TMI Tax Updates - e-Newsletter
February 2, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty; cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction u/s 43B - AT
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Income Tax:
Refunds of tax due to regular assessment proceedings - assessed tax is lower than returned tax - if it is found that assessee is entitled for refund, the same should be refunded as the State cannot recover the tax more than what is due to it. - HC
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Income Tax:
Addition of unexplained expenditure u/s 69C - It is not understood as to how there was such a huge export turnover in one year. That too in the first year of business and then there was substantial fall in the next year and subsequently there was no business of export in any of the years. This shows that this is not the regular business of the assessee. - HC
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Income Tax:
Entitlement for registration u/s.12AA - whether giving of interest free loan to particular community is a religious activity within the meaning of Section 2(15)? - Benefit of exemption allowed - HC
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Income Tax:
Provision for leave salary encashment and gratuity was made by the assessee on the basis of actuarial valuation done by actuary and these are considered as ascertained liabilities and allowable expenses - AT
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Income Tax:
Disallowance u/s 43B on account of service tax outstanding - section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assessee. - AT
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Income Tax:
Set off of loss incurred on sale of polished diamond goods against deemed income assessed u/s. 69A - set off against the income declared during the course of search - Since section 71 do not debar from setting off such losses, set off of business losses allowed - AT
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Income Tax:
Levy of penalty u/s 271(1)(c) - disallowance of expenses of foreign Travel expenses and inter city travel expenses - Revenue has not rejected the explanation of the assessee and merely levied the penalty on the basis that the expenses are for non-business purposes - No penalty - AT
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Income Tax:
Quantum of penalty u/s 221(1) - failure to pay tax before filing of return - AO levied the maximum penalty prescribed equal to 100% without recording any satisfaction - CIT(A) was right in restricting penalty to 10% of the total tax payable - AT
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Income Tax:
Ex-parte assessment u/s 147 - rejection of objections raised by the assessee - Right to be heard - :- The mere fact that written submissions were filed by the assessee, it is of the view cannot be so construed that the right to be heard was given up. - AT
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Customs:
Classification - whether the imported goods are SIM modules or integrated chip modules? - The SIM imported in reel is a 'card' classifiable under heading 8523 as a 'smart card' fulfilling all the essential ingredients of a 'smart card' - benefit of exemption notification allowed - AT
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Customs:
SEZ - condition of mandatory physical export - The relevant conditions of the policy of 2013 are not in consonance with the Rules since none of the Rules prohibit the unit established in SEZ to remove the goods in DTA. - HC
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Corporate Law:
No action having ever been initiated by the APIIC to raise a dispute as to its liability to pay the amount aforestated or as to delayed discharge of contractual obligations by the company petitioner, it is too late in the day for it to now raise the ruse of a bonafide dispute to ward off the summary proceedings initiated under the Act of 1956 for its winding up. - HC
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Indian Laws:
THE FINANCE BILL, 2017 - As passed by Lok Sabha
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Indian Laws:
BUDGET SPEECH - Speech of Mr. Arun Jaitley, Minister of Finance as on February 1, 2017
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Service Tax:
The proceedings initiated now are to re-classify the service under Erection, Commissioning and Installation Service - the appellants were registered with the department and discharging service tax under a different category of service - demand, if any, should be limited to a normal period - no penalty - AT
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Service Tax:
Valuation - C&F Agency services - reimbursement of the expenditure - demand restricted to normal period - penalty waived - AT
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Service Tax:
Refund - period of limitation - service tax was paid under pressure from the department - In that view of the matter, it cannot be said that the payments were made voluntarily and without protest - HC
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Central Excise:
Refund of cenvat credit - Sick Company - The petitioner is not asking the money to be paid into his account. He is only asking the money to be paid to the State Bank of India towards discharge of some loan. In such a case, the payment to the Bank would also act, probably as a recovery for the Bank. - HC
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Central Excise:
CENVAT credit - non-registration as ISD should not deprive the assessee of substantial benefit of credit - AT
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Central Excise:
The criminal case is decided on the basis of evidence adduced therein and cannot be rejected on the basis of evidence in departmental proceedings and therefore, both proceedings pending before the CESTAT and the trial court shall go on simultaneously and there is no impediment for the same - HC
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Central Excise:
CENVAT credit on capital goods - Vertical Storage Tanks are installed in the premises of the Customers and not in the factory premises of the manufacturer - credit cannot be allowed - AT
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VAT:
Withdrawal of Compounding u/s 8 - there is no reason for the AO to consider the withdrawal application, since the assessee has already acted in accordance with the compounding application made and remitted the tax due under the scheme - penalty waived for one of non-payment or default in payment - HC
Articles
Notifications
Central Excise-
07/2017 - dated
2-2-2017
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CE
Amendment In Notification No. 16/2010-Central Excise, dated the 27th February, 2010
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06/2017 - dated
2-2-2017
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CE
Amendment In Notification No. 12/2012-Central Excise, dated the 17th March, 2012
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05/2017 - dated
2-2-2017
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CE
Exempts All items of Machinery, Including Instruments, Apparatus and Appliances, Transmission Equipment and Auxiliary Equipment (including those required for testing and quality control) and components.
