TMI Tax Updates - e-Newsletter
December 2, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
-
GST:
Classification of goods - the applicant’s product is not classifiable as ‘Aerated Waters’ under CTH 22021010 and the product commercially named as ‘K juice Grape’ is classifiable under CTH ‘22021090- Other’ as it contains the Grape fruit juice with added natural and artificial flavours.
-
GST:
Classification of supply - the applicant supplies materials and in conjunction provides the service of erection of the Systems into at the Integrated Cryogenic Engine & Stage Test Facility making all the systems together as an immovable property - The present supply is a composite supply to be treated as a supply of services.
-
GST:
An exemption or a relief provided in an enactment shall only be interpreted in the exact wording employed in the legislature. Nothing can be extrapolated or inferred to extend the scope of an exemption.
-
Income Tax:
Prohibition of Benami Property Transactions (1st Amendment), Rules, 2019
-
Income Tax:
Addition u/s 56(2)(viia) - valuation of purchasing the shares of foreign company from its directors - Provisions of section 56(2)(viia) cannot apply to a foreign company as the relevant Rule 11U which defines ‘balance sheet’ was not applicable to a foreign company. - The amendment in the rule is only prospective in nature and cannot apply to the year under appeal.
-
Income Tax:
Penalty u/s 271B - assessee failed to get his account audited and furnish report u/s 44AB even after release of documents where were seized by the authorities - If the assessee had filed the audited accounts within the 3 months after 30 September 2008 then it would be a reasonable cause for not filing the audited accounts but the assessee had taken more than 3 years to file the audited accounts, which in our view, is not in accordance with law.
-
Income Tax:
Bogus expenditure - addition @20% - Since all these expenses are otherwise essential for carrying out the business activity by the assessee, therefore, the claim of the assessee cannot be considered as absolutely bogus or falls - additions restricted to 10% instead of 20%
-
Income Tax:
Speculation loss u/s 73 - loss incurred on purchase and sale of shares in respect of delivery based transactions - the aggregation of the share trading loss and profit form derivatives transaction should be done before application of Explanation to section 73 of the Act and since there was surplus profit on such aggregation, Explanation to section 73 would not be applicable.
-
Income Tax:
Reopening of assessment u/s 147 - AO himself did not make addition in respect of the first part of the items of reason recorded - The addition made by the AO on the second part of the reason recorded i.e. disallowance of crane charges and boki charges has been deleted by the Ld. CIT(A) - additions made on account of the items other than the items in reasons recorded deleted.
-
Income Tax:
Set-Off of brought forward unabsorbed depreciation against income from other sources and/or capital gains - CIT(A) has rightly directed the AO to allow the set off of unabsorbed depreciation allowance carried forward from earlier years against ‘income from other sources’ after necessary verification.
-
Customs:
EPCG scheme - additional duty liability which had not been disclosed in the B/E - the impugned show-cause notice is about the recovery of duty foregone in terms of the conditions of the Notification. The appellants having not appealed against the assessment of the Bill of Entry and having not requested for provisional assessment, cannot demand the same while replying to the show-cause notice.
-
Customs:
Conversion of shipping bills - it is for conversion from Advance Authorization scheme to duty drawback scheme - the request for conversion of the shipping bill cannot be disallowed by pressing into the application of time limit prescribed by the Board in its circular
-
Customs:
Imposition of penalty u/s 114A and 112(a) of Customs Act - Liability of penalty on on the authorized signatory or on the proprietor of the firm - penalty under this Section is payable by the person by whom duty or interest there upon is payable.
-
Customs:
Jurisdiction - authority to file an appeal - a person, who is not a party to a writ petition - the impugned order passed by the learned single Judge adversely affects all the parties whose applications are pending for registration in response to the public notice dated 04.10.2019. - Appeal is maintainable.
-
SEBI:
Norms for Debt Exchange Traded Funds (ETFs)/Index Funds
-
SEBI:
Cut-off Time for Determining Minimum Threshold of Margins to be Collected from Clients
-
SEBI:
Framework for issue of Depository Receipts - Permissible Jurisdictions and International Exchange(s)
-
SEBI:
Investment Policy of Clearing Corporations - it has been decided to permit the Clearing Corporations to make investments in Overnight Funds
-
Service Tax:
Classification of services - technical knowhow - Know-how is not recognized as Intellectual Property law by any Indian Law for the time being in force - appellants are not liable to pay service tax on ‘Consulting Engineering Services’ and ‘Intellectual Property Services’ as demanded by the department
-
Central Excise:
CENVAT Credit - input - iron Ore Fines - whether 'exempted item' within the meaning of Rule 2(d) of the CENVAT Credit Rules, 2004 or not - whether by-product or not - non-maintenance of separate records - the matter requires detailed deliberation with reference to each and every aspect pointed out in the order - matter restored before the CESTAT
Articles
Notifications
GST - States-
Removal of Difficulty Order No. 08/2019- State Tax - dated
27-11-2019
-
Bihar SGST
Bihar Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019.
-
38932 - FIN-CT1-TAX-0043-2017 - dated
19-11-2019
-
Orissa SGST
Odisha Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019
-
36413 -FIN-CT1-TAX-0043/2017 - dated
25-10-2019
-
Orissa SGST
Amendment in Notification No. 25813-FlN-CT1-TAX-0043/2017, dated the 30th July, 2019
-
36407-FIN-CT 1-TAX-0072/2017 - dated
25-10-2019
-
Orissa SGST
Amendment in Notification No. 27485-FIN-CT1-TAX-0072-2017, dated the 16th September, 2017
-
S.O.123/P.A.5/2017/S.7/2019 - dated
24-10-2019
-
Punjab SGST
Notification under section 7(2) to notify the grant of alcoholic liquors licence neither a supply of goods nor a supply of service under the PGST Act, 2017
-
S.O.122/P.A.5/2017/S.9/Amd./2019 - dated
24-10-2019
-
Punjab SGST
Amendment in Notification No. S.O.70/P.A.5/ 2017/S.9/2019, dated the 06th June, 2017
-
S.O.120/P.A.5/2017/S.9/Amd./2019 - dated
24-10-2019
-
Punjab SGST
Amendment in Notification No. S.O. 35/P.A.5/ 2017/S.9/ 2017, dated the 30th June, 2017
-
S.O.119/P.A.5/2017/S.11/Amd./2019 - dated
24-10-2019
-
Punjab SGST
Amendment in Notification No. S.O.37/P.A.5/2017/S.11/2017, dated the 30th June, 2017
-
S.O.118/P.A.5/2017/Ss. 9, 11, 15 and 16/Amd./2019 - dated
24-10-2019
-
Punjab SGST
Amendment in Notification No. S.O.17/P.A.5/2017/S.9, 11, 15 and 16/2017, dated the 30th June, 2017
Income Tax-
101/2019 - dated
29-11-2019
-
IT
Prohibition of Benami Property Transactions (1st Amendment), Rules, 2019
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2019 (11) TMI 1366
Classification of goods - rate of GST - fruit beverages or drinks 'K Juice Grape' - scope of definition under the FSSAI Act in section 2.3.3.A - Is there any persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? - whether the said product fall under the category of fruit beverages or fruit based drinks? HELD THAT:- The label of the product have the description Carbonated Fruit Beverage . As per the label, the ingredients are Carbonated water, sugar, grape juice, acidity regulator, etc. It also has permitted flavour and colour - as per the classification of FSSAI, Fruit juices are unfermented but fermentable product obtained by a mechanical process from sound, ripe fruit or the flesh thereof and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage and are intended for direct consumption. In the instant case, the product is made by adding fruit juices to large quantities of water along with other preservatives which then goes through a carbonation process. The juices are not meant for direct consumption here but are just one ingredient of the drinks - fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the product of the applicant is not thermally processed fruit juice but covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in Appendix A to these regulations. In the instant case, water constitutes around 76% in the products in question. The product is prepared by adding fruit juice, procured by the applicant (as per the letter addressed to the applicant by Food Systems Asia), to RO water. It is evident that this large quantity of water results in diluted product which as per the Explanatory Notes above gets classified under CTH 2202 - In the case at hand, the manufacturing process of the products involves addition of Grape juice (13%) to the filtered sugar solution (86%-76% RO water and 10% Sugar) in a blending tan which is subjected to Mild Thermal Treatment (loss of water by 2 to 3%), cooled to room temperature, to which additives and preservatives as per the formulation and coloring flavoring agent are added. Waters with added carbon dioxide which may contain added preservatives and flavoring, sugars are separately classified under Para 2.10.6 as Carbonated Water and Category 14.1.1.2 as table waters and soda waters which are different from Carbonated Fruit Beverages or Fruit Drinks of Para 2.3.30 and Category 14.1.4.1 of FSSAI regulations - the applicants product is classified under Para 2.3.30 of FSSAI and not para 2.10.6. It is evident that the carbonated water described in Para 2.10.6 of FSSAI regulations are the Aerated Waters covered under CTH 22021010. Therefore, the applicant s product is not classifiable as Aerated Waters under CTH 22021010 and the product commercially named as K juice Grape is classifiable under CTH 22021090- Other as it contains the Grape fruit juice with added natural and artificial flavours.
