TMI Tax Updates - e-Newsletter
March 14, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
Wealth tax
Indian Laws
Highlights / Catch Notes
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GST:
Processing of refund applications for UIN entities - CGST - Circular
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Income Tax:
Determine the ALP of the export sales to AEs - manufacturing of electric connectors, accessories, cable assemblies and system integration - TNM method is the most appropriate method is a reasonable and possible view on application of appropriate test in the present facts. - HC
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Income Tax:
Disallowance of returned loss holding that the assessee's business has not been set up - grievance of the Appellant is that the business has been set up as it evident from the fact that the Appellant had purchased two vehicles and also taken office on hire - assessee failed to meet the absence of various other requirement - HC
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Income Tax:
Condonation of delay - to seek that the period of limitation provided in the statute be ignored in case of Revenue's appeals cannot be accepted. The Appeals which are filed by the Revenue in this Court under Section 260A of the Act are very large in number and on an average over 2000 per year from the orders of the Tribunal. Thus, the officers of the Revenue should be well aware of the statutory provisions and the period of limitation and should pursue its remedies diligently. - HC
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Income Tax:
Provision for non-moving inventory - Consistent treatment given by the assessee from year to year with regard to treatment of provision for non-moving inventory in the return of income - Disallowance deleted - AT
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Income Tax:
Deemed dividend addition u/s 2(22)(e) - assessee had mortgaged his properties for availing credit limits by the company and dried up his resources for getting financial assistance from the banks. Therefore, he had no option except to take the loan from the assessee company or to get released the properties mortgaged to the Bank - deleted the addition made towards deemed dividend - AT
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Income Tax:
Deduction u/s 80IC - manufacture of external hard disk and DVD writer - even qua the laptops and mouse the deduction allowed was withdrawn - The claim has been rejected on suspicious and surmises ignoring the facts on record and on an incorrect appreciation of law for the reasons set out herein above at length. - AT
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Customs:
Misdeclaration of value of imported goods - undervaluation - The non-inclusion of design charges is, admittedly, not in line with the valuation provisions. - The redemption fine imposed is 10% of the value of assessment and the penalty is 5% of such value - AT
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Customs:
Classification of imported goods - Anti-dumping Duty - when the goods are 100% Viscose (Rayon) Staple Fibre, they will have to be classified in the specific subheading in entry 5504-Artificial staple fibres, not carded, combed or otherwise processed for spinning namely “5504 10 00 – “of viscose rayon". - AT
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Customs:
100% EOU - conversion from EOU scheme to DBK Scheme - exporter is very much entitled for conversion of zero duty EPCG shipping bills to zero duty EPC scheme cum drawback scheme shipping bills - AT
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FEMA:
Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions - Circular
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State GST:
Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling
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State GST:
Online submission of Letter of Undertaking by the taxable person who makes zero-rated supply of goods or services or both without payment of Integrated Tax under IGST Act.
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Indian Laws:
Cheque Bounce - Recovery of compensation from petitioner - Warrants of attachment - Section 138 of the Negotiable Instrument - By merely undergoing the default sentence, the accused cannot claim discharge of the liability to pay the compensation amount - HC
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Service Tax:
Business Auxiliary Service - export of services - promotion and marketing of products and services of the client situated outside India - the services are to be considered as exported out of India - AT
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Service Tax:
Business Support Services - providing infrastructural and administrative support facilities to the visiting doctors & consultants - there is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure - AT
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Service Tax:
Liability of service tax - works contract - construction of residential accommodation for use by the Police Department for their personnel is excluded from the taxable activities under construction of complex service - AT
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Service Tax:
Applicability of Rule 6 (3) (i) of CCR 2004 - CENVAT credit - provision of taxable as well as exempt services - The appellants cannot be asked to pay 5% of value of exempted services when they have reversed proportionate/all the credit available on common input services - AT
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Service Tax:
Commercial coaching and training services - the appellant has been authorized as a Study Centre under a Memorandum of Understanding entered into with Alagappa University on the basis of Distance Education Council (DEC) guidelines issued under the IGNOU Act, 1985 - appellant would be exempted from service tax levy during the relevant period - AT
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Service Tax:
With effect from 1.5.2006, the words “commercial concern" was substituted by the words “person" and w.e.f 16.5.2008, the words “to a client” was replaced by the word “to any person”. There is no dispute that appellants are a charitable, non-profit organization and for the period at least upto 1.5.2006, appellant cannot be called a “commercial concern” - AT
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Central Excise:
100% EOU - Cenvat Credit - denial on the ground that tractors are not capital goods as defined under CCR 2004 since not installed within the factory premises - when the notification does not provide the definition of capital goods, the same has to be construed as used in common parlance. - AT
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Central Excise:
Classification of goods - Tapioca Starches, ‘Native' as well as 'Modified' - It is not understood that when the samples were drawn by Revenue in the presence of the appellant and sent to the chemical examiner for testing, then why the results of the same were not provided to the assesse. - AT
Articles
Notifications
Customs-
06/2018 - dated
12-3-2018
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ADD
Seeks to impose anti-dumping duty on imports of 'O-Acid' originating in or exported from China PR.
