TMI Tax Updates - e-Newsletter
November 2, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.
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GST:
Levy of CGST - scope of mutual contract / tender notification - the contention advanced by learned counsel for petitioner that, GST is not tax enabling the respondents to rely upon clause 44 of tender conditions, is devoid of merits. - petitioner is not at liberty to introduce any legal principle to his rescue so as to interfere with the rule of the game provided under Ext.P1 notice inviting tender, having an express stipulation for enhancement of rate of tax from time to time.
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Income Tax:
Registration u/s 12AA - Gujarat Cricket Association[GCA] - Merely because an activity is performed in an organized manner, that alone, will not make such activities as business/commercial activity. The profit motive is one essential ingredient which is apparently missing in the case on hand - The nature of the activities of the assessee cannot take its colour from the nature of the activities of the donor.
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Income Tax:
Capital Gains - Disallowance of sum paid for the share certificate of the property - This share certificate has no independent value in its self. This share certificate is transferable only along with the property in dispute. Therefore, the cost incurred on such share certificate can be treated as part of the cost of the property
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Income Tax:
Disallowance of interest - the assessee’ counsel, proceeded de hors what had transpired during the previous hearing, reiterating, without reference to any factual basis, that the assessee had sufficient interest-free capital to preclude the disallowance of interest on borrowed capital. The assessee’s case, thus, continues to be no more than a bald statement, i.e., as it was before the Revenue authorities - additions confirmed.
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Customs:
Classification of goods - filing of incorrect IGM - There were reasons for the captain to be unsure/unaware of the procedures to be followed in such cases and as such ignorance of CBEC Circular 58/97 dated 06-11-1997 is understandable. - Levy of penalty reduced.
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DGFT:
Amendments in Appendix 1A of Foreign Trade Policy, 2015-20 - Revised territorial jurisdiction of Regional Authorities of DGFT is notified in Appendix 1A of Appendices and Aayat Niryat Forms
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DGFT:
Amendment in Chapter 7 of the Handbook of Procedures 2015-20 - Refund of drawback of Duty paid on inputs is also allowed on All Industry Rate.
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Service Tax:
CENVAT Credit - inputs - It is clear that CERA Audit has conducted audit of records of the appellant including the Cenvat credit record and no objection was raised - Adjudicating Authority has rightly set-aside the demand for the extended period for which the audit was conducted.
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Service Tax:
Levy of service tax - Commercial training or coaching center services - The Appellant does not issue the certificates. In such circumstances, it is clearly a ‘commercial training or coaching centre’ providing ‘commercial training or coaching’. It is providing a taxable service. All decisions of the Tribunal taking a contrary view stand overruled.
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Central Excise:
Valuation - inclusion of royalty charges in the assessable value - Royalty Charges is shown as Sales & Distribution overhead in the appellant’s books of account. This itself proves that the Royalty Charges is indeed included in the transaction value - Demand set aside.
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Central Excise:
CENVAT Credit - delay in taking the credit from the date of issuance of invoice - the appellant had reasonable excuse for not taking the credit as there was a dispute regarding the input service - no reason to invoke the extended period of limitation in the present case.
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VAT:
Condonation of delay beyond 90 days - revisional power of High Court u/s 48 of HP VAT - Section 48(1) nowhere expressly excludes the applicability of provisions of the Limitation Act. The provisions of section 5 are applicable to Section 48 as they are not expressly excluded by the provisions under the Act of 2005.
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (11) TMI 41
Liability of GST - Rate of tax - services rendered by the applicant on quality testing and certification of gold ornaments - HELD THAT:- The Jewellery Manufacturing Services includes gold maintenance / repair works, which falls under service Classification Code 998892. As per Section 2 (68) of the CGST Act, 2017; Job work is defined as undertaking any treatment or process by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. The rate of GST applicable for manufacturing services on physical inputs (goods) owned by others is 5%; if undertaken on goods belonging to registered persons as per SI No.26 (i) (c) and 18% GST, if job work undertaken on goods belonging to unregistered persons as per SI No. 26 (iv) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. As per Section 22 of CGST/SGST Act, 2017; every supplier of services is required to obtain registration only when his aggregate turnover, to be computed on all India basis, in a financial year exceeds the threshold limit of ₹ 20 lakhs.
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2019 (11) TMI 40
Classification of supply - composite supply or not - supply of spare parts / accessories and repair service - principal supply is repair service - taxable at 18% or not? HELD THAT:- The supply of spares parts / accessories and repair service are distinct and separately identifiable supplies for which the rates are quoted differently and work orders are issued separately specifying the spares / accessories to be supplied and the services to be supplied and the rates applicable thereon as per the rates quoted in the Repair Rate Contract can't be considered as a composite supply. Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.
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2019 (11) TMI 39
Classification of goods - rate of tax - agricultural implements used for rubber tapping such as Spouts, Cup Holders and Collection Cups - HELD THAT:- Spout, cup holder and latex collection cup are agricultural implements exclusively used for rubber tapping come under the classification HSN 8201 90 00 other hand tools of the kind used in agricultural, horticulture or forest , As such these items are exempted from GST.
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2019 (11) TMI 38
Protection of welfare rights of the registered GST dealers by directing the respondents not to bother in earning livelihood by fair means of registered GSTN dealers and remove the hurdles for smooth business operations for the welfare of GSTN dealers and society as well - HELD THAT:- In the present case, we are not satisfied that this is a genuine petition filed in public interest so as to invoke the jurisdiction in the public interest under Article 226 of the Constitution. Petition dismissed.
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2019 (11) TMI 37
Grant of Bail application - offence under Section 132(1)(e) of Central Goods Service Tax Act, 2017 - input tax credit - HELD THAT:- The partners of the firm have been granted protection by the Apex Court and petitioner is in custody from 28.08.2019; the total amount which as per Department is wrongly claimed after deposit of ₹ 3.33 Crores is less than ₹ 5 Crore, I deem it proper to allow the bail application. Bail application allowed.
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2019 (11) TMI 36
Levy of CGST - scope of mutual contract / tender agreement - Release and refund of EMD of ₹ 2,00,000/- furnished by the petitioner along with the tender submitted on 3.6.2017 and to re-notify the tender for the work incorporating GST - HELD THAT:- There is a stipulation contained under clause 44 of Ext.P1 that, the Sales Tax as per Rules from time to time is liable to be paid by the petitioner and the rates quoted for various items remain unaffected by any changes that may be made from time to time at which such tax is levied. The case projected by the petitioner is that, as per the special condition, petitioner is liable to pay Value Added Tax at the rate of 4%. However, on a harmonious construction of clause 44 as well as special condition contained under Ext.P1, even though petitioner was only liable to pay tax at the rate of 4% when notice inviting tender was issued, if during the course of proceedings or even after execution of the agreement, if the tax is increased, petitioner is liable to pay the same as per the stipulations contained under clause 44 quoted above without insisting for any rate variation. So also the tender is to be submitted by a bidder taking into account various factors and components and a little bit of speculation is also required. When clause 44 was incorporated in Ext.P1 tender notification and the introduction of GST was under comprehension and in fact it was made without being introduced and therefore, it cannot be said that, petitioner was not aware of the likelihood of legislation being introduced on and with effect from a future date. Therefore, necessarily, petitioner ought to have visualised such a situation and the rates should have been quoted only in accordance with the same. It is also clear from Exts.R3(a) and R3(b), petitioner has quoted less than the probable amount of contract and according to the learned Special Government Pleader, petitioner wants now to wriggle out of the contract without causing any injury to him. GST is nothing but tax on supply of goods, supply of service and supply of goods and services, however, a homogeneous mixture of several of the indirect taxes under a single umbrella, having uniform rate through out the country, on any goods or service covered by GST. Therefore, the contention advanced by learned counsel for petitioner that, GST is not tax enabling the respondents to rely upon clause 44 of Ext.P1, is devoid of merits - Petition dismissed.