-
2019 (11) TMI 1365
Classification of supply - supply of Engineering, Procurement Construction (EPC) contract for establishment of Integrated Cryogenic Engine Stage Test facility (ICET) - composite supply or not - natural bundling of services - Establishment of Fluids Servicing System (FSS) - principal supply or not - taxable at 5% GST vide notification No. 45/2017 -Central Tax (Rate) dt 14 th November, 2017 or not - If Principal Supply taxable at 5%, whether the entire transaction in the contract is taxed as per the rate applicable to Principal Supply? HELD THAT:- The applicant is awarded contract by IPRC to Establish Integrated Cryogenic Engine Stage Test Facility at Mahendragiri in the capacity of Prime Contractor - it is seen that the applicant supplies Goods and Services as required in the contract. It is to determine if the supply of goods and services by the applicant under contract to IPRC can be considered as a composite supply. In the case at hand, the applicant supplies civil electrical and Air conditioning system, structural and Mechanical system, Facility Fluid System, safety and Fire protection system, Instrumentation, control and data acquisition system - the whole contract for 'Establishment of an Integrated Cryogenic Engine Stage Test Facility' at ISRO Propulsion Complex (IPRC), Mahendragiri is a composite contract as various supplies of goods and services are naturally bundled together. In the case at hand, the applicant has a contractual obligation to supply the materials and also to erect the civil electrical and Air conditioning system, structural and Mechanical system, Facility Fluid System, safety and Fire protection system, Instrumentation, control and data acquisition system. Such erection and installation is to be done to the Integrated Cryogenic Engine Stage Test Facility' by means of civil works. It involves the transfer of ownership of these equipment, instruments, consumables, civil and electrical goods involved in the erection, construction and installation of these systems. The Integrated Cryogenic Engine Stage Test Facility itself is an immovable structure erected at the site in Mahendragiri. Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID CORRECT ENGINEERING WORKS ORS. [ 2010 (4) TMI 15 - SUPREME COURT] has held that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinions constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. Applying the above to the case at hand, the erection of the Systems at site makes the system a permanent fixture, i.e. immovable property. Thus it is clear that in the case at hand, the applicant supplies materials and in conjunction provides the service of erection of the Systems into at the Integrated Cryogenic Engine Stage Test Facility making all the systems together as an immovable property - Therefore, the whole contract for 'Establishment of an Integrated Cryogenic Engine Stage Test Facility' at ISRO Propulsion Complex (IPRC), Mahendragiri at ISRO Propulsion Complex (IPRC), Mahendragiri is also a 'Works Contract'. The present supply is a composite supply to be treated as a supply of services. As it is a supply of service, Notification No.45/2017-Central Tax (ate) dated 14.11.2017 and corresponding SGST notification G.O. (MS) No. 161, dated 14.11.2017 which provides for concessional rate of tax for a supply of goods is not applicable. The applicable rate of tax for this supply which is a supply of service will be the rate of tax of applicable for this supply of works contract.
-
2019 (11) TMI 1364
Levy of GST - rate of GST - Extraction of Timber/ Bamboo in natural Forests - Transportation of Timber/ Bamboo from natural Forests to the Govt. Depots - Maintenance of Govt. Depots like classification/ grading of timber and bamboo and wages to Mastris for supervision - HELD THAT:- What is a support service in relation to the above had been defined by means of an explanation to the same entry. And the explanation had employed the word 'mean' which is restrictive in nature. Thus what is given in explanation shall only mean as support services and nothing else shall. From the explanation given to the entry, the support services mentioned are only in relation to agriculture and fishery and animal husbandry. None of the services are mentioned in relation to natural forests. Moreover, agricultural produce and natural forest produce are entirely different and involve different processes starting form plantation to harvesting - Hence in the absence of any specific exemption to that effect, one cannot extend the services that are mentioned in relation to agriculture to those of natural forests. It is a settled law that an exemption or a relief provided in an enactment shall only be interpreted in the exact wording employed in the legislature. Nothing can be extrapolated or inferred to extend the scope of an exemption. Therefore, the service in question viz., a) cutting logging b) Transportation c) maintenance of depots of forest department cannot be covered under the said entry 24(i) - The transactions referred to are taxable at the rate of 9% CGST + 9% SGST as per the general entry 35 of the notification no 11/2017 dt:28-06-2017.
-
2019 (11) TMI 1363
Levy of GST - composite supply or not - 3 contracts entered for establishment of Solar PV Power Project - whether classified under SI. No.234 of Schedule I of the Notification No.1/2017- Central Tax (Rate) dt.28.06.2017? - whether GST can be paid on value relating to supply of solar modules alone at 5 % as per SI. No.234 of Schedule I of the Notification No.1/2017- Central Tax (Rate) dated. 28.06.2017? HELD THAT:- In the instant case, The cross fall breach clause as mentioned above establishes the indivisibility of the contract and reinforces the conditionality that all the three contracts in unison obligate the applicant to take up all activities i.e., end to end setting up of Solar Power Plant right from procurement of equipment to Erection and Operation Maintenance of the same. In the present case, the applicant received the contracts for providing the design, procurement, supply, installation, testing commissioning and the operation maintenance of the Solar PV Plant along with grid connecting system for a period of 5 years from the date of successful completion of trial run. There is both supply of goods and services in the case as per agreement and they are naturally bundled as a package - the contention of the applicant that it's a composite supply is agreed upon. Whether the composite supply of the applicant would fall under works contract or not? - HELD THAT:- In the present case, the applicant submits that the solar Plant is fixed to land for its efficient functioning and for this purpose, minor civil work is undertaken to fix the solar power Modules - It is evident from the said activities that the project has an element of permanence. But the applicant had taken a different stance by furnishing certain photographs of the project and stating that the solar modules/panels are merely fitted with nuts and bolts on mounting structure and claimed that it is a movable property. This presentation of the issue is in clever manner but not in bonafide manner in view of the fact that the very mounting structure is embedded permanently to the earth by civil foundation and support. In fact the solar modules are fixed on civil foundation and the degree/mode of annexation has the character of permanence and immovability. As it involves permanent beneficial enjoyment of the land to which the power plant is installed, it satisfies the condition of things embedded in the earth. The view of the applicant that the project is movable is incorrect - Thus the instant case satisfies the condition of immovable property and falls under the purview of works contract, which is essentially a service and rate of tax shall be determined in accordance with notification no 11/2017 CT (Rate) dt:28-06-2017 as amended from time to time.
-
2019 (11) TMI 1362
Detention of goods alongwith vehicle - detention on the ground that the E-way Bill did not indicate the correct number of the vehicle that was carrying the goods - non-compliance with the provisions of Section 129 of the CGST/SGST Act - HELD THAT:- The detention of the goods was justified for non-compliance with the provisions of Section 129 of the CGST/SGST Act, the respondent are directed o release the goods and vehicle of the petitioner, on the petitioner furnishing a bank guarantee to cover the tax and penalty amounts determined in Ext.P6 order. The respondent shall thereafter forward the files to the adjudicating authority for an adjudication in accordance with Section 130 of the CGST/SGST Act - petition disposed off.
