TMI Tax Updates - e-Newsletter
November 26, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Penalty u/s 271E - repayment of deposits in cash made by the assessee to her related persons - default u/s 269T - the burden entirely lay upon AO first to establish that there existed a loan or advance and the contentious payment in repayment of such loan - No penalty.
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Income Tax:
TDS u/s 194J - membership fee for listing and custodian fee paid to a stock exchange would not be covered by the definition of the term "technical services" under Section 194J of the Act on which TDS was required to be deducted.
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Income Tax:
Revision u/s 263 - it was incumbent upon the A.O. to refer the transfer pricing matter to the TPO. The A.O. having failed to do so, the case admittedly falls under the jurisdiction of the Pr. CIT as an order by the A.O. which is erroneous so as to be prejudicial to the interest of the Revenue.
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Income Tax:
Claim of Exemption u/s 54F - LTCG - assessee in the case on hand is eligible to be allowed for exemption u/s 54F of the Act in respect of multiple facts, i.e., the 3 flats in the same apartment building received by him upon entering into the JDA
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Customs:
Classification - Aluminum Scrap-Throb - The goods stand described in the imported documents as Aluminium Scrap-throb. They have been converted into ingots shape of varying lengths for the purpose of transportation only, which is permissible as per ISRI.
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Customs:
Levy of penalty for abetting - Although, it may be true that by such invoices the exporter was able to indulge in fraudulent export, the involvement of the appellant in mis-declaration of the goods is not brought out.
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Indian Laws:
Disciplinary proceedings against CA - professional misconduct - it was entitled to do under Schedule I Part-IV subclause( 2) if, in the opinion of the Council, such act brings disrepute to the profession whether or not related to his professional work. - SC confirms the action of ICAI
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Service Tax:
Scope of Courier Service - entire services provided by the appellant to UPS Worldwide for picking up the consignments in case of Export Freight Collect and for delivery in the case of Import pre paid have been provided in India. Since these services are provided in India, they are liable to service tax - Demand confirmed invoking the extended period of limitation.
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Service Tax:
Classification of services - the activity under taken by the appellant for Railways will be appropriately classifiable under the ‘Business Auxiliary Services’, and liable to payment of service tax - demand for service tax has to be restricted to the normal time limit.
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Service Tax:
As the said IPRs supplied by the foreign collaborators of the appellant are not registered in India, the technical know-how , etc. supplied by the foreign collaborators to the appellants do not fall under the category of “Intellectual Property Right” service thereby liable to pay service tax
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Service Tax:
Levy of service tax on Transport of goods through pipe lines or other conduit - The issue regarding inclusion of fixed facility charges for transportation of gases through pipe lines was clarified by CBEC - It was clarified that such fixed facility charges are to form part of the transaction value for the purposes of Central Excise duty - Demand set aside.
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Service Tax:
Renting of immovable property - Joint property rented to tenants - Conceptually service tax is levied on the service provided, which is an intangible thing and hence it is not necessary to be identified with physical demarcation of the immovable property given on rent against individual co-owners.
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Service Tax:
Liability of Service Tax - Sub-contractor - The appellants have produced certificate issue by M/s. BHEL to support their contention that service tax on the said activities has been discharged by M/s. BHEL, who are the main contractors. - adjudicating authority directed to look into the facts.
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Service Tax:
Construction services - appellants provided construction activities to land owners in lieu of relinquishment of their right over the UDS in land as per the agreement - after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - Demand set aside.
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Service Tax:
Penalties u/s 76, 77 and 78 of FA - Non-payment of Service Tax collected from clients due to the financial difficulties - The delay / non-payment of service tax cannot be said, is an act of suppression of facts with intent to evade payment of tax. - No penalty.
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Service Tax:
CENVAT credit - common input services used to render taxable as well as exempted services - Rule 6(5) permits full credit of 17 services specified therein - there is no reason for denying the above credit.
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Central Excise:
Refund claim - unjust enrichment - nature of amount - as a condition of pre-deposit or in the nature of duty - The issue of unjust enrichment has to be dealt with before sanctioning of any refund, in any case.
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Central Excise:
Clandestine removal - The denial of cross-examination tantamount to violation of natural justice. The demand has wholly been raised, on the basis of the statements recorded. In such cases, the denial of cross-examination is fatal to the proceedings.
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Central Excise:
CENVAT Credit - Rule 5 of the CCR Rules does not stipulate registration of premises as a necessary prerequisite for claiming a refund - credit cannot be denied
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Central Excise:
Valuation - prototypes - The similar model vehicles which are commercially manufactured can be said to be copies of the prototypes. It cannot be then said that these prototypes are consumed in further manufacture of motor vehicles. Thus Rule 8 of Central Excise Valuation Rules 2000 will not apply to such a situation.
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VAT:
Classification of goods - tyres - classification as ‘Iron and Steel’ - the entry “tyres” in the central legislation would not be construed as tyres retreaded with rubber, even though the main classification is that of iron and steel.
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VAT:
Refund of VAT - goods sold inter-state - petitioner could not produce any reliable evidence of actual movement of goods. Mere production of C form would not ensure the benefit of reduced tax
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VAT:
Recovery of dues the director of the company - GVAT Act - in absence of any statutory provision and further in absence of any prima facie facts even suggesting that the company was created only to defraud the government revenue or some such other valid reason, the department cannot seek recovery of the company's dues from its directors
Articles
Notifications
GST - States-
Corrigendum to Notification(4-S/2017) No.FD 47 CSL 2017 - dated
31-10-2018
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Karnataka SGST
Corrigendum to Notification(4-S/2017) No.FD 47 CSL 2017, Bengaluru, dated 17/09/2018.
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(04-U/2017) No. FD 47 CSL 2017 - dated
27-10-2018
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Karnataka SGST
The Karnataka Goods and Services Tax (Eleventh Amendment) Rules, 2018.
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(04-T/2017) No. FD 47 CSL 2017 - dated
27-10-2018
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Karnataka SGST
The Karnataka Goods and Services Tax (Tenth Amendment) Rules, 2018.
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(04-S/2017) No. FD 47 CSL 2017 - dated
17-9-2018
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Karnataka SGST
The Karnataka Goods and Services Tax (Ninth Amendment) Rules, 2018.
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F-A-3-63-2017-1-V-(96) - dated
15-11-2018
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Madhya Pradesh SGST
Amendment in the Notification of this department No. F.A-3-63-2017-1-V(82) dated the 29th September, 2018.
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F-A-3-62-2017-1-V-(99) - dated
15-11-2018
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Madhya Pradesh SGST
Supersession of the notification of this department No. F.A.-3-62/2017/1/V(102), dated the 15th September, 2017.
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F-A-3-42-2018-1-V-(95) - dated
15-11-2018
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Madhya Pradesh SGST
Notifies the persons whose registration under the said Act has been cancelled by the proper officer on or before the 30th September, 2018 furnish the final return in Form GSTR-10 of the said rules till the 31st December, 2018.
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F-A-3-39-2018-1-V-(97) - dated
15-11-2018
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax Rules, 2017
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F-A-3-38-2018-1-V-(98) - dated
15-11-2018
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax Rules, 2017
Circulars / Instructions / Orders
Case Laws:
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GST
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2018 (11) TMI 1191
Release of detained goods with vehicle without producing bank guarantee - Held that:- Indeed has seen from Section 129(6) of the GST the detention proceedings are time bound. there are no reason to doubt that the STO will drag the proceedings contrary to the statutory mandate - the writ petition is closed leaving it open for the petitioner to appear before the STO in terms of the Ext.P4 and invite an order accordingly.
