TMI Tax Updates - e-Newsletter
February 4, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Interest receipt or discount on deposits, loans or advances, which is exempted, shall not be considered for computing aggregate turnover in order to determine eligibility for composition scheme.
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GST:
Intermediary services - pure and mere promotion and marketing services - The service of facilitating a supply of goods between the Principal and the customers is provided by the Appellant to the overseas client. The Appellant is not supplying such goods on his own account - to be classified as an ‘intermediary service’
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GST:
Naturally bundled services - the question of being naturally bundled does not arise for the reason that every promotional activity with prospective customer does not result in a sale. Further, every sale does not necessarily mean that installation support or after sale support is required.
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GST:
Detention of vehicle along with goods - When the writ petitioner is a registered dealer, when the tax in respect of the goods have already been remitted and when the transportation of goods is duly covered by proper documentation, the respondent ought to have taken a sympathetic and indulgent view of the lapse committed by the driver of the vehicle
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GST:
Jurisdiction to detain the goods - The squad officer can intercept the goods, detain them for the purpose of preparing the relevant papers for effective transmission to the jurisdictional assessing officer. It is not open to the squad officer to detain the goods beyond a reasonable period. The process can at best take a few hours.
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GST:
Jurisdiction to detain the goods - HC uphold the power of Assistant state tax officer to call upon the person in charge of the conveyance to produce the documents in question for verification.
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GST:
Jurisdiction to detain the goods - Commissioner directed to issue a circular to all the inspecting squad officers in Tamil Nadu not to detain goods or vehicles where there is a bonafide dispute as regards the exigibility of tax or rate of tax.
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Income Tax:
TDS u/s 194C - we cannot absolve the assessee from the liability to deduct tax at source merely on the ground of there existing no written contract.
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Income Tax:
LTCG - Section 54 does not lay down that the construction of the new house must taken after the sale of the old residential house or that the sale proceeds of the old residential house must be used for the construction of the new residential house.
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Income Tax:
Addition u/s 68 - enhancement u/s 251(1)(a) by CIT-A - CIT(A) is not competent to enhance the assessment taking an income which income was not considered expressly or by necessary implication by the Assessing Officer at all.
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Income Tax:
TDS u/s 194H - How the said incentive has been treated to be as ‘commission’ is not clear, because once assessee has said that the incentive given to his ex employee was in the nature of salary, then simply rejecting the contention without any basis cannot be sustained.
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Income Tax:
MAT computation - re-computation of book profit u/s 115JB - since the assessee has not routed the benefit got out of onetime settlement of loan from the banks through P&L Account, the AO has rightly made addition to book profit computed u/s 115JB in respect of addition made u/s 41(1) of the Act.
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Income Tax:
Addition towards share premium u/s 68 - The definition of income as provided under section 2(24) at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013
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Customs:
Jurisdiction - power to issue SCN - the Additional Director General of DRI is also a proper officer to perform functions in connection with the various provisions of the Customs Act.
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Service Tax:
Valuation - inclusion of expenses and salaries paid to the Security Guards and the statutory payments like contributions to ESI and EPF in gross value - Vires of Section 67 in Chapter V of the Finance Act, 1994 - The provision is not ultra vires - Petition dismissed.
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Service Tax:
Levy of service tax - photography service - Merely because the appellant does not have a studio or has own industry not registered as commercial concern would not take him out of the ambit of the photography service as he is a professional photographer - demand upheld.
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Service Tax:
Extended period of limitation - apart from a bald allegation that appellant suppressed facts there is no positive act on the part of appellant brought out in show cause notice or impugned order as to suppression - appeal succeeds on limitation coupled with revenue neutrality
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Central Excise:
CENVAT Credit - input services - Travel Service - it is for the Revenue to prove that the same were used for the personal use/consumption of the employees for which nothing has been brought on record in the case on hand - credit allowed.
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Central Excise:
Refund of accumulated / unutilized CENVAT credit - closure of manufacturing activity - even though there is no provision for grant of refund on account of closure of factory, since the appellant has gone out of the CENVAT credit scheme, they are eligible for refund
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Central Excise:
Supply against International Competitive Bidding - benefit of N/N. 6/2006-CE - exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding.
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Central Excise:
100% EOU - appellant is required to pay customs duty as calculated by the authorities on the inputs consumed for manufacturing of final products which were cleared locally into DTA - CENVAT credit cannot be utilised for payment of customs duty.
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Central Excise:
CENVAT Credit - input services - Outward Goods Transportation Service (from factory to customers, from railway siding to godown and from godown to customers) - October, 2011 to March, 2012 - the order of Tribunal cannot be sustained - credit not allowed.
Articles
Notifications
Customs-
4/2019-Customs (N.T./CAA/DRI) - dated
1-2-2019
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Cus (NT)
Appointment of Common Adjudicating Authority by DGRI
GST-
ORDER No. 02/2019 - dated
1-2-2019
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CGST
Central Goods and Services Tax (Second Removal of Difficulties) Order, 2019
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ORDER No. 01/2019 - dated
1-2-2019
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CGST
Central Goods and Services Tax (Removal of Difficulties) Order, 2019
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Order No. 01/2019-GST - dated
31-1-2019
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CGST
Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Central Goods and Service Tax Rules, 2017 in certain cases
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Order No. 04/2018 - dated
31-12-2018
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CGST
Seeks to extend the due date for furnishing the statement in FORM GSTR-8 by e-commerce companies for the months of October to December, 2018 till 31.01.2019
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Order No. 03/2018 - dated
31-12-2018
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CGST
Seeks to amend Removal of Difficulty Order No. 1/2018 dated 11.12.2018 so as to extend the due date for furnishing of annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the FY 2017-2018 till 30.06.2019
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Order No. 02/2018 - dated
31-12-2018
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CGST
Seeks to extend the due date for availing ITC on the invoices or debit notes relating to such invoices issued during the FY 2017-18
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ORDER No. 1/2018 - dated
11-12-2018
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CGST
Removal of difficulty order regarding extension of due date for filing of Annual return (in FORMs GSTR-9, GSTR-9A and GSTR-9C) for FY 2017-18 till 31st March, 2019
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ORDER No. 01/2019 - dated
1-2-2019
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UTGST
Union Territory Goods and Services Tax (Removal of Difficulties) Order, 2019
GST - States-
19/GST-2 - dated
31-1-2019
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Haryana SGST
Seeks to amend Notification No. 131/ST-2, dated the 22nd November, 2017
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18/GST-2 - dated
31-1-2019
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Haryana SGST
Seeks to amend Notification No. 34/ST-2, dated the 30th June, 2017
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16/GST-2 - dated
31-1-2019
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Haryana SGST
Notification to bring into force the HGST (Amendment) Act, 2018
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (2) TMI 126
Intermediary services - pure and mere promotion and marketing services - after sale support services - place of supply of services - naturally bundled services - section 12 of the Integrated Goods and Services Tax Act, 2017 - composite supply of services - principal supply - client is overseas entity - exports or not - zero-rated supply - challenge to AAR decision. Whether the promotion and marketing activities undertaken by the Appellant for the overseas Principal, are to be classified as ‘intermediary services’? - Held that:- There does not seem to be any difference between the meaning of the term “intermediary” under the GST regime and pre-GST regime. In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account. The phrase ‘such goods or services’ used in the definition of ‘intermediary’ implies that the person should not be supplying on his risk and reward entirely, the very goods or services whose supply he is arranging or facilitating - In the instant ease, the Appellant is facilitating the supply of the products of Brabender between the Principal in Germany and the Principal’s customer in India. He is not supplying the products of Brabender on behalf of the Principal. He is only arranging the contact between the Principal and the Principal’s customer and the actual supply of the products is done by the Principal directly to the customer. The service of facilitating a supply of goods between the Principal and the customers is provided by the Appellant to the overseas client. The Appellant is not supplying such goods on his own account. The argument of the Appellant that the promotion and marketing services are supplied to the Principal on their own account and hence they fall within the exclusion clause of the definition of intermediary is not a correct interpretation of the law - the Appellant is clearly facilitating the supply of the products of the overseas client directly to the client’s customers in the territory of India and is not supplying such goods on his own account. Therefore, the Appellant does not fill within the ambit of the exclusion. The decision of the AAR is upheld that the service of promotion and marketing of the products of the overseas client is in the nature of facilitating the supply of the products of the overseas client and is appropriately classified as an ‘intermediary service’ as defined under Section 2(13) of the IGST Act - Having concluded that the service supplied by the Appellant is classified as an ‘intermediary service’ as defined under Section 2(13) of the IGST Act, it automatically flows that the place of supply of such service will be in terms of Section 13(8) of the IGST Act. Whether the after-sales service provided under a composite contract would amount to a composite supply and if so what would be the principal supply? - Held that:- There is no dispute that the Agency contract in question involves two taxable supplies of services i.e promotion and marketing service and after-sales support service. However in order for the supply to be termed as a ‘composite supply’, what is required is that the supply of the said services should at least be bundled, more specifically be ‘naturally bundled’, and supplied in conjugation with each other. The term ‘naturally bundled’ has not been defined in the GST Act - the question of being naturally bundled does not arise for the reason that every promotional activity with prospective customer does not result in a sale. Further, every sale does not necessarily mean that installation support or after sale support is required - the after sales support service, although rendered in a composite manner with the promotion and marketing service is not a composite supply. The price for the after sale support service is clearly identifiable and has been so stated in the contract itself - ruling of AAR upheld. Whether the above contracts would qualify as exports in terms of Section 2(6) of the IGST Act and Will be a zero-rated supply as provided under Section 16 of the said Act? - Held that:- One of the important requirements for supply of any service to be treated as ‘export of service’ is that the place of supply of service is outside India. The provisions for determination of place of supply of services where the location of the supplier or the location of the recipient of services is outside India are contained in Section 13 of the IGST Act, 2017. Thus. the entire issue is intrinsically related to determination of ‘place of supply’ of service by the applicant - It is evident from the above that determination of place of supply is not a question on which an advance ruling can be sought. The Authority for Advance Ruling has been constituted in exercise of the powers conferred by section 96 of the Karnataka Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Karnataka. The AAR is a creature of statute and has to function within the legal boundary mandated by the Acts. As the ‘place of supply’ is not covered by Section 97(2) of the Acts, the AAR was right in refraining from answering this question on the grounds of of jurisdiction - AAR ruling upheld. AAR ruling upheld.