-
2019 (11) TMI 1353
Classification of supply of services - naturally bundled services - composite supply/principal supply - supply of services such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., - supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them are naturally bundled - exempt services - supplies made to the consumers through contractors and third parties for the purpose of transmission or distribution of electricity or sale of electrical energy - exempt services or not - HELD THAT:- The applicant being a distribution licencee of electricity is of the view that various other activities or services rendered for which they charge separate recoveries from their customers are naturally bundled with distribution of electricity and accordingly those services are also exempted under entry 25 of Notification no.12/2017 - Central Tax (Rate) dated 28.06.2017 wherein Transmission or distribution of electricity by an electricity transmission or distribution utility - In the present case, the exemption is only for Transmission or distribution of electricity only and not to any other services for which separate charges are fixed and collected. For a supply to be considered as a composite supply, its constituent supplies should be so integrated with each other that one is not supplied in the ordinary course of business without or independent of the other. In other words, they are naturally bundled - Merely because the provider of service is bound by a statute to provide the related supplies together with supply of electricity, it would not make the said supplies composite unless they are naturally bundled. Further, any service cannot become a composite merely because they are provided by the same supplier to the same service provider - the distribution and supply of electricity only is exempted and the other services are not exempted and also not naturally bundled to become composite supply, and any other services provided are taxable. The works under the schemes DDUGJY/ IPDS/ADSMS referred by the applicant fall under the works contract; and covered under entry no. (ii) of S. No. 3 of the table of notification no. 11/2017-Central Tax (Rate), Dated - 28th June 2017 as amended from time to time and corresponding notifications under APGST Act, 2017; and the applicable rate of tax is 18% (9% under Central tax and 9% State tax). Whether the supply of services such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., and supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them are naturally bundled and thus form part of the composite supply of principal activity of supply of electrical energy? - Whether the supply of services such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., and supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them can be treated as part of principal supply of transmission or distribution of electricity which is exempted? - Whether the above supplies made to the consumers through contractors and third parties for the purpose of purpose of transmission or distribution of electricity or sale of electrical energy are also exempted? - HELD THAT:- The Transmission or distribution of electricity by an electricity transmission or distribution utility is only exempted vide entry no. 25 of the Notification No. 12/2017- Central Tax (Rate) New Delhi, the 28th June, 2017. Any service, other than transmission or distribution of electricity, rendered by the applicant is not covered in the said entry for claiming exemption. Services rendered apart from transmission or distribution of electricity are taxable. Whether the works executed under Deendayal Upadhyay Gram Jyoti Yojna for Rural Electrification ( DDUGJY ), Integrated Power Development Scheme ( IPDS ) and Restructured Accelerated Power Development and Reforms Program supplies made through contractors are liable to 12% GST since they are executed under grants provided by central government and no commercial activity is involved with regards these works? - whether the execution of the Agricultural Demand Side Management Scheme (AGL) works are liable to 12% GST since they are executed for the purpose of non-commercial? - HELD THAT:- The activities referred by the applicant are not covered in the Notification No.24/2017-Central Tax (Rate), dated 21.09.2017 for availing concessional rate of 12% GST rate and the applicable rate of tax is 18% (9% under Central tax and 9% State tax). Whether the supply of services and goods made by the applicant through contractors by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the tube well of the farmer or agriculturist for agricultural are exempted vide Notification No.14/2018- Central Tax (Rate) dated 26.07.2018? - HELD THAT:- The Applicant is only entitled for the benefit of NIL rate of GST under SI. No. 10A of Notification no. 12/2017-Central Tax (Rate), dated 28.06.2017, amended by notification no. 14/2018-Central Tax (Rate), dated 26.07.2018 for the stated works and not for the contractors providing services to the applicant.
-
2019 (11) TMI 1331
Profiteering - purchased of a Flat in the Respondent's project Palm Wood Royal Gulmohar Green - benefit of input tax credit not passed on - contravention of provisions of Section 171 of the CGST Act, 2017 - HELD THAT:- It is evident that the respondent has denied the benefit of ITC to the buyers of the flats being constructed by him in contravention of provisions of section 171(1) of CGST Act, 2017 and has thus profiteered an amount of ₹ 85,97,436/- as per the explanation attached to section 171 of CGST Act, 2017. It is also established from the facts of the present case that the respondent in constructing two projects viz. 'Gulmohar Green' as a residential project and 'Andaman Square' as the commercial project. It is further established from the record that the respondent has availed benefit of ITC on the above commercial project also which he has himself admitted during the course of the present proceedings and he has also furnished the details of the area sold and the turnover realised by him on the above project. Therefore there are sufficient grounds to believe that the respondent is liable to pass on the benefit of additional ITC to the buyers of the commercial area as per the provisions of section 171 of CGST Act. Application disposed off.
-
Income Tax
-
2019 (11) TMI 1358
Revision u/s 263 - HELD THAT:- From the above order of the Tribunal, it is evident that the original assessment order, wherein, the additions/ disallowances had been made and also confirmed by the ld. CIT(A), stand merged in the order of the Tribunal dated 1/5/2013. The provisions of section 263 are attracted only if the assessment order is erroneous and prejudicial to the interests of the Revenue. Since the assessment order and the first appellate order stood merged in the order of the Tribunal, there was no assessment order in existence as on the date of issuance of notice under section 263, i.e., on 8/8/2013. We are of the view that since the assessment order and the order of the first appellate authority stood merged in the order of the Tribunal, and there was no assessment order in existence as on the date of issuance of notice under section 263, i.e., on 8/8/2013, the revisionary proceedings initiated by the ld. CIT under section 263 are not valid in the eyes of law. Accordingly, we set aside the order. Appeal of the assessee is allowed.
