TMI Tax Updates - e-Newsletter
December 23, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03 - CGST - Circular
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GST:
Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger- Reg. - CGST - Circular
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GST:
Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling - reg - CGST - Circular
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GST:
The principal and the auctioneer of tea, coffee, rubber etc. are required to declare warehouses where such goods are stored as their additional place of business. The buyer is also required to disclose such warehouse as his additional place of business if he wants to store the goods purchased through auction in such warehouses.
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GST:
In case of supply by artists through galleries, there is no consideration flowing from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same is not a supply. It is only when the buyer selects a particular art work displayed at the gallery, that the actual supply takes place and applicable GST would be payable at the time of such supply.
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Income Tax:
Immunity - Summons u/s 131 by ACIT calling upon the petitioner to attend the office of the respondent No.3 for recording his statement - - The provisions of the Diplomatic Relations (Vienna Convention) Act, 1972 relied upon by the learned counsel for the petitioner also do not envisage any such immunity and Section 8 of the Diplomatic Relations (Vienna Convention) Act, 1972 - HC
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Income Tax:
Disallowance of Finance Cost incurred during the year under the consideration u/s 36(1)(iii) - mere acceptance of the claim in earlier years in proceedings u/s 143(1) does not debar Revenue from examining the claim on merits in subsequent years and does not create a bar of res-judicata . - AT
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Customs:
Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2018, when imported under the India-Japan Comprehensive Economic Partnership Agree - Notification
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Customs:
Seeks to impose 30% Basic Customs Duty on Chana (Chickpeas) and Masoor (Lentils) - Exemption withdrawn
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Customs:
Refund of Terminal Excise Duty (TED) - why the respondents were of the view that refund claim or benefit under the CENVAT regime under the Central Excise Act or the other statutory schemes framed under it is available - HC
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Customs:
Levy of ADD - It is clear that the DA on careful consideration arrived at the conclusion that NPL was not to be considered as a related company of Solvay. It was further recorded that the provision of Companies Act or provision relating to special resolutions are not relevant for the present investigation. We are in agreement with the findings recorded by the DA. - AT
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Indian Laws:
Liability of applicant, Special Director of the accused company - dishonour of the cheques - No vicarious liability can be fastened on the applicant herein, he being appointed as a Special Director by the Board for Industrial And Financial Reconstruction. - HC
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Service Tax:
Classification of services - their activities are merely to supervise the quantity and monitoring the loading, movement of coal from the collieries by Railways in receipt of the same at the destination of rakes are not to be organized by the appellant - the services provided by the appellant are not classifiable under C&F Agent Service - AT
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Service Tax:
Nature of transaction - service or goods - transfer of rights and privilege of export of sugar quota - the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - - AT
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Central Excise:
Extended period of limitation - The appellants cannot be blamed for about three years long delay in issue of the show cause notice. The proviso to sub Section 11A(1) cannot be used to cover up indolence on the part of the Jurisdictional Central Excise Officers - AT
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VAT:
Works contract or contract for Sale - the contract in the instant case is predominantly for supply of equipment, erection and installation - The intention of parties as derived from the diverse contractual provisions set out above leaves us in no manner of doubt that the contract in question was not a works contract but the dominant intention was of sale of equipment. - HC
Articles
Notifications
Customs-
56/2017 - dated
21-12-2017
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ADD
Seeks to extend anti-dumping duty on Phthalic Anhydride originating in or exported from Korea RP, Chinese Taipei and Israel
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95/2017 - dated
22-12-2017
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Cus
Seeks to amend notification No. 152/2009-Customs dated 31.12.2009 so as to provide deeper tariff concessions in respect of specified goods imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement (CEPA) w.e.f. 01.01.2018
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94/2017 - dated
22-12-2017
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Cus
Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2018, when imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)
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93/2017 - dated
21-12-2017
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Cus
Seeks to impose 30% Basic Customs Duty on Chana (Chickpeas) and Masoor (Lentils)
GST - States-
G.O.MS.No. 551 - dated
16-11-2017
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Andhra Pradesh SGST
CORRIGENDUM - Government in Go.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated the 29th June, 2017
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G.O.MS.No. 494 - dated
3-11-2017
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Andhra Pradesh SGST
Reduction of Goods and Services Tax rate of 2.5 per cent on Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government.
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17/2017 – State Tax - dated
23-11-2017
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Kerala SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores
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16/2017 – State Tax - dated
23-11-2017
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Kerala SGST
Notification regarding last date for filing of return in FORM GSTR-3B
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14/2017 – State Tax - dated
24-10-2017
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Kerala SGST
Extension of time for declaration in FORM GST ITC-01
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13/2017 – State Tax - dated
24-10-2017
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Kerala SGST
Seeks to extend the time limit for filing FORM GSTR-6
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (12) TMI 1132
Tax Recovery Officer jurisdiction to declare the transaction of transfer of property as null and void under section 281 in the proceedings under rule 16 of the Second Schedule to the Act - Held that:- The Revenue has to institute a suit seeking such declaration from a civil court. The contention raised by learned advocate Mr.Bhatt that the Tax Recovery Officer was justified in declaring the transfer as null and void as the same was made between husband and wife to defraud the Bank does not merit acceptance in view of the law enunciated in the aforesaid judgments. As observed by this Court in the decision rendered in the case of Karsanbhai Gandabhai Patel (2014 (4) TMI 411 - GUJARAT HIGH COURT) section 281 does not create any machinery for the Revenue authorities to entertain dispute and declare the transaction to be void for which purpose, only civil suit would lie. We, therefore, unhesitatingly, set aside the impugned order dated 26.05.2017. However, the right of the respondent authorities to seek the declaration of the transfer as null and void under section 281 of the Income Tax Act, is not taken away and if they so desire, initiate appropriate proceedings in accordance with law seeking such declaration. The petition is allowed accordingly.
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2017 (12) TMI 1131
Reopening of assessment - reasons to believe - claim for unabsorbed depreciation - Held that:- The decision of this Court in the case of the assessee for the Assessment Year 2004-05 [ 2010 (3) TMI 164 - BOMBAY HIGH COURT] holds that a mere change of opinion would not justify the Assessing Officer in seeking a recourse to the powers under Sections 147 and 148 unless there is tangible material before the Assessing Officer to prove that income chargeable to tax has escaped assessment. This Court further held, while allowing the petition, during the course of the assessment proceedings, that the Assessing Officer brought his mind to bear upon the questions involved and there was absence of tangible material on the basis of which assessment could have been reopened. In the present case the very same assessment year was under consideration whereas this Court has already taken a view in the aforesaid assessee's case. There was no warrant for issue of further notice. It is evident that this has occasioned only as a change of opinion and an afterthought and in any event, the reopening sought to be effected is beyond the period of 4 years. In CIT v/s. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] it has been held by the Supreme Court that even within the period of 4 years there has to be tangible material on the basis of which assessment can be reopened. No justification for reopening the assessment. Lastly we express our displeasure at the conduct of the officer of revenue in issuing a fresh notice despite a binding decision in the case of the assessee and the law laid down by the Supreme Court. The revenue must reign in their officers in matters which have attained finality failing which costs thrown away may have to be imposed. The impugned order, therefore, cannot be sustained. - Decided in favour of assessee.
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2017 (12) TMI 1123
Revision u/s 263 - deduction under section 80IB(10) allowed by AO erroneously - Gram Panchayat Aadai of District Raigad competency for purpose of issuing approval and completion certificate for claiming deduction - Held that:- During the assessment proceeding, the AO issued notice under section 142(1) wherein he made the enquiry related with the project undertaken by the assessee with regard to area of project, date of approval of project from local authority, date of commencement, date of completion of the project and if the project is covered under section 80IB(10). The AO also made the enquiry related to size of residential unit, commercial area in project, nature of land holding, commencement certificate from appropriate authority under whose jurisdiction work was carried out along with copy of plan and revised plan, proof of land holding and total proposed construction along with return of income filed for AY 2011-12 and 2013-14 with balance-sheet, computation of income and Auditor’s report. The assessee in its reply furnished the information related with total area of the project which is 5940 sq. meter i.e. 1.5 Acres (approximately), date of approval of the project on 29.03.2007 and date of completion of project dated 05.03.2012. The assessee provided the details of built-up area, copy of land purchase agreements, commencement and completion certificate along with copy of plan, return of income for AY 2011-12 and 2012-13 and Auditor’s report. The AO after considering the reply and the documentary evidence furnished by assessee allowed the claim of assessee under section 80IB in the assessment order passed on 30.03.2015. The AO granted the deduction under section 80IB(10). In our view, the AO has made a sufficient enquiry before passing the assessment order. Co-ordinate Bench of Pune Tribunal in Hiraman Nivrutti Bhujbal vs. ITO [2014 (5) TMI 1137 - ITAT PUNE] held that concerned Gram Panchayat is a competent local authority for the purpose of issuing approval and completion certificate for claiming deduction under section 80IB(10) in respect of the profit from sale and eligible flats in the project. In our view, the AO has taken a legally possible view while allowing deduction under section 80IB(10). In our view, the provision of section 263 of the Act can be invoked if the twin condition prescribed under section 263 is fulfilled i.e the order is erroneous and prejudicial to the interest of Revenue. In the present case, the AO has taken legally permissible and possible view, thus, the order passed by AO is not erroneous. - Decided in favour of assessee.
