TMI Tax Updates - e-Newsletter
December 8, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Assigning jurisdiction to Commissioner (Appeals) under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BM Act)
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Income Tax:
Business expenditure u/s 37 - Word ‘wholly’ refers to quantum of expenditure and word ‘exclusively’ refers to motive, object and purpose of the expenditure. Personal expenses or money spend for private purpose is not deductible. They fail the business expediency test - onus on the assessee to prove.
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Income Tax:
Income from house property - Estimation of annual value @8.5% appears to be without any basis since the annual value has to be determined as the value for the property might reasonably be expected to let from year to year.
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Income Tax:
Additional grounds/claims - assessee was entitled to make claim in the assessment proceedings u/s. 153A, though the same were not made in the earlier assessment proceedings u/s.143 of the act.
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Income Tax:
Fee levied u/s 234E - TDS returns belatedly filed by the assessee - The demand u/s 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power u/s 200A by the respondent for the period of the respective assessment year prior to 1.6.2015
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Income Tax:
TDS us 194C - determination of milling cost paid by the assessee - AO observed that the amount need to be increased by the cost of by-product for the purpose of deduction of tax at source - since the property in the by-product was not passed on by the assessee as milling charges, not liable to TDS.
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Income Tax:
Disallowance u/s 54F - assessee not offered any capital gain for taxation - mere non-reference about specific section under which the assessee is making claim cannot be a reason to disallow the claim of the assessee.
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Customs:
Revised All Industry Rates of Duty Drawback
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Customs:
Clarification with respect to amendments to Customs and Central Excise notifications for EOUs - reg.
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Customs:
Revocation of CHA License - Since there is no charge against the custom broker of attempting to influence the Customer Officer, the charge under Regulation 11(i) cannot be upheld.
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Customs:
Valuation of imported goods - enhancement of value based on NIDB data - enhancement of the value without proper evidence is not correct and legal - merely on the basis of NIDB data, the declared value cannot be enhanced.
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Customs:
Before coming to the conclusion that the seized goods are of foreign origin, the Customs Department was required to establish by means of evidence that the goods are of smuggled goods. Mere fact that the goods bore foreign markings, will not be enough to conclude that the goods were smuggled.
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Customs:
Short payment of CVD on imported goods - the duty demand is based only on price lists and depositions, but there was no evidence that any higher MRP was affixed on the goods - The decision of the Member Judicial, setting aside the duty demands, confiscation and penalties is correct in law.
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Corporate Law:
Liability to pay the audit fee of the auditors on the Company - auditors were appointed by the Tribunal - the Respondent company is liable to pay the audit fee of the auditors - the fee has been claimed as per ICAI norms seems reasonable.
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Service Tax:
This is an established case of intentional evasion of service tax by manipulating and forging the figures of the taxable value for levy of service tax by the appellant and therefore, we hold that the demand for extended time period is rightly invoked.
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Service Tax:
Consumption of goods by service provider during the provision of the service does not automatically convert the service into work contract. - Even consultancy service provided by engineer or advocate involves consumable like Paper, Ink, Pen, etc., service provided which are inclusive all the value of consumable cannot be treated as work contract.
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Service Tax:
GTA - exemption for transportation of agricultural produce / food grains or food stuff - nature of goods after processing done upon maize to extract sooji as well as atta - This process does not make any difference. Resultantly, both the products though acquire a distinct marketability but retains the essential characteristic of the derivatives of the agricultural produce i.e. maize. - benefit of exemption allowed.
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Service Tax:
Advertising Agency Services - outward foreign exchange remittances - import of services - the demand which is not permissible under any head to be proposed under the show cause notice, the imposition thereof is absolutely not permissible.
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Central Excise:
CENVAT Credit - recovery of proportionate credit in relation to amount adjusted from the invoices as liquidated damages - When the service tax paid by the provider has not varied, cenvat credit cannot be reduced, no question of denying availment at all arises.
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Central Excise:
Clandestine manufacture and removal - The statements of various buyers and suppliers have been relied upon - investigating team adopted pick and choose method as the persons who were involved in evasion of duty were not made party to the show cause notice creates doubt on the statements of these witnesses.
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Central Excise:
SSI Exemption - clubbing of clearances - Merely, rubber stamp and invoices were found in the premises of M/s AAR Kay is not sufficient to rely that M/s AAR Kay has used the invoices of M/s Harish Engg Works for clearance of their goods
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Central Excise:
CENVAT Credit - input services - The mechanical approach to issues without application of mind increases litigations - the insurance policies have been taken for compliance under the labour legislations, the same are eligible for credit.
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Central Excise:
CENVAT Credit - duty paying documents - denial of cenvat credit on the allegation that all the duty paying documents were under the name of M/s Johnson Matthey Chemicals Pvt. Ltd. and not in the appellant’s name - credit allowed.
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Central Excise:
CENVAT Credit - denial on the premise that the same cannot be input to manufacture their final product - the said goods can be used as inputs i.e. fuel for manufacture their final product - credit allowed.
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Central Excise:
Utilization of Cenvat credit of basic excise duty for payment of National Calamity Contingent Duty (NCCD) - there is no bar in utilization of basic excise duty for payment of NCCD.
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Central Excise:
CENVAT Credit - input services - services used for construction of secured landfill and jarofix storage pond - This activity is essential, though indirectly, for the manufacture of final product of the assesse and as such qualifies eligibility of being called as input service.
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VAT:
Rate of tax - Classification of goods - plastic trays, containers, box and bowls - The containers, trays and bowls made of plastic cannot be said to be either a tin, bag or cover.
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VAT:
Input tax credit - raw material purchased for generation of electricity - The assessee is entitled to claim input tax credit. - electricity though included under the First Schedule is specifically excluded from the definition of “goods” as available u/s 2(xx) of the KVAT Act.
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VAT:
Input tax credit - Unless the assessee proves that the stock transfer was in pursuance of an export order, there cannot be a contention raised that the stock transfer was in the course of export merely for the reason that the goods have been identified under the Central Excise Act to be exported.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (12) TMI 416
Deletion of penalty - Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 - transportation of goods - Held that:- The explanation furnished by the assessee with respect to first transaction was found to be false. Even with respect to the goods that were seized which have resulted in the penalty proceedings, discrepancy in quantity of goods has been found to be established and, therefore, in his submission, the first Appellate Authority has erred in overlooking that vital aspect of the matter and in deleting the penalty - Matter requires consideration.
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2018 (12) TMI 415
Validity of SCN wrongly issued by respondent No.3 on the same cause of action - Held that:- We dispose of the present writ petition by granting liberty to the petitioner to file a detailed and comprehensive representation raising all the pleas as raised in the present writ petition before respondent No.3 and reply to the show cause notice dated 18.10.2018 (Annexure P-1) within two weeks - petition disposed off.
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Income Tax
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2018 (12) TMI 407
Addition as income from house property on a notional basis - Annual value how determined - Held that:- The assessee has already elected one house situated at Saraswati Sadan as self occupied property, the value of which has been taken as Nil. Therefore, in terms of Clause (4)(b), the annual value of the other properties are to be determined as per clause (1) which envisages that the annual value of the same are to be considered as the sum for which the property might reasonably be expected to let out from year to year. We have already noted that the properties or any part thereof, as listed at serial number 4 & 5, were never let out by the assessee in any of the preceding year or during impugned AY. Therefore, the sub-clauses (1)(b) or (1)(c) becomes inapplicable to the same since both these applies in situation where property or any part thereof is let out, which is not the case here. The expression let as used by both these sub-clauses do not include mere intention to let out but the actual let out of the property keeping in view the doctrine of literal interpretation. If the annual value of the same are taken as nil in terms of sub-clause (1)(c) as contended by AR, then the provisions of clause (4) shall become otiose and shall have no applicability at all in any situation, which do not appear to be the intention of the legislatures. Estimation of annual value @8.5% appears to be without any basis since the annual value has to be determined as the value for the property might reasonably be expected to let from year to year. Therefore, AO is directed to re-compute the same in terms of the statutory provisions - Decided in favour of assessee for statistical purposes.
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2018 (12) TMI 406
Additional grounds/claims - Entitlement to make claim in the assessment proceedings u/s. 153A, though the same were not made in the earlier assessment proceedings u/s.143 - Held that:- When the issue has been decided in favour of the assessee by placing reliance upon decisions including that of the honourable apex court in SHELLY PRODUCTS AND ANOTHER [2003 (5) TMI 4 - SUPREME COURT] we find that the same will prevail over other case laws referred by the learned departmental representative in absence of any direct Hon'ble jurisdictional High Court decision on this issue. As reiterated in the case of Asst. CIT vs. Shri Dilip Chimanlal Gandhi [2018 (8) TMI 271 - ITAT MUMBAI] wherein it was held that insofar as charging provisions are concerned, if two views on possible one in favour of the assessee should be adopted, in contradiction to the exemption provisions, where if two views are possible one in favour of the Revenue should be adopted. Accordingly, in view of the aforesaid precedent's including that from the Hon’ble Apex Court we hold that assessee was entitled to make claim in the assessment proceedings u/s. 153A, though the same were not made in the earlier assessment proceedings u/s.143 of the act. Disallowance u/s. 14A - MAT computation - Held that:- As regards the ground with regard to disallowance u/s. 14A is concerned the same has been done in accordance with ITAT direction. Hence, we find no reason to interfere in the same. As regards disallowance u/s. 115 JB is concern, we find that the same is not as per rule 8D of section 14A, it is on reasonable basis, which in our view is in accordance with the mandate of the Special Bench of the Tribunal in the case of Vireet Investment Pvt. Ltd. and ANR.[2017 (6) TMI 1124 - ITAT DELHI]. Accordingly we do not find any infirmity in the ld CIT-A's direction in this regard.
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2018 (12) TMI 414
Rejection of books of accounts - Addition of unaccounted sales - material found during the survey proceedings showed that the books of accounts were not correctly maintained and that therefore, there was no error in rejection of the assessee's books of accounts - Held that:- SLP dismissed.
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2018 (12) TMI 405
Assessment u/s 153C - no notice issued - admission of additional evidence - Held that:- Challenging the jurisdiction of the AO to make the assessment u/s. 143(3) instead of section 153C of the Act, and all the material facts, necessary for its disposal, are already on record. As held in the case of NTPC Vs CIT [1996 (12) TMI 7 - SUPREME COURT] the powers of the Tribunal are not confined only to the issues arising out of order of the CIT(A) but also questions of law arising from facts which are available on record. We are, therefore, inclined to admit the additional grounds of appeal, having a pure question of law challenging the assumption of jurisdiction to pass impugned assessment order u/s. 143(3) in place of sec. 153C. Therefore, the additional grounds raised by the assessee deserve to be admitted on record. The issue raised in the addition ground is found squarely covered by the decision of co-ordinate Bench in the case of BNB Investment & Properties Ltd [2018 (8) TMI 597 - ITAT DELHI] assessment under section 153C can be framed in the case of the assessee and at the time of initiating the proceeding against the assessee, should have issued notice u/s 153C which have not been done in this case. The issue of notice under section 153C is mandatory and a condition precedent for taking action against the assessee under section 153C of the I.T. Act. - Decided in favour of assessee.
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2018 (12) TMI 413
Stay of demand - Held that:- Short term and long term capital gains are supported by the documentary evidence and that the transactions relating two shares are routed through the registered stock broker and through the concerned stock exchange and each and every financial transactions are through bank and it is submitted that without evidence of the falsification of the records or evidence of a false statement by the petitioner, there is no scope for any prosecution of the petitioner under Section 277 of the Income Tax Act, 1961. In terms of order dated 22.06.2018, the photocopy has been received and the same has been perused by this Court. Considering the nature of complaint and the stand taken by the petitioner herein, this Court having seen that since notice was issued on 26.03.2018 and more than 5 months have been passed, this Court is inclined to stay being proceedings of pending before the learned Court of the Chief Judicial Magistrate, Kamrup(M), Guwahati-cum- Judicial Magistrate, First Class, Kamrup(M), Guwahati till the next returnable date.