-
2019 (11) TMI 1357
Expenses incurred for replacement of electricity meters - nature of expenditure - revenue or capital expenditure - HELD THAT:- In appeal, the CIT-(A) has allowed the appeal of the assessee holding that expenses incurred on replacement of electricity meters is of revenue nature while following the orders of his predecessors for the earlier Assessment Year. On further appeal by the revenue, the Tribunal held that these electricity meters have to be replaced periodically on account of obsolescence, meters burning out or becoming faulty etc. and these expenses are necessarily required to be incurred for the purposes of carrying out business operations. The expenditure is incurred for the purposes of enabling the Assessee to carry out its business more efficiently and more profitably. The replacement of meters does not increase the generation and/or distribution capacity of electricity. Moreover, as held in Empire Jute Co. Ltd. v/s. CIT ( 1980 (5) TMI 1 - SUPREME COURT) the test of enduring benefit is not a conclusive test to be applied mechanically without considering the facts of a given case. In the above facts, the expenses on replacement of electricity meters would be on revenue and not on capital account. The Counsel for the Respondent has not been able to point out that how the conclusion of the Tribunal in the earlier years will not be applicable to the present Assessment Year. Respectfully following the aforesaid decision, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly the ground No.1, raised by the revenue is dismissed Deduction u/s 80IA - proportionate apportionment and allocation of Head Office expenses amongst Goa and Windmill Units respectively while calculating profits eligible for deduction u/s 80IA of the Act in respect of the said units - HELD THAT:- We find that the Ld. CIT(A) had granted relief to the assessee in respect of impugned issue by placing reliance on various decisions of this Tribunal in assessee s own case passed up to A.Y 2010-11 and also on the decisions of Hon ble Jurisdictional High Court in the assessee s own case passed up to A.Y 2008-09. We find that the Ld. CIT(A) had also relied on the order passed his predecessor for A.Y 2012-13 and granted relief to the assessee. In assessee s own case for A.Y 2006-07 had decided this issue in favour of the assessee, wherein it was held the findings of the facts by the ITAT for the prior assessment years have been referred to and if at all any reference needed, paragraphs 17 and 18 of the ITAT s order are complete answers . Therefore, the factual findings do not raise any substantial question of law in relation to disclaim as well. Ground No. 2 raised by the revenue is dismissed. Disallowance u/s 14A of the Act r.w.r 8D(2) - Assessee made suo-moto disallowance - HELD THAT:- By placing reliance on the decisions of Hon ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd., [2009 (1) TMI 4 - BOMBAY HIGH COURT] and in the case of HDFC bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] , the Ld. CIT(A) deleted the interest disallowance made by the Ld. A.O under Rule 8D(2)(ii) of the Rules. We find that the factual findings given by the ld CITA on the availability of interest free funds with the assessee company remain uncontroverted by the revenue before us and hence do not find any infirmity in the said finding of the ld CITA. Disallowance of indirect expenses under Rule 8D(2)(iii) of Rules CIT(A) had directed the Ld. A.O to exclude investments made in subsidiaries, being strategic investments and to consider only those investments which had yielded exempt income during the year. We find that with regard to exclusion of investments made in subsidiaries and strategic investments made by the assessee, we find that this issue is recently settled by the Hon ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT] , against the assessee. Accordingly, this aspect of the ground raised by the Revenue is allowed. We also find that the Special Bench of the Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] , had held that only those investments which had yielded exempt income need to be considered for the purpose of working out the disallowance of indirect expenses under Rule 8D(2)(iii) of the Rules. Accordingly, the Ld. A.O is directed to re-compute the disallowance under Rule 8D(2)(iii) of Rules by considering only those investments which had actually yielded exempt income during the year under consideration. Disallowance made u/s 14A r.w.r. 8D of the Rules while computing the book profits u/s 115JB - HELD THAT:- We find that Ld. CIT(A) had deleted the said disallowance by following the decision of Hon ble Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] . But we find that the Special Bench had only held that the computation mechanism provided in Rule 8D(2) of the Rules cannot be imputed in clause (f) of Explanation (1) to Sec. 115JB(2) of the Act. The special Bench also held that the actual expenses debited to profit and loss account which are incurred for the purpose of earning exempt income need to be disallowed u/s 14A of the Act for the purpose of 115JB - Since, in the instant case, the assessee had already worked out the actual disallowance of ₹ 81,47,392/- as indirect expenses incurred for the purpose of earning exempt income, we direct the Ld. AO to adopt the same figure for the purpose of disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act. Accordingly, the ground No. 7 raised by the Revenue is partly allowed.
-
2019 (11) TMI 1356
Revision u/s 263 - Regarding the brought forward losses and the unabsorbed appreciation - HELD THAT:- At the outset we note that, the Ld. AR at the time of hearing did not dispute the finding of the Ld. CIT under section 263 of the Act. Therefore, we do not find any reason to interfere in the order of the Ld. CIT to the extent of brought forward losses and the unabsorbed depreciation. Dividend income - It is settled law that the order of the AO can be held as erroneous insofar prejudicial to the interest of Revenue on the satisfaction of the twin conditions. Firstly, it has to be erroneous and secondly such error should cause prejudice to the interest of Revenue. In the instant case, there is no loss to the Revenue on account of reducing the dividend incomes against the disallowance of the expense under section 14A read with rule 8D of Income Tax Rule. In the instant case the assessee has offered the exempted income to tax which needs to be reduced from the taxable income. As such the Revenue has to allow the rightful claims to the assessee despite the same were not claimed by the assessee. If the amount of dividend income is not reduced against the disallowance of the expenses, then such income has to be treated as exempted income under section 10(34). Finally, the amount of dividend will be reduced and disallowance of the expenses will increase. Thus in effect the entire exercise will be tax neutral. Therefore, in our considered view the order passed by the AO at the most can be held as erroneous but it does not cause any prejudice to the interest of Revenue. Thus in our considered view, on this count, the order of the AO cannot be held as erroneous insofar prejudicial to the interest of Revenue. Prior period expenses - HELD THAT:- There is no error in the order of the AO as alleged by the Ld. CIT. Hence in our considered view the order of the AO cannot be held erroneous insofar prejudicial to the interest of Revenue on this reasoning. AO is erroneous in so far prejudicial to the interest of revenue to the extent of the benefit granted by the AO on account of brought forward losses and unabsorbed depreciation. The assessee on this count fails. However, the assessee on other 2 items as discussed above succeeds for the reasons elaborated hereinabove. Hence the appeal of the assessee is partly allowed.
-
2019 (11) TMI 1355
Addition u/s 56(2)(viia) - valuation of purchasing the shares of foreign company from its directors - HELD THAT:- In view of the fact that the Rule specifically provides that balance sheet as on the date of valuation i.e 11.2.2015 should be considered for valuation. Rule 11 U defines valuation data as the date on which the property or consideration, as the case may be, is received by the assessee. Since the shares were acquired by the assessee company on 11.2.2015 (being the valuation date) the valuation arrived at by the ld AO relying on financial statements as on 31.12.2014 deserves to be ignored and disregarded as not being in consonance with the Rule. Provisions of section 56(2)(viia) cannot apply to a foreign company as the relevant Rule 11U which defines balance sheet was not applicable to a foreign company. We find that the amendment in this regard was brought in Rule 11U with effect from 1.4.19 under Rule 11U(b)(ii) of the Rules. This amendment is only prospective in nature and cannot apply to the year under appeal. No method was prescribed earlier for valuation of shares of a foreign company i.e KNP Industries Pte Ltd prior to Asst Year 2019-20, which mischief was sought to be rectified by way of an amendment made in the rules under Rule 11U(b)(ii) of the Rules w.e.f. 1.4.19 having prospective applicability. As we have already held supra that the legislature had sought to rectify the mischief hitherto prevailing upto Asst Year 2018-19 in the statute / rule and had accordingly brought an amendment effective from Asst Year 2019-20 onwards to curb the loophole available in the Act / Rules, hence we hold that the pre-amended definition of balance sheet cannot include foreign company therein. DR later filed the comments dated 26.6.2019 received from the AO before the bench. We have gone through the same and we find that the same is nothing but reiteration of the findings already recorded in the assessment order which had already been dealt by us hereinabove. DR that the issue needs to be remanded back to the file of ld CITA for fresh adjudication to decide in the light of pre-amended rule, as it would tantamount to giving a premium to the revenue to improve its case , which cannot be entertained by us, as the tribunal exercises only appellate jurisdiction. We direct the ld AO to delete the addition made u/s 56(2)(viia) of the Act. Accordingly, the grounds raised by the assessee are allowed.
-
2019 (11) TMI 1354
Revision u/s 263 - allowing the amounts contributed towards Settlement Guarantee Fund and Investor Service Fund - HELD THAT:- What has been emphasized MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT] is that every loss of revenue as a consequence of an order of the AO cannot be construed to be prejudicial to the interests of the revenue, unless it can be established that the assessment order is erroneous in as much as the same is unsustainable in law. We are also of the view that in order to set aside an order u/s 263 there must exist two circumstances to enable your honor to exercise the power of revision, viz; the order passed by the AO has to be erroneous and by virtue of the order being erroneous should be prejudicial to the interest of the revenue. From the facts as stated in the earlier paragraphs, it is very well established that the AO has not only applied his mind after proper enquiries but has examined and considered various details submitted during the course of assessment. Hence, the order passed by the AO is neither erroneous nor prejudicial to the interest of revenue i.e. involving any error or it is deviating from law. (as defined in Black's Law Dictionary). Since, the AO has acted in accordance with law and passed the assessment order, the same cannot be considered as erroneous and prejudicial to revenue, simply because AO has not elaborated various things in the body of the assessment order. Hence, we quash the revision order passed by PCIT and allow the appeal of the assessee on this issue - Appeal of the assessee is allowed
-
2019 (11) TMI 1343
Addition of peak credit - Peak Credit working - credit of withdrawals - HELD THAT:- CIT(A) has not given credit of withdrawal made on 27-09-2007 on the reasoning that the assessee has withdrawn money by using cheque. I do not find any rationale to this decision, since it is the assessee who has withdrawn money and hence the same should be given credit while working out peak credit. With regard to the withdrawal made on 28-09-2007, CIT(A) has not given credit for the same on the reasoning that the deposits have been made after expiry of 53 days. This time gap can be considered only if it is shown that the withdrawal made earlier was not available with the assessee when subsequent deposits were made. In the absence of any such material, I am of the view that the assessee should be given credit of withdrawal of ₹ 3.00 lakhs made. Accordingly, the observations made by Ld CIT(A) with regard to the above said two withdrawals are also liable to be set aside. Accordingly, set aside the observations made by Ld CIT(A) in paragraph 5.4 of his order. Since the assessing officer has not verified the peak credit workings, I restore this issue to his file for the limited purpose of verifying the peak credit workings and accordingly direct the AO to assessee 1/3rd of peak credit balance in the hands of the assessee.