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2019 (2) TMI 125
Detention of vehicle along with goods - the driver of the vehicle did not extend proper cooperation - specific stand taken by the writ petitioner is that the driver without knowing the correct route had taken a wrong turn and headed towards Sivakasi - evasion taking place or not? - Held that:- It is not in dispute that the bill is addressed only to the writ petitioner's principal office at Sivakasi; delivery alone is to be made at Virudhunagar. Even if by mistake, a wrong instruction had been given to the driver of the vehicle to head towards Sivakasi. Still it would not really matter. When the writ petitioner is a registered dealer, when the tax in respect of the goods have already been remitted and when the transportation of goods is duly covered by proper documentation, the respondent ought to have taken a sympathetic and indulgent view of the lapse committed by the driver of the vehicle - detention order dated 28.12.2018 and the order dated 11.01.2019 suffer from vice of gross unreasonableness and disproportionality - By directing the writ petitioner to pay a sum of ₹ 5,000/- towards fine to the respondent, the orders impugned in this writ petition stands quashed - petition allowed.
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2019 (2) TMI 124
Jurisdiction to detain the goods - classification of goods in dispute - power of Assistant state tax officer to call upon the person in charge of the conveyance to produce the documents in question for verification - Held that:- there cannot be any doubt that the fourth respondent is the notified Proper Officer in this case. - Similar issue came up for consideration before the Hon'ble Kerala High Court in N.V.K. Mohammed Sulthan Rawther and Sons and Willson Vs. Union of India [2018 (11) TMI 1503 - KERALA HIGH COURT] - The Hon'ble Kerala High Court held that in such cases at best the inspecting authority can alert the assessing authority to initiate the proceedings for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact - the squad officer can intercept the goods, detain them for the purpose of preparing the relevant papers for effective transmission to the jurisdictional assessing officer. The squad officer can intercept the goods, detain them for the purpose of preparing the relevant papers for effective transmission to the jurisdictional assessing officer. It is not open to the squad officer to detain the goods beyond a reasonable period. The process can at best take a few hours. The Commissioner of Commercial Taxes, Chennai is directed to issue a circular to all the inspecting squad officers in Tamil Nadu not to detain goods or vehicles where there is a bonafide dispute as regards the exigibility of tax or rate of tax. Petition allowed - decided in favor of petitioner.
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Income Tax
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2019 (2) TMI 123
Entitlement to deduction u/s 80-IC - whether an “undertaking or an enterprise” (Unit) established after 7th January, 2003, carrying out “substantial expansion” within the specified window period, i.e. between 7.1.2003 and 1.4.2012, would be entitled to deduction on profits @ 100%, under Section 80-IC? - Held that:- SLP dismissed.
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2019 (2) TMI 122
Computation of deduction u/s 10B - Foreign currency provided for software development services outside India – Held that:- SLP dismissed.
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2019 (2) TMI 121
Search and seizure u/s 132 - reason to believe - whether the search and seizer is arbitrary, illegal and violative of fundamental rights of the petitioner - the petitioner society is one of the largest Multi State Cooperative Societies in the field of the Credit - an order was passed u/s 133A(3)(ia) of the Act, by which, the documents as well as electronic media in the form of hard disk/CD/ Pen Drive etc. seized during the course of survey proceedings have been ordered to be impounded - Held that:- SLP dismissed. We are not inclined to entertain this petition under Article 32 of the Constitution of India, since, the petitioners have a remedy available under Article 226 of the Constitution of India.
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2019 (2) TMI 120
Addition u/s 68 - non discharge the burden/condition as given in section 68 - Held that:- The appellant could not discharge the burden/condition as given in section 68. It was noticed by the Tribunal as well as the lower authorities that the assessee has failed to prove the credit worthiness of the creditor and the genuineness of the transaction. It was also noticed that the assessee has neither before the CIT (Appeals), nor before the Tribunal could discharge the burden/condition as prescribed under section 68 with regard to credit worthiness and genuineness of the transactions in the matter. In our opinion, the Tribunal had taken all the relevant facts into consideration and the conclusions arrived at by the Tribunal were not perverse or unreasonable in confirming the order of Commissioner of Income Tax (Appeals). In view of the aforesaid facts, the case, in hand, is squarely covered by the judgment & order rendered by this Court in the case of Ram Baboo Agrawal ( 2017 (11) TMI 740 - ALLAHABAD HIGH COURT). - Decided in favour of the Revenue and against the Assessee
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2019 (2) TMI 119
Revision u/s 263 - Held that:- Section 263 enables enhancement of the demand when invoking such revisional powers. Even then, as correctly pointed out by the learned Counsel for the assessee, there is a specific direction insofar as an opportunity being afforded to the assessee before the disallowance is carried out. There is also a requirement for a demand to be raised after such disallowance is carried out by the AO. There could be no condition imposed for the period in which the appeal against Section 263 order is pending before the Tribunal. We, hence, delete the direction insofar as the condition imposed for not proceeding with the recovery, especially since the stage of recovery has not yet reached. However, we make it clear that if there is a demand made as a result of the consequential order, then the Revenue would be enabled to take out appropriate proceedings, subject however to any challenge made to that consequential order. We are of the opinion that by virtue of Section 263 order alone, there could be no recovery effected
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2019 (2) TMI 118
TDS u/s 194C - payment in excess of the wage liability to the workers employed by the assessee - assessee engaged manual labour for the stuffing and de-stuffing - whether no contract between the assessee and the association/firm - Held that:- The assessee's contention lay more emphasis on the absence of a written contract as such. The First Appellate Authority correctly found that there is no requirement for a written contract. There is definitely an implied contract, since it is for the purpose of maintaining industrial peace and ensuring parity in employment of manual labour, that the Association of Stevedore has devised a measure, by which its members employ persons from the two agencies, in which the different manual labourers are enrolled. There is definitely an implied contract and we cannot absolve the assessee from the liability to deduct tax at source merely on the ground of there existing no written contract. We are of the opinion that the payments made by the assessee clearly come under the rigor of Section 194C of the Act. We do not find any reason to interfere with the order of the Tribunal and we also do not discern any question of law as arising from the order of the Tribunal. - Decided against assessee
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2019 (2) TMI 117
Penalty imposed under section 271C - TDS u/s 195 - non deducted tax at source on the remittances to its AE - default under section 201(1)Held that:- Demand raised in pursuance to the order passed under section 201(1) and 201(1A) of the Act, in the mean while, has been deleted / quashed by the Tribunal while deciding assessee’s appeal [2017 (4) TMI 60 - ITAT MUMBAI]. Since, the very basis on which proceedings for imposition of penalty under section 271C of the Act was initiated and ultimately penalty was imposed no longer exists by virtue of the order passed by the Tribunal quashing the demand raised under section 201(1) and 201(1A) of the Act, penalty imposed under section 271C of the Act cannot survive. No infirmity in the order of the learned Commissioner (Appeals) in deleting the penalty imposed under section 271C of the Act. - Decided in favour of assessee.
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2019 (2) TMI 116
Deduction u/s 54 denied - payment made prior to the sale of the old property - assessee made payments after 10.04.2011 i.e. beyond the period of 3 years from the date of sale of old property - as property was not acquired within the stipulated period of three years and consequently, assessee is not entitled for deduction u/s 54 - Held that:- In CIT vs H.K. Kapoor (1997 (8) TMI 44 - ALLAHABAD HIGH COURT) held in unequivocal terms that in view of the decision of the Karnataka High Court in the case of CIT vs. J.R. Subramanya Bhat (1986 (6) TMI 7 - KARNATAKA HIGH COURT) the capital gains arising from the sale of the old house to the extent it got invested in the construction of the new house would be exempt u/s 54 and Section 54 does not lay down that the construction of the new house must taken after the sale of the old residential house or that the sale proceeds of the old residential house must be used for the construction of the new residential house. The law is fairly settled on this aspect that for acquiring the new house, it is not necessary that the assessee must utilize only the sale proceeds of the old house. By respectfully following this line of decision of the higher fora, we hold that the authorities below are not correct in refusing to accept the claim of the assessee to deduct such part of amount which was invested in the construction activity of the new house earlier to the sale of the old house. Turning to the other limb of the contention of the authorities below that the assessee did not acquire the property within three years from the date of the sale of the old house, the fact remains that there is no dispute that except the sum of ₹ 22,91,382/-, the entire sale consideration for the new house was invested on or earlier to 23.3.2011 i.e. within 3 years from the date of the sale of the old house. No substance in the objection taken by the authorities below to disallow the claim for deduction u/s 54 of the Act. - Decided in favour of assessee.
