Appellate Authority. Further, the Revisional Authority does not dispute the factual position and if such is the case, no case has been made out for reviewing the order passed by the Appellate Authority. An appeal ought to have been filed before the Special Tribunal - at the time when the Writ Petition was filed there was no Appellate Tribunal and therefore, the petitioner has approached the Court - the Writ Petition is pending from 2004, matter not relegated to the Tribunal - writ petition allowed - decided in favor of appellant.
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2016 (10) TMI 116
Demand of MVAT dues - maintainability - alternative remedy of appeal - section 26 of the Maharashtra Value Added Tax Act, 2002 - Held that: - petitioner can appeal to Maharashtra Sales Tax Tribunal. If such an appeal is filed within a period of three weeks from the date of receipt of a copy of this order, then, the Tribunal shall not insist on an application seeking condonation of delay being filed, but would proceed on the assumption that the Revenue does not object to the appeal on the ground of delay nor seek its dismissal only on that ground. It should then decide the appeal on merits and in accordance with law. No opinion expressed on the rival contentions and it will be entirely for the parties to raise them and the Tribunal to deal with them in accordance with law. The writ petition is disposed of with a further direction that the petitioner shall not have to seek a stay of the recovery of the amount demanded as MVAT dues if it is secured substantially by a bank guarantee as ordered by this Court which shall be kept alive till the disposal of the appeal before the Tribunal and for a period of six weeks thereafter. Petition disposed off - matter remanded.
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2016 (10) TMI 115
Failure to furnish "C Form" Declarations in time - whether the power under Section 55 of the Act is a power of review or only a rectification? - Held that: - the declaration forms to avail concessional rate of tax could be produced by the dealer at any time during the course of assessment or thereafter and if those forms are produced, then the Assessing Officer would be required to redo the assessment. The inability to produce the 'C' Forms at the appropriate time was for reasons beyond the control on the part of petitioner - the respondent directed to consider the petition filed for rectification along with the 'C' Forms - petition allowed - decided in favor of petitioner.
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2016 (10) TMI 114
Levying of tax under the Rajasthan Tax on Entry of Motor Vehicles Into Local Area Act, 198 - power of DC(A) - validity of order passed by DC(A) u/Sec. 36 & 7 of the Rajasthan Tax on Entry of Motor Vehicles into Local Areas Act, 1955 read with Sec. 29 of the Rajasthan Sales Tax Act, 1994 - restoration of matter to officer having jurisdiction - Held that: - the decision in the case of Assistant Commissioner, Anti-Evasion-II, Jaipur Vs. M/s Anshu Jain, Sanjay Jain [2015 (12) TMI 1477 - RAJASTHAN HIGH COURT] apply where it was held that in case the respondent-assessee is already assessed to tax by a particular CTO, the same officer would have jurisdiction to assess the assessee and in case some of the assessees are not assessed to sales tax, then the CTO will get jurisdiction to assess according to the place of residence of the person. Matter restored - the officer having jurisdiction will, after hearing the assessee, decide the matter in accordance with law within a period of four months - petition allowed - decided in favor of petitioner.
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Indian Laws
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2016 (10) TMI 126
Valuation - whether customs duty is to be added to the value of goods for the purpose of payment of octroi under Bombay Municipal Corporation (Levy of Octroi) Rules, 1965 - import of certain computer parts and claimed exemption from payment of customs duty thereupon invoking the provisions of Notification No. 133 of 1994 dated 22.06.1994 - Held that:- from the reading of Rule 2(7)(a), it becomes clear that for ascertaining the value of the goods not only the original invoice but certain other charges like shipping dues, insurance, custom duty, excise duty, countervailing duty etc. are also includible in the value of articles if such charges are, in fact, incurred by the assessee or even “liable to be incurred by the importer”. It was the case of the respondent-Corporation that since 25 per cent of the production was allowed to be cleared in the domestic market subject to payment of excise duty, equivalent to the custom duty, is added. We find that the aforesaid position taken by the respondent-Corporation does not flow either from the reading of Rule 2(7)(a) or paragraph 3 of Notification No. 133 of 1994 dated 22.06.1994. Insofar as excise duty is concerned, the said excise duty was not paid on the goods imported. On the contrary, it was paid on the articles that were manufactured out of the goods which were imported. Therefore, the payment of excise duty on such manufactured articles would have no relation or connection with the goods that were imported by the appellants. Once we read and interpret the provisions of paragraph 3 of the notification in the manner stated above, obviously, there was no liability towards customs duty on these goods which were incurred or were liable to be incurred as mentioned in Rule 2(7)(a) of Rules, 1965. It is stated for the sake of repetition that insofar as customs authorities are concerned, they have not only granted exemption, they even allowed the clearance of 25 percent of the production into the domestic area in terms of paragraph 3 of the exemption notification. Thus, as far as goods are concerned, they were fully exempted from payment of any customs duty. Therefore, no liability in this respect is either incurred or was liable to be incurred and therefore, provisions to Rule 2(7)(a) for the purpose of adding the customs duty would not be attracted. - Decided in favour of appellant
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