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2017 (12) TMI 1122
Validity of reopening of assessment - whether there was relevant material to form a reasonable belief is to be seen? - bogus purchases - Held that:- There is a specific information received during the investigation by the authority and it has been prima facie found that assessee is also the beneficiary of the said parties, the re-reopening of assessment is valid. Notice under section 148 for re-opening the assessment was issued after four year from the end of relevant assessment year and the AO has not specified as to what material facts and information the assessee has failed to disclose. However, all these leaches are not available in the present case. The other submissions of the assessee that no prior permission or approval of JCIT was obtained has no force. The ld AR for the assessee is his written submissions dated 04.10.2017 has specifically contended that “From the documents relating to the approval of JCIT was with the LAO and therefore he has to prove that the approval was with the application of mind”. No other material was brought to our notice to take a contrary view that there was no approval of JCIT for reopening the assessment. Thus, we do not find any force in the submission of ld. AR of the assessee; hence, the Ground No.1 of the appeal is dismissed. Addition on account of bogus purchases - Held that:- Under Income-tax Act, the only real income can be taxed by the Revenue, even if the transaction is not verifiable due to any reason, the only taxable is the taxable income component and not aggregate of the transaction. After considering the fact and nature of business of assessee, we are of the opinion that in order to fulfil the gap of revenue leakage, the disallowance of reasonable percentage of impugned purchases would meet the end of justice. The Hon'ble Bombay High Court in CIT v. Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. We have noted that the ld CIT(A) after relying on various decisions restricted the disallowance at 12.5% of the tainted/ bogus purchase. Thus, we do not find any illegality or infirmity in the order passed by ld CIT(A), which we sustained. - Decided against assessee.
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2017 (12) TMI 1121
Disallowance u/s. 14A r.w. Rule 8D - Held that:- We noted that the CIT(A) has given a clear cut finding of fact that investment of the assessee, which is amounting to ₹ 585 crores, is less than the assessee’s capital reserve and accordingly following the decision in the case of CIT vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) and CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] deleted the disallowance in respect of interest but directed the AO to compute 0.5% of the average investments and while computing the 0.5% of the average investments in the subsidiary company directed to exclude and dismissed the additional ground taken by the assessee for excluding from calculation of 0.5% of the average investment on which there is no tax free income is earned following the order of the CIT(A) for A.Y. 2010-11. The CIT(A) also following the order for A.Y. 2010-11 directed the AO to exclude while computing 0.5% of the average investment expenditure involved in administrate expenses. Expenditure on account of replacement of electricity meters - nature of expenditure - revenue or capital expenditure - Held that:- After hearing the rival submissions we noted that this Tribunal in the case of the assessee for A.Y. 2010-11 confirmed the order of the CIT(A) deleting the said disallowance as the said issue has been decided in favour of the assessee by the decision of the Hon'ble High Court in assessment years 2001-02, 2002-03, 2003-04, 2006-07, 2007-08 and 2008-09. Provisions of Section 115JB applicability to the assessee company as the Accounts of the assessee are prepared according to provisions of Electricity Supply Act - Held that:- The assessee is following the accounting policies under the Electricity Supply act and prepared its accounts in view of those very policies. Following those very policies, the accounts in accordance with part II & III of Schedule VI of the Companies Act are not applicable at all. Once there is no possibility for preparing the accounts in accordance with the part II & 11 of Schedule VI of Companies Act then the provisions of sec. 115JB cannot be forced.
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2017 (12) TMI 1120
Disallowance of Finance Cost incurred during the year under the consideration u/s 36(1)(iii) - acceptance of the claim in earlier years in proceedings u/s 143(1) - Held that:- Merely because the revenue has accepted the said claim of interest as business expenses in the earlier years in the summary proceedings u/s. 143(1) does not create res-judicata as revenue has never gone into the details of the said claim as the return of income was accepted in summary manner u/s 143(1) without scrutiny being conducted u/s. 143(3) r.w.s. 143(2). Thus, mere acceptance of the claim in earlier years in proceedings u/s 143(1) does not debar Revenue from examining the claim on merits in subsequent years and does not create a bar of res-judicata . We are fully aware that consistency is to be maintained but the claim of interest expenses was never examined by the revenue in any of the earlier years as scrutiny proceedings were not initiated in any of the earlier years since said loans were raised by the assessee. Thus only bald statements are made by the assessee for claiming that the interest has been paid for the business purposes while no such evidences are brought on record by the assessee to prove its contention that the said loans were used for business purposes by the assessee and mandate of Section 36(1)(iii) was complied with. The payments and the return thereof of the said advances are from the sister concerns and in the absence thereof of the evidences on record to substantiate that these were business expenses, we are afraid claim of the assessee to allow interest expenses on bank overdraft as business expenses cannot be accepted and hence the appeal of the assessee is dismissed. - Decided against assessee.
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2017 (12) TMI 1119
Addition made on account of bad debt written off - Held that:- In the present case, the condition stipulated in Sec 36(2) of the Act was satisfied in as much as the amount of debt representing money lent in the ordinary course of business of money lending, which is carried on by the assessee was written off in the books of account as irrecoverable. On perusal of the order of the CIT-A, we find that the Chairman of the assessee company vide its Board Meeting/Board Resolution has approved the bad debt of ₹ 2,59,67,905/-. We further find that the impugned loan, on which impugned bad debt arisen, was given in the normal course of business, which cannot be ignored in the facts and circumstances of the case. The CIT-A was justified that the bad debt claimed by the assessee for an amount of ₹ 2,59,67,905/- is held to be an allowable being business expenditure. Therefore, we find no infirmity in the order of the CIT-A in holding the same. Accordingly, we direct the AO to delete the same. - Decided in favour of assessee.