-
2019 (11) TMI 1342
Set-Off of brought forward unabsorbed depreciation against income from other sources and/or capital gains - CIT-A allowed the claim - HELD THAT:- We find that the order of the CIT(A) is inconsonance with the decision of the Hon ble Supreme Court in the case of CIT vs. Virmani Industries Pvt. Ltd. [ 1995 (10) TMI 1 - SUPREME COURT] and General Motors India P. Ltd. vs. DCIT [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] . The Hon ble Gujarat High Court in CIT vs. Gujarat Themis Biosyn Ltd. [ 2014 (5) TMI 194 - GUJARAT HIGH COURT] has also expressed the view that claim of the assessee for carry forward of unabsorbed depreciation was to be allowed to be carried forward to the succeeding assessment years without any fetters of limitation of 8 years placed as per erstwhile provisions of Section 32(2) of the Act. The CIT(A) in our view has rightly reversed the action of the AO and directed him to allow the set off of unabsorbed depreciation allowance carried forward from earlier years against income from other sources after necessary verifications of quantum of brought forward unabsorbed depreciation. We see no error in the order of the CIT(A). - Decided against revenue
-
2019 (11) TMI 1341
Tax rate for grossing up u/s.195A - applicability of provisions of section 206AA - Determining the tax liability u/s.201(1) - TDS U/S 195 - payments to its Associated Enterprises (AE) who were non-residents as Onsite Service Charges and Selling and marketing charges - CIT(A) accepted the plea of the Assessee that the DTAA will override the provisions of the Act including Sec.206AA of the Act and that the rate of tax to be applied for grossing up should be as per the DTAA - HELD THAT:- Referring to Circular No. 17/2014 dated 10.12.2004 in the context of compulsory requirement to furnish PAN of employees u/s 206AA, it becomes crystal clear that the CBDT has provided that: 'Education cess @ 2% and secondary and higher education cess @1% is not to be deducted in case the tax is deducted at 20% u/s 206AA of the Act.' Albeit, this part of the Circular is not relevant for the purposes of deduction of tax at source in terms of section 195, yet it throws some guidance on the non-levy of education cess and surcharge etc. in case tax is deducted in terms of section 206AA on the payments made to non residents. No contrary provision mandating the levy of surcharge and education cess on the rate of 20% u/s 206AA(1)(iii) has been brought to our notice by the DR. CIT(A) was not justified in upholding the action of the AO in levying the surcharge and education cess on the amount of tax deducted at source u/s 206AA(1)(iii) of the Act. The same is, therefore, directed to be deleted AY 2012-13 - The Hon ble Delhi High Court in the case of Danisco India Private Limited Vs. Union Of India Ors. [ 2018 (2) TMI 1289 - DELHI HIGH COURT] held that where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty. There is no merit in the appeals of the Revenue. The grounds raised in the Cross-objections of the Assessee do not require any consideration in view of the decision in the revenue s appeals and those issues are left open without any adjudication.
-
2019 (11) TMI 1340
Reopening of assessment u/s 147 - addition of fright and crane charges and boki charges - HELD THAT:- AO himself did not make addition in respect of the first part of the items of reason recorded i.e. freight to M/s Haryana Concrete. The addition made by the AO on the second part of the reason recorded i.e. disallowance of crane charges and boki charges has been deleted by the Ld. CIT(A). Thus we find that no addition on account of the items of reasons recorded is in existence after the order of the Ld. CIT(A). As per the record, the Revenue is not in appeal against said deletion by the Ld. CIT(A). In the circumstances, following the decision of the Hon ble High Court in the case of Adhunik Niryat Ispat Ltd [2012 (11) TMI 895 - DELHI HIGH COURT] and Ranbaxy Laboratories Ltd [2011 (6) TMI 4 - DELHI HIGH COURT ] the additions made on account of the items other than the items in reasons recorded , cannot survive. We direct the AO to delete the additions accordingly. The issue in dispute involved in the grounds raised by the assessee is accordingly allowed in favour of the assessee. Since we have allowed the appeal on legality of the addition made in reassessment proceedings, we are not adjudicating on merit of the additions. - Decided in favour of assessee.
-
2019 (11) TMI 1339
Speculation loss u/s 73 - loss incurred on purchase and sale of shares in respect of delivery based transactions - matter was referred to Third Member u/s 255(4) - difference of opinion between the ld. Members constituting the Division Bench of ITAT, Kolkata - HELD THAT:- Hon ble Third Member has concurred with the findings of ld. Accountant Member observing that the Explanation to Section 73 does not differentiate between delivery based transactions and derivative transactions in F O segment and the same applies to the entire business of purchase and sale of shares, whether such trading is delivery based or non-delivery based, whether there is profit or loss from such business. In the present case, the assessee-company has treated the entire activity of purchase and sale of shares, which comprised of both the delivery based and non-delivery based trading as one composite business and accordingly claimed set off of the loss incurred in delivery based trading against profit derived from derivative trading - the aggregation of the share trading loss and profit form derivatives transaction should be done before application of Explanation to section 73 of the Act and since there was surplus profit on such aggregation, Explanation to section 73 would not be applicable. - Ld. Third member has agreed with the view of the Accountant Member. Appeal of the assessee is allowed.
-
2019 (11) TMI 1335
Bogus expenditure - addition @20% - assessee has not able to prove that these expenses are wholly and exclusively incurred for the business of the assessee - HELD THAT:- We concur with the view of the A.O. as well as the ld. CIT(A) that when the assessee has not produced any documentary evidence in support of the expenses as well as in support of the explanation that he was having any arrangement with the drivers to pay them a fixed amount on account of fuel expenses. Since all these expenses are otherwise essential for carrying out the business activity by the assessee, therefore, the claim of the assessee cannot be considered as absolutely bogus or falls. Accordingly, having regard to the facts and circumstances, the disallowances made by the A.O. at 20% appears to be on higher side and excessive, therefore, the same is restricted to 10%. Appeal of the assessee is allowed in part.
-
2019 (11) TMI 1334
Penalty u/s 271B - assessee failed to get his account audited in respect of previous years or furnish report of such audit as required under section 44AB - case of the assessee that the assessee had demanded the documents seized by the authorities during the course of survey as they were not provided by the authorities,therefore there was reasonable cause for not filling the audited accounts - HELD THAT:- The assessee vide letter the date 30 September 2008 had asked for 3 months time for filing the audited reports/documents however the accounts were audited only on 25.3.2011. In view of above said facts if we look into the conduct of the assessee then it is clear that assessee had not filed the audited account within the 3 months as sought by the assessee after 30 September 2008 and the audited accounts were only filed on 25 March 2011. In view of the above are we do not find any reason much less plausible reason or cause for not filing the audited account within time. If the assessee had filed the audited accounts within the 3 months after 30 September 2008 then it would be a reasonable cause for not filing the audited accounts but the assessee had taken more than 3 years to file the audited accounts, which in our view, is not in accordance with law. We may point out that the judgements relied upon by the ld. AR for the assessee are not applicable to the facts of the present case as the facts in all these decisions were entirely different. In the result the appeal of the assessee is required to be failed and accordingly we dismiss both the appeals.