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2018 (11) TMI 1190
Stay of petition - validity of assessment order - Held that:- The petitioner has exercised on time its statutory remedy of filing an appeal. It appears that it has also filed a stay petition. Procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition.
The petition disposed off directing the respondent authority to defer coercive steps until the 2nd respondent considers the stay petition.
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2018 (11) TMI 1189
Detention of goods with vehicle - detention on the ground that GSTIN of the recipient is incorrect, which is in violation of Rule 46 of the CGST Rules, 2017 r/w section 31 of CGST Act, 2017 and also on the ground that No e-way Bill/e-declaration has accompanied the transport - Held that:- As the Assistant State Tax Officer has already taken up the issue, it is inappropriate for this Court to observe anything on the merits - petition disposed off.
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2018 (11) TMI 1188
Extension of time for filing GST TRAN-1 - Held that:- Notification No. 48, dated September 10, 2018 has been issued for amending the Central Goods and Services Tax Rules, 2017 giving power to the Commissioner for extension of time for submission of declaration form GST TRAN-1 upto March 31, 2019. The power can be exercised by the Commissioner on the recommendation of the Council - petition disposed off.
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2018 (11) TMI 1187
Revision of monthly returns - Initially, on 25. 10. 2016, the Assistant Commissioner (Assessment) allowed the petitioner to revise the monthly returns from November 2015 to March 2016. But the request concerned the months from April 2015 to March 2016 - revision of return was rejected from the Office of the Commissioner, State Goods & Services Tax Department, Kerala, Thiruvananthapuram.
Held that:- The Assistant Commissioner discharges the functions of a quasi judicial authority. And the reasoning is the heart of the adjudication. Here, the Ext. P4 reads more like a fiat. It contains no reasons for rejection - the Ext. P4 is set aside and matter remanded for fresh adjudication.
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Income Tax
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2018 (11) TMI 1172
Revision u/s 263 - non reference of matter to the Transfer Pricing Officer(TPO) - Held that:- It is settled law that the CBDT Circulars are binding on Revenue authorities. The assessee’s contention that in earlier years the matter was referred to the TPO, no transfer pricing adjustment was made, cannot at all be an excuse for the A.O. for not referring the matter to the TPO. As already explained herein above there is no discretion to the A.O. in this regard. Once it is so held the assessment order passed is clearly erroneous so as to be prejudicial to the interest of the Revenue.
In the background of the aforesaid discussion, in our considered opinion, in light of the CBDT Circular Instruction 3/2016 dated 10th March, 2016, it was incumbent upon the A.O. to refer the transfer pricing matter to the TPO. The A.O. having failed to do so, the case admittedly falls under the jurisdiction of the Pr. CIT as an order by the A.O. which is erroneous so as to be prejudicial to the interest of the Revenue. - Decided against assessee
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2018 (11) TMI 1171
MAT - non-applicability of minimum alternative tax(popularly called as “MAT”) on book profits u/s 115JB in the case of banks in favour of the assessee - Held that:- As decided in assessee's own case for AY 2006-07 we hold that provisions of Section 115JB shall not be applicable to the assessee bank for the impugned assessment year under consideration viz. AY 2007-08.
Computation of grant of interest u/s 244A payable to the assessee on refund arising out of the order giving effect to order of the appellate authority or consequent to order passed u/s 154 - Held that:- Since it is matter involving computation of eligible amount of interest u/s 244A of the Act, we are of the view that this issue requires fresh examination at the end of the AO. In the decisions relied upon by the assessee, the Tribunal has followed the decision rendered by Hon’ble Delhi High Court in the case of India Trade Promotion Organisation Vs. CIT (2013 (9) TMI 451 - DELHI HIGH COURT) and accordingly given direction to the AO to follow the said decision
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2018 (11) TMI 1170
Unexplained cash credit under section 68 - Bogus share premium amount - creditworthiness as well as the genuineness of the share premium amount - Held that:- Relevant documentary evidence in the form of Annual Reports, Bank statements, copies of PAN Card, etc. of the shareholder companies was produced before the Assessing Officer in order to establish the identity as well as creditworthiness of the said shareholder companies. The notices issued by the Assessing Officer were also duly responded by the said shareholder companies by filing their replies.
It is observed that the AO, however, doubted their creditworthiness as well as the genuineness of the share premium amount mainly on the ground that the assessee-company failed to produce the Directors of the shareholder companies for examination. He, however, accepted the share capital amount received from the concerned shareholder companies and treated mainly the share premium amount paid by them as unexplained. As pointed out by the ld. Counsel for the assessee, the share premium charged by the assessee-company was duly justified before the ld. CIT(Appeals) by furnishing the relevant facts and figures - Decided in favour of assessee.
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2018 (11) TMI 1169
TPA - selection of comparable - functinal dissimilarity - Held that:- Assessee is a company engaged in the business of rendering IT enabled services ( ITES) in the nature of data management services (i.e. data management services, data collection, organization, validation, analysis and filtering of accounts) and call center services to its overseas associated enterprise (AE) thus companies functionally dissimilar with that of assessee need to be deselected from final list. Also on the huge brand value and the huge asset base of intangible assets need to be rejected.
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2018 (11) TMI 1186
Condonation of delay of 171 days - removal of office objections - the attempt on the part of the Revenue to explain the delay is most casual - Held that:- SLP dismissed.
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2018 (11) TMI 1168
Charging of interest u/s 234A and 234B - Held that:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This principle has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and therefore uphold the AO’s action in charging the said interest. The AO is, however, directed to re-compute the interest chargeable u/s 234A and 234B
Claim of Exemption u/s 54F - 3 residential units received by the assessee in lieu of entering into a JDA with the same developer M/s. Chamundi Builders - Held that:- Respectfully following the decisions of the Hon’ble Karnataka High Court in the case of CIT Vs. Smt. K. G. Rukminiamma (2010 (8) TMI 482 - KARNATAKA HIGH COURT) and CIT Vs. V. R. Karpagam (2014 (8) TMI 899 - MADRAS HIGH COURT) and other judicial pronouncements referred to above, I am of the considered opinion that the assessee in the case on hand is eligible to be allowed for exemption u/s 54F of the Act in respect of multiple facts, i.e., the 3 flats in the same apartment building received by him upon entering into the JDA on 14.12.2005 with M/s. Chamundi Builders. The AO is accordingly directed. Consequently, ground No. 4 of the assessee’s appeal is allowed.
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2018 (11) TMI 1184
TDS deducted on the amount of compensation payable to a land loser on acquisition of his land - Held that:- In view of the judgment in Commissioner of Income Tax versus Ghanshyam (HUF)[2009 (7) TMI 12 - SUPREME COURT] no TDS will be deducted on the amount of compensation payable to a land loser on acquisition of his land. Following that dictum, the amount deposited through TDS by respondent No. 3 with respondents No. 1 and 2 is required to be refunded to the petitioners.
Accordingly, respondents No. 1 and 2 are directed to refund the deducted TDS amount to the petitioners within eight weeks in view of the TDS Certificates.
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2018 (11) TMI 1167
Disallowance u/s 14A - expenditure incurred in relation to income which does not form part of total income shall be disallowed - Held that:- It is settled position of law that the provisions of section 14A can be applied to quantify the expenses in relation to exempt income.
Since the exempt income is Nil, section 14A will not apply. The Rule 8D can be applied only when there is difficulty in finding the expenditure relating to exempt income. The provisions of section 14A and Rule 8D will not apply to the present case.
In the case under consideration, after going through the financial statements filed by the assessee, we find that there is no dividend income received by the assessee. Therefore, we uphold the order of CIT(A) and dismiss the grounds raised by the revenue.
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2018 (11) TMI 1185
Reopening of assessment - claim of deduction u/s 10B - Furnishing the explanation in support of the claim of deduction under Section 10B - Held that:- SLP dismissed.