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Income Tax
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2019 (11) TMI 35
Registration u/s 12AA rejected of Gujarat Cricket Association[GCA] - According to revenue in view of the amendment under Section 2(15) DIT (Exemption) was justified in taking the view that the activities of the GCA cannot be termed as charitable and such activities were commercial in nature with the element of earning profit from the income of sale of tickets, income from the ICC, income from hosting the international cricket matches etc. - HELD THAT:- The main and predominant object and activity of the assessee is to promote, regulate and control the game of cricket in the State of Gujarat. The undisputed fact is that over a period of years, this activity has been recognized by the Income Tax Department as a charitable activity and the registration under Section 12A of the Act was granted to the assessee. A number of assessment orders under Section 143(3) were passed, wherein the assessee was held eligible for the exemption under Sections 11 and 12 of the Act. It appears that it is only after the Proviso came to be inserted that, all of a sudden, the department now believes that the activity of the assessee is commercial in nature and no longer charitable. It is difficult for us to take the view that the assessee could be said to be carrying on trade, commerce or business under the garb of the activity being general public utility . Merely because an activity is performed in an organized manner, that alone, will not make such activities as business/commercial activity. The profit motive is one essential ingredient which is apparently missing in the case on hand. In carrying out an activity, one may earn profit or one may incur loss. But for making it as a business activity, the presence of the profit motive is sine qua non. In the case on hand, the ultimate beneficiary is either the cricketer or the game of cricket. The assessee is not charging any fees or revenue from the cricketer who is the ultimate beneficiary. Thus there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on the charitable basis as far as real beneficiary is concerned. Whenever the revenue is earned, the same is not on commercial lines and the same could be said to be earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not in full In the aforesaid view of the matter, we are not convinced with the case put up by the Revenue. It is not the case of the Revenue that the objects of the Trust are not charitable, but the case of the Revenue is that the activities undertaken by the Association are not charitable in nature. In the result, this appeal fails and is hereby dismissed. The substantial question of law, as formulated by this Court, is answered in favour of the assessee and against the Revenue. Benefit of Section 11 and 12 to the appellant cricket associations - Charitable activities u/s 2(15) - income of the Associations from the sale of tickets etc - HELD THAT:- In carrying on the charitable activities, certain surplus may ensue. However, earning of surplus, itself, should not be construed as if the assessee existed for profit. The word profit means that the owners of the entity have a right to withdraw the surplus for any purpose including the personal purpose. It is not in dispute that the three Associations have not distributed any profits outside the organization. The profits, if any, are ploughed back into the very activities of promotion and development of the sport of cricket and, therefore, the assessees cannot be termed to be carrying out commercial activities in the nature of trade, commerce or business. It is not correct to say that as the assessees received share of income from the BCCI, their activities could be said to be the activities of the BCCI. Undoubtedly, the activities of the BCCI are commercial in nature. The activities of the BCCI is in the form of exhibition of sports and earn profit out of it. However, if the Associations host any international match once in a year or two at the behest of the BCCI, then the income of the Associations from the sale of tickets etc., in such circumstances, would not portray the character of commercial nature. The State Cricket Associations and the BCCI are distinct taxable units and must be treated as such. It would not be correct to say that a member body can be held liable for taxation on account of the activities of the apex body. Irrespective of the nature of the activities of the BCCI (commercial or charitable), what is pertinent for the purpose of determining the nature of the activities of the assessees, is the object and the activities of the assessees and not that of the BCCI. The nature of the activities of the assessee cannot take its colour from the nature of the activities of the donor. - Decided in favour of assessee
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2019 (11) TMI 34
Revision u/s 263 - order of the AO as erroneous insofar prejudicial to the interest of revenue for wrongful deduction claimed and allowed to the assessee under section 80IB of the Act in the assessment framed under section 143(3) - HELD THAT:- AO during the assessment proceedings has required the assessee to furnish the details of the deduction claimed under section 80IB(10) and the assessee in response to the above notice has made the submission vide letter dated 7-1-2015 as detailed. Assessee has made the disclosure in the tax audit report in form 3CD about the projects and corresponding deduction claimed under section 80IB(10) of the Act and details of the units sold/unsold which is placed on pages 9 to 21 of the PB. In view of the above, we hold that the assessment order was framed under section 143(3) of the Act after due verification by the AO. Accordingly, we are of the view that the order of the AO cannot be held as erroneous insofar prejudicial to the interest of the Revenue on account of non-verification of the facts - Decided in favour of assessee.
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2019 (11) TMI 33
Validity of initiation of proceedings u/s.153C - without having incriminating material and without recording the reasons for initiation of proceedings in the case of the searched person - HELD THAT:- In the instant case, there is no dispute that there is no satisfaction recorded by the AO of the searched person. No material was placed before us to show that the satisfaction was recorded by the AO of searched person before transfer of the material to the officer having jurisdiction over such other person in this case, the assessee. Hence we hold that the assumption of jurisdiction without recording the reasons in the case of searched person is invalid. Accordingly, we quash the notices issued u/s.153C of the Act and cancel the assessments framed u/s.143(3) r.w.s. 153C - Decided in favour of assessee Agricultural income in the hands of the HUF - assessee stated that the lands situated at Vattinagulapally village does not belong to HUF and belonged to individual and acquired by inheritance through gift deed from his mother - HELD THAT:- There is no case for considering the same as agricultural income in the hands of the HUF. Further it is seen from the orders of ITAT that the said lands were given to M/s.Dakshin Shelters Pvt. Ltd. [ 2012 (5) TMI 649 - ITAT HYDERABAD] for the purpose of development and the assessee came to know that the developer already started real estate project and incurred substantial expenditure for development of the same. The lands were stated to be mountainous lands. This fact finding was given by the ITAT in its order (supra). Except the land revenue authorities, no other evidence brought by the assessee for establishing the agricultural income. Therefore, we find no reason to interfere with the orders of the authorities below and accordingly, we, dismiss this appeal of assessee.
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2019 (11) TMI 32
Condonation of delay - delay of 154 days in filing this appeal by the assessee - CIT (Central), Hyderabad invoked the provisions of section 263 and passed an order on 10/03/2015 setting aside the assessment made u/s 144 of the Act and directed the AO to re-do the assessment - assessee stated that he was under bonafide impression that appeal, if any, would lie when the AO passed an order in consequence to the direction of Ld. Pr. CIT - HELD THAT:- Having appeared before the Pr. CIT and filed the details before him and received the order from Pr.CIT what we do not understand is after receiving the order from Pr. CIT, why he was not approached the Advocate, was not explained before us. He has only approached the Advocate, when he received the order passed by the AO u/s 143(3) rws 263 of the Act, on 31/12/2015. In our considered the view, the explanation offered by the assessee for the delay in filing the appeal is not bonafide and therefore, it is not a fit case to condone the delay as the assessee has failed to establish that the assessee is prevented by sufficient cause for not filing the appeal within the stipulated time. Accordingly, the appeal is dismissed as not admitted. Unexplained investment u/s 69 - gold and silver articles found in search operation - AO gave credit for gold worth ₹ 26,40,468/- (weight of gold 1333.57) treating the same as inherited from assessee s parents and the remaining gold jewellery as unexplained investment - HELD THAT:- It is a fact that assessee s son and his daughter-in-law both are working in USA and there is every possibility that out of their earnings, they must have brought some gold jewellery. Therefore, we are of the view that some more credit should be given to the assessee and accordingly, we direct the AO to give credit of gold worth ₹ 24,00,000/- to the assessee and recalculate the addition (₹ 1,04,66,134 ₹ 24,00,000) accordingly. Thus, ground No. 2 is partly allowed.