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2018 (12) TMI 404
Claim of brought forward unabsorbed depreciation - Unabsorbed depreciation would be calculated at a higher figure than one accepted by the AO - stand of the assessee is that it has filed return in the past and also computation of income if those computations are perused then unabsorbed depreciation would be calculated at a higher figure than one accepted by the AO - Held that:- Our attention was drawn towards the copy of acknowledgement of filing of Income Tax return. Similarly, on acknowledgement exhibiting filing of return in AY 1999-2000 has been placed. Both these documents have not been relied upon rather they are belied by both the authorities in a concurrent finding. We have perused these acknowledgements alongwith other acknowledgements for other assessment years. We find that the diary number/receipt number showing submission of returns are not verifiable. The Revenue authorities were reluctant in putting their reliance on these documents for accepting the claim of the assessee. They have recorded a finding of fact. We do not find merit in the contention of the learned counsel for the assessee for remitting this issue to the file of the AO. These documentations have been specifically examined and assessee failed to create a dent in the finding recorded by the AO. We could appreciate the claim of the assessee if it has some new materials which required to be investigated and if investigated it can give rise to different result. During the course of hearing, we have directed the learned counsel for the assessee to show us the original copies of these acknowledgements so that we can make some decisions about the genuineness of the document. We have also desired let the Directors who have signed those returns filed their affidavits so that some new angle of inquiry could be explored but learned counsel has expressed his inability in filing the affidavits of the Directors/authorized persons who signed these returns as well as original copies of these acknowledgements. We do not see any reason to remit any issue to AO for re-analyzing those very details which have been gone through by both the authorities
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2018 (12) TMI 412
Delay in filing the Revision Application u/s 264 by 198 days - condonation of delay - Held that:- As explained by the petitioner by pointing out that there was huge work load of assessment under Section 153A of the Act, under an erroneous advise of the tax consultant, the assessee had inadvertently offered interest income under misconception of law and that the main person looking after the affairs of new tax consultant was indisposed for about 6 to 7 months due to serious back injury. When the issues of technical and substantial justice are pitted against each other, the course of substantial justice would normally prevail. In the present case, when the delay was even otherwise not inordinate and was explained in the above terms, the Commissioner should have condoned the same. In the previous round, the High Court had remanded the proceedings before the Commissioner by allowing the petitioner to file separate application for condonation of delay and requested the Commissioner to consider such application. Perhaps this second round of litigation could have been avoided. Be that as it may, we allow the petitioner's applications for condonation of delay
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2018 (12) TMI 403
Validity of assessment u/s 153A - incriminating material found during the course of search and seizure proceedings - addition of share application money received u/s 68 and addition of commission allegedly paid on the share application money and finally a disallowance u/s 14A - Held that:- No incriminating material has been found during the course of search. The alleged statements recorded from entry operators have been admittedly retracted by them and the Assessing Officer has not based the additions on these statements. Even otherwise, when copies of the alleged statements recorded by the revenue officials have not been given to the assessee, no addition can be made based on such evidence which is not confronted to the assessee. The contents of the statements are also not brought out in the assessment order. Only a general reference is made that there were certain statements recorded from various entry operators by the investigation wing. No addition can be made on such general observations. The assessee has not been given an opportunity to cross-examine any of these persons, based on whose statements, the ld. D/R claims that the additions have been made. The Hon’ble Supreme Court in the case of Kishinchand Chellaram vs. CIT, (1980 (9) TMI 3 - SUPREME COURT) had held that the opportunity of cross-examination must be provided to the assessee. It is not clear as to which of these statements were recorded during the course of search operation u/s 132 of the Act or whether the statements were recorded during the course of any survey operations u/s 133A of the Act. It is well settled that a statement recorded during the course of survey operation cannot be used as an evidence under the Act. Coming to the alleged cash trail, none of the material gathered by the Assessing Officer by way of bank account copies of various companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. Thus, none of these material gathered by the Assessing Officer can be categorized as incriminating material found during the course of search or found during the course of any other operation under the Act. Thus, we hold that the additions in question are not based on any incriminating material. - Decided against revenue
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2018 (12) TMI 402
Fee levied u/s 234E - TDS returns belatedly filed by the assessee for the assessment years 2013-14 to 2015-16 - as per assessee the provisions of section 234E were made applicable for the purposes of section 200A only from 01.06.2015 and are, therefore, not applicable for the assessment years under consideration - Diversified views - Held that:- Section 200A lays down the manner in which the statements of tax deducted at source are to be processed for issuing the intimation. First of all, the sums deductible under the Chapter are to be computed and interest, if any, shall be computed on the basis of such sums deductible as computed in the statements as per clause (a) and (b) under section 200A(1) of the Act. Clauses (c) to (f) reproduced above were substituted for clauses (c) to (e) by the Finance Act, 2015 w.e.f. 01.06.2015. As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. As held State Bank of India v. ITO(TDS) [2018 (6) TMI 284 - ITAT AGRA] as prior 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E of the Act. The provision of Section 234E is charging provision i.e. substantive provision which could not be applied retrospectively, unless it is expressly provided in the Act, to levy the late fee for any delay in filing the TDS statement for the period prior to 01.06.2015. Substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. The demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. - Decided in favour of assessee.
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2018 (12) TMI 401
Disallowance of deduction u/s 80IB(10) - demonstration of completion of the project - Held that:- Hon'ble Jurisdictional High Court in the case of Ambey Developer Pvt. Ltd. [2017 (12) TMI 1008 - PUNJAB AND HARYANA HIGH COURT] has categorically held that the assessee having demonstrated completion of the project and having applied for completion certificate well within stipulated date, it shall be entitled to claim deduction u/s 80IB(10) and as per the facts in the present case the assessee had demonstrated completion of the project in the year 2009 and had also shown to have applied for completion certificate in 2009 itself while it was required to obtain the certificate by 31.3.2011, it can be safely said that the assessee had applied with the conditions of having obtained completion certificate within five years from the date of approval of the project and hence was entitled to claim deduction of profits u/s 80IB(10) of the Act. - decided in favour of assessee. Expenditure claimed under Travelling Expenses - Held that:- Issue has neither been considered nor argued with reference to the relevant facts. In the interests of justice, parties are directed to refer to specific visits specifying the persons travelling and the countries travelled to as mere filing of bills raised by travel agent cannot be said to be sufficient compliance. The issue is restored to the AO to decide the same on the basis of facts and evidences. The expenses of children or personal expenses, it goes without saying, have to be disallowed. The assessee in its own interest is directed to place full facts and evidences on record. The documents filed admittedly are not sufficient and complete - set aside the issue back to the file of the AO directing the assessee to place supporting facts and evidences as relying upon generalized arguments would be of no help. The ground No. 3 allowed for statistical purposes
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2018 (12) TMI 400
Addition on account of short term capital gain - right to set off, under an agreement of actionable claim - set off being non-refundable entry fee paid by the UW to DOT in the year 2008 against the allocation of licenses to the appellant against the fresh spectrum fee payable in respect of the newly acquired spectrum of six circles in an auction conducted on 14.11.2012 - Acceptance of the facts and findings recorded in CAG report Held that:- UW had no enforceable legal right, title, interest in the amount of non-refundable entry fee paid by UW to DoT. Once we conclude that, there was no right, title, interest which was enforceable in law, the answer to the issue involved, in our opinion is that, since UW had no right, title, interest in the said non-refundable entry fee or it was not entitle to make any claim from DoT for set off of the said license fee, UW could have not transferred any such right so as to enable the appellant to acquire such an alleged right. The appellant had paid ₹ 100 crores to acquire such a right, under the actionable claim agreement, itself shows, when there existed no right, the amount so paid by the appellant was apparently by way of abundant precaution to safeguard its interest. However, in our opinion, it cannot be held that the assessee had acquired any capital asset which was transferred by it by way of extinguishment in favour of DOT, as held by the Revenue on mere fact that the appellant had paid ₹ 100 crores which in our opinion is not a decisive factor. CAG was also of the considered opinion that UW had no right, title, interest to claim any set off and so far as the appellant is concerned, in any case, the appellant had no legal enforceable right to seek a set off and has been also stated in the aforesaid report of CAG, as being not allowable to the appellant. We agree that CAG being a Constitutional Authority, the findings as noted in the Report cannot be disputed and consequently its findings in the Report cannot be ignored. We observe that there is no inconsistency between the facts stated in CAG report regarding the event which lead to the set off of such amount and submission made by the appellant before us. Therefore in the absence of any contrary material, we consider it appropriate to have to accept the facts and findings recorded in CAG report. Accordingly, the objections of the ld. CIT DR that the taxability of the amount in question cannot be decided by considering the CAG report is rejected. In the instant case the assessee has received no sum directly or indirectly. It had not entered into business transaction or any transaction with DoT in respect of such amount so waived and such sum had been set off by DoT on the principle of equal restitution. Also, we find that the appellant is not in the business of trading of UASL. Further, the DoT guidelines applicable, at that time did not permit trading/sharing of spectrum. It was privy only to the Appellant and the Appellant alone could use it to render permitted telecom services. Thus, the set off against the spectrum fees cannot, by any stretch of imagination, be construed in the revenue field or a sum chargeable to tax under the head profit and gains from business and profession. The action CIT(A) to tax such amount as business receipts is devoid any merit. The amount of set off is allowed on account administrative and policy decision and not by way of adventure in nature of trade. CIT (A) in its order placed reliance in the case Of CIT vs. Kasturi Estates [1965 (10) TMI 7 - MADRAS HIGH COURT] which is clearly distinguishable as the issue in the said case was whether the sale and purchase of land would fall under capital field or revenue field. Accordingly, the appellant also succeed on this count. In view of the above, the ground nos. 2 to 4 are allowed. Unearned revenue - principle of recognizing the revenue - whether earned revenue has not accrued to the appellant during the captioned assessment year and accordingly, not taxable in given year? - Held that:- The said additions only resulted in a timing difference and the overall taxable income remains the same and as such, there is no loss to the Revenue. The CIT (DR) relied upon the order of AO and Ld. CIT (A) based on the contention that the amount had accrued to the appellant in the captioned year and the AO had rightly brought to tax the same in the hands of the Company. We find that the facts of the present case are identical to the facts and circumstances of the case of ACIT vs. Shyam Telelinks Limited (2012 (7) TMI 955 - ITAT DELHI) and is squarely covered by the decision of this Tribunal wherein on the basis of identical facts the ITAT deleted the additions made by the AO. Thus we uphold the contentions of the Assessee that the unearned revenue had accrued to the appellant as income for the AY 2014-15. Accordingly, the earlier orders of this Tribunal are applicable in the case of the appellant also. Hence, we direct the learned AO to examine whether unearned revenue of ₹ 220.80 crores has been offered to tax in the succeeding year, if so, then the said amount is directed to be deleted. - Decided in favour of assessee for statistical purpose.
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2018 (12) TMI 411
Addition being 5% of the turnover - assessment completed under Section 143(3) - inflation of expenses - Held that:- It cannot be ruled out that the assessee has not inflated the expenses, however, found fault with the Assessing Officer in adopting 5%, pointing out that it is on higher side and directed the Assessing Officer to adopt 2.5%. The order passed by the Assessing Officer as well as the Tribunal are wholly erroneous. A low gross profit rate can at best be a reason for making an enquiry, but it cannot be a sole basis for making an addition. In Symphony Comfort System Ltd.[2013 (10) TMI 258 - GUJARAT HIGH COURT] held that the Assessing Officer cannot make addition merely by comparing the expenditure with preceding year's expenditure, which precisely was done by the Assessing Officer in the instant case, while he passed the assessment order dated 20.12.2016. Thus, we are fully convinced that the addition made by the Assessing Officer was rightly deleted by the CIT (Appeals) and the Tribunal fell in error in interfering with the said order and by way of a guess work reducing to 2.5% without any material before it. Thus, for the above reasons, the order passed by the Tribunal calls for interference. Appeal filed by the assessee is allowed.
