TMI Tax Updates - e-Newsletter
March 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
TMI SMS
Highlights / Catch Notes
-
Income Tax:
Penalty u/s 271(1)(c) levied on income declared in the revised return of income filed u/s. 139(5) - Admittedly, there is no allegation that the revised return of income filed by the Assessee, contains any inaccurate particulars of income - ITAT rightly deleted the penalty - HC
-
Income Tax:
Depreciation - Determination of cost of plant and machinery - inclusion of payment on account of liability for gratuity, PF, bonus and other statutory liabilities - payment was made on behalf of the vendor - depreciation cannot be allowed on such payment - AT
-
Income Tax:
Levying the penalty u/s 271E - loan received by the assessee had been squared off by way of conversion of loan into equity - the businessman (i.e. assessee) cannot be compelled by the revenue to conduct its business as per the whims and fancies of the revenue. - AT
-
Income Tax:
Undervaluation of stock - it is a revenue neutral issue because whatever addition is being made in the closing stock, it will be opening stock in the next year. If the assessee would fail to realize the value in proportion with the valuation of closing stock, she will claim loss in the next year, and if she acquired higher rate, then profit will be made. - AT
-
Customs:
Classification of goods - Bentonite Powder BH 200 Mesh - Volclay Bentonite Powder Fine 325 Mesh - the burden of classification is on the Revenue which has to be discharged with evidence - AT
-
Customs:
Classification of imported goods - Business Projectors - The projectors merely having additional function cannot be a ground for classifying it other than 85286100, they cannot be said to be meant for use solely or principally in an automatic data processing system of heading 8471 - AT
-
Customs:
Non-fulfilment of export obligation - we do not find any merit in the contention of the appellant that CVD should not be demanded from them because they would be eligible to avail the Modvat credit from CVD. If that view is accepted, then no importer-manufacturer would ever be required to pay CVD on the ground that Cenvat Credit of the same would be availed by them at the next stage. - AT
-
IBC:
Initiation of Corporate Insolvency process - non-issuance of Section 8 notice prior to filing of the present application is a non-curable defect, which cannot be cured at this stage. - Tri
-
Service Tax:
Valuation - reimbursement of expenses - only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. - SC
-
Service Tax:
Liability of service tax on sub-contractor - the argument of fails that the main contractor has paid tax on the entire value and therefore no demand of service tax can be made against the sub-contractors - AT
-
Service Tax:
Availing credit while availing benefit of abatement - the main contractor is not entitled to the credit of service tax paid by sub-contractor if he is availing notification No.01/2006. Thus any service tax paid by the subcontractor would come as revenue to the Government and no credit of same would be available to the main contractor. - AT
-
Service Tax:
Penalty u/s 76 and 78 - by not filling return for a period of over three years and not by paying tax despite collecting the same from the service recipients even though they had taken the registration have made themselves liable to penalty under Section 78 also. - AT
-
Central Excise:
Valuation - sale through depot - Once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable, there is no need to determine the assessable value on the basis of price at which the goods may be sold subsequent to the time of removal of goods. - AT
-
Central Excise:
Classification of goods - spent catalyst - whether classified under CETH 2620.00 of the CETA, 1985 or otherwise? - spent catalysts cannot be considered to be a result of manufacturing process and thus there cannot be any liability under Central Excise on spent catalysts - AT
-
Central Excise:
Valuation - pressure cooker parts - Sale from depot - The appellant is required to pay duty at the value, the price on which the goods have been cleared from the depots i.e. the assessable value and the appellant had paid duty accordingly. - AT
-
Central Excise:
CENVAT credit - duty paying documents - the impugned invoices do not become the eligible document for taking the credit by the manufacturer himself as the invoices are in the name of recipient. - AT
Articles
Notifications
GST - States-
F.3(16)/Fin (Rev-I)/2017-18/DS-VI/91 - dated
23-2-2018
-
Delhi SGST
Seeks to amend Notification No. F.3(16)/Fin (Rev-I)/2017-18/DS-VI/359 dated 30th June, 2017
-
9/2018 - dated
23-2-2018
-
Delhi SGST
Supersession of Notification No. F.3(10)/Fin(Rev-I)/2017-18/DS-VI/341, dated the 22nd June, 2017
-
6/2018 - dated
23-2-2018
-
Delhi SGST
Waiver of late fee for failure to furnish the returns in FORM GSTR 5A by due date
-
1/2018 - State Tax (Rate) - dated
23-2-2018
-
Delhi SGST
Seeks to amend Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017
-
09/2018 - State Tax (Rate) - dated
23-2-2018
-
Delhi SGST
Seeks to amend Notification No. 45/2017-State Tax (Rate), dated the 28th November, 2017
-
08/2018 - State Tax (Rate) - dated
23-2-2018
-
Delhi SGST
Reduction of State tax on intra-state supply of certain old and used motor vehicle
-
07/2018 - State Tax (Rate) - dated
23-2-2018
-
Delhi SGST
Seeks to amend Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017
-
04/2018 - State Tax - dated
23-2-2018
-
Delhi SGST
Waiver of late fee for failure to furnish the returns in FORM GSTR 1 by due date
-
1/2018 - dated
13-2-2018
-
Delhi SGST
Seeks to amend Notification No. 8/2017- State Tax, dated the 30th June, 2017
-
03/2018 - dated
31-1-2018
-
Delhi SGST
Delhi Goods and Services Tax (Amendment) Rules, 2018
-
190/2018/5(120)/XXVII(8)/2018/CT-11 - dated
20-2-2018
-
Uttarakhand SGST
Rescinds the notification No. 07/2018/9(120)/XXVII(8)/2017/CT-74 dated 01st January, 2018
-
142/2018/5(120)/XXVII(8)/2018/CTR-6 - dated
6-2-2018
-
Uttarakhand SGST
Amendment in Schedules of notification of Govt. of Uttarakhand Finance Section -8 no. 514 dated 29/06/17.
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2018 (3) TMI 389
Reimbursement of additional burden due to implementation of GST - scope and extent of the contract with railways - Held that: - no cause of action has been arisen to the petitioner-assessee yet in the matter and the present petition has been filed by the petitioner- assessee prematurely against the Respondents not to take any action against them under the newly enacted GST law enforced from 01.07.2017 - Unless a cause of action arises to the petitioner-assessee by an impugned action notice or order by the Respondents-Department, the academic questions raised by the petitioner-assessee cannot be determined under Article 226 of the Constitution of India - petition dismissed being pre-mature.
-
Income Tax
-
2018 (3) TMI 382
Reopening of assessment - accessibility of capital gain from sale of capital asset - Held that:- Since, the assessee did not raise this issue before the authorities below and the agreement dated 13.05.2005 is not the basis of the AO to initiate the proceedings u/s 147/148 of the Act therefore, in the absence of the leave of the Tribunal to raise a fresh ground which is altogether setting up a new case and also purely factual in nature, adjudication of the same requires investigation of the facts first time pleaded by the assessee at this stage, the same cannot be allowed. Hence, we reject the ground No. 2(iii) of the assessee’s appeal and the same is not arising from the impugned orders of the authorities below
Index cost of acquisition being fair market value of the asset as on 01.04.1981 and full value consideration as per the provisions of section 50C - Held that:- Since, the issue of assessability of capital gain in the year under consideration or for the A.Y. 2004-05 has been set aside to the record of the Assessing Officer which goes to the root of the matter therefore, the other issues are only consequential and can be examined only after deciding the issue of taxability of the capital gain whether in the assessment year under consideration or for the A.Y. 2004-05. Accordingly, these issues are also set aside to the record of the Assessing Officer for consideration and adjudication after deciding the issue of chargeability of capital gain in the year under consideration.
-
2018 (3) TMI 381
Rejection of the books of accounts - estimation of the profit at the rate of 8% of the gross profit - Held that:- Assessee has merely made certain submissions despite specific request by the Ld. assessing officer to produce the books of accounts on several occasions. The assessee has not come out with the clean hands by producing the books of accounts. Therefore, it is clear from the records that assessee did not wish to produce the books of accounts. According to us, if the books of accounts are not produced, there is no option left with Ao other than to estimate the net profit of the business of the assessee. Therefore no fault can be found with the Ld. assessing officer in applying the provisions of section 145 (3). Decisions relied up on by the assessee are perused and it is found that in all those years the assessee produced the books of accounts and AO verified it. However in the facts in this case are startling that assessee has not produced the books of accounts at all.