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2017 (12) TMI 1118
Penalty levied u/s 271C - liable for deduction of tax at source on provisions of Brokerage made in books of account - Held that:- TDS was not practically feasible to be deducted by the assessee on the provision so made, and as and when the payments were made to the brokers, TDS was deducted and remitted to the Government. So also is not disputed that no benefit of any provision for expenses was availed by the assessee and due tax was paid in full, as such there is neither tax evasion nor loss of revenue to the Government. The controverted facts establish that because of the peculiarity of the circumstances involved in this matter, namely, at the time of creation of the provision for brokerage expenses, neither the names of the brokers nor the amounts to be paid to them on account of brokerage was a determinable owing to the fluid situation, due to which TDS was not practically feasible to be deducted by the assessee, and more particularly in view of the fact that the assessee neither claimed nor availed any benefit of the provision made for expenses and paid due tax in full, we are of the considered opinion that the findings of the Ld. CIT(A) that there is neither any tax evasion nor loss of revenue to the Government do not suffer any illegality or irregularity, and that this tribunal cannot interfere with the same. - Decided against revenue
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2017 (12) TMI 1117
TPA - comparable selection criteria - Held that:- Assessee is engaged in cutting edge product without appreciating that the products are not conceptualized in India and hence the role of PSC is limited to only that of a routine captive service provider, thus companies functionally dissimilar with that of assessee need to be deselected from final list. Depreciation claimed by the assessee @ 30% on moulds on the ground that these are used in plastic factories - Held that:- AR has just verbally submitted that in most of the products which are manufactured by the assessee are made up of plastic product which appears to be true. But as such no documentary evidence was filed in support of the assessee claim. However in the interest of justice & fair play, we are inclined to restore this matter to the file of AO for fresh adjudication in accordance with the law. The ld. AR is directed to produce necessary documents in support of his claim. Hence the ground of appeal filed by the assessee is allowed for statistical purposes. Credit of tds - Held that:- We direct the AO to grant the amount of TDS as per the provision of law Surcharge on DDT - Held that:- On perusal of records, we find that the surcharge applicable for the AY 2011-12 is 7.5%. But it is undisputed fact that dividend was declared and distributed and paid in AY 2012-13 and therefore the surcharge as applicable to the AY 2012-13 i.e. @ 5% should be applied on the DDT. In view of above, we direct the AO to delete the extra surcharge levied on the DDT Addition on AMP expenses as international transaction - Held that:- AMP cannot be regarded as international transaction. In holding so we find the support & guidance from the judgment of Hon’ble Delhi High Court in the case of Maruti Suzuki India Limited Vs. CIT [2015 (12) TMI 634 - DELHI HIGH COURT] Addition on account of lease rental paid for the cars - AO was of the view that the expenditure incurred on lease rental are in the nature of capital expenditure - Held that:- We find that the issu9e under dispute is covered by the decision of the Hon'ble Supreme Court in the case of ICDS Ltd [2013 (1) TMI 344 - SUPREME COURT ] decided in favour of the assessee Addition on account of waiver of loan - Held that:- We note the loan amount was taken by the assessee through cheque / cash. The ld. DR has also not brought anything on record contrary to the argument of ld. AR. Thus in our considered opinion the amount of loan waived off by the assessee is capital transaction and outside the purview of tax net. Hence the ground raised by the Revenue is dismissed
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2017 (12) TMI 1130
Investigation by Tax Recovery Officer - Held that:- Tax Recovery Officer has failed to understand the scope of the provisions of rule 11 of the Second Schedule to the Act, in observing that the matter involved complicated issues and referring the matter for the opinion of the learned standing counsel instead of confining the inquiry to the extent provided under rule 11. Besides, what the Tax Recovery Officer has failed to appreciate is that powers under rule 11 of the Second Schedule to the Act are vested in him and he is required to exercise the same in accordance with the said rule and cannot abdicate his powers in favour of anyone. In the present case, the Tax Recovery Officer, instead of independently exercising powers under rule 11 of the Second Schedule, has abdicated his powers by placing reliance upon the opinion of the learned senior standing counsel and basing his order thereon. Evidently therefore, the Tax Recovery Officer has failed to exercise the jurisdiction vested in him. Under the circumstances, the writ petition under Article 226 of the Constitution of India would be maintainable before this court. In the light of the above discussion, the impugned order dated 3.3.2016 passed by the third respondent Tax Recovery Officer cannot be sustained. The petition, therefore, succeeds and is, accordingly, allowed.
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2017 (12) TMI 1129
Non-collection of TCS on sale of scrap and interest charged u/s.206C(C) - Held that:- The expression “scrap” as defined under clause (b) of the Explanation to section 206C of the Act, clearly provides that scrap means waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such. In the facts of the present case, the rags, wipers or chindi are actually products manufactured by the assessee and are used as such by the buyers for the purpose of manufacturing other items and are not products which cannot be used as such because of breakage, cutting up, wear and other reasons. The articles manufactured by the respondent assessee, therefore, would not fall within the ambit of the expression “scrap” as envisaged in clause (b) of the Explanation to section 206C of the Act. No infirmity can be found in the impugned order passed by the Tribunal in holding that the rags, wipers or chindi sold by the appellant would not fall within the meaning of “scrap” so as to attract the provisions of section 206C of the Act making the assessee liable to deduct tax at source under the said provision. Violation of Rule 46A(3) of the Income Tax Rule by not giving opportunity to the AO after admitting evidences in the form of photographs, samples - Held that:- If the additional evidence furnished by the assessee before the first appellate authority is in the nature of clinching evidence leaving no further room for any doubt or controversy, in such a case no useful purpose would be served by forwarding such evidence/material to the Assessing Officer to obtain his report and in such exceptional circumstances, the said requirement can be dispensed with. In the facts and circumstances of the present case, the additional evidence was only in the nature of the photographs and samples of the articles manufactured by the assessee. In the opinion of this court, considering the nature of the additional evidence produced by the assessee no useful purpose would have been served by forwarding such evidence/material to the Assessing Officer to obtain his report as such evidence was in the nature of clinching evidence leading no further room for any doubt or controversy. Under the circumstances, the second question proposed by the appellant also does not merit acceptance.
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2017 (12) TMI 1128
Revision u/s 263 - entitled to deduction under section 80P - Held that:- Powers under section 263 of the Act have been exercised on the ground that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue. It is settled law that if two views are possible on the same issue, the order cannot be said to be erroneous or prejudicial to the interest of the revenue. The facts as emerging from the record reveal that in relation to the assessment year 2011-12, the Assessing Officer had disallowed the deduction under section 80P of the Act in the case of the assessee society. However, the Commissioner (Appeals) has deleted such addition. The Commissioner (Appeals) has taken a view that the assessee is entitled to deduction under section 80P of the Act. Therefore, once the Assessing Officer has taken a view which is a plausible view, the assessment order cannot be said to be erroneous or prejudicial to the interest of the revenue. The Tribunal therefore, did not commit any error in setting aside the order under section 263 of the Act. - Decided in favour of assessee.
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2017 (12) TMI 1127
Software development charges - nature of expenditure - revenue or capital expenditure - Held that:- Tribunal in the impugned order has followed the decision of this High Court in the case of N.J. India Invest Private Limited [2013 (7) TMI 738 - GUJARAT HIGH COURT] wherein it has been held that the expenditure of maintenance, backup and support services to the existing hardware and software is revenue in nature. The court, in the above decision, has held that these services were essentially in the nature of maintenance and support services providing essentially backup to the assessee, who had procured software for its purpose. These services, thus essentially, did not give any fresh or new benefit in the nature of a software to be used by the assessee in the course of the business but were more in the nature technical support and maintenance of the existing software and hardware. Thus, all that the Tribunal has done is that it has applied the decision of the jurisdictional High Court to the facts of the present case. In that view of the matter, it is not possible to state that the impugned order passed by the Tribunal gives rise to any question of law
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2017 (12) TMI 1126
Non collection of TCS on sale of brass scrap - non-furnishing of Form 27C to the respective Commissioner - Held that:- Considering the fact that the information on record was incomplete and did not fully demonstrate the facts, the Tribunal restored the matter to the Assessing Officer to verify and examine the facts of the case of the assessee and decide the same in accordance with the principles laid down by the jurisdictional High Court in the case of Commissioner of Income Tax (TDS) v. Siyaram Metal Udyog (P) Ltd., (2016 (7) TMI 68 - GUJARAT HIGH COURT). Having regard to the fact that the Tribunal has merely restored the matter to the Assessing Officer as the information on record was incomplete and did not fully demonstrate the facts, it cannot be said that the impugned order passed by the Tribunal gives rise to any question of law
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2017 (12) TMI 1125
Deductions u/s 10A - whether made only at the stage of computation of gross total income under Chapter VI of the Act and not at the stage of computation of the total income under Chapter IV of the Act before setting off the loss, particularly in view of the circular of CBDT dated 16/07/2013 - Revision u/s 263 - Held that:- We find it appropriate to hold that the Income Tax Appellate Tribunal was justified in setting aside the order of the Commissioner of Income Tax passed under Section 263 of the Act, observing that the deduction under Section 10A of the Act has to be made at the stage of the Chapter IV of the Act. Accordingly, we answer the substantial question of law in favour of the assessee and against the revenue.
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2017 (12) TMI 1124
Immunity - Summons under Section 131 by ACIT calling upon the petitioner to attend the office of the respondent No.3 for recording his statement - Held that:- Under the said provisions of Section 131 of the Income Tax Act, 1961, the designated Assistant Commissioner or other specific authorities have the powers of the Civil Court vested in them under the Code of the Civil Procedure, 1908. The said provision is applicable to any person to whom such summons are issued and the said provisions do not carve out any exception for any designation of office held by him. The alleged immunity claimed by the present petitioner under the provisions of the Diplomatic Relations (Vienna Convention) Act, 1972 cannot be claimed by the petitioner so as not to respond to the summons issued by the Assistant Commissioner in connection with the business activity of the petitioner or his company in which he is Director particularly, when the business is carried out in the same premises in which the alleged consular activities were also being carried on. The provisions of the Diplomatic Relations (Vienna Convention) Act, 1972 relied upon by the learned counsel for the petitioner also do not envisage any such immunity and Section 8 of the Diplomatic Relations (Vienna Convention) Act, 1972 The respondent-Assistant Commissioner can summon the petitioner to his own office under Section 131 of the Act. The learned counsel for the petitioner also has fairly agreed that the petitioner would not object to it. Therefore, the present petition is disposed of with a liberty and direction to both the parties to undertake the proceedings under Section 131 of the Income Tax Act in the office of the respondent-Assistant Commissioner Circle-4(1) (1), Bengaluru. The respondent Authority will be free to issue fresh summons under section 131 of the Act to the petitioner for seeking his appearance, within a period of one month from today.