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2018 (12) TMI 410
Quantum of disallowance u/s 14A r.w.r 8D - Held that:- The question of netting i.e. reduction of interest received from interest paid for the purpose of computation of disallowance under Rule 8D sub-rule (2) would in a given case require consideration. We would not express any firm or final opinion in this regard, as the question of quantum of deduction under Section 14A of the Act read with Rule 8D of the Rules is otherwise covered against the Revenue by decisions of the Supreme Court and this Court. Total exempt income earned by the assessee in this year was ₹ 19 lakhs. In these circumstances, we are not required to consider the case of the Revenue that the disallowance should be enhanced from ₹ 75.89 crores to ₹ 144.52 crores. Upper disallowance as held in Principal Commissioner of Income Tax vs. McDonalds India Pvt. Ltd. [2018 (11) TMI 1057 - DELHI HIGH COURT] cannot exceed the exempt income of that year. This decision follows the ratio and judgment of the Supreme Court in the case of Maxopp Investments Ltd. vs. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. There is another error made by the AO in computing the disallowance under clauses (ii) of Rule 8D (2) with reference to the formula prescribed. Numerical B in clause (ii) refers to average value of the investment, income from which does not form part or shall not form part of the total income. The Assessing Officer for numerical B in clause (ii) had taken the total value of the investment and not the investment that had yielded exempt income. The Delhi High Court in ACB India Ltd. vs. Asstt. Commissioner of Income Tax [2015 (4) TMI 224 - DELHI HIGH COURT] has held that only average value of the entire investment that does not form part of the total income is the factor which could be covered by the numerical B for computing disallowance under clause (ii) of Rule 8D(2) of the Rules.
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2018 (12) TMI 409
Adhoc disallowance of business promotion and dress and costume expenses - allowable business expenditure u/s 37 - Held that:- Requirement of Section 37 is that the expenditure should be wholly and exclusively laid out and expended for the purpose of business. Merely because payments were made through credit card would not show that the expenditure was wholly and fully for the purpose of business. This contention was rightly rejected by the assessing officer, as nature and object of the outgoing has to be also examined. Word ‘wholly’ refers to quantum of expenditure and word ‘exclusively’ refers to motive, object and purpose of the expenditure. Personal expenses or money spend for private purpose is not deductible. They fail the business expediency test. Further, whether the expenditure was incurred wholly and fully for the purpose of business has to be established and proven by the assessee. These facts are within the exclusive knowledge of the assessee and therefore he is under an obligation to place all facts and circumstances before the authorities. The appellant-assessee had failed and did not produce material and documents to show that the expenditure under the aforesaid heads was incurred wholly exclusively for the purpose of business. The findings of the Assessing Officer affirmed in the appeals are factual. Nothing has been placed before us to show that these findings are perverse and contrary evidence and material on record. No substantial question of law therefore arises on account of ad-hoc disallowance of expenses under the head business promotion and dress and costume expenses. - decided against assessee.
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2018 (12) TMI 399
Scrutiny assessment - denial of natural justice - as argued that assessee was not supplied with the copy of documents/ material relied by the AO and no opportunity of cross examination was afforded to the assessee - AO has made the addition on the basis of the Directorate of Investigation Wing, Kolkata - Held that:- AO has completed the assessment by relying on the Investigation Report, but the copy of the Investigation Report was not provided to the assessee, despite request made by him in his letter dated 23.12.2016, which is against the law settled in the case Kishinchand Chellaram vs. CIT [1980 (9) TMI 3 - SUPREME COURT]. CIT(A) has himself written that AO has given reasonable opportunities to the assessee and even if there was any deficiency, appellant has due opportunity during appellate proceedings and also observed that the concept of affording cross examination is flexible, which shows that opportunity of cross examination was not provided to the assessee, which is not proper and against the law settled by the Hon’ble Supreme Court of India in the case of Andaman Timber Industries vs. CIT [2015 (10) TMI 442 - SUPREME COURT] - decided in favour of assessee
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2018 (12) TMI 398
TDS u/s 194C - determination of milling cost paid by the assessee - AO observed that the amount need to be increased by the cost of by-product for the purpose of deduction of tax at source - short deduction of TDS - Held that:- Under the circumstances it cannot be said that the consideration was passed in kind, rather, it was passed in terms of the monetary value of the sale price received from the catch, subject to the condition that it would not be more than US$ 6,00,000. In the aforesaid case of 'Kanchanganga Sea Foods Ltd.' [2010 (7) TMI 3 - SUPREME COURT OF INDIA] the assessee, Kanchanganga Sea Foods Ltd., remained the owner of the catch until its sale value was realized and had right to retain the realized value that was more than US$ 6,00,000 and at the same time it was entitled to retain the sale value of the 15% catch, even though, the sale value of the remaining 85% of the purchase would fetch less than US$ 6,00,000. It was the sale value of the catch which was the determining factor and till the catch was not sold or its value was not determined, the property in the catch fish would remain under the ownership of the assessee 'Kanchanganga Sea Foods Ltd.' (supra). In this case, the property in the by-products comes into ownership of the millers from the very point of coming of it into existence, hence, in this case the assessee were not the owners of the by-products. Another factor for consideration is that the property passed 'in kind' should have some ascertainable and determinable value, which can be taken as part of the consideration paid for the work done. Further, it is the nature of the contract, term of the agreement, the intention of the parties and overall facts and circumstances of the case which are required to be analyzed and considered for determining whether the provisions of section 194C or other similar provisions of the Chapter would be attracted or not in a particular case. As discussed above in detail, since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. This issue is decided in favour of the assessee / Procurement Agencies.
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2018 (12) TMI 397
Disallowance u/s 54F - assessee not offered any capital gain for taxation - assessee has not indicated the provision under which the assessee was claiming deduction - assessee claimed deduction under Section 54B/54D/54EC/54F/54G/54GA - as per assessee before due date for filing of the return of income, according to the assessee the Department seized the amount by withdrawing the same from bank account, therefore, the money was with the Department thus was physically prevented from depositing the same in the Capital Gains Account - Held that:- Admittedly, the property was sold for ₹ 9 Crores. The sale consideration disclosed in the sale deed was only ₹ 6 Crores. The assessee apparently received sale consideration to the extent of ₹ 3 Crores in cash. However, he deposited the same in S.B. Account in the names of self, his wife and children. ₹ 1.40 Crores was used for repayment of loan and ₹ 4.60 Crores was deposited in Capital Gains Account. The balance amount to the extent of ₹ 2,99,50,000/- was deposited in State Bank of India in the name of assessee, his wife and children and the same was taken over by the Department before the due date for filing of return of income - rightly the assessee was prevented from depositing the money in the Capital Gains Account. The total capital gain is ₹ 6,71,08,935/-. Hence, considering the deposit of ₹ 4.60 Crores in Capital Gains Account and the money taken by the Department to the extent of ₹ 2,99,50,000/-, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee under Section 54F . Failure of the assessee to make a specific claim under specific provision - Held that:- No doubt, the assessee has not made any specific claim - return of income clearly shows that the assessee claimed deduction under Section 54B/54D/54EC/ 54F/54G/54GA - provisions of Section 54 and 54F are beneficial provisions. Merely because the assessee has not made any specific reference, that cannot be a reason to disallow the claim of the assessee. It is not a case of the Revenue that the assessee is not eligible for deduction under Section 54F. Therefore, mere non-reference about specific section under which the assessee is making claim cannot be a reason to disallow the claim of the assessee.- decided in favour of assessee
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2018 (12) TMI 396
Disallowance made u/s 14A r/w rule 8D - MAT computation - book profit computation u/s 115JB - addition made to the book profit on account of disallowance under section 14A r/w rule 8D - Held that:- It is the contention of the AR before us that the assessee has made a working of direct expenditure attributable to earning of exempt income. Undisputedly, the aforesaid working was neither before the Assessing Officer nor before the learned Commissioner (Appeals). Therefore, in all fairness, the claim of the assessee requires to be examined by the Assessing Officer. In view of the aforesaid, we are inclined to restore the issue to the Assessing Officer for fresh adjudication keeping in view the relevant case laws to be cited by the assessee as well as the provision of section 115JB of the Act. Needless to say, the Assessing Officer must afford a reasonable opportunity of being heard to the assessee before deciding the issue. Grounds raised in this regard are allowed for statistical purposes. Deduction under section 80IB(9) - Held that:- Considering the assessee has raised the issue by way of additional grounds which were never raised before the first appellate authority and further, the issue relating to assessee’s claim of deduction under section 14A is restored to the Assessing Officer, we are inclined to restore the issue relating to assessee’s claim of deduction under section 80IB(9) of the Act to the Assessing Officer for deciding afresh by applying the ratio to be laid down in MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. [2018 (3) TMI 805 - SUPREME COURT OF INDIA] in the appeal pending before them on identical issue as referred to above. Needless to mention, the Assessing Officer before deciding the issue must afford reasonable opportunity of being heard to the assessee. Additional grounds are allowed for statistical purposes. Disallowance of direct expenditure under rule 8D(i) read with section 14A - Held that:- Assessing Officer has ultimately proceeded to determine the total income and compute tax liability of the assessee under section 115JB of the Act. While deciding the grounds raised by the assessee on applicability of section 14A r/w rule 8D to the provisions of section 115JB of the Act, we have restored the issue to the Assessing Officer for fresh adjudication keeping in view the Special Bench decision of the Tribunal, Delhi Bench, in Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. Therefore, the issue raised in the present appeal by the Revenue becomes redundant.
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2018 (12) TMI 408
Penalty u/s 271(1)(c) - failure on the part of the assessee to file the returns voluntarily - o evade payment of tax on rental income - Held that:- Failure on the part of the assessee to file the returns voluntarily, as statutorily prescribed, would be a culpable act or omission attracting penalty under Section 271(1)(c) - only subsequent to the search that the assessee filed returns and this reveals the intention of the assessee to avoid payment of tax; if the search had not been taken out. There is also clear evidence of attempt to evade payment of tax on rental income, which is received by his wife for property belonging to him. The fact regarding the sale of the property in variance with the consideration mentioned in the agreement is also evidence of intention to evade payment of tax. The penalty originally levied was 200%, which was reduced to 100% by the Appellate Tribunal. We find no reason, whatsoever, to interfere with that finding of the Appellate Tribunal and the questions of law are answered in favour of the Revenue and against the assessee.