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2019 (2) TMI 115
Revision u/s 263 - MAT - Modification of books profits - Held that:- The provisions of section 115JB is very clear that the profit or loss should be the same as laid before AGM. The assessee cannot alter the book profit by not following an Accounting Standard. What is relevant is the profit adopted in the AGM even after the qualification by the statutory auditors in the given case. Therefore, the profit adopted by the company in the AGM overlooking the qualification of auditor is the final book profit for the purpose of section 115JB, the assessee cannot alter the same by claiming that it had not followed certain Accounting Standards. All the judicial pronouncements relied on by the assessee are the direction to the AO to go beyond and modify the book profit if the assessee not followed the Accounting Standard. The assessee has no right to modify the profit declared as per Companies Act and adopt differently for the purpose of MAT provisions. As per the judicial pronouncements, AO can and must modify the book profit in case the company not followed the Accounting Standards as per the provisions of Companies Act. Whereas the assessee has prepared the financial statement by following accounting system, standards and methods as per the provisions of Companies Act and laid before the company in the AGM. Once the financial statements are ratified by the shareholders, the assessee cannot modify the book profit as per the first provision to section 115JB(2). Therefore, the wrong interpretation of law empowers ld. CIT to invoke provisions of section 263. - Decided against assessee.
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2019 (2) TMI 114
Penalty proceedings u/s 271(1)(c) - disallowance of commission /brokerage on purchases - Held that:- The assessee has been paying brokerage/ commission in the earlier year also and in order to prove the claim, the parties have directly sent confirmations, their income tax returns, bank statement etc. to show that these commissions have been paid to them on account of purchases. Thus, the primary onus cast upon the assessee, stood discharged and even if these persons could not be produced or did not appear inspite of summon u/s 131, that does not mean the material and evidence filed by the assessee was incorrect or has been found to be false. Assessee was able to substantiate its claim though such a claim did not found favour only for the reason that these parties did not appear. There is no other material or evidence on record to show that such payment of brokerage / commission is bogus or is coloured transaction - no penalty can be levied for furnishing of inaccurate particulars of income and same is directed to be deleted - Decided in favour of assessee.
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2019 (2) TMI 113
Addition u/s 68 - enhancement u/s 251(1)(a) by CIT-A - eligibility for deduction u/s 54F - Held that:- Words "enhance the assessment" are confined to the assessment reached through a particular process. It cannot be extended to the amount which ought to have been computed. There being other provisions which allow escaped income from new sources to be taxed after following a certain prescribed procedure. So long as a certain item of income had been considered and examined by the AO from the point of view of its assessability and so long as the CIT(A) does not travel beyond the record of the year, there has never been any doubt as to his powers of redoing the categorization and bringing the assessment within the true description of the law. Claim of the assessee u/s 54F of the act which was rejected after inquiry and further claim alternatively made u/s 54 of the act was also rejected. The issue of verification of capital gain was not the issue which was at all dealt with by the assessing officer, or even a question of verification made by AO. There was no inquiry made by the ld AO on the issue of capital gain shown by the assessee. AO has not at all considered the issue of sales consideration received by the assessee on sale of house as an issue of dispute before him. Therefore according to us, CIT (A) could not have made enhancement on the issue holding that capital gain shown by the assessee itself is not in accordance with the law and given a finding that no capital gain has accrued to the assessee. CIT (A) further held that funds received by the assessee is unaccounted income of the assessee and chargeable to tax u/s 68 of the act. Hence, enhancement u/s 251 (1) (a) of the act is prohibited on the issues which have not at all been considered by the AO during assessment proceedings. This gives the common understanding that the ld CIT (A) cannot enhance income of the assessee on altogether ‘new Source‘. Therefore it is clear that CIT(A) is not competent to enhance the assessment taking an income which income was not considered expressly or by necessary implication by the Assessing Officer at all. Such is the mandate of the decisions of various high courts such as in CIT vs. National Company Ltd. [1990 (8) TMI 16 - CALCUTTA HIGH COURT], Sait Bansilal and Raggisetti Veeranna vs. CIT [1970 (1) TMI 25 - ANDHRA PRADESH HIGH COURT], Sterling Construction & Trading Co. vs. ITO [1974 (5) TMI 22 - KARNATAKA HIGH COURT] and Lokenath Tolaram vs. CIT [1985 (8) TMI 332 - BOMBAY HIGH COURT]. Decided in favour of the assessee. CIT (A) has exceeded his jurisdiction in enhancing the income of the assessee by considering the new sources of income not at all considered by the AO, consequently we allow the ground no 9, 10,11,12 and 13 of the appeal of the assessee where the addition u/s 68 has been made by the CIT (A) enhancing income of the assessee holding that sale consideration received by the assessee on sale of property is chargeable to tax as undisclosed income u/s 68 of the act. We also allow ground of the appeal of the assessee where the sales consideration received by the assessee of sale of property is chargeable to tax as capital gain and not as undisclosed income u/s 68 of the act. Further Ground of the appeal with respect to claim of deduction u/s 54 of the act , we set aside it back to the file of the AO with a direction to verify whether assessee is eligible for deduction u/s 54 or not. Assessee is directed to put its claim in its entirety and ld AO may proceed in accordance with law after granting roper opportunity of hearing. - Decided in favour of assessee.
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2019 (2) TMI 112
Disallowance of bogus purchases - Held that:- It is not in dispute that the purchases of the assessee are not fully verifiable. The book result of the assessee is not reliable and therefore, the lower authorities were justified in rejecting the book result of the assessee. However, keeping in view the above comparable cases which were assessed by the department, it is equally difficult to sustain the assessment made by the revenue. DR could not dispute the fact that the above named persons were engaged in same line of business in which the assessee was engaged in. Therefore, going by the percentage of income assessed in their case ranging from 0.12% to 0.49%, it cannot be believed without cogent material that the assessee could have earned income of 12.33% of its turnover. We, therefore, set aside the orders of the lower authorities. We find that the highest rate of net profit assessed in comparable case for the year under consideration is 0.49% of the turnover. In order to considered opinion it shall be fair and in the interest of justice that the AO is directed to take assessee’s net income at 0.49% of its turnover. Direct AO to recompute the assessee’s income. Thus, this ground of appeal of the assessee is partly allowed.
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2019 (2) TMI 111
Unexplained cash found - unexplained jewellery - Held that:- The impugned order of the CIT(A) wherein he deleted the aforesaid additions of ₹ 5,05,550/- and ₹ 69,92,195/, needs no interference. The cash found, amounting to ₹ 5,05,550/- is fully explained by cash balance, as on 01.08.2011. The AO erred in making addition of the aforesaid amount of ₹ 5,05,550/-, without any reasoning and in the absence of any evidence to show that the cash found was unaccounted or unexplained or undisclosed. Similarly, the Jewellery found from the premises of the Assessee is also fully explained by Wealth Tax Records of various persons. AO erred in making the addition of the aforesaid amount of ₹ 69,92,195/- without proper reasoning, and in the absence of any evidence to show that the Jewellery found was unaccounted or unexplained or undisclosed. AO had no basis to make the addition, when the Jewellery found is fully disclosed in Wealth Tax Records. In view of the foregoing, there is no material to warrant any interference by us with the impugned order of the Ld. CIT(A). We find that in view of the facts and circumstances of this case, the order of the Ld. CIT(A) is sound in law - decided against revenue.
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2019 (2) TMI 110
TDS u/s 194H - Addition of commission expenditure paid on purchases made by the assessee - Held that:- Statement of one commission agent has been recorded who has categorically explained the entire nature and process of the chemicals procured; how he has introduced purchases for providing quality material used in the paper industry; what is the effect if material fails during the trial period; and how the responsibility for losses is to be owned. He has also explained that there is high risk of failure of the product on the basis of quality and why he has paid high commission for the assured quality so that the risk of failure is minimum. Without their being any discrepancy or any inconsistency in his statement, AO cannot discard the said statement and proceeded to make the disallowance of such a claim of payment of commission. Under the facts and circumstances the reasoning given by the authorities below cannot be upheld and accordingly, the disallowance is deleted. TDS u/s 194H - Disallowance of salary paid by the assessee under the head incentives to an ex employee on the ground that no TDS was deducted by the assessee - Held that:- Shri Amit Kumar was an employee of the assessee till last year and in this year he was not employee for the whole time. Assessee has decided to pay him performance based salary instead of regular salary and the salary was paid in the form of incentive based on his support provided to the assessee by visiting the industries on behalf of the assessee during use of the products by the paper industry. AO has held that such an incentive has to be treated as commission and therefore, assessee was liable to deduct TDS u/s 194H. How the said incentive has been treated to be as ‘commission’ is not clear, because once assessee has said that the incentive given to his ex employee was in the nature of salary, then simply rejecting the contention without any basis cannot be sustained. Even if any commission is paid in addition of any salary or wages that also falls in the category of ‘Salary’ in terms of clause (iv) of section 17. Since the assessee has only made payment of ₹ 62,000/- to Shri Amit Kumar and his income was below taxable limit, therefore, there was no requirement to deduct TDS - Decided in favour of assessee.
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2019 (2) TMI 109
Reopening of assessment u/s 147 - assessee has misused the facility of client code modification provided to stock brokers to avail contrived loss - Held that:- We find the AO, on the basis of the information received in the shape of the report of the Investigation Wing of Ahemdabad, reopened the assessment u/s 147 on the ground that assessee has misused the facility of client code modification provided to stock brokers to avail contrived loss. There is no dispute to the fact that the assessee in the instant case has traded at the stock exchange through the broker M/s. Gaurav Investment and Consultancy Private Limited. There is also no dispute to the fact that the Assessing Officer during the course of assessment proceedings has called for certain information from the said broker who has replied to the queries raised by the Assessing Officer in response to notice u/s 133 (6) and there is no allegation by the Assessing Officer in his findings that there was any connivance between the assessee and the broker. Since in the instant case action has been taken us/ 147 after completion of the assessment u/s 153A/ 143 (3) on the basis of report of the Investigation Wing and the Assessing Officer has not conducted any enquiry on the same, therefore, hold that reassessment proceedings initiated in the instant case are not in accordance with law. Accordingly the same is quashed. Since the assessee succeeds on the legal ground, the grounds of appeal challenging the addition on merit become academic in nature for which these are not being adjudicated. - Decided in favour of assessee.