GST - States-
G.O.Ms.No.087 - dated
16-2-2018
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Andhra Pradesh SGST
Common Goods and Services Tax Electronic Portal.
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G.O.Ms.No.086 - dated
16-2-2018
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Andhra Pradesh SGST
Waiver of a portion of the late fee payable under section 47 of the APGST Act, 2017 for failure to file the return in form GSTR-6 - within the due date.
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G.O.Ms.No.085 - dated
16-2-2018
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Andhra Pradesh SGST
Waiver Of A Portion Of The Late Fee Payable Under Section 47 Of The APGST ACT, 2017 For Failure To File The Return In FORM GSTR-5A – Within The Due Date.
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G.O.Ms.No.084 - dated
16-2-2018
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Andhra Pradesh SGST
Waiver of a Portion of the Late Fee Payable Under Section 47 of The APGST Act, 2017 For Failure to File The Return In Form GSTR-5 - within the due date.
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G.O.Ms.No.083 - dated
16-2-2018
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Andhra Pradesh SGST
Waiver of a Portion of the Late Fee Payable Under Section 47 of the APGST Act, 2017 for failure to file the return in form GSTR-1 within the due date.
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G.O.Ms.No.082 - dated
16-2-2018
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Andhra Pradesh SGST
Andhara Pradesh Goods and Service Tax (Fifteenth Amendment) Rules, 2018
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G.O.Ms.No.076 - dated
14-2-2018
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Andhra Pradesh SGST
Postponing the applicability of E-way bill rules - rescinding notification.
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G.O.Ms.No.036 - dated
24-1-2018
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Andhra Pradesh SGST
Amendments in the Notification issued vide G.O.Ms.No.250, Revenue (Commercial Taxes-II), 28th June, 2017, - Composition Levy
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G.O.Ms.No.035 - dated
24-1-2018
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Andhra Pradesh SGST
The Andhra Pradesh Goods And Services Tax (Fourteenth Amendment) Rules, 2017
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G.O.Ms.No.034 - dated
24-1-2018
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Andhra Pradesh SGST
Notifying the effective date for certain provisions of Andhra Pradesh goods and services tax rules.
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G.O.Ms.No.033 - dated
24-1-2018
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Andhra Pradesh SGST
Waiver of a portion of the late fee payable under section 47 of the Andhra Pradesh Goods and Services Tax Act, 2017 for failure to file the return in FORM GSTR-4 – within the due date.
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G.O.Ms.No.032 - dated
24-1-2018
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Andhra Pradesh SGST
Special Procedure for filing outward supplies for suppliers whose aggregate turnover is up to 1.50 crore rupees in the preceding financial year or the current financial year –furnishing of quarterly returns - extension of time.
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G.O.Ms.No.018 - dated
10-1-2018
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Andhra Pradesh SGST
The Andhra Pradesh Goods and Services Tax (Thirteenth Amendment) Rules, 2017.
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G.O.Ms.No. 622 - dated
28-12-2017
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Andhra Pradesh SGST
Further Extending the Time Limit of Operation of the Notification.
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FTX.113/2017/072 - dated
19-1-2018
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Assam SGST
Scheme of reimbursement of tax paid under the Assam GST Act,2017 by an eligible unit located in the state of Assam.