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2018 (11) TMI 1183
Reopening of assessment u/s 147 - 'reasons to believe' - Held that:- The respondents can not proceed with the reassessment proceedings without deciding the objections and that in respect of the assessment year 2010-11 re-assessment on similar grounds was done and the said assessment is under challenge by the petitioner in appeal before the CIT (A) which is pending. In GKN Driveshafts (India) Limited Vs. ITO (2002 (11) TMI 7 - SUPREME COURT) it has been held that once notice of reassessment is given, the assessee has a right to demand 'reasons to believe' and on supply of the reasons he may prefer objections and in case objections are so filed, the assessing officer is obliged to decide the same by a speaking order.
In view of the above, since the objections of the petitioner have not been considered and decided we deem it proper that the petitioner should wait for the decision of the same.
Accordingly, we are not inclined to exercise our discretionary jurisdiction in the matter at this stage and dispose of the writ petition with the direction that the respondent authority would before making the reassessment would decide the objections.
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2018 (11) TMI 1182
Penalty u/s 271E - repayment of deposits in cash made by the assessee to her related persons - default u/s 269T - first burden to establish that there existed a loan or advance - Held that:- AO was having books of accounts of the assessee, including the cash book evincing the contentious payment. It was thus incumbent upon him to have recorded the finding that there existed a loan or deposit or advance by the said recipient viz. Adarsh Credit Cooperative Society. In absence of any loan or advance by the ACCS, the cash payment made to it does not fall foul to Section 269T of the Act of 1961.
There is nothing on record to show that there existed a loan or advance by said ACCS, repayment whereof has been made in cash. Argument of Mr. Bissa that the burden was on assessee to show that the payment was not in violation to Section 269T is misconceived and ex-facie contrary to settled canon of burden of proof. It is a settled proposition that the burden to prove lies upon a person who asserts a fact. In the facts of the present case assessee put forth her explanation and took a stand that there existed no loan or advance from ACCS and the amount was paid towards her contribution in the society.
As such the burden entirely lay upon AO first to establish that there existed a loan or advance and the contentious payment in repayment of such loan. That being the factual and legal position, we are of the considered opinion that the learned Commissioner (Appeals-2), Udaipur was perfectly justified in holding that there is no violation of the provisions of Section 269T of the Act of 1961 and consequently, levy of penalty under Section 271E of the Act of 1961 was uncalled for. - decided in favour of assessee.
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2018 (11) TMI 1181
Treating of agriculture income as undisclosed source - Held that:- There is perversity in the impugned order inasmuch as contentions raised by the appellant, furnishing explanation, perhaps plausible with regard to increase in the amount of agricultural income in the relevant year i.e. assessment year 2008-2009 stands not considered by the authority below. Agricultural income alleged to have been generated from agricultural produce was through a proper banking channel, from the persons whose particulars stood disclosed. Even in the previous and succeeding years similar income was there from such source.
From the bare reading of the order (s), it cannot be said that all this stands considered and as such, on this short ground alone, we quash and set aside the impugned order dated 8.1.2015, passed by the Commissioner of Income Tax (Appeals)-3, Gurgaon and the matter is remanded back to the Commissioner, Income Tax Appellate Tribunal Division Bench, Chandigarh, for consideration of the matter afresh.
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2018 (11) TMI 1180
Stay petition - pre-deposit - petitioner to pay 15% of the demand as a pre-condition to having further proceedings stayed - CBI registered crimes on the Company's complaint and those crimes are in progress - Held that:- As I see, a citizen has complained about a crime: the crime of graft. An organisation like CBI has registered a crime after laying the trap. Perhaps accidentally, though, the company that complained has been in the departmental crosshairs ever since. As the learned Senior Counsel has put it, the conditional stay in an appeal is only an interim arrangement. The repeated assessments and the preconditions may have left the Company with the feeling of victimization. Its Directors have opened their mouth against the graft or alleged graft in the Department. Normally, it pays to complain. Here, the complainant is, it seems, made to pay. So the Department could have taken a lenient view to inspire confidence in the Company that it need not end up as a victim only because it has pointed out a flaw in the system, as it were.
Therefore, first, I place on record that the pre-condition of the assessee's depositing 15% demanded tax can neither be termed perverse nor illegal. Yet, I also hold it is a peculiar case that deserves an exception.
Thus set aside the Exts.P8, P14 and P13 to the extent of their requiring the Company to deposit 15% as a precondition. Instead, the amount stands reduced to 5% per each assessment year. Once the Company pays 5% of the demanded tax, the appellate authority will hear the appeals on merits.
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2018 (11) TMI 1179
Nature of income - capital gain or busniss income - income from sale of land - period of holding - Held that:- We are of the opinion that the transaction cannot be considered to be an adventure in the nature of trade and the findings so entered by the AO on meagre details of transactions of purchase long prior and sale together after 12-15 years, as found from the assessment order cannot be justified in law.
We also have to notice that at the time of the first appeal, there was a remand report called for; based on which the first appellate authority found that there could be no exemption granted from capital gains as there were no agricultural operations carried on and the sale cannot be deemed to be of agricultural lands. We would not interfere with that portion of the first appellate authority's order, which the Tribunal also has not interfered with. However, we reject the instant appeal, affirming the order of the Tribunal and answering the question of law in favour of the assessee and against the Revenue. The direction to assess capital gains has achieved finality and what remains is only computation in accordance with the provisions of the IT Act
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2018 (11) TMI 1178
Charitable activities u/s 2(15) - Cancellation of registration u/s (3) of Section 12AA - Secretary of the Society was getting lease rent for the land given to the Society for running the School or his wife who had requisite qualification was teaching in the school - Held that:- The contentions raised by learned counsel for the Revenue lacks merit. There is no requirement under Section 12A of the Act that the assessee-Society is required to be registered under the 2012 Act. Moreover, the assessee-Society explained before ITAT that it had applied for registration under the 2012 Act but due to back log, grant of registration was delayed. The certificate regarding registration under 2012 Act was produced before the ITAT.
The application under Section 12A of the Act cannot be rejected merely on the ground that the Secretary of the Society was getting lease rent for the land given to the Society for running the School or his wife who had requisite qualification was teaching in the school and was being paid the salary. It is not the case set up by the Revenue that the exorbitant amounts had been paid by the assessee- Society to the Secretary or to his wife. No dispute has been raised to the fact that the assessee-Society is running a school as per its aims & objects. The CIT while rejecting the application has not doubted the genuineness of aims and objectives of the assessee-Society. On the other hand the Assessing Officer while finalising the assessment for assessment year 2010-11 under Section 143(3) of the Act has specifically recorded the finding that the income earned by the Society has been utilized for educational purposes. - Decided against revenue
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2018 (11) TMI 1131
Addition u/s 68 - Addition made towards share premium - non-compliance of the summons u/s 131 - Held that:- We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book.
AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. Once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus - all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences
Only grievance of the AO was that the assessee could not produce the directors of the share subscribing companies In our considered opinion, for this reason alone, there cannot be any addition u/s 68 of the Act as held by the Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd.[1986 (3) TMI 3 - SUPREME COURT] - Decided in favour of assessee.
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2018 (11) TMI 1177
Peak credit addition - Held that:- The assessee-appellant was unable to satisfactorily explain the source of ₹ 14,73,000/-, which was added on account of peak addition, no error could be pointed out in the impugned orders which may warrant interference by this Court. Thus, question No.1 does not arise.