Estimation of the net profit of the business - benchmarking of the net profit for the current year cannot be made in comparison with those years. The net profit at the rate of 8% is also too high in case of the business of the civil construction for this year compared to the assessment history of other years of the assessee. No reasons have been given by the assessing officer for estimating the net profit at the rate of 8%. No comparative instances have also been cited. Further even in section 44AD for the small business where the turnover is less tha 60 lakhs rate of profit is 8 %. In the present case the assessee has turnover of more than 9 croes therefore such a high rates cannot be applied to the business of the assessee. No injustice would be caused if the net profit of the assessee were estimated at the rate of 5% of the gross receipt of the assessee. AO is directed to estimate the net profit of the assessee at the rate of 5% instead of 8%. - Decided partly in favour of assessee partly.
-
2018 (3) TMI 380
Scope of rectification of mistake order - Disturbing the value of sale consideration in the proceedings u/s 154 by CIT-A - CIT(A) authorization as per law to pass an order u/s 154 by withdrawing the relief already granted to the assessee - correct adoption of the sale consideration - Held that:- CIT(A) is also one of the Income Tax authorities referred to in section 116 and accordingly he is entitled to amend his order passed by him under the provisions of the Act. However, the rider has been placed in section 154(1A) of the Act, wherein, it stipulates that an order earlier passed by Income Tax authorities could be subject matter of amendment/rectification in terms of section 154(1), only in relation to matter other than the matter which has been so considered/decided by such authority earlier in his order.
In the instant case, CIT(A) had accepted the sale consideration reported by the assessee and also appreciated the fact that it was a distress sale made by the assessee after taking into account the existence of the dispute for 28 years and that the assessee was forced to sell subject mentioned properties to the existing persons who was occupying the subject mentioned properties itself. Hence, CIT(A) has categorically given his finding in his original order dated 30.12.2015 with regard to the adoption of the sale consideration of the subject mentioned properties for the purpose of capital gains and also after appreciating the fact that the valuation officer had not considered the existing disputes over the subject mentioned properties , while valuing the property.
Hence, the entire gamut of consideration of the subject mentioned properties has been duly considered and decided by the Ld. CIT(A) earlier in his order dated 30.12.2015. Hence, the said finding of facts cannot be disturbed by him by way of seeking recourse to section 154 in view of specific rider or prohibition provided in section 154(1A) as enumerated supra.
Thus with reference to specific provisions of Section 154(1A) CIT(A) was not authorized as per law to pass an order u/s 154 of the Act by withdrawing the relief already granted to the assessee in the instant case. - Decided in favour of assessee.
-
2018 (3) TMI 379
Revision u/s 263 - Addition on account of freight and forwarding charges - Held that:- The assessee absorbed the freight and forwarding charges as its expenditure by debiting to profit and loss account by giving corresponding credit to the customers account as the assessee had to reimburse the freight and forwarding charges to the customers. This fact is also evident from the statement of sales furnished by the assessee before the lower authorities.
We also find from the profit and loss account of the assessee that a sum of ₹ 1,25,34,106.76 is credited towards gross sales before deduction of freight and forwarding charges. We also find that the total freight and forwarding charges were paid for goods consigned through transporters to various parties and these charges were paid by the customers on behalf of the assessee as consignment notes are on ‘To pay basis’ and for which, the assessee had credited the customers account accordingly. Hence we do not find any infirmity in the accounting treatment given by the assessee and the claim of deduction of freight and forwarding charges in the sum of ₹ 6,33,344/- is in order.
The assessee had not made any double deduction claim towards freight and forwarding charges as wrongly suspected by the CIT in his section 263 order and by the ld AO in the giving effect proceedings. The ld DR prayed for setting aside of this appeal to the file of CIT-A for adjudication of the issue on merits. We do not deem it fit and necessary as the facts and the treatment of gross sales before freight and forwarding charges credited in the manufacturing account and the statement of sales submitted before the lower authorities, are staring on us. Absolutely there is no scope for taking a different view in the impugned issue. Assessee had pleaded the same before the CIT in section 263 proceedings ; before the AO and before the CIT-A by way of written submissions together with evidences in support of its submissions, which has not appreciated by the authorities below. Accordingly, the grounds raised by the assessee are allowed.
-
2018 (3) TMI 378
Gains from sale of shares and derivatives as business income - non bifurcation into business income and capital gains - Held that:- Evidences and documents that were filed by the assessee before the ld CITA so as to seek an opportunity for the AO and alleging violation of provisions of Rule 46A of the Rules. CIT-A had actually recomputed the entire gains as business income without any bifurcation of gains into business or capital gains, by actually enhancing the income of the assessee , from the very same materials that were available on record. There was no additional evidence filed by the assessee.
It is only better appreciation of the facts already available on record which warranted recomputation of income by the ld CIT-A. The revenue cannot be aggrieved on the same. Hence the Ground No. 2 raised by the revenue is rejected outrightly. We find that the revenue had pleaded in Ground No.1 that the opening stock of shares as on 1.4.2011 should be taken at ₹ 4,16,12,081/-, for which no workings were provided by the ld DR before us. We find that this figure does not emanate either from the assessment order or from the appellate order.
No workings for the same in any manner whatsoever were furnished by the ld DR before us to address the grievance of the revenue in this regard. On the contrary, we find that the ld CITA had adopted the figure of opening stock of shares as on 1.4.2011 at ₹ 5,91,73,606/- which was the same figure used by the ld AO also for computing the business income in his assessment order. Hence we hold that there cannot be any grievance for the revenue in this regard. Accordingly, the Ground No. 1 raised by the revenue is dismissed.
-
2018 (3) TMI 377
Depreciation - Determination of cost of plant and machinery - inclusion of payment on account of liability for gratuity, PF, bonus and other statutory liabilities - payment was made on behalf of the vendor - Held that:- Since this issue is settled by the decision of the Hon’ble Supreme Court in CIT vs Hooghly Mills Co. Ltd [2006 (11) TMI 137 - SUPREME Court] as held had it been a case where the agreement to sale mentioned the entire sale price without separately mentioning the value of the land, building or machinery, we would have remitted the matter to the tribunal to calculate the separate value of the items mentioned in Section 32 and granted depreciation only on these items. However, in the present case, the agreement itself mentioned the value of the building, plant and machinery. Hence it is not necessary to remit the matter to the tribunal in this case.
No doubt, the word 'plant' had been given the deeming meaning vide Section 43(3) but even this deeming meaning does not include the gratuity liability. No depreciation can be granted on the gratuity liability taken over by the respondent assessee.
Decided in favor of revenue.
-
2018 (3) TMI 376
Allowing the depreciation in respect of Dhule Power Unit claimed by the assessee u/s 154 - Held that:- It is well settled that the depreciation is to be granted to the assessee mandatorily irrespective of claim made by the assessee in the return of income. It is not in dispute that the assessee had not made any claim of depreciation in respect of its Dhule Power Plant for the Asst Years 2006-07 to 2008-09. Hence applying the provisions of Explanation 5 to section 32(1) of the Act, depreciation is to be granted to the assessee in the proceedings u/s 154 of the Act for the Asst Years 2006-07 to 2008-09. We find that the ld AO having applied the very same provision (i.e Explanation 5 to section 32 of the Act) for the Asst Year 2009-10, ought to have applied the same for the Asst Years 2006-07 to 2008-09 also in the interest of justice. We find that the ld CITA had rightly granted relief to the assessee in this regard. - Decided against revenue.
With regard to the allowability of book losses in the rectification proceedings u/s 154 of the Act, which were offered to tax by the assessee in the respective returns of income and assessed as such, we find that the veracity of the said losses requires investigation of facts and enquiries by the ld AO and only after such verification , the ld AO could come to a conclusion that the said losses are genuine and is allowable. Hence we hold that the ld CITA had rightly rejected this plea of the assessee that the same cannot be done u/s 154 by placing reliance on the decision of T.S.Balaram vs Volkart Bros (1971 (8) TMI 3 - SUPREME Court). No infirmity in the order of the ld CIT-A in this regard. Accordingly, the cross objections of the assessee are dismissed for the Asst Years 2006-07, 2007-08 and 2008-09.
-
2018 (3) TMI 375
Levying the penalty u/s 271E - loan received by the assessee from Prakash Electronics System Ltd had been squared off by way of conversion of loan into equity - Held that:- In the instant case, the loan has been borrowed from Prakash Electronics System Ltd in the earlier year and the same has been converted into equity during the year under appeal. Hence the genuinity of the said transactions cannot be questioned by the CIT-A. The said transaction cannot be considered to be in violation of provisions of section 269T of the Act.
We hold that the assessee had properly explained the entire gamut of transactions together with its end use i.e for investment in co-ownership property. It was a conscious business decision taken by the assessee to use the amounts raised through share capital for investing in co-ownership property for the purpose of its business and the businessman (i.e. assessee) cannot be compelled by the revenue to conduct its business as per the whims and fancies of the revenue.