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04/2017 - dated
2-2-2017
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CE
Amendment In Notification No. 42/2008-Central Excise, dated the 1st July, 2008
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03/2017 - dated
2-2-2017
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CE
Amendment In Notification No. 6/2005-Central Excise, dated the 1st March, 2005
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5/2017 - dated
2-2-2017
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CE (NT)
Central Excise (Amendment) Rules, 2017
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4/2017 - dated
2-2-2017
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CE (NT)
CENVAT Credit (Amendment) Rules, 2017
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3/2017 - dated
2-2-2017
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CE (NT)
Amendment In Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010
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2/2017 - dated
2-2-2017
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CE (NT)
Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Amendment Rules, 2017
Customs-
6/2017 - dated
2-2-2017
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Cus
Seeks to further Amend Notification No. 12/2012-Customs, dated the 17th March, 2012
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5/2017 - dated
2-2-2017
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Cus
Exempts all items of machinery, including, instruments, apparatus and appliances, transmission equipment and auxiliary equipment
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4/2017 - dated
2-2-2017
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Cus
Seeks to further Amend Notification No. 21/2012-Customs, dated the 17th March, 2012
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3/2017 - dated
2-2-2017
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Cus
Seeks to Amend Notification No. 27/2011-Customs, dated the 1st March, 2011
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8/2017 - dated
31-1-2017
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Cus (NT)
Tariff value Notification in respect of Fixation of tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
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5/2017-Customs (N.T./CAA/DRI) - dated
31-1-2017
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Cus (NT)
Director General, Revenue Intelligence, appoints officers
Service Tax-
7/2017 - dated
2-2-2017
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ST
Amendment In Notification No.25/2012 Service Tax, dated the 20th June, 2012
Circulars / Instructions / Orders
News
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English rendering of the Prime Minister’s Statement on Union Budget- 2017-18
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Salient Features of Direct Tax Proposals in Union Budget 2017
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The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18 in Parliament today
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Budget’s thrust on stimulating growth, relief to Middle Class, Affordable Housing, Curbing Black Money, promoting Digital Economy, transparency of Political Funding and simplification of Tax Administration
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In order to make ,MSME companies more viable, income tax for smaller companies with annual turnover upto ₹ 50 Crore is reduced to 25%
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Fiscal deficit for 2017-18 pegged at 3.2% of GDP and to achieve 3% in 2018-19
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Agriculture to grow more than 4 percent as Government announces a slew of pro-farmer measures in General Budget 2017-18 Farm credit fixed at a record level of ₹ 10 lakh crores; Irrigation fund hiked to ₹ 40, 000 crores Finance Minister announced setting-up of a Dairy Processing and Infrastructure Development Fund with a corpus of ₹ 8,000 crores to augment farm income
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Rural, Agriculture and Allied sectors to get about Rupees, One Lakh 87 thousand crore in the Budget 2017-18 , 24 % higher than the previous year Centre announces Mission Antyodaya to bring 1 crore households and 50 thousand Gram Panchayats out of poverty by 2019 MGNREGA gets the highest ever allocation of ₹ 48,000 crore 100% village electrification would be achieved by 1st May 2018
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Mahila Shakti Kendra will be set-up at village level
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Political Parties cannot receive donation above ₹ 2,000 in cash from one person; entitled to receive donations by cheque or digital mode from their donors;. Have to file its Income-Tax Return within the prescribed time limit Banks to issue Electoral Bonds to enable donations to Political Parties
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Allocation for welfare of SC, ST and Minorities to be enhanced
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First combined Budget of Independent India, that includes Railways, presented Total Capital And Development Expenditure of Railways pegged at ₹ 1,31,000 crores Government to focus on ‘Swachh Rail’; ₹ 1 lakh crores ‘Rashtriya Rail Sanraksha Kosh’ to be created in 5 years Cashless reservations go up from 58% to 68%
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Total allocation for Infrastructure Development stands at ₹ 3,96,135 crores in 2017-18
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Finance Minister announces Measures for Promoting Affordable Housing and Real Estate Sector
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Finance Minister reduces the tax rate from 10 to 5 per cent for individual income between ₹ 2.5 to ₹ 5 lakh.
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Finance Minister announces several measures for revenue mobilization in the General Budget 2017-18 along with a reduction in tax rates for small tax payers
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Finance Minister announces several anti graft and rationalisation measures in the field of Income tax
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Demonetisation will lead to bigger, cleaner and real GDP, says Jaitley
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Budget gives a major push to Digital Economy; proposes No Cash Transaction above ₹ 3 lakh
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General Budget 2017-18 proposes Reduction in Customs and Excise for Renewable Energy Sector, and Cashless Transaction Devices
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GST Council has finalised its recommendations on almost all the issues based on consensus, says Finance Minister in his Budget Speech
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Finance Bill, 2017 (Clause by Clause) and Notifications under Customs, Central Excise & Service Tax
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Finance Minister unveils string of measures towards Ease of Doing Business
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FIPB to be phased-out in the next fiscal, Bill to be tabled in Parliament soon to crack down on ponzy schemes
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KEY TO THE BUDGET DOCUMENTS 2017-2018
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Shares of Railway PSEs - IRCTC, IRFC and IRCON to be listed
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BUDGET AT A GLANCE 2017-2018
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Affordable Housing will be given Infrastructure Status
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Action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018 and Measles by 2020
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Legislative reforms to be undertaken to Simplify, Rationalize and Amalgamate the existing Labour Laws
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A System of measuring Annual Learning Outcome will be Introduced
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Innovative Fund for Secondary Education to Encourage Local Innovation
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Reforms will be undertaken in UGC; Good Quality Institutions would be enabled to have greater Administrative and Academic Autonomy
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“SWAYAM” Platform will be launched to leverage Information Technology
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National Testing Agency for Entrance Examinations in Higher Education Institutions
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Pradhan Mantri Kaushal Kendras to be extended to all over the Country
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BUDGET 2017-18 SPEECH - Speech of Mr. Arun Jaitley, Minister of Finance as on February 1, 2017
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Next Phase of Strive to be Launched at a Cost of ₹ 2200 Crore
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Demonetisation bold, decisive step; to boost economy: Jaitley
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Cabinet approves Extension of tenure of loans under the Credit Linked Subsidy Scheme (CLSS) of Pradhan Mantri AwasYojana (PMAY) from 15 to 20 years
Case Laws:
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Income Tax
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2017 (2) TMI 39
Addition made u/s.145A - assessee has not given any details of challan of various Excise duty paid on raw-materials - Held that:- The detailed finding recorded by CIT(A) after observing that assessee has been consistently following the same method of adjustment u/s.145A over the years has not been controverted by Id. DR by bringing any positive material on record. The detailed working so arrived at by CIT(A) and the findings given there on are as per material on record, thus, do not require any interference on our part. Accordingly, we upheld the order of the CIT(A) for deleting the addition made by the AO u/s. 145A. - Decided in favour of assessee Disallowance on account of custom duty expenses - Held that:- This ground of appeal is covered in favour of assessee by the decision of special bench in DCIT vs. Glaxo Smith Healthcare Ltd. [2007 (7) TMI 334 - ITAT CHANDIGARH] wherein held Section 43B in clear terms provides that the deduction claimed by the assessee in respect of any sum paid by way of tax, duty, cess or fee, shall be allowed only in computing the income referred to in section 28 of that previous year in which it was actually paid, irrespective of the previous year in which the liability was incurred for the payment of such sum as per the method of accounting regularly employed by the assessee. For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty; cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction u/s 43B of the Act. In this view of the matter, the appeal deserves to be allowed in favour of assessee.
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2017 (2) TMI 38
Reopening of assessment - addition being profit on sale of flats - Held that:- No addition was made by AO in respect of income from Colaba flat which was the basis of formation of belief that income had escaped assessment as per the reasons recorded for reopening the assessment. In view of the decision of Jet Airways (2010 (4) TMI 431 - HIGH COURT OF BOMBAY ) which was followed by the CIT(A), we do not find any infirmity in his order for quashing the reopening and deleting the addition made on account of income in respect of Radhakrishna Niwas, in so far as CIT(A) has clearly mentioned in his order that AO is free to issue fresh notice u/s. 148 if satisfied about any escaped income from Radhakrishna Niwas subject to applicable provisions of IT. Act, 1961. - Decided in favour of assessee
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2017 (2) TMI 37
Refunds of tax due to regular assessment proceedings - assessed tax is lower than returned tax - amount of tax recovered without any authority of law - Held that:- The contention raised by the appellant that on acceptance of the scrutiny, if he is entitled for other benefits which he has not claimed, the same be refunded to him i.e. after the proceeding if it is found that assessee is entitled for refund, the same should be refunded as the State cannot recover the tax more than what is due to it. The issue is answered in favour of the assessee and against the department.