-
2019 (11) TMI 1333
Disallowance u/s. 14A - absence of exempt income - HELD THAT:- First of all, we examine the P L account of the assessee company to find out as to whether any exempt income is earned by the assessee in the present year or not. We find that as per the P L account, there is gross income of ₹ 4,95,79,007/- which includes sales of products, interest received, excess provision written off and service income and hence, it is seen that there is no exempt income earned by the assessee in the present year. This is by now settled position of law that in the absence of exempt income, provisions of section 14A cannot be invoked and hence, by respectfully following these various judgments cited by ld. AR of assessee, we delete the disallowance made by the AO and confirmed by ld. CIT(A) u/s. 14A of the IT Act. - Decided in favour of assessee.
-
Customs
-
2019 (11) TMI 1361
Maintainability of petition - alternative remedy of appeal - Duty Free Import Authorisation (DFIA) Scheme - Focus Product Scheme (FPS) - Focus Market Scheme (FMS) - clandestine imports of paper - fictitious/non-existent, scrips, or scrips in which the quantum of exemption available had been fraudulently enhanced in the EDI system - demand of customs duty u/s 28(4) of the Customs Act, 1962 - levy of interest and penalties - opportunity for cross-examination not provided - principles of natural justice. HELD THAT:- Para 11 (1) of the Order-in-Original specifically refers to the communication, dated 30th July, 2019, addressed by the petitioner. We also find, from a reading of the said paragraph, that the Commissioner referred to the requests made by the petitioner in the said communication, as well as the fact that responses, to some of the said requests, had been furnished, to the petitioner, by the department, at earlier stages during the proceedings - It cannot, therefore, be said that the Order-in-Original has proceeded in ignorance of, or by overlooking, the communication, dated 30th July, 2019, of the petitioner. It is true that the impugned Order-in-Original makes no specific reference to the order, dated 6th September, 2019 supra, passed by this Court. However, this Court had, in the said order, merely directed that the application, dated 30th July, 2019, be considered and decided by the Commissioner. Inasmuch as the impugned Order-in-Original has taken stock of the said communication, as well as the demands of the petitioner therein, we do not find the lack of reference, in the impugned Order-in-Original, to the order dated 6th September, 2019, passed by this Court, sufficient justification to set aside the impugned Order-in-Original. Cross-examination - HELD THAT:- The request, of the petitioner, was for permission to examine, rather than cross-examine, the said officers. Be that as it may, the Commissioner has taken a considered decision not to summon the officers, who had assessed the concerned imports, in the witness box, as he was required to decide whether the imports themselves were in accordance with law, or not, and whether the petitioner was complicit in effecting the allegedly illegal imports. The justifiably of this decision of the Commissioner is, in our view, not amenable to examination under Article 226 of the Constitution of India, as there is an efficacious alternate remedy available, to the petitioner, by way of statutory appeal before the Customs, Excise and Service Tax Appellate Tribunal, under Section 129A of the Act. A reasonable justification for avoidance cannot be constituted, by the petitioner, of resort to the statutorily provided appellate remedy. It can be said that there is no fatal flaw, in the impugned Order-in-Original, as would justify its premature decapitation, at our hands, without requiring the petitioner to avail, in the first instance, the appellate remedy provided by the statute - as an efficacious alternate remedy is provided, to the petitioner, under Section 129B of the Act, by way of appeal to the Tribunal, any interference with the impugned Order-in-Original, would, in the facts and circumstances of the present case, be unjustified. Petition dismissed with no costs.
-
2019 (11) TMI 1360
100% EOU - import of prohibited goods - Department entertained the view that the impugned goods are prohibited as the appellant has not produced the said certificate of legally mined minerals - whether the impugned goods have been legally mined and whether the appellants have produced sufficient documents to prove the same? - principles of natural justice. HELD THAT:- The show-cause notice was issued to the appellant on 26/07/2019 proposing to confiscate the goods on the ground that they are not legally mined minerals and are prohibited goods. In the show-cause notice, 30 days time has been given as observed in para 24 of the show-cause notice to file the reply. But the Commissioner passed the impugned order on the next day itself i.e. 27/07/2019 without affording an opportunity of filing the reply to the show-cause notice by the appellant. It appears that the Commissioner has no regard for the principles of natural justice. The opportunity of proper hearing has to be accorded to the appellant against whom the order of absolute confiscate has been passed on the next day of the issue of show-cause notice and that too without taking proper reply to the show-cause notice and without affording proper opportunity of hearing to the appellant. The manner and the speed with which the impugned order has been passed by the Commissioner without affording adequate opportunity to the appellant to file the reply to the show-cause notice is in complete violation of the principles of natural justice. Once the appellant has produced the legally mined minerals certificate along with other documents which have also been filed along with the appeal before the Tribunal but the same have not been considered at all and the instructions issued subsequent to the filing of the shipping bills has been considered for passing of the impugned order absolutely confiscating the impugned goods - further, during the same period, identical goods were allowed to be exported under 16 shipping bills without any objection by the same Customs authorities after a proper examination and verification and the impugned goods have been absolutely confiscated on the basis of instructions issued by the Tamil Nadu Government as well as Trade Facility circular issued by the Customs House , Cochin and that too after the filing the shipping bills. Absolute confiscation - HELD THAT:- As per the policy prevalent during the relevant time, the natural garnet was freely exportable and importable without any restriction - further, the DGFT has issued a Notification No.26/2015-2020 dt. 21/08/2018 canalising the export of beach sand minerals through M/s. Indian Rare Earths Ltd. and the appellants are now legally not authorized to export the said goods. Once the goods are found to be not prohibited, then it is mandatory for the Customs authorities to release the same on payment of redemption fine if there is a violation of any conditions prescribed by any other law in force - Whereas in the present case, according to my considered view, appellant has not violated the provisions of Customs Act and has purchased the legally mined Garnet from N/s. Transworld Garnet India (P) Ltd. The impugned order is not sustainable in law as the same has been passed without following the principles of natural justice and without considering the documents produced by the appellant justifying the legally mined minerals - the impugned order is set aside and the Customs authorities, Cochin are directed to release the impugned goods to the appellant because the same cannot be exported by the appellant in view of the DGFT Notification No.26/2015-2020 dt. 21/08/2018 - appeal allowed.
-
2019 (11) TMI 1359
Concessional rate of duty - EPCG scheme - additional duty liability had not been disclosed in the B/E - import of Fruit Dehydration Plant (Spray Evaporation Machine SPV 10) from Germany - HELD THAT:- The appellants have failed to fulfill the export obligation and accordingly, Customs Department has issued a show-cause notice to recover the applicable duty on the imported goods. We find that the representation of the appellants could not succeed before the EPCG Committee and the appellate authority. This being the fact of the case, we find that Customs Authorities, as submitted by the Commissioner (AR), cannot take an independent decision. We further find that the Bill of Entry is dated 6.5.1996 and the appellants sought to revalue the goods and approached the Commissioner with a request dated 18.1.2001 and 9.2.2001 for re-assessment of the Bill of Entry. We also find that the appellants have submitted a Bond at the time of import binding themselves to the conditions envisaged in the Notification No.110/95 dated 5.6.1995. We find that the Department was within its rights to impose the conditions of the Bond for violation of the provisions therein. We find that the impugned show-cause notice is about the recovery of duty foregone in terms of the conditions of the Notification. The appellants having not appealed against the assessment of the Bill of Entry and having not requested for provisional assessment, cannot demand the same while replying to the show-cause notice. Such a request, is beyond the scope of the provisions of Customs Act. Once a machine is imported in terms of the EPCG license wherein certain export obligation has been fixed by the DGFT authorities and particularly, in the case when the EPCG Committee has rejected the appeal made by the appellant, Customs cannot revalue the goods and reduce the export obligation accordingly. We find that the appellants have shown no case for redetermination of the value of the imported goods in terms of the provisions of Customs Act either. There is no infirmity in the lower authorities coming to a conclusion that the redetermination, of the value was not possible in the facts and circumstances of the case and under the provisions of law - appeal dismissed.