Hence the observation of the ld CIT-A that the assessee could have utilized the amounts raised through share capital from other sources to repay the loan to Prakash Electronics System Ltd would only tantamount to stepping into the shoes of the businessman and we hold that the said observation is not warranted, more so in the penalty proceedings u/s 271E of the Act. The business compulsions of the assessee warranting such conversion of loan into equity cannot be brushed aside simply as a matter of doubt merely because the shares were issued at premium. - Decided in favour of assessee
-
2018 (3) TMI 374
Calculation of capital gain - adoption of cost of asset - Net sale consideration - Held that:- A perusal of computation of income made by the ld.AO on page no.8 of the assessment order would indicate that the ld.AO took net sale consideration falling to the share of assessee at ₹ 59,14,747/-. The indexed cost of acquisition in the hands of assessee was computed at ₹ 29,42,376/-. Thus, net LTCG worked out in the hands of assessee is of ₹ 29,72,370/- i.e. (Rs.59,14,747 minus ₹ 29,42,376). The ld.AO granted benefit of set off as under:
Capital gain x cost of new asset /Net sale consideration
The cost of new asset was taken at ₹ 30 lacs only and in this, set off was granted upto ₹ 15,07,606/-. The balance i.e. total capital gain : ₹ 29,72,370 minus ₹ 15,07,606 = ₹ 14,64,764/- has been taxed at the rate of 20%. I allow this appeal and direct the AO to take cost of new asset at ₹ 70 lakhs instead of ₹ 30 lakhs and calculate the amount of capital gain, if any. In other words, there will be no capital gain for tax in the hands of assessee.
-
2018 (3) TMI 373
Deduction u/s. 80P(2) - claim denied for the reason that the assessee cannot be considered as Primary Agricultural Credit Society - Held that:- As decided in Nannambra Service Co-operative Bank Ltd. [2018 (2) TMI 866 - ITAT COCHIN] Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only “Primary Agricultural Credit Society” not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license.
The assessee had extended credit facilities only to the members. The Revenue does not have a case that such credit facilities are extended to the outsiders. Therefore the income generated in the instant case is only out of the transaction with the members. Deduction u/s. 80P is allowed only for the said income. The assessee had claimed deduction u/s. 80P only in respect of net income which is derived by extending credit facilities to the members. - Decided against revenue
-
2018 (3) TMI 388
Recovery of tax dues of defaulter from the purchaser of property - Interpretation of clause (iii) of sub-rule (2) of Rule 68B of the Second Schedule to the Income Tax Act - Remedy of writ under Article 226 - Held that:- It is seen that the purpose of sub-rule (2) of Rule 68B is to exclude the period during which the Tax Recovery Officer is prevented from continuing the proceedings for realisation of the tax arrears by virtue of orders passed by Courts as also the period during which it is inappropriate for the Tax Recovery Officer to continue the proceedings for realization of the tax arrears on account of the pendency of the proceedings challenging the decisions taken by the Tax Recovery Officer, irrespective of the fact as to whether there is any interim order in such proceedings or not, while computing the outer time limit provided for under sub-rule (1) of Rule 68B. Looking at the issue in the above perspective, I have no doubt that the proceedings are liable to be treated as proceedings falling within the scope of the expression 'appeal' contained in Clause (iii) of subrule (2) of Rule 68B of the Second Schedule. Any other interpretation of the said provision would go against the principle that he who prevents a thing from being done shall not avail himself of the non-performance he has occasioned. The question aforesaid is thus answered accordingly.
Remedy of writ under Article 226 is extraordinary and discretionary and that the exercise of discretion to issue a writ shall be for the purpose of granting an equitable relief to the party. It is equally well established that the power under Article 226 may not be exercised by the court to strike down an illegal order or action although it would be lawful to do so, if the exercise of the jurisdiction in a given matter would resurrect a grave illegality or would work out injustice to others. High Court cannot be oblivious of the conduct of the party invoking the remedy while exercising the said jurisdiction.
In the instant case W.P. was instituted by the petitioner with an undertaking that he would liquidate the entire tax arrears of the defaulter. Had the petitioner not made such an undertaking when the said matter was taken up for hearing, this Court would not have entertained the said writ petition in exercise of the discretionary power and in that event, the Revenue would have at least received the balance sale consideration from the successors of the auction purchaser who were willing to pay the same as indicated in the judgment in the writ petition. Having obtained a favourable order in the writ petition, the petitioner changed his stand and refused to liquidate the tax arrears of the defaulter. This is not a fit case at all for exercise of the discretionary jurisdiction of this Court under Article 226 of the Constitution.
-
2018 (3) TMI 387
Disallowance of sum paid to director of the company - only reason for disallowance was that in the previous year they have not made any such claim - Held that:- Upon examination of the entire record and the CIT's order as well as the Tribunal's order, it appears that she was doing the work of promotion for selling flats and for this purpose she had been paid. The amount paid to her was named as 'liaisoning fee'. Each year stands on its own footing and showed the expenditure and income. The amount which was earned by the Director Asha Peterson was disclosed and declared by her in her income tax return and was paid tax on it.
The Tribunal also recorded a finding of fact that the business of the assessee was of selling flats and flats had been booked in that year and had been sold and her services had been used for selling of those flats.
In view of the finding of the fact recorded by the Tribunal it cannot be said that any part of provision of Section 37(1) were contravened. We, therefore, upheld the finding and reasoning adopted by the Tribunal. - Decided in favour of assessee
-
2018 (3) TMI 372
GP estimation - rejection of books of accounts - undervaluation of stock - Held that:- There is no dispute with regard to the proposition that the assessee would be required to value closing stock either at cost or at market price whichever is lower. The assessee did not adopt cost price. The assessee has adopted sale which could be realized out of the stock. But what was guiding factor to adopt rates. The ld.CIT(A) has observed that during the period when valuation was done rates of these items were quite different in the market. The ld.CIT(A) made reference to those rates in the finding extracted supra, and thereafter held that stock was undervalued by a sum of ₹ 98,10,499/-. We do not find any error in this finding of the ld.CIT(A). More so, it is a revenue neutral issue because whatever addition is being made in the closing stock, it will be opening stock in the next year. If the assessee would fail to realize the value in proportion with the valuation of closing stock, she will claim loss in the next year, and if she acquired higher rate, then profit will be made. Therefore, no interference is called for in the finding of the ld.CIT(A).
Disallowance of foreign tour expenses - Held that:- CIT(A) has recorded a categorical finding that expenditure on foreign travel of assessee’s son was not for the purpose of business, hence, it could not be allowed. Before us, the assessee failed to demonstrate business expediency with regard to this expenditure, and how Shri Kenny Thomas and his family have fulfilled objects of business carried out by the assessee. Therefore, we do not find any reason to interfere in the finding of the ld.CIT(A).
-
2018 (3) TMI 386
Cancelling the registration of assessee's Trust u/s 12AA(3) - whether the Tribunal was justified in restoring the registration under section 12A of the Act? - Held that:- This issue stand concluded against the Revenue and in favour of the respondent assessee by the order of this Court in Commissioner of Income Tax Vs. The Mumbai Metropolitan Regional Iron and Steel Market Committee (2017 (7) TMI 920 - BOMBAY HIGH COURT) and Director of Income Tax (Exemptions) Vs. Khar Gymkhana [2016 (6) TMI 489 - BOMBAY HIGH COURT] as held that the Commissioner, nowhere has given the finding that the activities of the Respondent institution are not genuine one or that the said activity carried out are not in consonance with the object of the institution. The Commissioner has merely relied on proviso to Sub-Section 2 of Section 15 of the Act, as it stood then. The said proviso has subsequently gone amendment.
Tribunal justified in restoring the registration under section 12A - Held that:- As is evident from the Section 13 of the Act itself, it comes into play while applying Section 11 of the Act. It is in domain of the Assessing Officer during the assessment proceedings and not a basis for cancellation of registration. Besides, the amendment not being in the spirit of Charitable Trust, cannot be the basis of cancellation under Section 12AA(3). This is as vague as vague could be. The term “spirit of a Charitable Trust” is not defined in the Act nor elaborated in the order of Commissioner of Income Tax. In the above facts, the impugned order of the Tribunal correctly holds that the Commissioner has focused on change in the future management of the Trust rather than the object of the Trust to cancel the Registration. The amendment made in the Trust Deed which the Commissioner relies upon to cancel the Registration does not even remotely suggest any change / addition to the objects of the Trust. It has only to do with the appointment of the Chief Trustee and the manner of managing the Trust. No substantial question of law.
