TMI Tax Updates - e-Newsletter
November 21, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Supply of Services - supply of "Business Support Service' comprising of 'Back Office Support' and "Accounting' which is its Principle Supply - Do not qualify as Zero Rated Supply in terms Of Section 16 of the intergated Goods & Service Tax Act, 2017
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GST:
Remittance of amount under the head 'SGST', instead of 'IGST' - HC directed the revenue that, there is no difficulty for the respondent officials to allow the petitioner's request and get the amount transferred from the head 'SGST' to 'IGST'.
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Income Tax:
Application for seeking PAN amended for the persons where the mother is a single parent and applicant wishes to apply for PAN by furnishing the name of your mother only.
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Income Tax:
All persons (other than Individuals) entering into a transaction of ₹ 2.50 Lakhs or more shall be required to obtain PAN including its key persons (officers)
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Income Tax:
Black money assessment - undisclosed income under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - offence u/s 50 is not made out - All complaints and proceedings quashed.
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Income Tax:
Addition towards amount found credited in HSBC Bank account, Geneva - the assessee is a non resident and he does not have any business connection / interest in India - AO is not justified in placing the onus of proving a negative on the assessee.
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Income Tax:
Unaccounted sales consideration - unaccounted money - Revenue did the best it could do to find out the truth and the assessee denied himself an opportunity to wriggle himself out of the situation and such a conduct only shows that he is no good defence.
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Income Tax:
Penalty levied u/s. 271(l)(c) - additions towards donation paid and STT paid - assessee failed to add back in the statement of total income, while filing return of income. The said mistake has been rectified immediately after noticing during the course of assessment proceedings - No penalty.
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Income Tax:
Exemption u/s 11 - the assessee trust is entitled to set off of excess expenditure of earlier years in subsequent assessment years as application of income.
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Income Tax:
Addition on account of alleged bogus purchases - The complete onus to prove the genuineness of the purchases was upon assessee and the same, in our opinion, has remained unfulfilled.
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Income Tax:
TDS u/s 194A - disallowance u/s 40(a)(ia) - loans were sanctioned under tie up arrangement of both the farmer and the assessee - the assessee made the payment (repayment of loan) to the bank and has discharged its liability / obligation - No TDS liability - No additions.
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Income Tax:
Addition u/s 68 - AO cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him.
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Income Tax:
Addition of surrendered income - retraction of statement - Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement - additions confirmed.
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Customs:
Clarification for re-imports through Post under notification No. 45/17-Cus, dated 30.06.17 and 46/17-cus, dated 30.06.17 - reg.
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Customs:
Classification of goods - Cutter Suction Dredger - the production meter is so integrated with the dredging equipment that it cannot be dismantled and is used for as an integral part of the dredger imported - to be classified under chapter heading 8905 1000
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Customs:
Revocation of CHA License - Even the statements which were recorded by the Customs Authorities only point to the negligence on behalf of the CHA and it is employees but not to any complicity or collusion - revocation set aside and CHA license is restored.
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DGFT:
Amendment in Appendix 1B, Hand Book of Procedures 2015-20
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Service Tax:
Time limitation to issue SCN - the petitioner ought to have filed the return by April 25, 2011. The show-cause notice was issued on April 22, 2016. It was within a period of five years contemplated under Section 73 (6)(b) of the Act of 1994
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Service Tax:
Refund of unutilized CENVAT Credit - export of services - denial of refund on the ground that the appellant has exported exempted services, but failed to observe the requirements specified in Rule 6 of the Cenvat Credit Rules - refund cannot be rejected on these grounds.
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Service Tax:
GTA Services - there is no reason to hold that extended period of limitation cannot be invoked as the appellant had wilfully suppressed the facts from the department
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Service Tax:
Reduction of penalty u/s 78 of FA - non-payment of service tax - appellant has not recorded the said transactions in their specified records - Penalty reduced to 50% of the service tax.
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Service Tax:
Classification of services - activity of collection of toll - Merely because a project is funded by toll tax, it cannot be said no service has been provided. - The appellants are providing the BAS and there is no doubt regarding the same.
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Service Tax:
The activity of packing, loading/ unloading of cement bags cannot be taxed under the category of ‘Cargo Handling Service’, especially when w.e.f. 16.06.2005, the Department accepted the classification of said services under ‘Manpower Supply Services.
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Central Excise:
Process amounting to manufacture or not? - Locks - activity of branding, polishing, affixation of MRP, packing etcetera - Assessee in the case in hand is a manufacturer of lock and not that it is engaged in only furnishing and branding.
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Central Excise:
SSI Exemption - clubbing of clearances - two units managed by same person - separate entities or not - mutuality of interest - the adjudicating authority is in doubt to conclude that which is the principal unit - clubbing of clearances not justified
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Central Excise:
Clandestine removal - information provided by the Railways - In absence of original RRs the Revenue cannot allege it could not be as to which of the Appellants had actually lifted the Iron Ore.
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Central Excise:
Rebate Claim - Gutkha - The Government of NCT could not have banned the export of sale – as is understood in the Customs enactment parlance.
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Central Excise:
Recovery of duty from successor industry - the appellant having not been heard, there is flagrant violation of principles of natural justice and the appellant cannot be left without any remedy in law merely because he has purchased some debris of old go-down tin shed where at some prior point of time an industry was operational.
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Central Excise:
Demand u/s 11D - collection of amount - reversal of cenvat credit under Rule 6 - The reference to Section 11D as it stood at the relevant time also makes it clear that the Section will have no application to exempted goods. Section 11D was made applicable to goods which are wholly exempted or chargeable to the ‘Nil’ rate of duty only after its amendment w.e.f. 10.05.2008. - Demand set aside.
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Central Excise:
CENVAT Credit - manufacture of dutiable as well as exempt goods - since before the issue of the show cause notice itself the appellants have reversed back the proportionate Cenvat credits and we do not find any malafide intention on the part of the appellant for intentional attempt to evade or mis-use Cenvat credit, no penalty.
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Central Excise:
Restoration of appeal - Tribunal cannot accept the amount deposited by the appellant after the extended period granted by the Hon’ble High Court for restoring the appeal.
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Central Excise:
CENVAT Credit - there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (11) TMI 957
Detention of goods alongwith vehicle - goods were not accompanied by the e-way bill - Held that:-Section 129 (1) of the U.P. Goods and Service Tax Act, 2017 contemplates for immediate release of the detained/seized goods on furnishing security and indemnity bond as may be provided under the order passed under Section 129 (3) of the Act - The order under Section 129 (3) of the Act was not passed for more than 12 days and thus the goods and the vehicle was unnecessarily kept detained and seized by the respondent without any just and proper cause.
Apparently there is inordinate delay on part of the officer in issuing notice under Section 129 (3) of the Act and in not passing an order under Section 129 (1) of the Act - respondents called upon to file personal affidavit of Arun Kumar Singh, V Assistant Commissioner (Mobile Squad-3) Meerut to show cause why notice under Section 129 (3) of the Act or the order of release of the goods could not be passed immediately after the goods were detained or seized on 3.11.2018 - List on 5th December 2018.
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2018 (11) TMI 956
Release of seized goods alongwith vehicle - Section 129(3) of the U.P. GST - Held thar:- The seized goods and the vehicle shall be released on the petitioner depositing the amount in accordance with the provision of Section 129(1)(a) of the Act and on giving an indemnity bond of the same amount.
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2018 (11) TMI 954
Release of detained goods - remittance of amount under the head 'SGST', instead of 'IGST' - Held that:- The petitioner, as a consignee and transporter, purchased goods from the consignor in Chennai. While those goods were in transit, they were detained. Further not in dispute is the fact that the consignor paid the tax and penalty. Either on the ASTO's advice or on its own, it remitted the amount under the head 'SGST', instead of 'IGST' - Section 77 provides for the refund of the tax paid mistakenly under one head instead of another. But Rule 4 speaks of adjustment. Where the amount of refund is completely adjusted against any outstanding demand under the Act, an order giving details of the adjustment is to be issued in Part A of FORM GST RFD-07.
There is no difficulty for the respondent officials to allow the petitioner's request and get the amount transferred from the head 'SGST' to 'IGST' - goods alongwith vehicle is released - petition disposed off.
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2018 (11) TMI 958
Exemption from GST - Classification of goods - Frozen Meat of Sheep and Goats - Classified under Tariff Item No. 0204 or not - exemption under N/N. 02/2017- Central Tax (Rate) dated 28/06/2017 - Supply of meat in gunny bag - whether unit container or not?
Held that:- For the details indicated also for fact that they are also supplying meat as per Tender of the Indian Army under similar terms and conditions, we find that these facts are similar to the facts recorded by us in the Advance Ruling already given in case of M/s. Monrovia Leasing and Finance Pvt Ltd [2018 (10) TMI 1244 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA], where it was held that The impugned product would be covered by notification 2/2017 - Integrated Tax (Rate) dated 28th June, 2017 as amended by serial no.9 of the Notification no.44/2017 - Integrated Tax (Rate) dated 14th November 2017 and would be exempt from whole of GST.
The frozen meat of sheep / goat in HDPE gunny bag which do not indicate any information related to weight / number of carcass packed in such bags would tantamount to being as a product not put up in unit container and thus falls under chapter tariff heading 0204 and is further covered by serial no. 9 of Notification No-2/2017 Integrated Tax (Rate) dated 28/06/2017 as amended.
Ruling:- The product Frozen Meat of Sheep and Goats fall under chapter tariff heading 0204 and exemption given to this tariff item vide Notification No. 02/2017-Central Tax (Rate) dated 28/06/2017 is available.
The meat supplied in gunny bag would not be treated as unit container.
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2018 (11) TMI 959
Supply of Services - supply of "Business Support Service' comprising of 'Back Office Support' and "Accounting' which is its Principle Supply - intermediary services - Composite supply - zero rated supply - section 16 of IGST Act - export of services - supplier of service located in India - establishment of Distinct person - POPOS Rules.
Held that:- Admittedly appellant is to provide back office support services, payroll processing, to maintain records of employee to overseas companies i.e. clients and after finalization of purchase / sale between the client and its customer. As per the legal understanding of the applicant aforesaid services proposed to be rendered qualify as 'Zero rated supply' in term of section 16 of the IGST Act. In order to have seal of approval on the issue, the present application is made and applicant has requested this authority to decide the issue.
Applicant as a person who arranges or facilitate supply of goods or services or both between the overseas client and customers of the overseas client, and therefore applicant is clearly covered and falls in the definition of an intermediary as defined under the IGST Act. As the applicant is held as Intermediary the provisions pertaining to place of supply in case of intermediary services as provided in 8 of section 13 are relevant - the place of supply in case of services provided by the applicant being intermediary would be the location of the supplier of services i.e. the location of the applicant which is located in the state of Maharashtra, India. 'To qualify transaction of supply of services as export of services that transaction has to satisfy all five ingredients of the definition of export of services simultaneously.