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S.O. 149 - dated
7-3-2018
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Bihar SGST
Rescinds the Commercial Taxes Department, Notification No. S.O. 126 dated the 23rd January, 2018.
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S.O. 148 - dated
7-3-2018
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Bihar SGST
The Bihar Goods and Services Tax (Amendment) Rules, 2018.
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S.O. 147 - dated
12-2-2018
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Bihar SGST
Appointed as State officer in the State Level Screening Committee.
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S.O. 144 - dated
6-2-2018
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Bihar SGST
Exempted tax shall not apply to petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
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S.O. 142 - dated
3-2-2018
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Bihar SGST
Notified New e-way Bill
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S.O. 140 - dated
31-1-2018
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Bihar SGST
E-way bill generated upto 31st January 2018.
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S.O. 134-06/2018-State Tax (Rate) - dated
25-1-2018
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Bihar SGST
Amendments in the Commercial Taxes Department Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017.
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S.O. 133-05/2018-State Tax (Rate) - dated
25-1-2018
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Bihar SGST
Exempting the intra-state supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both.
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S.O. 132-04/2018-State Tax (Rate) - dated
25-1-2018
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Bihar SGST
notifies the following classes of registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure.
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3/2018- State Tax (Rate) - dated
23-2-2018
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Delhi SGST
Seeks to amend Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017
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2/2018–State Tax (Rate) - dated
13-2-2018
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Delhi SGST
Seeks to amend Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017
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F. 3(16)/Fin.(Rev.-I)/2017-18/DS-VI/36 - dated
17-1-2018
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Delhi SGST
Appoint the officer to assist the Commissioner of State Tax and Value Added Tax Government of National Capital Territory of Delhi
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (3) TMI 538
Rebate - recovery of amount - recovery of amount in view of enactment of transitional provisions under the CGST - Held that: - It was not an order passed merely because the Court was upset with the Respondents or because of the absence of the advocates, but it is clear from the order that it was to impress upon the Authorities that the proceedings before this Court should not be delayed - On account of the fair stand of the Petitioner and Mr. Sridharan, we direct that the amount paid of ₹ 25,000/be returned to the Respondents - petition disposed off.
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2018 (3) TMI 539
Returns filed by the electronic mode are not generated on the website of the Department, and thus were not accepted - Held that: - even if the returns are forwarded belatedly, they cannot be refused for those forwarding these returns after the prescribed period are aware that they would be visited with tax liability and the component of interest and penalty may be also added - This Court should not be flooded with litigations of this nature - there are no reasons why the returns are not being accepted or not loaded on the site.
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Income Tax
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2018 (3) TMI 525
Allowing the claim of pre-operative expenses - Held that:- The assessee having found that it had committed an error by wrongly capitalizing the employee cost for February and March, 2009 in the books of accounts and also not claiming deduction for the same in the original return of income, later on proceeded to file a revised return for assessment year 2009-10 and claimed the same as deduction and correspondingly debiting prior period expenses for the very same amount in assessment year 2010-11 in the books and fairly disallowing the same voluntarily in the memo of income filed for the assessment year 2010-11. We hold that the Ld. CIT(A) had rightly deleted the disallowance of ₹ 3,01,21,223/- for the assessment year 2009-10. Accordingly ground no. 1 raised by the Revenue is dismissed.
Disallowance on account of leave encashment - Held that:- Similarly the assessee had also made provision for leave encashment in the earlier years and had also made payments during the year on account of such pre-existing liability i.e. payments made during the year on account of earlier year provisions. We find that the ld. AO and the Ld. CIT(A) had not looked into this issue in the proper perspective by linking the same with the tax audit report filed by the assessee wherein all these details are duly mentioned. Hence, we deem it fit and appropriate to remand this issue to the file of the ld. AO for de novo adjudication and decided the same in accordance with the law. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, ground no. 2 raised by the revenue is allowed for statistical purposes.
Disallowance towards provision for warranty - Held that:- We find that the provision has been made during this year based on the transaction carried out in the last preceding three years on a scientific basis and this method has been consistently followed by the assessee in the past. In view of these facts and findings and respectfully following the decision of this Tribunal in the assessee’s own case for the earlier years, we hold that the Ld. CIT(A) had rightly deleted this disallowance and granted relief to the assessee.