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2019 (11) TMI 31
Computation of Capital Gains - Disallowance of sum paid for the share certificate of the property - whether the assessee has incurred an expense by way of share certificate obtained from the society namely Om Dharam Jivan Association where the assessee was holding property? - HELD THAT:- Claim of the assessee does not depend upon the confirmation from the third party. The assessee as such has furnished share certificate which is primary document mentioning the payment of ₹ 5000.00. This fact has not been doubted by the authorities below - in the absence of the confirmation from the 3rd party the assessee is not disentitled for claiming the deduction of the impugned expenditure. The certificate issued by the society, Om Dharam Jivan Association, has direct nexuses with the property held by the assessee. This share certificate has no independent value in its self. This share certificate is transferable only along with the property in dispute. Therefore, the cost incurred on such share certificate can be treated as part of the cost of the property - the assessee was holding a property in the society Om Dharam Jivan Association and this fact was also admitted by the AO in his remand report. Therefore in our considered view the share certificate issued by the society, Om Dharam Jivan Association, cannot be doubted being closely connected with the impugned property - direct the AO allow the claim to the assessee Short-term capital gain - Assessee in the year under consideration has sold the shares of L T - HELD THAT:- AO during the remand proceedings obtained an information from the broker namely Rajvee stock broking Ltd wherein it was confirmed that the assessee has incurred a loss of ₹ 674/- in respect of sale purchase of the shares of L T. AO in the remand report objected on the admission of the additional evidences on the ground that the case of the assessee does not fall in any of the exception as specified under rule 46A of Income Tax Rule. CIT (A) has observed that the assessee has dealt in 45 scripts but the broker has furnished the details with respect to 6 scripts only. On perusal of the reply of the broker placed on pages 7 and 8 of the paper book we note that the assessee has dealt only in 6 scripts. As such, the learned CIT (A) has not brought any information on record suggesting that the assessee has dealt in 45 scripts. From the above, we conclude that the assessee has incurred losses on the sale purchase of L T shares amounting to ₹ 674/- and as a whole for all the scripts he has earned a profit of ₹ 2,250/- only. - There cannot be any addition to the total income of the assessee on account of sale of shares of L T for the reasons as discussed above. Regarding the allegation of the learned CIT (A) about the source of investment in the shares, we note that there was there was no such show cause notice issued to the assessee explaining the source of investment. Therefore there cannot be any addition on account of source of investment without showing a show cause notice to the assessee for his explanation. - Decided in favour of assessee.
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2019 (11) TMI 30
Violation of principles of natural justice - CIT(A) not affording an opportunity of hearing to the assessee and passed ex parte order - Nature of land sold - HELD THAT:- CIT(A) issued three notices to the appellant but because of some reason could not appeared before the CIT(A) and in limine CIT(A) without discussing any merit of the case just confirmed the order of the Assessing Officer. We have gone through the relevant record and impugned order. As we can see, without discussing the merit of the case, ld. CIT(A) has confirmed the order of the Assessing Officer. In our considered opinion, same is amounting to miscarriage of justice. CIT(A) has simply concurred with the AO without formulating specific points and taking note of details available before the Id.CIT(A). In a way, the appeals were dismissed in summary manner. This exercise of power at the end of the ld.CIT(A) is not in coherence with the mandate of section 250(6) of the Act, therefore, we set aside all these orders and restore all the issues in these three assessment years to the file of the Id.CIT(A) for deciding them on merit. We further direct the assessee to cooperate with the ld.CIT(A) and refrain himself from seeking unnecessary adjournments. Appeals of the assessee are allowed for statistical purpose.
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2019 (11) TMI 29
Penalty u/s. 271(1)(c) - cash deposited in bank account - HELD THAT:- Assessee was the man of means as evident from the deposit of cash in the bank account. Therefore we are of the view that there cannot be any penalty merely on the addition of such a small amount of cash deposit. We also find that the assessee in support of cash deposit has filed the cash book and there was no defect pointed out therein. The amount returned from the staff, we note that the question of returning the advance arises only when the advances have been made. As such, none of the authorities below has doubted on the amount advanced by the assessee to such party. The assessee claimed that such additions were highly debatable, but to avoid the litigation, the same were accepted. Looking at the amount of the addition we are of the view that there was no deliberate act on the part of the assessee to conceal the particulars of income as pointed out by the authorities below, therefore we hold that there cannot be any penalty of the assessee in the given facts and circumstances. We find support and guidance from the judgment of the supreme court in case of Dilip N Shroff Vs. JCIT [ 2007 (5) TMI 198 - SUPREME COURT ] wherein as held as signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars We are not inclined to uphold the findings of the authorities below. Hence we set aside the order of the Ld. CIT(A) and direct the AO to delete the penalty imposed by him under section 271(1)(c) - Appeal of the assessee is allowed
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2019 (11) TMI 28
Validity of reopening of assessment - assumption of jurisdiction u/s 147 - non fulfillment of mandatory jurisdictional conditions specified under the Act - As per assessee reopening was based on the borrowed satisfaction of CIT Central II, New Delhi and was without an independent application of mind - addition on accommodation entry - HELD THAT:- An investigation wing of the Income Tax department is very important organ and arm collecting lot of significant information/s under the Act. However, the requirement of recording the reasons u/s 148 of the Act is vested in the AO only and nobody else. In the present case, the AO should have given relevant details in the reasons recorded vis a vis the crucial aspects of information shared by the CIT Central/ investigation wing (if any) which in his own independent opinion led him to formulate the belief for assuming jurisdiction for re-assessment and sans which we cannot approve the present reasons as valid and correct. Notably, nowhere in the reasons AO has shed any light on as to whether any specific statement of Shri Aseem Gupta or any other person was there to warrant assumption of jurisdiction in assessee s case except some general allegations. Moreover, not a single document is mentioned and referred to in the reasons recorded wherefrom the stated allegation, as levelled in the reasons, can be supported. These are fatal errors which strike at the very foundation of the validity of the re-assessment proceedings. CIT (A), in his adjudication on the validity of the reasons recorded, has simply stated that since the AO has taken care of the procedure to be followed as dictated in the case of GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] nothing more was required to be seen and looked into. This observation, to our mind, is a very casual way of dealing with the detailed arguments of assessee made before him. Taking a holistic view on the facts of this case, we are of the considered view that reopening in the present case cannot be approved on the basis of the reasons recorded and the same is held to be without authority of law - AO has simply relied on the information from the CIT(Central)/DIT(Inv) to form a conclusion about escapement of income, which itself is flawed and cannot pass the test of 'reason to believe' - Decided in favour of assessee
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2019 (11) TMI 27
Unexplained cash deposit in the bank account of the assessee - HELD THAT:- A perusal of the order of the CIT(A) shows that Sh. Anil Sachdeva in his statement had clearly stated that he had never signed the affidavit nor has given ₹ 3 lacs for getting the demand draft in favour of M/s. Hundai Motors Ltd. PAN number given by the assessee is also incorrect. Similarly Sh. Sanjay Khattar had also stated that neither he has signed the affidavit nor has given ₹ 2,50,000/- for getting demand draft in favour of the assessee Sh. Suresh and Chakresh. He had never given any amount of ₹ 2,50,000/- to Sh. Padam Lal Dua i.e. assessee. Similarly summon issued to Ms. Bhawna Narula was returned back unserved and the assessee, despite being asked by the AO to produce the said party, never produced Ms. Bhawna Narula who has given an amount of ₹ 13,60,000/- to the assessee as claimed by him. A perusal of the order of the CIT(A) shows that assessee has forged the affidavit of Sh. Anil Sachdeva and Sh. Sanjay Khattar and failed to produce Ms. Bhawna Narula before the AO despite being given opportunity by the AO during remand proceedings. The arguments of the assessee that opportunity to cross-examination was not given falls flat especially when the two persons have stated before the AO on oath that neither they have signed the affidavit nor have given any such amount to the assessee. Similarly Ms. Bhawna Narula was never produced before the Assessing Officer for recording her statement despite being asked by the AO to do so since the summon issued to her was returned unserved. Assessee also failed to justify the source of the balance amount of ₹ 75000/- i.e. (1985000 -19,10,000 i.e. (3,00,000+250000+13,60,000). Appeal filed by the assessee is dismissed.