In the present case, the condition at (iii) of the above definition is not satisfied and hence without examining and getting into the contention of the jurisdictional officer with regards to condition at (v) of the said definition as to distinct person which would require more specific and detailed examination and verification on their part to get correct factual position in this regard, the services proposed to be rendered by the applicant do not qualify as 'export of services' as defined u/s.2(6) and thus not a 'zero rated supply' as per sec.16(I) of the IGST Act, 2017.
The facts of the present case are different and not similar to facts of M/S GODADDY INDIA WEB SERVICES PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI-IV [2016 (3) TMI 355 - AUTHORITY FOR ADVANCE RULINGS] - In case of GoDaddy the provision of support services was admittedly on principal to principal basis and were provided with sole intention of promoting the brand GoDaddy US in India for augmenting its business - In the present case, the activities undertaken by the applicant are for and on behalf of clients to facilitate supply of goods and services between the clients their customers.
Ruling:- The aforesaid services as proposed to be rendered do not qualify as Zero Rated Supply in terms Of Section 16 of the intergated Goods & Service Tax Act, 2017.
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Income Tax
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2018 (11) TMI 951
Estimation of commission income derived from hawala transactions - certain incriminating materials were found in the premises of the assessee and further, one of the employees has stated that the company is involved in hawala transactions - Held that:- AO has made protective addition in the hands of the assessee towards estimated commission income derived from hawala transactions on the ground that certain incriminating materials were found in the premises of the assessee and further, one of the employees has stated that the company is involved in hawala transactions. It is also an admitted fact that substantive addition made in the hands of Shri Vishal Kalantri has attained finality in view of the order of ITAT, where the addition made by the AO has been examined in the light of incriminating material found during the course of search.
Once, the substantive addition has been considered by the appellate authorities in the hands of Shri Vishal Kalantri, the protective addition made towards commission income in the hands of the assessee could not be sustained. CIT(A), after considering relevant submissions, has rightly deleted addition made in the hands of the assessee for all assessment years under consideration. We do not find any error in the findings of CIT(A) and hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeals filed by the revenue for AYs 2007-08 to 2013-14. - Decided against revenue.
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2018 (11) TMI 950
TDS u/s 194A - disallowance u/s 40(a)(ia) - loans were sanctioned under tie up arrangement of both the farmer and the assessee - interest payment made to the bank - Held that:- Since, the loans were sanctioned under tie up arrangement of both the farmer and the assessee and the entire agricultural loans were disbursed directly to the assessee, it has shown as loan funds in the assessee’s balance sheet. It is also not disputed that the assessee has made the direct payment to the bank and there was no payment made to the individual farmers. Farmers also did not dispute the payment made to the banks and thus there was an implied agreement of the farmers for payment of interest and loan directly to the bank. It is a fact that the loan was not utilized by the farmer and the entire loan was utilized by the assessee for cold storage plant and given securities to the bank. Therefore, there is an obligation on the part of the assessee to repay the loan to the bank. Accordingly the assessee made the payment to the bank and has discharged its liability / obligation. Since the payment was directly made to the bank on behalf of the farmers it should be construed as the payment made to the bank, but not to the individual farmers., the interest payment made to the bank does not attract the TDS as per section 194A. Accordingly, we uphold the order of the CIT(A) and hold that no disallowance is called for u/s 40(a)(ia) and dismiss the appeal of the revenue.
Addition made towards sundry creditors - Held that:- The advance money, in the present case before us, is adjusted the sale price of the motor cycle and sale is disclosed in the return of income i.e. the trading account of the assessee. Accordingly, we find no ambiguity in the system followed by the assessee.
From the details filed before us, DR could not point out the discrepancy in the same because these advances were adjusted against sales. When this was pointed out to Ld. Sr. DR, he stated that the assessee is unable to produce the PANs, names and addresses of the parties. He was specifically shown a tax/retail invoice wherein complete details were given except thePAN/Voter I. Card. In our view, PAN/Voter Identity Card is a KYC norm, which does not apply to the sale of goods under the Sale of Goods Act. We are of the view that the AO and CIT(A) both have erred in making and confirming this addition and accordingly, we delete the same - decided in favour of assessee.
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2018 (11) TMI 949
Addition towards amount found credited in HSBC Bank account, Geneva - income accrued in India - assessee has failed to explain and prove that deposit is not having any connection to income derived in India and not sourced from India - Held that:- It is a settled law that a judgement / order delivered by consent has no precedential value. Admittedly, in this case, the assessee is a non resident and he does not have any business connection / interest in India.
No amounts have been transferred from his Dena Bank account in India to any of the bank accounts maintained including HSBC, Geneva. In fact, the balance in the account maintained in Dena Bank is so less that it cannot fund an amount of ₹ 4.28 crores which has been added by the AO as assessee’s income. - Despite this, the AO sought to put the onus of proving a negative that the deposits in foreign bank account are not sourced from India, on the assessee. - AO is not justified in placing the onus of proving a negative on the assessee
We are of the considered view that the AO was erred in making addition towards deposits found in HSBC Bank account, Geneva u/s 69 of the Act. CIT(A), after considering relevant facts, has rightly deleted addition made by the AO. We do not find any error or infirmity in the order of Ld.CIT(A). Hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the revenue.
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2018 (11) TMI 948
TDS u/s 194J - professional fees - Held that:- The nature of the transactions as explained by Ld. Sr. Counsel is not in dispute since similar facts have been noted by the Tribunal in earlier years. Upon perusal of impugned order, we find that first appellate authority has provided relief to the assessee by relying on the order of this Tribunal for AYs 2006-07 to 2009-10. Nothing on record suggests that the aforesaid order has ever been over-ruled or negated by the orders of any higher judicial authority. Further, following the same order, the appeal of the revenue has been dismissed by the Tribunal for subsequent AYs 2010-11 & 2011-12.
Therefore, we find no reason to deviate from the same and inclined to confirm the impugned order. However, the same shall be subject to verification of the fact that similar treatment has been given to the aforesaid payments by AAEPL in its books of accounts and the stated payments have not been claimed as expenditure therein. The Ld. AO is directed to delete the additions after verifying the aforesaid fact, if found correct. The assessee is directed to provide documentary evidences to substantiate the same. Appeal dismissed.
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2018 (11) TMI 947
Addition on account of alleged bogus purchases - as per assessee he has placed on record documentary evidences in the shape of purchase summary, copies of challans, purchase orders - Held that:- As rightly noted by AO, the assessee has failed to provide transport details / any other documentary evidences to substantiate the delivery thereof. It is also undisputed fact that the all suppliers were listed as hawala dealers by Sales Tax Department, Maharashtra and the assessee failed to produce even the single supplier to confirm the transactions. The complete onus to prove the genuineness of the purchases was upon assessee and the same, in our opinion, has remained unfulfilled. Therefore, the stand of first appellate authority, under the circumstances, in making estimated additions, was quite fair and justified.
However, keeping in view the overall factual matrix including VAT rates, we find that estimation to be slightly on higher side and therefore, we reduce the same to 8%. Secondly, upon perusal of details, it is noted that the net amount of expenditure [excluding VAT] as debited by the assessee in the profit & loss account aggregates to ₹ 47,92,345/-. Therefore, by modifying the impugned order, we restrict the impugned additions to 8% of net alleged bogus purchases of ₹ 47,92,345/- which comes to ₹ 3,83,388/-. - Decided partly in favour of assessee.
Disallowance of foreign education expenses - Allowable revenue expenditure - expenditure incurred in relation to knowledge enhancement of the key personnel of Assessee Company namely Nakul Toshnival aged around 36 years - Held that:- The program was designed as an executive program for experienced professionals having relevant work experience who wished to develop analytical and leadership skills necessary to formulate and advocate policy on key international issues - the said arrangement was duly supported by an agreement dated 13/01/2011 having onerous stipulations for the director to return back to India after completion of the program and serve the assessee for a minimum period of 5 years. Also, the director was liable to refund the said expenditure in case of breach of various terms of the agreement. The expenditure was duly authorized by the Board of Directors of the assessee company. The offer letters of the concerned universities offering the aforesaid course to the director has also been placed on record - thus the aforesaid expenditure as incurred by the assessee fulfilled the conditions of Section 37(1) and was incurred in furtherance of assessee’s business interest and hence, allowable. - Decided in favour of assessee.
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2018 (11) TMI 946
Exemption u/s 11 - Allowability of set off of excess expenditure of earlier years amounts to application for the purpose of section 11 - Held that:- The assessee is a trust for religious purposes & involved in the activity of running hospitals and several charitable activities. The assessee’s trust has been applying more income towards its object then its income earning for the last several years. It is also noticed that the ld.CIT(A) has placed reliance on the judgment of various High Courts to held that there is nothing in section 11(1)(a) of the Act, which shall indicate that the expenditure incurred in the earlier years cannot be met out of the income of the subsequent years can be carry forward. We have noticed judgment of various High Courts including jurisdictional High Court wherein the identical issue has been decided in favour of the assessee.
the assessee trust is entitled to set off of excess expenditure of earlier years in subsequent assessment years as application of income. - Decided against revenue
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2018 (11) TMI 945
Addition u/s 68 - undisclosed share application money receipts - share applicants could not prove their credit worthiness and failed to produce any documentary evidence to prove their identity, profession, income certificate to establish their claims having paid the share application money - scrutiny under CASS - Held that:- In this case, the assessee company is not operational and the company was closed.
Though the assessee produced 5 persons before the AO and the AO has given an observation that none of them have credit worthiness and did not produce any document with regard to identity, profession, income certificate etc.., but the AO has not furnished the names of the persons and discussed in detail share applicant wise, the contents of the statement recorded from them and as to why the applicants lacking the source. In the absence of complete discussion, much reliance cannot be placed on the observations of the AO with regard to the credit worthiness in the case of 5 persons who were produced before the AO.
AO even did not issue notice u/s 133(6) calling for the information from the share applicants. In the absence of any enquiries made, contents of confirmations cannot be held adversely against the assessee. It is a settled principle that suspicion whatever strong, the same cannot be held against the assessee unless it is proved. Having filed the confirmations, explained the sources, the assessee has discharged its burden and the onus is shifted to the AO and the AO did not shift the burden again to the assessee. Therefore, having failed to prove that the share application money received by the assessee was bogus, we are unable to sustain the order of the Ld.CIT(A) - Decided in favour of assessee.