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Customs
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2018 (12) TMI 393
Revocation of CHA License - it was alleged that Sh. Jaikishan B. Kotak (son of the Prop. of appellant firm), Bipin Pragi Kotak (husband of the prop. of the appellant custom broker), and Sh. Dinesh Ojha, an employee of the appellant firm, have actively participated in conspiring and organizing the smuggling - invocation of regulation 17(1), 17(9), 11(e) and 11(i) of Custom Broker License Regulation 2013. Held that:- A perusal of regulation 17(1) shows that a custom broker is required to verify the antecedents of the employees before hiring by identifying the antecedents and identity at the declared address by using reliable independent authentic documents, data or information. It is seen that the charge made in the proceedings does not clearly bring out as to how the custom broker has failed in this regard - Any action by any employee in a personal capacity, not in transaction of business of the custom broker, cannot be held against the custom broker. Similar Regulation 11(e) is in respect of the transactions between the custom broker and his client. In the instant case the importer was not client of the Custom Broker and hence no charge under Regulation 11(e) can be substantiated. The charge under Regulation 11(i) relates to Customs Broker attempting to influence the officials of the Custom Station in any matter. In the instant case, there is no charge that the custom broker tried to influence the officials of the Customs Stations. The charge if any of influencing the officer is against Shri Jaikishan B. Kotak (son of the Prop. of appellant firm) and Shri Bipin Pragi Kotak (husband of the prop. of the appellant custom broker) of the Custom Broker and the Employee Shri Dinesh Ojha. Since there is no charge against the custom broker of attempting to influence the Customer Officer, the charge under Regulation 11(i) cannot be upheld. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 392
Valuation of imported goods - enhancement of value based on NIDB data - entire case of undervaluation was made on the basis of DGOV Circular dated 07.08.2013 - Held that:- The assessable value of the goods i.e. PU Belts is enhanced by the customs authorities mainly on the basis of DGOV Circular, which is not an authority to dispute the valuation of the imported goods. It is necessary that if there is any doubt, an investigation has to be carried out on the basis of material available on record. In the present case, though the value was enhanced on the basis of NIDB data but no bill of entry of contemporaneous import was brought on record. It is also not established that price of which goods adopted by the customs in the present case is of the same quality, quantity and origin. Therefore, the NIDB data is also of no basis and relevant to the present case. This Tribunal time and again has taken a view that enhancement of the value without proper evidence is not correct and legal - merely on the basis of NIDB data, the declared value cannot be enhanced. The enhancement of the value as held by the lower authorities, is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 391
Smuggling - readymade garments - notified goods or not u/s 123 of CA - certain labels which bore markings as “Made in Bangladesh” and “Jack & Jones”, the goods were presumed to be smuggled goods - foreign origin goods or not? - Held that:- It is not in dispute that the readymade garments are not notified goods in terms of Section 123 of the Customs Act, 1962. Consequently, before coming to the conclusion that the seized goods are of foreign origin, the Customs Department was required to establish by means of evidence that the goods are of smuggled goods. Mere fact that the goods bore foreign markings, will not be enough to conclude that the goods were smuggled. The investigation undertaken by the Revenue has failed to establish that the goods were smuggled - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 390
Short payment of CVD on imported goods - it was alleged that subsequent to the import of the goods, the appellant has been affixing a higher RSP on the products, as per the Price List available with the appellant - disputed period April, 2005 to November, 2005 - this matter is now placed before for setting aside difference of opinion - the Learned Member (Judicial) has held that the impugned order is liable to be set aside and the appeals be allowed, whereas the Learned Member (Technical) has held that the duty demands, interest and penalties have to be confirmed and only the redemption fine needs to be revisited, for which purpose, he proposed to remand the matter. Held that:- The requirement of payment of CVD on the basis of MRP would arise, if the two conditions are satisfied, viz, (i) There shall be a requirement under Standards of Weights and Measures Act / Rules (later renamed as Legal Metrology Act) to declare RSP (Retail Sale Price) on such goods; and (ii) Such goods must be included under Third schedule to the Central Excise Act and attract duty of excise under Section 4 A of the CE Act. It may be noted that while the requirement to affix MRP is cast under SWM Act / Rules, what is relevant for the purposes of assessment of Customs duties is the MRP declared on such goods - There is no scope to go beyond the MRP declared. Hence, the observations made by Member Technical that the issue is one of misdeclaration and not mere change of MRP cannot be countenanced. It is apt to refer to the finding of the Member Judicial, in para 9 of the order, which is apposite. It is also fact, as rightly noted by the Member Judicial that the duty demand is based only on price lists and depositions, but there was no evidence that any higher MRP was affixed on the goods. Lack of any machinery provision in the Statute, to demand any differential duty if the MRP declared at the time of import was later changed or the goods are sold at higher prices - Held that:- The Member Judicial has relied on a slew of decisions, wherein it has been consistently held that no demand of differential duty could be made in such cases, till 01.03.2008. A decision arrived at, after referring to several decisions on the same issue, could not be faulted - Further, the Member Technical has not recorded any contra view on this aspect. Hence, it cannot be said that there is any difference of opinion between the two members on this issue, i.e. as to whether duty demand could be made on the basis of higher MRP at which the goods were subsequently stated to be sold, in the absence of any machinery provision to do so, till the introduction of Central Excise (Determination of Retail Sale Price of excisable goods) Rules, 2008. Even if a higher MRP was affixed on the goods after their import, whether such activity would amount to manufacture? - Held that:- Once the activity amounts to manufacture, it is only excise duty that can be demanded. In this connection, the Member Technical has observed that it is a separate issue and CVD is also payable as per the revised MRP. The decision of the Member Judicial, setting aside the duty demands, confiscation and penalties is correct in law and decision of the Member Technical to confirm the duty demand, confiscation (with reduction of redemption fine) and penalties cannot be subscribed to - the decision of the Member Judicial concurred with and the file returned to the Division bench to pronounce the majority decision.
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2018 (12) TMI 389
Valuation of imported goods - enhancement of value on the basis of contemporary imports - assessment for bills of entry - Section 17(5) of the Customs Act, 1962 - Held that:- As per the provision of Section 17(5) of the Act, in the case of reassessment under Section 17(4) of the Act, where valuation of the goods has been enhanced, the adjudicating authority is required to pass a speaking order within 15 days of the assessment of the bills of entry. In Section 17(5) of the Act, there is no whisper about that the assessee is required to make a request or to seek the order under Section 17(5) of the Act - in the case the issue involved of classification, exemption, concession or valuation and the value has been enhanced or assessment done in terms of Section 17(4) of the Act, the adjudicating authority is required to pass a speaking order under Section 17(5) of the Act within 15 days of the assessment of the bills of entry. Admittedly, in this case, the same has not been done. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2018 (12) TMI 395
Transfer of proceedings pending in the Company Court to the National Company Law Tribunal (NCLT) - winding up proceedings - Held that:- Except for the Appellant, there is no opposition by the OL or any of the parties to the winding up proceedings to the transfer of the proceedings to the NCLT. The OL was certainly a party to the winding up proceedings and this was sufficient, in terms of the proviso to Section 434(1) (c) of the 2013 Act, for the Company Court to proceed to exercise its discretion in the matter. With the prospect of recovery of dues being brighter in the NCLT, the two other claimants can also have no objection to the transfer of the proceedings to the NCLT. The fact of the matter is that despite pendency of the winding up petition for more than four years, no money has been able to be recovered by any of the creditors. At this juncture it is necessary for this Court to clarify that it is not expressing any view on the plea of the Appellant regarding the conduct of Respondent No.1 since that is not the subject matter of the present appeal. That will have to be pursued separately by the Appellant in accordance with law. Thus this Court concurs with the Company Court that it was in the best interest of all the creditors that the matter should be transferred to NCLT.
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2018 (12) TMI 394
Liability to pay the audit fee of the auditors on the Company - Held that:- The auditors were appointed by the Tribunal and the liability for payment of the amount of audit fee is of the Company. Therefore, the Respondent company is liable to pay the audit fee of the auditors. Thus there is nothing wrong with such directions which calls for our interference with the same. Alternative methods for recovering monies to pay audit fees of auditors including auctioning of Respondent company movable assets instead of directing recovering from two companies - Held that:- it is the duty of the Respondent Company to pay the audit fee of the auditors. It is not the duty of the Tribunal to direct the company to consider the other methods for recovering monies. As regards the Tribunal’s observations in the impugned order “that if the company has no money at present, it has to realise the money which is recoverable from the two sister companies” is also a possible course of action the company can. The appellant seems to be making out a case that the company does not have enough fund to pay the auditors’ fee but we wonder that the poverty of the company does not deter them to fight among themselves rather than concentrated on running the company for mutual benefit of all but fall out of liabilities of such behaviour is made out to be excessive. We do not appreciate this approach. Fees claimed by the auditors on higher side and also is not as per the ICAI norms and at best are entitled for a fees of ₹ 8,00,000/- - Held that:- We have no grounds to doubt that number of days spent is 439 and number of hours spent was 3512 in auditing. As ₹ 36 lakh approx. claimed by auditor are supported by number of days spend and composition of people working on the assignment whereas there is no rational basis for suggesting that ₹ 8 lakhs is a reasonable amount for the duty to be done. It can at best be called a wild guess. We further noted that the appellant has paid nearly ₹ 62,00,000/- for auditing of the sister concerns for the same period as in the case of Respondent Company. Therefore, we are satisfied that the fee has been claimed as per ICAI norms seems reasonable. During the course of arguments, the 7th respondent has justified the fees claimed on the basis of norms of ICAI and having meticulously spent the time on the assignment and the composition of people constituting audit team. Hence, 7th respondent asserted that the fees charged is reasonable looking into the context of the work which was required to do. In the course of arguments, we toyed with idea if the 7th Respondent appearing in person through Mr. N.S. Sudarshan Gupta would consider voluntarily accepting to reduce the fees to some extent. The 7th respondent fairly stated that it would accept the orders of the Tribunal and another ₹ 4 or 5 lakhs may be reduced. However, going through the material on record and the impugned order for which the audit was involved and the mandays which were required to be spent as well as the expenditure made on audit of sister concerns, we feel it would be improper for us to reduce fees, least it set a precedent and generating litigations with the hope of getting reduction through the Tribunal by agitating the fees. When the auditor is showing the fees on the basis of ICAI norms we find it improper to interfere. The appellants are also not with clean hands and plead insufficiency of money in their accounts and when the NCLT directed that they can have the money by recovering what their dues are from their sister concern, the appellants, come up in appeals - Appeal dismissed.
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Insolvency & Bankruptcy
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2018 (12) TMI 417
Corporate insolvency process - admitted Financial Liability - amount advanced by the Financial Creditors is an amount advanced as Loan - Whether the amount claimed by the Financial Creditors is an Investment or it is an amount advanced as a Loan? - Whether the amount claimed by the Financial Creditors is discharged as on date or is still in continuance? Held that:- Bench has examined the TDS Certificate i.e. Form – 26AS which is placed on record by the Financial Creditors. By going through the same it is noticed that the Debtor had deposited the TDS amount of ₹ 14,000/-, ₹ 10,500/- and ₹ 10,500/- respectively for 1st, 2nd and 3rd Financial Creditor. This TDS was deducted by the Debtor U/s. 194A of the Income Tax Act, 1961 and the same has been deposited also with the Income Tax Department. It is noticed that the S. 194A stands for the Tax on Interest other than the Interest on Securities. Since, the TDS is deducted U/s. 194A it cannot be towards the distribution of profits and therefore a conclusion can be drawn that the Debtor has paid the amount to the 1st to 3rd Financial Creditors towards the Interest Amount of Loan. In light of above observation to answer the above framed first question it can be stated that ‘the amount advanced by the Financial Creditors is an amount advanced as Loan’. Moreover the Debtor has not made out a case of disbursement of any ‘Dividend’ or ‘Profit’ so as to demonstrate the impugned transaction at all related to an Investment. Though there is pending dispute, prior to institution of the Petition U/s. 7 of the Code, the Adjudicating Authority need not to look into that dispute for the adjudication of the S. 7 Petition. In this case, the Bench has also perused the Orders of the Hon’ble Bombay High Court in the said Civil Suit and noticed that the Hon’ble Bombay High Court, in any way, has not restricted this Bench from proceeding in this case. At the cost of repetition, the issues in that Suit are altogether different and do not relate the question of default in repayment of an admitted Financial Debt. As far as the question of the ‘default’ is concerned, it has already been established supra. Hence, to conclude the discussion it can be stated that the Petition under Adjudication deserves Admission. The facts of the case have already established that the amount claimed is ‘Financial Debt’ as defined U/s. 5 (8) of the Code and there is a Default in the re-payment of the Debt as defined U/s. 3 (12) of the Code. As a consequence, keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor the Bench is of the conscientious view that this Petition deserves ‘Admission’.
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Service Tax
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2018 (12) TMI 385
Short payment of service tax - it was alleged that the service provider suppressed the actual amount of cable service charges in the guise of repair charges and new connection material charges and for purchase of spare parts - principles of natural justice - Held that:- The original authority has passed the order mainly relying upon the contents of the letter dated 09.06.2006 which was withdrawn by the appellant and the same cannot be considered to be reply to the show-cause notice. Further the original authority has also not considered other submissions of the appellant. Further, the order-in-original was passed in violation of the principles of natural justice as the contentions raised by the appellant in their letter dated 11.08.2006, 19.09.2006 and 10.11.2006 have not been considered. Further, both the authorities have wrongly imposed penalty under Section 76 and 78 which cannot be legally imposed - Further there is a calculation error in the computation of service tax and it appears that the adjudicating authority has taxed ₹ 1,85,392/- again. The matter is remanded to the original authority to consider the submissions of the appellant submitted in letters dated 11.08.2006, 19.09.2006 and 10.11.2006 and pass a fresh order in accordance with law after considering the cenvat claim of the appellant also - appeal allowed by way of remand.