Disallowance towards provision for non-moving inventory - Held that:- Consistent treatment given by the assessee from year to year with regard to treatment of provision for non-moving inventory in the return of income, we hold that the Ld. CIT(A) had rightly deleted the disallowance made in this regard by the ld. AO . Accordingly, ground no. 5 raised by the revenue is dismissed.
Addition on account of valuation of closing stock - Held that:- We find from the said workings that there are innumerable number of items comprising both low and high value items. Hence, the action of the ld. AO in averaging all the items put together cannot be accepted. The assessee also indeed filed complete details with regard to material code, product description, quantity, unit of measurement, corresponding price and value thereon in the said workings. In view of these facts and findings of the Ld. CIT(A) that the books of accounts of the assessee had not been rejected by the ld. AO, and in view of the fact that this method of valuation has been consistently employed by the assessee from year to year, there is no case to make any addition towards closing stock in the facts of the instant case. CIT(A) had rightly deleted this addition appreciating this fact and contentions of the assessee.
Provision of written back - Held that:- From the computation of income for the assessment year 2007-08 the assessee had voluntarily disallowed the provision for sales incentives payable to its employees amounting to ₹ 40 lacs. during the assessment year 2007-08. There is no dispute that out of such sum of ₹ 40 lacs, a sum of ₹ 20,02,667/- representing the provision for sales incentives is no longer required to be paid. Accordingly, the assessee credited the same in its profit and loss account by reflecting as ‘excess provision written back’ and claimed the same as deduction in the return of income for the assessment year 2009-10. If the action of the is to be sustained , then this sum of ₹ 20,02,667/- would get invited with double addition. Hence, in the interest of justice, it has to be rightly allowed as deduction in the year of write back, which has been rightly done by the Ld. CIT(A).
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2018 (3) TMI 524
Deemed dividend addition u/s 2(22)(e) - Held that:- In this case, the assessee has taken a loan from the company for construction of house. The assessee had mortgaged his properties for availing credit limits by the company and dried up his resources for getting financial assistance from the banks. Therefore, he had no option except to take the loan from the assessee company or to get released the properties mortgaged to the Bank. Since the properties cannot be released unless the credit limits are completely repaid, he has taken the advance from assessee company for construction of his house and the entire amount of advance was repaid along with interest as evidenced from the order of the Ld. CIT(A).
This Tribunal in the case of DCIT Central Circle-1 Visakhapatnam Vs. Sri Hariprasad Bhararia [2016 (11) TMI 1296 - ITAT VISAKHAPATNAM] held that the transaction between the assessee and the company are not within the meaning of loans and advances as defined u/s 2(22)(e) of the Act and accordingly, deleted the addition made towards deemed dividend under the provisions of section 2(22)(e) of the Act.
We hold that the transaction is not deemed dividend within the meaning of section 2(22)(e) of the Act and accordingly, delete the addition made by the A.O. - Decided in favour of assessee
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2018 (3) TMI 523
Revision u/s 263 - disallowance u/s 40(a)(ia) - Held that:- As per the provisions of I.T. Act, the interest and remuneration is required to be allowed as evidenced by the partnership deed. Since the partnership deed filed in the paper book permits the payment of remuneration and interest, the AO has not committed any error in allowing the interest and remuneration paid to the partners from the estimated income. Hence the assessment made by the AO in estimation of income is neither erroneous nor prejudicial to the interest of the revenue giving scope for invoking the jurisdiction u/s 263.
Similarly, in case, the assessment is completed u/s 143(3) by rejecting the books of accounts and estimating the income as held in the case of Indwell Constructions Ltd. (1998 (3) TMI 121 - ANDHRA PRADESH High Court), no other disallowance is required to be made. The view of the CIT that the AO has not considered the disallowance u/s 40(a)(ia) is also a difference of opinion and does not give any possibility for invoking the jurisdiction u/s 263. Hence, we set aside the orders of the Ld.CIT passed u/s 263 and allow the appeals of the assessee.
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2018 (3) TMI 522
Unexplained cash credits u/s 68 - Held that:- CIT(A) has observed that the bank account clearly indicates the possibility of cash withdrawals forming part of source for subsequent cash credits and no other evidence was shown by the revenue demonstrating that the cash withdrawals are used for any other purpose either for personal or business credits. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Appeal of the revenue is dismissed on this ground.