Addition on account of net profit @ 5% of the total amount of cash deposits to the CIT(A) - Held that:- Tribunal had recorded that from the order passed by the CIT(A), it appeared that the said issue was taken by the assessee in the grounds of appeal before the CIT(A), however, neither specific agitation was made by the assessee nor adjudicated by the CIT(A). The Tribunal had remitted the matter to the CIT (A) to decide the issue regarding the addition of ₹ 57,700/- made by the assessing Officer on account of net profit @ 5% on the total amount of cash deposits in the saving bank account of the assessee afresh on merits after affording proper opportunity of hearing to the assessee. Thus findings recorded by the Tribunal warrant no interference by this Court. - decided against assessee.
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2018 (11) TMI 1176
Disallowance u/s 40A(3) - cash payments made to sellers of the agricultural land - assessee-company contended that the Tribunal has rightly allowed the appeal after considering the case as per the provisions of Section 40A(3) - Held that:- From the perusal of the order of the Tribunal, it is evident that the Tribunal allowed the appeal following the decision of this Court in Gurdas Garg's case [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT]. The said order no longer exists as the same has been re-called in a review application filed by the revenue. In such circumstance, it would be appropriate to remand the matter back to the Tribunal to decide the appeals and the cross-objections afresh after examining the facts of each case in detail.
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2018 (11) TMI 1175
Re-assessment proceedings u/s 147 - reopening of after four years of completion of the assessments - rectification proceedings u/s 154 which is handed over across the Bar for the respondent - Held that:- It is pertinent that even in the rectification order, AO specifically notices that the assessee had been maintaining accounts for income tax purposes under the cash system. There was no accounts called for by the AO, who completed the assessment proceedings.
We are of the opinion that there could be no allegation raised of non-disclosure of full and true material facts. The reassessment proceedings having been attempted after a period of four years as prescribed under Section 147, there should be non-disclosure of full and true material facts. We agree with the Tribunal that there was no warrant for re-assessment especially after the expiry of four years. We reject the I.T.Appeals, answering the questions of law in favour of the assessee
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2018 (11) TMI 1174
Disallowance u/s 14A - Held that:- It is accepted and admitted that the assessee had not earned any exempt income in this year. In these circumstances, following the ratio of the decisions of this Court in Commissioner of Income Tax-IV versus Holcim India Private Limited, (2014 (9) TMI 434 - DELHI HIGH COURT) and Cheminvest Limited versus Commissioner of Income Tax-VI, (2015 (9) TMI 238 - DELHI HIGH COURT) and our decision in Principal Commissioner of Income Tax-6, New Delhi versus Mcdonald’s India Private Limited [2018 (11) TMI 1057 - DELHI HIGH COURT] no substantial question of law arises as the issue is covered by the aforesaid decisions against the Revenue.
TDS u/s 194J - Failure on the part of the assessee in deducting TDS on listing and custodian fee paid to National Stock Exchange, Bombay Stock Exchange and National Securities Depository Limited u/s 194J - Held that:- This issue whether TDS was required to be deducted is covered against the Revenue vide decision of the Supreme Court in CIT Vs. Kotak Securities Limited (2016 (3) TMI 1026 - SUPREME COURT) as held that Section 194J is attracted when an assessee avails of specialized, exclusive and individual services and not when it avails of common general facilities and services which are faceless, screen based transactions. Accordingly, membership fee for listing and custodian fee paid to a stock exchange would not be covered by the definition of the term "technical services" under Section 194J of the Act on which TDS was required to be deducted.
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2018 (11) TMI 1173
Exparte order - Held that:- Appellant is justified in making a grievance that the Tribunal did not put some check or restriction on the assessee so that sense of seriousness is brought about in the proceedings. In our prima facie view, even if the Tribunal was inclined to grant opportunity to participate in the proceedings, at least imposition of fair amount of cost could have been considered. This would bring in a level of seriousness required on the part of the assessee while facing assessment proceedings. However, only for such purpose, we are not inclined to entertain this appeal, since otherwise we do not find any question of law arising.
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2018 (11) TMI 1132
Exparte appeal orders - Tribunal remanded the proceedings for consideration of CIT (Appeals) on the ground that the appeal order was exparte - Held that:- Appellant is justified in making a grievance that the Tribunal did not put some check or restriction on the assessee so that sense of seriousness is brought about in the proceedings. Even if the Tribunal was inclined to grant opportunity to participate in the proceedings, at least imposition of fair amount of cost could have been considered. This would bring in a level of seriousness required on the part of the assessee while facing assessment proceedings. However, only for such purpose, we are not inclined to entertain this appeal, since otherwise we do not find any question of law arising. In future assure the Tribunal would bear in mind these observations.
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Customs
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2018 (11) TMI 1166
Classification of import goods - Aluminum Scrap-Throb - whether the goods in question are ‘Aluminium Scrap-Throb’ or the same are ‘Aluminium Alloy Ingots’?
Held that:- There is nothing in the report of CRCL which establishes that the goods are in-fact Ingots. The goods stand described in the imported documents as Aluminium Scrap-throb. They have been converted into ingots shape of varying lengths for the purpose of transportation only, which is permissible as per ISRI.
The said issue stands decided by various precedent decisions of the Tribunal - While dealing with more or less identical situation the Tribunal in the case of Commissioner of Customs, Chennai Vs Kamatchi Sponge & Power Coprn. Ltd. [2016 (3) TMI 220 - CESTAT CHENNAI] observed that declaration of the goods as Heavy Metal Steel Scrap cannot be converted into the welding pipes merely because 90% of the goods were found to welding pipes.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1165
Classification of imported goods - Filters - goods imported under project import - Registration of a Contract under ‘Project Import’ for online self clearing filters for drinking water as an ‘Initial Setup’ - Revenue was of the further view that the proposed import being a single/composite machine for the purpose of purification of water, could not be classified as a “project” under Customs Tariff Heading 9801 - The learned Commissioner vide Order-in-Appeal dt. 23.08.2011 set aside the order of the lower authority thereby allowing the appeal directing granting of Registration as sought.
Held that:- The observations of the learned Commissioner (Appeals) is apt and is also in tune with the CBEC Circular No. 659 - the water purification system itself could ideally be considered as a unit as explained in Regulation 3(d).
The water purification system itself could ideally be considered as a unit as explained in Regulation 3(d) - The Circular No. 659 also supports the contentions of the assessee by which the water treatment projects would get exempted. The assessee having satisfied the conditions of the said Circular, the Commissioner (Appeals) has rightly extended the benefit of the Circular to the assessee.
Appeal dismissed - decided against appellant.
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2018 (11) TMI 1164
Levy of penalty for abetting - Penalty u/s 114 of the Customs Act, 1962 - Smuggling - “Murate of Potash” (MOP) - restricted item - attempt to export MOP out of India in the guise of industrial salt - detention of consignments - Held that:- It is brought out from the evidence that appellant has issued invoices and that there was no physical transaction or delivery of goods which were raised in the invoices - Although, it may be true that by such invoices the exporter was able to indulge in fraudulent export, the involvement of the appellant in mis-declaration of the goods is not brought out.
Though penalty is attracted for abetment, imposition of penalty of ₹ 4 lakhs is on the higher side and requires to be reduced - appeal allowed in part.
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Insolvency & Bankruptcy
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2018 (11) TMI 1192
Corporate Insolvency Resolution Process - existence of Operational debt - Held that:- From the definition of “Operational creditor” and “Operational Debt”, it can be seen that the applicant has provided the services i.e. clearing the shipment of the respondent company from customs. Having providing services to the respondent company, the applicant clearly comes within the definition of Operational Creditor. Similarly, the claim of outstanding payments to applicant comes within the definition of Operational Debt. Respondent company having admitted that they have availed the services provided by the Operational Creditor and there being default in payment of claimed amount, and the respondent failed to establish the fact that there is pending dispute between the parties. Such application deserves to be admitted for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor.