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2018 (12) TMI 384
Undervaluation - security agency service - manpower supply service - suppression of taxable value - it was alleged that value of taxable service declared by them under ST 3 returns was much less than what was declared in the balance sheet and books of accounts of the appellant firm for various financial years - demand of service tax alongwith Interest and penalties - extended period of limitation. Demand on the ground that the appellant have evaded Service Tax by suppressing the taxable value in their ST 3 returns on taxable service namely, security agency service and manpower supply service - Held that:- The appellants have not contested that the figures given in the balance sheet which they have submitted before the investigating agency are not factually correct. It is also an admitted fact that the appellant had been indulging in fabricating and forging the figures given in the ST 3 returns vis-à-vis those given in the balance sheets. Even the duplicate (not based on real figures) were also prepared fraudulently and submitted before Departments Audit team - no evidence has been adduced by the appellant to controvert the facts that the taxable value declared by the appellant in ST 3 returns were not wrong and manipulated. We hold that demand and confirmation of service tax under section 73(1) of Finance Act, 1994 by the adjudicating authority is legally correct in principal. Quantum of service tax demand - Held that:- The adjudicating authority need to examine the claim made by the appellant that the value of certain exempted services namely, the construction of road and its maintenance provided by them ought to have been deducted from the total taxable value before determination of demand of service tax from them - this fact need to be checked by the adjudicating authority whether the claim which is being made by the appellant is factually correct or not and if they have been engaged in the activity of construction of roads and its maintenance, same need to be considered and taxability of the same to be checked as per the prevalent provisions of the Finance Act, 1994 at the relevant time. Whether the service tax is correctly been calculated on receipt basis before 1.7.2011 and on accrual basis after 1.7.2011? - Held that:- As per the provisions of service tax before 1.7.2011, the authorities should have determined the actual amount received in a financial year while demanding the service tax. However, this fact can only be checked at the level of original adjudicating authority - for the purpose of determining the financial year wise receipt of Service tax value prior to 1.7.2011, the adjudicating authority need to examine the balance sheet and other statement of accounts to re-determine the financial year wise receipts as claimed by the learned advocate and to re-determine the demand of service tax for particular financial year - matter on remand. Cum-duty-benefit - Held that:- This fact also needs to be examined at the level of original adjudicating authority. As we find from the show cause notice that assessee have been collecting service tax on the value which is given by them on the invoices and which have been taken in the balance sheet However, since all the details are not available before us, we direct the adjudicating authority to examine the appellants claim in this regard. Extended period of limitation - Held that:- This is an established case of intentional evasion of service tax by manipulating and forging the figures of the taxable value for levy of service tax by the appellant and therefore, we hold that the demand for extended time period is rightly invoked. Appeal allowed by way of remand.
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2018 (12) TMI 383
Undervaluation - security agency service - manpower supply service - suppression of taxable value - it was alleged that value of taxable service declared by them under ST 3 returns was much less than what was declared in the balance sheet and books of accounts of the appellant firm for various financial years - demand of service tax alongwith Interest and penalties. The appellant has mainly contested that their liability is to be determined on receipt basis and not on the basis of gross figures reflected in the balance sheet - whether the service tax is correctly been calculated on receipt basis before 30.06.2011? - Held that:- This fact can only be checked at the level of original adjudicating authority and therefore, we are of the view that for the purpose of determining the financial year wise receipt of Service tax value prior to 1.7.2011 and even upto 30.06.2011, the adjudicating authority need to examine the balance sheet and other statement of accounts to re-determine the financial year wise receipts as claimed by the learned advocate and to re-determine, the demand of service tax for particular financial year - matter on remand. Cum-duty-benefit - Held that:- This fact also needs to be rejected at the level of original adjudicating authority. As found from the show cause notice that assessee have been collecting service tax on the value which is given by them on the invoices and which have been taken in the balance sheet However, since all the details are not available before us, we direct the adjudicating authority to examine the appellants claim in this regard - matter on remand. Appellant also claim that they have paid an excess service tax of ₹ 3,00,221/- in the ST-3 return for 2009-10 - Held that:- There is no reason why the same should not be adjusted against their demand for the years 2009-10 to 2011-12, if the same is correct. If the claim of the appellant is correct, the same should be appropriated and adjusted against their present demand. Extended period of limitation - Held that:- This is clear cut case of intentional evasion of service tax by manipulating and forging the figures of the taxable value for levy of service tax by the appellant and therefore, it is held that the demand for extended time period is rightly invoked. Appeal allowed by way of remand.
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2018 (12) TMI 382
Liability of sub-contractor to pay service tax - It is the case of appellant that main contractor is already paying the service ax and the liability on him will amount to double taxation - Held that:- In the instance case it has not been clarified in the certificate of M/s Furnace Fabrica (India) Ltd that whether service tax has been paid on the entire value of the service and if M/s Furnace Fabrica (India) Ltd was entitled to cenvat credit of the service tax paid by appellant. In these circumstances it cannot be said that liability of service tax on the appellant is amounting to double taxation. The argument that if service recipient is paying tax, such service provider would be exempt from payment of tax would destroy the entire structure of all the service tax law. Thus, the argument that no liability can be fixed for appellant because M/s Furnace Fabrica (India) Ltd has paid service tax it cannot be accepted. - demand upheld. Wroks contract service or not - the argument of the appellant is that the services provided by the appellant are in the nature of work contract, therefore, they cannot be any liability of service tax for the period prior to 01.06.2007 - Held that:- From the work order placed to the appellant from M/s Furnace Fabrica (India) Ltd, it is seen that it is essentially work order for service. The question is that whether inclusion of the value of consumables in the service would convert all item of service into work contract? Consumption of goods by service provider during the provision of the service does not automatically convert the service into work contract. If the scope of work contract is extended to including consumables then there will be no service which can fall outside the purview of work contract. Even consultancy service provided by engineer or advocate involves consumable like Paper, Ink, Pen, etc., service provided which are inclusive all the value of consumable cannot be treated as work contract. Thus, the service provide by the appellant cannot be treated as work contract as claimed by appellant - demand upheld. Appeal dismissed - decided against appellant.
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2018 (12) TMI 381
Refund claim of service tax erroneously paid - case of appellant is that amount of service tax on transportation of said agricultural produce/ food grains under reverse charge mechanism was paid but the same was exempted as per N/N. 25/2012-ST dated 20.06.2012 - time limitation. Whether the appellant was rightly claiming the exemption of Notification 25/2012-ST dated 20.06.2012? - Held that:- The said Notification grants exemption to the services provided by a goods transportation agency by way of transport in goods carriage of agricultural produce. Section 65B(5) of Service Tax Act, 1994 defines agricultural produce to mean any produce of agriculture on which either no further processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. The processing done upon maize to extract sooji as well as atta is same and the processing is nothing more than grinding which is possible at the cultivator or the producer end. Though grinding may be a process of manufacture as far as the marketability thereof is concerned. But for the purpose of impugned exemption available towards GTA service for transporting agricultural produce. This process does not make any difference. Resultantly, both the products though acquire a distinct marketability but retains the essential characteristic of the derivatives of the agricultural produce i.e. maize. Maize sooji is a prederivative than maize atta in the process of grinding of maize - Otherwise also, the said Notification got amended vide Notification No. 03/2013 dated 01.03.2013 vide which the exemption was extended to food grains or food stuff and the transportation thereof vide its subsequent Notification No. 06/2015 of 01.03.2015. Time Limitation - Section 11B of Central Excise Act - Held that:- This Section is applicable only where there is a statutory levy which is either not paid or is short paid - Section 11B of CEA was made applicable on the ground that the petitioner in that case has committed mistake of fact in understanding the Law as he assumed that the transaction for which he has paid tax is covered under law. In the present case, it is not the mistake of fact but the mistake of law that the Notifications extending exemptions to the appellant were not into his notice - the Adjudicating Authority below has committed an error while considering the claim as time barred due to non applicability of Section 11 B to the present case. Rejection of refund claim also on ground of no production of documents, nor of any evidence - Held that:- In view of the admitted fact of appellant being engaged in manufacture of sooji and atta of food grains, in view of subsequent admission of Notification extending exemption to food grains/ agricultural products, in view of above discussion that sooji or food grain is also an exempted product under the said Notification, there remains no need of any evidence to be produced on record. The absence of document is a mere procedural lapse. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 366
Short payment of service tax - mining of mineral, oil or gas services provided to Madhya Pradesh State Mining Corporation Ltd. - suppression of facts - penalty - Held that:- There appears no infirmity in the findings based on the statement of services provided during the relevant year, as provided by the appellant alongwith the ledger accounts of the service recipients that the appellant have paid service tax in excess during the period in question and that the charge of short payment of service tax as alleged in Show Cause Notice is not based on any evidential proof - demand withheld. CENVAT credit wrongly availed - wrongly availed credit utilised for payment of service tax for the period July-September 2012-13 - the credit has been availed on the purchase of two machines vide two invoices dated 06.06.2011 and 24.12.2011 which were to be used to execute the work order of mining between the Corporation and the appellant - Held that:- The credit is rather permissible to be taken on both these machines by the appellants in another unit irrespective of the invoices showing the different address of the appellant - Even the CBEC Circular as relied upon by the appellant has clarified that where the goods are ordered by registered / head office of the assessee and the invoice does not bear the consignee address, the credit ought not to be denied - credit allowed. Lapse of procedural compliance - rule 9 of CCR - Held that:- The Larger Bench of this Tribunal in the case Kamakhya Steel Vs. C.C.E. [2000 (8) TMI 113 - CEGAT, NEW DELHI] has consistently held that once duty paid character of goods, receipt at works and utilisation thereof stood established, credit ought not to be denied on procedural lapses/ minor deviations - the findings of Commissioner(Appeals) that the invoices produced by appellant are not containing correct address of the appellants registered premises but are having address of their other premises has wrongly been considered as a ground to deny the availment of cenvat credit on the capital goods used by the appellants for providing the output service - credit allowed. Non-payment of late fees - ST-return for the period April-September 2011-12 filed on 22.04.2012 i.e. after a delay of 98 days - Held that:- It is observed that details of amount received and service tax paid for the last 5 years of period in dispute were provided by the appellant to the Department. Based thereupon, it is the finding of the authorities below that the service tax was paid in excess by the appellant during the period in question. Confirming the demand of late fee is apparently a contradictory finding and resultantly is not sustainable - demand set aside. Penalty - Held that:- The onus was of the Department to prove the suppression of fact on part of the appellant to evade the payment of duty but the record of the matter and even the findings of the appellate authority are sufficient to prove that the appellant has been paying the excess duty for some of the financial years of the period in dispute and had been adjusting the same qua short payment is sufficient to hold that there is no intent to evade the duty. In absence thereof no question arises for imposition of penalty - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 387
Service provided by way of technical testing or analysis of new developed drugs - exemption from payment of service tax - Held that:- This Court after taking into account the material available on record, is of the opinion that the present appeal certainly deserves to be admitted on the substantial questions of law - it is directed that the respondent shall not take any coercive action against the petitioner.
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2018 (12) TMI 380
Business Auxiliary Service - deduction of handling charges while paying commission - demand of Service Tax - Held that:- ₹ 100/- deducted from the amount payable indicates that the amount paid by the respondent to their associates is paid less than that should have been paid. The whole transaction simply means that while paying commission, the respondent is paying less commission than required to be paid. Therefore, in the whole transaction the associates are rendering service and respondent is not rendering service and the respondent is recipient of service. Demand do not sustain - appeal dismissed - decided against Revenue.
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2018 (12) TMI 379
Interest on delayed refund - interest denied on the ground that the appellant has not filed refund claims in form ARE-1 at the time of filing of refund - Held that:- While issuing show cause notice to deny the refund claims of the appellant, no issue was raised that the refund claims have not been filed in form i.e. ARE-1. Therefore, the revenue cannot deny interest on delayed refund on the said ground - the appellant is entitled to interest on delayed refund after 3 months from the date of filing of refund claims till its realization - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 378
Works contract service - evasion of payment of Service Tax - It is also alleged that appellant has wrongly classified the remaining service under ECIS and CICS with the sole intention to wrongly avail the benefit of Notification No.1/2006-ST dated 01.03.2006 - Held that:- Prior the appellant started Civil Construction, Errection or Installation at the agreed site, the equipments to be erected/installed at that site were agreed to be supplied to the appellant vide a separate agreement. This particular fact makes it abundantly clear that property in goods which were to be erected and installed by the appellant had not transferred in his favour at the site of construction and erection. Above all it is admitted and acknowledged fact that execution of three separate agreements was the mandate of the bid of company itself. We, therefore, are of the firm opinion that value of this contract cannot be treated as the part of the gross-value for the entire work done by the appellant. Commissioning and Industrial Construction Services - Held that:- It is very much apparent that the technical specification, material for the projects were to be provided by the service recipient to the appellant. Relying upon the M/s Larsen & Toubro Ltd. (Supra) as above there is no doubt that the said contract is of work contract service altogether different from remaining two contracts. Department has alleged that the appellant has wrongly availed the benefit of notification 1/2006 but on perusal of show cause notice show that the impugned order‟s period is 01/10/2009. Erection, Commissioning & Installation Services - Held that:- For executing this contract the goods required for the purpose were supplied to the appellant vide a separate agreement. No question for this service to become work contract arises nor for adding the value of three of the contracts as to gross-value liability under works contract service as alleged. It is apparent and admitted fact that the appellant is otherwise discharging liability for three of these contracts separately. In the present case though we observe that same judicial indiscipline is committed by the Original Adjudicating Authority herein, however, keeping in view that the same is not the ground of appeal and also that the Commissioner has a bona-fide opinion of the present case being different from the previous one, we do not opt to impose any fine. However the Adjudicating Authority below are warned to strictly maintain the judicial decision. Appeal allowed.