-
2018 (3) TMI 385
Non payment of admitted tax u/s 140A - real income theory - Appeal maintainable as against the original order of the Tribunal - Held that:- We see from the statement of total income as filed by the assessee at Annexure-A that it was filed based on the profit estimated on the income, which would have come to the assessee, if the claims against Skyline Builders were allowed. Definitely the tax on the income can only be assessed after it comes to the hands of the assessee as per the real income theory propounded in United Commercial Bank v. Commissioner of Income Tax, [1999 (9) TMI 4 - SUPREME Court]. We do not think that there is any reason to set aside the orders of the Commissioner of Income Tax (Appeals) and the Tribunal. The assessment carried out has taxed the income which came to the assessee in the relevant year.
-
2018 (3) TMI 384
Penalty u/s 271(1)(c) levied on income declared in the revised return of income filed u/s. 139(5) - Tribunal deleted the penalty - Held that:- Revised return of income u/s 139(5) was filed by the Assessee on its own and not on account of any detection of inaccurate particulars of income being filed by the Respondent in its original return of income. The finding of fact rendered both by the CIT(A) and the Tribunal that the revised return of income was filed by the Respondent suo motu and not consequent to detection of inaccurate particulars of income by the Assessing Officer, is not shown to be perverse. Admittedly, there is no allegation that the revised return of income filed by the Assessee, contains any inaccurate particulars of income. No substantial question of law. - Decided in favour of assessee.
-
2018 (3) TMI 383
Treatment in the books of accounts of the assessee with respect to losses on account of foreign exchange fluctuation - Held that:- The CIT(A) followed the judgment of the Kerala High Court in CIT Vs. International Creative Foods (P) Ltd., (2010 (10) TMI 862 - Kerala High Court) and noticed that the accounting standard AS11 was followed in this case. ITAT also upheld the deletion of disallowance. The Court has considered the submissions of the parties. ITAT accurately observed that in the past years, in the prior and subsequent years, the assessee had accorded similar treatment for foreign exchange gains and paid the required tax. Having regard to the consistent approach adopted by the assessee, the conclusion arrived at by it, which is also a concurrent finding, cannot be said to involve any substantial question of law.
Disallowance u/s 40A(3) - The Court notices that hitherto findings are concurrent;, the amount is small and furthermore, the genuineness of the transaction cannot be doubted.
-
2018 (3) TMI 391
Exclusion of Freight and Insurance from the Total turnover for the purpose of quantifying the deduction u/s.10B - Held that:- We have already decided this issue against the Revenue and in favour of the assessee relying on the decision of the Tribunal in assessee’s own case [2014 (4) TMI 1091 - ITAT PUNE].
Nature of expenses - Product Development Expenditure - revenue or capital expenditure - Held that:- As decided in assessee's own case [2016 (8) TMI 1047 - ITAT PUNE] we do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) in accepting the product development expenditure as revenue in nature.
Allowability of deduction paid by the assessee to the Coast Guard u/s.37(1) - Held that:- As decided in assessee's own case [2016 (8) TMI 1047 - ITAT PUNE] the intention of celebrating “Cost Guard Day’ is to spread awareness of the service which operates with Indian Navy during external aggression and independently guards Indian cost line from intruders during peace. The business motive behind contributing the fund was the assessee has taken godowns on lease from M/s. Sovereign Pharma Pvt. Ltd. at Daman for storage of vaccines and Indian Cost Guard has its huge base at Daman. The expenditure has been incurred towards discharge of corporate social responsibility.
Disallowance u/s.14A of the Act r.w. Rule 8D(ii) - assessment u/s 153A - Held that:- AO has no jurisdiction over the assessee since he does not have any incriminating material in his possession for granting jurisdiction to make addition u/s.14A of the Act
Allowability of deduction with reference to the Wealth Tax paid by the assessee for the purpose of computing book profits u/s.115JB - Held that:- As relying on case of Usha Martin Industries Ltd. [2000 (3) TMI 170 - ITAT CALCUTTA-E] we agree with the contention of the learned authorised representative of the assessee that a provision made for wealth-tax cannot be equated to any liability towards income-tax and accordingly, cannot be disallowed while computing the book profit by invoking Clause (a) of the Explanation to Section 115JA(2) of the Act. In any case, this is the case where no incriminating material was seized by the Revenue during the search action connecting to the disallowability of Wealth Tax payment qua the book profits computation. - Assessee appeal allowed.
-
Customs
-
2018 (3) TMI 371
Misdeclaration of goods - prohibited goods - country of origin - whether the subject batteries could be considered as Heavy Duty AA R6 type of batteries as per IS-9128 specification?
Held that: - whatever material relied upon by Revenue for holding the goods as prohibited and in respect of country of origin, the same is not sufficient to hold against the appellant - As regard the issue that whether the batteries imported by the appellant is of IS-9128 specification or otherwise no confirmation was received from BIS. Therefore, only on the basis of report received from ERTL (W) it cannot be said that the appellant have mis-declared the goods.
Country of origin - As regard the issue that whether the batteries imported by the appellant is of IS-9128 specification or otherwise no confirmation was received from BIS. Therefore, only on the basis of report received from ERTL (W) it cannot be said that the appellant have mis-declared the goods - Held that: - the internet website detail alone is not sufficient - As per the documents and certificate of origin it was found that the goods are of Malaysian origin. Therefore, only on the basis of internet website, the learned Commissioner has concluded that the goods are not of Malaysian origin which is not correct - the adjudicating authority need to give a relook on the entire issue and pass a fresh speaking order.
Appeal allowed by way of remand.
-
2018 (3) TMI 370
Anti Dumping Duty - flexible slabs-stock Polyol (PUC) - export from Australia, EU, Singapore - violation of principles of natural justice - Held that: - It is a fact that at the time of making disclosure statement, the information available with the DA indicated SEPL and SETL would complete the value chain. However, the DI commenting on the disclosure statement contested the said position and submitted further facts for re- consideration. The said facts were examined on merit and accordingly the DA concluded that certain inferences made earlier require revision and modification. The same was then based on facts made available by the DI as an interested party. The final decision was with the DA on merits. He concluded that there was a gap in the value chain and accordingly, the EQRs filed by the appellants were rejected. We note that the contention of the appellants they should have been provided opportunity again before a final decision is taken, will lead to a situation of cyclical hearing and re-hearing by the DA.
It is not anybody’s case that the final finding, as such, should be as per disclosure statement only. That will be against the concept of disclosing available facts and calling for comments. Here, it is to be noted that even if further opportunity is provided to rebut the statements of the DI after the final disclosure, the same will be contrary to time-limit of 40 days for filing EQR by the interested parties. It would appear that the appellants were having different related entities managing in different inter-connected operations. They should have been well aware of the implications of such inter-connection in the analysis of AD duty investigation. We also note that the original investigation in the present case was concluded in January, 2015 and AD duty was imposed in April, 2015. The appellants had provision of mid-term review in terms of Rule 23 of the AD Rules.
Appeal dismissed - decided against appellant.
-
2018 (3) TMI 369
Benefit of N/N. 04/2006-C.E. - goods imported by the appellant is commercial propane, commercial propane is made of only propane and not a mixture of the stipulated gas - case of the department is that the exemption N/N. 04/2006-C.E. is available only to the goods Liquefied Petroleum Gases (LPG) - Held that: - similar issue decided in the case of COMMISSIONER OF CUS. (IMPORT), MUMBAI Versus AEGIS LOGISTICS LTD. [2014 (12) TMI 769 - CESTAT MUMBAI], where it was held that liquefied petroleum gases (LPG) is a term which is generic in nature and covers a wide range of petroleum gases which are in the liquefied form. Propane is one of such gas - benefit to be allowed - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 368
Benefit of N/N. 25/2005 –Cus., dated 01.03.2005, as amended - denial on the ground that the imported goods were being used by the appellant in the manufacture of Coaxial Cables, classifiable under CTH 8544 20 10 and that since RF Feeder Cable is the same as Coaxial Cable, the appellant cannot claim the classification of the said goods under sub-heading 8544 42 & 8544 49 of the Tariff Act.
Held that: - “co-axial cable”, under Tariff heading 8544 20 10 is not finding place as the eligible goods for the benefit of exemption provided under the Notification dated 01.03.2005. The classification of the impugned goods are supported by technical test opinion and due admission of such technical specification - the appellant is outside the scope and purview of the Notification dated 01.03.2005 and accordingly, was liable to pay applicable Customs duty on the goods imported by it.
Since the provisions of Rule 8 of Customs Rules, 1996 do not have any application to the case of the appellant, there was no jurisdiction on the part of the Central Excise Officer, having jurisdiction over the factory of the appellant to issue the Show Cause Notice and adjudication of the matter under Section 28 of the Act.
