TMI Tax Updates - e-Newsletter
February 16, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Determination of residential status - the assessee has to prove through cogent evidences such as passport to prove her stay outside India for stipulated period as per conditions stipulated u/s 6 of the 1961 Act. - AT
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Income Tax:
Once the Assessing Officer has taken the step of initiating penalty under section 271AAA of the Act in respect of additional income offered consequent to search, then the Assessing Officer or any of the authorities below are precluded by provisions of the Act itself to initiate any action for levy of penalty under section 271(1)(c) of the Act. - AT
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Income Tax:
Validity of reopening of assessment - addition u/s 69C - bogus purchases - M/s. JPK Trading Pvt. Ltd had never sold any goods and were only issuing bogus sales invoices and charged commission. Thus AO was justified in reopening the case of the appellant for the year under consideration u/s 147 of the Act - AT
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Income Tax:
Income accrued in India - Referral fees - considering that the referral activity was undertaken outside India and assessee’s Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee of ₹ 18,27,90,578/- earned by CSDB could not be construed to be attributable to assessee’s PE in India - No Tax liability in India - AT
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Income Tax:
TDS u/s 195 - payment made to non-residents towards the services rendered by them - non deduction of tds - the non-resident commission agents had rendered services outside India and they were not having P E in India - No TDS liability - AT
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Income Tax:
Penalty u/s 271(1)(c) - merely for the reason that the said expenditure was claimed as a revenue expenditure would not justify imposition of penalty under Sec. 271(1)(c), for the reason that the same was held by the A.O to be in the nature as that of a capital expenditure - AT
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Customs:
Classification of the imported goods - Insoluble Sulphur - presence of 20% oil as found during testing of the sample of the imported goods - classification of the goods ordered under CTH 2503 0010 - AT
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Indian Laws:
Appeal against Chartered Accountants Final Examination result - Merely because the alleged notification contains the term "published for general information" cannot lead to the conclusion that the said notification was actually published especially in view of the categoric statement by the respondent-institute that the said alleged notification was never published in any manner - HC
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IBC:
Corporate insolvency procedure - guarantee has not been invoked - guarantor cannot be deemed to be a defaulter, therefore, his case is not covered under clauses (c) and (h) of section 29A of the amended I.B. Code. Disqualifying the entire class of guarantors under clause (h) of section 29A would be discriminatory. - Tri
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Service Tax:
Refund claim - time limit - In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. - AT
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Service Tax:
Valuation - includibility - the inclusion of costs and expenditures in the gross taxable value by making provision in the Rules is repugnant to Section 66 and 77 of the Finance Act and to that extent is ultra vires. - AT
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Service Tax:
Banking and Financial Service - admittedly there is no transfer of the ownership of the goods at the end of lease, the same does not fall in the category of financial lease and falls in the category of operating lease - demand not sustainable - AT
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Service Tax:
Refund of unutilized CENVAT credit - at the time of availment of cenvat credit it was not disputed by the Revenue that these services are not ‘input services’. In the circumstances, at the time of claiming the refund claim, cenvat credit cannot be denied - AT
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Central Excise:
SSI exemption - calculation of aggregate value - various food preparations made and sold by the appellants in their kitchen/restaurants are generally covered by the Chapters 16 to 20 will not meet the legal requirement of applying the provisions of Notification 8/2003. - AT
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Central Excise:
CENVAT credit - Education cess and Higher education cess paid on CVD - If the 3rd education cess is considered as a levy on total excise duty, the obvious conclusion would be that the credit also admissible - the credit availed on the education cess paid for the third time by the appellants on the CVD portion is eligible. - AT
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Central Excise:
Classification of goods - PVC/ HDPE Pipes, HDPE Sprinkler - these pipes which were manufactured and cleared by them are intended for irrigational purpose in agriculture/ horticulture - the classification of the product under Chapter 39 is not sustainable - AT
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Central Excise:
CENVAT credit - marine insurance service - insurance for directors and supervisory officers arising in day-to-day functioning - credit allowed - AT
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Central Excise:
CENVAT credit - demerger - the transferor will be allowed to transfer the Cenvat credit lying unutilized to the transferee company - AT
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Central Excise:
CENVAT credit - utilization of ‘security service’ for the hostel maintained at their factory at a remote location - In order to run the factories smoothly, without any stoppages, they had constructed township/residential colonies near factory premises and accommodated the employees working in such factories - CENVAT credit is maintainable - AT
Articles
Notifications
Customs-
13/2018 - dated
15-2-2018
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Cus (NT)
Exchange Rates Notification No.13/2018-Custom(NT) dated 15.2.2018
GST - States-
31/ST-2 - dated
2-2-2018
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Haryana SGST
Rescinding the Haryana Government Excise and Taxation Department Notification No.04/ST-2 dated 09th January, 2018 under the HGST Act, 2017
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29/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in notification No. 125/ST-2, dated 14.11.2017 under HGST Act, 2017
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28/ST-2 - dated
25-1-2018
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Haryana SGST
Notification regarding exemption from state tax on motor vehicles on certain categories
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27/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in Notification No. 36/ST-2, dated 30.06.2017 under the HGST Act, 2017
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26/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in notification No. 35/ST-2, dated 30.06.2017 under HGST Act, 2017
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25 /ST-2 - dated
25-1-2018
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Haryana SGST
Notification to exempt Central Government share at profit petroleum from State Tax under HGST Act, 2017
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24/ST-2 - dated
25-1-2018
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Haryana SGST
Notification under section 148 to provide special procedure with respect to the payment of tax by registered persons supplying service by way of construction against transfer of development of right and vice-versa under HGST Act, 2017
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23/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in notification No. 48/ST-2, dated 30.06.2017 under HGST Act, 2017
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22 /ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in notification No. 47/ST-2, dated 30.06.2017 under HGST Act, 2017
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21/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment in notification No. 46/ST-2, dated 30.06.2017 under HGST Act, 2017
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20/ST-2 - dated
25-1-2018
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Haryana SGST
Amendment of notification No. 26/ST-2 dated 22.06.2017 for notifying e-way bill website under the HGST Act, 2017
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19/ST-2 - dated
25-1-2018
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Haryana SGST
Reduction of late fee in case of delayed filing of form GSTR-6
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18/ST-2 - dated
25-1-2018
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Haryana SGST
Reduction of late fee in case of delayed filing of form GSTR-5A
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17/ST-2 - dated
25-1-2018
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Haryana SGST
Reduction of late fee in case of delayed filing of form GSTR-5
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16/ST-2 - dated
25-1-2018
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Haryana SGST
Reduction of late fee in case of delayed filing of form GSTR-1
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14/ST-2 - dated
9-1-2018
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Haryana SGST
Corrigendum - Notification No. 126/ST-2, dated the 14th November, 2017
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04/ST-2 - dated
9-1-2018
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Haryana SGST
Notification regarding the date from which E-Way Bill Rules shall come into force under the HGST Rules, 2017
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03/ST-2 - dated
9-1-2018
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Haryana SGST
Waiver of the late fee payable for failure to furnish the return in FORM GSTR-4 under the HGST Act, 2017
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02/ST-2 - dated
9-1-2018
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Haryana SGST
Extending the due date for quarterly furnishing of FORM-GSTR1 under the HGST Act,2017 for taxpayers with aggregate turnover up to ₹ 1.5 Crore
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GST-1-2018/101 - dated
29-1-2018
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Punjab SGST
E-Way Bill for intra-state supplies in Punjab optional for 2 months (till 31.03.2018)
SEZ-
S.O. 663(E) - dated
13-2-2018
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SEZ
Central Government rescinds the Notification No. S.O. 39 (E) dated 15.01.2007 and S.O. 253 (E) dated 03.02.2010
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (2) TMI 983
Release of detained goods - Section 129 of the Central Goods and Services Tax Act as also the Kerala State Goods and Services Tax Act - Held that: - an identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - the writ petition is disposed of directing the competent authority to complete the adjudication provided for under Section 129 of the statutes - petition disposed off.