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2018 (11) TMI 944
Penalty levied u/s. 271(l)(c) - additions towards donation paid and STT paid - Held that:- As admitted fact that the assessee has filed revised statement of total income rectifying the said mistakes before completion of assessment proceedings. The reason given by the assessee for not disallowing those two items in the statement of total income is that there is an inadvertent error while filing return of income, which resulted in omission of those two items in the statement of total income.
The said mistakes is only a human error which cannot be considered as deliberate attempt made to evade payment of taxes. When we examine the claim of the assessee in the light of the decision of Hon’ble Apex Court in the case of Price Waterhouse Coopers Pvt Ltd vs CIT, Kolkatta [2012 (9) TMI 775 - SUPREME COURT] we find that the facts of the assessee’s case are identical to the facts of the case while deleting penalty levied u/s 271(1)(c).
In the said case, although the tax auditor quantified the disallowance of certain amount, the assessee failed to add back in the statement of total income. Under those facts, this cannot be considered as wilful attempt made to evade payment of taxes and at best, it could be termed as a human error which we are all prone to make. In this case, on perusal of facts, we find that although the assessee has disclosed all facts in respect of those two items of expenses, but failed to add back in the statement of total income, while filing return of income. The said mistake has been rectified immediately after noticing during the course of assessment proceedings by filing revised statement of total income. Under these facts and circumstances, the AO was incorrect in coming to the conclusion that the assessee has furnished inaccurate particulars of income in respect of donation paid & STT which warrants levy of penalty u/s 271(1)(c). - Decided against revenue.
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2018 (11) TMI 943
Addition u/s 68 - unsecured credit - proof of identity, creditworthiness and genuineness of the transaction - Held that:- Section 68 provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its income of the previous year in which the same was received. Both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants.
The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the AO. All the three conditions as required u/s. 68 i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to the AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted u/s 68.
CIT(A)’s findings under challenge deleting the impugned sec. 68 addition of unexplained share capital / premium. - Decided against revenue.
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2018 (11) TMI 942
Revision u/s 263 - presumption that the assessment order passed u/s 153C has erroneous and prejudicial to the interest of the revenue - addition of deemed dividend - Held that:- The question of applicability of deemed dividend does not arise as there is no incriminating material was found in the course of search in respect of deemed dividend.
Assessee has filed original return of income u/s.139(1) of the Act and also in compliance to notice dated 22.01.2016 filed written submission on the return of income on 04.02.2016 with nil income, whereas the ld. DR could not substantiate with any evidence or with any proof that there is any incriminating material was found in respect of deemed dividend as dealt in the revision order passed by the Pr. CIT. We are of the opinion that the proceedings u/s.263 of the Act are in respect of the order passed u/s.153C r.w.s.143(3) of the Act dated 31.03.2016 whereas the AO has accepted the assessee’s return of income without any additions and the issue of deemed dividend.
Similar issue on deemed dividend was decided by the Kolkata Bench of the Tribunal in the case of M/s Tanuj Holding Pvt. Ltd [2016 (2) TMI 426 - ITAT KOLKATA] wherein as held addition towards deemed dividend u/s 2(22)(e) of the Act in the assessments framed u/s 153C of the Act for the Asst Years 2007-08 to 2010-11 without any incriminating materials found during the course of search with respect to those assessment years, is not warranted and held as not in accordance with law. - decided in favour of assessee
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2018 (11) TMI 941
Unaccounted sales consideration - unaccounted money - Held that:- The generation to make the original assessment and the assessment under section 153A merges into one, only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing are brought to the record of the assessing officer. In this matter, therefore, AO is justified in considering not only the sale deeds that were found during the search proceedings but also the other material in the shape of statements of the sellers and the slip containing the calculations in respect of sale consideration. We therefore find that the decisions relied upon by the assessee in the cases where the assessments were concluded, have no application to the facts of the case on hand.
In respect of the evidence on record, impugned order speaks that AO relied upon the piece of paper containing some calculations and the name “Bishan”, and all these papers were filed alongwith the remand report dated 25th February, 2011 copies of which were furnished to the assessee also. The sums mentioned therein tallied with the contents of the statements as well as the bank statements of the sellers. The statements of the sellers were confirmed by the brokers and the events and facts are confirming each other. Revenue did the best it could do to find out the truth and the assessee denied himself an opportunity to wriggle himself out of the situation and such a conduct only shows that he is no good defence.
Thus the authorities below are justified in reaching the conclusion that the sale consideration was ₹ 3,01,96,750/-and the unaccounted money of ₹ 2,58,24,044/- was paid by the assessee in cash to the sellers and such an amount is taxable in the hands of the assessee. - Decided against assessee.
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2018 (11) TMI 940
Liability for tax collection at source u/s 206C - Held that:- Identical issue was considered by the Tribunal in assessees sister-concerns as stated the assessee had filed W.P. before the Hon’ble High Court that it was not liable for TCS under the provisions of section 206C of the I.T. Act and therefore, the matter was sub judice.
In the light of the above factual background, Form No. 27C declarations, needs first to be examined by the AO and he shall forward the same to Principal CIT or CIT as the case may be. AO shall also examine the declarations countersigned by the Chartered Accountant stating that the buyers of timber from the assessee had duly paid the taxes on the same. AO after examining Form 27C declarations and declarations countersigned by the CA, shall take a decision in accordance with law after affording a reasonable opportunity of hearing to the assessee. It is ordered accordingly. Therefore appeals of the assessee are allowed for statistical purposes.
We deem it appropriate to admit the additional evidence and restore the issue to the A.O. to consider whether the assessee is liable for tax collection at source u/s 206C - Appeals filed by the assessees are allowed for statistical purposes.
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2018 (11) TMI 939
Unexplained cash credit - addition merely on the basis of statement of third person recorded at the back of the assessee - Held that:- We find that the assessee has been able to demonstrate the receipt from the aforesaid creditor and has successfully demolished the stand of refusal taken by the creditor in this regard. Thus, the version of the creditor cannot be prima facie taken as reliable. The cross examination of the creditor demanded has not been granted. Therefore, no addition can be made merely on the basis of statement of third person recorded at the back of the assessee without opportunity of cross examination thereon. One course of action would be to remit the matter back to the AO for fresh examination on this aspect - the protracted litigation requires to be avoided in view of the tangible evidence placed on behalf of the assessee and lapse committed by Revenue. Therefore, the additions under s.68 requires to be deleted. We direct the AO to do so.
Addition of transaction charges of NMCX - Held that:- The claim of the assessee that transaction charges paid to National Multi Commodity Exchange of India (NMCE) requires to be allowed as ordinary business expenditure in the course of commodity trading carries good deal of force. The expense incurred is clearly in the course of commodity business and thus, the assessee is entitled to claim such expenditure as ‘business expenditure’. The action of the Revenue authorities is accordingly set aside and impugned transaction charges is allowed.
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2018 (11) TMI 955
Black money assessment - undisclosed income under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - scope of satisfaction - omission to furnish the details in the returns under Section 139(1) - prosecution compliant for offences - Held that:- Before proceeding with any action, it is the duty of the assessing officer to arrive at a conclusion, as to whether, there is an undisclosed income under Section 2(11) and a duty is cast on the assessing officer to form an opinion, under Section 2(11). Expression, "undisclosed source of investment" depends on the existence of the above and the opinion is dependent on each one of the facts. Show cause notice issued is totally extraneous to Section 2(11) of the Act.
At this juncture, it is pertinent to consider, what "satisfaction” means. "Satisfaction" means to be satisfied with a state of things, meaning thereby, to be satisfied in one's own mind. Satisfaction is essentially a conclusion of mind. The word "satisfied" means, "makes up its mind".
In the case on hand, the assessee have furnished the details of the assets in Schedule FA of the Income-Tax returns, under Section 139(5).
Thus, even taking it for granted that the assessee have omitted to furnish the details in the returns under Section 139(1) of the Act, in the light of the decision of Central Board of Direct Taxes, prosecution cannot be launched, but at best, there could only be penal proceedings.
As per Section 196(d) of Income Declaration Scheme, 2016, the provision of the scheme shall not apply, in relation to any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015).
Under the Scheme, even in case of (i) failure to furnish a return, under Section 139 of the Income Tax Act; (ii) failure to disclose in a return of income furnished by him under the Income-tax Act, before the date of commencement of this Scheme; and (iii) in the case of escaped assessment, by reason of omission or failure to furnish a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise, the assessee can make a declaration to disclose fully or truly, all material facts necessary for assessment or otherwise.
The expression, "or otherwise", has been used in Section 186(1)(c) of the Act, let us consider few decision as to how the words or otherwise has been interpreted by the Courts. We are of the considered view that Section 55 Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is not attracted. There was no failure to furnish any information relating to any foreign asset or investment.
The Company has filed the original return of income, as well as the revised return of income within the time stipulated under the Income Tax Act, 1961.
A return of income has many schedules and all the schedules are part of the 'return of income' referred to in Section 139 of the Income-tax Act. Offence under Section 50 is made out only if, in the return of income under sub-section (1) or sub-Section (4) or Sub- Section (5) of Section 139 of the Income-tax Act, there has been a wilful failure to disclose any information relating to foreign asset.
It is an admitted fact that the foreign asset in each case was acquired with money that was disclosed in the books of account of the assessee (and tax paid) and which was remitted through banking channels under schemes approved by the RBI. There is no allegation of Black Money or unaccounted money or money that has escaped tax or money that was remitted through illegal channels. It is not disputed by the Income-Tax department - that the source of investment was tax paid money remitted through banking channels in accordance with schemes approved by the RBI.
In the case of the petitioners, the asset was ultimately disclosed in Schedule FA and in the case of Karti P Chidambaram, in the Original return of income and, in the other three cases, in the Revised return of income filed within the due date.
Though reliance was placed to paragraph Nos.5 and 7 of the Order dated 03.05.2018, that this Court directed the Authority to bear in mind all the relevant provisions of the Income Tax Act and Black Money Act and the implications that they may throw. But the Authorities were also directed to grant the Petitioners due and proper opportunity to present their side of the case and disregarding the directions of this High Court, the Authority, without applying his mind to the two questions set out in the Order and without giving an opportunity to the noticees/assessees, proceeded to sanction prosecution and filed the complaints against the Petitioners on 11.05.2018, in view of the foregoing discussions, it is not necessary to delve into the said aspect.
In the light of the decisions, on the power coupled with duty and on consideration of the materials, we are of the view that the Sanctioning Authority has failed to consider the above, and has come to an erroneous conclusion that the case deserve prosecution for non-disclosure of the details of the asset in the return filed under Section 139(1) of the Act. Sanction order deserves to be set aside and accordingly, set aside.
Going by the definition of Section 50 of the Black Money Act, read with Section 2(11) of the Act, and in the light of the above discussion and decisions, we are of the view that the offence under Section 50 is not made out. Consequently, complaints filed in C.C.Nos.4482 to 4485 of 2018 dated 11.05.2018 are quashed.