The impugned order passed by the Commissioner of Central Excise and Service Tax, Alwar cannot be sustained, as he is not the Jurisdictional Customs Officer, who assessed the imported goods, cleared by the appellant on filing the bill of entry.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 367
Classification of goods - Bentonite Powder BH 200 Mesh - Volclay Bentonite Powder Fine 325 Mesh - The case of the department is that the goods i.e. Bentonite Powder BH 200 Mesh and Volclay Bentonite Powder Fine 325 Mesh were Activated Bentonite classifiable under CTH 38029019 attracting duty at a higher rate - Held that: - the supplier has clearly certified that the product supplied was not activated with any acid alkaline and soda ash. These are natural unactivated bentonite and are only dried, ground and sized before supply. In view of the certificate, nothing contrary can be assumed and the product as per the certificate is not activated bentonite. The Revenue could not bring anything on record to contradict this certificate. Therefore, in absence of any evidence which can remotely indicate that the product is activated bentonite, we cannot agree with the finding given by the learned Commissioner in the impugned order.
The courts have clearly held that the burden of classification is on the Revenue which has to be discharged with evidence - In the present case, no such burden was discharged by the Revenue.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 366
Penalty u/s 112 of CA 1962 - penalty imposed on the appellant for having enabled the exporter to stake claim for credit by enabling them to evidence the cost of production - Held that: - it is an erroneous conclusion that acceptance of declared value was facilitated by these certificates. The penal provision in section 114 is liable to be invoked for any act of omission or commission in relation to the goods that are held liable for confiscation. No evidence has been brought on record to establish that mis-declaration of value was enabled by the certified cost of production or that the proper officer was, thereby, led to accept the declared value - penalty set aside - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 365
Principles of Natural Justice - case of Revenue is that the first appellate authority has not considered various aspects of the case more specifically the evidence produced of Chemical Examiner, CFRL, Dhanbad and has relied upon the low ash content as reported and that the first appellate authority has not discussed the same in the findings of the impugned order.
Held that: - the first appellate authority has considered all angles of the issue in this case in hand and has correctly come to the conclusion that the adjudicating authority was in error and set aside the adjudication order - the impugned order is correct and legal and does not require any interference - appeal dismissed - decided against Revenue.
-
2018 (3) TMI 364
Classification of imported goods - Business Projectors - benefit of N/N. 24/2005-Cus. dated 1.3.2005, N/N. 2/2008 dated 1.3.2008 at S. No. 63 and N/N. 29/2010-Cus. dated 27.2.2010 - the department entertained a view that the goods are rightly classifiable under 85286900 and are not eligible for exemption as per above notifications - Held that: - The Tribunal in the case of Vardhaman Technology P. Ltd. [2013 (8) TMI 271 - CESTAT MUMBAI] had specifically analyzed the issue as to whether the projectors having other features like video port, S-video port, HDMI, RCA etc. would be classifiable under 852861900, and it was held in the case that The projection system cannot be used in isolation but replaces the functionality of a monitor. The projectors merely having additional function cannot be a ground for classifying it other than 85286100, they cannot be said to be meant for use solely or principally in an automatic data processing system of heading 8471
The impugned data / business projectors are classifiable under 85286100 - demand set aside - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 363
N/N. 93/2004-Cus - import of raw materials i.e. HR coils without payment of customs duty under Advance Authorization Licenses - the case of the department is that the removal of goods without use by the appellant is in contravention of the condition of N/N. 93/2004-Cus - penalty u/s 114A - Held that: - penalty u/s 114A can be imposed when there is evasion of customs duty - The fact in the present case is that the appellants have not paid the customs duty when the goods were removed. This demand is also admitted by the appellant, therefore, penalty under Section 114A is inevitable particularly when there is suppression of fact and extended period was invoked under the SCN - penalty upheld.
Penalty on Director u/s 112(a) of the CA 1962 - Held that: - the appellant have admittedly paid the duty along with interest and they have also issued invoice in respect of removal of imported goods - the personal penalty was not warranted on Shri N.K. Chaudhari, who is mere employee of the appellant company - penalty set aside.
Appeal allowed in part.
-
2018 (3) TMI 362
Confiscation - penalty u/s 112 (a) of CA - wrong invoicing by the supplier - Held that: - the airway bill does give correct number of pieces. It is also a fact that the consignment was subjected to open and examination at which time this discrepancy was not noticed. At the same time, an important aspect is that the appellant themselves came forward, after the goods had been cleared out of charge, to inform the customs authorities that they had in fact received excess quantity of goods. This attests to their bonafides.
Jjustice should be accorded to the appellant by setting aside the order of confiscation as also setting aside the modified penalty amount of ₹ 25 lakhs imposed on the appellant.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 361
Refund claim - whether non-endorsement to the effect that no credit was availed in respect of imported goods on the sales invoices is sufficient ground for rejection of refund? - Held that: - the issue has been settled by the Tribunal's Larger Bench decision in the case of Chowgule & Company Pvt. Ltd. [2014 (8) TMI 214 - CESTAT MUMBAI (LB)], where it was held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus, notwithstanding the fact that he made no endorsement that "credit of duty is not admissible" on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein - refund to be allowed.
Rejection of C.A. certificate being not in the proper format - Held that: - appellant should be given another opportunity to produce the C.A certificate with the necessary details, to be verified by the adjudicating authority - matter on remand.
Appeal allowed in part and part matter on remand.
-
2018 (3) TMI 360
Non-fulfilment of export obligation - the appellant appeared to have availed the double benefit under N/N. 203/92-CUS dt. 19.05.1992 and violated para V(a) of the said notification - Held that: - the object of the bond is to ensure compliance with post-import requirements to thwart any attempt to divert imported goods and therefore hold that the conditions are substantive in nature. In the circumstances, compliance with these conditions is mandatory to meet the objects and purposes of the notification.
As to the question of levy of additional duty of customs (CVD) on the imported HMS, we do not find any merit in the contention of the appellant that CVD should not be demanded from them because they would be eligible to avail the Modvat credit from CVD. If that view is accepted, then no importer-manufacturer would ever be required to pay CVD on the ground that Cenvat Credit of the same would be availed by them at the next stage.
Extended period of limitation - Held that: - in the present case, the department has rightly alleged that the appellant had withheld the information about availment of Modvat credit at the time of import of consignments at CFS - extended period rightly invoked.
Appeal dismissed - decided against appellant.
-
Corporate Laws
-
2018 (3) TMI 359
Oppression and mismanagement - Syphoning of company money - misused Company Money by petitioner - Held that:- There is no evidence to support Petitioner that he was entitle to use Company money of ₹ 75 Lakhs for marriage of his daughter. The Resolution dated 25.04.2013 does not say so. Learned Counsel for Respondents rightly argued that Petitioner was changing stands on this count as, somewhere he claims he was authorized to use the money as 'advance', somewhere he seeks “adjustment” towards dues of 'Jewan Foods' while somewhere sought adjustment against dividend and yet somewhere that it was 'loan' he took. The Petitioner clearly misused Company Money giving lame excuses and deposited it only in 2013 when directed by C.L.B. Petitioner is thus not with clean hands and is not entitled to reliefs being claimed. Respondents claim that due to such conduct of Petitioner they were required to ask Bank not to allow withdrawals to Petitioner. It cannot be termed as 'oppression'.
We find substance in the submissions made by the learned Counsel for the contesting Respondents. Looking to the manner the Company Petitioner affairs were being conducted and the conduct of the Petitioner in selectively picking up disputes of the affairs of the Company Petition cannot be allowed to be entertained so as to put in difficulties other Respondents dealing with the Company. We have carefully gone through various records referred by NCLT in relation to the claims made by the Petitioner and we find that NCLT has rightly concluded that the Petitioner approached NCLT without clean hands and did not deserve reliefs as claimed by him.
-
Insolvency & Bankruptcy
-
2018 (3) TMI 390
Initiation of Corporate Insolvency process - prior notice under Section 8 of the Code - Held that:- In view of the statutory provisions of the Code and settled precedents a prior notice under Section 8 of the Code is mandatory before filing of an application under Section 9 of the Code. In the present case admittedly after withdrawal of the earlier application no notice under Section 8 has been issued. It is also relevant to note here that non-issuance of Section 8 notice prior to filing of the present application is a non-curable defect, which cannot be cured at this stage. Issuance of notice under Section 8 is an act that should have been done prior to filing of the present application. In the absence of issuance of such notice, the present application is not maintainable.
-
Service Tax
-
2018 (3) TMI 357
Valuation - reimbursement of expenses - includibility - Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5?
Held that: - The plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 01, 2006) or after its amendment, with effect from, May 01, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67 - High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.
The position did not change even in the amended Section 67 which was inserted on May 01, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of subsection (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider.
In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with ‘consideration’ is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax.
Appeal dismissed - decided against appellant.