It is also pertinent to note here that as per the reply of demand notice dated 22.05.2018 it can be seen that the Corporate Debtor himself have submitted that “Easytech i.e the Corporate Debtor has never refused to clear the outstanding dues as claimed in the demand notice. They have further submitted that they are incapable to clear the outstanding payments because of paucity of funds facing by their business organization”. Thus, they have admitted the liability.
We are satisfied that the present application is complete and there has been part admission of dues and non-payment of the same has resulted in default by respondent. Therefore, on fulfillment of the requirements of section 9 (5) (i) (a) to (d) of the Code, the present application is admitted.
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Service Tax
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2018 (11) TMI 1159
Scope of Courier Service - non-payment of service tax under the head - service provided worldwide - export of services or not - Circular No 96/7/2007-ST dated 23.08.2007.
Held that:- It is quite evident that in case of Export pre-paid UPS Worldwide has provided Courier Agency Service to Appellants, and in case of Import Prepaid and Export Freight Collect, appellants have provided Courier Agency Services to UPS Worldwide - In the agreement, by the use of phrase “in the export and import of freight forwarding of express documents/ parcels and shipments” it is quite evident that both appellant and UPS Worldwide are engaged in providing “Express Cargo Service”. The service as provided by UPS Worldwide to Appellant will be covered by Express Cargo Service as has been clarified by the Circular No 96/7/2007-ST dated 23.08.2007.
In case of Export Pre-paid, where the consignments are booked by the Appellant for delivery in for territory appellants receive the services from UPS Worldwide for picking up the said consignments from International Airport for delivery in foreign territory. Since Appellants have received the services from UPS Worldwide and the origin of the said services is within India, service tax required to be paid by UPS Worldwide is to be paid by the Appellant on reverse charge mechanism as provided for in Section 66A of Finance Act, 1994 read with rule 3(ii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - It is quite evident from the agreement that entire services provided by the appellant to UPS Worldwide for picking up the consignments in case of Export Freight Collect and for delivery in the case of Import pre paid have been provided in India. Since these services are provided in India, they are liable to service tax.
Exemption from Tax - Export of services or not - Held that:- In view of the fact the no component of service has been provided by the appellant outside India, the services provided by them to UPS Worldwide cannot be termed as export of services, even if the payment against them are received in convertible foreign exchange. Thus exemption claimed by the appellant against provision of these services, by treating them as export of service is not admissible.
Penalty - Held that:- Since the charge of suppression with intent to evade payment of tax has been upheld by us, the penalty under Section 78 is justified and upheld. - Also the penalties under Section 77, for non filing of proper returns and submission of complete information are upheld.
Demand of Interest - Held that:- Demand for interest under Section 75 of Finance Act, 1994 is also upheld
Appeal dismissed - decided against appellant.
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2018 (11) TMI 1158
Classification of services - Terminal Charges - whether classified under the head Port services or under Business Auxiliary Services? - Held that:- The activity under taken by the appellant for Railways will be appropriately classifiable under the ‘Business Auxiliary Services’, and liable to payment of service tax - reliance placed in the case of Chennai Port Trust vs. Commissioner of Central Excise [2017 (6) TMI 686 - CESTAT CHENNAI] - the activity under taken by the appellant for Railways will be appropriately classifiable under the ‘Business Auxiliary Services’, and liable to payment of service tax.
Time Limitation - Held that:- Hon’ble Supreme Court in the case of Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur [
2013 (1) TMI 616 - SUPREME COURT], in which the Hon’ble Supreme Court has observed that mere non-payment of duties is not equivalent to collusion or willful mis-statement or suppression of facts - extended period cannot be invoked - the demand for service tax has to be restricted to the normal time limit in respect of the initial show cause notice dated 26.10.2006.
Appeal allowed in part.
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2018 (11) TMI 1157
Intellectual Property Service - appellants entered into an agreement with M/s.Agfa-Gevert NV, Belgium and Hydro Dynamics Products, UK for supply of technical know-how and they have paid royalty to the foreign entities in consideration thereof - CBEC Circular No.80/2004-ST dated 17/09/2004 - Held that:- No evidence has been adduced by the department to show that such trademarks, know-how, etc. supplied by their foreign collaborators have been registered in India. Therefore, in view of the clarifications issued by CBEC vide circular, services received by the appellants cannot be held to be intellectual property right service.
As the said IPRs supplied by the foreign collaborators of the appellant are not registered in India, the technical know-how , etc. supplied by the foreign collaborators to the appellants do not fall under the category of “Intellectual Property Right” service thereby liable to pay service tax under Intellectual Property Right service in terms of Finance Act, 1994 - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1156
Transport of goods through pipe lines or other conduit - Fixed Facility Charges recovered from the customers - levy of service tax - Held that:- The gases are being supplied through pipe lines by the appellant to the customer, M/s Tata Steel Ltd., which is situated in adjacent premises. For this quantum of gases supplied, Excise duty is paid on the quantity measured through meter at the boundary wall between the two factories.
An identical dispute pertaining to the appellant’s own other unit situated in Rajasthan, came up before Delhi Bench of the Tribunal in BOC INDIA LTD. (FORMERLY KNOWN AS LINDE INDIA LTD.) VERSUS C.C.E., JAIPUR [2018 (3) TMI 854 - CESTAT NEW DELHI]. The facts in that are slightly different inasmuch as the delivery of gases was not through pipe lines, but through tankers. We find that the ratio of such decision can be applied to the present case - it was held in the case that fixed facility charges are part of transaction value for the purpose of Central Excise duty
The issue regarding inclusion of fixed facility charges for transportation of gases through pipe lines was clarified by CBEC - It was clarified that such fixed facility charges are to form part of the transaction value for the purposes of Central Excise duty.
There is no justification for demand of service tax - Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1161
Maintainability of petition - alternative remedy of appeal - Held that:- Once the petitioner has got efficacious alternative remedy of statutory appeal, the same ought to have been availed by it before invoking the writ jurisdiction of this Court - The writ petition is accordingly disposed of by relegating the petitioner to avail the alternative remedy of appeal under Section 85 of the Finance Act, 1994.
Condonation of delay in filing appeal - Held that:- Since during the pendency of this writ petition, the time limit to file the appeal has expired, it appears that the prayer of the petitioner for condonation of delay in filing the appeal deserves acceptance - the Appellate Authority is directed that in case the petitioner files an appeal within a period of four weeks from today, the delay in filing the appeal may be condoned and the appeal may be decided on merit and in accordance with law.
Condition of pre-deposit - Held that:- It would meet the ends of justice, if the petitioner is asked to make such pre-deposit in respect of the liabilities other than the penalty equivalent to the amount of services tax. Consequently, the Appellate Authority shall, on making pre-deposit by the petitioner at the prescribed rate qua the services tax, interest or penalty i.e., other than the penalty equivalent to the services tax, shall decide the appeal on merits.
Petition disposed off.
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2018 (11) TMI 1160
Maintainability of petition - alternative remedy of appeal - Held that:- Once the petitioner has got efficacious alternative remedy of statutory appeal, the same ought to have been availed by it before invoking the writ jurisdiction of this Court - The writ petition is accordingly disposed of by relegating the petitioner to avail the alternative remedy of appeal under Section 85 of the Finance Act, 1994.
Condonation of delay in filing appeal - Held that:- Since during the pendency of this writ petition, the time limit to file the appeal has expired, it appears that the prayer of the petitioner for condonation of delay in filing the appeal deserves acceptance - the Appellate Authority is directed that in case the petitioner files an appeal within a period of two weeks from today, the delay in filing the appeal may be condoned and the appeal may be decided on merit and in accordance with law.