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2017 (2) TMI 36
Addition of unexplained expenditure under Section 69C - rejection of the books of accounts u/s 145(3) - Held that:- The main source of income of the Assessee was from salary and partly from commission and brokerage. During the year under consideration the assessee started export business in gems and stones and has earned income only from Export business and bank interests. During the year under consideration the assessee has declared total export turnover of ₹ 2,35,10,077/- upon which gross profit of 1,15,62,119/- was shown thereby giving a G.P. rate of 49.8%. This is the first year of business of the assessee. During the next financial year 2001-02 the assessee has declared total export turnover at ₹ 32,71,097/- upon which gross profit of ₹ 18,01,075/- is shown thereby giving a GP Rate of 55%. On perusal of the return filed for the assessment year 2003-04 i.e. financial year 2002-03, it is seen that the assessee has declared Nil export and has declared income from salary as was done previously before he started his export business. It appears that this is an isolated case of export by the assessee in past several years. In view of the above facts, it is clear that the assessee had done the business of export mainly for one fyear i.e. for the fyear under consideration. It is not understood as to how there was such a huge export turnover in one year. That too in the first year of business and then there was substantial fall in the next year and subsequently there was no business of export in any of the years. This shows that this is not the regular business of the assessee. Identical issue was decided by the Court in the case of Commissioner of Income Tax vs. M/s. Bright Future Gems [2016 (11) TMI 539 - RAJASTHAN HIGH COURT ] there is nothing on record to certify the stones which were verified by any of the valuer. In our view it is all paper transactions for the purpose of taking benefit of the export and tax benefits and we are of the opinion that it is a bogus purchase - Decide against assessee
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2017 (2) TMI 35
Imposition of penalty under Section 271(1)(c) - Held that:- The grounds that were highlighted before the Tribunal pertain to the confirmation of levy of penalty by the Commissioner of Income Tax (Appeals). The error in that confirmation was highlighted by the assessee's representative and during the course of his arguments, the assessee's representative referred to the Tribunals views on the merits and in quantum proceedings. That is how he would support the contention that there was no case made out for imposition of penalty. Once such was the lis before the Tribunal, then the above quoted findings, which are derived from the Tribunal's order, do not raise any substantial questions of law, particularly, in the light of the argument of the Revenue's counsel as noted in paragraph 4 of the impugned order. Thus, whether the facts and circumstances justify deletion of penalty as prayed, or that the ingredients enabling imposition of penalty under that particular statutory provision are satisfied or not, was the real issue involved. That is evidently a mixed issue. We do not see, in light of the factual findings rendered by the Tribunal, that any substantial question of law arises for determination and consideration in these Appeals. We must see that the approach of the Tribunal in deleting penalty. On the date of that exercise undertaken, and to delete the penalty, the Tribunal had before it, its factual findings in quantum proceedings. On the date when the impugned orders were passed, those factual findings were not reversed or disturbed in any manner. In the circumstances, the Tribunal was justified in deleting the penalty - Decided in favour of assessee
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2017 (2) TMI 34
Addition u/s 14A - Applicability of Rule 8D - whether shall be applicable retrospectively or shall be applicable from AY 2008-09? - ITAT delted addition - Held that:- It is not in dispute that now following the decision of the Bombay High Court in the case of Godrej and Boyce Mfg Co. Ltd vs. Deputy CIT reported in (2010 (8) TMI 77 - BOMBAY HIGH COURT ), the Division Bench of this Court in the case of Commissioner of Income Tax vs. Torrent Power Limited (2014 (6) TMI 185 - GUJARAT HIGH COURT ) has held that provision of Rule 8D shall be applicable prospectively and shall not be applicable with respect to earlier assessment years. In view of above concluded question, it cannot be said the learned Tribunal has committed any error. The proposed questions of law are answered against the Revenue and in favour of assessee
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2017 (2) TMI 33
Penalty u/s 271E - Applicability of Section 269T - distinction between loan and deposit - Held that:- Since in the present case there is no doubt about the fact that the payment had been made toward a loan, share capital debenture, it would certainly not amounted to a 'deposit' and therefore, the provisions of Section 269T of the Act is clearly not attracted. - Decided in favour of assessee
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2017 (2) TMI 32
Entitlement for registration u/s.12AA - whether giving of interest free loan to particular community is a religious activity within the meaning of Section 2(15)? - Held that:- The Supreme Court in the case of CIT, Ujjain Vs.Dawoodi Bohra Jamaat (2014 (3) TMI 652 - SUPREME COURT ) has considered an identical set of facts concluding that the activity of 'Qardan Hasana' constitutes religious activity. The Trust is thus entitled to grant of registration under section 12AA of the Act. We may also note that the specific object in the Trust Deed in the present case objected to by the Commissioner of Income Tax which reads as follows: To promote, propogate, foster and implement the concept of Qardan Hasana among the Dawoodi Bohras, in accordance with the tenets and principles of Dawat-e-Hadiyah.is identical to the object considered by the Supreme Court as below; For the betterment of the Dawoodi Bohra community to give and take Qardan Hasana according to Farma of Qurane Majid. - Decided against revenue
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2017 (2) TMI 31
Compensation paid for pre-mature termination of agreement - nature of expenditure - revenue or capital - Held that:- As said in the case of Alembic Chemical Works Co. Ltd [1989 (3) TMI 5 - SUPREME Court]and the facts of the present case that the assessee Co. decided that instead of manufacturing the products, for which it had manufacturing licenses under toll arrangements, it was advantageous to have contract manufacturing arrangements. Accordingly, the assessee terminated pre-maturely the agreement with the Torrent Pharmaceuticals Ltd. and paid compensation as per the terms of agreement, as discussed above in detail. The compensation paid for pre-mature termination of agreement to reduce the cost and increase profitability is a business decision and assessee is already in the product of line of the business and not a new product is developed by the assessee by virtue of payment of this compensation. Accordingly, we are of the view that this is a revenue expenditure and allowable as deduction. We find no infirmity in the order of CIT(A) and hence the same is confirmed. This issue of Revenue’s appeal is dismissed. Disallowance on account of product development expenses u/s 37(1) r. w. s 35(1) - Held that:- We are of the view that the product development expense is a necessity for running of fast moving goods because of competition and continuing changes in consumer choices. This expenditure is a recurring expenditure and need not be incurred only once for all. This expenditure merely results in enabling the assessee to carry on the business in a more efficient profitable manner being responsive to the needs of consumers but did not lead to creation of any fixed asset. Alternatively also, we have to point out that in the case of CIT Vs. Ciba of India Ltd. (1967 (12) TMI 3 - SUPREME Court ) and in several other High Court decisions it is held to the effect that where the expenditure on research was carried on for and on behalf of the assessee, the expenditure laid out or expended was expenditure on research related to business. The Supreme Court has also observed that nonetheless, the expenditure so incurred could be allowed as deduction u/s 37 of the Act. Even otherwise, it cannot be overlooked that u/s 35(1)(iv) of the Act is capital expenditure