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2017 (12) TMI 1116
Profit from investment through portfolio management service - capital gain or business income - nature of income - Held that:- In the case of CIT vs. Kapur Investment P. Ltd (2015 (5) TMI 616 - KARNATAKA HIGH COURT) held that profit from investment through portfolio management service either directly or through professionally managed firm, would still remain as profits to be taxed as capital gains as same will not change nature of investment that is in shares, and law permits it to be taxed as capital gain and not as business income. We have also observed that the assessee has right from the beginning treated the amount held in shares as part of investment in the preceding assessment year. It was also brought to our notice that in the preceding assessment years 2005-06 to assessment year 2007-08 in the assessment made u/s. 143(3) the amount of gain arose from sale and purchase of shares was assessed under the head capital gain by the assessing officer. Similarly, it was also contended that in the subsequent years i.e. assessment year 2012- 13 to 2014-15 gain arising on sale and purchase of shares was shown under the head income from capital gain and were accepted by the assessing officer in the assessment made u/s. 143(3) of the act. After considering the above facts and legal findings, we are of the view that the ld. CIT(A) was not justified in upholding the addition made by the assessing officer as business income - Decided in favour of assessee.
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2017 (12) TMI 1115
Gross commission received - Credits found in the SBI bank account - Held that:- Both the assessee as well as his wife had duly credited the gross commission received in the sums of ₹ 8,74,922/- and ₹ 12,19,911/- in their respective income and expenditure account and this figure duly matches with the TDS certificate issued by GTFS to each of them. Hence there cannot be any addition that could be made based on credits found in the SBI bank account when the ld AO himself accepts the fact that the said credits represents only commission income derived by the assessee . Moreover, we find that the assessee himself had already credited the sum of ₹ 8,74,922/- as gross commission received, out of which major portion is included in the total credits sum of ₹ 12,63,839/-. We find that these facts were not examined by the ld AO. Hence we deem it fit and appropriate to set aside these issues to the file of the ld AO for denovo adjudication and frame the assessment afresh in accordance with law. Appeal of the assessee is allowed for statistical purposes.
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Customs
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2017 (12) TMI 1113
ADD - Hydrogen Peroxide - Import from Bangladesh, Taiwan, Korea RP, Indonesia, Pakistan and Thailand - methodology adopted for determining the injury and dumping margin - it was alleged that the subject goods have been exported to India from subject countries (other than Indonesia) below its normal value; the Domestic Industry has suffered material injury; and the injury has been caused by the dumped imports from subject countries - Held that: - the appellant is a non-cooperative exporter. Rule 6 (8) of the AD Rules provides for the Designated Authority to record its finding on the basis of facts available to it and make such recommendations to the Central Government as it deemed fit under such circumstances. NPL is a joint venture of M/s Bombay Dyeing and Manufacturing Company Limited and M/s Solvay SA which holds about 25.10% shares in NPL. The claim of the appellant is that Solvay SA is related to the DI in terms of explanation (ii) of Rule 2 (b) of AD Rules - It is clear that the DA on careful consideration arrived at the conclusion that NPL was not to be considered as a related company of Solvay. It was further recorded that the provision of Companies Act or provision relating to special resolutions are not relevant for the present investigation. We are in agreement with the findings recorded by the DA. DA is well within his powers to consider the scope of DI who were importing or related to the exporters of subject goods. There is no legal sanction against considering such DI in the investigation. Sickness and mis-management of DI - Held that: - there is no bar in consideration of a sick unit as a DI. There is no evidence to support the contention of the appellants that the sickness or the deterioration of DI is caused by factors other than import of subject goods. The impact of import on the DI has been elaborately discussed by the DA on all aspects and we are not inclined to interfere with such findings in the absence of any specific contra evidence. The grievance of the appellant (NPL) as a DI on the calculation of net return/ adjusted return as made by the DA requires re-examination. The learned Counsel for the DA also admitted that there has been no past instance of such second adjustment while arriving at the return on capital employed - the matter has to go back to the DA for a limited purpose of verifying the correctness of the return on investment as arrived at by the DA based on optimum production of 15 months and again by adjustment in the net return. There is no merit in the appeals filed by the exporters against the levy of anti dumping duty on the subject goods and the appeal filed by HOCL against the final finding - Appeal dismissed.
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2017 (12) TMI 1112
Whether the digital still image video cameras imported by the appellant are eligible for the benefit of nil rate of customs duty during the disputed period when the explanation was in place under N/N. 25/2005-Cus? - capability to record video for as long as 30 minutes in a single sequence using the maximum storage (including expanded capacity) - The interpretation of the Revenue is that digital cameras entitled to the benefit should not be capable of recording, a single sequence of more than 30 minutes using the maximum storage (including expanded capacity) - It has been found on examining the digital cameras that keeping in view the equipment memory capacity at the time of import, the cameras are capable of recording the video at resolutions and speed more than what is indicated in the notification, for a period greater than 30 minutes. If the maximum expanded storage capacity is taken into account, the recording time for the video is many times more. As such, Revenue is of the view that the imported cameras will not be entitled to the benefit of the notification. Held that: - The imported digital cameras taking into consideration the memory capacity at the time of import, were found to have the capability of recording video in a single sequence of more than 30 minutes. However, during investigation, it was found that such capabilities have been restricted through firmware to a single sequence of less than 30 minutes. Hence, the fact of matter is that the imported digital cameras, can run a single sequence of only less than 30 minutes whereas the cameras have the capability to have a single sequence of much more than 30 minutes - Such an interpretation will make the stipulation in the explanation to the Notification about the maximum storage (including expanded) capacity as redundant. It is obligatory to read and satisfy all the conditions of the notification without rendering any part therein as redundant. Since in the present case, the imported digital cameras are capable of recording video with minimum resolution and minimum recording speed for more than 30 minutes in a single sequence; using maximum storage capacity, such cameras will not be entitled to the benefit of notification. It is well settled that a person who claims exemption or concession, has to establish that he is entitled to that exemption or that concession. In the present case, as discussed above, the impugned goods do not fulfill all the conditions specified in the notification and hence it is an inevitable that the benefit of notification is denied to these goods. Time limitation - Held that: - It is clear that the appellants deliberately did not declare the full details of the imported goods and cleared the same by wrongly availing the benefit of notification. The correct facts came to the light only during investigation by DRI - demand cannot be held as time barred - extended period rightly invoked. Exemption from payment of cess - Education and Secondary and Higher Education Cess - Held that: - It may be mentioned that Exemption Notification NO. 69/2004-Cus dated 9.7.2004 and 28/2007 dated 01.03.07 exemption from Education Cess and Senior and Higher Secondary Education Cess for Digital Still image video cameras falling under Tariff Item 8525 8020. It is seen that these exemptions were continued even for the period under dispute - same exemption was continued as far as Cess is concerned, for the disputed period. Hence, Education Cess and Senior and Higher Secondary Education Cess cannot be demanded for the disputed period. Appeal dismissed - decided against appellant.
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2017 (12) TMI 1114
Refund of Terminal Excise Duty (TED) - validity of Policy Circular issued by the second respondent - policy provisions and Foreign Trade (Development and Regulations) Act, 1995 - Held that: - reliance placed in the case of Kandoi Metal Powders Mfg. Co. Pvt. Ltd. Versus Union of India And Others [2014 (2) TMI 773 - DELHI HIGH COURT], where Court also is unable to see the reason why the respondents were of the view that refund claim or benefit under the CENVAT regime under the Central Excise Act or the other statutory schemes framed under it is available. In this Court’s opinion, that regime operates in its own terms and is independent of the rights and liabilities of the petitioner and the respondents under the import-export policies framed under the 1992 Act. The third respondent is directed to process the refund claim in accordance with 2009 Policy by taking into consideration the petitioner's refund application and pass appropriate orders on merits and in accordance with law within a period of three months.
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2017 (12) TMI 1111
Confiscation - gold bars - smuggling - penalty - Held that: - the seizure of the gold biscuits and the subsequent proceedings are prima facie vitiated, there being no warrant of search in the name of the appellant. Further, it is apparent from the record that no reason was recorded against the appellant for any alleged evasion of Central Excise duty or evasion of any Customs duty - further, the appellant have discharged the onus as required under Section 123 of the Customs Act, 1962 - confiscation and penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1110
Jurisdiction - power of DRI to issue SCN - Revenue's argument is that “Proper Officer” being also used in drawback rule, the meaning of “proper officer” shall be known upon adjudication of the matter in Mangali Impex by Apex Court[2016 (5) TMI 225 - DELHI HIGH COURT]. Held that: - the drawback is also an incentive granted through Customs and Central Excise Duties Drawback Rules, 1995 where there is recognition of “Proper Officer” - as an abundant caution, following Mangali Impex judgment it would be preferable to await for the apex Court judgment since the concept of “Proper Officer” may be adjudicated by Apex Court for different purposes of law also. Appeal placed on remand.