Condition of pre-deposit - Held that:- It would meet the ends of justice, if the petitioner is asked to make such pre-deposit in respect of the liabilities other than the penalty equivalent to the amount of services tax. Consequently, the Appellate Authority shall, on making pre-deposit by the petitioner at the prescribed rate qua the services tax, interest or penalty of ₹ 10,0000/-, i.e., other than the penalty equivalent to the services tax, shall decide the appeal on merits.
Petition disposed off.
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2018 (11) TMI 1144
Valuation - petitioner pointed out that Rule 5 of the Service Tax (Determination of Value) Rules, 2006 has been struck down - Supreme Court decision in the case of Kusum Ingots & Alloys Ltd., v. Union of India and Another [2004 (4) TMI 342 - SUPREME COURT OF INDIA], referred by which, it has been held that once the particular provision is declared as ultra vires by one High Court, the said Rule cannot be invoked by any Authority of the Respondent-Department anywhere in the Country.
Held that:- Despite the lapse of one year, though the learned counsels at the bar have made a statement that the judgment of the Delhi High Court has been upheld by the Hon’ble Supreme Court in the light of the judgment rendered earlier in the case of Kusum Ingots & Alloys Ltd., v. Union of India and Another, neither the date of the said judgment is available with the learned counsels nor the copy thereof, is produced for perusal.
The writ petition is disposed of with a liberty and direction to the petitioner to appear before the concerned authority and show cause before him in pursuance of the show cause notice dated 12.07.2017 vide Annexure-E and cite the relevant judgments before the said authority.
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2018 (11) TMI 1155
Renting of immovable property - Joint property rented to tenants - scope of SCN - Held that:- SCN not having been issued to joint owners, nonetheless proceedings have been confirmed against four joint owners. Hence we have no hesitation in holding that orders of the lower authorities have gone beyond the scope of the SCN and even on these technical grounds, the impugned order cannot be sustained.
The issue is settled in the case of SAROJBEN KHUSALCHAND & OTHERS VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [2017 (5) TMI 240 - CESTAT AHMEDABAD], where it was held that Conceptually service tax is levied on the service provided, which is an intangible thing and hence it is not necessary to be identified with physical demarcation of the immovable property given on rent against individual co-owners. Once the value of service provided by a service provider is ascertainable service tax is accordingly charged.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1154
Business Auxiliary Service - service of auctioneering - appellants have rendered services in respect of conducting auctions of Tea - period from 10/2003 to 12/2005 - Held that:- The several activities have been averred in the SCN with regard to auction of tea. As per the Tea order 2003, the appellant who is a cooperative society has to do lot of procedures and also comply with the rules and regulations therein as a registered auctioneer. It is seen that predominately their activity as alleged in the SCN would fall within the ‘auctioneering services’ more than that of a broker.
The earlier decision of the Tribunal in the case of Forbes & Co. & Others Vs CCE Salem [2018 (1) TMI 1052 - CESTAT CHENNAI] is distinguishable since the auctioneering services have been brought within taxable service w.e.f. 1.5.2006.
Demand of service tax do not sustain - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1153
Liability of Service Tax - Sub-contractor - Erection, Commissioning or Installation Services - Composite contract or not - demand prior to 01.06.2007 - Held that:- There is no clarity as to whether contracts are composite contracts. Though such contracts are for setting up of power projects and is most likely to be involving supply of materials as well as service element, this fact needs to be verified.
The appellants have discharged service tax after 01.06.2007 under Works Contract Service. The demand of service tax under ECIS cannot sustain after 01.06.2007, if the contracts are of composite nature as laid down by the Tribunal in its decision in M/s. Real Value promoters [2018 (9) TMI 1149 - CESTAT CHENNAI] - In respect of the demand prior to 01.06.2007, the Hon’ble Apex court in the case of M/s. Larsen & Touboro [2015 (8) TMI 749 - SUPREME COURT] has held that the demand for Works Contract Service, which are composite in nature cannot sustain prior to 01.06.2007. This aspect also requires to be looked into.
The appellants have produced certificate issue by M/s. BHEL to support their contention that service tax on the said activities has been discharged by M/s. BHEL, who are the main contractors. This aspect has not been considered by the authorities below.
The matter requires to be remanded to the adjudicating authority, who is directed to look into the facts whether the contracts for the disputed period are composite contracts and whether the decision in the case of M/s. Real Value promoters and the decision in the case of M/s. Larsen & Touboro would apply - appeal allowed by way of remand.
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2018 (11) TMI 1152
Construction services - appellants provided construction activities to land owners in lieu of relinquishment of their right over the UDS in land as per the agreement - liability of service tax - Held that:- The period involved in the present case is from October 2004 to March 2009. The demand has been raised in the show cause notice under construction of residential complex services. The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service.
The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only.
The demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007 - The levy of service tax prior to 1.6.2007 cannot also sustain in view of decision in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1151
Reverse charge mechanism - appellants were engaged in providing clearing & forwarding services and they provided services to M/s. Project Management Inc. USA for the goods manufactured and exported by them for the period June 2008 - Held that:- The appellants have provided clearing and forwarding services to the service recipient who is situated outside India.
The Tribunal in the case of Bnazrum Agro Export Pvt. Ltd. [2018 (4) TMI 1239 - CESTAT CHENNAI], had occasion to analyse the very same issue and it was held that the said activities having been performed outside India will not be exigible to service tax.
Demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1150
Penalty u/s 76, 77 and 78 - Non-payment of Service tax - appellants though collected service tax, had not deposited the same to the Government - no intent to evade - Held that:- The appellants, though initially were paying service tax and were filing returns properly, had defaulted payment of service tax and filing of returns after 2005-06. The company was going through much financial hardship and it took some time for them to recover and for that reason, the service tax liability got accumulated. Nothing is brought out from evidence that there was any positive act of suppression with an intention to evade payment of service tax. Other than the delay caused due to financial crisis, we do not find any material to establish an intention to evade payment of service tax.
This is a fit case to invoke Section 80 since the appellant has put forward reasonable cause for the failure to discharge the service tax liability - the penalties imposed under Section 76 and 78 of the Finance Act, 1994 set aside without interfering with the penalty imposed under Section 77 of the Act ibid - appeal allowed in part.
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2018 (11) TMI 1149
Penalties u/s 76, 77 and 78 of FA - Non-payment of Service Tax - appellant had collected service tax but had not remitted the same to the Government Account - no intent to evade - Held that:- In the present case, facts indicate strongly that the non-payment was due to the financial difficulties. It is also brought out that appellant was burdened with payment of wages to the manpower supplied even though delayed amount / no amount was received from airlines. The amounts received from the customers were always less than the amounts to be spent by them and the difference was to be arranged through loan. The secured loans increased from 11.62 crores in April 2008 to 12.46 crores in March 2009 and unsecured loans increased from ₹ 76.67 lakhs to ₹ 97.78 lakhs; that sundry debtors have gone up from 4.43 crores to 7.56 crores during the same period. They furnished documents to establish these facts.
The delay / non-payment of service tax cannot be said, is an act of suppression of facts with intent to evade payment of tax. In fact, the demand has been raised on the basis of figures furnished by appellant and department has no allegation of any deliberate act done to evade payment of tax - the ingredients for imposing penalty under section 78 are not attracted.
Penalty u/s 76 and 78 set aside - penalty u/s 77 upheld - appeal allowed in part.
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2018 (11) TMI 1148
CENVAT credit - common input services used to render taxable as well as exempted services - Rule 6(3) (c) of the Cenvat Credit Rules, 2004 - invocation of extended period.