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2019 (11) TMI 26
Bogus sub-contract payments - contention of the assessee that the cash was in fact handed over to the respective sub-contractor and utilized by them in executing the work - HELD THAT:- In absence of any proof that assessee has utilized the same for any purpose other than the sub-contract business, we are inclined to accept the contention of the assessee that the cash was in fact handed over to the respective sub-contractor and utilized by them in executing the work. It is not the case of revenue that assessee has not completed the contract work, which was allocated to sub-contractors but for the cash management of the sub-contractors requirement, the whole sub-contract payments were disallowed. But as per records, assessee has executed the works assigned to sub-contractors and got the compensation. We further observe that Ld CIT has not confirmed the addition based on any evidence of utilization of cash only by assessee but heavily relied on the human probabilities and presumptions. Since there is certain element of uncertainty in utilization of such funds only in the sub-contract activities, we are inclined to direct the A.O, for the sake of justice, to disallow 5% of the total cash withdrawn by the sub-contractor with the assistance of assessee. Further, we propose to freeze the income earned by the sub-contractor @ 5% as the normal profit in this line of business. By this, we are technically upholding 10% of the sub-contract revenue as income. Accordingly, grounds raised by the assessee on this issue are partly allowed. Deduction u/s 80IA denied - returns were not filed within the period specified in the notice given u/s 153A - assessee filed a revised return on 6.2.2014 making a claim u/s 80IA - AO held that the return filed u/s 153A was not a valid return because it was filed belatedly and further that the AO did not have the power to condone the delay - AO held that the fresh claim u/s 80IA made in the revised return filed u/s 153A of the Act on 14.02.2013 is therefore, not entertainable as a revised return is not provided for under Chapter VIA of the Act. - HELD THAT:- CIT (A) has brought out the project-wise details of net profit transferred to the income computation which is claimed as a deduction u/s 80IA in the form of a table. Thereafter, he has directed the AO to evaluate the credentials of the contractor as a developer with reference to the specific facts of each contract where such claim is made and also directed the assessee to provide all the necessary details to the AO. CIT (A) also observed that section 80IA(4)(i)(b) requires that the development of infrastructure facility should be pursuant to an agreement entered into by the assessee with the Central Govt./State Govt./local authority/any other statutory bodies. After verifying the information furnished in the table, the CIT (A) observed that some of these agreements are prima facie, not with the Govt. or any other such authority but are with private parties such as Ratna Infrastructure Projects Pvt Ltd or IVRCL-SSIL JV etc., and therefore, the claim with regard to such contracts is not allowable. AO was accordingly directed to make appropriate quantification. We find that the CIT (A) has brought out the facts properly and the DR was not able to rebut any of these findings of the learned CIT (A) without any audience to the contrary. No reason to interfere with the order of the CIT (A) on this issue. Revenue s appeals are accordingly dismissed. Estimation of income on protective basis @ 12.5% on the alleged sub-contract receipts by the AO - HELD THAT:- CIT(A) has confirmed the addition based on human probabilities and presumptions and not relying on any material on record. The revenue declared by sub contractors is to be treated as income from business and the income from main contract, in this line of business, the Hyderabad benches have treated 8% as normal, for sub contract business, it was at 5%. Respectfully following the same, we direct the AO to estimate the income of sub-contractors @ 5% and any sub-contractors, who had declared the income in excess of 5% the same may be treated as income from this business. Accordingly, In all the appeals, grounds raised by assessees are partly allowed Penalty u/s 271B - failure to comply with the provisions of section 44AB - HELD THAT:- The assessee filed the return of income belatedly but before the search proceedings for the assessment years under consideration AY 2008-09, AY 2009-10 and AY 2010-11. The assessee made available the relevant audit report at the time of assessment, this is clearly evident from the fact that the audit had taken place before the date of filing return of income and the same was within the provisions of sec 44AB. With regard to AY 2011-12, the assessee has not completed the books and proper books are not maintained even though the turnover crossed the prescribed limit requiring the assessee to get its accounts audited. Since, it is clear violation of section 44AB, we are inclined to sustain the addition made by the AO. Accordingly, the appeals filed by the assessee for the AY 2008-09, 2009-10 and 2010-11 are allowed and for AY 2011-12 is dismissed.
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2019 (11) TMI 25
Disallowance of interest on borrowed capital u/s. 36(1)(iii) - sufficiency of interest-free capital - HELD THAT:- While the depletion during the year, in the form of withdrawals and loss, is at ₹ 3.29 lacs, amounting to 3.3% (of the impugned advances), leading to an average (by taking the mean of opening and closing balances) would therefore approximate to 4%. The ratio of the borrowed capital financing the non-business advances may thus be reasonably taken at 96% (as against 100% by the Revenue). Sure, some variables, as the unsecured and secured loans as at the beginning of the year, or indeed the average for the year, may well be different. Why, the non-business advances itself may well be, for all we know, at a higher figure (than as at year-end), absorbing such interest-free or, as the case may be, interest bearing capital. However, it was for the assessee to set up a case in this regard. In fact, even no contention to this effect, i.e., that the figures as at the beginning of the year are at a material variance, stands raised. What stands stated in the preceding paragraphs, was discussed during hearing, and the assessee, also represented by Sh. Anil Vasudeva, CA (i.e., along with Sh. Arora) on 07/3/2019, required to work out the adequacy or otherwise of the interest-free capital during the year, substantiating, thus, his case with facts and figures - no such exercise was done. Sh. Vasudeva, who presented the assessee s case on 07/3/2019, and was explained to state his case with reference to the contractual obligations attending the different interest-bearing or, as the case may be, interest free, liabilities, did not appear on the next date, with no explanation for the same. And neither was any adjournment sought. Rather, Sh. Arora, the assessee counsel, proceeded de hors what had transpired during the previous hearing, reiterating, without reference to any factual basis, that the assessee had sufficient interest-free capital to preclude the disallowance of interest on borrowed capital. The assessee s case, thus, continues to be no more than a bald statement, i.e., as it was before the Revenue authorities. No reason to interfere, except to direct relief to the extent of 5% (five per cent.), by further relaxing the interest-free financing component of the impugned advances by the assessee, obtaining for the year. No mistake in the working of the interest by the AO having been pointed out, the same works to ₹ 63,611/-. - Decided partly in favour of assessee.