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2019 (2) TMI 108
Penalty u/s 271(1)(c) - non specification of charge - Held that:- AO has not mentioned the specific charge in its penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. The penalty, therefore is deleted. Hence, the ground of appeal of the assessee is allowed. As we have deleted the penalty imposed by the AO & confirmed by the CIT-A on the technical ground, i.e. no specific charge has been invoked as discussed above, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.
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2019 (2) TMI 107
Addition u/s. 68 r.w.s. 115BBE - alleged evidence collected at the back of the assessee and not providing opportunity to examine and cross examine the witnesses - Held that:- In the present appeal i.e. “alleged evidence collected at the back of the assessee and not providing opportunity to examine and cross examine the witnesses” and the same was only raised before the Ld. CIT(A), who did not adjudicate the same, which is against the settled law. Therefore, in the interest of justice, we are of the considered view that CIT(A) has not adjudicated the legal ground no. 3 raised before him, which is very essential to adjudicate upon. Hence, we are setting aside the issues in dispute before us, to the file of the Ld. CIT(A) with the directions to decide the same afresh alongwith ground no. 3 raised before the Ld. CIT(A), which is reproduced above under para no. 5 of this order and accordingly pass a speaking order thereon, after considering all the aforesaid documentary evidences and give adequate opportunity of being heard to the assessee. - Appeal filed by the Assessee stands allowed for statistical purpose.
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2019 (2) TMI 106
Addition on account of alleged unexplained cash credit u/s 68 - Held that:- In order to establish the genuineness of the transaction the assessee supplied the relevant details of the concerned persons to the assessing officer and thus discharged her primary onus. With utter surprise we find no inquiry in order to come to a conclusion before making addition in the hands of the assessee has been conducted by the learned AO. It is relevant to mention that all transactions were routed through banking channels and the assessee duly explained source of income of those creditors. The additions, therefore, cannot be made under section 68 without due process of law. No deliberation on this score was made either by the first appellate authority when the same was again placed before him by the assessee. No remand report, even was not called for by the first appellate authority from the assessing officer before justifying the addition made by the AO. In the absence of any contrary evidence against the assessee up on inquiry made by the authorities below such addition, in our considered view, cannot be sustained in the present facts and circumstances of the case. We, thus, delete the addition made by the authorities below. - Decided in favour of assessee.
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2019 (2) TMI 105
Remission of unsecured loans taxable u/s 41(1) - Held that:- It appears from the record that the assessee had obtained unsecured loan from Metrix Logistic Co. Ltd. in the F.Y. 2004-05 and there were transactions of fresh loans and also repayment of above during the period of F.Y. 2004-05 to F.Y. 2010-11. Such loan was interest free and was unsecured which was obtained for the purpose of acquiring fixed assets by the company from time to time. The balance outstanding of loan amount to the tune of ₹ 2,56,86,457/- during the year under appeal was written off by the company on account of outstanding unsecured loan taken from Metrix Logistic Co. Ltd. from the books of account of the appellant company and corresponding accounting entries were passed. Such written off amount credited to the Profit and Loss account of the company is capital in nature the same was not included as income in the return of income for the year under appeal but the same was added to the total income of the assessee since not offered to tax though characterized as capital income as observed by the AO. We are of the opinion that such waiver of loan for acquiring capital assets cannot be taxed as perquisite u/s 28(iv) as receipt in the hand of the assessee in the form of cash on money neither can be taxed as a remission of liability under section 41(1) since such waiver of loan was not account of liability other than trading liability as rightly followed by the Learned CIT(A). However, whether such loan were utilized for acquiring fixed assets or not no such discussion was not available in the assessment order. CIT(A) directed the Learned AO to verify this particular aspect of the matter by the order impugned before us with a further direction thus in the event it is found to be correct the impugned addition to be deleted to the extent of loans utilized for capital purposes. No infirmity in the impugned order passed by the first appellate authority so as to warrant interference. The question is accordingly answered in the affirmation i.e. in favour of the assessee.
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2019 (2) TMI 104
TPA - ALP determination - assessee was charging cost plus 18% markup to its associated enterprises under the said software distribution segment - as per assessee where the assessee was remunerated at cost plus basis for providing the services to its associated enterprises, then there is no merit in making any adjustment in the hands of assessee - re-allocation of cost - Held that:- In assessment years 2011-12 and 2012-13, re-allocation of cost has been carried out and the analysis filed by the assessee has been accepted as such. This was the position in assessment year 2013-14 despite the fact that in earlier years i.e. assessment years 2011-12 and 2012-13, margins of assessee were re-allocated and upward adjustment on account of international transactions was proposed in the hands of assessee. So, following the principle of consistency, cost allocation method which has been regularly followed by the assessee in allocating the cost to the software distribution segment need not be disturbed and the margins declared by assessee in its transactions with its associated enterprises should be accepted as the said margins are higher than the margins of selected comparables. Where the TPO himself has considered the cost incurred on sales & marketing, delivery services and client care cost centres to be attributable to distribution segment and where the assessee had re-charged cost with 18% markup to its associated enterprises, then cost plus revenue related to the aforesaid cost should also be attributed to the distribution segment. It is not disputed that the TPO had accepted the assessee’s segmental bifurcation to arrive at TP adjustments. The cost allocated to software distribution segment had neither been challenged nor been disturbed by TPO, wherein the operating cost used by the TPO for margin computation of software distribution segment matches the total expenses in Row AA, column 2, matches operating cost used by TPO for margin computation of software distribution segment. Accordingly, no adjustment is warranted in the hands of assessee under the head ‘software distribution segment’. The arm's length price of software development segment is thus accepted to be at arm's length price. Consequently, the addition made by the Assessing Officer / TPO / DRP is deleted in the hands of assessee. DRP including the concern which was persistent loss making - comparable selection - Held that:- The findings of DRP had held that the finding of Tribunal is that the concern could not be rejected merely on account of having loss situation in the current year. Hence, the DRP directed the Assessing Officer / TPO to include the company Nouveau Global Ventures in the set of final comparable companies. This is the only direction given by DRP in respect of any of the comparables. The concern was excluded as it had losses in the said year but it was not persistent loss making concern and hence, we find no error in the directions of DRP to include the said concern in final set of comparables. The ground of appeal No.1 raised by Revenue is thus, dismissed. Treatment of Forex exchange fluctuations - Held that:- As decided in APPROVA SYSTEMS PVT. LTD. VERSUS CIT(A) -IT/TP AND DCIT, CIRCLE-1(1), PUNE [2015 (3) TMI 151 - ITAT PUNE] Forex exchange fluctuation should be treated as operating income for transfer pricing purposes. Accordingly, we hold that Forex exchange fluctuation is to be held as operating in nature and to be included in the margins of software development segment for computing PLI of assessee. Selection of comparable - Held that:- Companies to be rejected as being functionally not comparable to that of assessee who is in software development services.
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2019 (2) TMI 103
Rejection of books of accounts - Estimation of net profit of 8% on total turnover - Held that:- AO was right in rejection of books of account u/s 145 of the I.T. Act, 1961, when the assessee has failed to file complete details of evidences in support of purchase and sales transactions recorded in the books of account. When books of account are rejected, the books results of the assessee could not be relied upon to determine the true and correct profits from the business. The AO has to bring on record some comparable cases of similar nature or estimate a reasonable net profit which is in line with the profit in similar line of business. In this case, the AO has adopted 8% profit, but the said estimation is not supported by any comparable case of similar nature. The AO has adopted 8% profit, which is applicable for specified assessee as per section 44AD. In case of retail traders, the statute provides for 5% profit on total sales. Therefore, we are of the considered view that net profit of 5% would meet ends of justice. Therefore, we reverse the findings of the Ld.CIT(A) and uphold estimation of net profit of 5% on total sales turnover. Waiver of loans by banks as remission or cessation of liability u/s 41(1) - whether waiver of loan by banks is a capital receipt which could not be treated as remission / cessation of liability u/s 41(1) of the Act, as the assessee never derived any benefit or never claimed deduction towards said loan in the past? - Held that:- When a loan is borrowed for the purpose of business of the assessee, the principal amount of loan including any interest waived would constitute income chargeable to tax under the Act. Since the assessee has failed to controvert the finding of facts recorded by the lower authorities that the said loan has been taken for the purpose of acquiring capital asset, we find no reason to interfere with the findings of the lower authorities that the benefit derived by the assessee by way of waiver of loan constitute business profit which is taxable under the head ‘Income from business or profession’. This legal proposition is supported by the decision of Solid Containers Ltd vs DCIT []2008 (8) TMI 156 - BOMBAY HIGH COURT] wherein it was held that if an amount is received in course of a trading transaction even though it is not taxable in the year of receipt is being of capital character, that the amount changes its character when the amount becomes assessee’s own money because of limitation or by way of other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee. In this case, on perusal of facts, we find noticed that the assessee has borrowed working capital loan from banks by way of hypothecation of stocks and receivables. When a working capital loan is waived by banks, the same constitute business receipts chargeable to tax. The Ld.CIT(A), after considering relevant facts, has rightly allowed partial relief of ₹ 17,99,653 which is on account of waiver of term loan and confirmed balance amount being waiver of working capital loan. We do not find any error in the findings of the Ld.CIT(A) and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the assessee. Disallowance of expenses - assessee has credited interest waiver by the banks to P&L Account and has claimed various expenses including depreciation on plant and machinery, bad debt written off, write off of obsolete inventories, debit balances written off, write off of obsolete stores & spares and also claimed direct and administrative expenses including interest paid on loan - Held that:- As during the year under consideration, except for a trading activity of a different product, the assessee did not carry out any business activity including manufacture of its own product. Therefore, the question of use of plant & machinery in its business is ruled out. We further notice that in order to claim depreciation as per provisions of section 32, the assessee has to prove that the said plant & machinery owned by the assessee has been used for the purpose of business or profession in the year under consideration. In this case, since the assessee has failed to prove use of its plant & machinery for its business, the lower authorities were right in rejecting depreciation claimed by the assessee. As regards interest paid, the Ld. CIT(A) has allowed the claim by holding that the assessee has proved payment of interest on borrowing loan for the purpose of business. In regard to the other expenses, the Ld.CIT(A) has observed that the assessee has failed to file any evidence including bills and vouchers to prove that said expenditure incurred wholly and exclusively for business purpose. The Ld.CIT(A) further observed that even though the assessee has failed to prove the necessity of incurring said expenditure, keeping in view the fact that the assessee has regained control over plant & machinery, it has to incur certain expenditure on repairs and maintenance and security and also to incur certain administrative expenditure in order to maintain its corporate status, has allowed an amount of ₹ 25 lakhs towards expenses and balance amount of ₹ 1,17,66,261 has been confirmed. Facts remain unchanged. The assessee failed to bring on record any evidence to counter the facts of finding recorded by the Ld.CIT(A). Disallowing set off of brought forward losses of earlier years - Held that:- We find that the Ld.CIT(A) did not adjudicate the ground taken by the assessee in respect of carry forward and set off of losses . The assessee claims that loss claimed is allowable as it has fulfilled the conditions prescribed u/s 72 of the Income-tax Act, 1961. Therefore, we set aside the issue to the file of the AO and direct the AO to verify the details filed by the assessee to ascertain whether carry forward and set off of losses is allowable or not. In case, the AO found that the assessee has fulfilled all the conditions prescribed under the Act, to allow the benefit of carry forward and set off of losses, then, the AO is directed to allow losses claimed by the assessee. MAT computation - re-computation of book profit u/s 115JB - Held that:- The assessee has not prepared its account in accordance with Parts II & III of Schedule VI to the Companies’ Act and such accounts are not in accordance with the provisions of section 211(c) of Companies Act, 1956. In such cases, the AO has every right to make adjustment towards book profit computed u/s 115JB of the Act. In this case, since the assessee has not routed the benefit got out of onetime settlement of loan from the banks through P&L Account, the AO has rightly made addition to book profit computed u/s 115JB in respect of addition made u/s 41(1) of the Act. Therefore, we are of the considered view that there is no error in the adjustment made by the AO and accordingly, we uphold the AOs finding and reject ground taken by the assessee.