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2017 (12) TMI 1109
Revocation of CHA License - forfeiture of security deposit - export of drugs - Held that: - M/s Johar Enterprises was involved in exporting narcotics which is prohibited in law. Being anti-national activity, merely the statement of Ms. Bharti Chawla that somebody has handed over the consignment is neither sufficient nor acceptable - appeal dismissed - decided against appellant-assessee.
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2017 (12) TMI 1108
ROM application - the assessee has made a request that the Final Order No.55775-55776/2016 dated 10/08/2017 may be recalled for the reasons that benefit of reduced penalty of 25 per cent in respect of show cause notice dated 08/07/2011 has not been provided - Held that: - There is no clerical or arithmetical mistake in the present appeal. The submission of the appellant has been considered. It is not necessary to impede each and every argument of the appellant. Only the cumulative effect will have to mention in the order. It may be mentioned that in the garb of rectification, fresh order cannot be passed on merit. Oversight of fact/not considering arguments is not on error and no relief can be granted in rectification - ROM application dismissed.
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Corporate Laws
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2017 (12) TMI 1105
Scheme of merger/amalgamation rejected - Held that:- In the rejoinder affidavit, the appellants have taken a plea that the objection that ‘MCA21 portal’ reflects the paid-up capital of the Transferee Company is different as per the scheme, is not based on record. The ‘MCA21 portal’ of the Transferee Company’s master data shows that the paid-up capital is ₹ 5,68,79,400/- and as such, there is no discrepancy in the issued subscribed and paid-up capital of the Company as alleged. The appellants have also taken a plea that the Transferee Company is not a Non-Banking Financial Company (NBFC). However, on perusal of the report of the Regional Director and letter forwarded to the Reserve Bank of India dated 28th April, 2017, it is clear that the “Signature Global (India) Private Limited’, namely, the Transferee Company is carrying NBFC’s activities which, according to the Reserve Bank of India, is illegal activity, as no permission of the Reserve Bank of India has been taken. In view of the specific plea taken by the Reserve Bank of India and brought to the notice of the Tribunal by both Registrar of Companies and Regional Director, Northern Region, we are not inclined to interfere with the impugned order dated 11th August, 2017. Appeal dismissed.
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Insolvency & Bankruptcy
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2017 (12) TMI 1106
Challenging constitutional validity of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (Repeal Act) and restricts his challenge to the amended provisions of Section 4(b) and Section 5(1)(d) of the Repeal Act as being violative of Article 14 of the Constitution of India - primary contention of the petitioner is that the aforesaid provisions, Section 4(b) and Section 5(1)(d) of the Repeal Act, are unconstitutional as they draw a distinction between sick companies where schemes have been sanctioned under Section 18 of the SIC Act and cases where draft schemes were pending consideration before the BIFR and had not been sanctioned, thus violates Article 14 and is discriminatory - Held that:- We have confined to the two provisions enacted vide S.O. No. 1683(E) but do not find any merit in the contention. As noticed above, the aforesaid notification has been issued by the Central Government in exercise of power conferred under sub- Section (1) of Section 242 and 252 of the Code. A perusal of the impugned notification, extracted above, and Section 252 of the Code extracted below, clearly shows that the Eighth Schedule is a part of the Code and Section 4(b) of the Repeal Act as amended was incorporated in the Code vide the Schedule. As per Section 252 of the Code, the Repeal Act was amended in the manner specified in the Eighth Schedule. The Eighth Schedule of the Code as originally enacted had amended Section 4(b) of the Repeal Act, and has been already reproduced above. Thus amended clause (b) to Section 4 of the Repeal Act was specifically incorporated and included in the Eighth Schedule. In this manner, Section 4 clause (b) of the Repeal Act became part and parcel of the Code. Thus, the said order is not ultra vires as what has been done, in effect, is under the Code itself. This being the position, we do not think that the petitioner is correct in contending that the Central Government could not have issued the Removal of Difficulties Order, to rectify and correct anomalies noticed while implementing the Code. The petitioner, we may notice, has not challenged Section 252 of the Code which had the effect of amending, in the manner as specified in the Eighth Schedule, the provisions of the Repeal Act. In view of the above discussion, it is held that the Central Government, in exercise of power conferred under Section 242 of the Code could have removed the difficulties which came to its notice upon enforcement of the Code and its implementation. Clause (b) to Section 4 of the Repeal Act, in fact, was substituted in terms of Eighth Schedule inserted by Section 252 of the Code. To summarise - (i) the classification of cases where draft schemes for reconstruction have been sanctioned and those cases where schemes are pending is nondiscriminatory and is based on intelligible differentia as also has nexus to the object sought to be achieved by enacting the Code; (ii) the inclusion of the Eighth Schedule to the Code is in exercise of powers under Section 242 and Section 252 and is thus not ultra vires; (iii) the prescribing of a cut-off date by way of notifications i.e. 1st December, 2016 is not contrary to law; The Petitioner, if it is so advised may avail of the remedy provided under the Code. As the time period of 180 days has already lapsed, if the Petitioner approaches the NCLT, the request for condonation of delay, if any, be considered if permissible in law.
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2017 (12) TMI 1104
Corporate insolvency procedure - maintainability of application for procedure - Held that:- From the record we find that a sub-contract works agreement was reached between the parties. The scheduled completion date in relation to works of agreement dated 19th April, 2011 was 31st December, 2012. According to appellant, the respondent/applicant failed and ignored to complete the agreement works by that date. The respondent/applicant continued the works till May, 2014 and executed only 78% of the agreement value of works and had wilfully abandoned the works w.e.f May, 2014. From the aforesaid fact not disputed by respondent, it is clear that there was a dispute in existence prior to issuance of demand notice under sub-section (1) of Section 8 of the ‘I&B Code’ and for that the application under Section 9 of the ‘I&B Code’ was not maintainable. Prima facie, we are of the opinion that as the ‘I&B Code’ do not empower the Adjudicating Authority to suggest any name or appoint any ‘Interim Resolution Professional’/Resolution Professional of its own choice. However, as we find that the parties have settled the dispute and initiation of Resolution process under section 9 of the ‘I&B Code’ was not maintainable, in view of existence of dispute, we leave the question open as to whether the Adjudicating Authority has power to appoint any person of its own choice or not which will be decided in an appropriate case.
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2017 (12) TMI 1107
Petition filed under the Insolvency and Bankruptcy Code, 2016 admitted - arbitration proceeding purported to be started after the imposition of the said moratorium - Held that:- The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against Corporate Debtors. This being the case, we are surprised that an arbitration proceeding has been purported to be started after the imposition of the said moratorium and appeals under Section 37 of the Arbitration Act are being entertained. Therefore, we set aside the order of the District Judge dated 06.07.2017 and further state that the effect of Section 14(1)(a) is that the arbitration that has been instituted after the aforesaid moratorium is non est in law. Also as informed that criminal proceeding being F.I.R. No. 0605 dated 06.08.2017 has been taken in a desperate attempt to see that the IRP does not continue with the proceedings under the Insolvency Code which are strictly time bound. We quash this proceeding. As a result, the appeal is allowed and the steps that have to be taken under the Insolvency Code will continue unimpeded by any order of any other Court.
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PMLA
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2017 (12) TMI 1103
Offence under PMLA - direct / indirect involvement of any person or property with the proceeds of the crime - attachment orders - Held that:- As under section 68(A)(1)(d)&(e) even the person who are relative of the accused or associates, the ED has a right to forfeiture and acquired the illegal property of the relative associates. However, in the present case under the PMLA Pritam Kaur is neither the relative or the associates of Shri Hardeep Singh Thapar. At the time of making the payment by Shri Hardeep Singh Thapar no criminal case under the schedule offence or PMLA was pending. At that time the amount received by Pritam Kaur was earnest money cannot be considered as tainted under the PML Act and even she was not aware about any activities about Shri Hardeep Singh Thapar on the date of execution of the agreement. It was a bonafide transaction. The Adjudicating Authority has not discussed any relevant issue involved in the impugned order which was passed in mechanical manner and without application of mind without considering and consulting law.. The appellant is an innocent person. No criminal complaint is pending against her. It is purely a civil dispute. She has no link or nexus with Hardeep Singh Thapar directly or indirectly. Both orders are accordingly set-aside. All the four appeals are allowed. The attachment of only immovable properties stands released. The appellant may take the necessary steps as per law. ED and Adjudicating Authority has totally ignored the said vital facts involved in the present matter. Both orders are passed in mechanical manner. Infact, had ED applied its mind of the peculiar facts of the matter, the provisional attachment order would not have been passed. Both provisional attachment orders and confirmation orders are perversed and against the law.