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Income Tax
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2018 (2) TMI 982
Validity of reopening of assessment - A.O. power to review in the absence of any fresh tangible material - eligible reason to believe - disallowance u/s 40(a)(ia) for non-compliance of the provisions of section 194(c) Held that:- Assessing Officer raised a specific query regarding the nature of the assessee’s business and the same was answered in writing by the assessee. The nature of the transaction was spelt out in detail. On the basis thereof the assessee’s contention that he was merely a commission agent was obviously accepted. The original assessment order proceeded on that basis. The subsequent proceedings for reopening were held to be on change of opinion. There is also held that there was no new information or material. The Tribunal on this basis and after following the judgments of Delhi High Court in Madhukar Khosla v. Assistant Commissioner of Income Tax (2014 (8) TMI 568 - DELHI HIGH COURT) and Orient Crafts Ltd. (2013 (1) TMI 177 - DELHI HIGH COURT) rightly allowed the appeal on the ground that the Assessing Officer was not entitled to assume jurisdiction under section 147 of the Act in the absence of any new information or material. - Decided in favour of assessee
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2018 (2) TMI 981
Addition on account of investment from undisclosed source - assessee was unable to furnish any sustainable documentary evidence with regard to his contention of being a farmer and that the purchase consideration was out of his agricultural income though his returns did not reflect any agricultural income - ITAT deleted the addition - Held that:- Land in the name of the assessee and Shri Niwas Thakur was shown in the audited balance sheet of the Company. Shri Niwas Thakur filed an affidavit dated 01.10.2010 to the effect that transfer of land was without consideration and for administrative reasons. MOU was entered between the Company and its Directors that the land bought in the name of the Directors shall be the sole property of the Company. The sale deed dated 16.10.2010, vide which the land under consideration was sold to M/s Oracle Realty Developers, showed that the consideration is to be paid to the Company. Even the AO in its remand report admitted that the sale proceeds were received by the Company. The bank statement of the Company fortified the said fact. The assessment of the Company was framed vide order dated 08.11.2011 under Section 143 (3) of the Act. On analysing the above mentioned evidence and fact, the addition was deleted. The question raised by the Revenue in the appeal is a question of fact and not a question of law, much less a substantial question of law. - Decided against revenue
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2018 (2) TMI 980
Assessment against non existent company - validity of reopening of assessment - Held that:- It is evident from the narration of facts that in the first instance the assessment was conducted in the name of a non existing entity. The DRP to whom the matter was directed by the first remand of the ITAT, was not directed to, in turn, require the AO to “better” the original incurable illegality and here the DRP clearly did that. The fact that the matter was remitted at the instance of the assessee who did not question the remand ipso facto does not, in any manner, further the Revenue’s contentions. This Court is of the opinion that the ruling in Spice Entertainment Ltd. ( 2011 (8) TMI 544 - DELHI HIGH COURT ) is categorical, in that, if the assessment is concluded in favour of a non existing entity, then notwithstanding Section 292B, the position does not improve. Applying Spice Entertainment Ltd. (supra), this Court had in Commissioner of Income Tax v. Dimension Apparels Pvt. Ltd. (2014 (11) TMI 181 - DELHI HIGH COURT) also held that the position taken or urged by the assessee cannot be held against it if the primary jurisdiction does not exist i.e. to conclude an assessment in the name of a non existing entity. - Decided against revenue
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2018 (2) TMI 979
Penalty u/s 271(1)(c) - concealment of income on the amount offered in the returns filed under section 153 (A) - undisclosed income - Held that:- We find that all the three conditions in the present case have been fulfilled because after the search and seizure, the assessee had admitted in his statement that income has been derived from the land deals in the present case and thereafter, he filed returns in pursuance of the notice issued to him under section 153 (A) of the Income Tax Act by declaring the same in the returns of income and further, the assessee had paid tax together with the interest on the undisclosed income thereafter. We further find that assessee had already paid tax along with interest, although belatedly, but there is no limitation prescribed for the same under Clause 2 of Explanation 5 to Section 271 (1) (c) as held by the Hon’ble Supreme Court in the case of Gebilal Kanhaialal HUF 2012 (9) TMI 297 - SUPREME COURT). - Decided in favour of assessee
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2018 (2) TMI 978
Treatment to Capital gain on sale of flat - STCG v/s LTCG - period of holding - possession held for more than 36 months - CIT-A treated as LTCG - Held that:- Interest in the property is created the moment the agreement to purchase is entered into in favour of the assessee accompanying with part payment. The date of possession is not material for deciding the period of holding by the assessee for the purpose whether the gain is long term or short term. CIT(A) has passed a reasoned and elaborate order for coming to the conclusion that the assets held by the assessee was long term asset and directed the AO to recompute the long term capital gain by allowing indexation on the cost of acquisition taking the date of purchase as 18.12.2006. The case of the assessee is also covered by a plethora of decisions of various High Courts and decisions of Coordinate Benches which has been referred to by the first appellate authority. - Decided against revenue
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2018 (2) TMI 977
Reopening of assessment - three items of income have escaped assessment - validity of reasons to believe - Held that:- A perusal of the reasons to believe reveals that the records on the basis of reasons for re-opening were recorded were available before the AO even at the time of original assessment proceedings as is apparent from the statement of computation of total income placed at page 1 of the paper book and also fortified by the discussions by the AO himself in the original assessment order passed under Section 143(3) r.w.s. 153A dated 22.12.2008 of the original assessment order. Thus we find that the AO has recorded the reasons on re-examination of the same records/information which were available at the time of framing the original assessment passed under Section 143(3) r.w.s. 153A of the Act. A review by the AO of his own order is not permissible under the Act as decided by the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) - Decided in favour of assessee
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2018 (2) TMI 976
Rectification of mistake - mistake apparent from records - determination of the residential status of the assessee for period under consideration - Unit Trust of India ( which is claimed to be government documents by the assessee) application forms/ receipts filed by the assessee w.r.t. subscription of US 64 securities issued by UTI in July 1995 which were subscribed by the assessee wherein the assessee declared herself to be Non Resident in the application form - Held that:- To determine the residential status of the assessee from the point of view of the 1961 Act, it is essential to know the period of stay outside India of an individual as is required under the provisions of Section 6 of the 1961 Act r.w.s. 2(30) which we are afraid that this document does not throw any light to conclude that the assessee was non-resident during the relevant period and had satisfied the conditions of being out of India for stipulated period(s). These documents are merely in the nature of self declaration and are not conclusive to determine residential status of the assessee as required under the provisions of 1961 Act. These are the documents for making investments in UTI in the US 64 securities offered by UTI for which self declaration by the assessee could be sufficient but to establish the residential status in India of the assessee from the view point of the 1961 Act , the assessee has to prove through cogent evidences such as passport to prove her stay outside India for stipulated period as per conditions stipulated u/s 6 of the 1961 Act. Scope of provisions of Section 254(2) is restricted to correction of the mistakes apparent from record and wherein in the instant case a conscious decision was taken by the DB of Tribunal which is not shown by the assesee to be a perverse view not sustainable in the eyes of law , and hence the same is not amenable to corrections within limited mandate of provisions of Section 254(2). Thus this contention of the assessee lacks merit and is hereby rejected. The assessee did not submit passport for relevant period nor any bank statements were submitted and it was claimed that bank statement and passport was lost. The tribunal has duly deliberated on these issues in its order in details and came to conclusions after due application of mind and the said view of the tribunal is not shown to be a perverse view dehors material on records and hence in our considered view there is no mistake apparent from records in tribunal order dated 17-03-2017 which is amenable to correction within limited mandate of provisions of Section 254(2) - Decided against assessee.
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2018 (2) TMI 975
Disallowance of management services fees - Held that:- Management service fee paid by assessee to Asia Investment Pvt. Ltd is allowable. As decided in assessee's own case [2017 (4) TMI 908 - ITAT PUNE] where there is nexus between the expenditure incurred and the purpose of business, then the revenue cannot put itself in the arm chair of the businessman to decide how much of the expenditure is reasonable.The expenditure incurred by the assessee on management fees in order to facilitate smooth running of its business is an allowable expenditure in the hands of assessee. - Decided in favour of assessee Addition on account of payment of Royalty to Dana Corp., USA. - TPA addition - Held that:- Since, identical issue has already been decided in favour of assessee by the Tribunal in assessment years 2009-10 and 2010-11 that where the payment of Royalty by the assessee to its associate enterprise Dana Corporation is @ 2.85%is liable to be considered at arm's length rate and no addition is warranted on this count. Accordingly, the claim of assessee is thus, allowed. In any case, the jurisdiction and power of TPO is to determine arm's length price of Royalty and the order of TPO holding that the assessee had not derived any benefit under the said Agreement is beyond the scope of TPO while benchmarking the international transaction for the purpose of determining arm's length price - Decided against revenue Warranty provision applicability - Held that:- DRP has given categoric finding that provision of warranty made by assessee are based on scientific analysis of the past data and represents a reliable estimate of obligation arising out of sales made during the relevant previous year. The ld. DR has not been able to controvert the findings of DRP. In Rotork Controls India P. Ltd.(2009 (5) TMI 16 - SUPREME COURT OF INDIA) has held that where provision for warranty is made on scientific basis, the same is to be allowed.- Decided against revenue
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2018 (2) TMI 974
Penalty u/s 271AAA - assessee offered additional income during search - Held that:- Penalty under section 271AAA of the Act can be levied only for the ‘specified previous year’ which is clearly defined by Explanation (b) to section and is limited to the said assessment years only. In the present case, search on the premises of assessee was carried out on 25.08.2011 and hence, the year of search is assessment year 2012-13. The years which are in appeal before us are relate to assessment years 2006-07 to 2010-11. Admittedly, none of the assessment years are the years of search. Secondly, the second condition of the due date for filing the return of income having not expired under section 139(1) of the Act is not applicable to assessment years 2006-07 to 2010-11 where the assessee was due to file the return of income us 139(1) of the Act much before the date of search. The assessee claims that it had furnished the said returns of income for the respective years before the date of search and the time limit prescribed under section 139(1) of the Act had already expired. Thus we hold that where the assessee though during the course of search had offered additional income, which was declared in the return of income in response to notice under section 153A of the Act; however, in view of specific definition of ‘specified previous year’, the rigours of section 271AAA of the Act are not attracted for assessment years 2006-07 to 2010-11. Accordingly, we hold so. Thus, the assessee is not liable for levy of penalty under section 271AAA of the Act for the said assessment years. Accordingly, we uphold the order of CIT(A) in deleting penalty levied under section 271AAA of the Act, though on different grounds. - Decided in favour of assessee. CIT(A) failure to exercise his coterminous powers in not initiating the penalty u/s 271(1)(c) after deleting penalty levied u/s 271AAA - Held that:- We find no merit in the plea of Revenue since before initiating penalty proceedings under section 271AAA and / or 271(1)(c) of the Act, clear satisfaction has to be recorded by Assessing Officer as to which section is attracted in the facts of case. Sub-section (3) to section 271AAA of the Act very clearly provides that no penalty under the provisions of section 271(1)(c) of the Act shall be imposed upon assessee, in respect of undisclosed income which is referred to in sub-section (1) to section 271AAA of the Act. Once the Assessing Officer has taken the step of initiating penalty under section 271AAA of the Act in respect of additional income offered consequent to search, then the Assessing Officer or any of the authorities below are precluded by provisions of the Act itself to initiate any action for levy of penalty under section 271(1)(c) of the Act. Accordingly, we hold so. - Decided against revenue
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2018 (2) TMI 973
Computation of LTCG - invoking of the provisions of section 50C - Identification of property - Held that:- A perusal of description of properties clearly indicate that the survey numbers giving description of property in development agreement dated 17-01-2004 are different from survey numbers of land which are subject matter of agreement dated 19-01-2004. Even the total area of land is different in both the agreements. Both the authorities below have failed to examine that the land which is subject matter of development agreement dated 19-01-2004 is different from the land which was mentioned in development agreement dated 17-01-2004. Thus, in the first instance the land which is subject matter of Long Term Capital Gain needs to be identified. Contention of the assessee that the transaction which has been subjected to tax in the present proceedings has already been offered to tax in proceedings arising from search operations u/s. 153A of the Act has been raised by assessee for the first time before the Tribunal. During the assessment proceedings the assessee never appeared before the Assessing Officer and apparently no such ground was raised by assessee before the First Appellate Authority. Therefore, we deem it necessary to remit this appeal back to the file of Assessing Officer for necessary verification and identification of the land before proceedings with the assessment of any gain arising from sale of land. - Decided in favour of assessee for statistical purposes.
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2018 (2) TMI 972
Penalty imposed u/s. 271AAB - income from commodity profit has been found during search u/s. 132 of the Act which is not reflected in the regular books of account - AO has accepted that during search the assessee has admitted u/s. 132(4) the income from speculative trading - Held that:- Since the assessee is not engaged in business or profession, he does not require to maintain the books of account as per sec. 44AA or sec. 44AA(2) of the Act, therefore, the assessee’s case falls in the second limb i.e. “or other documents” as stipulated u/s. 271AAB Explanation (c) (supra) which describes undisclosed income for the purposes of this section which is very important to adjudicate this issue. The question is when the search took place, the assessee’s transactions (in this case, the speculative transaction) has been found to be recorded in the “other documents” which is (retrieved from the assessee’s accountant’s drawer) and based on that the assessee declared ₹ 3 cr. during search and later returned income of ₹ 3 cr. as income under the head “Income from Other Sources” which was accepted by the AO in toto. We note that since the income under question (Rs. 3 cr.) was in fact entered in the “other documents” maintained in the normal course relating to the AY 2013-14, which document was retrieved during search, hence, the amount of ₹ 3 cr. offered by the assessee does not fall in the ken of “undisclosed income” defined in Sec. 271AAB of the Act. So, ₹ 3 cr. which was commodity profit recorded in the other document maintained by the assessee which was retrieved during search cannot be termed as “undisclosed Income” in the definition given u/s. 271AAB. Since ₹ 3 cr. cannot be termed as “Undisclosed Income” as per sec. 271AAB of the Act, no penalty can be levied against the assessee - Decided against revenue.