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2019 (2) TMI 102
Addition towards share premium u/s 68 - Held that:- As decided in PRINCIPAL COMMISSIONER OF INCOME-TAX VERSUS APEAK INFOTECH, YOGESH INFOTECH, AMPLY INFOTECH, WESTLINE TRADING COMPANY, JASPER COMMERCE, INEX INFOTECH [2017 (9) TMI 1590 - BOMBAY HIGH COURT] the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. The definition of income as provided under section 2(24) at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have, no application to the share premium received by the assessee in the previous year relevant to the assessment year 2012-13. Similarly, the amendment to section 68 by addition of proviso was made subsequent to previous year relevant to the subject assessment year 2012-13 and cannot be invoked. This court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017 (3) TMI 1263 - BOMBAY HIGH COURT] has while refusing to entertain a question with regard to section 68 of the Act has held that the proviso to section 68 of the Act introduced with effect from April 1, 2013 will not have retrospective effect and would be effective only from the assessment year 2013-14.- Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - Held that:- As there was no exempt income claimed by the assessee in the return of income and accordingly the provisions of section 14A of the Act cannot be made applicable at all . Cases followed - CHETTINAD LOGISTICS PVT. LTD. [2017 (4) TMI 298 - MADRAS HIGH COURT], HOLCIM INDIA P. LTD. [2014 (9) TMI 434 - DELHI HIGH COURT], CHEMINVEST LIMITED [2015 (9) TMI 238 - DELHI HIGH COURT] - decided in favour of assessee.
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2019 (2) TMI 101
Addition u/s 68 of unsecured loan taken by the assessee company - credibility of the corporate entity from whom loan has been taken - Held that:- A.O. has not brought on record any cogent, adverse material to rebut the credibility of the corporate entity from whom loan has been taken. As already pointed out by us as above, that these corporate entities were found by the A.O. to have acquired funds by borrowals and acceptance of share capital and share premium. This by itself cannot lead to presumption that these sources are bogus without any enquiry. DR's request that this issue be again remitted to the file of the A.O. to make further necessary enquiries cannot be entertained. The decision of FIDELITY BUSINESS SERVICES INDIA (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [2018 (7) TMI 1738 - KARNATAKA HIGH COURT] was on a different set of facts, wherein, the Hon’ble Karnataka High Court on the facts and circumstances of the case had upheld the certain direction of the ITAT. In the present case, as pointed out hereinabove, in our considered opinion, the assessee has discharged its onus. A.O. has not brought on required cogent material to rebut the documentary evidence submitted by the assessee nor he made any enquiry. As noted above, the assessee has given all the necessary evidence including the confirmation letters, bank statement, financial statements of the corporate entities. Hence, in our considered opinion, the identity, creditworthiness, genuineness of the transaction has been proved by the assessee and the onus cast upon the assessee has been discharged. In the background of the aforesaid discussion and precedent, we find that the ld. CIT(A) has passed a well reasoned order supported by appropriate case laws duly rebutting all the findings of the A.O. Hence we uphold the order of the ld. CIT(A). Since we have upheld the order of the ld. CIT(A) as regards the deletion of the addition on account of unsecured loan, the disallowance of interest on that account has been rightly deleted by the ld. CIT(A). We uphold the same also. Disallowance u/s 14A - Held that:- We find that the said issue is duly covered in favour of the assessee by the decision of Cheminvest Ltd vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and the decision in the case of Principal CIT vs. Ballarpur Industries Ltd.[2016 (10) TMI 1039 - BOMBAY HIGH COURT]. In these cases, it was expounded that when no exempt income has been earned, no disallowance u/s.14A is permissible. - Decided in favour of assessee.
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Customs
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2019 (2) TMI 100
Jurisdiction - power to issue SCN - Confiscation of seized item - Section 124 of the Customs Act 1962 - case of the writ petitioner is that the second respondent is not vested with the jurisdiction to issue the impugned Show cause notice under Section 124 of the Customs Act 1962 - Held that:- Section 124 of the Customs Act talks about issuance of Show cause notice before confiscation of goods under Section 122 and before adjudication is done under Section 122 of the Act - A reading of the provision as a whole leads to the irresistable conclusion that it is only the proper Officer who can issue the show cause notice. What this Court must see is whether the second respondent has been designated as the Officer of Customs and whether he has been also designated as the 'proper officer' in terms of Section 2(34) of the Act. Section 4 of the Customs Act talks about appointment of Officers of Customs and Section 5 talks about their powers - The second respondent herein is the Additional Director General of DRI and he is referred to in the Column 2. In view of the aforesaid notification, dated 07.03.2002 as amended by subsequent notification dated 16.09.2014, the petitioner will have to be considered as the Principal Commissioner of Customs or Commissioner of Customs. The Principal Commissioner or Commissioner of Customs have been notified as proper officer in relation to various sections of the Customs Act. Vide Notification No.17/2002, dated 07.03.2002 as amended by Notification No.82/2014, dated 16.09.2014, the Additional Director General of DRI is appointed as the Commissioner of Customs. Therefore, on reading the notifications together, this Court has to necessarily held that the Additional Director General of DRI is also a proper officer to perform functions in connection with the various provisions of the Customs Act. The contention of the petitioner's counsel that the second respondent herein does not have the jurisdiction to issue the impugned show cause notice cannot be accepted - petition dismissed - decided against petitioner.
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2019 (2) TMI 99
Refund of SAD - N/N. 102/2007-Cus. dt. 14.09.2007 - rejection on the ground that the condition in clause 2 (d) of the notification that the claimant has to establish that VAT / CST has been paid in the domestic sale is not fulfilled - Held that:- The issue has been considered by the Tribunal in the case of Gazal Overseas Vs CC New Delhi [2015 (12) TMI 427 - CESTAT NEW DELHI] - This very Bench in the case of Kubota Agricultural Machinery India Pvt. Ltd. & Other [2017 (6) TMI 565 - CESTAT CHENNAI] has held the issue in favor of the assessee - rejection of refund not sustainable - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 98
Refund of Duty - verification of Country of Origin (COO) after clearance of goods - denial on the ground that appellants had not challenged the assessment and that unless original order is challenged or modified, the claim for refund does not arise - Held that:- The appellants need not have challenged the assessment to enable them to file the refund claim. The ratio laid down in Priya Blue Industries [2004 (9) TMI 105 - SUPREME COURT OF INDIA] will not apply to the amended provisions of Section 27 (1) of the Customs Act, 1962. In the said case, there was no assessment order as duty was paid under protest which implies there was a dispute - In the appellant’s case, there is no dispute and duty was paid under mistake. A perusal of the Certificate of Origin filed by the appellants in page 133 of the appeal book clearly certifies that the goods were produced in the Republic of Korea and they comply with the origin requirements specified for these goods in the Korea - India Comprehensive Economic Partnership Agreement. It is also noticed that the said Country of Origin has been issued on 24.02.2014 by the Director, Korea Chamber of Commerce & Industry. Further the goods have been loaded at Inchon Port as per Bill of Lading dt. 20.02.2014 - the matter back to the original authority to re-examine the issue only from the aspect of whether documents and certificates submitted by the appellants are adequate to satisfy that the imported goods were indeed originating from the Republic of Korea and therefore qualifying for exemption benefit under N/N. 54/2013-Cus. Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2019 (2) TMI 97
Prayer for directions to the resolution professional to provide all relevant documents including the insolvency resolution plans in question to members of the suspended Board of Directors of the corporate debtor - Held that:- The erstwhile Board of Directors are not members of the committee of creditors, yet, they have a right to participate in each and every meeting held by the committee of creditors, and also have a right to discuss along with members of the committee of creditors all resolution plans that are presented at such meetings under Section 25(2)(i). It cannot be gainsaid that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be furnished copies of such plans beforehand if they are to participate effectively in the meeting of the committee of creditors. This is for the reason that under Section 30(2)(b), repayment of their debts is an important part of the resolution plan qua them on which they must comment. Thus, even though persons such as operational creditors have no right to vote but are only participants in meetings of the committee of creditors, yet, they would certainly have a right to be given a copy of the resolution plans before such meetings are held so that they may effectively comment on the same to safeguard their interest. Under Regulation 36 of the CIRP Regulations, the information memorandum that is given to each member of the CoC and to any potential resolution applicant, will contain details of guarantees that have been given in relation to the debts of the corporate debtor (see Regulation 36(2)(f) of the CIRP Regulations). Also, under Regulation 37(d) of the CIRP Regulations, a resolution plan may provide for satisfaction or modification of any security interest. The arguments of the respondents that “committee” and “participant” are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Equally, the Regulations, far from going beyond the Code, flesh out the true intention of the Code that is achieved by reading the plain language of the Sections that have already been adverted to - So far as confidential information is concerned, it is clear that the resolution professional can take an undertaking from members of the erstwhile Board of Directors, as has been taken in the facts of the present case, to maintain confidentiality. The time that has been utilized in these proceedings must be excluded from the period of the resolution process of the corporate debtor - the appellants will be given copies of all resolution plans submitted to the CoC within a period of two weeks from the date of this judgment - appeal allowed.