-
2018 (3) TMI 356
Liability of service tax on sub-contractor - Supply of skilled and unskilled labour for carrying out the work such as shifting, erection, pre-assembly, testing and commissioning activity - sub-contract - Extended period of limitation - it was argued that the main contractor has paid tax on the entire value and therefore no demand of service tax can be made against the sub-contractors - Availing credit while availing benefit of abatement - Held that: - when a sub-contractor does construction work on a land, the propriety passes to the owner of the land immediately on construction. These are peculiar facts with reference to the works contract involving construction on land. This argument would not apply to the provision of service as there is no property transaction taking place which involves direct transfer from sub-contractor to the main recipient of service - In the instant case, the appellants are involved in providing services to the main contractor which they claimed to be a sub-contract. The appellants are providing services to the main contractor and not the owner of the land. Moreover the nature of services provided by the appellants to the main contractor is not the same as those provided by the main contractor to its client.
Whether rent and access charges for providing junctions for mobile operation to cellular telephone operators by DOT will be subject to no service tax? - Held that: - Cellular phone operators are realizing rent and access charges from their subscribers and as such when cellular companies pay service tax on the amounts received by them from their subscribers it includes rent and access charges and as such to charge again service tax on their charges by DOT will amount to double taxation. Board is of the view that no service tax is again chargeable on rent and access charges paid to DOT by cellular phone operators.
It is apparent that these circulars were intended to reduce un-necessary work and not to provide exemption or give away revenue. In the instant case however, the main contractor is not entitled to the credit of service tax paid by sub-contractor if he is availing N/N. 01/2006. Thus any service tax paid by the subcontractor would come as revenue to the Government and no credit of same would be available to the main contractor.
The matter is remanded to the original adjudicating authority - appeal allowed by way of remand.
-
2018 (3) TMI 355
Penalty u/s 76 and 78 - delayed payment of service tax - delayed filing of returns - Held that: - it is apparent that M/s. Venkateshwara Earthmovers failed to pay the duty in the entire period of three years. They had also not filled any ST-3 returns however they had already taken registrations. The amounts paid by the appellants in cash also take the shape of duty only when the same are adjusted by filling the return against the duty liability. In absence of such adjustment of amounts paid against a existing duty liability the said payments do not take the shape of payment of service tax. Thus it is apparent that M/s. Venkateshwara Earthmovers by not filling return for a period of over three years and not by paying tax despite collecting the same from the service recipients even though they had taken the registration have made themselves liable to penalty under Section 78 also.
The penalty equal to the duty amount confirmed under Section 78 is imposed however the noticee is given an option to pay only 25% of the penalty amount - appeal allowed in part.
-
2018 (3) TMI 354
Commercial or Industrial Construction Services - service provided to Agriculture Produce Market Committee, Ahmednagar - Held that: - issue has been squarely decided in the case of M/s. A.B. Projects Pvt. Ltd. Versus Commissioner of Central Excise, Nagpur [2017 (8) TMI 518 - CESTAT MUMBAI], where it was held following the CBEC Circular, we can reach to the conclusion that the activities of APMC in respect of these contracts are not commercial in nature. Thus these contracts are not covered under the purview of commercial and industrial construction service - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 353
Works contract Service - Erection, commissioning and installation Service - transportation of goods by road - Held that: - the adjudicating authority has not rendered a clear finding in the order-in-original and has thus hamstrung the first appellate authority - a fresh consideration of the original notice would require that the demand for subsequent period should also be considered along with.
Matter remanded to the original authority for disposal together with the earlier notice.
-
2018 (3) TMI 352
Coaching and Training Services - whether giving certificate to the students by the respondent s institute which enabled the said students function as Insurance Agents is taxable or otherwise? - Held that: - Similar matter has been decided by this Bench in the case of Pasha Educational Training Inst. [2008 (12) TMI 80 - CESTAT, BANGALORE], where it was held that training imparted should be considered to be a vocational training. Once, it is held that the appellant imparts vocational training, then they would be entitled for the benefit of exemption Notification 9/2003 ST, dated 20.6.03 as amended - appeal dismissed - decided against Revenue.
-
2018 (3) TMI 351
Valuation - pure agent - includibility - reimbursable expenses - Held that: - Revenue is unable to establish that sharing of charges is in connection with provision of infrastructure support service. There is also no agreement between subsidiary company and the respondent for procurement of any services - also, the recovery is no more or no less than the actual expenditure with no consideration involved. This is certified by Chartered Accountant.
The respondent has not engaged in the provision of business support service as alleged and this challenge to the impugned order is without merit - appeal dismissed - decided against Revenue.
-
Central Excise
-
2018 (3) TMI 349
Valuation - whether the price prevailing for sale at depot immediately prior to the clearance from the factory gate was to be adopted or the price prevailing at the depot at the point of time nearest to the time of clearance from the factory gate was to be adopted for the purpose of assessment? - Circular No. 643/34/2002-CX dt. 1.7.2002 - Held that: - the words used in a clarification are the nearest date when clearances of the goods were affected from the depot or other place should be taken into consideration - Similarly in the Circular dt. 30.6.2000, in the example for clearance of goods from factory on 5.7.2000 the price of sale at depot on 1.7.2000 was adopted. It is apparent that the CBEC wishes to adopt the price which is available at the time of clearance from the factory. The other interpretation sought by Revenue would perforce make all the clearances from the factory provisional and assessable price at the time of clearance from factory sale would always remain indeterminate - interpretation adopted by the appellant appears to be proper.
Reliance placed in the case of EI. DU PONT INDIA PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2004 (10) TMI 481 - CESTAT, NEW DELHI], where it was held that Once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable, there is no need to determine the assessable value on the basis of price at which the goods may be sold subsequent to the time of removal of goods.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 348
Classification of goods - spent catalyst - whether classified under CETH 2620.00 of the CETA, 1985 or otherwise? - Held that: - it has been consistent view of Apex Court that spent catalysts cannot be considered to be a result of manufacturing process and thus there cannot be any liability under Central Excise on spent catalysts - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 347
Clandestine removal - sub-contract - Held that: - In the present application for additional evidence, the appellant had not produced any documents or witnesses to be examined or affidavits and therefore such application is without any substance. The appellant in their Memo of Appeal contested the demand of ₹ 1,96,181.00. The goods were supplied by one invoice to the consignment on payment of Central Excise duty and the same Invoice no. was used showing another consignee s name where no goods were supplied and the said Invoice was used for the purpose of managing Bank Loan from the Indian Bank, Durgapur Brach, which was duly acknowledged by the Bank.
Admittedly, the appellant maintained parallel Invoice so the onus lies with the assessee to establish that the second set of Invoice was not used for clearance. It cannot be shifted on the department by stating that the Officers had not enquired the matter - the appellant paid the duty before issuance of the SCN partly. So, they are entitled to avail the option to pay penalty of 25% of duty as per proviso to Section 11AC of the CEA 1944.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 346
Extended period of limitation - SCN was issued proposing to demand duty alleging that these cannot be considered as scrap of accessories and that duty has to be paid considering the goods to be capital goods and also allowing depreciation - Held that: - The original authority has taken note of the Chartered Engineer s certificate and observing that the goods have been procured duty free under cover of CT3 certificates has dropped the proceedings upholding the payment of duty to the tune of ₹ 31,701/- and interest thereof. It is to be mentioned that the impugned goods were procured under CT3 certificate and the department was in full knowledge about such procurement as well as the exit of the appellant from EOU scheme. Therefore, the show cause notice issued invoking extended period alleging suppression of facts cannot sustain.
The appellant has made out good case on limitation - demand is time barred - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 345
Refund claim - whether refund could be rejected based on the Education Cess and Secondary & Higher Education Cess has already been collected from their customers - time limitation - unjust enrichment - Held that: - if the amounts which is required to be paid as reversal for the exempted goods cleared is in itself has not a duty but an amount, the question of levy of Education Cess would not arise.
The undisputed fact is the amount paid by respondent being an amount and does not amount to duty, the provisions of Section 11B of the Central Excise Act, 1944, would not get attracted to such refund claims, and the bar of unjust enrichment will not apply, as the said provisions of Section 11B of Central Excise Act, will apply to refund is a duty.
Appeal dismissed - decided against Revenue.
-
2018 (3) TMI 344
CENVAT credit - items like angles, channels, joists, TMT bars, mill plates etc. - denial on the ground that these items are not capital goods nor components in machineries and therefore are not covered under the definition of inputs - Held that: - issue covered by the decision in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 343
Manufacture - goods processed/manufactured by the appellants out of the free issue of input materials received from their customers and galvanisation of the manufactured goods received by them from their customers and after the required processes the goods were returned to the customers form whom the input goods were received - Held that: - identical issue decided in the case of M/s Krishna Saa Fabs Pvt. Ltd. Versus CC & CE, Tirupati [2016 (7) TMI 771 - CESTAT HYDERABAD], where it was held that process undertaken by the respondents do not amount to manufacture as the MS rods, plates, angles etc. remain the same even after the process have been carried out. Therefore, there is no new manufacturing process involved.