Staff Salaries and Bonus and accounting charges disallowed - Held that:- DR did not bring any tangaible material to substantiate the disallowance of salaries at 30% and disallowance of entire expenditure in respect of staff bonus and accounting charges. No other material was placed on record before us to controvert the finding of Ld.CIT(A). Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and accordingly ground of revenue’s appeal are dismissed.
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2018 (3) TMI 521
Revision u/s 263 - not examining the rental receipts understated by the assessee compared to the TDS receipts as per Form No.26AS and the excess depreciation claimed by the assessee in respect of motor cars and long term capital gain loss claimed by the assessee - Held that:- The assessee has received the rents as per Form No 26AS a sum of ₹ 25 lakhs, whereas the assessee had admitted a sum of ₹ 12,28,020/- in the return of income and the A.O. has not examined the issue with regard to the remaining amount of ₹ 13,31,800/- which should have been brought to tax by the A.O., similarly, the assessee had claimed the depreciation @ 50%. The A.O. has neither called for the details nor the assessee had demonstrated that the motor cars were used for the purpose of running them on hire.
With regard to the capital gains, the assessee had purchased shares at ₹ 10/- per share and sold the same at ₹ 10/- per share and claimed the long term capital loss of ₹ 1,28,65,574/- with indexed cost of acquisition at ₹ 2,48,65,574/-. But there was no valuation report submitted by the assessee to arrive at the market value as required by the Income tax rules. Therefore, the A.O. clearly committed an error which is prejudicial to the interest of the revenue and the Ld.CIT has rightly taken up the case for revision u/s 263.
CIT(A) while remitting the matter back to the file of the A.O., had directed the A.O. to disallow the capital loss based on cost of inflation index and remitted the remaining two issues for readjudication. However, we are of the considered opinion that all the three issues required to be remitted back to the file of the A.O. to re-do the assessment afresh on merits. Accordingly, while upholding the order of the CIT passed u/s 263 of the Act, we remit the matter back to the file of the A.O. all the three issues with a direction to re-do the same afresh on merits. - Decided against assessee
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2018 (3) TMI 537
Validity of reopening of assessment - eligible reasons to believe - proof of change of opinion - Held that:- The basis of the reopening notice is that the amount of ₹ 97.74 lakhs had remained to be disallowed in the regular proceedings leading to assessment order dated 25th February, 2005 as the expenses were not routed through profit and loss account. This basis is incorrect as the assessment order dated 25th February, 2005 under Section 143(3) of the Act, in fact, at paragraph no.7 examines the entire claim of ₹ 339.96 crores, which includes ₹ 97.74 crores. In fact, the impugned order records the fact that the order dated 25th February, 2005 under Section 143(3) of the Act records that ₹ 339.96 crores is not been routed through the profit and loss account and yet disallowed only a part of the claim to the extent of ₹ 242 crores.
Thus, it is self-evident from the order of the assessment dated 25th February, 2005 that the Assessing Officer had applied his mind over the issue which forms the basis of the reopening notice dated 26th March, 2007. It is settled position in law that the the reopening notice based on mere change of opinion is not sustainable as held by the Apex Court in Commissioner of Income Tax Vs. Kelvinator India [2010 (1) TMI 11 - SUPREME COURT OF INDIA]. No substantial question of law
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2018 (3) TMI 536
Determine the ALP of the export sales to AEs - considering TNMM and MAM - manufacturing of electric connectors, accessories, cable assemblies and system integration - Held that:- We find that the TPO has while stating that FAR analysis has to be carried out, does not indicate that it was carried out. Tribunal in the impugned order has done the necessary FAR analysis. As compared the risk and functional differences involved in finished goods being sold to AEs as against those sold to third parties as we have enumerated above to come to the conclusion that the prices at which the finished goods sold to the third parties are not comparables to the prices at which the goods sold to the AEs on the FAR analysis. Finished goods are customized goods and the geographical differences, volume differences, timing differences, risk differences and functional differences, came to a conclusion that the CUP method would not be the MAM to determine the ALP. It upheld the stand of the respondent assessee that TNM method is the MAM to arrive at ALP. Thus, the view taken by the Tribunal on the facts before it, is a possible view on the application of appropriate tests. Revenue has not shown that the selection of TNM method as the MAM to determine the AL of export to AEs is perverse.