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PMLA
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2019 (2) TMI 96
Release of amount confiscated - alleged proceeds of crime - appellant has admittedly has now furnished surety in the court, therefore, the surety being in excess to the controversial amount of Rs. Twenty Three Lacs pertaining to this account, the appellant seeks suitable directions for release of ₹ 29,96,055 - appellant has filed the appeal against the order dated 20-03-2013 passed by Adjudicating Authority in OC-163-12-PMLA which is pending before this tribunal and is now fixed for hearing for 22-04-2019. Held that:- In a way, ED wants to secure double the amount, one a surety given by the appellant as per order of Special Court and secondly on deposit, the FDR shall be prepared and shall not be encashed till the final order of PMLA complaint is decided. The contention of ED cannot be accepted on double attachment without prejudice. The surety given by the appellant may be treated as alleged proceed of crime - ED is directed to deposit a sum of ₹ 29,96,055.65/- in the same account within one week from today. In failure to so the attachment shall be treated as released without any further notice with regard to the said amount. The suggestion given on behalf of applicant is allowed. The applicant shall not deal with the said amount till further order of this Tribunal - application disposed off.
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2019 (2) TMI 95
Possession of attached property - Interim order - whether the ED is entitled to take the possession once the property is already attached by the Prohibition of Benami Property Transaction Act, 1988 and the subject matter which is holding the property in custodia legis? - Held that:- There is no force of the argument of Shri Nitesh Rana to take the possession of the property at this stage as in the case of Kanhaiyalal V. Dr. D.R. Banaji and others [1958 (3) TMI 79 - SUPREME COURT OF INDIA], it is settled that without leave of that court/tribunal, it would amount committing for contempt of the Court as the property is already held by other authority who, ultimately may be adjudged the proceeding as per law. The principle of law laid down also helps the facts of this case prima facie in favour of the appellant - List on 20th May, 2019.
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Service Tax
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2019 (2) TMI 94
Valuation - inclusion of expenses and salaries paid to the Security Guards and the statutory payments like contributions to ESI and EPF in gross value - Vires of Section 67 in Chapter V of the Finance Act, 1994 (Act 32 of 1994) and the amendments made in the Rules and Notifications therein - Held that:- In Union of India v. M/s Intercontinental Consultants & Technocrats Pvt.Ltd., [2018 (3) TMI 357 - SUPREME COURT OF INDIA], Hon'ble Supreme Court while considering the scope of Section 67 of the Act and the Rules made thereunder, and in particular the constitutional validity of Rule 5, held that the valuation of taxable service shall be 'gross amount' chargeable by the services provided 'for such services', to the extent it includes reimbursement of expenses in the value of taxable service for the purpose of charging service tax - In the said decision, the consideration was mainly concerned with the reimbursement of expenses incurred, such as air travel, hotel stay, etc; whereas, in the case in hand, we are concerned with the amounts, which is inclusive of the ESI, EPF and such other statutory payments to be paid by the employer for the persons employed. Therefore, the security agencies are totally on a different footing and the above-cited decision is not applicable to the case in hand. There are no merits or reasons to interfere with these findings of the learned Single Judge so as to hold that the provisions under Section 67 is ultra vires the Constitution - appeal dismissed.
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2019 (2) TMI 93
Commercial training or coaching services - vocational training services - Benefit of N/N. 09/2003- ST and 24/2004-ST. - whether the appellant who provides training in management are covered by the definition of ‘commercial training or coaching services’ and consequently, whether the courses conducted by them are liable to be taxed as such? - exemption up to September, 2010 allowed or not? Held that:- This matter had gone up to the Hon’ble Supreme Court and on remand CESTAT-Bangalore in M/S. THE INSTITUTE OF CHARTERED FINANCIAL ANALYSTS OF INDIA, HYDERABAD (ICFAI) VERSUS CC&CE, HYDERABAD [2013 (6) TMI 446 - CESTAT BANGALORE] held that three co-appellants in the case viz., ISB (appellant herein), the Institute of Chartered Financial Analysts of India and Badruka Institute of Foreign Trade were commercial training and coaching institutes. The matter was remanded back to the Commissioners only with respect to examining the availability of the benefit of notifications 9/2003-ST & 24/2004-ST. Benefit of exemption notifications - Held that:- Both these exemption notifications are available for ‘vocational training institutes’ which have been defined as in ‘commercial training or coaching centre’ which provide vocational coaching or training that imparts skills to enable the trainee to seek employment or undertaken self employment directly after such training or coaching. We cannot think of a more practical job or self employment oriented training or coaching than management courses conducted by the appellant. The demand for the period July, 2003 to September, 2010 needs to be set aside - As far as the period October, 2010 to September, 2011 is concerned, the demand needs to be upheld as it is not covered by any exemption notification - The appropriate rate of interest has also to be paid - The question of penalty does not apply in this case as it is a demand for normal period under Section 78 - appeal allowed in part.
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2019 (2) TMI 92
Levy of Service tax - commission paid to foreign agents - reverse charge mechanism - period from 18.4.2006 to 31.3.2009 - exemption under N/N. 14/2004-ST dated 10.9.2004 - Held that:- The similar issue as to the demand of service tax for services of overseas commission agents for procurement of orders was analyzed by the Tribunal in the case of Texyard International [2015 (8) TMI 794 - CESTAT CHENNAI]. The Tribunal in the said case observed that the assessee is eligible for exemption of the Notification 14/2004-ST dated 10.9.2004 - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 91
Levy of service tax - photography service - the service was brought within the service tax net with effect from 16.7.2001 - period in dispute is October 2002 to September 2006 - Held that:- Photography studio or agency means any professional photographer or a commercial concern engaged in the business of rendering service relating to photography. Undisputedly, the appellant is engaged in doing advertisement film and such other activities. He also renders service in the cinematographic field. A person who renders such service cannot be considered to be an amateur photographer as rightly concluded by the authorities below - Merely because the appellant does not have a studio or has own industry not registered as commercial concern would not take him out of the ambit of the photography service as he is a professional photographer - demand upheld. Penalty u/s 78 of FA - Held that:- The appellant had entertained a reasonable view as to whether he would fall within the definition of photography service as he was not having any studio for rendering taxable service and taking into consideration the bonafide belief of the appellant, penalty is not leviable - penalty set aside. Appeal allowed in part.
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2019 (2) TMI 90
Construction servcies - works contract service - Transport of Goods by Road service - relevant records to the department for verification of the correctness of the service tax paid by them - period September 2004 to September 2008 not furnished - short payment for the period from 1.1.2005 to 30.9.2008 - Held that:- The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts - Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only. The demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007 - The levy of service tax prior to 1.6.2007 cannot also sustain. GTA Service - Held that:- Since the appellants are not contesting the same, that portion of the impugned order is not interfered with. Appeal allowed in part.
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2019 (2) TMI 89
Construction Services - Construction of Complex Service - appellant entered into agreement with the customers for sale of undivided share of land and for providing construction service - period involved is from 10.9.2004 to 31.10.2008 - Held that:- The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only. The demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007. The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 88
Rectification of Mistake application - the said plea of the appellant being that the hospital is a charitable institution, the said observation made by the Tribunal is apparently an error - Held that:- There are no doubt with regard to the conclusion made by the Tribunal. If hospital charges fee for treatment, the same would make the building being used for commercial purpose. In cases where mere registration fees are collected and treatment is completely free, they would come within the ambit of non-commercial entity. However, this depends upon facts of each case and the Tribunal after examining the facts of the case has made such observation and directed for re-examination of these facts on this issue. There are no error apparent on the face of record that requires interference - ROM Application dismissed.