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2019 (11) TMI 2
Additions based on any material found during the course of search - application filed by the assessee for admission of additional evidence - HELD THAT:- In view of this, the additional evidences filed by the assessee are admitted and the impugned orders of the lower authorities are hereby set aside and the matter is restored to the file of the Assessing Officer to decide the issue afresh. The Assessing Officer will consider the evidence so furnished by the assessee - Appeal of the assessee is allowed for statistical purposes.
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Customs
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2019 (11) TMI 24
Principles of natural justice - it is alleged that SCN as well as notice for personal hearing was never received - HELD THAT:- As the notice of hearing was not received by this petitioner and even otherwise also for the co-noticees the matter has already been remanded by this Court by quashing and setting aside the Order-in-Original dated 28th February, 2019, we allow the writ petition. The Order-in-Original dated 28th February, 2019 passed by Additional Commissioner of Customs is hereby quashed and set aside and the matter is remanded for a fresh decision by the Additional Commissioner of Customs - Petition allowed by way of remand.
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2019 (11) TMI 23
Benefit of FTA N/N. 010/2008-Cus. dated 15.1.2008 - Time limitation for presenting the certificate of origin - classification of imported goods MLLDOE Granules - benefit of notification inadvertently not claimed at the time of import - HELD THAT:- The Commissioner (Appeals) is right in holding that the respondents have to be extended the benefit of FTA Notification 010/2008-Cus. dated 15.1.2008 - there is no infirmity in the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.
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2019 (11) TMI 22
Classification of goods - Whether the vessel mercury focus (formerly known as Transocean Mercury), imported by the appellants, which initially underwent repairs in the Cochin Shipyard and later moved to the site of exploration, merits to be called as a foreign going vessel or it is to be treated as goods for the purposes of Customs Act, 1962? - HELD THAT:- It is seen that the rig has arrived on MV Talisman. In the cargo declaration filed for the MV Talisman, the said rig was not mentioned as Cargo. However, a separate IGM appears to have been filed for the rig itself claiming the same to be calling on Cochin Shipyard Ltd. for repairs. The Department disputes that the appellants have not declared the vessel and the tug as goods having been imported in the country. Though, in terms of the Production Sharing Contract (PSC) dated 02.03.2007 they were very much aware that the said vessel and the tug were to be used in the country for petroleum operations. Whether the appellants required to declare the vessel and the tug as goods in the IGM and to this extent, is there any misdeclaration by the appellants? - Confiscation under Sections 111(d)(f)(g) and(h) of the Customs Act, 1962 - HELD THAT:- Both sides do not dispute the fact that the rig and the tug are vessels. They have been brought to Cochin Shipyard with an understanding on the part of the appellants that the same will be deployed to undertake Petroleum operations in the block allotted to them, albeit after repairs - Once the nature of the vessel was not that of a foreign going vessel, it acquires the nature of a vessel imported for the purpose of use in India. Therefore, it requires to fulfil the conditions of import. As the vessel was not categorically declared as goods intended for import in the IGM filed on behalf of the appellants, contravention of section 30, 32 etc. of Customs Act have taken place. Looking into the facts of the case that the appellants have taken the plea of confusion in the Customs practices itself; that the appellants have been regularly keeping the Department to notice of all the activities and that the officers have boarded the vessels and supervised the supply of ship stores and spares to Transocean Mercury and MV Shunter , we find that redemption fine imposed on appellants in lieu of confiscation of Transocean Mercury and MV Shunter , can be reduced. Whether the benefit of Notification No.12/2012 (Sl.No.359) dated 17.03.2012 is applicable to the appellants in respect of the vessel and the Tug? - HELD THAT:- It is not the case of the Department that the said Transocean Mercury and MV Shunter were put in to use for Petroleum operations without the essentiality certificate. On the contrary, the Department s contention was that the goods were imported for Petroleum operations and as such their declarations in the IGM in 2011 were incorrect. On completion of the repairs, the appellants filed a Bill of Entry for clearance of Transocean Mercury and to facilitate the filing of Bill of Entry amendment to IGM was also requested and accordingly granted. Only after the goods obtained the essentiality certificate, they were put to the intended use. Therefore, we find that the exemption is correctly availed - there is no infirmity in the filing of Bill of Entry in 2012 and allowing the exemption to Transocean Mercury and MV Shunter available as per Notification No. 12/2012-Cus dated 17.03.2012. Whether the said vessel and the tug MV Shunter which was brought to tow the above vessel is to be considered as a supply vessel meriting classification under 89.01 of Customs Tariff Act, 1975? - HELD THAT:- As the Tug is a supply vessel a few additional features to tow, it is correctly classifiable under CTH 8901. Therefore, we hold that the exemption under Notification 12/2012-Cus dated 17.03.2012 is available to the appellants on MV Shunter . Classification of the supply vessel is thus, answered. Whether the appellants are eligible to avail the exemption available for ship stores, consumables, spare parts, etc.? - HELD THAT:- The vessels were not foreign going vessels so as to be eligible for free supply of bunkers and ship stores - The impugned vessel is not a foreign going vessel; we find that such ship stores supplied to a vessel which is not a foreign going vessel are not applicable for exemption thereof. Whether the penalties imposed on different parties are sustainable? - HELD THAT:- The benefit under Notification 12/2012-Cus dated 17.03.2012 is available to the appellants, M/s Focus Energy, on the Rig Transocean Mercury and the AHTS M. V. Shunter and that they are not liable to pay any duty in this regard. Therefore, the penalty imposed on M/s Focus Energy under Section 114A is set aside. As above, we find that there was a mis-declaration on the part of the appellants and the shipping agents, as far as the nature of the Rig Transocean Mercury and the AHTS M. V. Shunter is concerned, and the same have become liable for confiscation. There were reasons for the captain to be unsure/unaware of the procedures to be followed in such cases and as such ignorance of CBEC Circular 58/97 dated 06-11-1997 is understandable. Therefore, we find that penalty imposed on him can be reduced. Appeal allowed in part.
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2019 (11) TMI 3
Non-compliance with the order of this Court dated 27 June 2017 - order dated 27 June 2017 was not being implemented earlier by the Respondent Nos.2 and 3, on the ground that they had filed an application for review bearing Review Petition (Stamp) No.23342 of 2018 in Writ Petition No.6472 of 2017 - HELD THAT:- The only justification for not complying with the order dated 27 June 2017 of this Court urged by Mr.Jetly on instructions is that they are in process of filing an appeal to Hon ble Supreme Court. However no stay of the order dated 27 June 2017 of this Court is obtained. Thus duty bound to honour and comply with the order dated 27 June 2017 of this Court. As a matter of last chance we direct the Respondent Nos.2 and 3 to comply with the order of this Court dated 27 June 2017 within a period of three weeks from today. It is made clear that in case this order is not complied by the next date, we may be compelled to initiate action against Respondent Nos.2 and 3 in our contempt jurisdiction in accordance with law. Stand over to 8 November 2019.