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2017 (12) TMI 1102
Condonation of delay - Held that:- The proviso of sub-Section 3 of Section 26 permits the appellant Tribunal to condone the delay after the expiry of 45 days if there was sufficient case. Having considered the facts and circumstances of the case. We are inclined to condone the delay in filing of the appeal as valuable rights are involved in the matter. The appellant has been able to show sufficient cause for not filing the appeal in time. In the interest of justice, subject to the cost of ₹ 5,000/- which shall be paid by the appellant to the counsel for the respondent within six weeks from today.
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Service Tax
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2017 (12) TMI 1098
Classification of services - Clearing and forwarding agency service or Business Auxiliary services - case of appellant is that they have no infrastructure to handle the coal and the coal companies are solely responsible for C & F operation and this by no stretch of imagination can be called Clearing and Forwarding operations. Held that: - From the activities of the appellant as mentioned in the show cause notice and impugned order, it is seen that there is no role of appellant in getting the coal cleared from the collieries. The role of appellant is merely to supervise the loading and movement of coal - it is seen that at no stage during the movement of goods the appellant actually received the goods in their custody. The appellants act as an agent at different stages to take samples of coal. While the appellant are responsible for dispatch of coal as per SLC Linkages/MSEB requirement of the coal they are not responsible to dispatch the goods themselves. In terms of the agreement Clause (2), their activities are merely to supervise the quantity and monitoring the loading, movement of coal from the collieries by Railways in receipt of the same at the destination of rakes are not to be organized by the appellant. The clearance of goods the coals is also not required to be organized by the appellant - the services provided by the appellant are not classifiable under C&F Agent Service - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1097
Interest - Penalty - Rule 15(1) of CCR, 2004 - CENVAT credit - input services - mandap keeper service - Held that: - the appellants are not liable to pay interest and penalty because this particular service falls in the definition of input service - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1096
CENVAT credit - first appellate authority took note that a sample of the copies of invoices furnished did not bear the name and address of the provider of service as detailed in the registration certificate - rule 9(2) of the CCR, 2004 - Held that: - in the present instance there is a mis-match of the address of the supplier vis-Rs.-vis registration certificate. The validity of that ground to allege complicity especially in the context of the tax evasion by the service provider to deny CENVAT credit is sustainable only with reasonable evidence - denial of CENVAT credit on the ground of failure to deposit tax by the service provider is not correct in equity when there is no any express condition to that effect of CENVAT Credit Rules, 2004 - denial of credit not tenable - penalty also not proper - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1095
Penalty u/s 76 - invocation of section 80 - case of appellant is that service tax could not be paid on account of financial difficulties and he will pay the balance of service tax at the earliest - Held that: - the appellant has failed to pay the service tax liability till today and unless he pays the service tax liability, he cannot claim benefit under Section 80 for dropping penalty u/s 76 of the FA - appeal dismissed - decided against appellant.
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2017 (12) TMI 1094
Refund claim - service tax paid which was not required to be paid in view of the exemption - denial on the ground of unjust enrichment - Held that: - the judgment in Writ Petition has not been considered by the Commissioner (A) at all and as per the judgment, the appellant alleged that he has refunded the said amount to the service provider - this case needs to be remanded to the original authority to verify that the appellant has refunded the said amount to the service provider or not - appeal allowed by way of remand.
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2017 (12) TMI 1093
Principles of Natural justice - case of appellant is that baseless allegations have been made without examining any documents or looking to the taxability aspect of different items intended to be taxed - Held that: - Prima facie, perusal of show cause notice and adjudication order do not indicate following of course of natural justice by the Adjudicating Authority granting opportunity of defence to defend the allegations made in show cause notice. We do not say so by a hypertechnical reading of the same. Justice is not seemed to have been done without proper examination of nature of receipt, ascertaining taxability thereof and quality of evidence examined. Matter is remanded to learned adjudicating authority to readjudicate the matter by 31st March 2018 granting fair opportunity of hearing to the appellant.
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Central Excise
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2017 (12) TMI 1092
Clandestine removal - clearance of cone yarn under the guise of hank yarn clearances - evidence - cross eamination of witnesses - Held that: - the entire case of the Revenue was based upon the oral evidences in the form of statement of the buyers. He has observed that in as much as there is consistency in the said statements with regard to authenticity of the private records seized under mahazar on different date and details available therein, the same has to be given the status of evidence. It is well settled law that the statements can act as a corroborative evidence to the other independent evidences available on record and cannot by itself, be adopted as the sole evidence for holding against the assessee. In the present case, apart from the said evidences, the Revenue has failed to produce any other evidence to show that the appellant was clearing cone yarn under the guise of hank yarn and was indulging in any clandestine activities. The Hon’ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. Vs. Union of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] have observed that the deponent of the statement are not only required to be produced for cross examination but examination in chief is also required to be undertaken by the adjudicating authority, in terms of the provisions of Section 9D(a) of the Central Excise Act. In the absence of the same, the statements have to be kept out of consideration and cannot be relied upon as an evidence. If that be so, the said statements cannot be considered to be an evidence and if taken out of the records, nothing survives for the Revenue to rely upon as an evidence - the demand of duty against M/s.Venus Cotton Mills Pvt. Ltd. along with imposition of penalty upon them is required to be set aside. Penalty on Managing Director - Held that: - as we have set aside the penalty on the manufacturing unit, the penalty imposed upon the Managing Director is also set aside. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1091
Adjustment of excess paid duty with short paid duty - Intermediate goods - Appellant clears SSFA Noodles to its sister concerns located in tax exempted areas, who use such SSFA noodles in the manufacture of toilet soaps, which are cleared without payment of duty by availing area based exemption - Department was of the view that appellant will not be entitled to adjustment between short paid duty and excess paid duty, since no provisional assessments have been ordered in respect of the assessee. Held that: - The goods have been cleared by the appellant to their own sister unit located in tax exempted areas. Consequently, the appellant is require to pay excise duty on goods so cleared. The basis of valuation is also required to be done in terms of Rule 8 of the Central Excise Valuation Rules, 2000 following the Cost Accountant Standards (CAS-4). It is not in dispute that valuation has been done properly as per CAS-4. However, such valuation has been done on the basis of CAS-4 certificate prepared on the basis of annual cost of production. The appellant has paid duty on a month to month basis on the basis of the cost of the goods for the previous month. When the valuation is finalised on an annual basis, there has been short payment of duty in some months as well as excess payment in other months. The appellant has already paid the excess duty wherever the value as per CAS-4 is more than the value adopted for payment of duty, but after adjusting the excess paid duty in other months. Such adjustment has not been permitted by the adjudicating authority even in the denovo adjudication. An identical issue has been considered by the Tribunal in the case of Essar Steel India [2016 (9) TMI 1175 - CESTAT NEW DELHI], in which the Tribunal held that duty paid in excess in certain months has been availed as credit by sister unit hence, cannot be adjusted towards short payment also not tenable. The appellant has claimed that they have already paid the short paid duty payable after deducting adjusting the excess. The adjudicating authority is directed to verify the same and recover only the differential, if any, after such adjustment. Appeal allowed by way of remand.
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2017 (12) TMI 1090
CENVAT credit - Rule 3(4A)(a) of the CCR, 2002 - credit is reversed while clearing the goods on commercial invoice - Held that: - Legislature has provided the rule keeping all the factors in mind. Any interpretation which makes part of the text of law for otios cannot be considered a proper interpretation - the interpretation that reversing the credit amounts to not taking credit at all would make proviso to Rule 3(4A)(a) of Cenvat Credit Rules, 2002 otios. In these circumstances such interpretation cannot be accepted. Revenue neutrality - Held that: - Once the option to pay tax on the transaction value for certain goods is allowed it is possible that goods may be sold at a loss and therefore duty paid in respect of such goods can be less than the credit taken by the appellant. The proviso to the sub rule has been introduced to take care of such situation. It is possible for a dealer to misuse the rule by making the sale of loss making goods against the Cenvatable invoice and profit making goods by reversal of credit. In those circumstances there will be revenue loss. Appeal dismissed - decided against appellant.