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2019 (2) TMI 87
Works Contract - Construction of Residential Complex Service - period from February 2006 to February 2008 - whether construction of quarters for police personnel would fall within the taxable service of construction of complex service under section 65(30a) r/w section 65(105)(zzzh) of Finance Act, 1994? - Held that:- Undisputedly, the appellants have entered into an agreement with TNPHCL for providing services in relation to construction of residential complex. However, these are meant for use of police personnel. The said issue was considered by the Tribunal in the case of Nithesh Estates [2015 (11) TMI 219 - CESTAT BANGALORE], where it was held that that for the period after 1.6.2007, the levy cannot sustain. The levy of service tax cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 86
Penalty - Non-discharge of Service Tax - appellant has paid major part of the service tax demand much before issuance of the SCN - Held that:- The reason for omission to pay the service tax is explained by them - appellant were filing returns as well as were paying service tax under the event management service. Thereafter Business Exhibition Service came to be introduced, with effect from 10.9.2004. They did not discharge the service tax for the reason of confusion as to the classification of service - On being instructed by the department in January 2005, they had remitted the service tax. It is also brought out that the appellants have not collected service tax separately and therefore the amount received should be considered as cum-tax value - The request of the appellant is reasonable and tenable. It is a fit case for invoking Section 80 of the Finance Act to set aside the penalties imposed - the adjudicating authority shall requantify the service tax after giving the cum-tax benefit as well as the CENVAT credit benefit to the appellant - Appeal allowed.
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2019 (2) TMI 85
Extended period of limitation - Revenue neutrality - import of services - reverse charge - Scientific and Technical Consultancy service - appellants have entered into a master agreement with M/s. Europlex – Ireland for receiving R&D services. By such agreement, it was agreed that M/s. Europlex shall establish a separate technology department which shall provide R&D assistance to the appellant - Held that:- Undisputedly, M/s. Europlex is engaged in design, development and manufacture embedded control and communication products and software. They have taken up the responsibility of putting up a separate department for research and development of the projects and products of appellant and therefore it can be strongly inferred that they have the capacity for such research and development activities. The amount paid by the appellant to M/s. Europlex is also for the services of such assistance rendered in R&D activity. The definition of taxable service included not only advice, consultancy but also technical assistance rendered in any manner, either directly or indirectly, in disciplines of science or technology. It can be concluded that the assistance given by M/s. Europlex to the appellant for its research and development activity is nothing but technical assistance for improvement of its projects / products - In the present case, there is no transfer of technical know-how. It is only a technical assistance for research and development activities, which would definitely fall under scientific or technical consultancy service - demand do not sustain. Time Limitation - Held that:- The show cause notice for the period October 2007 to April 2008 has been issued on 24.4.2010. Being a revenue neutral situation, as per the decisions of the Tribunal, the demand raised invoking extended period is not sustainable. The appellants had disclosed the amounts in the accounts and financial statement. The issue whether the transaction would fall under Scientific or Technical Consultancy service is interpretational too - apart from a bald allegation that appellant suppressed facts there is no positive act on the part of appellant brought out in show cause notice or impugned order as to suppression - appeal succeeds on limitation coupled with revenue neutrality. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 84
Works Contract service - construction of flats - composite contract involving supply and transfer of property in goods during the execution of contract - demand of service tax with interest and penalties - Held that:- The issue is decided by the Bench in the case of M/s. Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI], where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service - For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. The demand is not sustainable - appeal dismissed - decided against Revenue.
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2019 (2) TMI 83
Penalty u/s 78 of the Finance Act, 1994 - demand along with applicable interest was paid before the issuance of the SCN - Held that:- Revenue has neither suspected the bona fides of the appellant nor alleged suppression, fraud, wilful mis-statement, etc. - also, It is not the case of the Revenue that the tax was not paid/short paid or paid after the demand was raised against the appellant herein and hence, the findings of this Bench in the case of M/s. Dusters Total Solutions Services Pvt. Ltd. [2018 (9) TMI 825 - CESTAT CHENNAI] is squarely applicable, where it was held that The conduct of the appellant in paying up service tax and interest, and the categoric finding of the Commissioner that there is no intention to evade tax, persuades us to hold that appellant has established reasonable cause for invoking Section 80 of the Act ibid. Penalty not warranted - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (2) TMI 82
Penalty u/s 11AC of CEA - Time Limitation - whether the Tribunal had erred in holding that the demand is beyond the period of one year from the relevant date and is time barred? - Held that:- If the assessee is not dissatisfied with the findings recorded by the Tribunal on first four issues, he cannot be allowed to say that the department should be required to file appeal even against the part of the judgment of the Tribunal before the Supreme Court particularly when the department itself has accepted finality of that part of the judgment by which the matter has been remanded back to the Original Adjudicating Authority for its fresh findings - The question of limitation and demand being time barred will have to be decided independently. The department has been able to make out a case for recall of order dated 11.04.2018 passed by this Court - The application is allowed.
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2019 (2) TMI 81
CENVAT Credit - input services - Outward Goods Transportation Service (from factory to customers, from railway siding to godown and from godown to customers) - October, 2011 to March, 2012 - place of removal - Held that:- In view of the amended definition of input service w.e.f. 01.03.2008 as also in the light of judgment of the Supreme Court in Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], judgment of the Tribunal cannot be sustained in law and the demand is liable to be revived. However, the present matter deserves to be remanded to the Tribunal to consider the question of penalty. The matter is remanded back to the Tribunal for consideration of the question of penalty to decide the same after hearing both the parties in accordance with law - Petition allowed by way of remand.
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2019 (2) TMI 80
100% EOU - Utilization of balance in CENVAT credit account for discharge of customs duty like basic customs duty, additional customs duty (CVD) and special customs duty - inputs which have been used for manufacturing finished goods and these finished goods are cleared to DTA claiming exemption under N/N. 21/2002-Cus, 22/2003-CE and 52/2003-Cus. Held that:- There is no dispute as to the fact that the inputs were imported and customs duty was foregone as the appellant being EOU, that the finished goods are manufactured in the EOU and exported as also cleared locally i.e. into DTA and claiming exemption from payment of duty; that appellant is required to pay customs duty as calculated by the authorities on the inputs consumed for manufacturing of final products which were cleared locally into DTA - the relevant portions of the CENVAT credit Rules clearly indicate that the CENVAT credit cannot be utilised for payment of customs duty. In the case in hand, Revenue authorities are correct in demanding the amount of customs duty, in cash, on the raw materials consumed for manufacture of finished goods which are cleared to DTA by claiming exemption - No provisions in the CENVAT Credit Rules permit the appellant herein to use the balance for discharging the customs duty on the imported goods. The appellant should discharge all the customs duty in cash, calculated by the Revenue authorities, on the imported goods consumed in manufacturing of final products cleared to DTA claiming exemption, on that occurrence of event CENVAT credit which has been used for debiting the said amount should be recredited by the jurisdictional authorities - appeal disposed off.
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2019 (2) TMI 79
Supply against International Competitive Bidding - benefit of N/N. 6/2006-CE dated 1.3.2006 - denial on the ground that exemption was available only to M/s. VA-Tech Wabag Ltd., as they were the actual bidders and there was no certificate issued by any authority to the effect that the goods supplied by the appellant to M/s. The Eimco-KCP Ltd. were for use in International Competitive Bidding mega project - Held that:- The respondents have supplied the goods for water treatment plant for human consumption and the only ground for disallowing the benefit of Notification 6/2006 is that the respondents who is a sub-contractor has not participated in the International Competitive Bidding. It is not disputed that M/s. VA-Tech Wabag Ltd. have participated in the International Competitive Bidding. The issue as to whether the respondents themselves have to take part in the bidding has been settled in the case of Toshniwal Industries Pvt. Ltd. [2017 (5) TMI 387 - CESTAT NEW DELHI], where it was held that exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding. Benefit of exemption cannot be denied - appeal dismissed - decided against Revenue.
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2019 (2) TMI 78
Refund of accumulated / unutilized CENVAT credit - closure of manufacturing activity - applicability of Rule 5 of CENVAT Credit Rules, 2004 - whether relevant Rule 5 of CENVAT Credit Rules deals with situation of export and not of closure of factory? - Held that:- The Hon’ble High Court of Karnataka in the case of Slovak Trading Co. Pvt. Ltd. [2007 (1) TMI 556 - SUPREME COURT] had occasion to analyze the very same issue and held that even though there is no provision for grant of refund on account of closure of factory, since the appellant has gone out of the CENVAT credit scheme, they are eligible for refund - denial of refund is not justified - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 77
Clandestine removal - MS Rounds, Flats etc - allegation based on higher of electricity - principles of audi alteram partem - Held that:- The sole reliance to allege a clandestine activity rests on the uncorroborated statements of the bill traders. Admittedly, such statements are neither given to the assessee for rebuttal, nor did the Revenue think it fit to subject those persons to cross-examination by the assessee. Hence, their statements cannot be taken into consideration - The action of the Revenue authorities is therefore clearly hit by the principles of audi alteram partem and hence, the consequent Orders are clearly unsustainable for which reason, the same is set aside. Even with regard to alleged electricity consumption, no documentary evidence is available nor has there been any attempt to prove procurement of raw materials, proof for transportation or even payment outside the books, since it is the settled position of law that allegations howsoever strong, cannot take the place of proof. Appeal allowed - decided in favor of appellant.
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2019 (2) TMI 76
CENVAT Credit - input services - GTA Service - Travel Service. Travel Agency Services - Held that:- Appellant has only been used by the appellant in relation to the manufacture and clearance of final products. Also, the dispute pertains to the period prior to 01.04.2011 when the definition of “input services” had a wide ambit and included any service used by a manufacturer, directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Further, it is for the Revenue to prove that the same were used for the personal use/consumption of the employees for which nothing has been brought on record in the case on hand - credit allowed. GTA (Outward) Services - Held that:- The Ld. Advocate has not pressed the issue - Demand upheld. Appeal allowed in part.