-
2019 (11) TMI 1351
Refund of tax already paid - whether second respondent is a competent person to decide their claim? - HELD THAT:- This Court, at this stage, is not expressing any view on the merits of the claim made by the respective parties, since admittedly the request made by the petitioner before the second respondent dated 11.04.2019 in writing, has not been disposed of by the second respondent. Needless to say that it is for the second respondent to pass orders on the said request made on merits and in accordance with law so as to enable the petitioner to work out his remedy before the appropriate forum, if such order is passed adverse to the interest of the petitioner. Petition disposed off.
-
2019 (11) TMI 1350
Jurisdiction - authority to file an appeal - case of respondent is that a person, who is not a party to a writ petition, cannot file an appeal against the order passed in the writ petition and therefore, the appellant has no locus to challenge the ad interim order passed by the learned single Judge - By the impugned order passed by the learned single Judge, the process of registering sales contract for import of Poppy sees from China in response to the public notice has been stayed. - HELD THAT:- Since the matter is sub-judice before the learned single Judge and has come up before us only against an ex parte interim order, therefore, we do not intend to deal with the merits of the case as the same has to be dealt with by learned single Judge. However, the fact remains that the impugned order dated 24.10.2019 passed by the learned single Judge adversely affects all the parties whose applications are pending for registration in response to the public notice dated 04.10.2019. Since the impugned order has been passed without hearing the parties including the appellant, which would be adversely affecting it s interests, and the impugned order, in fact, tantamounts to violation of principles of natural justice, we are inclined to quash the order dated 24.10.2019 insofar as it pertains to the appellant herein and direct the respondent no.1 herein to implead the appellant has respondent in the writ petition.
-
2019 (11) TMI 1345
Imposition of penalty u/s 114A and 112(a) of Customs Act - Liability of penalty u/s 112(a) on on the authorized signatory or on the proprietor of the firm - HELD THAT:- A reading of the provisions of Section 114A makes it very clear that the penalty under this Section is payable by the person by whom duty or interest there upon is payable - In this case duty is payable by the respondents i.e., M/s. Flower World. It being a proprietary concern the duty is payable by Smt. V.M. Hareefa - the impugned order is not maintainable to that extent. Imposition of penalty on Shri J. Shamsudeen under 112(a) of Customs Act, 1962 - HELD THAT:- It is found from the records of the case that Shri J. Shamsudeen has been the authorised signatory of the respondents. He has filed various documents and liasoned with the customs authorities in the imports under taken by the respondents. He was in the knowledge of the fact that for each of their imports they carried two sets of invoices (i) one showing a lesser value for the purpose of customs and the other showing higher value for the purpose of actual payment - Shri J Shamsudeen has made himself liable to pay penalty under Section 112(a) of the Customs Act, 1962. Penalty of ₹ 54,76,724/- along with applicable interest imposed on Shri J. Shamsudeen, Authorised Signatory, of the respondents, under Section 114A of the Customs Act, 1962 is set aside - penalty, of ₹ 54,76,724/- along with applicable interest, imposed on Smt. V. M. Hareefa, Proprietrix of the respondents, under Section 114A of the Customs Act, 1962 - penalty of ₹ 5,00,000/- imposed on J. Shamsudeen, authorised signatory, of the respondents, under Section 112(a) of the Customs Act, 1962. Appeal allowed - decided in favor of Revenue.
-
2019 (11) TMI 1338
Conversion of shipping bills - conversion of bills from Advance Authorization scheme to duty drawback scheme - HELD THAT:- During the relevant period there was no provision under the Customs Act, 1962 prescribing the time limit for conversion of the shipping bill - Further, in the case of GLOBAL CALCIUM PRIVATE LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2016 (12) TMI 199 - CESTAT CHENNAI] , the request of the assessee was for conversion of the free shipping bills to drawback shipping bills. The Tribunal after considering the submissions observed that the time limit specified in the above circular cannot be applied to deny the request for conversion of the free shipping bills to drawback shipping bills. In the present case, it is for conversion from Advance Authorization scheme to duty drawback scheme - the request for conversion of the shipping bill cannot be disallowed by pressing into the application of time limit prescribed by the Board in its circular dated 23.9.2010. The appeal is allowed by way of remand to the original authority for conversion of the shipping bills from Advance Authorization Scheme to duty drawback scheme with consequential benefits if any.
-
2019 (11) TMI 1337
Benefit of nil rate of duty as per N/N. 64/88 dated 01.03.1988 - appellant submits that provisions of Section 28AB and Section 114A of the Customs Act 1962 were not on the Statute book at the time of import - HELD THAT:- There is no doubt that the appellant have not been issued an installation certificate by the DGHS and the exemption certificate has also been cancelled. Therefore, they have not fulfilled the conditions of Notification No. 64/88. This Notification gives exemption to hospital equipment imported by specific category of hospitals subject to certification by DGHS. In case of provisional assessment, the relevant date is the date of finalisation of assessment. In this case, the assessments were finalised denying them the benefit of exemption notification and the differential duty has accrued consequently - It is found that the appellant is liable to pay the differential duty under Section 28. As far as the interest under Section 28AB and imposition of penalty under Section 114A of the Customs Act are concerned we find that both these provisions were not in existence at the time of import. The demand of interest under Section 28AB and imposition of penalty on the importer under Section 114A are not sustainable and need to be set aside - As far as the confiscation of imported goods which were provisionally released and imposition of redemption fine under Section 125 are concerned we find that under Section 111 several types of goods brought into India from a place outside India shall be liable to confiscation - appeal allowed in part.
-
Service Tax
-
2019 (11) TMI 1348
Refund of unutilised Cenvat Credit - rejection on merit when issue of Jurisdiction remain unresolved - rejection on the ground that invoices raised in the name of unregistered branch office, which has been affirmed by the Commissioner (Appeals) in his order referred above, is assailed in this appeal - HELD THAT:- Admittedly in the deficiency memo jurisdictional issue had not been agitated nor there was any attempt made by the refund sanctioning authority to send the refund application to Gurgaon Commissionerate, if he were of the view that such an application for refund was not maintainable at Mumbai. Jurisdiction being preliminary issue should have been considered at the first instance before the merit of refund was to be adjudicated upon but the Learned Asst. Commissioner (Refund-II) Service Tax-I Mumbai preferred to give his findings on both without any show cause notice was issued to the appellant indicating his intention to reject such refund claim - the legality of the order concerning non-maintainability of the refund claim at Mumbai and its confirmation by the Commissioner (Appeals) is unsustainable. Other grounds of rejection of refund were also dealt with out of which appellant had accepted the time barred claim of ₹ 43,399/- which has been abandoned by it as revealed from page no. 17(1) of its appeal memo. Concerning the rest 3 rejection of refund of ₹ 188310/- ₹ 1,24,301/-₹ 1,08,915/- on the ground of mismatch of invoices/improper invoices etc., appellant had put forth its stand unsuccessfully before the Commissioner (Appeals) and even filed export invoices etc. in this court as additional evidence but having regard to the fact that appellant was denied of the opportunity to defend its case before the refund sanctioning authority who even did not prefer to issue show cause notice to it in grass violation of the principle of natural justice, in the absence of opportunity being provided to the appellant to put forth the genuiness of its refund claim for which the order of Commissioner (Appeals) confirming the rejection order passed by the Asst. Commissioner is unsustainable in law. Appellant is entitled to get refund of ₹ 28,00,095/- which respondent department is directed to pay within two months from the date of passing of this order with due regard to Section-11AA concerning applicability of interest on refunds - Appeal allowed.