and is also allowable. Disallowance of project registration expenses - Held that:- We find that this issue is now covered by the decision of co-ordinate bench in the case of ITAT Chandigarh bench in the case of Glaxo Smith Kline Consumer Health Care Ltd. Vs ACIT (2007 (3) TMI 300 - ITAT CHANDIGARH-A ) wherein the Tribunal has clearly held that mere development and introduction of new varieties of product and consequent registration charges do not create any new line of business or fixed asset and hence these type of expenses are to be held as Revenue expenditure. MAT computation - exclusion of provision of leave encashment and gratuity and provision for date expire of stock for computing book profit u/s 115 JB - Held that:- We find that the CIT(A) after conceding the provision of section 115 JB of the Act to explanation (1)(c) of the Act, noted that the provision for contingent liabilities debited to the profit and loss A/c are required to be added to the book profit. He also noted that the provision for leave salary encashment and gratuity was made by the assessee on the basis of actuarial valuation done by actuary and these are considered as ascertained liabilities and allowable expenses as relying on the decision of Hon’ble Supreme Court in the case of Bharat Earthmovers Vs.CIT (2000 (8) TMI 4 - SUPREME Court). We find no infirmity in the order of CIT(A) and hence the same is confirmed. Software expenditure is an allowable revenue expenditure. See CIT Versus Raychem RPG Ltd. [2011 (7) TMI 953 - Bombay High Court ] Allowance of operating and other expenses - Held that:- We find that the assessee has filed details along with letter dated 27-11-2009 and 01-09-2009 whereby, compete details as required by the AO were filed. The additional CIT during remand proceedings admitted that the AO has received the information vide above mentioned two letters. We find that the CIT(A) has considered this fact and allowed the claim of the assessee. We find no infirmity in the order of CIT(A) Disallowance u/s 43B on account of service tax outstanding - Held that:- Respectfully, following Hon’ble Bombay High Court in the case of Ovira Logistics P. Ltd. (2015 (4) TMI 684 - BOMBAY HIGH COURT ) wheren held that section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assessee. In our view, liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise. Accordingly, when services are rendered, the liability to pay the service tax in respect of the consideration payable will arise only upon the receipt of such consideration and not otherwise, hence confirm the order of CIT(A) deleting the disallowance Revenue appeal dismissed.
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2017 (2) TMI 30
Set off of loss incurred on sale of polished diamond goods against deemed income assessed u/s. 69A - set off against the income declared during the course of search - assessee is a diamond merchant - Held that:- Identical additions were made in assessee group case wherein held Section 115BBE bar from claiming any expenses or allowance from the income taxable under section 68, 69, 69A, 69B, 69C, or 69D of the Act. In the instant case before us the claim was of set off of business loss against income declared during search. There is vital difference between the loss and expenses/ allowance. Hon'b1e Supreme Court in case of CIT Vs. Wallford share & Stock brokers Pvt. Ltd ( 2010 (7) TMI 15 - SUPREME COURT ) while discussing the issue that losses incurred in mutual fund from which dividend received, cannot be considered for the purpose of section 14A of the Act and held that one must keep in mind the conceptual difference between loss expenditure, cost of acquisition, etc. while interpreting the scheme of the Act. In view of the decision of Hon’ble Supreme Court, business loss cannot be treated at par with the expenses / allowances and such business loss can be set off against any type of income as section 71 do not debar from setting off such losses.
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2017 (2) TMI 29
Validity of reopening - long term capital gains addition arising from sale of land - proof of capital asset u/s.2(14)(iii) - locus for the assessee left any more as she has already paid the taxes in question well before Section 148 proceedings - Held that:- We notice that a co-ordinate bench of this tribunal in ACIT vs. Satyanarayan Agarwal (2002 (3) TMI 207 - ITAT CALCUTTA-B ) holds that an admission made in the return is not binding in case an assessee seeks to change or modify his or her stand. Learned co-ordinate bench is of the view that an assessee can always seek to prove that the income declared earlier was not taxable. We draw support therefrom to reject Revenue’s above contention of non maintainability of the instant assessee’s appeal. We therefore remit the assessee’s latter substantive ground as well back to the CIT(A) to decide afresh as to whether her land sold was a capital asset or not u/s.2(14)(iii) of the Act in tune with the other group cases (supra). It is made clear that the assessee would be at liberty to place on record all the relevant details in order to prove the fact that her land sold was agricultural not forming a capital asset under the above statutory provision. It would be appreciated if the ld. CIT(A) decides all these group cases together. - Decided in favour of assessee for statistical purposes.
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2017 (2) TMI 28
Levy of penalty u/s 271(1)(c) - disallowance of expenses of foreign Travel expenses and inter city travel expenses - distinction between set of facts “not proved” and facts disproved and facts proved - Held that:- Inquiry must proceed from the stage the alleged disclosure has taken place and not stop at that stage and close the inquiry at the threshold on the abstract principle that mere rejection of explanation does not result into levy of penalty. In the present case also the Revenue has no where proved the allegation of concealment despite explanation offered by the assessee. The AO has made disallowance of foreign travel expenses and local travel expenses merely on the basis of non-business purposes without making any enquiry. The assessee produced complete details i.e. the bills and vouchers relating to expenses incurred on foreign travelling and local travelling and claimed by the assessee for business purposes. The actual position in law is that merely because the assessee’s addition has been confirmed, that cannot automatically bring in levy of penalty for concealment. If the assessee offers an explanation, the Revenue authorities have to consider the acceptability of the explanation and pass necessary orders. In the present case, the Revenue has not rejected the explanation of the assessee and merely levied the penalty on the basis that the expenses are for non-business purposes. In term of the above discussion and facts of the case, we delete the penalty - Decided in favour of assessee
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2017 (2) TMI 27
Disallowance of salary expenses - CIT(A) deleting the 50% of disallowance in connection with its business of cargo handling operations - Held that:- The assessee has identified the personals who were involved in cargo handling activity and those who were involved in cost construction activity and computed the salary cost of these employees. The assessee has debited total cost to the assessee on account of these employees amounting to ₹ 7.53 crores out of which an amount of ₹ 2.47 crores pertains to those, who were involved in the business of cargo handling operation and ₹ 5.06 crores pertains to the employees who were involved in the construction work. The AO has not doubted the genuineness of the claim of expenses. It is also note that the case of the AO that the assessee failed to prove the expenditure or fail to produce cogent and convincing evidence in support of the claim of expenditure and therefore, there is no good reason to disallow the expenditure claimed by the assessee on adhoc basis. It is also not in doubt that the expenditure is not for the purpose of business. The only reason for disallowance of expenses was that the assessee is unable to submit any log-sheet bifurcating salary expenses for CWIP and the claim made against cargo handling activities. In reply to this the assessee has to explain that on the basis of ratio of receipt the expenditure has been split between the P&L and CWIP. In view of these facts, we find no infirmity in the order of CIT(A) and hence the same is confirmed. Hence, this issue of Revenue’s appeal is dismissed.