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2018 (2) TMI 971
TDS u/s 195 - withholding of tax - nature of payments made to Intelsat Global Sales & Marketing Ltd., UK on account of Transponder fee in terms of an agreement dated 29/12/2010 - Held that:- Relying on the judgment in the case of one of the payee, i.e. Intelsat Corporation US [2012 (9) TMI 1081 - DELHI HIGH COURT] we conclude that the assessee is not obligated to deduct tax at source on payments made for transponder services. Thus, on this aspect assessee succeeds. Allowability of interest u/s 244A on refund arising due to extra deposit of TDS u/s 195 - Held that:- It was a common point between the parties that the said issue was also before the Tribunal in the past, and vide order [2016 (12) TMI 1338 - ITAT MUMBAI], the same has been sent back to the file of Assessing Officer to decide in the light of the CBDT Circular No.11 of 2016 dated 26/04/2016. Following the aforesaid precedent, in this year too, we direct the Assessing Officer to follow the earlier order of the Tribunal(supra) on this aspect and decide the matter afresh and as per law. Thus, on this aspect assessee succeeds for statistical purposes.
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2018 (2) TMI 970
Validity of reopening of assessment - addition u/s 69C - bogus purchases - Held that:- The assessee had shown purchases from the above company of Shri Praveen Kumar Jain amounting to ₹ 20,96,965/-. The AO on examination of the records found that no actual purchases were made from these parties but their names were only used to inflate the business expenses and thereby reducing the income chargeable to tax. According to the AO, it is established on the basis of information provided by the Investigation Wing that purchase from the parties are bogus and the bogus purchases pertaining to the Assessment Year under consideration representing income of ₹ 20,96,965/- had therefore, escaped assessment. AO noted that it was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Hence reasons for reopening of the cases were recorded and notice u/s 148 was issued on 24-03-2014 which was duly served upon the assessee. It is also noted that copy of reasons recorded were supplied to the assessee alongwith notice u/s 142(1) and notice u/s 143(2) dated 21-04-2014. The AO on examination of purchase details noted that the assessee had shown purchases from M/s. JPK Trading Pvt. Ltd amounting to ₹ 20,96,965/-. As per the statement of Shri Praveen Kumar Jain, it was found that M/s. JPK Trading Pvt. Ltd had never sold any goods and were only issuing bogus sales invoices and charged commission. Thus AO was justified in reopening the case of the appellant for the year under consideration u/s 147 of the Act - Decided against assessee
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2018 (2) TMI 969
Income accrued in India - Referral fees received by the assessee from Credit Suisse Securities (India) Pvt. Limited - constitute Fees for Technical services - HELD THAT :- Merely because the fee was payable by the Indian Company to CSDB after execution of the work of the referred client is no ground to determine the nature of the payment. In this context, the Authority for Advance Rulings in the case of Cushman Wakefield(S) Pte. Ltd., [ 2008 (7) TMI 8 - AUTHORITY FOR ADVANCE RULINGS] has dealt with a somewhat similar situation, wherein the applicant was a resident of Singapore, who had earned commission from an India based entity for having referred customers. As per the Authority for Advance Rulings, such referral fee , being in the nature of commission was to be treated as being in the nature of business income ; both, under the Act as well as under the Indo-Singapore Double Taxation Avoidance Agreement (DTAA), and not as fees for technical services . Notably, the aforesaid decisions have also been referred and relied upon by the DRP in concluding that the referral fee is in the nature of commission to be taxed as business income and not as fees for technical services . In the course of hearing before us, no decision to the contrary has been brought out by the Revenue. For all the said reasons, we are unable to uphold the stand of the Assessing Officer that the impugned referral fee was a consideration in the nature of fees for technical services . Another factual aspect which is not in dispute is that CSDB has no PE in India and also the fact that assessee s PE in India i.e., Mumbai bank branch had no role to play in the performance of the referral activity in question. Neither the discussion in the draft assessment order and nor in the course of hearing before us any credible assertions to the contrary has been brought out by the Revenue. Thus, considering that the referral activity was undertaken outside India and assessee s Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee of ₹ 18,27,90,578/- earned by CSDB could not be construed to be attributable to assessee s PE in India and thus, the DRP rightly applied Article 7 of Indo- Swiss Double Taxation Avoidance Agreement (DTAA) and held the same to be non-taxable in India.- Decided in favour of assessee.
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2018 (2) TMI 968
TDS u/s 195 - payment made to non-residents towards the services rendered by them - non deduction of tds - existence of PE in India - income accrual in India - Held that:- The provision of section 5(2)(b) r.w.s. 9(1)(i) of I.T. Act are not applicable as the payee has not earned any income in India as the services by the foreign agents have been rendered outside India without having any PE or business connection in India.The Hon’ble Apex Court in the case of Toshoku (1980 (8) TMI 2 - SUPREME Court) held that commissions earned by the non-resident acting as selling agent for the Indian exporter wherein such non-resident was rendering services from outside India doses not accrue in India. Further the decision of the Hon’ble Supreme Court in the case of G.E. India Technology Centre P. Ltd. Vs. CIT ( 2010 (9) TMI 7 - SUPREME COURT OF INDIA ) has rightly supported the case of the assessee that tax is not deductible in the case of the assessee. Thus the non-resident commission agents had rendered services outside India and they were not having P E in India therefore, we uphold the decision of the ld. CIT(A) that the assessee was not liable to deduct tax on the commission paid to foreign agents - Decided in favour of assessee
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2018 (2) TMI 967
Rejection of books of accounts - additions made on account of unaccounted investment and unaccounted profits - variation of consumption of electricity was more than 15% - CIT-A deleted the addition - Held that:- We find, in group of cases with the lead case being Singla Concast Pvt. Ltd. (2017 (4) TMI 1310 - ITAT CHANDIGARH) has accepted that in view of norms outlined by the committee, there was no reason to reject the book results shown by the assessee who have reflected variation in the production pattern within the acceptable range as prescribed by the committee constituted. In view of the same and since as per the facts of the present case, the consumption of electricity is less then 15% of the yearly average the decision rendered by the I.T.A.T. in the case of Singla Concast Pvt. Ltd. (supra) will squarely apply to the present case following which we uphold the order of the ld. CIT(A) directing the Assessing Officer to accept the book result shows by the assessee and to delete the additions made on account of unaccounted profits/unaccounted investment. The contention of the ld. DR that the assessee having shown variation of more than 15% on the lower side of the average,we find, merits no consideration, since we agree with the ld. CIT(A) that lower consumption of electricity for the same quantum of production should be viewed positively and not adversely. Therefore, we agree with the Ld.CIT(A) that this cannot be the basis for rejecting the books of account of the assessee. In view of above, the grounds of appeal raised by the Revenue are dismissed.
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2018 (2) TMI 966
Revision u/s 263 - as per CIT-A assessee was not eligible for deduction u/s 11 and 12 of the I.T.Act and the status of the assessee should be treated as an A.O.P. - Held that:- The Cochin Bench of the Tribunal had held in assessee’s own case for assessment year 2010- 2011 [2018 (2) TMI 857 - ITAT COCHIN] that activities of the assessee are charitable in nature and was not hit by the proviso to section 2(15) of the I.T.Act, and consequently, the assessee was entitled to exemption u/s 11 and 12 of the I.T.Act. As we hold that there is no error in the assessment orders for earlier assessment years in granting exemption u/s 11 and 12 of the I.T.Act the revisionary order passed u/s 263 is bad in law. - Decided in favour of assessee
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2018 (2) TMI 965
Assessment proceedings u/s. 153C - disallowance of the claims of expenditure u/s. 37 (1) - principles of res judicata OR consistency - Held that:- We find that the documents do not disclose any undisclosed income on part of the assessee for any of the above AY's . The AO had disallowed business losses and that clearly prove that seized documents were of no relevance for the AO to make the disallowance. We allow the additional grounds raised by the assessee for all the three AY. s and decide the same in its favour. Thus, the assessment orders passed by the AO. s fail on the touch-stone of jurisdictional validity for AY. 2008-09, 2010-11 and 2011-12. The cases relied upon by the assessee, before us, also support the views taken by us. Therefore, we hold that the orders passed by the AO. s and confirmed by the FAA are not valid either on jurisdictional question or on merits. So, revering the orders of the FAA, we allow the appeals filed by the assessee-company. The Hon’ble Bombay High Court in the case of Gopal Purohit (2010 (1) TMI 7 - BOMBAY HIGH COURT) has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. While upholding the principles of res judicata the FAA has not demonstrated as to how the facts of AY. 2009-10 were different from the facts of other three AY's. especially of AY. 2008-09. This one more reason to reverse the order of the FAA. - Decided in favour of assessee.
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2018 (2) TMI 964
Addition on account of bogus purchases - purchases made from non - genuine parties - Held that:- The assessee is not a wholesale trader of steel, but is a manufacturer of steel items. It had purchased and used steel from the parties, who have not issued bills. PKS and others from whom the assessee has claimed to have purchased steel, had not supplied goods to it. But consumption of steel has not been questioned-rather sales have been accepted as it is. Unlike the matter of Bholanath Poly Fab (2013 (10) TMI 933 - GUJARAT HIGH COURT) it is not a case where the cheque issued by the assessee have been encashed by unknown persons. At least the AO has not alleged that. It is a case of purchases made from non - genuine parties and not a case of bogus purchases. The FAA had adopted a formula to determine possible profit out of purchases made from unknown suppliers. There is no legal or factual infirmity in her order. No hard and fast rules can be applied in such cases. The rate of profit would vary from business to business and case to case. So, we are not interested in interfering with her order. Confirming the same, we decide first ground of appeal against the AO. Addition on account of commission expenses - Held that:- FAA had rightly held that no ad hoc disallowance can be made without relying upon any cogent material. Confirming her order, we dismiss second ground, raised by the AO. Disallowance u/s 14A - time limit for issue of notice under section 143(2) - Held that:- The original return for the year under consideration was filed on 30/09/2009, the time limit for issue of notice under section 143 (2) was six months from the end of the financial year in which the return was filed, that the search took place on 29/04/2011, that time limit for issue of notice at expired on the date of initial of search, that the assessment for the year under appeal could not be said to be pending or abated, that the impugned order did not reflect that any material emanating from the search led to the disallowance, made by the AO, under section 14A. See All Cargo Global Logistics Ltd [2017 (6) TMI 309 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2018 (2) TMI 963
Penalty u/s 271(1)(c) - expenses incurred on Linkside building claimed as capital expenditure or revenue expenditure - defective notice - non specify the limb of Sec. 271(1)(c) for which the penalty proceedings had been initiated - Held that:- We find that the issue involved in the present case is squarely covered by the case of Meherjee Cassinath Holdings Vs. ACIT, Circle-4(2), Mumbai (2017 (5) TMI 904 - ITAT MUMBAI) wherein concluded that as the non striking off the irrelevant charge in the notice clearly reflects the non application of mind by the A.O, therefore, the order passed under Sec. 271(1)(c) in the backdrop of the said jurisdictional defect would be rendered as invalid and void ab initio. We find ourselves to be in agreement with the view taken by the CIT(A) that now when the only valid return of income was filed by the assessee as on 31.03.2011, therefore, the A.O could have imposed penalty only by pitting the income assessed vide order dated 19.03.2015, as in comparison to the income returned by the assessee in its return of income filed on 31.03.2011 - assessee had claimed the expenditure incurred on Linkside building as a capital expenditure in its original return of income, therefore, there was no basis for characterising the same as the concealed income of the assessee - as the assessee had duly disclosed the expenditure incurred on Linkside building in its return of income, therefore, merely for the reason that the said expenditure was claimed as a revenue expenditure would not justify imposition of penalty under Sec. 271(1)(c), for the reason that the same was held by the A.O to be in the nature as that of a capital expenditure. - Decided in favour of assessee
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2018 (2) TMI 962
Disallowance @ 10% of Labor Charges - Non deduction of tds - non-availability of supporting evidence - Held that:- AO has not brought on record any cogent reasons for making the disallowance of the above stated amount. It is not the case that the expenses were considered to be bogus or unreasonable. The allegation of the AO is that the vouchers were handmade. There are certain situations and circumstances where the external documents in support of the expenses are not available. One of such expense appears to be labour charges in he facts and circumstances of the given case. It is because the assessee is a Government Contractor which is labour intensive activity. Therefore the AO needs to refer to the earlier year financial statement to ensure unreasonable expenses has been claimed by the assessee. But no such exercise was carried out by the AO. - Decided against revenue. Addition on account of unverifiable sundry creditors - trade creditors could not respond to the notice issued u/s 133(6) - Held that:- It is undisputed fact that all the trade creditors appearing in the balance-sheet are arising out of the expense of material purchased by the assessee. Thus all the purchases have been duly accepted by the AO and same was not disputed. However, the trade creditors which are emanating from the purchases have been disallowed merely on the ground of non-response of notice issued to them u/s 133(6) of the Act. In our considered view, the trade creditors cannot be disturbed without disallowing the corresponding purchase. - Decided against revenue. Addition made being 5% of material purchase on the ground that assessee failed to produce supporting evidence - Held that:- Once the AO has reached to a conclusion that assessee has failed to produce the books of account and no supporting evidence has been filed then he should have disallowed entire amount of expense or he should have rejected the books of account and should have framed the assessment u/s. 144. We also observed in the absence of any documentary evidence the AO should have referred to the historical data of the assessee for making the disallowance in scientific manner but in the instant case, AO has made the disallowance based on his surmise and conjecture. AO arbitrarily has disallowed @ 5% of material purchase and had accepted 95% of the expense which is contrary to the finding of AO. It is also important to note that the assessee has declared net profit @ 6.5% which is quite reasonable in the line of government contractor business.- Decided against revenue.