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2017 (12) TMI 1089
Valuation - includibility - financial charge for release of payment immediately - case of department is that 1.9% discount given by appellant to Tata Motors Ltd. towards compensation of financial charges charged by their bankers for obtaining payment immediately is not a discount but an additional consideration received by the appellant - Held that: - this discount is nothing but prompt payment discount - the appellant have admittedly passed on this discount to the buyer Tata Motors Ltd. in their invoice for clearance of goods. 1.9% expenses incurred by Tata Motors Ltd. is an arrangement between them and the banker. The appellant have extended this discount since they have received the prompt payment instead of waiting for 89 days. Therefore the discount extended by the appellant cannot be part and parcel of the assessable value and the deduction on that account is admissible under Section 4(1)(a). The discount of 1.9% cannot be included in the assessable value - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1088
Penalties - CENVAT credit - fictitious supplier - job-work - Held that: - the supplier on record did not exist and that appellant had availed credit on receipt of goods that were not supported by documents prescribed as evidence of payment of duty - At the same time, while the invoices may have been found to fake, there is no evidence that goods have not been received or that they have in anyway infringed the law to render them liable for confiscation. The appellant has also made good the credit wrongly availed. Their contention that there is no evidence of any attempt on their part to evade duty cannot be disregarded - Penalties set aside - appeal allowed.
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2017 (12) TMI 1087
Valuation - inclusion of cost of motor vehicles chassis - appellants paid sales tax / VAT on the body building charges only and not on the motor vehicles manufactured and cleared by them - Department is of the that the valuation should be taken under Rule 10A of the Valuation Rules, 2000 - Held that: - issue decided in the appellant own case Kamal Coach Works Pvt. Ltd. Versus C.C.E., Jaipur [2017 (1) TMI 533 - CESTAT NEW DELHI], where it was held that similar issue has come up before the Tribunal in the case of Audi Automobiles vs. C.C.E., Indore [2009 (5) TMI 426 - CESTAT, NEW DELHI], where the condition of interest and demand of duty was sustained and penalty was set aside and was held that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so, the activity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6. Penalty - Held that: - it appears on higher side - keeping in mind the doctrine of equity and justice, we modify the impugned order and reduce the penalty to 50%. Appeal allowed in part.
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2017 (12) TMI 1133
Intermediate goods - N/N. 67/95-CE dt. 16.03.95 - Department however took the view that duty is payable on intermediate products consumed captively in manufacture of the final products cleared without payment of duty to SEZ, since SEZ unit is not included in the condition for exemption - Held that: - the issue at hand is squarely covered by the case of M/s Ultratech Cements Ltd And Others Versus Commissioner of Central Excise And Service Tax, Tiruchirapalli And Others [2015 (10) TMI 1058 - CESTAT CHENNAI], which have unequivocally held that supplies made to SEZ / Developers by DTA unit are neither chargeable to Nil rate of duty nor exempt from payment of duty under exemption notification, hence they are not exempt goods for the purpose of Rule 2 (d) of Cenvat Credit Rules, 2004. The appellants are very much entitled to the benefit of Notification No.67/95-CE in respect of intermediate goods used to manufacture final products which were supplied to a SEZ unit - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1086
Clandestine removal - the stocks of finished goods as well as raw materials were not entered in the record up-to-date - Section 11AC of the CEA, 1944 - Held that: - undisputed facts are that the records of finished goods and records of raw materials, including inputs was not maintained from 18/08/2013 to 04/09/2013. It is undisputed fact that finished goods valued at ₹ 30,87,050/- were available in the factory which were not entered into RG-1 register and raw materials valued at ₹ 40,33,338/- were available in the factory which were unaccounted for - It is very clear from the provisions of Rule 25 that provisions of said Rule are subject to provisions of Section 11AC of the CEA, 1944. In the SCN or during the whole proceedings Revenue has not established that provisions of Section 11AC were applicable in the present case. Appeal dismissed - decided against Revenue.
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2017 (12) TMI 1085
CENVAT credit - removal of capital goods to sister units - Rule 4(5) (a) of CCR - Held that: - once the capital goods is cleared under Rule 4(5)(a), the same was supposed to be returned back within 180 days. If the assessee is not in a position to bring it back within 180 days, they are supposed to reverse the cenvat credit availed on such capital goods - In the facts of the present case, the removal of capital goods were taken place under Rule 4(5) (a) for the year 13.10.2006 and 4.4.2007. However the same was not returned back within 180 days, the Cenvat credit was required to be reversed, hence the appellants are failed to do so - appeal dismissed - decided against appellant.
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2017 (12) TMI 1084
Jurisdiction of adjudicating authority - goods manufactured in the state where the adjudicating authority had no jurisdiction - Held that: - it is established beyond doubt that the goods in question were duty paid and not manufactured by respondent and since the said goods were duty paid and not manufactured within the jurisdiction of Adjudicating Authority. He had no jurisdiction to deal with them and, therefore, the order passed by learned Commissioner (Appeals) is sustainable. The goods in question were duty paid and they were manufactured by manufacturers in Maharashtra, Karnataka and Uttar Pradesh and they were not manufactured by the respondent. Further, since duty of Central Excise was discharged, they were no more excisable goods. Therefore, the Adjudicating Authority did not have any jurisdiction over them. Appeal dismissed - decided against Revenue.
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2017 (12) TMI 1083
Refund claim - goods cleared after payment of duty, was subsequently banned - Held that: - it is an admitted fact that the goods were cleared after paying the excise duty. The goods were meant exclusively for the purpose of export. Due to legal ban as per the directions of the Hon’ble Supreme Court everybody becomes helpless and finally the goods have become non-marketable. The assessee-Respondents have suffered a loss due to the ban. The Commissioner (Appeals) has rightly order to refund the claim of the duty which was paid by the assessee-Respondents - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1082
CENVAT credit - proportionate Cenvat credit on account of exempted services - liability on interest - Electric Generating Set - Held that: - it has not been disputed that the appellant had sufficient balance in their Cenvat register, which amount was subsequently reversed, on being objected by the audit. Further it has been provided by way of amendment vide N/N. 18/2012-CE (NT) dated 17/03/2012 that no interest is chargeable upon subsequent reversal of the credit, if the assessee is able to demonstrate that they had not utilized the credit. The period of dispute in the present appeals is 2011-12 and 2012-13 - under the provisions of the amended Rule 14 of CCR, 2014 the same shall have retrospective effect and under the admitted fact that they have not applied the credit. I hold that they are not liable to pay interest. CENVAT credit - Electric Generating Set - Held that: - It is admitted fact that there is no stay granted by the Hon'ble Gujarat High Court against the order of the Tribunal. In this view of the matter, I find no merits in the appeal of the revenue. Appeal allowed - decided in favor of appellant-assessee.
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2017 (12) TMI 1081
Clandestine removal - pig iron - evidences - penalty - Held that: - the allegation appears to be presumptive, as the investigating officers have not stated a single instance, the name of the party etc. to whom Pig Iron was sold by the appellant, M/s Goyal. The allegation of sending of consignment of pig iron by M/s Apparent Iron & Steel Pvt. Ltd. Goa, is also presumptive - Mr. Onkar Nath Goyal had retracted his statement recorded on 09th March, 2005 and the same cannot be weighted for imposition of penalty. Confession cannot form of levy of Excise duty, much less retracted statements. Penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1080
CENVAT credit - input services - Intellectual Property Services - Repair and Maintenance (Civil Work) services - Membership Subscription Charges - Telephone Services - Insurance services - Development Charges - freight charges - denial on account of nexus - Held that: - When analysis is made to the scope of Rule 2(l) of the Cenvat Credit Rules, 2004, that demonstrates the legal position as contended by appellant stated herein before. Appellant says that documents were available on record and those were ignored by learned Commissioner (Appeals) without calling the record from learned adjudicating authority, is nothing untrue. He did not assign any reason to reject integral connection of input services to the manufacture. Therefore in absence of reasoning in the order and also for the lack of verification of record, appellant should not suffer - Ld. adjudicating authority shall re-examine as to whether the freight charges paid were in terms of contract for delivery at the destination following guidelines given by the Board Circular aforesaid and pass appropriate order. Appeal allowed in part by way of remand.