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2017 (2) TMI 26
Quantum of penalty u/s 221(1) - CIT(A) reducing the quantum of penalty u/s 221(1) from 100% to 10% - AO concluded that assessee failed to pay demand before filing of return without reasonable cause - Held that:- As noticed that there is no minimum penalty prescribed under the law on making the default in depositing the admitted tax, the AO levied the maximum penalty prescribed. The AO has not recorded his satisfaction as to why the maximum penalty of 100% of tax in arrear was levied. The AO further not recorded as to how much amount on account of arrears of tax was due on the date of passing of the order of penalty. CIT(A) observed that assessee has promised to pay outstanding self-assessment tax by 31.12.2012 and paid most of the amount by that date. Though, the assessee has not completed his entire liability by 31.12.2012, however, completed by 15.01.2013, therefore, the observations of AO that the assessee has not fulfilled his obligation to pay tax is not correct. The assessee has paid till 31.12.2012 an amount of ₹ 3,77,00,000/- and remaining balance of ₹ 47,76,310/- was paid on 15.01.2013. The ld. CIT(A) also considered the financial constraint of the assessee and observed that the contentions of the assessee that non-deposit of admitted tax liability due to the delay in receipt of payment from MCGM appears to be correct and the assessee tried his best effort to wipe out the tax liability. CIT(A) considered the totality of the fact and the case history related to the earlier years for AY 2010-11 and 2011-12 observed that such penalty was levied for those years and restricted the penalty to 10% of the total tax payable.
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2017 (2) TMI 25
Ex-parte assessment u/s 147 - rejection of objections raised by the assessee - Additions on the basis of A/c Statement received from the Bank - Right to be heard - denial of principle of natural justice - non speaking order - Held that:- The mere fact that written submissions were filed by the assessee, it is of the view cannot be so construed that the right to be heard was given up. Thus taking note of the fact that although more than sufficient opportunity has been provided to the assessee during the remand proceedings and the appellate proceedings, it is find one more opportunity on facts ought to have been provided as in the eventuality the written submissions were considered to be not sufficient to support the claim, an opportunity of being heard as per law ought to have been given. Thus in the face of the fact that the grievance of the assessee still persists the impugned order is set aside to the file fo the Ld.CIT(A) directing the said authority to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.
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Customs
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2017 (2) TMI 11
Release of seized goods - import of Multi-Functional Devices - whether MFDs would come within the category of "hazardous waste" or not? - Held that: - this Court is not inclined to release the goods placing reliance on the decisions cited. Especially since the original authority has not considered the issue and the impact of the declarations made by the different High Courts on the facts of the instant case. The issue cannot be dealt with on the basis of the provisions in the Customs Act alone. There are specific rules provided for import of hazardous waste and other wastes, which requires authorisation from authorities and import of second hand goods is specifically prohibited by the Foreign Trade Policy brought out by Government of India, Ministry of Commerce and Industry, Department of Commerce. In the context of what has been stated above by the Department, this Court is not inclined to grant an order for provisional release. The adjudicating authority would have to consider the issue and adjudicate on the same in a time bound manner.
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2017 (2) TMI 10
Recovery of establishment charges - Held that: - The petitioner was given a Private Bonded Wareouse Licence, dated 17.10.2002, with a condition that they should pay the establishment charges, i.e., pay and allowances, if any, and other supervision charges of the staff members of the Customs Department. Subject to the said proviso only, the petitioner was given the Private Bonded Warehouse Licence. Therefore, it is not open to the petitioner to repudiate the same or resile from their obligation, and say that they will not make payment - this Court does not find any merit in the claim of the petitioner that they are not liable to make any payment to the Customs Department towards establishment charges - petition dismissed - decided against petitioner.
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2017 (2) TMI 9
Classification of imported goods - Benefit of exemption under N/N. 6/2006-CE dated 1st March 2006 - appellant classified the goods as under heading 85235210 of the first schedule to the Customs Tariff act, 1975 as ‘SIM modules' - revenue's claim that the imported goods are classifiable under heading 8542 of first schedule to Customs Tariff Act, 1975 as 'integrated chip modules' and hence not eligible for exemption from additional duty that is extended under relevant notification to 'smart cards' - whether the imported goods are SIM modules or integrated chip modules? Held that: - u/r 2(a) of the General Interpretative Rules supra, SIM as imported, is liable to be treated as a finished 'SIM card'. Denial of benefit of exemption notification on the ground that it is not card but a mere precursor to card would create an anomalous situation. SIM embedded in a card with a personalization, imported from abroad would be eligible for the exemption notification. On the other hand, the bulk of the 'SIM cards’ sold in the market, also imported and subject to personalization in India for different mobile service providers, would render the goods liable to additional duty. The coverage of sl.no.22(1) of N/N. 06/2006-CE supra would be available only to mobile service operators, who either import the embedded SIMs, or to entities who enter into exclusive supply contracts with a specific service provider. The SIM imported in reel is a 'card' classifiable under heading 8523 as a 'smart card' fulfilling all the essential ingredients of a 'smart card' - benefit of notification allowed - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 8
Provisional release of imported goods - despite repeated requests, the application for provisional release has not been considered - Held that: - the respondents shall expedite the process and ensure that an order is made on the provisional release application as early as possible and preferably within two weeks from today. The respondents shall also take into account the amounts deposited, while imposing any condition it warrants necessary - petition disposed off - decided partly in favor of petitioner.