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Customs
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2018 (2) TMI 961
Provisional release of goods - import of Heavy Melting scrap at ICD, OWPL Ludhiana declaring the grade of the scrap as ISRI 207 - said goods were examined and on detailed examination of the consignment declared as Heavy Melting scrap ISRI code 207, the imported goods were found containing CR sheets/sheet cutting cut to various sizes weighing 132.895MT and 159.575MT respectively - mutilation of goods. Held that: - As there is divergent views of the Members of this Tribunal, therefore the matter may be placed before the Hon'ble President to appoint third Member to resolve the following issue: - Whether the goods can be released provisionally to the appellant as per the terms and conditions of Para 10 of this order, as held by Member (Judicial) - Matter referred to Third Member.
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2018 (2) TMI 960
Refund claim - credit of amount to Consumer Welfare Fund - Section 27(2) of the Customs Act, 1962 - Held that: - since the refund claim does not pertain to only the said amount and also relates to the customs duty and the CVD component, Chartered Accountant certificate cannot be considered for deciding the issue regarding applicability of the doctrine of unjust enrichment - the appellant has not produced any other evidence to show that it had not passed on the duty incidence to any other person - transferring the refund amount by the authorities below to the Consumer Welfare fund is not faulted - appeal dismissed - decided against appellant.
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2018 (2) TMI 959
Concessional rate of duty - N/N. 97/04 dated 17.9.2004 - non-fulfillment of condition of Notification to earn foreign exchange within eight years from the date of issue of license - Held that: - admittedly, in the present case, the appellant has not been able to furnish the EODC certificate showing the fulfillment of conditions of the Notification. In view of the non-submission of EODC certificate, appellant is not entitled to the benefit of N/N. 97/2004 - appeal dismissed - decided against appellant.
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2018 (2) TMI 958
Valuation - exported steel plates - goods overvalued to get higher DEPB benefits - Held that: - no active involvement of the officers has emerged from the available records except carelessness on their part. The value declared by the exporter has not given any benefit to the officer. When it is so, there is no justification in the impugned order. Penalty of Rs One lakh each on the appellants set aside - remaining order upheld - appeal allowed in part.
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2018 (2) TMI 957
Penalty on Shri Radheshyam Rander u/s 112 (a) and 112 (b) of the Customs Act, 1962 - 100% EOU - violation of import condition - detailed investigations carried out revealed that M/s. STC had diverted the raw silk imported duty free illegally into the domestic market in gross violation of the provisions of the EOU scheme - Held that: - the detailed and timely investigation carried out by DRI has unearthed the illegal activities of M/s. STC. It was found that M/s. STC has diverted the duty-free imported silk goods in total violation of the EOU Regulations - investigations further clearly established the role played by Shri Radheshyam Rander in abetting such diversion by procuring the goods from M/s. STC and disposed of the same for a commission of 3.5%. Considering the role played by Shri Radheshyam Rander, he is liable for penalty under Section 112 (a) and 112 (b) of the Customs Act, 1962 - quantum of penalty reduced. Appeal allowed in part.
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2018 (2) TMI 956
Rejection of declared value - Polyester Zipper Rolls from China - claim of the appellant was rejected in the impugned order only on the ground that they failed to produce the bills of entry - Held that: - while taking contemporaneous imports for comparison of assessable value, it is necessary to examine that such comparison are made with declared value and not with already enhanced value. Further, when there are multiple declared values, during the material period, it is an accepted principle that lowest price of such comparable value will be considered for re-determination of value of goods, whose original declared value was rejected. None of these principles have been followed in the present assessment - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 955
Short levy of Customs Duty - only ground on which Revenue has challenged the impugned order is that certified shore tank receipt certificates were not available on record - Held that: - The customs duty is to be charged only on the basis of the actual quantity of crude receipt in the shore tank - After a perusal of the appeal records, it is found that the original authority has already perused copies of the respective shore tank receipt certificates and has finalised the provisional assessments - appeal dismissed - decided against Revenue.
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2018 (2) TMI 954
Mis-declaration of imported goods - heavy melting scrap - redemption fine - penalty - Held that: - at the time of examination, neither the appellant asked for examination of the report nor disputed the same instead of that he wrote a letter that they have no objection for holding by the department that 142 MT is re-rollable material and the appellant was ready to pay differential customs duty on the said material. As the said fact is on record that the classification of the goods question as re-rollable material has not been disputed before clearance, in that circumstance, the appellant can not agitate the same at this stage. Redemption fine - penalty - Held that: - the goods were re-rollble material and the same has been admitted by the appellant on pointing out by the Revenue. Therefore, the goods have been mis-declared by the appellant - redemption fine and penalty rightly imposed. Appeal dismissed - decided against appellant.
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2018 (2) TMI 953
Refund of SAD - only reason why the refund claims were rejected by the original authority was that more than on refund claim was filed in a month which is not in conformity with the CBEC circular No.6/2008, according to which the importers are required to file only one consolidated claim per month for refund in terms of N/N. 102/2007 - Held that: - since the notification itself does not provide for such a condition that only one refund claim is to be filed within a month, refund is allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 952
Valuation - ship demurrage charges - includibility - Held that: - the issue of ship demurrage charges has been settled by the Hon’ble Supreme Court in favour of the assessee in CCE, Mangalore Vs. Mangalore Refinery and Petrochemicals Ltd. [2016 (1) TMI 325 - SUPREME COURT], where it was held that The demurrage charges are admittedly incurred after the goods reached at Indian ports and, therefore, it is a post-importation event. Such charges, therefore, cannot form part of the transaction value - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 951
Classification of the imported goods - Insoluble Sulphur - Department was of the view that because of the presence of oil, the goods will not be classifiable under Customs Tariff Entry 2503 0010 which is applicable to Sulphur but will be classifiable under CTH 3812 3030 - Held that: - The imported goods have been declared as Insoluble Sulphur but the doubt in classification has arisen because of the presence of 20% oil as found during testing of the sample of the imported goods - classification of the goods ordered under CTH 2503 0010 - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 949
Absolute confiscation - Gold - smuggling - restricted goods - penalty - Held that: - the course of investigation made they submit that they have procured the gold from the dealers in open market but could not identify or could not produce any licit document for procurement of gold from the dealers in open market. As per Section 123 of the Act, the burden is on M/s. Keshavlal Khemchand to show the source of procurement of the said gold which they have failed to do so - the penalty on Keshavlal Khemchand is rightly imposed. Confiscation of Gold - Held that: - the source of procurement of the gold has not been established - the gold is rightly confiscated. Appeal dismissed - decided against appellant.
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2018 (2) TMI 948
Penalties u/s 114AA of the Customs Act 1962 - smuggling of MOP in the guise of ‘Bentonite Powder’ - penalty on N.A. Jayaram - charge against the N.A Jayaram is that he has issued invoices of Muriate of Potash (MOP) in the name of ‘Bentonite Powder’ - Held that: - it is admitted by the appellant that they have issued invoice from Sakaleshapur as the invoice in question has been issued by the appellant in the case of MOP in the guise of ‘Bentonite Powder’ and without detection of DRI the said activity of the appellant could not have been reliable - penalty rightly imposed. Penalty on Mehaboob Khan has been imposed on the basis of transaction between Shri N.A. Jayaram and Shri Mehaboob Khan - Held that: - Revenue has no positive evidence against the Mehaboob Khan therefore penalty against Shri Mehaboob Khan is set aside - penalty set aside. Penalty on N.J. Shyla - allegation against Smt N.J. Shyla is that he has taken godown on rent in which MOP was stored by Shri N.A. Jayaram - Held that: - The fact of storage by N.A. Jayaram has not been disputed and it is a case of smuggling of MOP therefore the penalty on Shri N.A. Jayaram is imposed - quantum of penalty reduced. Penalty on Rajesh Balar - allegation against Shri Rajesh Balar is that he has provided details of overseas buyer and also provided test reports of Bentonite Powder of M/s. SGS India Pvt. Ltd. Chennai - Held that: - the fact on records that the test report has been provided by Shri Rajesh Balar therefore the culpability of Shri Rajesh Balar stands proved - penalty upheld but quantum reduced. Appeal allowed in part.
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Insolvency & Bankruptcy
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2018 (2) TMI 986
Corporate insolvency process - existence of dispute - Held that:- We find that there is an ‘existence of dispute’ pending even before the issuance of demand notice under sub-section (1) of Section 8 of the I & B Code. In view of ‘existence of dispute’, we are not inclined to interfere with the impugned order. In absence of any merit also, the appeal is dismissed.