Principal Director of Income Tax (Investigation), Chennai jurisdiction/competence under section 55 Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to sanction prosecution or file a prosecution compliant for offences under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 against the petitioners - Held that:- Respondents in their counter affidavit have contended that as per section 2(16) of the Income-tax Act, 1961, the word "Commissioner" has been defined, inter-alia, to include a person appointed as Principal Director of Income-tax and since the Commissioner is also one of the competent authority for according sanction under section 55 of the Black Money Act, the same covers the Principal Director of Income-tax also. Except Mr.ARL.Sundaresan, learned Senior Counsel for the petitioners, no serious contentions, on the above aspect, were made. Respondents have explained the competence of the Principal Director of Income Tax, and other authorities under the Income Tax Act, 1961, to accord sanction for prosecution and going through the provisions of the Income Tax Act, 1961, we do not accept the contention of the petitioners that the Principal Director of Income Tax is not an authority, jurisdiction/competence under Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to sanction prosecution or file a prosecution complaint for offences, under Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
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2018 (11) TMI 938
Deduction u/s 54F denied - assessee is a doctor by profession - joint ownership property sold - investments made by assessee's husband - non-submissions of sale deed - Held that:- The property which has been sold by the assessee was in joint ownership with her husband and the investments in new properties, first in Claremont and thereafter in Westgate, made by the assessee are also in joint ownership with her husband. The whole sale consideration has been reflected by the assessee in her return of income and therefore, the stand of Ld. first appellate authority in disregarding the investments made by her husband was not justified. We order so.
Coming to assessee’s claim of deduction u/s 54F, the documents on record reveal that the assessee, jointly with her husband sold a commercial premises situated at Thane (W) vide Agreement for Sale dated 21/10/2008 for a sale consideration of ₹ 45 Lacs. The assessee, jointly with her husband, acquired certain rights in properties situated at Claremont vide allotment letter dated 08/10/2008 pursuant to application dated 05/02/2008, by making payment of ₹ 27.72 Lacs from time to time, the details of which have already been extracted in the quantum assessment order. Subsequently, as per the request of assessee dated 10/09/2009, the said booking has been transferred to another property situated at Westgate as evidenced by fresh allotment letter dated 22/10/2009 issued by the same builder.
The explanation of the assessee, in this regard, as evident from the documents on record, is that the construction of the building Claremont was not coming as per the schedule and therefore, the assessee after a mutual discussion with the builder decided to shift the payment to another building viz. Westgate - explanation to be plausible one since the delay in construction projects is common as well as regular feature of this industry - assessee could not be penalized for these delays since the assessee, in good faith, had made the investments in the hope of getting the allotment particularly when substantial payment towards the same was already made by the assessee - Mere non-submissions of sale deed etc., in our opinion, could not disentitle the assessee to claim the said deduction particularly when all documentary evidences as to allotment and payments were available on record and the same were not under dispute - claim deduction u/s 54F allowed - Decided in favour of assessee.
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2018 (11) TMI 953
Addition of surrendered income - relevancy of statement recorded u/s 132(4) - retraction of statement given within reasonable time - Held that:- Statement recorded u/s 132(4) of the Act and later confirmed in statement recorded under Section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence.
Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days.
We are persuaded to allow the appeal of the revenue which is accordingly allowed. - Decided against assessee.
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2018 (11) TMI 894
Assessment u/s 153A - proof of incriminating material found in search to the share capital or share premium were found during the course of search - Held that:- In respect of abated assessments (i.e pending proceedings on the date of search), fresh assessments are to be framed by the AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. This would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the DR in this regard deserves to be dismissed.
We hold that the assessment framed u/s 143(1) of the Act for the Asst Year 2010-11, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share capital and share premium u/s 68 is hereby directed to be deleted - there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium except understanding the discovery of modus-operandi of raising bogus share capital based on the certain statements recorded from entry operators in some cases in West Bengal. - Decided in favour of assessee
Trading loss on sale of shares - Held that:- As given for the Asst Year 2010-11 with regard to disturbing the concluded assessments in the absence of incriminating materials found during search, we hold that the disallowance of trading loss on sale of shares of ₹ 38,45,844/- made by the ld CITA in the assessment framed u/s 153A of the Act cannot be made as per law. Hence the disallowance made thereon in the impugned assessment is hereby directed to be deleted for want of incriminating materials. Since the relief is granted to the assessee on the preliminary ground of want of incriminating materials , we refrain to give our finding on merits of the addition for the Asst Year 2013-14 and hence the adjudication of other grounds on merits does not arise. Accordingly, the grounds raised by the assessee are allowed for Asst Year 2013-14.
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2018 (11) TMI 952
Addition u/s 68 - burden of proof - proof of credit worthiness - Held that:- Where the assessee has discharged the initial burden placed upon him under sec. 68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction, the burden of proof shifts on the Assessing officer. In such a case, the AO cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. If the Assessing Officer harbours any doubts of the legitimacy of any subscription, he is empowered, nay dutybound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings or has no material in his possession, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company. No substantial question of law arises in this appeal
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Customs
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2018 (11) TMI 934
Refund of SAD - rejection on the ground of SAD - goods in question were imported on 18.12.2013 and sold on 24.12.2013 and the VAT on the goods sold was paid on 16.01.2014. The refund claim was filed on 29.12.2014 - Held that:- On identical issues in the case of Sree Krishna Enterprises [2017 (6) TMI 883 - CESTAT HYDERABAD], this Bench had held that the time limitation specified in Notification No. 102/2007-CUS as amended applies for refund of SAD.
The applications for refund were correctly rejected to the extent they were time barred - appeal dismissed - decided against appellant.
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2018 (11) TMI 933
Refund of SAD - rejection on the ground that appellant have cleared the goods on payment of VAT and the VAT rate is NIL as applicable to the goods - Held that:- In the case of Malhotra Imports & Exports Corporation [2017 (7) TMI 1113 - CESTAT CHENNAI] the Tribunal has come to the conclusion that SAD refund is payable even if no VAT is chargeable on the goods which were sold - same view is taken in the case of CBEC Circular No. 6/2008 dated 28.04.2008 - refund allowed - appeal dismissed - decided against Revenue.
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2018 (11) TMI 932
Revocation of CHA License - revoking CHA license of the appellant which had already been revoked on 25.06.2013 - Held that:- The licence was nonest at the time of passing this order hence needs to be set aside on this ground alone as you cannot revoke a licence which does not exist - CHA license which is already revoked cannot be again revoked subject to it being reinstated by higher authorities - revocation order set aside.
Revocation of CHA License - appellant has not verified the credentials of the importer, that he has got the documents through Shri Sunil Yadav a 3rd party; that he also obtained the GATT declarations which were blank and not signed by the importers - Held that:- There were definite lapses on the part of the appellant - However, there is nothing on records, to show that the appellant was aware that firecrackers were being imported under guise of glassware in the container. Even the statements which were recorded by the Customs Authorities only point to the negligence on behalf of the CHA and it is employees but not to any complicity or collusion - revocation set aside and CHA license is restored.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 931
Classification of goods - Cutter Suction Dredger - whether classified under CTH 8905 1000of CTA or under chapter heading 90.31? - Held that:- Cutter Suction Dredger which was imported is with the production measuring equipment as a part and parcel of the dredger - the production meter is so integrated with the dredging equipment that it cannot be dismantled and is used for as an integral part of the dredger imported.
The first appellate authority was correct in holding that production measuring equipment is part and parcel of the dredger and cannot be classified separately under chapter heading 90.31 - appeal dismissed - decided against Revenue.
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Corporate Laws
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2018 (11) TMI 936
Family settlement - seeking a decree of permanent injunction to restrain the defendants, their associates, shareholders etc. from acting in contravention of the family settlement - Held that:- Settled legal position is that a family settlement which settles disputes within the family should not be lightly interfered with especially if the settlement has already been acted upon by some members of the family. It is also settled that such settlements have to be treated differently from ordinary contracts and should not be lightly disturbed.
In the present case the settlement has been partially implemented as noted above. If I were to vacate the interim order passed by the court on 7.2.2018 on the aforenoted grounds relating to the omissions of the plaintiff and also relating to failure to seek alternative efficacious remedy it would jeopardize the family settlement and complicate matters more. The family may further get embroiled in a complicated dispute which may get difficult to resolve. Presently, the suit is at the initial stage. Pleadings have just been completed. An opportunity should be granted to the plaintiffs to take steps to seek reliefs which will also have the effect of implementing the terms and conditions of the family settlement. Such a step would help resolve the conflict between the family and also help in implementing the terms and conditions of the family settlement. Order accordingly.
Accordingly, in the interest of family amity and unity and to uphold the family settlement, thus confirm the interim order passed by this court.
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2018 (11) TMI 935
Property belonging to the Company (In Liquidation) had been demolished and stolen - illegal demolition and theft of the Company has arisen in the course of the winding up of the Company - Held that:- As already noticed in the body of this order above, the investigation had been ordered because the Company Court found that not only property belonging to the Company (In Liquidation) had been demolished, it had also been stolen. The demolition has undoubtedly resulted in diminishing the value of the assets of the Company (In Liquidation), which will adversely effect the interest of the secured creditors as also the workmen.
It would also be relevant to refer to Section 456(2) of the Companies Act, which provides that all the property and assets of the Company (In Liquidation) shall be deemed in the custody of the Court from the date of the order of its winding up.
Section 456(2)(d), of the Companies Act, 1956, provides that the Company Court, notwithstanding anything contained in any other law for the time being in force, has jurisdiction to entertain, or dispose of, any question of priorities or any other question, whatsoever, whether of law or fact, which may relate to or rise in the course of the winding up of the Company. The question of illegal demolition and theft of the Company has arisen in the course of the winding up of the Company.
The objections of learned Advocate General are therefore, rejected out right, not only on the ground that they lack merit but also because, prima facie, they appear to have been raised, malafide, and only with a view to protect the perpetrators of the illegal demolition and theft
This Court also finds substance in the contention of Shri Gopal Verma that the police has failed to interrogate the persons, whose photographs were provided by the Official Liquidator.
Various photographs have been provided by him to the Court also.
This Court also considers it necessary to note that the counsel appearing for the State have been consistently praying for further time. Even the Principal Secretary(Home) after being asked by the Court, as to whether, he was aware of the seriousness of the matter stated that he had been apprised of the situation. He thereafter made a prayer for two months further time for carrying out a proper investigation, which prayer for turned down because it was not found to be, bonafide.
As on date, more than three months have elapsed since lodging of the F.I.R. and the Court can perceive absolutely no progress in the investigation, as recorded above.