Appeal dismissed - decided against Revenue.
-
2018 (3) TMI 342
Refund of CENVAT credit - export of goods - Held that: - Similar issue came up before the Hon’ble High Court of Bombay in the case of Repro India Ltd Vs UOI [2007 (12) TMI 209 - BOMBAY HIGH COURT] wherein their Lordships went into detail as to whether the refund can be allowed in respect of CENVAT credit availed on inputs which are used for goods which are exempted or non-dutiable, and it was held that the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt.
The 1st Appellate Authority was correct in coming to such a conclusion that the respondent is eligible for the refund of the amount.
Appeal dismissed - decided against Revenue.
-
2018 (3) TMI 341
100% EOU - restriction of time limit for availment of CENVAT credit insofar as the goods lying in stock, or under utilisation, after entitlement to credit was restored to appellant - Held that: - Rule 6(6) of CCR 2004 emphatically excludes such export oriented units from various restrictions on availment of CENVAT credit. This follows from the principle that exporters are entitled to refund of duties/taxes discharged on inputs/input services, as well as terminal excise duties, which is operationalised by rule 5 of CENVAT Credit Rules, 2004. Such a rebating is possible, and is given effect to, only by availment of CENVAT credit.
There is no dispute over the claim of the appellant that CENVAT credit has been availed only on stocks that were physically available, either in original form or as converted, within the factory, the disallowance of CENVAT credit in the impugned order is set aside - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 340
Valuation - pressure cooker parts - Sale from depot - Department was of the view that since the goods were being sold from the depots and the appellant have not produced any evidence at the time of removal, what was the price at which the goods were being sold from the depots, they are liable to pay duty on the price mentioned in the invoices for removal from the factory without any abatement.
Held that: - Since in this case, the goods were being sold from the depots, it is the depot which is to be treated as the place of the removal and as per the provisions of Section 4, the duty was required to be paid at the time of removal from the factory on the value of the goods at the depots, while the duty has been paid by the appellant on price equal to MRP minus 35% at the time of removal from the factory, There is no evidence produced by the Department that at the time of removal, the goods were being sold from the depots at the full MRP price without any abatement.
The appellant is required to pay duty at the value, the price on which the goods have been cleared from the depots i.e. the assessable value and the appellant had paid duty accordingly.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 339
Clandestine removal - excess stock of finished goods - confiscation - redemption fine - penalty - Held that: - the authorities below have recorded the statement of the Director, the appellant No. 2 herein, stating that he has accepted that the excess found stock was kept in the factory premises, with an intention to remove the same clandestinely, without payment of Central Excise duty. However, on verification of the statement recorded from Shri Sunil Kedia on 1.8.2009, I find that no such statements were furnished by him before the Central Excise officers. Thus, I am surprised as to how the authorities below have recorded such fact, which is not emanating from the statement recorded by the officers of the department on the spot from the Director of the company.
In absence of any credible evidence regarding the intention to remove the goods in clandestine manner, the imposition of redemption fine and penalties cannot be sustained in the eyes of law.
Confiscation of excisable goods - imposition of fine/penalty under Rule 25 - Held that: - the law is well settled that in absence of the ingredients like suppression, or wilful mis-statement as provided under Section 11AC of the Central Excise Act, 1994, the provisions of Rule 25 ibid cannot be invoked.
This Tribunal in the case of Industrial Thermo Pack [2015 (3) TMI 1145 - CESTAT NEW DELHI] under identical set of facts of non-maintenance of proper records, has set aside the redemption fine and penalty, holding that there was no deliberate or mala fide intention to remove the goods clandestinely.
Penalty on the Director u/r 26 - Held that: - since the goods cannot be confiscated, there is no question of imposition of penalty on the Director of the assessee-appellant under Rule 26 ibid.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 338
Reversal of Cenvat Credit - various option available as per Rule 6 of CCR - Held that: - the issue is decided in the case of M/s. Mercedes Benz India (P) Limited Versus Commissioner of Central Excise, Pune-I [2015 (8) TMI 24 - CESTAT MUMBAI], where it was held that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services - appeal allowed.
-
2018 (3) TMI 337
CENVAT credit - duty paying documents - Revenue felt that the said supplementary invoices were not the proper documents as defined under Rule 9 of CCR 2004 - Held that: - Cenvat Credit Rules prescribe the documents on which Cenvat credit can be taken. One of the documents is supplementary invoice issued by the manufacturer from his factory on which the recipient can take the Cenvat credit - In the instant case, the recipient did not accept the impugned invoices. In that situation, the impugned invoices do not become the eligible document for taking the credit by the manufacturer himself as the invoices are in the name of recipient.
In the BDH Industries [2008 (7) TMI 78 - CESTAT MUMBAI], it was held that the suo motu credit of duty or refund cannot be taken by assessee without sanction by a proper officer.
Appeal dismissed - decided against appellant.
-
2018 (3) TMI 336
Levy of duty on yarn manufactured and captively consumed - provisional assessment - scope of SCN - Held that: - for provisional assessment, there should be a proper order under rule 9B by the Revenue and the endorsement on RT-12 return to the effect that the assessment is provisional would not suffice for making the assessee liable for payment of duty.
In fact the Revenue never directed the Appellants to execute the bond with any security or surety or such conditions that the Collector may approve for the provisional assessment of the goods under Rule 9B. In such case, the assessment was not provisional in terms of Rule 9B. The order under rule 9B towards provisional assessment has not been issued and in that case it cannot be said that the goods were assessed provisionally.
Further, no SCN was issued by the Revenue in terms of Section 11A to the Appellant for recovery of duty - Once the Revenue did not issue any SCN u/s 11A, no demand could have been made from the Appellant. It is only under Section 11A that demands can be raised against assessee. The Revenue, having failed to issue any show cause notice, now cannot take the shelter of the bond executed by the Appellant in terms of the order passed by the Hon'ble Delhi Court.
In absence of provisional assessment order, the demand of duty made against the Appellants is not sustainable.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 335
Rectification of mistake - In paragraph 8 of the order the amount of demand is ₹ 15,57,360/- instead of ₹ 15,55,360/- - Held that: - the mistakes to be rectified, required is to be done to rectify the mistake - ROM application allowed.
-
2018 (3) TMI 334
Clandestine removal - cross-examination not allowed - natural justice - Held that: - Revenue has relied on the status sheet and the statement of Shri Anil Pahal, who has admitted clandestine removal of goods but Shri Anil Pahal was not examined for cross-examination. In that circumstances, there is gross violation of principles of natural justice - matter needs re-examination - appeal allowed by way of remand.
-
2018 (3) TMI 333
CENVAT credit - input services - air travel service - architect service - club membership - event management and sponsorship services - Held that: - air travel service has been used by the Directors/employees of the appellant for business promotion i.e. for sale and purchase of their goods. Therefore, the said service is directly related to their manufacturing activity - credit allowed.
Architect service - Held that: - said services of the architect has been availed by the appellant for modernization and renovation of their plant and machinery and same is covered under the inclusive part of definition in terms of Rule 2(l) of CCR 2004 - credit allowed.
Club Membership - Held that: - the said service have direct nexus with the manufacturing activity of the appellant - credit allowed.
Event Management Service - Held that: - the said service has been availed by the appellant for attending various conferences and events of business promotion of the appellant - credit allowed.
Sponsorship Service - Held that: - said service has been availed by the appellant for sponsorship of the various events organized by various social organizations - the service of sponsorship of various events organized by social organizations have no relation to the manufacturing activity of the appellant - credit not allowed.
Appeal allowed in part.
-
2018 (3) TMI 332
Penalty - short payment of duty - job-work - Held that: - In failure to supply the costing data by the principal who has no locus standi inasmuch as the appellant being an assessee and liable to pay duty, appellant cannot wash out their hands from the statutory compliance of valuation provisions of the final product being manufactured. It is also observed that the appellant have also not informed the department regarding their inability to assess the value correctly due to non-supply of costing data. In such as situation, the appellant had legal option to follow the provisional assessment as provided under the law in respect of their goods which also they have failed to comply. In these circumstances, the bonafide of the appellant is not proved. Therefore, penalty under Section 11AC was rightly imposed by the lower authority.
The penalty reduced to 25% in terms of proviso to Section 11AC subject to condition that the duty, interest and 25% penalty stand paid within one month from date of receipt of this order - As regard the penalty imposed under Rule 25, once the penalty under Section 11AC has been imposed, no further penalty under Rule 25 is warranted.
Appeal allowed in part.