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2018 (12) TMI 377
Advertising Agency Services - outward foreign exchange remittances - case of Department is that the appellant is recipient of imported services falling under the category of ‘Advertising Agency Services’? - Held that:- It is apparent and admitted fact for the present appeal that proposed demand of ₹ 2,90,23,827/- has been reduced to ₹ 4,58,833/-. The Adjudicating Authority below has considered various documents on record to hold that demand was wrongly proposed in the show cause notice without looking into the documents as that of certificate from the bank where appellant maintains account. There is a catena of judgments to hold that adjudication cannot go beyond the scope of show cause notice. We draw our support from case relied upon by the appellant wherein it was held that the demand which is not permissible under any head to be proposed under the show cause notice, the imposition thereof is absolutely not permissible. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 376
CENVAT Credit - GTA Service - credit for the period 20/4/06 to 12/07/2006 is not eligible for the reason that Rule 2(p) was omitted - service tax on inward GTA was paid by M/s Nirma Marketing Enterprise whereas the credit was availed by the appellant - credit on inward GTA was availed prior to 01/01/2005 when there was no reverse charge for the purpose of payment of service tax. Denial of credit for the reason that explanation of Rule 2(p) was omitted - Held that:- The denial of credit on the ground that explanation of Rule 2(p) was omitted is absolutely incorrect for the reason that the appellant, even thereafter discharging the Service tax on Reverse Charge Mechanism. In term of Rule 2(r) of Cenvat Credit Rules, 2004, the person who is liable to pay the Service Tax is a deemed provider of service. Therefore, by virtue of this provision, since the appellant is undisputedly discharging the Service Tax even though on Reverse Charge Mechanism, he is deemed service provider. The inward transportation on deemed service is discharged is otherwise the input service for the purpose of Cenvat Credit as per the definition of input service under 2(l) of Cenvat Credit Rules. Therefore, the lower authorities have wrongly denied the Cenvat Credit on this ground - credit allowed. Denial of credit for the reason that invoice of GTA is in the name of Nirma Marketing Enterprise - Held that:- Both Nirma Marketing Enterprise and appellant are separately registered and engaged in separate activities. Therefore, in the eyes of Service Tax laws both are separate assessee. Even though both are under the same company, both are separate assessee. Credit of one assessee cannot be transferred to another. Accordingly, the credit availed by the appellant on the strength of invoice which is in the name of Nirma Marketing Enterprises is not admissible - credit rightly denied. Cenvat credit prior to 01/01/2005 was argued only on limitation - Held that:- Though the appellant have declared aggregate Cenvat amount in the ST-3 return but individual service wise credit detail is not available in the ST-3 return. The discrepancy was pointed out by the audit. Thereafter only the Show Cause Notice was issued. Prior to audit the fact was not disclosed to the department. Therefore, there is a clear suppression of fact on the part of the appellant. Accordingly, the demand cannot be set aside on account of time bar - Credit for the time prior to 01/01/2005 is upheld. Appeal allowed in part.
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2018 (12) TMI 386
Out-door catering services or not - appellant was a contractor conducting a canteen in the premises of M/s. Hindustan Newsprint Ltd. - Held that:- The High Court exercising its extra-ordinary power, could also look into the hardship caused especially in the context of the Appellate Authority having found the specific transaction to be not taxable and not coming within the ambit of a taxable service under the Finance Act, 1994 - In the present case, as we already noticed, there is no taxable transaction insofar as the transaction of the appellant having been held to fall outside the definition of out-door catering service, on which alone, the assessment was made under the Finance Act, 1994. The Assessing Officer could not have imposed tax, especially on the finding rendered by the First Appellate Authority which is accepted by the Department - the demand made be not proceeded with on the certain condition being complied - appeal disposed off.
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Central Excise
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2018 (12) TMI 372
CENVAT Credit - input services - services used for construction of secured landfill and jarofix storage pond and other allied works for disposal of industrial waste and polluted water - appellant otherwise engaged in manufacture of lead and zinc concentrates, zinc cathode and sulphuric acid - Held that:- For the present case, it is an undisputed fact that the cenvat credit is taken by the assesse on the services used for construction of secured landfill i.e. for stabilisation of hazardous waste as that of jarofix being a toxic affluent. Since the activity is for securing the landfill from which the final product has to be extracted it is definitely the part and parcel of their manufacturing activity i.e. of extraction of lead and zinc from these mines. Otherwise also this construction is meant for disposal of industrial waste i.e. it is an activity of pollution control and as such is statutory requirement for any manufacturing unit generating waste. This activity is essential, though indirectly, for the manufacture of final product of the assesse and as such qualifies eligibility of being called as input service. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 371
CENVAT Credit - recovery of proportionate credit in relation to amount adjusted from the invoices as liquidated damages - Circular No. 122/3/2010-ST dated 30.04.2010 - Rule 3 of CCR - Held that:- The provider of taxable service is allowed to take the credit of the amount paid on input services received, i.e. the gross amount charged as consideration for the purpose of services and such credit shall be allowed on or after the day which the payment is made of the value of input services. This value has to be computed in accordance of the various sub-rules of Section 67 vide which valuation is the cost incurred by the service provider and charged. Circular No. 122 of 34/2010 - Held that:- Circular is about clarification regarding availment of credit on input services. More specifically about a doubt raised as to whether the receiver of input service can take credit only after the full value i.e. indicated in the invoice / bill/ challan rest by the service provider and also the service tax payable thereon has been paid and as to whether when the service receiver does not pay the full invoice value and the service tax indicated thereon due to some reasons - The order under challenge is silent about Circular despite it was duly brought to the notice of the adjudicating authority below and despite the fact that it covers the issue involved herein. The authority below has opted to rely upon Circular No. 877 dated 17.11.2008. The perusal thereof shows that it is about clarification regarding reversal of cenvat credit in case of trade discount. This perusal itself is sufficient to hold that the Circular is not applicable to the facts in hand. The Commissioner(Appeals) has wrongly placed reliance on the said Circular. Irrespective that this Circular is about the excise duty but the intention of the Revenue herein is also same as in Circular No. 122 i.e. irrespective the price is reduced subsequent to raising the invoice the credit can still be availed on the duty paid in accordance of the amount shown in the invoice. This finding is opined to be sufficient to hold that the findings of Commissioner(Appeals) are erroneous on the face of it. When the service tax paid by the provider has not varied, cenvat credit cannot be reduced, no question of denying availment at all arises. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 370
Clandestine manufacture and removal - demand is based on the diary recovered from the premises - admissible evidence or not - Section 36A of the Central Excise Act - quantification of demand - benefit of Notification No. 3/2001-CE denied - time limitation. Held that:- The appellant have sought to disown the content of the diary recovered from their premises. It is seen that before the original adjudicating authority, the appellant had admitted their guilt and the data given in the diary and paid the duty. It is only before Commissioner (A) and in the Tribunals stage that the appellant are contesting the diary. In these circumstances Section 36A of the Central Excise Act is applicable. In the instant case the diary was recovered from the premises of the appellant and therefore unless contrary is proved by the appellant themselves, the said diary is an admissible evidence. Since no evidence to the contrary has been produced by the appellant, the diary can be relied as an admissible evidence. Quantification of demand - appellants have sought to assert that demand should be restricted to only the illicit clearance of textured yarn recovered from 03.12.2001 to 01.01.2002 - Held that:- It is seen that the production recorded in the said diary is only from 11.12.2001 to 31.12.2001. Obviously the clearances before 11.12.2001 recorded in the diary need to be factored in the calculation of total illicit clearances. In these circumstances, we cannot find fault with the impugned order as regard the quantification of the quantity illicitly removed is concerned. Benefit of Notification No. 3/2001-CE denied - Held that:- It is seen that the benefit of said notification is available only if the goods are manufactured by using textured or draw twisted yarn on which appropriated duty has been paid in terms of condition No.22 to the said notification - In the instant case, the appellant did not have any evidence of purchase the goods from the market. The only other conclusion can be that goods were obtained from grey market. In these circumstances the goods cannot be deemed to be duty paid goods - benefit of Notification 3/2001 rightly denied. Time Limitation - case of appellant is that the issue came to knowledge of Revenue in the year 2002 and hence period of limitation should be considered from the date when the issue came to the knowledge of Revenue - Held that:- It is seen that in the case of Neminath Fabrics (P) Ltd. [2010 (4) TMI 631 - GUJARAT HIGH COURT], where it was held that suppression stands admitted by the respondent assessee and established by evidence on record and as a natural corollary, the proviso to sub-section (1) of section 11A would stand attracted - the benefit of limitation cannot be extended to the appellant. The appeal of M/s Vanita Texturisers (P) Ltd. is accordingly dismissed - The appeal of Shri G.M. Solanki (Director) is abated since he is expired and a Death Certificate is already produced.