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2018 (2) TMI 985
Initiating Corporate Insolvency Resolution Process - Held that:- In the case in hand, it is an undisputed fact that Corporate Debtor is a going concern and has about 1178 employees and workmen on its Roll. RP has also admitted that corporate debtor is a going concern. Section 33(7) also provides that order of liquidation shall be deemed to be a notice of discharge to the officers, employees and workers of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process. Regulation 32 also provides provision for the manner of sale during liquidation process which shows that it can be by way of slump sale and slump sale means the transfer of an undertaking as a whole. In the light of the order of the Hon’ble Supreme Court in case of Allahabad Bank (2000 (9) TMI 931 - SUPREME COURT OF INDIA), we pass following orders in addition to the orders made above. (1) The Liquidator shall try to dispose off the Corporate Debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Corporate Debtor as a going concern will be only three months from the date of the order, if the process of sale as a going concern is failed during this period, then process of the sale of the assets of the company will be according to the provisions of sale of asset of the Corporate Debtor prescribed under section 33, Chapter VI of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. In case it is not concluded within this period, the order of this Court directing the sale of the company as a going concern shall stand set aside and corporate debtor to be liquidated in the manner as laid down in Chapter III of the Liquidation Process provided in Insolvency & Bankruptcy Code. (2) The Liquidator is further directed to issue a public announcement stating that the Corporate Debtor is in liquidation. (3) It is also ordered that copy of the order be sent to the Registrar of Companies with which the Corporate Debtor is registered. It is further declared that subject to provision of section 52, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. Provided that a suit or other legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor, with the prior approval of the Adjudicating Authority. Above provision shall not apply to legal proceedings about such transactions, as may be notified by the Central Government in consultation with any Financial Sector Regulators.
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2018 (2) TMI 984
Corporate insolvency procedure - Resolution Applicant for transmitting to the Committee of Creditors for taking immediate steps - Held that:- In the case in hand, the guarantee has not been invoked, and the personal guarantor has not committed any default. No demand has been made under guarantee. Therefore, no default in the payment of dues by the guarantor has occurred. During the moratorium period, the guarantee cannot be invoked. Thus, present Resolution Applicant is not barred by clause (c) and clause (h) of section 29A of the I.B. Code. It is pertinent to mention that in the case in hand the extended period for submission of Resolution Plan is going to expire on 23rd Dec 2017. The Resolution Applicant has submitted the revised Resolution Plan after deliberate discussion in consecutive meetings of CoC, and the same was under consideration meanwhile IB Amendment Ordinance promulgated on 23rd Nov 2017. Aims and objective of the Ordinance were to prohibit certain persons from submitting a Resolution Plan who, on account of their antecedents, may adversely impact the credibility of the processes under the Code. It is clear that contract of guarantee under which no claim has been made and which need not be performed cannot be treated as a subsisting or enforceable contract for clause (h) of section 29A, as the liability to pay for a guarantor arises when the debt is crystalised. If the guarantee is not invoked and demand is not made on the guarantor, debt payable by him is not crystalised. The Company Application has been decided to clarify the position of the Resolution Applicant, who happens to be the personal guarantor of a corporate debtor, against whom guarantee has not been invoked, and demand has not been made, regarding his eligibility to submit a resolution plan. In such a situation guarantor cannot be deemed to be a defaulter, therefore, his case is not covered under clauses (c) and (h) of section 29A of the amended I.B. Code. Disqualifying the entire class of guarantors under clause (h) of section 29A would be discriminatory. However, it is to be made clear that we have clarified the legal position only and CoC has to take independent decision on the Resolution Plan of the applicant.
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Service Tax
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2018 (2) TMI 950
Refund of unutilized CENVAT credit - input services - Rule 5 of Cenvat Credit Rules, 2004 - Held that: - in respondent’s own case M/s. Apotex Pharmachem India Pvt. Limited Versus Commissioner of Central Excise, Customs and Service Tax, Bangalore [2017 (2) TMI 54 - CESTAT BANGALORE] this Tribunal held that these services are ‘Input Services’ and respondent is entitled for refund claim filed by them - appeal dismissed - decided against Revenue.
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2018 (2) TMI 946
Refund claim - time limit - Section 11B of the Central Excise Act, 1944 - whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received? Held that: - there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, completely ignoring the provisions of Section 11B may not be appropriate. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give it meaning such that the objective of the provisions; i.e. to grant refund of unutilized CENVAT credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Service Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Remittance Certificate (FIRC) is definitely relevant. In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. The matter reverted to the regular Benches for deciding the respective appeals.
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2018 (2) TMI 945
Valuation - includibility - freight charges and equipment rental charges etc. - The department was of the view that as per Rule 5(1) of Service Tax (Determination of Value) Rules 2006, any expenditure or cost which are incurred by the service provider in the course of providing taxable services are to be treated as consideration and has to be included in the value of taxable services for levy of service tax - sub-rule 1 of Rule 5 of Service Tax (Determination of Value) Rules 2006 Held that: - The applicability of Rule 5 (1) was considered by the Hon’ble High Court of Delhi in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2012 (12) TMI 150 - DELHI HIGH COURT]. The Hon’ble High Court held that the inclusion of costs and expenditures in the gross taxable value by making provision in the Rules is repugnant to Section 66 and 77 of the Finance Act and to that extent is ultra vires. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 944
Valuation - includibility - reimbursement of certain expenditure incurred on behalf of the clients - Held that: - Regarding exclusion of reimbursement expenses, it is clear that the said exclusion can be allowed on satisfactory proof of documents specifically to the effect that these are on actual basis as per the arrangement between the client and the appellant. This can be easily verified with the supporting documents to be submitted by the appellants - Admittedly, the documents were not fully available at the time of proceedings before the original authority. Now, the appellant assures that all the required documents will be submitted for the scrutiny of the original authority to his satisfaction. The matter is remanded back to the original authority for a fresh consideration - appeal allowed by way of remand.
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2018 (2) TMI 943
Benefit of reduced penalty u/s 78 - non-discharge of service tax - extended period of limitation - Held that: - once the demand of service tax liability for the period 01.10.2005 to 31.07.2008 is demanded under the show cause notice dated 17.02.2011, it is obviously done by invoking the extended period. If there is a demand by invoking extended period for the payment of service tax, in my view, the provisions of Section 78 will have to be followed, giving relief of payment of reduced penalty - Adjudicating authority will have to requantify the amount of service tax liability and appropriate the amount by the appellant towards tax liability and interest and extend benefit pay of pending 25% of the amount of such requantified amount of tax liability, and also appropriate the amount which has been paid by the respondent towards penalty. Appeal disposed off.
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2018 (2) TMI 942
Classification of services - services of loading of coal at railway goods shed, transporting & unloading same at the premises - whether the activity under taken by the respondent would merit classification under cargo handling service or otherwise? - Held that: - the respondent was required to do the transportation of coal from the railway head to the factory premises shifting of various materials with the premises - the first appellate authority has correctly Interpreted the clauses of agreement entered by respondent - appeal dismissed - decided against appellant.
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2018 (2) TMI 941
CENVAT credit - modernization, renovation or repairs of premises - Held that: - there is no dispute as to the services were availed by the appellant, in respect of modernization, renovation or repairs of premises - The First Appellate Authority has also recorded that these services are covered under inclusive part of the definition. If these services are undisputedly, used for modernization, renovation or repair of premises the question of denying the CENVAT credit of the service tax paid on the disputed services does not arise - Both the lower authorities have erred in rejecting the claim of appellant that they are eligible for CENVAT credit an amount of ₹ 30,44,044/-. Appeal disposed off.
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2018 (2) TMI 940
CENVAT credit - Commission agent services - common inputs and input services which are used to utilise for trading activity - Held that: - in respect of service tax paid on Commission Agent Services, appellant is not eligible to avail cenvat credit - any commission paid for procurement of business cannot be considered is in relation to business activity and hence held to be ineligible - credit not allowed. CENVAT credit - trading activity being exempted services - Held that: - Since the issue is settled that trading activity is an exempted service, appellant needs to follow the rule 6(3A) of Cenvat Credit Rules, 2004 and reverse the cenvat credit availed on trading activity - matter needs verification of the reversal done is in accordance with the law or otherwise. Decided partly against appellant and part matter on remand.
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2018 (2) TMI 939
Classification of services - cargo handling services or transportation services? - appellants have argued that loading and unloading done is a kind of self-service necessary to undertake the service of transportation undertaken by them. Held that: - Loading in the riverbed is not a simple activity of loading as the sand has to be mined using an excavator or other machine. The location of riverbed is not fixed. The loading in the stockyard is, however, simple activity of loading. The contract describes it to be a contract for excavation from riverbed, transportation from riverbed to warehouse and transportation from warehouse to bunker. Rates have been quoted for both on per MT basis but the rate changes with the distance between the origin and destination. In these circumstances it is to be examined if the activity is primarily an activity of transportation or of cargo handling. There is no doubt that the activity of removing/excavating sand from the riverbed amounts to mining activity. However for the period in dispute mining was not a taxable service. In any case, the activity of movement of sand from warehouse to bunker cannot be considered as mining activity. From the terms of the contract it is apparent that the prime purpose of the contract is to bring the sand from the riverbed/ warehouse to the bunker. The loading or unloading are merely necessary requirements to complete activity of movement of the sand. The contract is primarily intended for the purpose of transportation of sand and the activity of loading/unloading is merely incidental. No tax under the head of Cargo Handling Service can be levied in these circumstances. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 938
Classification of service - GTA Service - respondent is engaged in carrying the sugarcane from the collection point to its factory by individual truck operators - whether classified under GTA Service or otherwise? - Held that: - an identical issue has came up before the Tribunal in the case of M/s. Ashoka Marbles Pvt. Ltd. Vs. CCE, Jaipur I [2017 (9) TMI 711 - CESTAT NEW DELHI], where it was held that the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp), and hence there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency - demand set aside - appeal dismissed - decided against Revenue.
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2018 (2) TMI 937
Business Auxiliary Service - non-payment of service tax - Held that: - the issue already stands decided in favour of the appellant by the Tribunal in the case of CST, Mumbai-I Vs. Sai Service Station Ltd. [2013 (10) TMI 1155 - CESTAT MUMBAI], where it was held that circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount, no demand - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 936
Banking and Financial Service - appellant is engaged in the financial leasing of equipment and machines under the agreement named as Fixed Period Rental Agreement - Held that: - admittedly there is no transfer of the ownership of the goods at the end of lease, the same does not fall in the category of financial lease and falls in the category of operating lease - demand not sustainable. Business Auxiliary Service - it was alleged that appellant is providing Business Auxiliary Service for the foreign entity, namely, M/s Canon Singapore Pvt. Ltd. and the services provided do not qualify as export of service under the Export of Service Rules, 2005 - Held that: - The terms of the authorized distributor agreement are clearly on principal to principal basis - for the previous period 2003-2008, the Department has accepted the view that the appellant is carrying out the sales and promotion on their own behalf. Hence, these activities are not covered under Business Auxiliary Service”. Management, Maintenance and Repair Service - import services - recipient of services - reverse charge mechanism - Held that: - it is difficult to agree with the finding of the Ld. Commissioner (A) that it is not an export of service. Since it will be export of service, in that circumstances too, no service tax is leviable and the demand on this issue is therefore unsustainable. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 935
Goods Transport Operator services during the period 16/11/1997 to 01/06/1998 - reverse charge mechanism - Department was of the view that the service tax is liable to be paid by appellant as a recipient of service on reverse charge basis, for the above period - Held that: - Hon’ble Supreme Court in the case of CCE, Vadodara-I Vs. Gujarat Carbon & Industries Ltd. [2008 (8) TMI 4 - SUPREME COURT] has held that In respect of GTA, the liability to file return was cast on the appellant’s u/s 71A. The class of persons who come under Section 71A is not brought under the net of Section 73. Therefore, the show cause notices issued u/s 73 are not maintainable - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 934
Business Auxiliary Service - non-payment of service tax - Held that: - the issue already stands decided in favour of the appellant by the Tribunal in the case of CST, Mumbai-I Vs. Sai Service Station Ltd. [2013 (10) TMI 1155 - CESTAT MUMBAI], where it was held that circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount, no demand - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 933
Penalty - wrongly availed CENVAT credit, reversed alongwith interest as soon as pointed out - Held that: - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX Versus M/s ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [2011 (9) TMI 114 - KARNATAKA HIGH COURT], where it was held that The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid. Keeping in view the conduct of the appellant, it is a fit case for invoking provisions of Section 80 of the Finance Act, 1994 for waiving the penalty which is imposed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 932
Condonation of delay of 256 days in filing the appeal before the Commissioner(Appeals) - Held that: - as per Section 85(3) which is applicable during the relevant period, which provides that an appeal shall be presented within three months from the date of receipt of the decision or order of the authority, relating to service tax, interest or penalty - Further the proviso to this section provides that the Commissioner of Central Excise(Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 3 months, allow it to be presented within a further period of three months. In this case, even after allowing the condonation of 3 months, still the appeal is beyond the time and therefore the Commissioner(Appeals) has rightly dismissed the appeal on limitation. Appeal dismissed.