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Service Tax
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2019 (11) TMI 21
Maintainability of appeal - appeal was dismissed on the ground of time bar - HELD THAT:- The respondent no.2, vide letter dated 10.05.2019, provided certified copy of the order in original to the petitioner. The petitioner without any delay filed an appeal under Section 35 of the Central Excise Act, 1944 in Form ST-4 before the Commissioner (Appeals-I), CGST, Central Goods Services Tax Commissionerate, Jaipur, on 07.06.2019 - the Commissioner, without going into the merits of the case, dismissed the same on the ground of limitation. No doubt, the appeal filed by the petitioner was time barred but in the facts of the case, the appeal of the petitioner ought to be decided on merits rather dismissing the same on the ground of delay. The delay occurred in filing the appeal is condoned and remit this matter to the Commissioner (Appeals), Central Goods And Service Tax, Jaipur, for its decision on merits - petition allowed by way of remand.
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2019 (11) TMI 20
Levy of service tax - Ocean Freight as per balance-sheet - in the second show-cause notice the tax was claimed on account of the service of Freight Forwarder. - HELD THAT:- The adjudicating authority shall not permit the respondents to run a case inconsistent with the earlier show-cause notice, if the appellant is able to show that the transactions covered by the earlier showcause notice and those which are the subject-matter of the present show-cause notices are identical in nature, scope and effect. All other points are kept open before the said authority. The impugned judgement and order dated 14th August 2018 is modified by relegating the appellant to the alternative forum directing it to decide the two show-cause notices before it by giving an opportunity to the appellant to file a reply thereto, strictly in terms of our observations by a reasoned order, within six months of communication of this order - appeal disposed off.
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2019 (11) TMI 19
CENVAT Credit - inputs - M.S. Angles/Channels/G.P. Coils/Beams etc., which were used for fabrication/ erection of structures on which hoarding boards are installed - case of the department is that the appellant are not entitled for the Cenvat credit in respect of said steel goods - Board Circular No. 13/90-CX.1 dated 18.04.1990, 53/2/98-CX dated 02.04.1998 and 58/1/2002-CX dated 15.01.2002 - Time limitation - HELD THAT:- The issue of admissibility of Cenvat credit of in any case is a mixed question of law and facts which can be decided only on the basis of use of goods. Therefore, since there is so much development taken place after passing the adjudication order, the Adjudicating Authority must reconsider the entire case in view of the facts of this case and considering various judgments passed by various High Courts. Therefore, we are of the considered view that in assessee s appeal, matter should go back to the Adjudicating Authority. The Revenue s appeal seeking setting aside the dropping of demand of ₹ 57,94,280/- on the ground of time-barred, the Adjudicating Authority dropped the said demand holding that in respect of such demand, there is no suppression of facts. It is clear that CERA Audit has conducted audit of records of the appellant including the Cenvat credit record and no objection was raised. Therefore, there is absolutely no suppression of facts on the part of the appellant - Adjudicating Authority has rightly set-aside the demand for the extended period for which the audit was conducted. Appeal allowed by way of remand.
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2019 (11) TMI 18
Demand of interest - reversal of credit - whether interest is payable on reversal of credit of ₹ 40,60,683/-? - HELD THAT:- On transfer of business by the appellant to M/s Sodexo Facilities Management Services India Pvt. Ltd., the input service credit lying in the balance as on 30.6.2011 have been transferred following the mandatory provisions prescribed under Rule 10(2) of the CENVAT Credit Rules, 2004. Whatever credit lying in balance, according to the learned C.A., was relating to input service credit. In support, they have referred to the invoices enclosed with appeal paper book. No contrary evidence is placed by the Department. In these circumstances, insisting to follow the procedure of transfer of credit laid down under Rule 10(3) and applicable to input and capital goods, is unwarranted and incorrect when input service credit is transferred. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 17
Levy of Service tax - whether Service Tax was leviable under commercial training or coaching [Section 65(26)] of Finance Act for the coaching provided by the Junior Colleges? - HELD THAT:- For an institute to claim that it is not a commercial training or coaching centre , it must also be issuing certificates recognized by law for the time being in force. The Appellant does not issue the certificates. In such circumstances, it is clearly a commercial training or coaching centre providing commercial training or coaching . It is providing a taxable service. All decisions of the Tribunal taking a contrary view stand overruled. The decision of the Tribunal in Sri Chaitanya Educational Committee lays down the correct law which was in relation to the Appellant s own case for the previous years from 2003-07, while examining the contention raised on behalf of the Appellant that since the optional courses were integrated in the syllabus of the first and second year, commercial coaching or training was not provided by the Appellant, was repelled by a learned Member (Technical) . The appeals may now be listed before the Regular Bench.
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2019 (11) TMI 11
Applicability of provisions of Section 106(2A) of the Finance Act, 2013 - no inquiry had been initiated against the respondents herein to warrant rejection of the declaration made under the VCES scheme. Maintainability of declaration - whether the information sought from M/s.Marvel Realtors was an inquiry of roving nature and, therefore, the declaration ought to have been accepted? HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CENTRAL TAX PUNE I COMMISSIONERATE VERSUS MARVEL LANDMARKS PVT. LTD., M/S. MARVEL SIGMA HOMES PVT. LTD. [ 2019 (5) TMI 164 - BOMBAY HIGH COURT] where it was held that The Tribunal found that the enquiry being made in respect of the respondents were in nature of roving enquiry, not hit by Section 106(2) of the Finance Act, 2013. In view of above questions, these questions as proposed do not give rise to any substantial question of law. Thus, not entertained - appeal dismissed.
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Central Excise
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2019 (11) TMI 16
Benefit of abatement for non-production - whether the assessee could on their own calculate excise duty and set off the same against the duty payable in the next month? - HELD THAT:- The statue, that is proviso to Sub-section (2) of Section 3A itself provides for abatement where a factory producing notified goods did not produce the same during any continuous period of 15 days or more, the duty calculated on the proportionate basis shall be abated in respect of such period, if the manufacturer of such goods fulfills such condition as may be prescribed. In the present case as the assessee having complied the statutory requirement, is entitled to the benefit claimed by him. Once the Department has issued circular holding that assessee is entitled to abatement of duty, in the event of closure of factory for continuous period of 15 days or more, without first depositing the duty in terms of Rule 10 of PMPM Rules, 2008, the appeal of the revenue has no force and is hereby dismissed . The question of law are answered in favour of the assessee and against the revenue.
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2019 (11) TMI 15
Permission for withdrawal of application - monetary amount involved in the appeal - denial of CENVAT credit - HELD THAT:- It is averred in the application that Central Board of Indirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limits for filing appeal before this Court to ₹ 1.00 Crore and the said instructions are applicable to pending appeal. It is further averred that office of Commissioner of Central Goods and Service Tax, Rohtak has sent instruction to the effect that personal penalty involved in the appeal being ₹ 5 lacs is below prescribed threshold limit and as such prayer for withdrawal of the appeal. Application dismissed as withdrawn.
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2019 (11) TMI 14
Permission for withdrawal of appeal - monetary amount involved in the appeal - CENVAT Credit - HELD THAT:- It is averred in the application that Central Board of Indirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limits for filing appeal before this Court to ₹ 1.00 Crore and the said instructions are applicable to pending appeal - It is further averred that office of Commissioner of Central Goods and Service Tax, Rohtak has sent instruction to the effect that duty involved in the appeal being ₹ 66, 30, 293/- is below prescribed threshold limit and as such prayer for withdrawal of the appeal. Application dismissed as withdrawn.