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2018 (12) TMI 369
Clandestine manufacture and removal - undervaluation - clubbing of clearances - imposition of penalties - suppression of facts and not accounting for actual production to remain within exemption limit as provided in the SSI exemption notifications - Held that:- The evidence brought on record recovered from Shri Mahadev Goel in the nature of private records, cash book, ledger, challans and various files and the statements. Shri Mahadev Goel has retracted his statement and lodged a complaint with Police, these facts have not been contraverted by the Revenue and no further statement has been recorded of Shri Mahadev Goel, therefore, the statement of Sh.Mahadev Goel cannot be relied upon and cannot be the basis of alleged clandestine manufacture and removal of goods. Cross-examination not allowed - Held that:- The statements of the suppliers and buyers which have been relied upon by the adjudicating authority have never been examined in chief and denied cross examination of witness whose statement has been relied without any lawful reason - also the provisions of section 9D have not been followed by the adjudicating authority, therefore, on this sole ground, the impugned order is not sustainable. The statements of various buyers and suppliers have been relied upon by the adjudicating authority and in their statements they have stated they have supplied the goods without cover of invoices or they have purchased the goods from the appellant without cover invoices which means they were involved in the evasion of payment of excise duty but they were not made party to the show cause notice which shows that investigating team adopted pick and choose method as the persons who were involved in evasion of duty were not made party to the show cause notice creates doubt on the statements of these witnesses. Therefore, the statements of these witnesses cannot be relied upon to allege clandestine manufacture and clearance of the goods. Clubbing of clearances - Held that:- Both units are located at a distance of about 60 KM having independent ownership and infrastructure. Each units have its own manufacturing set up and machinery to manufacture heir finished goods independently. In that instant case, their clearances cannot be clubbed to alleged clandestine manufacture and removal of the goods. The adjudicating authority has not given its independent finding on the issue how he arrived on the conclusion that the appellants were engaged in the clandestine manufacture and clearance by undervaluing the same and why cross examination cannot be granted - no corroborative evidence has been brought on record to allege that the clandestine removal of the goods. The demands confirmed against the appellants are not sustainable without any corroborative evidence - Penalties also set aside - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 368
SSI Exemption - clubbing of clearances - it was alleged that M/s AAR Kay was manufacturing and clearing the goods from his factory on the bills of other units to remain within SSI exemption limit - Held that:- If the clearances of M/s Mahalaxmi Engg Works are clubbed with the clearances of M/s AAR Kay then the total duty works out of ₹ 40,12,136/. The said demand of duty is to be considered as cum duty price. Therefore, the said benefit is to be given and after giving the benefit to the appellant, the demand of interest is to be calculated and adjusted against the said amount of ₹ 40.00 Lacs. If any amount is pending then the same is to be paid by the appellant within 30 days of the receipt of this order and in said circumstances, the appellant M/s AAR Kay is entitled for reduced penalty to 25% confirmed if the same is paid within 30 days of receipt of this order as per the proviso to Section 11AC of the Act. Clearances of M/s Harish Engg Works sought to be clubbed with the clearances of M/s AAR Kay - Held that:- Shri Harish Mehendiratta in his statement as stated that is engaged in repairs as well as manufacturing of stone crushing machinery like jaw crusher, rotopactor etc, and having sufficient machinery in the manufacture of said goods i.e. two lathe machines, one shaper, one roller machine, one gas cutter and three chain pulleys in the factory. These facts have not been contraverted by any evidence by the Revenue. As M/s Harish Engg Works is having sufficient machinery to manufacture the goods in question and Shri Harish Mehendiratta have never stated that is not engaged in the business of manufacturing of stone crushing machinery, therefore, the said statement is having a piece of evidence to relied upon. Merely, rubber stamp and invoices were found in the premises of M/s AAR Kay is not sufficient to rely that M/s AAR Kay has used the invoices of M/s Harish Engg Works for clearance of their goods. Also, the buyers/sellers were not issued any show cause notice for aiding and abating the payment of duty, therefore, the statements of buyers/sellers are doubtful and can’t be relied upon - the clearances made by M/s Harish Engg Works cannot be clubbed with the clearances made by M/s AAR Kay. Therefore, the demand of duty on that account is set-aside and no penalty is imposable on M/s AAR Kay and Shri Harish Mehndiratta for the clearances made by M/s Harish Engg Works. Demand sought to be confirmed on the clearances made by M/s DKV Enterprises alleging that the invoices of M/s DKV Enterprises have been used by M/s AAR Kay - Held that:- There is no evidence on record to show that raw material purchased by M/s DKV Enterprises have been unloaded in the premises of M/s AAR Kay. Moreover, no evidence has been brought on record in support of the statement of Shri Vinay Batra that they have done any job work or fabrication work on behalf of the M/s AAR Kay. Merely, on the basis of the statement of Shri Vinay Batra clearances of M/s DKV Enterprises cannot be clubbed with the clearances to the M/s AAR Kay in the absence of corroborative evidence - the clearances made on the invoices of M/s DKV Enterprises can’t be clubbed with the clearances made by M/s AAR Kay. Therefore, the demand of duty is sustainable on that account. Clearances of M/s Maa Laxmi Hardware Store sought to be clubbed with the clearances made by M/s AAR Kay on the basis of the statement of Shri Dharmendra, Shri Jitendra and Shri Anup Lohia supplier and one buyer M/s CHM Projects - Held that:- The goods were transported by the vehicles arranged by him and not owned by him, we find that no statement of any owner of the vehicles or the drivers of the vehicles have been recorded to prove that the machines have been supplied by M/s AAR Kay or machines have been loaded from the premises of M/s AAR Kay. In fact, the driver of the vehicle is the person who can reveal the truth, but, the same has not been examined, therefore, the transporter’s statement is not admissible evidence. With regard to the statement of Shri Ramesh Mehndiratta, we have dealt the same in the case of M/s Harish Engineering Works and same observations are to be taken here as it is - the buyers/sellers were not issued any show cause notice for aiding and abating the payment of duty, therefore, the statements of buyers/sellers are doubtful and can’t be relied upon - the clearances made M/s Maa Laxmi Indt. Hardware Store cannot be clubbed with the clearances of M/s AAR Kay in the absence of any positive evidence on record. The charge of undervaluation has not been proved with tangible evidence. In that circumstances, the charge of undervaluation is not sustainable. Consequently, no redemption fine can be imposed on M/s AAR Kay Industries. Consequently, the redemption fine of ₹ 4.00 Lacs is set-aside. The allegation has been made of the undervaluation on the invoices cleared by M/s Harish Engg Works and Mahalaxmi Engg Works - Held that:- As the clearances made by M/s Harish Engg Works cannot be clubbed with the clearances of M/s AAR Kay and all the clearances made by M/s Harish Engg Works remained with SSI exemption limit. Therefore, the charge of undervaluation on the invoice M/s Harish Engg Works is not sustainable. With regard to the three invoices issued by M/s Mahalaxmi Engg Works, we find that the charge of undervaluation has been made only on the basis of the statement of buyer Shri Ashwani Mehta, Proprietor of M/s Techno Crafts, but no evidence has been brought on record to prove that the said charge of undervaluation - the appellants were never confronted with the statement of Shri Ashwani Mehta to corroborate the charge of undervaluation and Shri Ashwani Mehta was not issued any show cause notice to allege aiding and abating the payment of duty, the statement of Shri Ashwani Mehta is doubtful and can’t be relied upon. In that circumstances, due to lack of evidence on record, the charge of undervaluation is not sustainable. A penalty of ₹ 10,00,000/- has been imposed on Shri Sumit Mehndiratta which is on higher side - penalty reduced to ₹ 1,00,000/-. Appeal disposed off.
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2018 (12) TMI 367
CENVAT Credit - input services - Employees Group Insurance - Personal Accident Insurance Policies - Held that:- In the appellant’s own case, for the period October 2007 to May 2011, the department has allowed credit. The Commissioner (Appeals) have totally disregarded this decision. Instead of analysing the reason for allowing credit on such services after 1/4/2011, the Commissioner (Appeals) has brushed aside this order stating that major part is prior to 1/4/2011. I do not think this is sufficient reason to deviate from abiding the judicial discipline. The mechanical approach to issues without application of mind increases litigations. The Hon’ble High Court of Madras in the recent decision in M/s. Ganesan Builders Ltd vs CST, Chennai [2018 (10) TMI 269 - MADRAS HIGH COURT], has observed that when the insurance policies have been taken for compliance under the labour legislations, the same are eligible for credit. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 365
Clandestine removal - Shortage and excess of finished goods - held that:- It is an admitted fact that due to marriage of son of the appellant, who was busy in the distribution of the wedding cards at the time of visit of the officers to the factory, when the factory was closed. A person who is busy in distribution of wedding cards of his son definitely cannot concentrate on his business during that impugned period. Therefore, the contention of the appellant is acceptable that due to marriage of his son, the appellant could not maintain proper records. It is a fact on record that the appellant is a regular exporter and exported the goods. In that circumstance, the benefit of doubt goes in favour of the appellant. Further, the goods found in excess in the factory of the appellant was due to business of the appellant in the marriage of his son in distribution of wedding cards during the impugned period, therefore, the goods are not liable for confiscation. In that circumstance, the redemption fine imposed is also set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 364
Default in payment of duty - denial of right to use the cenvat credit account for payment of duty - the entire case of the Revenue is that on account of default in payment of duty for the period from August, 2007 to November, 2007 the appellant have lost their right to use the cenvat credit account, for payment of duty - Rule 8(3A) of the Central Excise Rules - Time Limitation - penalty. Held that:- The said issue stands considered by the Tribunal in the latest decision in the case of M/s Bakewell Agro Ltd. and others V/s CCE, Meerut-I [2018 (12) TMI 156 - CESTAT ALLAHABAD], it stands held that the assessee was entitled to use the cenvat credit for payment of duties of their final product even during the period of default. Time limitation - Held that:- The appellant debited their cenvat credit account at the instance of the visiting officers in December, 2007. Such entries made by the appellant were indicated to their Range Officer as well. No objection was raised by the Revenue at that point of time. A show cause notice issued after a period of 3-4 years by invoking the extended period cannot be uphold - As such apart from the merits of the case, the demand is also barred by limitation. Penalty - Held that:- It is seen that a further demand to the tune of ₹ 9,651 and of ₹ 25.158/- stands confirmed which were also debited by the appellant from their Cenvat Credit account. Inasmuch as the said demand is accepted by the appellant, we find no reasons to set aside the same. However, penalty on the said two grounds are set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 363
CENVAT Credit - duty paying documents - denial of cenvat credit on the allegation that all the duty paying documents were under the name of M/s Johnson Matthey Chemicals Pvt. Ltd. and not in the appellant’s name - Held that:- The issue decided in appellant own case M/S AKZO NOBEL INDIA LTD. (FORMERLY, ICI INDIA LTD.) VERSUS C.C.E., - KANPUR [2016 (10) TMI 1156 - CESTAT ALLAHABAD], where it was held that The existence of commercial arrangement between the appellant and JMCIPL is only to carry out the commercial activities for the purpose of business of the company in the light of the need for financing control, sales, marketing and allied activities to run the business and in no way, does it disentitle the manufacturer of excisable goods i.e. ICI India Limited (presently Akzo Nobel Ltd.) to Cenvat Credit of the duty paid on inputs and capital goods. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 362
CENVAT Credit - inputs returned by the job worker, but, these goods have not been returned by the buyer to whom the appellant sold these goods - Held that:- Held that:- It is not disputed the fact that the goods in question has not been received by the appellant, therefore, on the receipt of the said goods which were sold by the appellant under invoices issued by the buyer, the appellant is entitled to avail cenvat credit on such returned goods - credit allowed. CENVAT Credit sought to be denied on the allegation of diversion of the goods which the appellant has admitted and reversed alongwith interest - appellant has also paid 25% of the cenvat credit as penalty under Section 11 AC of the Central Excise Act, 1944 - Held that:- Admittedly, the said payments have made by the appellant before passing the adjudication order, therefore, in terms of provisions of Section 11 AC of the Act, the appellant is entitled for the benefit of 25% cenvat credit as penalty and which has been done by the appellant. Therefore, the appellant is entitled for the benefit of 75% cenvat credit as penalty. Accordingly, the penalty is reduced to 25% of cenvat credit in question. CENVAT Credit - denial on the premise that the same cannot be input to manufacture their final product - Held that:- The revenue has not able to produce any evidence on record that these goods are not received by the appellant or have been diverted by the appellant. On the contrary, the appellant is able to show that as per the expert’s opinion, the said goods can be used as inputs i.e. fuel for manufacture their final product - credit allowed. The appellant is entitled for cenvat credit of ₹ 2,52,133 and ₹ 28,853/- and reduced penalty of 25% of cenvat credit of ₹ 16,552/- - appeal disposed off.
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2018 (12) TMI 361
Rectification of Mistake - it was alleged that this Tribunal has not given any finding on imposition of penalty under Rule 25 of the Central Excise Rules, 2002 - Held that:- When the order passed by this Tribunal, this Tribunal has upheld the impugned order, in these circumstances, when the impugned order has been upheld, therefore, the question of discussion of penalty does not arise - there is no merit in the application for rectification of mistake - ROM application dismissed.
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2018 (12) TMI 360
Rectification of Mistake - mistake apparent on record - Held that:- Considering the mistake of apparent in record, therefore, the caption be read as under “Arising out of Order-In-Original No. O-I-O- 26/Ldh/2006 dated 27.11.2006 passed by the Commissioner of Central Excise and service tax, Ludhiana” - ROM Application allowed.
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2018 (12) TMI 359
Rectification of Mistake - case of appellant is that this Tribunal has committed a mistake holding that the appellant has paid the amount in question during the course of investigation under protest and also that the adjudicating authority has not taken any paying to adjudicate the show cause notice dated 01.07.2016. Held that:- In this case the show cause notice was issued on 01.07.2016 whereas the amount has been paid by the appellant on 09.12.2015 and CRCL report was communicated to the appellant on 28.01.2016 and the statement of the appellant has also recorded on 06.01.2016 which is after payment made by the appellant, therefore, the amount paid by the appellant, during the course of investigation as statement of the directed was recorded after the amount deposited by the appellant. On that ground, there is no mistake apparent on record, therefore the application for rectification of Mistake does not have any merits on this ground. We also observed that on 30.08.2018, the adjudicating authority was directed to refund the amount paid by the appellant, during the course of investigation within three weeks. Instead of compliance of order of this Tribunal, the adjudicating authority filed this application for rectification of mistake to gain time. ROM application has no merit and is dismissed.
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2018 (12) TMI 358
Rectification of Mistake - mistake apparent on record - Held that:- Tribunal has relied that on the order passed by the Commissioner of Central Excise (Mysore) dated 27.11.2008, wherein, the Ld. Commissioner held that the merit classification of electrical grade insulating pressboard is under chapter heading 4810 and the said order has been accepted by the Revenue, therefore, there is no mistake apparent on record - application for ROM dismissed.