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2018 (2) TMI 931
Levy of service tax - telecommunication services - Department was of the view that such inter connection usage charges are leviable to service tax under the category of ‘leased circuits’ - Held that: - the leviability of service tax on inter connection usage charges has been the subject matter of various appeals which stand decided by the Tribunal in favour of the telecom service providers - In the case of Bharti Airtel Ltd. Vs. CST, Ahmedabad [2007 (3) TMI 246 - CESTAT AHMEDABAD], where it was held that CBEC Circular No. 91/2/ 2007-S.T. dated 12-3-2007 clarified that the inter-connection usage charges will be chargeable to duty from the date of the Finance Bill of 2007 becomes an Act and for the earlier period such charges will not be subject to service tax - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 930
Stay of impugned order - Refund of service tax paid on certain construction activities carried out by them during the period 01.04.2015 to 29.02.2016 - Held that: - The learned Commissioner (Appeals), vide the impugned order, has remanded the matter to the original authority for fresh adjudication of the refund claim filed by the respondent. Inasmuch as this is only remand, we find no reason to interfere with the same. The original authority is directed to pass de novo orders in respect of the refund claim filed by respondent on the basis of law without getting influenced by the observations made in the impugned order - appeal disposed off.
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2018 (2) TMI 929
CENVAT credit - angles, channels and beams etc., used to erect the towers and pre-fabricated buildings on which transmission equipments were installed - Held that: - identical issue has been decided by this Bench in M/s. Bharat Sanchar Nigam Ltd., Versus CCE, C & ST, Hyderabad-III [2017 (2) TMI 439 - CESTAT HYDERABAD], wherein the Bench on merits held against BSNL, holding that Cenvat Credit is not to be allowed on the angles, channels and beams etc., Which are used for fabrications of transmission towers it also held that demand beyond the period of limitation from the date of Show Cause Notice, is unsustainable and penalties are not warranted - demand within the limitation period from the date of issuance of Show Cause Notice is upheld with interest and penalties are set aside - appeal disposed off.
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2018 (2) TMI 928
GTA service - N/N. 35/2004-ST, dated 03.12.2004 - Department took the view that notification exemption is not available to appellant as there was no evidence to show that the conditions of the notification were fulfilled - Held that: - Notification No. 32/2004-ST restricted the service tax liability on taxable value in respect of services provided by Goods Transport Agency (GTA) to 25% of the gross amount charged. This notification was rescinded w.e.f. 01.03.2006 by notification No. 2/2006-ST, dated 01.03.2006. However, the exemption allowing for discharge of service tax liability only on 25% of the gross amount charged by the GTA was continued by notification No. 01/2006-ST, dated 01.03.2006, without any conditions on declaration etc. CBEC and in particular the circular No. 137/154/2008-CD.4, dated 21.08.2008, clarified that even for the past cases before the extension of benefit of 75%, abatement to GTA services unconditionally (by notification No. 13/2008, dated 1.3.2008), the benefit of such abatement will be available to the appellant without requirement of any specific endorsement on every consignment note, but merely on general declaration from GTA - In the instant case, from the facts it is seen that the appellants have obtained such undertaking letters from concerned transporters. This being so, the confirmation of demand is in contradiction to the clarifications of CBEC themselves vide circular dated 21.08.2008 - demand do not sustain. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 927
100% EOU - Refund claim - Renting of Immovable Property for parking space - Supply of Tangible Goods for Cafeteria - rejection on the ground that the services for which they filed refund claim are not input services as per Rule 2(l) of the CCR 2004 - Held that: - the Renting of Immovable Property for parking space is a part of the output service as without that space the persons visit to the office of the appellant cannot reach to the office and for that purpose, the parking space is required. Therefore, these parking space is necessary for providing the output services of the appellant - refund allowed. Supply of Tangible Goods for Cafeteria - Held that: - the employees of an output service provider are required to avail the services of the cafeteria which is essential for the employees. If cafeteria services have not been provided to the employees, the efficiency of the employees shall come down as they have to go outside the premises for cafeteria and they will not able to work in their full capacity - refund allowed. Also, refund claim cannot be denied merely on the premise that services in question on which cenvat credit remained unutilized in cenvat credit are not ‘Input Services’. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 926
CENVAT credit - input/input services - Revenue is of the view that as the goods exported by the respondent is an exempted goods, therefore as per Rule 6(1) of the Cenvat Credit Rules 2004, they are not entitled to cenvat credit on input/input services used for manufacturing of exempted goods - Held that: - identical issue decided in the case of JOLLY BOARD LTD Versus COMMISSIONER OF CENTRAL EXCISE [2014 (3) TMI 124 - CESTAT MUMBAI], where it was held that CENVAT credit used in the manufacture of final product being exported irrespective of the fact that final product are otherwise exempted by provisions of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 are applicable - refund allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 925
Refund of unutilized CENVAT credit - various input services used for export of Information Technology Software Services - Held that: - at the time of availment of cenvat credit it was not disputed by the Revenue that these services are not ‘input services’. In the circumstances, at the time of claiming the refund claim, cenvat credit cannot be denied - refund allowed - decided in favor of appellant.
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2018 (2) TMI 924
Refund claim - input/input services - Revenue is of the view that as the goods exported by the respondent is an exempted goods, therefore as per Rule 6(1) of the Cenvat Credit Rules 2004, they are not entitled to cenvat credit on input/input services used for manufacturing of exempted goods - Held that: - identical issue decided in the case of JOLLY BOARD LTD Versus COMMISSIONER OF CENTRAL EXCISE [2014 (3) TMI 124 - CESTAT MUMBAI], where it was held that CENVAT credit used in the manufacture of final product being exported irrespective of the fact that final product are otherwise exempted by provisions of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 are applicable - refund allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 923
Management Consultant Service to the Joint venture company - non-payment of service tax - Held that: - it is difficult to appreciate that preparation of statistical report by the appellant could be construed as providing any service in connection with the management of the company, hence, would come under the scope of aforesaid definition of management consultant - on merit the levy of Service Tax on the services provided by the Appellant cannot be sustainable - ancillary issues not dealt with - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 922
Refund of service tax paid inadvertently on non-taxable services - the decision in the case of Commissioner of Central Excise And Service Tax (LTU) , Mumbai Versus The Shipping Corporation of India Ltd. [2016 (8) TMI 852 - CESTAT MUMBAI] - Held that: - the decision in the above case upheld - appeal dismissed.
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Central Excise
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2018 (2) TMI 921
Maintainability of petition - grant of stay - Section 35-G (2) of the Central Excise Act, 1944 - Held that: - an order keeping in abeyance the judgment of a lower Court or authority does not deface the underlying basis of the judgment itself, i.e., its reasoning - appeal dismissed - decided against Revenue.
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2018 (2) TMI 920
Delayed payment of central excise duty under Section 3A of the Central Excise Act, 1944 - Demand of Interest and penalty - Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994 - Annual Capacity of Production Scheme - respondent is independent processor of textile fabrics - Held that: - In Shree Bhagwati Steel Rolling Mills Vs. Commissioner of Central Excise, [2015 (11) TMI 1172 - SUPREME COURT], the Hon'ble Supreme Court has declared Rule 96 ZQ(5)(ii) of the Central Excise Rules, 1944, as ultra vires of the Act and therefore, the second substantial question of law, is also answered against the revenue. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 919
SSI exemption - calculation of aggregate value - Revenue held a view that since the appellants were engaged in preparing variety of food items using meat, vegetables, pulses etc. and these items being exempted from payment of Central excise duty, while calculating the aggregate value of clearances for SSI exemption under No/N. 8/2003 dated 01/03/2003, the gross value of all products is to be considered - Held that: - What is needed is to see whether a new, commercially identifiable product emerged after processes undertaken on the raw materials which are distinct from the finished product. there is no hesitation to hold that the finished products, in the present case are different types of food preparations and are new marketable products and are liable to excise duty subject to due classification as available in the Central Excise Tariff. A summary conclusion that the various food preparations made and sold by the appellants in their kitchen/restaurants are generally covered by the Chapters 16 to 20 will not meet the legal requirement of applying the provisions of Notification 8/2003. The gross turnover to arrive at the exemption limit for the base year has to be reckoned considering value of each one of the manufactured and cleared items which are subjected to excise levy. The matter has to go back to the Original Authority for a clear finding - appeal allowed by way of remand.
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2018 (2) TMI 918
Demand of interest - scope of SCN - neither the SCN nor the Order-in-Original dated 7.1.1977 makes any whisper about liability to pay interest - whether the appellant is liable to pay the interest demand of ₹ 4,99,48,695/-? - Held that: - there is no proposal for duty demand in the SCN and there is no determination of duty in the Order-in-Original dated 7.1.1977 which are the genesis of this litigation. The SCN as well as the order-in-original dealt only with the issue of classification and the denial of benefit of exemption under N/N. 25/1970. Section 11AA provides for charging of interest where a person chargeable with duty determined under sub-section (2) of section 11A fails to pay such duty within three months from the date of such determination. In such a case, a person would be liable to pay interest at such rate not below 10% and not exceeding 30% per annum as may be fixed by the Central Government on such date from the date immediately after expiry of said three months till the date of payment of such duty. Thus, when the duty is determined under sub-section (2) of section 11A, the assessee is liable to pay interest at the specified rate on the date which remained unpaid after three months of determination till actual payment. Determination of duty means the duty ascertained after adjudication as per sub-section (2) of Section 11A. For the interest to be payable, there must be an ascertained amount of duty - In the present case, there has been no such determination of duty - In the absence of determination of duty under sub-section (2) of section 11A, the provisions of section 11AA is not attracted. The demand of interest therefore cannot sustain. There is no determination of duty under sub-section (2) of section 11A and therefore the ingredients of Section 11AA are not attracted. Further, there is no show cause notice issued for demand of interest. The demand of interest has been made by issuing a letter. Demand of interest not sustainable - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 917
Valuation - includibility - scrap retained - The department took the view that during the period 2004-05 the appellants had retained scrap value of ₹ 24,30,687/- which value was required to be added to the assessable value - Held that: - Rule 6 of the Valuation Rules introduced on 01.07.2000 has amplified the earlier Rule 6 and as also added an Explanation thereto, however, even in the new Rules, there is no provision for non-inclusion of value of scrap where job worker has retained the scrap or sold it of - It is also not the case that the entire value of landed cost plus rate charges plus job work charges have been fully included in the value on which duty has been paid by the appellant. There definitely is a depression in the value adopted by the appellant proportionate to the value of the scrap - decided against appellant. Time limitation - Held that: - there is no bonafide on the part of appellant, therefore, the appellant s plea on limitation which also fail. Appeal dismissed - decided against appellant.