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2017 (2) TMI 7
SEZ - condition of mandatory physical export - manufacturing recycled plastic raw material from the imported plastic scrap in the zone - As per the policy dated 17.9.2013, Units have been restrained from carrying out any broad band activity with regard to unrelated products, all the manufactured goods are required to be physically exported out of country gradually from second year onwards and from fifth year onwards, 100% of goods manufactured in the SEZ is to be physically exported. Some penal actions have also been referred in the Policy for breach of any conditions. Held that: - the Central Government while notifying any area as Special Economic Zone etc. has to consider generation of additional economic activity, permission of export of goods and services. It is true that the important feature of establishing SEZ is to promote the activities of export on goods and services but it does not prevent the units established in SEZ to sell such goods in domestic tariff area (DTA) - the Central Government is empowered to make Rules by notification for carrying out the provisions of this Act under Section 55 of the Act. In sub-Section (2) of Section 55, it is made clear that certain matters are required to be covered while framing the Rules. The relevant conditions of the policy of 2013 are not in consonance with the Rules since none of the Rules prohibit the unit established in SEZ to remove the goods in DTA. Under Section 55 (3) of the SEZ Act, no rules are amended and, therefore, when the petitioner units are following the rules, particularly, Rule 53 of the Rule and in accordance with Section 30 of the Act and paying the custom duty in foreign currency, there was no need to impose conditions as per the guidelines of 2013. When Section 30 itself provides the payment of custom duty with regard to removal of goods manufactured in SEZ to Domestic Tariff Area and the conditions specified in the Rules, there is no reason for the Authority to issue a Policy with regard to plastic manufacturers only and compelling them to remove the goods out of India. Petition allowed - decided in favor of petitioner.
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Corporate Laws
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2017 (2) TMI 4
Scheme of Amalgamation - Held that:- Considering the approval accorded by the shareholders and creditors of the petitioner companies to the proposed Scheme of Amalgamation and the affidavits filed by the Official Liquidator and the Regional Director, Northern Region, not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. The petitioner companies will comply with the statutory requirements in accordance with law. Certified copy of this order be filed with the Registrar of Companies within 30 days. It is also clarified that this order will not be construed as an order granting exemption from payment of stamp duty as payable in accordance with law. Upon the sanction becoming effective from the appointed date of amalgamation, i.e. 1st April, 2015, the transferor company shall stand dissolved without undergoing the process of winding up.
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2017 (2) TMI 3
Compounding of alleged offence committed under under section 217(2AA) of the Companies Act, 1956 - In what types of cases, the CLB/NCLT can exercise its powers under Section 621A of Companies Act, 1956, for composition of offence(s), without reference to Criminal Court? - Whether the present case is a fit case to allow composition of alleged offence? - Held that:- In the light of the above discussions of the provisions of section 621(A) of the Companies Act, 1956, and the interpretations given in the Hon’ble High Court of Delhi in VLS Finance Ltd. [2003 (11) TMI 334 - HIGH COURT OF DELHI] there is no iota of doubt about jurisdiction and power of the Company Law Board or NCLT to consider for composition of offences under the Companies Act, 1956, either before or after institution of the prosecution and, the only exception is in a case, where the offence alleged is liable to be punished with imprisonment only or with imprisonment and also with fine. However, the Criminal Court does not have any jurisdiction before the Institution of criminal case but whereas the Company Law Board/Tribunal has power and competency, under the Companies Act, to entertain even suo moto application before institution of criminal. It is not in dispute that offence in question is compoundable and, the applicants have also declared unequivocally that the new management of the Company has taken appropriate actions and implemented policies/designs to prevent any future defaults. It is not in dispute that the present offence is the first of its kind committed by the Company and, the Registrar of Companies also has not opposed the case and left it to the consideration of Tribunal as per merits. The Company also committed not to recur this type of the offences in future. In the light of the facts and circumstances of the case and, also in the interest of Justice, we are inclined to allow the present application by exercising the powers conferred under Section 621A of the Companies Act, 1956, however, subject to payment of compounding fees for the alleged offence committed U/s. 217(2AA) of the Companies Act, 1956. Thus direct each applicants to pay ₹ 20,000/- (Rupees Twenty Thousand Only) which is the maximum penalty as prescribed under Section 217(6) of the Companies Act, 1956 within a period of three weeks from the date of the receipt of the copy of the order.
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2017 (2) TMI 2
Winding up petition - outstanding dues - Held that:- On facts, it is clear from the material placed on record that there is an admission by the APIIC at the highest level, viz., the Managing Director, that a substantial amount of money is due and payable to the company petitioner after adjustment of the amount already paid. The company petitioners dues stand at ₹ 8,18,36,584/-. No action having ever been initiated by the APIIC to raise a dispute as to its liability to pay the amount aforestated or as to delayed discharge of contractual obligations by the company petitioner, it is too late in the day for it to now raise the ruse of a bonafide dispute to ward off the summary proceedings initiated under the Act of 1956 for its winding up. As pointed out by the Supreme Court in IBA HEALTH (INDIA) PRIVATE LIMITED [2010 (9) TMI 229 - SUPREME COURT OF INDIA], mere commercial solvency of the APIIC is of no avail in the present situation as the same would only be a useful aid in deciding whether the refusal to pay the debt is a result of a bonafide dispute as to the liability or whether it reflects an inability to pay. The Supreme Court further observed that if there is no dispute as to the companys liability, the solvency of the company might not constitute a stand alone ground for setting aside a notice under Section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid and if the company refuses to pay without genuine and substantial grounds, it should not be able to avoid the statutory demand. We therefore find no grounds to interfere with the order of admission of the company petition. However, we are of the opinion that another opportunity should be afforded to the APIIC to make good the payment due to the company petitioner in terms of the order under appeal, as the real fault in this regard lies, not with it, but elsewhere. We therefore grant two months time from today to the APIIC to deposit the sum of ₹ 8,18,36,584/- to the credit of Company Petition before the Registrar (Judicial) of this Court. In the event the APIIC does so, the company petition itself would stand dismissed as ordained by the learned Company Judge. The company petitioner would be entitled to withdraw the amount so deposited by approaching the Registrar (Judicial).