-
2018 (3) TMI 331
Remission of duty - goods destroyed by fire - natural justice - Held that: - as the appellants have not been given proper opportunity to defend themselves by the adjudicating authority, it would be appropriate that the matter is the remanded back to the adjudicating authority for fresh adjudication after giving proper opportunity to the appellants to defend their case - appeal allowed by way of remand.
-
2018 (3) TMI 350
Validity of assessment order - main activity, according to the petitioner, is the supply and installation of goods purchased from the vendor by integrating such goods to the need of such customer - Held that: - The power of the Commissioner would depend upon the factual situation. In that sense, without adverting to the factual situation, the Commissioner could not have exercised the power. That means the Commissioner had erred in exercising the jurisdiction to pass such order - this Court can invoke the power under Article 226 of the Constitution to set right such jurisdictional error committed in the decision making process. Therefore, the impugned order is set aside leaving it for reconsideration - appeal allowed by way of remand.
-
2018 (3) TMI 330
Benefit of reduced penalty - Held that: - appellant had already paid up the duty liability and interest well before issue of SCN. Accordingly, they are very much entitled to avail benefit of reduced penalty. In the circumstances, Commissioner (Appeals) has exceeded his brief in ordering 100% penalty before April 2011 and 50% penalty thereafter - Appeal is allowed to the extent of restricting the penalty payable by the appellant only under Rule 15 (2) of CCR 2004 / 11AC of C.E. Act to 25% of the penalty imposed by the original authority.
-
2018 (3) TMI 329
Clandestine removal - M.S. Ingots/risers - CENVAT credit disallowed on alleged shortage of Sponge Iron at the time of physical verification - penalty - Held that: - it is evident on the face of record that the alleged shortage of Sponge Iron (raw material) is a matter of wild guess based on eye estimation. There is no calculation sheet or weighment detail on record and/or annexed with the panchnama. As such I hold that the allegation of shortage of raw material/sponge iron is not sustainable.
As regards alleged clandestine clearance of ingots is concerned, I find that the allegation of revenue is based mainly on the initial admission of Shri Kulbhushan Jain and further admission of Shri Sanjay Agarwal Director of VVS Alloys Ltd. and Deepak Handa, director of M/s Sarda Steel Ltd. It is found that the statements of these persons are not admissible, as evidence, under provisions of Section 9D of the Act, as the adjudicating authority have failed to examine these persons in the course of the adjudication proceedings nor offered its witness for cross examination, more so inspite of application made by the appellants for the same.
Suspicions howsoever strong cannot form evidence for confirming allegation of clandestine removal - The allegation of clandestine production and removal is not established - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 328
CENVAT credit - own duty paid goods returned from the customer due to rejection - Rule 57I of erstwhile Central Excise Rules, 1944 - whether the modvat credit is admissible on the finished goods itself when it is returned for reconditioned/repaired? - Held that: - This issue was decided by the adjudicating authority on different aspect which was not raised in the show cause notice also it is not flowing from the order-in-original, therefore the impugned order is not sustainable - the matter is remanded back to the adjudicating authority to decide the case on merit and only on the issue raised in the SCN after affording an opportunity of personal hearing to the appellant - appeal allowed by way of remand.
-
2018 (3) TMI 327
Default in monthly payment of duty - whether the appellant company is liable for penalty under Rule 25 and Director of the company liable for penalty under Rule 26 of Central Excise Rules, for default in monthly payment of duty under Rule 8 of Central Excise Rules, 2002 when the appellant company have paid the duty though belatedly but along with interest? - Held that: - The liability of the non-payment of duty was declared in the ER1 return for the month of November, 2010 therefore this is not a case of suppression of facts or malafide intentions on the part of the appellant with intention to evade duty - the appellant have paid entire duty though belatedly along with interest - there is no reason to impose penalty on the appellant company or penalty under Rule 26 on the director of the company.
However, by making delayed payment appellant have contravened provisions - appellant liable for penalty u/r 27.
Appeal allowed in part.
-
2018 (3) TMI 326
Appeal dismissed for non-prosecution - Held that: - Commissioner (Appeals) has given specific findings in his order dated 31-7-2003 whereby the adjudicating authority was directed to re-quantify demand. This order was upheld by the Tribunal vide order dated 7-9-2011 - Since first order of the Commissioner (appeals) itself has attained finality, no grievances can be made by the appellant in the second round.
Appeal dismissed - decided against appellant.
-
2018 (3) TMI 325
Refund claim - whether the supply made to 100% EOU is entitle for refund of accumulated Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004? - Held that: - As per the amended definition of export goods refund is only allowed in respect of export goods, which are taken outside India - Ld. Commissioner has relied upon the sanction order of appellant which is pertaining to the period prior to 1-3-2005 therefore same is not relevant to the fact of the present case - refund not allowed - appeal allowed - decided in favor of Revenue.
-
2018 (3) TMI 324
CENVAT credit - whether the Appellant is required to reverse the cenvat credit on the common input service attributed to the trading activity for the period prior to 1/4/2011 when the trading activity was considered as exempted service, as per rule 2(E) w.e.f. 1.4.2011? - time limitation.
Held that: - the Appeal can be disposed of only on limitation since the SCN has invoked the extended period, i.e. beyond one year.
As per the fact of the case, the Appellant are carrying out manufacturing activity in respect of dutiable goods and simultaneously, they are also doing trading activity in respect of bought out goods, Prior to 1.4.2011, there was a confusion whether the trading activity can be treated as exempted service to invoked the provision of Rule 6 of Cenvat Credit Rules on the said trading activity. The trading activity was not taxable service, therefore, there was an interpretation that trading being neither service or exempted service, does not cover under Rule-6 of the Cenvat Credit Rules 2004.
It is a settled law that when there is an interpretation of law and had general practice amongst the mass, it cannot be said that the assessee has malafide intention to avail undue benefit. It is also on record that the Appellant have been declaring the availment of cenvat credit on common input service in their ST-3 return. The Appellant have recorded in their books of account the manufacturing activity as well as trading activity. In such situation, it cannot be alleged on the Appellant that they have suppressed the facts to evade duty. In absence of any malafide intention and suppression of fact, the extended period of demand cannot be invoked. Hence, the demand is liable to be set aside on the ground of limitation itself.
Appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 323
CENVAT credit - allegation against the appellant is that they failed to reverse the credit of duty on the inputs used in the trial production for which the demand SCN issued - Held that: - The reality of manufacture makes trial run a necessity and there is no provision for deniability of credit of inputs used for production process in CENVAT Credit Rules, 2004. The dutiability, or otherwise, of the waste product does not, in any way, attract restrictions on availment of CENVAT credit of the inputs used therein. The recovery of cost of inputs from the foreign customers through debit notes does not alter the eligibility to take credit of tax paid on tax liability that has been duly discharged.
The disallowance of CENVAT credit in the impugned order is without any basis in law - appeal allowed - decided in favor of appellant.
-
2018 (3) TMI 322
CENVAT credit - rule 6(3) of CENVAT Credit Rules, 2004 - Held that: - the credit of duty had not been taken on inputs/input services used for exempt product and, therefore, they were in full accord with rule 6(1) of CCR, 2004; the prescriptions in rule 6(3) of CCR, 2004 are, therefore, not required to be complied by the appellant. However, as the two lower authorities had not ascertained the veracity of the claim that credit had been reversed, the matter needs to be decided afresh - appeal allowed by way of remand.
-
2018 (3) TMI 321
CENVAT credit - job-work - supply of tangible goods - Held that: - The goods in question are crane, diesel generator sets and other equipments for movement of heavy articles. These are essential in manufacturing process and there is no allegation in the show cause notice that these were put to use at a place other than that of job-worker. It is inconceivable that the job-worker may find a use for these equipments in any other manufacture. The definition of “input service” in rule 2(l) of CENVAT Credit Rules, 2004 is of sufficient latitude to allow service used directly or indirectly in relation to manufacture of final products.
There is no ground to deny CENVAT credit on this particular service under CCR 2004 - appeal allowed - decided in favor of appellant.
-
Indian Laws
-
2018 (3) TMI 358
Interpretation of statute - MPT Act - Whether the liability to pay ‘ground rent’ on containers unloaded at Cochin Port, but not cleared by the consignees/importers and refused to be de-stuffed by the Port, on the ground of inadequate storage space, can be imposed on the owners of the vessel/steamer agents beyond the period of 75 days, fixed by the Tariff Authority of Major Ports (TAMP), a statutory body constituted under Section 47A of the Major Port Trust Act (MPT Act), 1963?
Held that: - the matter referred to Larger Bench to resolve the issues:- Whether in the interpretation of the provision of Section 2(o) of the MPT Act, the question of title of goods, and the point of time at which title passes to the consignee is relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust and other relevant issues - The larger Bench may deal with any additional issues relevant to the context, as it deems necessary.
|