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2018 (2) TMI 916
Receipt of motor vehicle chassis due to various defects - Revenue entertained a view that the processes undertaken by the appellant on such returned chassis will not amount to manufacture of any new item - applicability of rule 16 of CER - can there be a total dismantling and re-manufacture of such duty paid motor vehicle cleared in the form of chassis with all the requirements of engine, transmission system? Held that: - there is no total dismantling and re-manufacture of the impugned goods in the premises of the appellants. There is no supporting evidence to that effect. In fact, we have all the indications to show that only replacement of various components, though critical has been undertaken. These are engine, gear box, steering system, axles etc. These are no doubt critical components of a motor vehicle. But replacement of such items will not amount to manufacture of motor vehicle. There is no ambiguity regarding the procedure to be followed by an assessee under Rule 16. Admittedly, the appellants did follow the procedure under Rule 16 in so far as re-credit availed upon return of defective goods. They did observe the procedure as per the Trade Notice 108/LTU dated November, 2008 issued by Commissioner, LTU. We are dealing with a part of provision of Rule 16 (2). Having held that the appellants did not undertake any processes amounting to manufacture, we note the said Rule will apply in full force. Regarding the claim of the appellants that certain numbers of returned chassis upon removal of defects, have been cleared either on physical exports out of country or to supply to EOU or supply under N/N. 108/95 - Held that: - these products irrespective of the dispute under Rule 16 are otherwise eligible for clearance without payment. These can be verified from the documentary support that will be produced by the appellants - matter on remand. Penalty u/r 25 of CER - Held that: - there is a case for the appellants for claiming interpretation of the provisions of Rule 16 - penalty not justified. Appeal allowed in part - part matter on remand.
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2018 (2) TMI 915
CENVAT credit - Education cess and Higher education cess paid on CVD - Held that: - the credit availed on education cess and secondary, higher education cess on the CVD portion is eligible - demand raised on this count cannot sustain and requires to be set aside, which we hereby do. CENVAT credit - Education cess and Higher education cess paid on CVD for third time - Held that: - the issue has been discussed in the case of Polypack Industries Vs. CCE [2013 (8) TMI 956 - CESTAT BANGALORE], where it was held that If the 3rd education cess is considered as a levy on total excise duty, the obvious conclusion would be that the credit also admissible - the credit availed on the education cess paid for the third time by the appellants on the CVD portion is eligible. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 914
CENVAT credit - input services which are related to civil work (brick work) or painting work of new construction - Held that: - the Adjudicating authority has recorded that this amount is regarding service tax paid on the services rendered on the Civil construction work or works contract service and painting work of new construction. He has recorded a clear finding that these services are excluded from eligibility to availed CENVAT credit under the inclusive clause of Rule 2(l) of the CENVAT Credit Rules, 2004, I find it so. The factual findings of the Adjudicating Authority are not controverted before the Tribunal - demand upheld. As regards the confirmation of demand Approximately of ₹ 10,41,458/- availed on invoices not found - Held that: - the Adjudicating Authority should have extended an opportunity to appellant to produce the documents - matter placed on remand. Appeal disposed off.
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2018 (2) TMI 913
Confiscation - penalty u/r 25 of CER - clandestine removal - Held that: - the production particulars of the excisable goods were not entered in the statutory records on 29.9.2010 for the reason that the stock particulars were verified by the department on the said date at 2.00 P.M. Further, it is not the case of the department that the appellant had the intention to remove the excess availability of goods in clandestine manner - the provisions of Rule 25 cannot be invoked for imposition of redemption fine and penalty against the appellant - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 912
CENVAT credit - manufacture of dutiable and exempted finished goods - non-maintenance of separate records - Rule 6(3) of Cenvat Credit Rules 2004 - Held that: - the Slag which is a waste product arises during the manufacturing of MS Billets and the same is also exempted by virtue of N/N. 12/2012 dated 17.03.2012 - Slag is a waste product and is not excisable. The provisions of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 are not applicable to this case as the Slag emerges as inevitable waste and therefore, the manufacturer is not required to maintain separate account with regard to the Slag - appeal allowed - decided in favor of appellant
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2018 (2) TMI 911
Valuation - job-work - Rule 10A(ii) of Central Excise Valuation Rules, 2000 - it was alleged that M/s ISGEC is selling the goods as such as the appellants have manufactured the goods in complete form, therefore, in terms of Rule 10A(ii), the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods - Held that: - identical issue came in appellant own case Suyog Engineers Pvt. Ltd., Yamuna Fabricators Versus CCE, Panchkula [2017 (10) TMI 893 - CESTAT CHANDIGARH], where it was held that on the amount on which duty have been demanded from the appellants, duty has already been paid by the M/s ISGEC on the said amount. If the duty has been demanded from the appellant, in that circumstances, it will be the case of demand of duty twice on the same product which is not permissible in law. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 910
Demand of interest under Rule 7(4) of the Central Excise Rules read with Section 11AA of Central Excise Act - finalization of provisional assessment - Held that: - the issue is no more res integra and has been settled by the Hon'ble Supreme Court in the case of Commissioner V. CEAT Limited [2015 (12) TMI 1587 - SUPREME COURT] wherein it was held that interest is not required to be paid on differential duty if the same is paid before finalization of assessment - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 909
Valuation - includibility - freight element shown in the invoices separately - lower authorities held that the appellants should include the freight also in the transaction value as the terms of sales are on FOR basis, goods to be delivered at the premises of the buyer - Held that: - Hon’ble Supreme Court in Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] examining the term “place of removal” held that under no circumstances, the ‘place of removal’ can refer to a ‘place of delivery’ which may on facts be the buyer’s premises In the present case, the sales tax is shown in the invoice prepared in the factory and there is nothing to indicate that the sale is not happening at the factory gate. The freight incurred by the appellant is shown separately and collected from the client in terms of their own arrangement - freight need not be included in assessable value. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 908
Principles of Natural justice - Section 9D of the Central Excise Act, 1944 - Held that: - There is no requirement in terms of Section 9D for the noticee to give elaborate justification before requesting for cross-examination - The cross-examination in case could not be conducted, the reason for the same as mentioned in Section 9D itself has to be recorded - the impugned order suffers due to violation of principles of natural justice and accordingly set aside. The matter has to go back to the Original Authority for a fresh decision after complying the provision of Section 9D and other related regulations before adjudication - appeal allowed by way of remand.
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2018 (2) TMI 907
Area Based Exemption - dispute in the present case mainly relates to the fact relating to the date of change of ownership of the unit and the date of filing intimation by the appellant to avail the area based exemption - Held that: - It is clear that the statutory mandate is that the manufacturer should opt in writing before affecting the first clearance. Such option shall be effective from the date of exercise and shall not be withdrawn during the remaining part of the financial year. Except for this stipulation, we could not get any other provision with reference to opt in or opt out of the scheme during the operation of the said notification. The fact with reference to the date of filing intimation by the appellant is in dispute. Different dates are claimed by both the parties. This requires verification with supporting evidence available with the jurisdictional officer - appeal allowed by way of remand.
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2018 (2) TMI 906
CENVAT credit - input services - services distributed by Head Office as ISD - business auxiliary services - business promotion services - event management services - courier services - Architect, design and interior decorator services - Industrial construction services - Tours and travel services - Repair and maintenance services - Photography and video shooting services - Insurance services - Mandap keeper/real estate agent services - photocopy services - Canteen services. Held that: - the credit eligibility on these input services has been subject matter of various decisions and as per the findings recorded, it is clear that on principle the denial of credit on such services is not sustainable. Wherever the documentary verification, as per the original invoices which are received by the appellant on which they have claimed credit, can be done by the Jurisdictional Service Tax Authorities to their satisfaction to note the correct quantum and correctness of original documents. While in principle the appellant is eligible for credit for all these input services, the verification of records wherever required can be done by the Jurisdictional Authority of the appellant - appeal allowed by way of remand.
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2018 (2) TMI 905
CENVAT credit - MS sheets, angles, channels, MS plates etc. - denial on the ground that they are being used as supporting structurals, which cannot be held to be Cenvatable after the insertion of explanation 2 to Rule 2(k) of CCR 2004 - Held that: - Reference can be made to Hon'ble Gujarat High Court’s decision in the case of Mundra Ports & Special Economic Zone Ltd. v. CCE & Cus. [2015 (5) TMI 663 - GUJARAT HIGH COURT], where it was held that plain reading of the definition of Rule 2(k) would demonstrate that all the goods used in relation to manufacturer of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit - we deem it fit to set aside the impugned order and remand the matter to original adjudicating authority - appeal allowed by way of remand.
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2018 (2) TMI 904
Classification of goods - PVC/ HDPE Pipes, HDPE Sprinkler - benefit of N/N. 3/2005 dated 24/02/2005 (S. No.70) - whether classified under chapter 39 or under chapter 84? - Held that: - The appellant could establish that these pipes which were manufactured and cleared by them are intended for irrigational purpose in agriculture/ horticulture - the classification of the product under Chapter 39 is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 903
Interest on CENVAT credit wrongly availed - Held that: - the appellant has on two occasions wrongly availed cenvat credit but reversed suo motu and on two occasions the appellant has reversed the credit after the same was pointed out by audit - Hon’ble High Court of Bombay in the case of GL&V India Pvt. Ltd. [2015 (5) TMI 375 - BOMBAY HIGH COURT] has held that the interest on cenvat credit wrongly availed is leviable irrespective of the fact that the said credit was utilized or not - demand upheld. Penalty under Section 11AC - Held that: - the ingredients for imposing penalty under Section 11AC are not brought out by the proceedings and the lower authority - on two occasions, the credit was suo motu reversed by the appellant and on other two occasions, credit was reversed as soon as the same was pointed out by the audit - mala fides cannot be attributed - penalty set aside. Appeal allowed in part.
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2018 (2) TMI 902
CENVAT credit - marine insurance service - insurance for directors and supervisory officers arising in day-to-day functioning - Held that: - it is only a clerical error as no reason has been recorded for disallowing the credit of insurance for directors and supervisory officers liability - credit allowed. Marine insurance policy - Held that: - no argument has been extended in the grounds of appeal - In absence of any argument, the appeal cannot be allowed. Appeal allowed in part.
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2018 (2) TMI 901
Clandestine removal - benefit of reduced penalty - Held that: - admittedly the appellant deposited the interest within a period of 30 days along with deposit of penalty of 25%, within the said period, in terms of the Tribunal s order - Deposit under a wrong head also goes to the Revenue only and as such it cannot be concluded that the appellant had not deposited the said interest. The penalty was directed to be reduced to 25% - appellant would be entitled to the refund of pre-deposit of ₹ 4 lakhs made by them in terms of the said order of the Tribunal - appeal allowed.