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2018 (12) TMI 357
Refund of education/ higher education cess paid by them on such final products - Revenue entertained a view that such cess is not refundable as no exemption is provided for the same - Held that:- The issue stands covered by the decision of Hon’ble Supreme Court in SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - decided in favor of appellant. Valuation of excisable goods - inclusion of outward freight up to the place of delivery of their finished goods - Held that:- The appellant has not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse, any other premises, a depot, consignment agents premises etc. from where such excisable goods were sold. Admittedly, the goods sold by the appellant delivered at the buyers premises will not make the place of removal as buyers premises - there is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - the question of paying duty on such value addition to be covered by the exemption under Notification 56/2002-CE does not arise - decided against appellant. Appeal allowed in part.
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2018 (12) TMI 356
Utilization of Cenvat credit of basic excise duty for payment of National Calamity Contingent Duty (NCCD) - Held that:- Rule 3 (1)(v), the Cenvat credit includes the NCCD leviable under Section 136 of Finance Act, 2001. As per this provision, credit of NCCD is a Cenvat credit. As regard utilization in terms of Rule 3(4)(a), the Cenvat credit is allowed to be utilized for payment of any duty of excise on any final product. Rule 3(7)(b) provides some restrictions, according to which the cevnat credit in respect of NCCD can be utilized only for payment of NCCD that means, Cenvat credit of NCCD is not allowed to be utilized for payment of basic excise duty. However, similar restriction is not provided for utilization of basic excise duty for payment of NCCD. The Hon'ble High Court in the case of CCE, Dibrugarh vs. Prag Bosimi Synthetics Limited [2013 (11) TMI 487 - GAUHATI HIGH COURT], after interpreting Rule 3(4) and Rule 3(7) came to the conclusion that the Cenvat credit can be utilized towards payment of NCCD in Cenvat credit. In view of the clear statutory provisions, there is no bar in utilization of basic excise duty for payment of NCCD. Appeal dismissed - decided against Revenue
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2018 (12) TMI 375
Refund of education cess and the higher education cess paid - area based exemption availed - North East Industrial Policy of 1997 - Held that:- In view of the consensus reached between the parties, this Court directs the respondents in the Department of Excise/Goods and Services Tax of the Government of India, more particularly the respondent Nos. 4 to 6 to make an appropriate calculation and thereupon refund the education cess and the higher education cess paid by the petitioner from July, 2004 to February, 2015 - the aforesaid process of refund be undertaken and completed, leading to refund of the education and higher education cess, within a period of 05(five) months from the date of receipt of a certified copy of this order - petition disposed off.
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2018 (12) TMI 374
Refund of education cess and the higher education cess paid - area based exemption availed - North East Industrial Policy of 1997 - Held that:- In view of the consensus reached between the parties, this Court directs the respondents in the Department of Excise/Goods and Services Tax of the Government of India, more particularly the respondent Nos. 4 to 6 to make an appropriate calculation and thereupon refund the education cess and the higher education cess paid by the petitioner from July, 2004 to February, 2015 - the aforesaid process of refund be undertaken and completed, leading to refund of the education and higher education cess, within a period of 05(five) months from the date of receipt of a certified copy of this order - petition disposed off.
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2018 (12) TMI 373
Applicability of Extended period of limitation - circular No. 1063/2/2018-CX dated 16.02.2018 - Held that:- The Adjudicating Authority shall decide all the issues de novo as directed vide judgment impugned dated 29.11.2017 including the issue of extended period of limitation, in the light of the circular No. 1063/2/2018-CX dated 16.02.2018 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs providing, that the extended period of limitation would not be available to the department - petition allowed by way of remand.
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CST, VAT & Sales Tax
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2018 (12) TMI 355
Denial of input tax credit - Principles of natural justice - validity of assessment order - case of petitioner is that during the assessment proceedings, the assessing authority had not either provided the details of such dealer, nor called upon the petitioner to clarify the position in this regard - Held that:- The impugned order suffers from gross violation of principles of natural justice. The departmental authority cannot unilaterally come to the conclusion that the petitioner's sales or purchases were not genuine and therefore, tax credit in relation to such transactions was liable to be disallowed - Any such finding must be preceded by an opportunity of hearing to the petitioner. Impugned order st aside - proceedings are placed back before the adjudicating authority for passing a fresh order in accordance with law - petition allowed by way of remand.
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2018 (12) TMI 354
Taxability - transfer of trade mark to sister concerns - whether the transfer of trade mark to sister concerns would lead to a transfer of right to use, thus making the transaction taxable under the Kerala Value Added Tax Act, 2003? - Held that:- It is only appropriate that there be a remand to the last fact finding authority, the tribunal to further examine the facts; specifically the terms of the agreement of franchise. The assessee shall produce the agreement before the Tribunal and the Tribunal shall examine the same. Both the assessee and the State would have right to file a revision from the order of the Tribunal since we have not expressed anything on the merits of the matter - revision disposed off.
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2018 (12) TMI 353
Input tax credit - Section 11 of the KVAT Act, 2003 - stock transfer is in the course of export or not - assessee claimed input tax credit of the tax paid on purchase of raw materials from registered dealers to the extent of the stock transfer on consignment, made to the godown of the assessee at Tamil Nadu - Held that:- Unless the assessee proves that the stock transfer was in pursuance of an export order, there cannot be a contention raised that the stock transfer was in the course of export merely for the reason that the goods have been identified under the Central Excise Act to be exported. Even if there is no diversion of goods and if there is no export, then necessarily the intention is not served and it cannot be said that the benefit conferred specifically for the export of goods should also be extended to those goods manufactured for export, but eventually not actually exported. The mere fact that the goods so consigned is manufactured under a Unique Product Code enabling exemption from excise duty and specifically earmarked for export would not by that alone qualify for the consignment to be treated as a consignment made in the course of export - It is also to be stated that merely for the reason that the manufactured goods are first consigned to the godown at Tamil Nadu and then exported, it would not result in dis-entitling the assessee to a claim that the stock transfer is in the course of export. This would have to be proved by sufficient documents, which the assessee could produce before the Assessing Authority. The stock transfer destined to Tamil Nadu cannot be said to be in the course of export, since the destination of the foreign buyer is not clear at the time stock transfer originates. The consideration as to whether a specific stock transfer on consignment, is in the course of export has to be considered by the Assessing Authority - Appeal allowed by way of remand.
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2018 (12) TMI 352
Compounding of tax - voluntarily switched over to regular assessment - case of assessee was that the assessee was coerced into agreeing for the compounding of the offence - Limitation. Whether the assessee would have agreed to payment of such a compounding fee, especially in the context of the assessee having challenged the original order itself on the ground of coercion? - Held that:- This is a fit case where this Court should exercise discretion insofar as denying the Department the right to make any revision of the compounding fee which already has been accepted by the assessee and amounts paid. Disentitlemnet of the regular assessment made on the assessee being dis-entitled to continue the compounding under Section 8(c) due to the commencement of the beer and wine parlour - Held that:- The assessee could take a contention that there should be a cancellation first effected before the regular assessment is made. On the assessee obtaining a beer and wine parlour licence and commencing the sale, the entitlement to continue compounding under Section 8(c) automatically stands extinguished. There is absolutely no requirement of cancellation first before a regular assessment is taken up. We reject the contention so raised. Limitation - Held that:- Limitation raises mixed questions of fact and law. But in the present case, there is no dispute on facts. The relevant facts are only the subject assessment year as also the date on which the Department initiated proceedings to determine the taxable turnover under Section 25(1) based on the detection of the dis-entitlement of the assessee to continue under the compounding scheme - the question of limitation is only a question of law. Assessment order set aside - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 351
Rate of tax - Classification of goods - plastic trays, containers, box and bowls - whether fall under Entry 174 of List A of Third schedule bearing HSN Code 3923 and are taxable at the rate of 5% - Held that:- The containers, trays and bowls made of plastic cannot be said to be either a tin, bag or cover. The plastic containers, trays and bowls having not been included in any of the entries and the specific eight digit HSN Code 3923.90.90 under the Customs Tariff Act also having not been included under Entry 174, it cannot be said that the containers, trays and bowls which fall under the Tariff Entry 3923 as against eight digit HSN Code 3923.90.90 is also included under Entry 174 of List A of Third Schedule under the KVAT Act. The main heading under Entry 174 is not aligned to the four digit HSN Code and the eight digit HSN Code under 3923.90.90 is not aligned against any of the sub-entries under Entry 174. The Commissioner has correctly found that the said goods do not come under either Sl.No.3 or 3A - We have extracted those goods which come under Sl.No.3 or 3A herein above, which do not include either of the goods now arising for our consideration in the appeal; being containers, trays and bowls. The said commodities do not also fall under Entry 174 packing materials and hence necessarily the same has to be taxed under the residuary entry of SRO 82/2006. The impugned order in the above case being a continuation of the proceedings under Section 94, there can be no prospectivity declared for the same. Appeal dismissed - decided against Appellant.
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2018 (12) TMI 350
Input tax credit - raw material purchased for generation of electricity - electricity is included as an exempted item under Schedule I of the Kerala Value Added Tax Act - prohibition u/s 11(5) under KVAT Act - Held that:- In the present case, the said prohibition would have been applicable, if the manufactured electricity was sold by the assessee, on which there is no levy of tax. As far as the assessee is concerned, the entire electricity generated is captively consumed for manufacturing purposes and for electrifying the factory premises. Hence the proportion of the raw material employed in the production of electricity, used in the manufacturing process of newsprint, is an input used in the manufacture of the final product of the assessee being newsprint, which is assessable to tax under the KVAT Act. The assessee is entitled to claim input tax credit. In this context, it is also to be noticed that electricity though included under the First Schedule is specifically excluded from the definition of “goods” as available under Section 2(xx) of the KVAT Act. The assessee would also be liable to produce sufficient documents to prove the payment of tax on purchase of raw material for which input tax credit is claimed. The assessee should also produce sufficient materials before the Assessing Officer to segregate the percentage of electricity used for manufacturing purpose and for illuminating purpose. If the assessee is not able to produce such material to the satisfaction of the Assessing Officer, then on best judgment, the Assessing Officer could determine the proportion of the electricity used in the manufacturing process and in illuminating the factory premises. The input tax credit can be allowed only insofar as the raw materials used for production of electricity, employed in the manufacturing process. Decided against Revenue.
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Indian Laws
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2018 (12) TMI 388
Condonation of delay in delay of 514 days in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 -benefit of Sections 5 and Section 14 of the Limitation Act - Differences with regard to the performance of the construction work - reference to Arbitration - prayer for setting aside the arbitral award. Whether the learned Single Judge was justified in condoning a delay of 514 days by the respondent in filing the application under Section 34? Held that:- The position of law is well settled with respect to the applicability of Section14 of the Limitation Act to an application filed under Section 34 of the 1996 Act. A plain reading of sub-section (3) along with the proviso to Section 34 of the 1996 Act, shows that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 could be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause and not thereafter. The use of the words but not thereafter in the proviso makes it clear that the extension cannot be beyond thirty days. Even if the benefit of Section 14 of the Limitation Act is given to the respondent, there will still be a delay of 131 days in filing the application. That is beyond the strict timelines prescribed in sub-section (3) read along with the proviso to Section 34 of the 1996 Act. The delay of 131 days cannot be condoned. To do so, as the High Court did, is to breach a clear statutory mandate. The respondent received the arbitral award on 31 October 2014. Exactly ninety days after the receipt of the award, the respondent filed an application under Section 34 of the 1996 Act before the District Judge, Port Blair on 30 January 2015. On 12 February 2016, the District Judge dismissed the application for want of jurisdiction and on 28 March 2016, the respondent filed an application before the High Court under Section 34 of the 1996 Act for setting aside the arbitral award. After the order of dismissal of the application by the District Judge, the respondent took almost 44 days - Hence, even if the respondent is given the benefit of the provision of Section 14 of the Limitation Act in respect of the period spent in pursuing the proceedings before the District Judge, Port Blair, the petition under Section 34 was filed much beyond the outer period of ninety days. In view of the period of limitation prescribed in Section 34(3), the learned Single Judge of the High Court was not justified in condoning the respondent s delay of 514 days in filing the application - The petition under Section 34 stands dismissed on the ground that it is barred by limitation.
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