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PMLA
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2017 (2) TMI 1
Protection in respect of conviction for offences - money laundering - Held that:- A lot was argued on behalf of the respondents as regards the conduct of the applicant. It was pointed out that in the past, for two times, the summons issued by the authority were not honoured. This, according to the respondents, is suggestive of the fact that the applicant is not willing to cooperate in the investigation. Mr. Chaudhary, the learned senior counsel appearing for the applicant pointed out that when the first summons was served, the father of the applicant informed that the applicant was with the C.B.I. for the purpose of interrogation. When the second summons was served, it was pointed out that since the documents have been asked for, it would take some time for the applicant to collect the same and he would, thereafter, appear before the authority. I am not so much concerned as regards the conduct of the applicant. I expect the applicant to extend full cooperation in the course of his interrogation which the authority wants to undertake in connection with the ECIR referred to above. Even otherwise, the person summoned under Section 50 of the Act, 2002 is bound to state the truth upon any subject respecting which he is examined or make statement, and produce such documents, as may be required. In view of the aforesaid, I hold that although the applicant cannot claim the relief, as a matter of right, yet as of abundant caution and prudence, I am inclined to permit the counsel of the choice of the applicant to remain present within visible distance, but beyond the hearing range. In the result, this application is allowed. Direct the respondent No.2 to permit the advocate of the applicant to be present during the interrogation of the applicant. The advocate concerned should be made to sit at a distance beyond the hearing range, but within the visible distance and the lawyer must be prepared to be present whenever the applicant is called upon to attend such interrogation. Also take notice of the fact that the applicant was directed to remain present on 2nd January 2017. It will be open for the authority to issue a fresh summons under Section 50 of the Act, 2002 to the applicant asking him to remain present on a particular date. On receipt of such summons, the applicant shall remain present before the authority for the purpose of interrogation. Rule is made absolute to the aforesaid extent. Direct service is permitted.
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Service Tax
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2017 (2) TMI 24
Refund claim - N/N. 5/2006 dated 14.3.2006 - the appellant has entered into an agreement with the foreign parties in terms of which they were required to give advice on opportunities related to companies incorporated, headquartered or doing business in India - whether the services rendered by the appellant are used outside India? - Held that: - the services rendered by the appellant to the foreign service receivers are to be considered as used outside India. However, the Id. DR has pointed out that some of the conditions specified in the notification such as non-submission of relevant documents, the export invoices, use of input service in the export service etc. have not been annexed with original refund application. For this purpose, matter remanded to the original authority - appeal allowed by way of remand.
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2017 (2) TMI 23
Refund - period of limitation - service tax was paid under pressure from the department - Whether the CESTAT was correct in allowing the Appeal of the Respondent contrary to the ground of limitation under the provisions of Section 11 B of the Central Excise Act, 1944 as made applicable to the service tax matters? - Held that: - A conjoint reading of the letters establishes that the payments were made under protest. If the payments were made voluntarily and without reservation the assessee would not have addressed either of the letters dated 07.06.2006. The fact that by the letters the assessee contended that it was not liable to pay the tax, sought a clarification and protested about it being required to pay the amount under pressure from the Department indicates that the assessee made the payments under protest. The nature of the contents of the letter further establishes the same. The assessee referred to the provisions of law, analysed the same and expressly contended that it was not liable to service tax. In that view of the matter, it cannot be said that the payments were made voluntarily and without protest - appeal allowed - decided in favor of assessee.
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2017 (2) TMI 22
Valuation - C&F Agency services - consideration received under various headings like salary of staff, rent of godown, miscellaneous receipts etc. - appellants claim that the amounts are towards reimbursement of the expenditure incurred by them and not to be added in the gross value for service tax - Revenue claims that all amounts received by the appellants in connection with providing C&F Agency services are to be added for calculating service tax. Held that: - the Hon’ble Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India [2012 (12) TMI 150 - DELHI HIGH COURT] dealt with the scope of Section 67 (1), though the new valuation rule was also subject matter of decision by the Hon’ble Delhi High Court. The general principles of valuation and non-inclusion of certain cost and expenditure incurred by the service provider was the subject matter of the said decision. We also note that on similar set of facts, this Tribunal set aside the demands for extended period waived the penalties also - demand restricted to normal period - penalty waived - appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 21
Works contract - Erection, Commissioning and Installation Services - liability of tax for the period 01.10.2004 to 31.03.2009 - benefit of N/N. 1/2006-ST - denial on the ground that certain plant, machinery and equipment were supplied by the recipient of service - Held that: - the appellant executed composite works contract but service tax liability will arise with effect from 01.6.2007 as held by the Hon'ble Supreme Court in Larsen & Toubro Limited [2015 (8) TMI 749 - SUPREME COURT] - the appellant not liable to service tax paid up to that date, in respect of composite works contract involving supply of materials and labour. The appellants were registered with the department and were discharging service tax under the category of Construction service. The proceedings initiated now are to re-classify the service under Erection, Commissioning and Installation Service - the appellants were registered with the department and discharging service tax under a different category of service. There can be no allegation of fraud, collusion or willful mistake to invoke the extended period. We find that the demand, if any, should be limited to a normal period under the category of Works Contract as claimed and admitted by the appellant - no penalty shall be leviable on the appellant and appellants are rightly eligible for waiver of penalties under section 80 of the Finance Act, 1994. Appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 20
Extended period of limitation - for the period 01.04.2006 to 30.06.2006, the show cause notice was issued on 13.07.2007 - Held that: - In absence of availability of documents, there was no scope on the part of the authorities to know about the activities of the appellant. Since the show cause notice was issued within a period of one year from the date of acquiring the knowledge regarding the activities of the appellant, the same in our view is not barred by limitation of time - appeal dismissed - decided against assessee.
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Central Excise
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2017 (2) TMI 19
Sick Company - CENVAT credit - refund claim - petitioner's claim is that they are sick company, and there is no point in having CENVAT credit for a sick Company. The petitioner actually wants the amount of refund to be paid to the State Bank of India, which is a secured creditor - is claim of petitioner justified? - Held that: - A careful look at the order in appeal passed in favour of the petitioner directing refund, shows that this is a case where the petitioner paid excess duty, but did not pass on the incidence of such duty to any other person. Such a finding is recorded by the Commissioner (Appeals) and the said order has also attained finality. Therefore, this case, in our opinion, falls within Clause (e) under the proviso to sub-section (2) of Section 11B. The petitioner is not asking the money to be paid into his account. He is only asking the money to be paid to the State Bank of India towards discharge of some loan. In such a case, the payment to the Bank would also act, probably as a recovery for the Bank. The respondents are directed to pay the amount directly to the lien account - petition allowed - decided in favor of petitioner.
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2017 (2) TMI 18
100% EOU - refund claim - cenvat credit - insurance service - catering services - employees health insurance services - time bar - Held that: - canteen services fall in the definition of input service and the appellant is entitled to claim refund of CENVAT credit in respect of outdoor catering services - as per the Board's Circular No.120/1/2010-ST dated 19.1.2010, there cannot be a different yardstick for establishing the nexus for taking of credit and for refund of credit - Similarly with regard to refund of CENVAT credit of service tax on general insurance services and employees group medical and health insurance services, these services are held to be input services as there is a mandatory requirement under the labour law to take insurance policies, credit allowed - refund allowed. Time bar - Held that: - as per the judgment of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT OF INDIA], it was held that for every kind of refund, the time limit as prescribed under Section 11B is applicable - refund of ₹ 5,66,916/- is time bared, and is rightly rejected. Appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 17
CENVAT credit - input service - whether GTA service availed by the appellant prior to 1.4.2008 to deliver the output to the buyer at his place shall be construed as input service? - Held that: - reliance was placed in the case of Commissioner of Central Excise, Chennai II Vs. Lucas TVS Ltd. [2016 (4) TMI 189 - CESTAT CHENNAI], and it was held that the service of GTA availed before 1.4.2008 shall be input service according to the term upto the place of removal used in Rule 2(l) of CENVAT Credit Rules, 2004 - appeal allowed - decided in favor of assessee.