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2019 (2) TMI 75
Reversal of credit - re-transfer of goods from the warehouse to the factory under Goods Delivery Note (GDN) - only allegation of the department is that at each retransfer, the appellant ought to have reversed the credit - Held that:- It is brought out from evidence that the appellants have availed credit only when the entire quantity of inputs as per the invoice were used for manufacture. Even though part of inputs were returned, they did not avail credit on such inputs. Thus, though they have retransferred the unused inputs to their warehouse, there is no excess credit availed than that is relatable to the invoice corresponding to the procurement of inputs. When the inputs are brought to the factory since credit is not availed, there is no requirement of reversal of credit as under 3(5) of CENVAT Credit Rules, 2004. The credit is availed only when entire quantity of inputs as per an invoice is used for manufacture - demand do not sustain. CENVAT credit - rejected goods - rejected goods were repaired and sent to customers - Demand of differential duty u/r 16 of CER - Held that:- The said issue has been decided in the case of Tube Investments of India Ltd. Vs. Commissioner of Central Excise, Chennai [2017 (10) TMI 1320 - CESTAT CHENNAI], where it was held that From the reading of the Rule 7 (4) of CENTRAL EXCISE RULES, 2002 it is seen that interest is payable only when any amount is payable consequent to the order for final assessment. When no amount is to be paid consequent to the order of final assessment, sub-rule 4 is not attracted at all - demand do not sustain. Demand to the tune of ₹ 50,917/- is in respect of central excise duty when the goods have been supplied by appellant to customers for periodical sample testing - Held that:- The appellants are duty bound to discharge the duty when the goods are cleared from the factory for testing. The appellant contends that they have discharged duty whenever finished product was cleared. However, this requires verification - matter on remand. An amount of ₹ 4,42,938/- is the demand of excise duty in respect of components supplied to customers and which are returned to appellant for repair work under RDC as per Rule 4(5)(a) of CENVAT Credit Rules - Held that:- It is brought out from the facts that the appellants are carrying out repair work and such process of repair work does not amount to manufacture. The facts discussed in the orders passed by authorities below does not throw much light as to the activity of repair/testing undertaken would amount to manufacture or not - the issue requires reconsideration - matter on remand. An amount of ₹ 17,84,883/- is seen to be a demand of excise duty raised when the appellant has sent inputs / capital goods for further processing or for tool grinding purposes to job workers under RDC - Held that:- Interestingly, the demand of excise duty is not on job worked goods and instead the demand of excise duty is on inputs / capital goods which are sent for job work which, in our view, is incorrect and cannot sustain - demand set aside. An amount of ₹ 18,06,561/- is raised alleging that there is delay in issuing invoices - Held that:- In fact, there was no delay in payment of central excise duty and duty was paid when goods were cleared. There was delay in raising the invoices only. This has occurred only due to some technical fault in system to raise invoices for which the assessee cannot be burdened with demand of excise duty. It is not the case of department that duty was not paid when goods were cleared - demand set aside. Appeal allowed in part and part matter on remand.
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2019 (2) TMI 74
Rectification of Mistake - case of assessee is that there is no finding on the penalty and Interest - Held that:- It is the settled position of law that an issue involving interpretation, being mired in litigation, etc., cannot lead to suppression or intention to evade payment of duty and cannot also therefore attract penalty. For the above reasons, penalty is deleted - ROM Application allowed. Interest - Held that:- The appellant had utilized a portion of the CENVAT Credit availed for which portion there has to be a liability of interest - it is appropriate to direct the adjudicating authority to compute the interest on that portion of CENVAT Credit utilized by the appellant for the years under dispute - this ground of the ROM applications is treated as allowed in part. ROM Application is disposed off.
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2019 (2) TMI 73
CENVAT Credit - input services - Outdoor Catering Service - Held that:- Hon’ble Madras High Court in the case of Bharath Heavy Electricals Ltd. [2016 (3) TMI 441 - MADRAS HIGH COURT] after considering the decision of other fora including that of the Hon’ble Apex Court, has held Outdoor Catering Service to be an eligible input service prior to the exclusion w.e.f. 01.04.2011. The denial of CENVAT Credit on Outdoor Catering Service is unjustified - appeal allowed - decided in favor of appellant.
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2019 (2) TMI 72
Process amounting to Manufacture or not - clutch assemblies received from their Unit-I - main allegation of the department is that clutch assemblies received from their Unit-I did not undergo any manufacturing activities such as packing / repacking, labelling / relabeling, affixing of new M.R.P rates - principles of natural justice - Held that:- The adjudicating authority has not addressed or analysed the data supplied by the appellants. The adjudicating authority has also not addressed the claim of the appellants that wherever there has been no “deemed manufacture” as per Section 2f (3) of the Act, they have reversed the credit in terms of Rule 3 (5) of CCR and that for export clearances they are not required to reverse the credit availed by them at the input stage. While the appellants have given the data as mentioned above, it is not clear therefrom as to what quantum of goods were subjected to processes amounting to “deemed manufacture” and / or on which M.R.P was revised upwards resulting in discharge of differential duty liability. So also, the data with regard to clearances of inputs as such by reversing cenvat credit availed thereon under Rule 3 (5) ibid has also not been separately indicated. While the adjudicating authority has not adequately addressed the various contentions and submissions of the appellant made by the appellant during the adjudication proceedings, the appellant themselves have not submitted clear break up each type of removals of the goods received by them from Unit-I. So also, while appellants have submitted information in respect of credit reversed due to export, no details have been given with regard to value or quantum of exports concerned and the datas of such export - the matter requires to be remanded to the adjudicating authority for de novo consideration. Penalty - Held that:- The entire dispute pertains to interpretation of the provisions relating to “deemed manufacture” and in particular, the eligibility to avail cenvat credit on goods - also appellants have consistently provided all the necessary details to the department as and when called for including reply dt. 13.10.2011 in response to audit party’s queries dt. 6.9.2011 - penalty not warranted and is set aside. Appeal allowed in part and part matter on remand.
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2019 (2) TMI 71
Demand of Interest and penalty for delayed payment - wrongly availed credit was reversed immediately on being pointed out - Held that:- This very Chennai Bench of the CESTAT in the case of M/s. Lenovo India Pvt. Ltd. Vs. C.C.E., Puducherry [2018 (7) TMI 243 - CESTAT CHENNAI] has held that there was no liability towards interest or penalty. The interest and penalty cannot be sustained - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (2) TMI 70
Quashing of Order passed by Authority directing that the state of U.P. be proceeded against ex-parte - Held that:- The relevant entry in the register of this Authority shows that on 08.03.2018 Mr. Ravinder Ratnakar Singh, Assistant Commissioner, Uttar Pradesh was indeed present. It appears that this was not pointed out to the then incharge Chairman of this Authority. In the circumstances, order dated 08.03.2018 directing that respondent no. 24 be proceeded against ex-parte is set aside - application disposed off - Adjourned to 18.04.2019.
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2019 (2) TMI 69
Creation of encumbrance on the subject matter properties - no attachment was made on those properties at any point of time and that the purchases made by the petitioner were prior to the date of assessment order dated 29.07.2008 - present writ petition is filed by contending that the impugned proceedings cannot be sustained against the petitioners' properties as the same were purchased much earlier to the order fastening the tax liability on the said dealer - Held that:- There is no dispute to the fact that the present impugned communication was issued by the first respondent to the second respondent to create encumbrance in respect of the subject matter properties only for the purpose of realising the tax dues from the said dealer viz., M/s.Ashok Spinners, Udumalpet. It is also not in dispute that the petitioner is nothing to do with the said dealer and on the other hand, he purchased the subject matter properties by way of two sale deeds dated 25.11.2004 and 03.04.2006. Therefore, it is apparent that those properties were purchased much earlier to the order of assessment dated 29.07.2008. In any event, as these properties were purchased by the petitioner much earlier to the order of assessment and in view of the admitted fact that at the time of purchase, those properties were free from encumbrance much less an attachment by the Revenue - impugned order do not sustain. Petition allowed - decided in favor of petitioner.
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2019 (2) TMI 68
Principles of natural justice - case of petitioner is that the Assessing Officer has passed the impugned order without affording sufficient opportunity to the petitioner to produce the relevant documents inpite of their request made in writing to that effect - Held that:- There is a reasonable presumption on the part of the assessee to wait for a communication from the Assessing Officer in respect of their request for extension of time. If the Assessing Officer has passed the assessment order without informing the assessee as to whether the request for time is granted or rejected, it has to be construed that the assessment made thereafter, is in violation of principles of natural justice. The very same issue was considered by this Court in the case of Tvl Vikranth Construction Vs Deputy Commercial Tax Officer, Cuddalore [2017 (5) TMI 319 - MADRAS HIGH COURT], where it was held that The assessment order passed without intimating the decision taken on the request for extension of time, is in violation of the principles of natural justice and therefore on that ground alone, the assessment order has to be set aside. The matter is remitted back to the Assessing Officer to redo the assessment - appeal allowed by way of remand.
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Indian Laws
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2019 (2) TMI 67
Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instrument Act - Held that:- It is evident from the record that the petitioner/accused has filed an application under Section 91 of the Cr.P.C. to call the agreement made between the parties, cheque book, income tax returns and details of saving accounts of the respondent/complainant. Respondent/complainant has filed a reply of this application before the trial Court and submits that he is retired person and does not pay the income tax. Therefore, he is unable to produce the documents relating to income tax return. So far as, agreement is concerned, the learned Revisional Court has observed that the complainant did not mentioned about this fact. This finding of the learned Revisional Court is found correct. Apart from that, it is also evident that the evidence stage of complainant/respondent is going on and complainant was not cross-examined yet, therefore, petitioner/accused can put up his defence by asking question to the complainant and thereafter the respondent/complainant will clarify his position then only the petitioner/accused will be entitled to put up such application before the learned trial Court. It does not appear that it is a case of failure of justice or a case in which interference can be made by invoking the extra ordinary jurisdiction of the Court - petition dismissed.
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