Differentiating CUP analysis on the basis of geographic difference and volume difference in respect of sale commission - Held that:- We note that the impugned order of the Tribunal has analyzed the differences between sales commission paid to its AEs for clients identified by them and the sales commission paid to third party agents in respect of sales goods in India. On account of the differences in respect of function and geography between the AEs transaction and third party transaction, the CUP method is not the MAM method. Therefore, held that TNM method is the most appropriate. View of the Tribunal that the TNM method is the most appropriate method is a reasonable and possible view on application of appropriate test in the present facts.
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2018 (3) TMI 535
Penalty u/s 271(1)(c) - addition on account of bad debts - Held that:- We set aside the impugned order of the Tribunal dated 2nd September, 2014 and restore the issue to the Tribunal for fresh consideration keeping in view the decision of our Court in M/s. Shree Gopal Housing & Plantation Corporation (2018 (2) TMI 604 - BOMBAY HIGH COURT) and also considering the respondent-assessee's submission that no penalty is imposable under Section 271(1)(c) of the Act as no inaccurate particulars of income had been filed by the respondent in the present case.
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2018 (3) TMI 534
Disallowance of returned loss holding that the assessee's business has not been set up - grievance of the Appellant is that the business has been set up as it evident from the fact that the Appellant had purchased two vehicles and also taken office on hire - Held that:- In the present facts, the purchase of two cars was preparatory to setting up of business. However, in the absence of necessary permission for operating license as required from the Regulatory Authorities, was not produced before the Authorities and the absence of various other requirement to conclude has been set up was found on facts by all the Authorities under the Act, to be lacking.
Finding of fact arrived at by the Authorities under the Act, cannot be said to be perverse. No substantial question of law.
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2018 (3) TMI 533
Condonation of delay - reason for delay - Held that:- We find that on 14th January, 2016 when the impugned order of the Prothonotary & Senior Master was passed, the appellant was represented by the Managing Clerk and its Advocate. The Affidavit-insupport seeking condonation of delay is bereft of any particulars. The Affidavit also does not mention the date when the deponent, Assessing Officer learnt about the dismissal of the Appeals. There is nothing on record to indicate that the Advocate who was appearing for the appellant had not kept the Assessing Officer informed of the order dated 14th January, 2016 passed by the Prothonotary & Senior Master. The Affidavit is most casual and there has been no attempt to explain the delay of 632 days in removing the office objections.
Affidavit-in-support of the present Notice of Motion which has been taken out in December, 2017 has completely ignored the observations of the Court and makes no attempt to explain the delay.
No reason to condone the delay. The Notices of Motion are accordingly dismissed.
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2018 (3) TMI 532
Condonation of 632 days delay - rejection of the Appeal for non-removal of office objections - Held that:- We have perused the Affidavit-in-support of the Notice of Motion. It does not indicate the date when the applicant came to know about the rejection of the Appeal for non-removal of office objections. The Affidavit-insupport is bereft of any particulars. It is most casual and even the date when the deponent came to know of the rejection of the Appeal is not mentioned. There is no explanation even attempted to be offered for the delay.
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2018 (3) TMI 531
Condonation of delay - period of limitation provided - Held that:- It is for the general benefit of the entire community so as to ensure that stale and old matters are not agitated and the party who is aggrieved by an order can expeditiously move higher forum to challenge the same, if he is aggrieved by it. As observed by the Apex Court in many cases, the law assist those who are vigilant and not those who sleep over their rights as found in the Maxim “Vigilantibus Non Dormientibus Jura Subveniunt”. Therefore, merely because the Respondent does not appear, it cannot follow that the applicant is bestowed with a right to the delay being condoned.
We are conscious of the fact that the period of limitation should not come as an hindrance to do substantial justice between the parties. A party cannot sleep over its right ignoring the statute of limitation and without giving sufficient and reasonable explanation for the delay, expect its Appeal to be entertained merely because it is a State. Appeals filed beyond a period of limitation have been entertained by us, where the delay has been sufficiently explained such as in cases of bonafide mistake, malafide action of the Officer of the State etc. However, to seek that the period of limitation provided in the statute be ignored in case of Revenue's appeals cannot be accepted. The Appeals which are filed by the Revenue in this Court under Section 260A of the Act are very large in number and on an average over 2000 per year from the orders of the Tribunal. Thus, the officers of the Revenue should be well aware of the statutory provisions and the period of limitation and should pursue its remedies diligently.