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2017 (12) TMI 1079
Liability of interest - whether the appellant is liable to pay interest for alleged late payment of duty under the fact that the packing machines were lying uninstalled and had been reinstalled after 5th of June and the duty for the month of June had been paid on 24th June, 2015, under the provisions of Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination & Collection of Duty) Rules, 2010? Held that: - the appellant is not liable to pay any interest for deposit of duty on 24/06/2015, under the admitted fact that the machine was uninstalled/closed from 1st June, 2015 to 19th June, 2015, and under such facts, it amounts to addition of a machine and the due date for payment of duty is 5th of the next month - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1078
Nature of transaction - service or goods - transfer of rights and privilege of export of sugar quota - whether the transaction being, transfer of rights and privilege of export of sugar quota by the respondent assessee on receipt of consideration, whether the same is a service or transaction in goods? Held that: - the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - reliance placed in the case of Vikas Sales Corporation and Another Versus Commissioner of Commercial Taxes and Another [1996 (5) TMI 363 - SUPREME COURT OF INDIA], where it was held that DEPB has an intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as goods within the meaning of the sales tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax. Appeal dismissed - decided against Revenue.
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2017 (12) TMI 1077
Valuation - includibility - R & D expenditure - contention of Revenue was that the said t expenses on R & D should be considered u/r 8 of Central Excise Valuation Rules, 2000 and should be added with 15% as required under the said Rule - Held that: - Pre-condition in said Rule 8 is that it is applicable when the goods are not sold but consumed captively - SCN dated 30.11.2005 nowhere established that the goods were not sold but they were cleared on stock transfer basis without involvement of sale. There was no case of invocation of Rule 8 of Central Excise Valuation Rules, 2000 - penalties also not warranted - appeal allowed.
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2017 (12) TMI 1076
Extended period of limitation - Area Based Exemption - whether the appellants were entitled to exemption under N/N. 50/2003 CE or they have done any act of suppression etc. by filing the required declaration being the declaration of their intention to avail the area-based exemption under the said Notification? - Held that: - intimation to the Department about the option for claiming benefit of the exemption appears to be only procedural requirement - A liberal attitude, therefore, has to be taken in this regard, when the assessees otherwise are entitled to the benefit of exemption Notification. Time limitation - Held that: - The appellants cannot be blamed for about three years long delay in issue of the show cause notice. The proviso to sub Section 11A(1) cannot be used to cover up indolence on the part of the Jurisdictional Central Excise Officers. Accordingly, it was held that the show cause notice is wholly time barred and impugned order was not sustainable on the ground of limitation. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1075
Classification of goods - various instruments and appliances used in medical, surgical dental or veterinary sciences including I.V. Cannulas - whether the subject goods fall within the scope of the term Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces? - benefit of N/N. 6/2002 dated 01/03/2002, after amendment vide N/N. 6/2003 CE dated 01/03/2003, read with N/N. 21/2002 CU dated 01/03/2002. Held that: - similar issue decided in the case of M/s Becton Dickinson India Pvt. Ltd. Versus CCE, Delhi –III [2015 (6) TMI 335 - CESTAT NEW DELHI], where it was held that On the basis of the certificates of various experts certifying that the scalp vein infusion sets, in question, are Cannula which can be used for blood vessels, the Tribunal held that the same would be eligible for exemption - the appellants are eligible for exemption for i. v. cannula manufactured by them - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (12) TMI 1074
Works contract or contract for Sale - M/s. Rashtriya Chemicals & Fertilizers Ltd. (RCF) had engaged the applicant apparently for designing, engineering, supplying, erection, installation and Commissioning of the TrombayV Expansion Project at RCF site for a total price of about ₹ 22 crores under a contract - The Assistant Commissioner of Sales Tax Assessment treated the transaction as a transaction of sale - The applicant produced the relevant documents and correspondence before the Deputy Commissioner of Sales Tax claiming that the contract was a divisible contract for supply of labour and could not be treated as a contract for sale. Held that: - in the facts of the present case the contract was clearly one for supply and erection of equipment, supply of equipment being dominant purpose. No doubt the State of Maharashtra had enacted the Maharashtra Sales Tax on “Transfer” of property of goods involved in works contract Act only in 1982 but the contention that during the period under consideration 197980 and 198081 the State had no power to levy the tax on Works contract will not be of any assistance to the applicant - the contract in the instant case is predominantly for supply of equipment, erection and installation. FPDIL was required to carry out all preparation work , provide foundation, provide all civil works required, the equipment was merely supplied and installed. In the instant case, even assuming a contract was a works contract, we are of the view that the labour element was only incidental. The contract is itself described as a divisible contract. The intention of parties as derived from the diverse contractual provisions set out above leaves us in no manner of doubt that the contract in question was not a works contract but the dominant intention was of sale of equipment. Having reached that conclusion the question referred for our opinion is answered in the affirmative, in favor of Revenue. Appeal dismissed - decided against assessee.
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2017 (12) TMI 1073
Condonation of delay of 1519 days in filing the revision - Held that: - Apart from referring to production of the documents being in Hindi and absence of a translator, we see no explanation, which can be treated as being sufficient - We notice that we have already rejected the application for condonation of delay, where the delay was of 1414 days in C.T.R. No. 54 of 2017, delay of 1415 days in C.T.R. No. 55 of 2017 and delay of 1931 days in C.T.R. No. 35 of 2017. There is no reason to condone the delay of 1519 days in filing the Revisions - application for COD dismissed.
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2017 (12) TMI 1072
Principles of Natural Justice - main contention raised by the assessee was that Annexure IV order revising Annexure I order under Section 8 of the KVAT Act was passed without issuing notice to it and therefore, the Tribunal ought to have remitted the matter to the assessing officer - Held that: - A reading of the order passed by the Tribunal shows that on a perusal of the provisions contained in Section 6 of the KVAT Act, Rule 10 of the KVAT Rules and Section 8 of the Finance Act, the Tribunal has come to the conclusion that in Section 8 while the legislature has made the tax payable on the basis of the turnover of the sale of the goods, for the purposes of Section 6, the phrase used is taxable turnover. It was therefore that the Tribunal has come to the conclusion that the deductions, which are permissible under Rule 10 provided with reference to Section 6 are of no relevance, in a proceedings under Section 8 of the Finance Act. The assessee has allowed Annexure V to the extent it was against it to become final. In such a situation, this plea is not available to the assessee at this stage and therefore, we cannot accept this plea - revision dismissed.
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Indian Laws
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2017 (12) TMI 1100
Whether the petitioner is jointly & severally responsible for the day to day conduct of the business of the accused No.1-Company-M/s Catmoss Retail P. Ltd. as alleged by the respondent No.1/complainant in the complaint under Section 138 NI Act? Held that: - Instant is a case where the learned Magistrate has not gone into the depth of From-32, where the petitioner i.e., Mr. Nitin Chawla, was not even an existing Director of the Company at the time of issuance of the said cheques in question. The learned Magistrate has not gone into the depth of the cause of action arisen qua against the petitioner as the cheques in question were issued by the Managing Director, i.e. Mr. A.K. Chawla, of the Company and subsequently, there was no occasion of actus reus on the part of the petitioner. It is because of this reason he took the defence to the notice under Section 251 Cr.P.C. dated 21.08.2012 that he does not owe any liability as alleged in the said notice - The aforesaid facts on record only indicates liability if so there is, it could be of civil liability and not criminal liability qua against the petitioner, which could be put into motion under Section 138 read with Section 141 of the Negotiable Instruments Act. The impugned summoning order dated 10.12.2010 qua against the present petitioner is bad and the same is set aside - petition allowed.
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2017 (12) TMI 1099
Liability of applicant, Special Director of the accused company - dishonour of the cheques - whether the applicant herein being the Special Director appointed by the Board for Industrial & Financial Reconstruction can be held vicarious liable under section141 of the N.I. Act? - Held that: - issue raised in this batch of writapplications is squarely covered by a decision of this Court in the case of Nikhil P. Gandhi Vs. State of Gujarat & Ors. [2016 (6) TMI 726 - GUJARAT HIGH COURT], where it was held that there is no cogent material on record to fasten any vicarious liability so far as the other accused are concerned who are NonExecutive Directors including the Office Bearers concerned with the Accounts Department of the company. No vicarious liability can be fastened on the applicant herein, he being appointed as a Special Director by the Board for Industrial And Financial Reconstruction. Application allowed.
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2017 (12) TMI 1101
Realization of amount by Home buyers - It is submitted by learned senior counsel appearing for Jaiprakash Associates Limited (JAL) that the company is ready with 275 crores. The home buyers raised their concern about the realization of the amount - Held that: - Needless to say that direction for deposit of ₹ 2,000 crores shall remain as it is. The only indulgence is to pay the same in installments - Matters be listed on 10.1.2018.
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