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2019 (11) TMI 13
Permission for withdrawal of appeal - monetary limit involved in the appeal - Clandestine removal - HELD THAT:- It is averred in the application that Central Board of Indirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limits for filing appeal before this Court to ₹ 1.00 Crore and the said instructions are applicable to pending appeal. It is further averred that office of Commissioner of Central Goods and Service Tax, Mohali has sent instruction to the effect that personal penalty involved in the appeal being ₹ 10, 95, 000/- is below prescribed threshold limit and as such prayer for withdrawal of the appeal. Application dismissed as withdrawn.
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2019 (11) TMI 12
Permission for withdrawal of appeal - monetary limit involved in the appeal - HELD THAT:- It is averred in the application that Central Board of Indirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limits for filing appeal before this Court to ₹ 1.00 Crore and the said instructions are applicable to pending appeal. It is further averred that office of Commissioner of Central Goods and Service Tax, Mohali has sent instruction to the effect that personal penalty involved in the appeal being ₹ 86, 63, 000/- is below prescribed threshold limit and as such prayer for withdrawal of the appeal. Application dismissed as withdrawn.
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2019 (11) TMI 10
Interest on delayed refunds - Whether the appellant is entitled to interest on the sanctioned amount of interest qua refund claims which could not be disbursed with three months thereof? - Section 11BB of Central Excise Act, 1944. HELD THAT:- The first argument of the appellants that they are entitled for interest on interest being compensatory in nature is not sustainable. Since, it technically is interest on interest it cannot be called as compensation suo moto, nor has been so prayed by the appellant himself - the question is answered in favor of Revenue. Now coming to the alternate argument of the Appellant that from the amount of refund sanctioned since there is an interest liability, the amount should be first adjusted towards the interest liability. It is observed that this rule of first appropriating the interest is applicable only to the debts or to the decreetal amount. The case law as relied upon by the appellant is also either qua debts or qua the decreetal amount. Hence, the same is not applicable to the present case of refund of indirect taxes. The said rule of interpretation is otherwise contained in order-21 Rule-1 of Civil Procedure Code relating to execution of decrees for recovery of money. Such a provision stands absolutely excluded from the Central Excise Act, 1944. Appeal dismissed.
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2019 (11) TMI 9
Valuation - inclusion of royalty charges in the assessable value - Royalty Charges for technical knowhow was paid during the period 2012-13 to 2014-15 - captive consumption - HELD THAT:- As per facts of the present case, the consumption of excisable goods is not for captive consumption but for home consumption and on principal to principal sale basis. Therefore, the guidelines relied upon by the department has no relevance in the present case. Now, coming to the facts that whether the transaction value at which goods were sold and excise duty was paid, included the Royalty Charges paid by the appellant to the foreign collaborators - The appellant, time and again maintained that the Royalty Charges is clearly included as Sales and Distribution Overheads. Therefore, there is no doubt that the Royalty Charges is included in the overall value of the excisable goods. After the amended valuation provisions, from 2000 onwards, the duty is chargeable on the actual transaction value at which the goods are sold and therefore, any overhead charges cost of manufacture or selling expenses, everything stand included in the transaction value of the finished goods. Therefore, only expenses on account of Royalty Charges not shown in the cost of manufacture of the product will not make any difference as the same is admittedly stand included as Selling and Distribution expenses in the overall transaction value - It is also evident from the Chartered Accountant s that Royalty Charges paid to foreign company stand included in the transaction value. The SCN also admit that the Royalty Charges is shown as Sales Distribution overhead in the appellant s books of account. This itself proves that the Royalty Charges is indeed included in the transaction value. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 8
CENVAT Credit - date of issuance of invoice - it was alleged that appellant had availed CENVAT credit of ₹ 4,37,222/- on the strength of invoices after lapse of six months/one year from the date of issue - proviso to Rule 4 of the CCR, 2004 as amended by N/N. 21/2014 CE (NT) dated 11.07.2014 and No.6/2015 CE (NT) dated 01.03.2015 - HELD THAT:- The appellant did not avail the CENVAT credit on Service Tax paid on commission to the Commission Agent because there was a dispute whether the said service falls in the definition of input service and a SCN was issued to the appellant and therefore, the appellant did not avail the CENVAT credit and kept the invoices pending and when the issue was finally settled by the Tribunal and thereafter the Additional Commissioner decided the SCN in favour of the appellant, then the appellant took the CENVAT credit - Further, the appellant had reasonable excuse for not taking the credit as there was a dispute regarding the input service. Time Limitation - HELD THAT:- The entire demand is also time barred because the SCN was issued on 28.06.2017 and the period of dispute is April 2013 to May 2014 and the appellant has been filing the Returns regularly therefore there is no reason to invoke the extended period of limitation in the present case. On merit as well as on limitation, the impugned order is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (11) TMI 7
CENVAT Credit - input service distribution - denial of credit on the ground that Mumbai office at whose address the invoices raised, were not registered as input service distributor - HELD THAT:- If the service is received even though invoices are addressed to head office or godown, on that count credit cannot be denied. Further, it is observed that the appellant have availed credit up to 30.06.2016 but the Company of the appellant was amalgamated somewhere in March 2016. Therefore, from March 2016 to June 2016, there were more than one factories being operated under the same Company. In this fact, if it is found that if the common service was used by more than one factory then appellant shall be entitled for the Cenvat credit only on pro-rata basis attributed to Dahej factory - However, this aspect has not been examined by the lower authorities. It is also observed that the Commissioner (Appeals) in its order refrained from giving findings as regard admissibility of input service in terms of Rule 2(l) of CCR. There are no option except to remand the matter to the Adjudicating Authority to pass a fresh order, after considering all the issues - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (11) TMI 6
Time Limitation - whether the High Court while exercising revisional power under Section 48 of the Himachal Pradesh Value Added Tax Act, 2005, condone the delay in case a revision under Section 48 of the Act of 2005, is filed beyond 90 days from the date of communication of the order or it excludes the applicability of Section 29 of the Limitation Act, 1963, and in consequence of Section 5 of the Limitation Act? HELD THAT:- The provisions contained in Section 29 of the Limitation Act deals with savings. The provisions in respect to the limitation prescribed for any suit, appeal or application by any special or local law, is different from the period prescribed by the Schedule, the provisions of Section 3 shall apply if the Schedule prescribed such period. The provisions contained in Sections 4 to 24 shall apply only in so far as and to the extent to which they are not expressly excluded. Section 5 of the Limitation Act deals with the extension of the prescribed period in particular exigencies. The provision applies to the Court and is excluded in the application to the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908). It provides that if the Court is satisfied that the appellant/applicant had sufficient cause for not preferring the appeal or making the application within limitation, the Court may admit the same after the prescribed period. Explanation attached to Section 5 makes it clear that in case the appellant or the applicant was misled by any order, practice, or judgment of the High Court in ascertaining or computing the prescribed period, may be sufficient cause within the meaning of Section 5. Section 81 deals with revision, and section 84 deals with the Limitation Act. Section 84 makes a vital difference for the Chapter in which the provision of section 81 finds a place. Only the provisions of sections 4 and 12 of the Limitation Act are made applicable, and other provisions stand excluded by limited application of the provisions of the Limitation Act. The decision under the Assam VAT Act has turned on the aforesaid crucial provision of section 84. The provisions contained in section 45 provides for an appeal from every original order passed under the Act or the Rules made thereunder. Subsection (4) of section 45 provides appeal to be filed within 60 days, or such more extended period as the appellate authority may allow, for reasons to be recorded in writing. Thus, because of the provisions contained in section 45(4), the principles of section 5 would apply to an appeal before the appellate authority, which otherwise in the absence of specific provision would not have applied to authority. The revision is provided to the Commissioner suo motu under the provisions of section 46(1), and the period provided is 5 years for suo motu exercise of revisional power. However, the tribunal has the power to entertain application within 60 days from the date of communication of the order. When we consider the provisions of section 48, revision is provided to the High Court, and an aggrieved person may within 90 days of the communication of such order, file a revision. Section 48(1) nowhere expressly excludes the applicability of provisions of the Limitation Act. The provisions of section 5 are applicable to Section 48 as they are not expressly excluded by the provisions under the Act of 2005. The provisions of Section 5 of the Limitation Act are held applicable to the revisional provision under Section 48 of the Act of 2005. The impugned judgments and orders are set aside - the cases are remitted to the High Court to examine the same on merits in accordance with the law.