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2018 (3) TMI 530
Stay of demand - determination of fair market value of the shares issued at a premium - Held that:- In view of the fact that the petitioner's Appeal is pending before the CIT (A) and the issue of the fair market value of the shares issued at a premium by the petitioners to its holding Company would be an issue which would be subject matter of consideration in the appeal and would be appropriately dealt with by him in appeal.
It is the petitioner's contention that the assessment order is without jurisdiction as it has ignored the DCF Method to arrive at fair market value of its shares, it would be open to the petitioners to file an application for stay of the order dated 21st December, 2017 passed by the Assessing Officer to the CIT (A) in its pending Appeal. In the above circumstances, there would be a stay of the order dated 21st December, 2017 to the extent of the demand raised for a period of 4 weeks from today. In case, the petitioner files a stay application to the CIT (A) within a period of 4 weeks from today, the demand of ₹ 62.38 crores arising consequent to the impugned order dated 21st December, 2017 is stayed till the stay application is disposed of and for a further period of 2 weeks thereafter.
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2018 (3) TMI 529
Addition u/s 68 - ITAT deleted the addition - Held that:- Initially burden cast upon the assessee had been adequately discharged by sufficient evidence. The fact that the share applicants were Directors of the assessee was also undisputed.
In these circumstances, the findings of the ITAT are essentially factual
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2018 (3) TMI 528
Penalty u/s 271(1)(c) - denial of exemption to interest income under Section 10B - Held that:- We find that the issue arising in these appeals is covered in favour of the assessee by the full bench decision of Karnataka High Court in Commissioner of Income Tax Vs. Hewlett Packard Global Soft Ltd. [2017 (11) TMI 205 - KARNATAKA HIGH COURT]. We find that for subsequent assessment years, the assessee has been granted the benefit of deduction under Section 10B of the Act to the extent of its interest income.
We find from the affidavit in reply dated 7th February, 2018 filed by Mr. Waseem Ur Rehman, Joint Commissioner of Income Tax (OSD), Mubmai that the respondents have already launched prosecution against the applicant assessee and its officers. In the present facts, prima facie, it appears that the controversy in the present appeals in respect of deduction of interest income under Section 10B stands resolved in favour of the applicant assessee. At the very least, it would be a debatable issue. No penalty levied.
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2018 (3) TMI 527
Reopening of assessment - grievance of the petitioner that order is been passed in breach of principles of natural justice as no hearing was given to him - Held that:- We are of the view that the CIT(A), the authority to whom the appeal would lie from the impugned order dated 29th December, 2017, would be able to provide the relief to the petitioners which they seek before us if they are right in their contention. Issue gives rise to factual investigation. We have not examined the merits of the respective contentions. It would be open to the parties to urge their contentions before the CIT(A) who would decide the same in accordance with law.
We are not entertaining this petition. However, bearing in mind the fact that the petition is pending before the impugned order dated 29th December, 2017 was passed, the time to file an appeal from the impugned order dated 29th December, 2017 is extended upto 12th March, 2018. In case, the petitioners file an appeal on or before 12th March, 2018 the same would be considered on its own merits by the CIT(A) without taking any objection on account of limitation
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2018 (3) TMI 526
Additions made on account of Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund, Mewad Relief Fund - Held that:- Amounts collected by the society towards Cane Development Fund shall be treated as income of the assessee and no claim for deduction shall be entertained and decided by the Tribunal. As regards Area Development Fund, the matters were remitted to the Tribunal. The Tribunal has to consider the case put forth by the assessee of utilising the said amount for the purpose for which it was collected.
Considering the judgment in the case of Siddheshwar S.S.K. Ltd., Vs. Commissioner of Income Tax (2004 (9) TMI 6 - SUPREME Court) it would be necessary to remit the matter back to the Tribunal for considering the aspects in respect of Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund and Mewad Relief Fund, afresh in light of the judgment in case of Siddheshwar S.S.K. Ltd., Vs. Commissioner of Income Tax (Supra).