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2018 (2) TMI 900
Restoration of appeal - Valuation - includibility - State Surcharges, RPO charges and RPO surcharges - Held that: - the requirement of approval by the Committee on Disputes has since been done away with by the Hon’ble Supreme Court - we restore the appeal to its original number and allow the appeal filed by M/s. HPCL. - appeal allowed.
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2018 (2) TMI 899
Valuation - includibility - service charges for testing their cylinders to check the level of vacuum and clean the cylinders for servicing, painting and changing the values etc - Department was of the view that the aforesaid charges collected is an additional consideration which needs to be included in the transaction value in terms of Rule 6 of the Central Excise Valuation Rules 2002 read with Section 4 of the CEA 1944 - Held that: - the identical issue has been referred by the Hon'ble Supreme Court to its Larger Bench as reported in the case of Commissioner of Central Excise, Indore Vs. Grasim Industries Ltd. [2016 (4) TMI 794 - SUPREME COURT]. Liberty is granted to the Revenue to approach this Tribunal again after having the final wording of the Larger Bench of the Apex Court, within the prescribed time - Appeal disposed off.
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2018 (2) TMI 898
CENVAT credit - Goods Transportation Service - CBEC Circular No.988/12/2014-CX dated 20.10.2014 - Held that: - transportation services for transporting their final product from their factory to their buyers place and transport charge has been included in the assessable value. In such a case, the service tax paid on such outward transportation charges shall be admissible as CENVAT Credit to the appellant - credit allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 897
CENVAT credit - input service credit - commission paid to the commission agents - Held that: - similar issue decided in the case of M/s Dwarikesh Industries Sugar Limited & Ors Vs. CCE, Meerut [2017 (10) TMI 1114 - CESTAT, ALLAHABAD], where it was held that appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 - refund allowed - appeal dismissed - decided against Revenue,
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2018 (2) TMI 896
CENVAT credit - demerger of appellant Company wherein CENVAT credit were lying unutilised - case of Revenue is that the invoice is in the name of other party and on which respondent has availed CENVAT credit therefore they are not entitled to avail CENVAT credit - Held that: - Identical issue came up before Tribunal in the case of Commissioner of Central Excise v. Samruddhi Cement Ltd. [2013 (8) TMI 877 - CESTAT MUMBAI], where it was held that If the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory with the specific provision for transfer of liabilities of such factory, then, the transferor will be allowed to transfer the Cenvat credit lying unutilized to the transferee company - on demerger of appellant’s Company, the respondent is entitled to avail CENVAT credit. Another ground taken by Revenue is that the respondent has not taken prior permission from the department for availment of CENVAT credit - Held that: - in the show-cause notice it is mentioned that on 23.07.2010 itself the respondent has intimated to the department for demerger and availment of CENVAT credit. Moreover as per Rule 10 of Cenvat Credit Rules, 2004, there is no such requirement to obtain prior permission for demerger of the Company - CENVAT credit rightly availed. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 895
Penalty u/s 11 A(1) of the Central Excise Act, 1944 - job-work - short payment of duty - extended period of limitation - Held that: - It is true that the respondent has not paid duty at the time of clearances of intermediary goods, which resulted that they paid short duty. But when they have been pointed out by audit party, they paid duty along with interest therefore, malafide intention is missing in this case. In such circumstance, no show-cause notice was required to be issued to the respondent. The SCN is also barred by limitation. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 894
CENVAT credit - input services - Repair and Renovation of their Paint Shop - Garden Maintenance and Cutting of Trees - Safety issues - House Keeping and Cleaning - Erection, Commissioning and Installation Service - Health service - Driver’s TA charges services - Rule 2(l) of the Cenvat Credit Rules 2004 - Held that: - As per Rule 2(l) of Cenvat Credit Rules 2004 for renovation services assessee is entitled to avail cenvat credit - credit allowed. Garden Maintenance and Cutting of Trees - Held that: - to run the factory it is compulsory for the assessee to maintain garden and require periodical cutting of trees - credit allowed. Safety issues services - Held that: - safety of the employees/workers is essential part of their manufacturing activity - the employees of the firm cannot work in their factory and without workers factory cannot run - credit allowed. Housekeeping and Cleaning Service - Held that: - Housekeeping and Cleaning is an integral part of the manufacturing activity, without availing that services full efficiency of the workers cannot be obtained - credit allowed. Erection Commissioning and Installation Service - Held that: - The said service has been availed by the assessee for painting of excavators which is the final product manufactured by the assessee. Without painting, these excavators cannot be sold by the assessee - credit allowed. Health Service - Held that: - the Health Services are integral part of manufacturing activity - Without said facility workers do not feel safe in working in the factory - credit allowed. Driver TA charges service - Held that: - The TA charges paid to the Driver for the work of factory are a part of manufacturing activity of the appellant and directly related to the manufacturing activity - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 893
Refund claim - denial on the premise that as appellant has paid the differential duty without any protest therefore refund cannot be granted - whether Section 11A(2B) had been applied or not? - Held that: - as per Section 11A(2B), the show-cause notice is not required to be issued if the assessee pays duty along with interest - Admittedly, in this case appellant did not pay interest. Therefore, the appellant did not comply with the provisions of Section 11A(2B) of the Act. In this case, appellant has not complied with the provisions of Section 11A(2B) of the Act and therefore show-cause notice was required to be issued for the appropriation of the amount already paid by the appellant as duty - As no SCN has been issued, therefore, the Revenue cannot retain the said amount as duty with them without any adjudication. The refund claim filed by the appellant cannot be rejected - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 892
Clandestine removal - certain manufactured goods have not been entered in statutory records and certain torn out invoices were also found in dustbin - retraction of statements - Held that: - the affidavit which has not been filed with the Department in time cannot be the basis for violation that the statement has been retracted from next day by Shri Nagappa. Therefore the retraction is not admissible - Revenue has been able to prove clandestine removal of goods on the basis of the torn of invoices recovered during the course of investigation - demand upheld - penalty on partnership firm upheld - penalty on partner set aside - appeal allowed in part.
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2018 (2) TMI 891
Refund of unutilized cenvat credit - CHA service - Manpower Recruitment and Supply Agency Service - denial on the premise that the services availed by the appellant were CHA, they have no nexus with the export of goods and Manpower Recruitment and Supply Agency Service have no nexus with the export of goods - Held that: - on CHA Service, the said issue has been examined by this Tribunal in the case of Chandra Engineers Vs. CCE, Delhi [2014 (8) TMI 477 - CESTAT NEW DELHI], where it was held that If the bills of other agencies engaged by CHA are directly linked to the imports made by the assessee and CHA was only acting as a intermediary, the benefit of credit of service tax paid by the other agencies should not be denied to the appellant. Manpower Recruitment and Supply Agency Service - Held that: - the said service has been availed by the appellant for manufacturing of the goods which has been exported and leave encashment have given to the employees which has been form part of the cost of goods exported - appellant is entitled to claim refund of the said amount. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 890
Refund claim - denial on the ground that the Repairs and Maintenance Services availed by the appellant have no nexus with the export of goods made by them - Held that: - claim cannot be rejected merely on the ground that the refund claim filed by the appellant for the services availed for Repairs and Maintenance service have no nexus with the export of goods - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 889
Remission of duty - rule 21 of Central Excise Rules, 2002 - Held that: - Hon’ble High Court of Punjab & Haryana in Barodia Plastics Pvt Ltd v. Commissioner of Central Excise [2015 (7) TMI 667 - PUNJAB AND HARYANA HIGH COURT], where it was held that A perusal of the Tribunal's order reveals a consideration which is neither logical nor founded in law as insurance companies do not provide insurance against payment of taxes much less payment of Excise duty - remission of duty allowed.
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2018 (2) TMI 888
CENVAT credit - molasses - rule 6(3) of CENVAT Credit Rules 2004 - Held that: - the appellant had failed to discharge its obligation to establish that the amounts debited in the CENVAT credit account had not been passed on to the buyer. On the bar of unjust enrichment operating against that claim. The appellant had submitted evidence in the form of certificate of Chartered Accountant for not having passed on the burden of payment discharged under rule 6 of CENVAT Credit Rules 2004. Moreover, this was not a duty that could have been availed as credit by the buyer of waste product. The transfer of refund to the Fund is, therefore, without authority of law and is set aside.
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2018 (2) TMI 887
CENVAT credit - utilization of ‘security service’ for the hostel maintained at their factory at a remote location - penalty u/r 15(2) of CCR 2004 read with section 11AC of CEA 1944 - Held that: - reliance placed in the case of Reliance Industries Ltd. Versus Commissioner of CE & ST (LTU) , Mumbai [2015 (11) TMI 100 - CESTAT MUMBAI], where it was held that Appellant has various factories which are situated in remote areas. In order to run the factories smoothly, without any stoppages, they had constructed township/residential colonies near factory premises and accommodated the employees working in such factories - CENVAT credit is maintainable - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (2) TMI 886
Revision of assessment - challenge to revision on the ground that the same was passed after the expiry of the time limit prescribed for the said purpose in terms of clause (c) of sub-section (2) of Section 56 of the Act - Held that: - Going by the plain meaning of the words used in the provision, the word 'year' therein can never be the assessment year. Further, if the word 'year' contained in the provision is reckoned as the assessment year, then the power under that section cannot be exercised, if the assessment is not completed within four years from the relevant assessment year. It is directed that if the petitioner prefers a revision challenging the impugned order within one month from the date of receipt of a copy of this judgment, the same shall be treated as one filed within time - petition disposed off.
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Indian Laws
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2018 (2) TMI 947
Appeal against Chartered Accountants Final Examination result - petitioners are aggrieved by the result declared and published on its website by the respondent-institute wherein all of them have failed in their respective Groups - credence given to the alleged notification being circulated on the whatsapp/facebook declreing the petitioners as passed - Held that:- The foremost fact which emerges from the record is that there is no denial by any of the parties that the result declared on the websites of the respondent-institute has never been altered, which is not even the case of the petitioners. Thus, the only case set up by the petitioners is that a notification was purportedly issued by the institute and sent to all its councils, centres, members/office bearers as per which the petitioners had allegedly passed. It is however, interesting to note that even though the entire case of the petitioners is based on the said alleged notification, in which they claimed to have passed, the petitioners have very conveniently and for obvious reasons stated in the petition itself that they were not sure about the authenticity and correctness of the e-mails or of the messages being circulated on the whatsapp and facebook. Merely because the alleged notification contains the term "published for general information" cannot lead to the conclusion that the said notification was actually published especially in view of the categoric statement by the respondent-institute that the said alleged notification was never published in any manner. - find merit in the submission of Mr.Chandhiok senior counsel for the respondent that once it is the own case of the petitioners that the said alleged notification was sent only to their branches, centres and members, it is evident that the same was merely an internal communication in which subsequently certain mismatches were noticed and, therefore, when the final result was declared. The mismatches, if any, were rectified and only the correct result was published on the websites of the Respondent-Institute at 5.37 pm. on 17.01.2018 i.e. much before the circulation of the whatsapp messages containing the alleged notification. The Respondent-Institute had only published the correct result and, therefore, no reliance can be placed on the alleged notification dated 17.01.2018 in which the petitioners claim to have been declared as successful. No ground to interfere with the final results published by the respondent on its websites.
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