There is also force in the submission of Shri Gopal Verma that in view of the allegations made that the rubble was removed in vehicles belonginig to the Nagar Nigam attempts should have been made by the Investigating Agency to obtain the vide footage from the CCTV's installed in the vicinity of the site of the demolition. This was clearly not done till 22.10.2018. The police cannot claim to be unaware that video footage from DVR's is to be procured promptly, failing which, it gets overwritten within a fortnight or at the most, after a month. The failure on the part of the investigating agency to act promptly was therefore only with a view to allow the evidence to be destroyed. This by itself show that complicity of the police in the matter. The SSP, Allahabad, on 22.10.2018, stated precisely this very fact before the Court.
Under the circumstances the objections raised by the Advocate General U.P are repelled and this Court is issuing the following directions :
I. Let notices under section 340 Cr.P.C be issued to Shri Ashwini Singh, Municipal Commissioner, Nagar Nigam Allahabad to show cause why action be not taken against him for having tried to mislead this Court by his letter in writing.
II.Notice under section 340 Cr.P.C, be also issued to the erstwhile SHO, Muttiganj, Allahabad, Rishi Kant Rai, for having made a false statement in Court that he had produced the order passed by this Court on 06.09.2018 before the concerned Magistrate when in fact it was not produced by him nor any prayer was made before the Magistrate for obtaining police remand.
III.A current and up to date report regarding the current status of the investigation be filed within three days to enable the Court to decide whether there is any progress in the investigation and / or whether, in the facts, and circumstances of this case, the investigation needs to be handed over to an outside agency beyond the control of the local administration or for handing over the inquiry to a retired Judge of the High Court of the accused.
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2018 (11) TMI 937
Offences involving serious financial frauds or economic misdemeano - offences punishable under the Companies Act, 2013 - Constitutional validity of the provisions of the Companies Act, 2013 - Held that:- The observations made in the impugned order may have far reaching consequences and deprive the Competent Authority or the Statutory Authority to proceed in the matter in accordance with the provisions of the Companies Act, 2013 in respect of investigations and including filing of complaint/police report concerning the offences involving serious financial frauds or economic misdemeanor, the impugned order, therefore, deserves to be stayed. We order accordingly.
The operation of the impugned order of the High Court is stayed but the interim relief granted to Respondent No.1/Neeraj Singal limited to his release on personal bond shall remain in force during the pendency of these proceedings, subject to the fulfillment of the conditions imposed by the High Court for his release and additionally to report to the concerned officer of SFIO on every Monday and Thursday between 10:30 A.M. to 12:30 P.M. and on such other day or time as directed by the officer concerned. We make it clear that the directions given in the interim order to the appellants [Union of India and Serious Fraud Investigation Office (SFIO)] shall remain stayed in view of the order of stay of operation of the impugned order, in particular, paragraph 71(iv) of the impugned order, namely, Respondent No.1/Neeraj Singal shall not be compelled by the SFIO to sign his statement under Section 217(4) read with Section 217(7) of the Companies Act.
We also grant liberty to the appellants to take out a formal application in these proceedings for recall of interim protection or for modification and/or imposing further conditions for the release of Respondent No.1/Neeraj Singal on personal bond. That application will be considered on its own merits.
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Service Tax
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2018 (11) TMI 926
Cargo Handling Service - appellant had provided services to various cement plants for loading/unloading of cement (cargo) at the sites and had received payments for services - Held that:- The activity of packing, loading/ unloading of cement bags cannot be taxed under the category of ‘Cargo Handling Service’, especially when w.e.f. 16.06.2005, the Department accepted the classification of said services under ‘Manpower Supply Services’ - the impugned order is not maintainable and the same is set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 925
100% EOU - Refund of accumulated CENVAT Credit - Rule 5 of Cenvat Credit Rules - Held that:- In the absence of the nature of the services provided by the service provider, it was not possible for Authorities to examine as to whether the service in question provided by M/s Reliance Communication was input services or not - in the interest of justice appellant should be given a further chance to establish the nature of the services received by them, we remand the said part of the matter to the Original Adjudicating Authority.
Refund to the extent of ₹ 24,48,930/- stands rejected on the ground that the services procured by them from their own overseas group M/s Markit Group Ltd., London does not stand specified in the invoices and the tax paid by them and there is no relation to their output services - Held that:- The appellant has paid the service tax on the said activity on reverse charge basis and has produced the challans of that effect. In such a scenario, it cannot be held that the appellant was not entitled to the credit and the consequent refund of the same in terms of the provisions of Rule 5 of Cenvat Credit Rules - refund allowed.
Appeal allowed in part and part matter on remand.
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2018 (11) TMI 924
Classification of services - Business Auxiliary service or not - activity of collection of toll - AMTRL selected the Appellant for the design, construction, operation and maintenance of the Ahmedabad-Mehsana Road Project. The appellant was also awarded a contract for the purpose of operation and maintenance of the said road - extended period of limitation.
Held that:- It is apparent that IL&FS has agreed to take up development, upgrading, repair, operation and maintenance of roads in the street on a ‘commercial basis’. The construction and operation and maintenance has been sub-contracted to the appellant by IL&FS through a corporate entity incorporated in the state and promoted by Govt. of Gujarat and IL&FS specifically for this purpose. From the above terms of the contract, it is apparent that the construction of road, and its operation and management have been undertaken strictly on commercial basis and the toll tax collected is being used for recovery of investment and operating cost on Build Own Operate Transfer (BOOT) basis.
Merely because a project is funded by toll tax, it cannot be said no service has been provided. Especially on the ground that during the phase when the toll tax is collected, the property owned by a corporate, promoted by Govt. of Gujarat and IL&FS - it is apparent that the toll collected is a compensation given to a private operator for providing the services of road used to the public on BOOT basis. Thus, the facility and usage of road against payment of toll is a service provided by the AMTRL.
Every user is a customer of AMTRL and the appellants are providing services to the customers (the users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS.
Time limitation - Held that:- The appellants are providing the BAS and there is no doubt regarding the same. Merely, because they are collecting the said amount on behalf of the corporate entity backed by Government it does not constitute a bonafide belief for exemption. The definition of BAS is very clear. Thus, they cannot be given any benefit on account of limitation.
Appeal dismissed - decided against appellant.
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2018 (11) TMI 927
GTA services - Freight charges - appellant engaged in the business of export of “Boneless Buffalo Frozen Meat” - reverse charge mechanism - Held that:- The demand of around ₹ 67 lakhs of service tax was raised by Revenue on the basis of presumption that entire expenditure on account of freight recorded in the balance sheet for the period covered by show cause notice was taxable - the entire demand of around ₹ 67 lakhs is presumptive and the same cannot sustain.
It was presumed by Revenue that commission was paid to the foreign commission agent for export. It is clear from the record that Revenue did not scrutinise any record and did not take into consideration the persons to whom commission was paid and raised the demand under presumption that the commission was paid to foreign entity and also presumed that such entity did not have any Office in India - demand on account of commission is also presumptive.
Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 921
Reduction of penalty u/s 78 of FA - non-payment of service tax - GTA Service - works contract service - Held that:- As per proviso to Section 78(1) of the Act, if the details relating to transactions are recorded in the specified record for the period beginning with the 8th April, 2011 upto the date on which the Finance Bill, 2015 receives the assent of the Hon’ble President of India, the penalty shall be 50% of the service tax so determined - There is no dispute with regard to the fact that the appellant has not recorded the said transactions in their specified records.
Penalty is to be reduced to 50% of the service tax - appeal allowed.
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2018 (11) TMI 920
Levy of Service tax - Tour Operator Services - GTA Services - appellants herein are providers of tour operator services and undertak journeys of persons by buses from Vizinagaram to other places for a monetary consideration - Demand of interest and penalty - extended period of limitation.
Tour Operator Services - Held that:- It is not in dispute that the appellant is a tour operator with a contract carriage permit and that the tour operator services rendered by such persons have been exempted vide Notification No. 20/2009-ST dated 7.7.2009. It is also not in dispute that this notification has been made effective from 01.04.2000 by the Finance Act, 2011. Therefore, this exemption is fully applicable to the appellant for the services rendered during the relevant period - demand set aside.
GTA Services - extended period of limitation - Held that:- It is not in dispute that appellant had rendered these services and had subsequently discontinued this service because the RTO found it incorrect to render this service. It is also not in dispute that the appellant is not registered for the GTA services. It is also not in dispute that they had not disclosed that they are providing these services to the department and this came to light only during the investigation - there is no reason to hold that extended period of limitation cannot be invoked as the appellant had wilfully suppressed the facts from the department - demand of ₹ 6,472/- on GTA services along with interest is sustainable - penalty is set aside by invoking section 80.
Appeal allowed in part.
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2018 (11) TMI 919
Interest on delayed refund - entitlement to Interest for the time barred period - penalty - Held that:- When the demand for the period April, 2005 to September, 2006 is held to be time barred, then the interest thereon is also not sustainable in law. Therefore the contention of the Appellant on this point is accepted.
Penalty - Held that:- According to the Appellant they are entitle for refund of the excess amount of ₹ 4,61,624/-. If that is so i.e. if the amount so deposited by the appellant before the issuance of show cause notice satisfy the demand of the amount of service tax from October, 2006 to March, 2011 along with interest for the period from October, 2006 to March, 2009 - the Appellant is not liable to pay any penalty.
The matter is remanded to the ld. Commissioner of Central Tax, Appeals-I, Mumbai, with a direction to recalculate the demand and interest.
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2018 (11) TMI 918
Refund of unutilized CENVAT Credit - export of services - denial of refund on the ground that the appellant has exported exempted services, but failed to observe the requirements specified in Rule 6 of the Cenvat Credit Rules - Held that:- Neither in Rule 5 nor in Notification No.5/2006 ibid, there is any condition which prescribes that the refund will be allowable only in cases where the output services exported is liable for payment of service tax. In any case the interpretation that any service which is exported is an exempted service, is without any basis.
Refund also rejected on the ground that the appellant has failed to file such refund claims on quarterly basis - Held that:- The claims are allowed to be filed on a quarterly/monthly basis but this condition cannot be read to mean that refund will be payable only if the claims are filed on a quarterly/monthly basis. It is clearly in the nature of an option given to the assessee to file refund claims on a quarterly or monthly basis and failure to do so cannot be a ground for rejection of the refund claim.
Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 917
Erection Commissioning and Installation of Lifts/Elevators/Escalators - appellant had paid service tax on 15% of the amount realized for the taxable services - appellant having not discharged the service tax liability for 33% of the amount realized, SCN is issued - Held that:- Such contracts are clearly liable to tax only with effect from 01.06.2007 - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 923
Scope of Service - free service provided by the respondent - Section 65 (105) (zo) of FA - Held that:- The free service of trucks in an authorizes service station will not come under the said definition - the question is answered in favor of the assessee an against the Revenue - appeal dismissed.