Extended period of limitation - contention of petitioner is that SCN dated 06.01.2011 will become time barred for the period prior to 2009, since an earlier show cause notice dated 12.10.2006 had already been issued to SFL on identical issue - Held that:- Since SCL and SFL remained as separate entities prior to their merger, we are of the view that invoking the extended period of limitation in the second show cause notice dated 06.01.2011 will not be against the order of the Supreme Court in the Nizam Sugar case. [2006 (4) TMI 127 - SUPREME COURT OF INDIA], where it was held that extended period cannot be invoked in a second show cause notice if, for identical facts for an earlier period, a show cause notice has already been issued.
The appellant will not be entitled to credit on common input services. Turning to the period post 01.04.2008, it is noted that Rule 6(3) has been amended from this date and Rule 6 (3A) has been inserted in place of the erstwhile Rule 6(3) (c) which had prescribed a limit of 20% on the common input services credit. Rule 6(3A) has prescribed the procedure for proportionate reversal of credit availed on common input services - The Tribunal in the case of M/S. SIFY TECHNOLOGIES LTD. VERSUS COMMISSIONER OF SERVICE TAX, LTU, CHENNAI [2018 (9) TMI 317 - CESTAT CHENNAI] has upheld that in respect of common input services, an assessee will need to follow either sub rule 2 or Sub Rule 3 of Rule 6. By maintaining separate accounts and availing cenvat credit only in respect of the exclusively taxable services in full, the appellant has subscribed to sub rule 2 - even for the period post 01.04.2008, despite the amendment carried out in Rule 6(3) and insertion of sub Rule 3A the decision of Tribunal is followed.
Another case of appellant is that the appellant is entitled to the full cenvat credit in respect of input services specified in Rule 6(5) of the Cenvat Credit Rules - Held that:- This sub rule permits full credit of 17 services specified therein - there is no reason for denying the above credit. It is also relevant to record that in the earlier proceeding culminating in the Order In Original dated 30.09.2009, the full credit of services under Rule 6(5) was in fact allowed by the adjudicating authority.
Appeal allowed in part.
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Central Excise
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2018 (11) TMI 1143
Refund claim - unjust enrichment - section 11B of Central Excise Act, 1944 - matter was remanded to test the issue of unjust enrichment, whether the appellants have passed on the incidence of refund to any other person or otherwise? - Held that:- There is no dispute that the amount of ₹ 38 lakhs was paid by the appellant as duty under the head ‘Excise duty’ which on the adjudication was appropriated against the confirmed demand. Therefore, it cannot be said that amount of ₹ 38 lakhs deposited by the appellant is not towards duty but only as a pre deposit. Even if it is considered that the amount paid is not duty, the only mechanism provided in Central Excise Act for refund is under section 11B of Central Excise 1944.
The issue is decided in the case of M/S. PETRONET LNG LIMITED VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD [2018 (8) TMI 111 - CESTAT AHMEDABAD], where it was held that the core issue decided is duty or deposit, the refund is governed by section 11B of the Central Excise 1944.
The issue of unjust enrichment has to be dealt with before sanctioning of any refund - Appeal dismissed - decided against appellant.
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2018 (11) TMI 1142
Valuation - inclusion of Guaranteed Powder Factor in assessable value - disallowance of reduction in assessable on “Guaranteed Powder Factor” holding that is not a price variation clause but is in the nature of a penalty - Held that:- It is a common practice in many agreements to have clauses with respect to variation and prices, depending upon several factors. It is also a common practice in agreements to have a clause related to achievement of the desired benchmarks and a reward or penalty for either over achieving or not achieving the benchmarks. In this case it is in the form of a guaranteed powder factor which will be evaluated once in every quarter and if there is shortfall, they will make proportionate deduction in payment. There is another clause in the agreement towards price variation depending upon various factors including the guarantee for blast failure.
It is evident that the respondent is paid less if they do not meet the guarantee powder factor but will not be rewarded if they over achieve - This issue is no longer res integra . In the appellant’s own case Gulf Oil Corporation Limited [2009 (11) TMI 417 - CESTAT, KOLKATA], it has been held that the penalty in the contract in case the explosives are not upto the bench mark agreed to between the parties will not have any bearing in the assessable value.
The Guaranteed Powder Factor in the form of penalty cannot alter the assessable value under section 4 of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1147
Clandestine removal - Principles of Natural justice - CESTAT rejected the appeal without appreciating the facts and evidence before it - Held that:- No doubt, the CESTAT has not discuss the evidence as greatly as it normally does and is expected to. What is however evident - from a plain reading of paras 6 to 10 is that the main points, which ultimately led the Commissioner to impose penalty and also inflict duty liability were taken into account. It is of course, desirable that the CESTAT as First Appellate Forum should discuss the evidence in some depth.
This Court is of the opinion that upon a total analysis of the circumstances, especially having regard to the statements made by the various parties including the third parties i.e. the sellers of the raw material, the inference drawn by the Commissioner could not have been faulted - questions of law urged by the appellant are purely factual.
Appeal dismissed.
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2018 (11) TMI 1146
Restoration of appeal - appeal was rejected on a hyper-technical ground i.e. an apparent defect in the appeal format - Held that:- The bare reading of the order would show that the Committee of Commissioners have permitted an appeal against the respondent/assessee for disputed duty to the extent of ₹ 28,07,089/- - However, an inadvertent mistake was committed in the appeal format with respect to the amount which was mentioned as ₹ 36,88,077. Ordinarily a judicial tribunal – like CESTAT is expected to permit rectification of such an obvious error; that it instead chose to dismiss the appeal altogether is shocking to say the least.
The impugned order and the order of rectification are hereby set aside - appeal against the respondent- Pymen Cable India Ltd. is hereby restored to its original place on the file.
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2018 (11) TMI 1133
Maintainability of petition - Held that:- None appears for the petitioner nor any representation is made even though the matter was called on two occasions. It is apparent that the petitioner is not interested in prosecuting the case - petition dismissed.
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2018 (11) TMI 1141
Clandestine removal - Electric Motors and power driven pumps - clearance of parts without payment of duty - demand mainly based on the statements recorded - opportunity for cross-examine not provided - Held that:- There are no documentary evidence put forward by department to establish the under-valuation of scrap and clearance of pats without payment of duty. It is very much clear that though the appellants requested for cross-examination of the said persons, the original authority or the Commissioner (Appeals) has not acceded to the request.
When the department relies upon statements, the opportunity of cross-examination of such witnesses ought to be granted to the appellants - The denial of cross-examination tantamount to violation of natural justice. The demand has wholly been raised, on the basis of the statements recorded. In such cases, the denial of cross-examination is fatal to the proceedings.
Clearance of motor pumps without payment of duty - Held that:- The quantification has been made basing upon the statement of the Manager of the Authorised Service Centre. According to the appellants such service station was engaged only for a short period. The quantification of demand on the basis of the statements of such persons for a period prior to 1997 indeed cannot sustain - the department has failed to establish the allegations raised in the show-cause notice - demand cannot sustain.
Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1140
Penalty - CENVAT Credit - alleged disproportionate in respect of the inputs physically found to be short of book balance - demand alongwith interest and penalty - Held that:- The judgment/Order of this Bench for the earlier period in the appellant’s own case INDIAN ADDITIVES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, CHENNAI [2018 (8) TMI 1576 - CESTAT CHENNAI] has held that Since the issue being an interpretational one and the appellants having litigated the same upto the Hon’ble High Court, penalty not sustainable and is set aside. .
As could be seen from the records, the Order-in-Original was passed on 26.07.2006 and the Order-in-Appeal came to be passed on 09.10.2017 whereas, the Hon’ble jurisdictional High Court passed its Order on 23.01.2018. Hence, a reasonable view could be adopted at least for this year/period, to hold that the matter which involved interpretational issue came to be settled after passing of the Order-in-Appeal which is impugned herein and that could be a ground to hold that there was no mala fide intention of evading duty by the appellant.