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2017 (2) TMI 16
CENVAT credit - manpower recruitment service - manpower recruitment service was utilized for maintenance of the factory, upkeep of garden and also assisting in canteen maintenance under Factories Act - security service - AMC service - Commercial construction service - Rent-a-cab service - penalty - Held that: - manpower in factory maintenance and canteen maintenance is permissible since the maintenance of such organizations is a requirement of Factories Act. So far as upkeep of garden is concerned, that has no connection to the manufacturing activity for which no CENVAT credit on such count shall be permissible. Security service - Held that: - the service being essential for the purpose of carrying on business, the CENVAT credit relating to such aspect is permissible. AMC service - Held that: - the service not being utilized in manufacture of any goods, no CENVAT credit of the service tax paid in respect of such service is permissible. Commercial construction service - Held that: - the service being carried out for the purpose of factory, CENVAT credit of the tax paid to avail such service is permissible. Imposition of penalty - Held that: - there was no intention to cause evasion for which the penalty imposed would be harsh - penalty set aside. Rent-a-cab service - Held that: - There is no evidence to substantiate the claim that the service so availed was in relation to manufacture. In absence of any integral connection and evidence, CENVAT credit of service tax paid on this service is not allowable - it was only misconception of law by the appellant to claim the benefit, there shall be no penalty. Appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 15
CENVAT credit - inputs services availed by the appellant for rent paid in respect of their head office - denial on the ground that the head office has not been registered as Input Service Distributor (ISD) as defined under Rule 2 (m) of the Cenvat Credit Rules, 2004 and requires to be distributed in the manner laid down in Rule 7 ibid - Held that: - reliance was placed in the case of Murugappa Morgan Thermal Ceramics Ltd. Versus Commissioner of Central Excise, Chennai [2016 (6) TMI 313 - CESTAT CHENNAI], where it was held that non-registration as ISD should not deprive the assessee of substantial benefit of credit - matter remanded to the original authority for de novo consideration - appeal allowed by way of remand.
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2017 (2) TMI 14
Stay of proceedings - The plea of the petitioner herein is untill the proceedings in the Appeals preferred by them before the 2nd respondent/department, is finally disposed of, the proceedings pending for criminal case filed by petitioner in C.C.No.49 of 2013, before Principal Special Judge for CBI cases, Chennai, may be directed to be stayed - Held that: - the criminal proceedings pending before the trial court shall go on and there is no need to entertain the plea of the petitioner to stay the proceedings in C.C.No.49 of 2013 - the criminal case is decided on the basis of evidence adduced therein and cannot be rejected on the basis of evidence in departmental proceedings and therefore, both proceedings pending before the CESTAT and the trial court shall go on simultaneously and there is no impediment for the same - petition disposed off - decided against petitioner.
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2017 (2) TMI 13
Maintainability of appeal - dismissal on the account that the documents annexed with the memorandum of appeal are not legible - Held that: - at the relevant point of time, the petitioner had submitted all the relevant documents on which it proposes to rely upon. However, due to lapse of time the documents have faded - the Tribunal is required to be restrained from passing similar orders dismissing the appeals on account of non-maintainability merely because the certain documents are not placed or the documents have become illegible due to lapse of time. The matters requires reconsideration - appeal restored - decided in favor of appellant.
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2017 (2) TMI 12
CENVAT credit on capital goods - Held that: - It is an undisputed fact that the said Vertical Storage Tanks are installed in the premises of the Customers and not in the premises of the manufacturer. As per the definition of Capital Goods under rule 2(a) of CCR, the said goods should be used in the factory of the manufacturer of the final products. As regards the credit availed on Portable Cryogenic Vessels, I find that the said Vessels are used for supply/ transportation of gases in liquid form and not for packing. Hence, the argument of the Appellants, that they were packing materials, cannot be accepted. Keeping in view the facts and circumstances of the case and the reasoning given by the learned Commissioner (A), I do not find any infirmity in the impugned orders and I therefore uphold the same by dismissing all the four appeals of the appellants.
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CST, VAT & Sales Tax
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2017 (2) TMI 6
Recovery of arrear sales tax - whether the liability of arrear tax can be fastened on the dealer and on transfer of the ownership of the units of the dealer, the transferee becomes liable for arrear tax? - Held that: - this Court after taking into consideration the judgments rendered in the case of National Iron and Steel Rolling Corporation [1994 (12) TMI 72 - SUPREME Court], has been pleased to hold that the Corporation has converted into money assets over which the Crown has a first charge, the Sales Tax Officer has called upon the Corporation to satisfy the sales tax dues first and as such, the contention of the petitioner that the sales tax liability can be realized from the opposite party no.4, is not worthy to be accepted - petition dismissed - decided against the petitioner.
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2017 (2) TMI 5
Withdrawal of Compounding u/s 8 - re-constitution of the firm due to death of the partner - The petitioner's contention is that since the compounding has not been accepted and an order passed, the petitioner cannot be asked to continue compounding and the petitioner is entitled to resile from the compounding scheme, which, is a contract between parties which would be concluded only on an order being issued - Held that: - evidently the compounding application was allowed by the Department on 17.05.2016. The application for withdrawal was made on 22.07.2016, received by the authority on 25.07.2016. It is also evident from the facts disclosed that the partnership firm had filed a return for one month ie: April 2016 and paid tax as per the compounding scheme. The contention of the stoppage of the unit also cannot be believed since even as per the returns filed by the assessee for the months of May to August, 2016, there was tax payable on conceded turnover and the same paid under Section 6 as evidenced from Exhibit P8 series of returns. Court has found that there is no reason for the Assessing Officer to consider the withdrawal application, since the assessee has already acted in accordance with the compounding application made and remitted the tax due under the scheme. The order granting permission to compound was also made on 17.05.2016. Based on it, the assessee could be considered to have not paid the tax; but, however, this Court is of the opinion that there can be no penalty imposed for reason of there being no evasion attempted by the petitioner. The issue is one of non-payment or default in payment and not an evasion. Petition allowed - decided in favor of petitioner.
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