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2018 (11) TMI 922
Time limitation to issue SCN - penalty - Section 78A of FA, 1994 - Held that:- If, a demand is raised beyond the prescribed period of limitation, then, the same cannot be recovered.
In the present case, the first petitioner was found to have rendered services defined as taxable service under Section 65B (51) of the Finance Act, 1994. It was found to have contravened various provisions of the Act of 1994 as also the Rules of 1994. It was issued a show-cause notice dated April 22, 2016 for the period 2010 to 2014 in respect of the first writ petition and another show-cause notice dated April 22, 2016 for the period 2010 to 2012 for the second writ petition - the first petitioner being an assessee was required to submit half-yearly return by the 25th of the month following the particular half year. Therefore, in the facts of the present case, the petitioner ought to have filed the return by April 25, 2011. The show-cause notice was issued on April 22, 2016. It was within a period of five years contemplated under Section 73 (6)(b) of the Act of 1994 - the two impugned orders are not barred by the laws of limitation.
Penalty u/s 78A of the Act of 1994 - Held that:- Such a provision cannot be invoked for the purpose of imposing a penalty for an offence happening prior to such provision coming into effect. Consequently, the penalty imposed in the impugned order of the first writ petition by invoking Section 78A of the Act of 1994 is quashed.
In the present case, none of the two writ petitions contain any prayer for allowing the petitioners to prefer an appeal by condoning the delay in preferring such appeals. Therefore, the question of directing the petitioners to prefer an appeal by condoning the delay therefore does not arise.
Petition disposed off.
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Central Excise
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2018 (11) TMI 916
Recovery of duty from successor industry - Condonation of delay in filing appeal - appeal was preferred after condonable period of delay beyond which the appellate authority has no power to condone the delay - opportunity of being heard not provided - principles of natural justice - Held that:- It is settled that the High Court can exercise extraordinary writ jurisdiction under Article 226 of the Constitution of India if the petitioner has been subjected to gross injustice and the order adverse to him has been passed in flagrant violation of principles of natural justice and that procedure adopted was either unfair or dehors the provisions of law.
In the case at hand, the Revenue has unilaterally assumed that the appellant is successor industry of M/s Gyan Industry without affording any opportunity of hearing to the appellant. The sale deed in favour of the appellant describes the property purchased by it to be debris of old go-down tin shed situated at industrial area, Bhilai. It nowhere recites that the appellant has either purchased the whole industry or plant and machinery owned by M/s Gyan Industry. Before issuing the demand notice, the appellant was not called upon to satisfy the department that he is not successor company of the M/s Gyan Industry. By issuance of demand notice for deposit of ₹ 22,19,135/-, the appellant has been condemned unheard.
The term “successor in interest” is not merely a term but it has definite connotations depending upon the nature of provisions defining the said term and the liability of a person who is successor in interest to pay the Government or other dues within statutory scheme. The issue needs to be adjudicated by the authority before issuance of demand notice. However, the appellant having not been heard, there is flagrant violation of principles of natural justice and the appellant cannot be left without any remedy in law merely because he has purchased some debris of old go-down tin shed situated at industrial area, Bhilai where at some prior point of time an industry was operational.
Matter remitted back to the adjudicating authority, who has issued the demand notice with a direction to provide opportunity of hearing to the appellant and pass reasoned order - appeal allowed by way of remand.
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2018 (11) TMI 913
CENVAT Credit - part of electricity used for captive consumption - demand equal to 6% of the sale value of the electricity sold during the period from March 2015 to December 2015 - Held that:- The issue is no more res integra and has been settled by the decision of the Allahabad High Court in the case of Gularia Chini Mills [2013 (7) TMI 159 - ALLAHABAD HIGH COURT], wherein it has been held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity.
The demand of 6% of the value of electricity sold to various companies is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 912
Clandestine removal - whether huge duty demand can be confirmed merely on the basis of information provided by the Railways and as to whether the duty demand can be confirmed without examining and relying on the original copies of the RRs? - demand also on the basis of the charts relied upon by the Revenue which has been stated to be prepared on the basis of the records seized from the transporters.
Held that:- The allegation of clandestine removal of finished goods is a very serious charge and required to be proved with independent, corroborative, tangible and affirmative evidence. In all these appeals, it has been presumed by the department that all the six manufactures had received unaccounted quantity of Iron Ore through Railway Sliding at Uslapur. The Sr. Divisional Commercial Manager of South East Central Railway vide his covering letter dated 5-03-2008 had given a list of 156 consignments, which has been made relied upon Documents as evident from the SCN and paper book submitted by the Appellant. In the case of M/s. SPIPL the said chart appears to have been prepared by the Revenue itself. And not by the Railway Authority.
In absence of original RRs the Revenue cannot allege it could not be as to which of the Appellants had actually lifted the Iron Ore. It was, therefore, absolutely necessary that the department should have obtained original copies of RRs and examined the same to arrive at a definite conclusion regarding the party which actually lifted the Iron Ore from the endorsements carried out in the said RRs and should have examined as to whether a particular manufacturer/ Appellants had entered the said quantity in their statutory records or not. Further, no reliance can be placed on the said chart as in respect of 98 RRs out of total 156 RRs, there is no entry under the column “endorsement” as this column has been left blank.
Regarding the allegation and finding about the receipt of unaccounted quantity of Iron Ore on the basis of records of M/s. Gyan Singh, no basis whatsoever has been given in the show cause notice. It has merely been alleged that certain entries as shown in the chart were regarding receipt of Iron Ore by the respective parties on the basis of records seized from M/s. Gyan Singh and not accounted for in the statutory records. It has already been noted hereinabove that records of M/s. Gyan Singh have not been relied upon in the show cause notice.
The records of the transportation is sufficient enough to fasten the appellant with the aforestated demands, unless corroborated with the other evidence, which Revenue has not been successful in doing so.
There are plethora of judgments wherein it has been held that duty cannot be demanded on theoretical calculation. It has been held that in order to prove clandestine removal the department has to bring on record independent and corroborative evidence - the cases of clandestine removal cannot be made out merely on the basis of receipt of one raw material when in order to manufacture final product several other raw materials are also required.
Demand of ₹ 16,89,789/- from M/s. PIPL on a quantity of 1367.62 MT of Sponge Iron. It has been contended by the learned Counsel that the said demand is based upon certain private records. They had requested for the cross-examination of Shri Shailendra Kumar Thawait, Manger (Accounts), M/s. Phil Ispat P. Ltd. Bilaspur, Shri P.S. Rao, General Manager (Plant), M/s. Phil Ispat P. Ltd., Bilaspur, Shri Amit Patel, Laboratory Assistant, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Niveet Mittal, Ex-Director, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Pradeep Jha, Ex-Director M/s. Phil Ispat P. Ltd., Bilaspur, and Shri Manoj Sharma, General Manager (Commercial), M/s. Phil Ispat P. Ltd. - It is noted that there is no independent finding by the Adjudicating Authority on this part of the duty demand - the matter requires to be remanded back to the Adjudicating Authority.
Clandestine removal - sponge iron - Held that:- Since in these appeals there is no evidence of clearance of finished goods duty demand on the Sponge Iron cannot be sustained.
Appeal disposed off.
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2018 (11) TMI 911
Restoration of appeal - appeals were originally dismissed for failure to make pre-deposit as ordered earlier by the Tribunal - Held that:- The dismissal order of the Tribunal was carried by the appellants before the Hon’ble High Court at Calcutta and further before the Hon’ble Supreme Court. Neither of the higher judicial forum interfered with the order of the pre-deposit of the Tribunal, but granted further time for making pre-deposit which was also reduced to ₹ 35.00 lac. Finally, the Hon’ble Supreme Court extended the period for making such pre-deposit by a further period of four weeks from the date of their order i.e. 10.04.2017. The said period was also lapsed before the appellant finally made such pre-deposit before approaching the Tribunal with the present Miscellaneous Applications.
The Revenue has strongly objected to such restoration after delayed compliance of the order for making pre-deposit - the issue settled in the case of RAKESH KUMAR VERSUS COMMISSIONER OF CUSTOMS (EXPORTS) , NHAVA SHEVA [2015 (10) TMI 2611 - CESTAT MUMBAI], where by majority order the Tribunal held that the Tribunal cannot accept the amount deposited by the appellant after the extended period granted by the Hon’ble High Court for restoring the appeal.
The appeals cannot be restored.
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2018 (11) TMI 910
CENVAT Credit - manufacture of dutiable as well as exempt goods - non-maintenance of separate records - Demand of 6% on the amount of electricity sold outside the factory - Held that:- This issue has been settled by the Allahabad High Court in the case of Gularia Chini Mills [2013 (7) TMI 159 - ALLAHABAD HIGH COURT] wherein it has been held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity.
In the present case, the appellant, during the relevant period, has not taken any credit on the input services used in the generation of electricity - no input or input services has been used in the present case in the manufacture of exempted goods i.e. Bagasse/electricity - demand of 6% on the value of electricity sold to Karnataka Electricity Board is not sustainable in law.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 909
Wrongful availment of CENVAT Credit - denial of credit on the ground that appellant were simultaneously claiming the full exemption from duty under N/N. 8/2003-CE dated 01.03.2003 - Held that:- As per N/N. 8/2003-CE dated 01.03.2003, there is no bar for taking credit of Service Tax paid on input services. Further, there is a bar for taking credit of input used in the manufacture of final product. Further, as per Rule 3 of CCR, 2004 read with definition of “Provider of Taxable Service”, there is no bar to take CENVAT credit of service Tax during the period assessee is availing small-scale exemption under Central Excise Act.
In the Notification, it is provided that the manufacturer shall not avail the credit of duty under Rule 3 or Rule 11 of CCR, 2002 on inputs used in the manufacture of specified goods - there is no reference to input services in the Notification - the CENVAT could not have been denied to the appellant - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 908
CENVAT Credit - manufacture of dutiable as well as exempt goods - non-maintenance of separate records - Rule 6 of CCR - Held that:- Rule 6 covered the exempted goods also and no specific provisions is there for the goods where the provisions of goods at concessional rate of duty for manufacturer excisable goods Rule 2001 are also required to be followed - The law is very clear that if any input, input services or capital goods find place in manufacture of goods which are exempted from payment of central excise duty in that case, the manufacture is legally required to reverse back the 6% of the value of clearances from the accumulated Cenvat credit - The provisions are very clear that manufacturer is also free to maintain separate account of inputs and the credits thereon for both dutiable as well as exempted goods and in that case the requirement of 6% of the value of clearances is need not to be followed.