-
2019 (11) TMI 1346
Refund of accumulated CENVAT Credit - Input services utilised for the services exported during the period 01/01/2011 to 31/03/2011 and 1/4/2011 to 30/6/2011 - Limitation for the purpose of filing refund claims in respect of unutilised credit of input services used in the export services - rejection of refund on various grounds namely the portion of refund claim is barred by limitation as the refund claim was filed beyond the period of one year from the date of export; the refund claim was not supported by certain documents listed; there is no nexus between input services on which credit was availed and the output service exported; the appellant has not produced concrete evidence in support of utilisation of input services in the export of service as required under Rule 5 read with Rule 2(1) of the CENVAT Credit Rules, 2001; the appellant did not state clearly whether the input services were totally used for export of services or were partially used and that the appellant had not fulfilled the eligibility criterion for refund of service tax paid on the input services used for providing taxable output service exported from the registered premises during the disputed period. HELD THAT:- Larger Bench of this Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] has set the issue to rest by observing that the relevant date can be taken as end of the quarter in which FIRC is received since the refund claim is filed for the quarter. Thus, the relevant date for filing refund claims should be the end of the quarter in which FIRC are received. CBEC Circular dt. 19/01/2010 clarified as submitted by the appellant regarding the nexus and the manner to deal with the voluminous records - The appellants have also submitted that the learned Commissioner (Appeals) has not given any finding on various case laws cited by them and the lower authority has not given them enough time to submit the records sought for, though they have been given in CD form. We find that such an action by the lower authorities is clear violation of principles of natural justice. It is the bounden duty of the authorities to examine the claim of the appellants in view of the provisions of law, Departmental circulars and legal pronouncements in this regard. The authorities are expected to go through the records of the case and the submissions of the appellants to evaluate the claim of the appellants on nexus between input and output services and receipt of consideration - the issue needs to go back to the lower authorities to re-examine the issue. Appeal allowed by way of remand.
-
2019 (11) TMI 1344
Import of services - Non-payment of service tax - Management Consultancy services availed from foreign service providers - Department also opined that the appellants have obtained technical knowhow from Foreign Service providers and were not paying applicable duty on technical knowhow and intellectual property service. Taxability before April 18, 2006 on Management Consultancy services - import of service - case of appellant is that import of services are taxable in India only with effect from April 18, 2006 i.e., the date on which Section 66A was inserted in the Finance Act - HELD THAT:- The appellant s contentions, as far as the applicability of service tax on Management Consultancy Services received by them before 18.4.2006 are concerned, are acceptable - reliance can be placed in the judgment of the Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI [ 2008 (12) TMI 41 - BOMBAY HIGH COURT ] where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service - thus, no service tax can be fastened to the appellants before 18.4.2006. Accordingly, it is to be held that the appellants are liable to pay service tax of ₹ 48,76,268/- for the period April 2006 to March 2007 - decided against Revenue. Classification of services - technical knowhow received from their related foreign entity for the period 16th August 2002 to 31st March 2007 - demand of service tax, however, the demand on the same was under the heading Consulting Engineering Services for the period 16.8.2002 to 9.9.2004 for an amount of ₹ 92,74,747/- and under Intellectual Property Services for the period 10.9.2004 to 31.3.2007 - HELD THAT:- The payments are made for technical knowhow, training, etc., and not for the use of logo. Though, the use of logo is permitted in terms of the agreement unless a specific payment is made for the same, it cannot be said that the appellants have availed any trademark in terms of the service tax law - reliance placed in the case of ABB LTD VERSUS C.C.E. S.T. -BANGALORE-LTU [ 2019 (1) TMI 1037 - CESTAT BANGALORE] where it was held that Know-how is not recognized as Intellectual Property law by any Indian Law for the time being in force. In fact know-how is the undisclosed information cited by the Department clarification dt. 10/09/2004 as example of intellectual property right not covered by any Indian law - appellants are not liable to pay service tax on Consulting Engineering Services and Intellectual Property Services as demanded by the department - penalty also set aside - decided against Revenue. Decided in favor of assessee.
-
2019 (11) TMI 1336
Commercial or Industrial Construction Services - short payment of service tax - period October 2004 to May 2007 - Works Contract Services for the period June 2007 to March 2008 - period involved is prior to 01.06.2007. HELD THAT:- The demand under Commercial or Industrial Construction Services cannot sustain for the period prior to 01.06.2007 as per the decision of the Hon ble Apex Court in the case of Larsen and Toubro Ltd [ 2015 (8) TMI 749 - SUPREME COURT ] - The demand for this period therefore requires to be set aside. Demand for the period June 2007 to March 2008 - Works contract services - HELD THAT:- The department has confirmed the demand under works contract services, applying the rate of service tax as 4.12%. During the relevant period i.e. prior to 01.04.2008, the rate of service tax is 2%. The appellant has filed returns by calculating the tax at the rate of 2% - the demand made by the department applying the rate aa 4.12% cannot sustain. Appeal allowed - decided in favor of appellant.
-
2019 (11) TMI 1332
Condonation of delay of 490 days in filing appeal - time limitation - appeal rejected on the ground that the appeal was preferred before him with a delay of 490 days - sub-section (3A) of Section 85 of the Finance Act, 1994 - HELD THAT:- On a plain reading of such statutory provisions, it transpires that the statute in clear and ambiguous terms has prescribed the time limit, within which the appeal has to be preferred and the Commissioner (Appeals) was also empowered to condone the delay within the prescribed condonable period. In this case, since the appeal was preferred by the appellant beyond the period of three months from the date of receipt of the adjudication order, which is an admitted fact on record, the appeal rejected by the Commissioner (Appeals) is proper and justified and cannot be interfered with at this juncture. With regard to filing of appeal and entertaining the same by the Commissioner (Appeals), the Hon ble Supreme Court in the case of Singh Enterprises vs. CCE, Jamshedpur [ 2007 (12) TMI 11 - SUPREME COURT ] has held that appeal preferred before the Commissioner (Appeals) beyond the period of three months cannot be entertained by the appellate authority. There are no infirmity in the impugned order passed by the learned Commissioner (Appeals) - appeal dismissed.
-
Central Excise
-
2019 (11) TMI 1349
CENVAT Credit - input - iron Ore Fines - whether 'exempted item' within the meaning of Rule 2(d) of the CENVAT Credit Rules, 2004 or not - whether by-product or not - non-maintenance of separate records - no detailed analysis carried out - principles of natural justice - HELD THAT:- No proper discussion has been made by the CESTAT with regard to the exigibility to duty / correctness of the Input Tax Credit / Services availed or as to the reversal of the Credit already availed to the requisite extent to have sustained the stand. There is no discussion with regard to what is the process of manufacture of 'Sponge Iron', how the 'Iron Ore Fines' are generated and whether the yardsticks mentioned by the Apex Court are available to have it declared as a 'by-product' and such other relevant aspects. The matter requires detailed deliberation with reference to each and every aspect pointed out - the matter is remitted to the CESTAT for fresh consideration with reference to all the relevant aspects - Appeal allowed by way of remand.
-
2019 (11) TMI 1347
Clandestine removal - batteries (lead acid battery) - whether appellant have manufactured and stored their finished products without entering the same in the statutory records for clandestine removal? - HELD THAT:- Arising from the same investigation and for the same period, two show cause notices have been issued. One for the seizure part and one for the duty part alongwith interest and penalty. Further, as regards the duty part, vide order-in-original No. 04/CE/demand/2017-18 dated 18.05.2017, the adjudicating authority have allowed conclusion of the proceedings under Section 11AC(1)(d) of the Central Excise Act. The said section provides for conclusion of all proceedings, arising from an investigation. Thus, Revenue has erred in passing separate order of confiscation and penalty, arising from the same investigation. Appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2019 (11) TMI 1352
Recovery of tax dues - attachment properties of the petitioner buyer - grievance of the petitioner is that when she purchased the property on 18.05.2010 earlier to the impugned orders of attachment, the authorities are not justified in making the impugned attachment orders, especially, when the petitioner is not the defaulter - HELD THAT:- The impugned orders of attachment were made in respect of the properties, over which, the defaulter has lost his title as on the date of attachments and that the petitioner has became the owner of the properties which is sought to be attached on the date of such attachments - It is not in dispute that the petitioner is not the defaulter and on the other hand, the above said person is the defaulter. The very same issue under similar facts and circumstances has been considered by this Court in P. SATHASIVAM VERSUS THE ASSISTANT COMMISSIONER (CT) , THE SUB-REGISTRAR THE OFFICE OF THE SUB-REGISTRAR UDUMALPET [ 2019 (2) TMI 69 - MADRAS HIGH COURT ] , wherein this Court after following several decisions of this Court allowed the writ petition and set aside the impugned proceedings. Petition allowed.
|