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2019 (11) TMI 5
Deprivation of assessee of an eligibility certificate viz-a-viz investment of ₹ 8,13,30,080/- made in diversification of it s new unit to manufacture monitors - whether the assessee was eligible to exemption a strict rule of interpretation had to be enforced? HELD THAT:- Undisputedly, the assessee did engage in diversification upon establishing manufacturing facility to manufacture refrigerators and PC monitors. No goods similar to those were being manufactured by it, earlier. It also cannot be disputed that the burden to establish that the assesse had made a single diversification to manufacture refrigerators and PC monitors rested on the assessee. It was a special fact in the knowledge of the assessee. Therefore, the burden would remain on the assessee to prove the same and for the revenue authorities to rebut such evidence as the assesse may produce. To that extent, the Tribunal has not erred in its approach. It is here that the Tribunal s approach is lacking. The Tribunal appears to have completely over-looked the most material part of the evidence relied upon by the assessee. In that, it had relied on the original approval letters issued by the Government of India dated 29.1.1997 and 4.11.1997 wherein it clearly disclosed its intent to set up a unit to manufacture, amongst others, refrigerators and PC monitors. Then the assessee is a public limited company. The contention of the assessee that there was evidence existing on record to establish that the entire diversification exercise to manufacture refrigerators and PC monitors was a single step diversification, is prima facie found to be based on evidence on record before the Tribunal. It is not a case where the assessee may not have led any evidence in support of its case. The observations and conclusions of the Tribunal, to the contrary, are found to be perverse. At present, the entire evidence appears to indicate at least on prima facie basis that the decision to diversify and its implementation was a single effort made by the assesse, which for unexplained reasons, came to be described as joint-venture - However, that word description is of no legal consequence. The Tribunal has misdirected itself in approach and, therefore, its order cannot be sustained. As to what would be the conclusion to be drawn on facts, is not being commented upon in this order. That would remain for the Tribunal to consider and decide on the strength of evidence placed before it. Insofar as the correct approach to be followed, that has been settled above - the question of law remain unanswered.
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2019 (11) TMI 4
Classification of goods - crankshaft' and 'camshaft' used in the compressors in refrigerators - machinery or not - whether goods in question 'crankshaft' and 'camshaft' are covered within the ambit of Entry No. 26 of Schedule-II Part-A of the U.P. VAT Act, 2008? - rejection of Books of Accounts - Best Judgement assessment - HELD THAT:- Section 4(1)(a) read with Schedule-II of the Act provides for rate of tax on goods that have been described in column-2 Schedule-II. Thus, everything else apart, the rate of tax on goods falling under Schedule-II would remain 4%. There exist other Schedules to the Act and parts thereof providing different categorization of goods both on the basis of rates and also use. However, no classification or categorization of any goods by virtue of those being 'capital goods' - On the other hand, Section 2(f) of the Act is not a provision affecting the rate of tax. There is no taxing entry of 'capital goods' existing or relied upon by the revenue. What was required to be seen first was - whether 'crankshaft' and 'camshaft' of compressors used in refrigerators and air-conditioners manufactured and sold by the assessee were items as would fall within any of the description of the taxing entry 26 of Schedule II, Part A of the Act. While examining that claim the Tribunal could not have looked into the residuary entry that in effect is Schedule V of the Act. Thus, if the answer to the above were in the negative and it were to be found that the 'crankshaft' and 'camshaft' manufactured by the assessee were not machinery, then, in absence of any other or alternative claim, the Tribunal could treat the goods to be unclassified under Schedule V to the Act. If however, that answer were in the affirmative, they could not be treated as unclassified by relying on Section 2(f) of the Act, which has no bearing to classification of any goods for taxation purpose. For the purposes of interpreting a taxing entry and to determine the classification of goods, section 2(f) of the Act and its effect would remain wholly irrelevant. It may be clarified, as there is complete absence of any taxing entry of 'capital goods' under any of the Schedules, hence there exists no occasion to examine that issue any further or to determine whether there exists a special entry (of capital goods) and a general entry (of machinery) under entry no. 26, Schedule II, Part A. Commonly, even in homes and non-commercial or non-industrial establishment machines come to be used on a daily basis. A common example of such machine is a ceiling fan. In absence of a special taxing entry to categorize it otherwise, merely because a ceiling fan may be used both in an industrial establishment and also at a residential establishment would not change its identity and therefore its taxability as a machine. It cannot be treated both as an classified and unclassified goods solely on the basis of its installation, whether at an industrial establishment or a home. The order passed by the Tribunal is wholly unsustainable - The same is set aside and the matter is remitted to the Tribunal to pass a fresh order in accordance with law - the question of law is left unanswered.
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Indian Laws
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2019 (11) TMI 1
Privity of contract - Whether the decree obtained by the predecessor of the appellants, can be executed against the appellants or not? HELD THAT:- In the case on hand, as much as there were only two partners, the partnership itself stand dissolved, in view of death of a partner - It is true that as per the deed of partnership, the partners have agreed, in the event of death of either party, their respective legal representatives shall automatically become partners in the partnership firm and they shall continue to act as partners of the firm, till the venture envisaged under said partnership is completed and such legal representatives who become partners shall have the same rights and shall be subject to same liabilities and responsibilities, as the deceased partner. The executable decree depend on the rights litigated by the parties. In the case on hand, the original decree was obtained against the predecessor of the respondents, who was party to partnership deed. In view of death of one of the partners, the partnership itself stands dissolved statutorily, by operation of law, in view of provision under Section 42(c) of the Indian Partnership Act, 1932. When the respondents are not parties to the partnership firm, they are not bound by the decree obtained by the predecessor of the appellant. More so, when it is a case of the respondents that they have not derived any assets and liabilities arising out of the partnership firm, decree obtained by the original plaintiff is not executable against the respondents. The respondents were not parties to the partnership deed and that the partnership stands dissolved, in view of death of one of the partners, the respondents have not derived the benefit of assets of the partnership firm, the decree obtained by the predecessor of the appellants, is not executable against the respondents herein. The Trial Court has rightly allowed the application filed by the respondents under Section 47 of C.P.C. and there is no error committed by the High Court, in confirming such order by dismissing the Civil Revision Petition filed by the appellants herein - Appeal dismissed.
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