In this case, since the appellants have not maintain separate account of Cenvat credit availed on exempted as well as dutiable final products, hence, legally they are required to reverse back the 6% of value of clearances of the exempted goods from the Cenvat credit - the appellant are legally required to reverse back the input credit availed on the inputs going into the exempted final products.
Penalty - Held that:- since before the issue of the show cause notice itself the appellants have reversed back the proportionate Cenvat credits and we do not find any malafide intention on the part of the appellant for intentional attempt to evade or mis-use Cenvat credit - penalty under Rule 15 of Cenvat Credit Rules readwith Section 11AC of Central Excise Act, 1944 not warranted.
Appeal allowed in part.
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2018 (11) TMI 907
Demand u/s 11D - collection of amount - reversal of cenvat credit under Rule 6 - Supply of pipes to water supply projects - N/N. 6/2002 dated 01.03.2002 - case of Revenue is that Since the appellant also supplied the pipes without availing the benefit of the notification as above and since cenvat credit was availed on inputs, they were required to pay an amount @ 8% of the value of the exempted goods, in terms of Rule 6(3) of the Cenvat Credit Rules, 2004.
Held that:- The Tribunal in the case of Mayfair Polymer Pvt. Ltd. [2007 (9) TMI 519 - CESTAT, AHMEDABAD] had occasion to examine a similar situation, where it was held that no evidence has been produced to indicate that they have shown an amount of duty more than the what they have paid to department in such assessment documents and collected such higher amounts and hence no case is made out for seeking recovery under Section 11D.
In the present case, it is not in dispute that the appellant have not indicated in their invoices the amount of 8% separately as excise duty. Hence, in the line with the decision of the Tribunal, the demand cannot be sustained.
The reference to Section 11D as it stood at the relevant time also makes it clear that the Section will have no application to exempted goods. Section 11D was made applicable to goods which are wholly exempted or chargeable to the ‘Nil’ rate of duty only after its amendment w.e.f. 10.05.2008. This fact has also been circulated by CBEC at the time of amendment vide their instructions dated 29.02.2008.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 906
Delay in payment of excise duty - invocation of Rule 8 (3A) of Central Excise Rules, 2002 - confiscation of goods so removed under Rule 25(1)(a) of the Central Excise Rules, 2002 - case of appellant is that that Rule 8(3A) has already been read down by the Hon’ble High Court of Gujarat and hence the demand is not sustainable - Held that:- The judgment of the Hon’ble High Court in the case of Indsur Global Ltd. has been appealed against and has been stayed by the Hon’ble Apex Court as reported at [2014 (11) TMI 1101 - SUPREME COURT] - The stay granted by the Hon’ble Apex Court leaves me with no option was to hold that the ratio of the judgment of the Hon’ble High Court does not apply.
Considering the overall facts, the quantum pf penalty is reduced - appeal allowed in part.
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2018 (11) TMI 905
Refund claim - acceptability of a debit note issued long after the goods were cleared on payment of duty for re-determination of the assessable value - Held that:- It has been brought on record that the appellant and the recipient of the goods had intended an alteration of the specification of the product; it is inconceivable that such alteration would not result in alteration of price and, the demonstrated oversight, should not stand in the way of acknowledging the existence of a lover transaction value. Accordingly, the discharge of duty liability in excess of ₹ 2,32,377.30 is held to have been established. This amount is eligible to be refunded in consequence of claim under section 11B of Central Excise Act, 1944.
It is only when the first buyer trained in those goods, or even uses those goods for the manufacture of further excisable goods, that the question of the lag between the charging of duty at the time of clearance and the disclaiming of such duty becomes relevant to ascertainment of having born the incidence of duty. Such is not the case in the present dispute - the test of ‘unjust enrichment’ is overcome.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 904
Jurisdiction - power of Superintendent of Central Excise to adjudicate the matter - SSI Exemption - Held that:- It is specifically stated in para 2 clause (i) of circular No. 1049/37/2016-CX dated 29.9.2016 that the Superintendent will not be having jurisdiction to adjudicate case involving taxability, classification, valuation etc.
The Commissioner (Appeals) has rightly set aside the Order in Original passed by the Superintendent dated 16.2.2017 holding that Superintendent has no jurisdiction to decide the matter. Though the appellant has put forward arguments on merits of the case also, I find that since the order passed by the Commissioner (Appeals) is confined to the lack of jurisdiction by the Superintendent and the matter having been remanded for reconsideration, the said arguments on merits are premature to be considered at this stage.
Appeal dismissed - decided against appellant.
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2018 (11) TMI 915
Process amounting to manufacture or not? - Review petition - liability of Central excise duty - stand of the department was that the assessee was not only involved in the activity of branding, polishing, affixation of MRP, packing etcetera but as a matter of fact the parts are made available by the firm to the suppliers - Held that:- The Assessee is a manufacturer of lock, it is wrong to assert that the Court has not answered all the issues which were formulated. The said finding is in consonance with the Section 2(f) of the Central Excise Act, 1944 which says that the word’ manufacturer’ is to include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacturer on his own account - A perusal of the facts available on record reveals that the R.P. Locks right from raw material stage upto the finished stage have been controlling the entire manufacturing activity and even sample, funds and design including raw material is made available by them. - Activity is a manufacturing activity. - Order as reported in [2017 (3) TMI 1721 - ALLAHABAD HIGH COURT] affirmed.
Review application has no merit and is dismissed.
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2018 (11) TMI 903
Confiscation - penalties - Process amounting to manufacture or not - manufacture of various types of paper tissues, paper hand towels, paper face tissues etc. by cutting and slitting jumbo rolls of paper - Held that:- Admittedly, during the relevant period, there was Supreme Court decision which held that cutting, slitting activities of jumbo rolls into smaller pieces does not amount to manufacture. The subsequent decision, which stands relied upon by the Tribunal in the assessees own case was passed on in 2015, whereas the seizure relates to July, 2014.
While upholding that the seized and confiscated goods are required to be cleared on payment of duty, there is no justification for confiscation of the same or for imposition of penalty upon the appellant - appeal allowed.
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2018 (11) TMI 914
Rebate Claim - Gutkha - N/N. 19/04-CE - Held that:- The notification No.19/04-CE by Rule 2 prescribes the conditions and limitations for availing excise rebate; Para 3 of that notification elaborates the procedure prescribed - Pan masala and gutkha were apparently not covered in the first instance by notification 19/04-CE. The Revenue therefore, included in the list of items that could claim rebate, pan masala and gutkha, through Notification No.32/08-CE. The conditions for availing such rebate were spelt out as well in Clauses (i) to (viii). Clause (ix) stated that the procedure prescribed in Notification No.18/2004 would be applicable mutatis mutandis. It is not in dispute that these conditions were complied with.
The Government of NCT could not have banned the export of sale – as is understood in the Customs enactment parlance. This is for the simple reason that the legislative competence and concurrently, the co-extensive executive power, to deal with the subject matter of customs or international transactions are not with the State or the Union Territory but that of the Central Government or Parliament, as the case may be.
This Court is of the opinion that the impugned order of the Revisional Authority as well as the order of the appellate authority which it confirms, cannot be sustained - petition allowed.
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2018 (11) TMI 902
CENVAT Credit - Duty paying documents - denial of credit on the ground that the invoice was not in the name of the appellant - Rule 9 of CCR, 2004 - Held that:- To avail a cenvat credit, the manufacturer or the provider of the output/input service, as the case may be, has to produce the documents as mentioned in sub-rule (1) (a) of the said Rule. The invoice No.1511 dated 18.06.2012 is such admitted document (the original one). Perusal thereof shows that it has all such details as were required to be submitted in compliance of the above said Rule, 9 of CCR except that the name of the appellant as the consignee was not mentioned and it was M/s. Tirupati Proteins Pvt. Ltd. who only was mentioned in the invoice as buyer.
Even if, the Department’s case for said invoice to have no inadvertent mistake in the invoice is concerned, the only difference it makes is that instead of appellant, M/s. Tirupati Proteins Pvt. Ltd. would have been entitled for availing the said credit i.e. there is no case to deny the availment or utilisation of Cenvat Credit.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 901
SSI Exemption - clubbing of clearances - two units managed by same person - separate entities or not - mutuality of interest - Held that:- Both the units are being managed by Sh. Shiv Kumar Goel and Sh. Yash Pal Goel, but are two separate private limited companies located at two separate locations and are having their own separate plant and machinery to manufacture their final products - if any amount is transferred from one company to another, the same has been returned back within reasonable time, then it cannot be alleged that there was a flow of the funds - Moreover, the allegation that too from M/s DST, the amount has been withdrawn by the shareholders to purchase the shares of M/s KCP, cannot be a reason of clubbing of clearances - If the adjudicating authority is of the view that both M/s DST and M/s KCP are one and same, in that circumstance, it is required to be declare by the adjudicating authority who is the principal unit and duty is to be demanded on the principal unit only. But in this case, duty has been demanded separately from both the units, which also shows that the adjudicating authority is in doubt to conclude that which is the principal unit - clubbing of clearances not justified - decided in favor of assessee.
Clandestine removal - reliability on statements of persons based on which charge of clandestine removal is based - Held that:- During the course of cross examinations, Sh. Rahul Jain, one of the supplier, appeared who stated that he has issued the invoices in the name of M/s KCKL and received the payment from M/s KCKL, therefore, the statement of Sh. Rahul Jain during the course of cross examination established that M/s KCKL was a trading firm and was not a dummy firm as alleged by the Revenue. Moreover, the other witnesses whose statements have been relied upon, were not cross examined despite the direction of this Tribunal, therefore, the statements of these witnesses are not admissible to allege the clandestine removal of the goods - thus, clearances made on the invoices of M/s KCKL cannot be held as clandestine removal goods by M/s DST.
The charge of clubbing of units in the absence of determining which is the principal unit and which is the dummy, the charge is not sustainable - the charge of clandestine removal of the goods is also not sustainable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 900
Auction sale - Liability of paying the customs duty and Central Excise duty out of the sale proceeds from the sale of assets - imposition of penalties - Held that:- No further arguments can be heard on discharge of duty by appellant herein, as the Apex Court very clearly held that duties are payable to the appellant. [Dy. Commissioner of Central Excise was an appellant before the Apex Court]. Nothing survives in the appeal of the appellant, though not contested in grounds of appeal, as to the demand of the duties of customs and excise.
Penalty u/s 112 of CA - Held that:- The adjudicating authority has come to a wrong conclusion in imposing penalty under Sec.112 of the Customs Act on the appellant, inasmuch appellant had never engaged themselves in the import of the goods which are liable for confiscation under the provisions of Sec.111 of the Customs Act, 1962 - It is also to be seen that there is no order for confiscation of the machinery which was sold by the appellant in an auction proceedings. Hence, visiting the appellant with penalty under Sec.112 is unwarranted.
Appeal allowed in part.