The demand raised against the appellant and the consequential interest levied by the adjudicating authority requires no interference - penalty set aside - appeal allowed in part.
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2018 (11) TMI 1139
CENVAT Credit - denial on the ground of non-registration - Held that:- The issue with regard to the non-registration for availing the benefit of CENVAT Credit has been laid to rest by the decision of the Hon’ble High Court of Madras in the case of COMMISSIONER OF SERVICE TAX-III, CHENNAI VERSUS CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, CHENNAI & M/S. SCIOINSPIRE CONSULTING SERVICES (INDIA) PVT LTD, CHENNAI [2017 (4) TMI 943 - MADRAS HIGH COURT], where it was held that Rule 5 of the 2004 Rules does not stipulate registration of premises as a necessary prerequisite for claiming a refund - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1138
CENVAT Credit - input services - Global Product Liability Insurance - reverse charge mechanism - Held that:- The issue settled in appellant own case M/S. SUNDARAM DYNACAST P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II [2018 (2) TMI 2 - CESTAT CHENNAI], where it was held that Product Liability Insurance were held to be covered by the definition of "Input Services", so as to make the same as cenvatable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1137
Valuation - compounded levy scheme - section 3A(3) of Central Excise Act, 1944 - whether the appellant is eligible for abatement during the period when the rolling mill was shutdown / non-functional? - Held that:- The Commissioner has permitted to furnish copies of letters dated 1.10.1998 and 1.10.1999 to the appellant. The only strong inference that can be drawn from this letter is that the intimations regarding the closure of the factory was received by the department. Therefore, the rejection of abatement on the ground that appellant did not give intimations cannot sustain.
The rejection of abatement is without basis - Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1136
Valuation - prototypes - Department contends that the valuation under Section 4(1)(b) r/w Rule 11 and Rule 8 should be applied - Held that:- At no stretch of imagination, the assessable value of similar model vehicle can be ₹ 71,14,198/-. It is to be noted that under Rule 126 of Central Motor Vehicle Rules, 1989, a prototype of every motor vehicle shall be subject to testing by designated Government Departments or Research Associations or Testing Institutes to ascertain the compliance of provisions of the Act and Rules. The said Act itself uses the word ‘prototypes’. Only after certification by such authorities can the manufacturer of motor vehicles manufacture and market the motor vehicles. The similar model vehicles which are commercially manufactured can be said to be copies of the prototypes. It cannot be then said that these prototypes are consumed in further manufacture of motor vehicles. Thus Rule 8 of Central Excise Valuation Rules 2000 will not apply to such a situation.
Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (11) TMI 1145
Classification of goods - tyres - Whether under section 14 in Chapter-IV “Goods of special importance in inter-state trade or commerce” of CST Act, 1956, subentry (XIV) of main entry No. (IV) containing reference to “tyres” could be construed as tyres made of “rubber” even when the main classification is of ‘Iron and Steel’? - Applicability of CST Act, 1956.
Held that:- The word “tyres” in entry (xiv) of sub-section (iv) of Section 14 of the ‘Central Act’ cannot be read in isolation and has to be read in the group of items in which the entry is made. Sub-section (iv) starts with the words “iron and steels”, thus items referred to in entry (xiv) necessarily has to be read contextually in that background along with other entries being the ‘wheels, tyres, axles and wheels sets’. Here the word “tyres” cannot be read so as to mean rubber tyres. It has to be read conjunctively with other entries, genus of which is iron and steel. Tyres necessarily would not acquire the connotation of rubber tyres so understood in common parlance, unlike a trader specifically dealing with the product.
The principle to be adopted for construction of tariff entries is no longer res integra. In the absence of statutory definitions, excisable goods mentioned in tariff entries are to be construed according to the trade practice.
The origin of the word “tyres”, as is so described in the dictionary, was in the 15th century denoting curved pieces of iron with which the carriage wheels were shod. In fact, it is also described as a strengthening band of metal fitted around the rim of a wheel especially of a railway vehicle. There can be a case where such tyres may be having a rubber covering, but then it would definitely not cover the activity of the Assessee who is in the business of retreading of rubber tyres - the entry “tyres” in the central legislation would not be construed as tyres retreaded with rubber, even though the main classification is that of iron and steel.
Assessee would be liable to be assessed as per the ‘State Act’ and not the ‘Central Act’.
Reference disposed off.
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2018 (11) TMI 1135
Refund of VAT - goods sold inter-state - denial of refund on the ground that there is no evidence of interstate movement of the goods - case of Revenue is also that petitioner could not produce any reliable evidence of actual movement of goods. Mere production of C form would not ensure the benefit of reduced tax - Held that:- petitioner could not produce any reliable evidence of actual movement of goods. Mere production of C form would not ensure the benefit of reduced tax
Petitioner is directed to deposit a sum of ₹ 20 lakhs with the respondent authorities latest by 30.11.2018 and further furnish a bank guarantee of a similar amount which will be kept alive till the First Appeal is disposed of - petition disposed off.
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2018 (11) TMI 1134
Recovery of dues of the private limited company from the petitioner as the director of the company - GVAT Act - Held that:- No provision is brought to our notice under the VAT Act enabling the department to do so. Concept of the company and its directors being separate and distinct entities is all too well established.
In the present case, in absence of any statutory provision and further in absence of any prima facie facts even suggesting that the company was created only to defraud the government revenue or some such other valid reason, the department cannot seek recovery of the company's dues from its directors - Additional ground in the present case is that it is doubtful whether the petitioner has any ownership rights over the property in question.
Petition disposed off.
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Indian Laws
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2018 (11) TMI 1163
Disciplinary proceedings against CA - professional misconduct - Sale of 100 shares in 1999, which were transferred to the Chartered Accountant’s own name - Disciplinary Committee took up the case and ultimately found that the conduct of the Respondent No.1-Chartered Accountant was derogatory in nature - guilty of ‘Other Misconduct’ under Section 22 read with Section 21 of the Chartered Accountants Act, 1949.
Held that:- The Disciplinary Committee has, on facts, found the Chartered Accountant guilty of a practice which was not in the Chartered Accountant’s professional capacity - Thus, it was entitled to do under Schedule I Part-IV subclause( 2) if, in the opinion of the Council, such act brings disrepute to the profession whether or not related to his professional work.
The impugned judgment is incorrect and must, therefore, be set aside - appeal disposed off.
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2018 (11) TMI 1162
Dishonor of Cheque due to insufficiency of funds - present appeal is filed on the ground that Appellate Court has failed to consider the falsity of defense witness - recovery of loan - Sections 138 and 142 of the Negotiable Instruments Act - Principles of natural justice - Held that:- The factum of issuing the cheques on 30.06.2012 not being disputed by the accused and the attempt to show that the subject cheque was obtained on the date of executing the mortgage deed being falsified despite examining of D.W.1 and D.W.3. The First Appellate Court has still dismissed the complaint by reversing the well considered judgment of the trial Court.
It is pointed out by the learned counsel for the appellant that the first Appellate Court by surmises and conjectures has laid its conclusion that the variance in colour and writings found in the subject cheques, amounts to material alteration in the Negotiable Instrument. The said findings of the First Appellate Court is perverse, contrary to law - The evidence of D.W.2, and the explanation of the accused goes to show that the subject cheques were given to the complainant on 04.11.2011 itself when he mortgaged the property and obtained loan of ₹ 2,00,000/- gets falsified.
The order of the First Appellate Court bristles with infirmity and perversity - appeal allowed.
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