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2018 (11) TMI 899
Valuation - Inasmuch as the actual cost of the raw-material was not verified at the time of sending the goods by M/s.Asian Paints Ltd., such cost was being adopted on the basis of previous year’s balance sheet - Revenue was of the view that there was escalation of the raw-materials subsequently and such escalated cost should have been taken into consideration - Held that:- The appellant had already discharged the additional differential duty as also the fact that the duty paid by the assessee was being availed as credit by M/s.Asian Paints Ltd., thus leading to a revenue neutral situation.
The legal issue also sands decided by the Hon’ble Supreme Court in favour of the assessee, in the case of CCE, Pune Vs. Mahindra Ugine Steel Ltd., [2015 (4) TMI 351 - SUPREME COURT], where it was held that the provisions of Rule 8 of Central Excise Valuation (Determination of Prices of Excisable Goods) Rules, 2000, is not applicable to the valuation required to be done in respect of the goods manufactured under job works.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 898
Imposition of penalty - demand of interest - appellant had deposited the entire duty even before the issuance of SCN - no malafide intent - Held that:- The appellant was a state corporation and was manufacturing various items for their own captive use. As the said goods were being consumed by them captively and were not being sold, there could be a bonafide belief on their part that the same would not attract duty of excise. The revenue has also not produced any evidence to show that the said non-payment of duty was with a malafide intention - imposition of penalty on the appellant is neither justified nor warranted.
Demand of Interest - Held that:- Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], has held that interest is payable even when duty is paid before issuance of the show-cause notice - the appellant is under legal obligation to pay the interest in respect of differential duty from the date when the same became payable till the date it was paid - demand of interest upheld.
Appeal allowed in part.
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2018 (11) TMI 897
Rectification of mistake - issue of extended period of limitation not considered - error apparent on the face of record - Held that:- There is an error on the part of this Tribunal in not deciding the issue of limitation. Under the facts and circumstances we appreciate the error on record.
Further considering the facts and circumstances and the rival contentions we hold that the issue involved, as held by this Tribunal in the Final Order is simply of classification and/or interpretation. Accordingly, we hold that the extended period of limitation is not available to revenue and accordingly the demand shall be limited to normal period of limitation only.
Further there is no discussion with regard to penalty imposed on the appellant-company. In view of the facts and circumstances we allow this ground and hold that no penalty is imposable on company under Section 11AC of the Central Excise Act.
So far the other two appellants are concerned namely, Vijay Singhvi and D.I. Desarda who were the employees of the company and have been visited with penalty as noticed by Tribunal in Para 2 of the Final Order. However, we find that in the aforementioned final order, neither there is any discussion with respect to their appeals nor there is any express rejection of their appeals. Thus, we are satisfied that appeals of the two individuals need to be considered and decided
Application disposed off.
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2018 (11) TMI 896
CENVAT Credit - capital goods - MH Sheet Metal Components (Rail) - Held that:- The demand of cenvat credit of ₹ 42,580/- on the goods used for repair of capital goods is already dropped - demand withheld.
Penalty - CENVAT Credit on vehicle insurance premium and health insurance premium already dropped - Held that:- Law is settled that the allegations as that of suppression with a malafide mensrea of tax evasion are of grave nature and cannot be confirmed unless and until there is a cogent evidence to that respect. For imposition of penalty, it has to be proved by the Department that the assesse acted deliberately in defiance of law and was guilty of conduct concumacious or dishonest or acted in conscious disregard of its obligation - penal proceedings dropped.
CENVAT Credit - input service - Works Contract Service - Held that:- The demand of Credit of service tax paid on Work Contract Service has already been dropped - demand withheld.
Short payment of Central Excise Duty - price escalation bills raised - Held that:- Since the duty is payable on price escalation and the appellant could not have produced any document proving that the railway authorities had finalised the amount of those 13 bills at an amount of ₹ 55,22,821/-, it is held that the order under challenge has rightly confirmed the said demand. Apparently, the appellant has failed to prove that the Bills on which amount has been calculated were merely the proposal amount - As there are no two set of bills on record, it is held that demand has rightly been confirmed under this Head.
Short payment of Central Excise duty - extra considerations under the guise of freight - Held that:- The freight expenses incurred for the purpose by the appellant are to be reimbursed by the railways at agreed upon rate. In the given circumstances, the assessee premises becomes the place of removal. It is held that the element of freight is not to be included in the normal value of the goods - demand withheld.
Demand of Interest - Held that:- Though the appellant has taken the plea that the interest amount has been paid and has not been reversed. The said fact for want of any evidence on record required verification from the Adjudicating Authority below. For this limited purpose, matter is hereby remanded back.
Appeal allowed in part and part matter on remand.
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CST, VAT & Sales Tax
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2018 (11) TMI 895
Dismissal of review application on the ground of time bar - principles of natural justice - Held that:- The Tribunal should have granted effective opportunity of hearing to the parties while considering the fact as to whether the copy of order passed by the Tribunal was actually delivered to the addressee or the counsel for the appellant appearing before the Tribunal. In case, it was not served, the appellant may have a case that the review application filed by him was within time.
The matter is remitted to the Tribunal for reconsideration after affording opportunity of hearing to both the parties - appeal allowed by way of remand.
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Indian Laws
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2018 (11) TMI 930
Maintainability of Complaint - Service of notice - Dishonor of cheque due to insufficiency of funds - Section 138 of NI Act - whether a complaint under section 138 Negotiable Instruments Act would be maintainable, against the company, if the statutory notice under section 138 Negotiable Instruments Act, is issued only to its Managing Director and is not issued to the company which is maintaining the account from which the subject cheque is issued?
Held that:- Vicarious liability is created by section 141 as the company being a juristic entity, is run by living persons who are in charge of its affairs and who guide the actions of that company and that if such company is guilty, those who were so responsible for its affairs and who guided actions of such juristic entity must be held responsible and ought to be proceeded against. Persons who are in charge of the affairs of the company and running its affairs must naturally be aware of the notice of demand under Section 138 of the Act issued to such company. That is the reason that no notice is additionally contemplated to be given to such Directors.
There is no requirement that the Directors of the Company in question must also be issued individual notices under Section 138 of the Act. Such Directors who are in charge of affairs of the Company and responsible for the affairs of the Company would be aware of the receipt of notice by the Company under Section 138 and would be liable without even being issued individual notices.
In the present case subject cheque was issued by the company under the signatures of Mr. M.S. Narula, its Managing Director. The statutory notice is addressed and served on Mr M.S. Narula. Since the company is a legal entity and functioning only through its directors and Managing Director, service of notice on the Managing Director would be sufficient service of notice on the company - There could be no better way of serving a legal entity like a company than by serving a notice on the person who is in charge and in control of the company. The Managing Director is the key person who is in control of the affairs of the company. Statutory notice in the present case has been served on the Managing Director.
There is sufficient compliance of the statutory requirements of section 138 Negotiable Instruments Act. The irregularity in filing the present complaint against the company without service of a notice in the name of the company and by serving the statutory notice on the Managing Director is a mere irregularity and is not fatal to the prosecution launched against the petitioner company - Petition dismissed.
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2018 (11) TMI 929
Dishonor of Cheque - recovery of loan - defendant/appellant contended that the said cheques were issued towards payment of insurance and not in discharge of any alleged loan amount - rebuttal of presumption presumption under section 139 of the N.I Act.
Whether suit filed by the respondent/plaintiff is barred under section of 3 of Punjab Registration of Money Lenders' Act? - Held that:- Apparently, the factum of the respondent allegedly running a money lending business would require determination of facts and evidence which is not within the domain of this Court in terms of Section 100 of the CPC, 1908, as amended, RSA No. 160/20-18 and thus no issue in relation thereto is necessitated, and thus no such issue can be framed.
Whether question of law regarding maintainability of the suit can be raised at the stage of first appeal? - Held that:- The aspect of issue of law of the suit being barred under the Provisions of Punjab Registration of Money Lenders Act has already been taken into account by the First Appellate Court and has been negated on the basis of the evidence led during the trial before the learned Trial Court and does not need any further reagitation.
Whether appellant rebuttal rebutted the presumption under section 139 of the N.I Act, when respondent failed to prove that any loan was given to the appellant? - Held that:- No such issue is sought to be framed arises as any substantial question of law in the instant case which is in fact based purely on facts qua which there are concurrent findings of the learned Trial Court and the First Appellate Court.
Whether if respondent claimed that he was charging the monthly interest, can it be a friendly loan or doing money lending covered under Punjab registration of Money Lenders' Act? - Held that:- The plaintiff i.e. the respondent to the present appeal did not bring forth that the defendant was running any business of money lending and that thus merely because interest was sought to be charged by the plaintiff on the loan given to the defendant/appellant.
Whether issuing of cheque is amount (sic) (amounts) to presumption that cheque is issued for re-payment of loan? - Held that:- The presumption of law on issuance of a cheque in favour of the holder of the cheque, unless the contrary is proved that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge in whole or in part of any debt or other liability, exists in law in terms of Section 139 of the Negotiable Instruments Act, 1881 as rightly held by the learned Trial Court and upheld by the First Appellate Court, and thus the formulation of the question of law to submit as to whether the issuance of a cheque amounts to a presumption that the cheque was issued for repayment of a loan as sought by the appellant does not arise in relation to repayment of any debt or other liability falling with the ambit of Section 139 of the Negotiable Instruments Act, 1881 itself.
No substantial question of law having arisen or being involved which is per se the sine qua non for exercise of jurisdiction under Section 100 of the Code of Civil Procedure 1908 (as amended) - Application dismissed.
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2018 (11) TMI 928
Dishonor of Cheque - cheque was issued by the petitioner under compromise - Section 138 of the Negotiable Instruments Act - Held that:- The revisionary jurisdiction of this Court under Section 397 Cr.P.C. is extremely limited and this Court would only interfere in case the petitioners have been convicted and sentenced without examining the material placed on record with a view to ascertain that the judgments so rendered by the learned Courts below are not perverse and are based on the correct appreciation of evidence on record. This Court would definitely interfere in case it comes to the conclusion that there is a failure of justice and misuse of judicial mechanism or procedure or where the sentence awarded is not correct.
Maintainability of the complaint on the basis of the cheque presented for the second time, but within six months - Held that:- This issue is no longer res integra in view of three Hon’ble Judges’ bench decision of the Hon’ble Supreme Court in MSR Leathers versus S.Palaniappan and another, [2012 (10) TMI 232 - SUPREME COURT] wherein the earlier decision in Sadanandan Bhadran versus Madhavan Sunil Kumar, [1998 (8) TMI 541 - SUPREME COURT] was over-ruled and it was held that prosecution based upon second or successive dishonour of the cheques is also permissible so long as it satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act.
Petition dismissed.
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