The impugned judgment is set aside. The matter is remitted to the Tribunal for deciding afresh
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2018 (3) TMI 520
Deduction u/s 80IC - manufacture of external hard disk and DVD writer - even qua the laptops and mouse the deduction allowed was withdrawn - AO was of the view that the assessee needed to demonstrate that the commodity which was subjected to the process of manufacture could be identified as a different character in name as well as in use i.e; a distinct commodity had come into creation as a result of his manufacturing activity.
Held that:- Apex court in the case of CIT-V versus Oracle software India Ltd (2010 (1) TMI 9 - SUPREME COURT OF INDIA) wherein the duplicacy process was considered to have changed the basic character of a blank CD which thus became dedicated to a specific use.
In the facts of the present case the specific steps processes have been identified the employees are available a partner of the assessee firm having a technical qualification is available on record the product being manufacture/produce admittedly does not use heavy electricity or heavy machinery similarly does not require highly literate, technically qualified staff the fact that the individual parts on going through the process of manufacture result in production of products which are separate and distinct from the sum total of the purchased parts which are identified as separate products in the market having separate and distinct identity from its individual parts. The claim has been rejected on suspicious and surmises ignoring the facts on record and on an incorrect appreciation of law for the reasons set out herein above at length. Accordingly for the reasons set out herein above the claim of the assessee is allowed.
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2018 (3) TMI 519
Depreciation on paper brands - allowable capital expenditure - Held that:- As relying on DCIT vs. ABC Paper Ltd [2017 (5) TMI 1539 - ITAT DELHI] wherein held since the assessee had purchased the user of brand name, trademark, logo for 3 years and similarly, the intellectual property right such as design, drawings, manufacturing processes and technical knowhow in respect of the products manufactured by unit was acquired, we hold that the expenditure incurred in this regard as valued by the approved valuer is capital expenditure on which the claimed depreciation was allowable - Decided in favour of assessee
Depreciation on Chemical Recovery Plant - Held that:- Again relying on DCIT vs. ABC Paper Ltd [supra] wherein held AO vide his remand report as mentioned that he has duly verified the statutory Excise returns filed with the Central Excise Department alongwith Cenvat credit records wherein the said Cenvat credit pertaining the Chemical Recovery Plant (CRP) was entered and also its corresponding entries in the Excise records - RG 23 C Part II (Entry book of duty credit of capital goods) and tallied the same with the Central Excise records, original invoices and original IGPs. The original IGPs which are made at the time receipt of the material were also produced before the AO during the remand proceeding and were duly verified by him and tallied with the relevant invoices. The AO has not made any adverse comment whatsoever on merit. Impugned addition made by the AO cannot be sustained on facts or in law. - Decided in favour of assessee
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Customs
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2018 (3) TMI 518
Interpretation of N/N. 21/2002-Cus dated 1.3.2002 - It stands contended that M/s Hyderabad Growth Corridor Ltd. is Road Construction Corporation under the control of the State of Andhra Pradesh and the findings of the original adjudicating authority that the said Hyderabad Growth Corridor Ltd. is not under the control of State Government is based upon wrong appreciation of the Memorandum of Association.
Held that: - The reasoning of the adjudicating authority that importer did not bring the relevant fact of the Hyderabad Growth Corridor Ltd., not being specified agency in the notification, before the assessing officer, would amount to fraudulent exercise, thus enabling the Revenue to initiate the proceedings by invoking the longer period of limitation does not appeal to us inasmuch as admittedly the fact that the order stand placed upon them by Hyderabad Growth Corridor Ltd. was placed before the assessing authority. If the Revenue intended to further investigate the matter, they were well within the power and jurisdiction to call for the Memorandum of Association and Article of Association of Hyderabad Growth Corridor Ltd.
The fact that such Memorandum of Association was not placed before the authority cannot amount to any mala fide on their part in the absence of any requirement or obligation by law to place such Memorandum of Association before the assessing authority.
Demand is barred by time limitation - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 517
Misdeclaration of value of imported goods - undervaluation - Revenue entertained a view that the appellants did not declare the correct value for duty purposes and admitted to short paid customs duty by not including the cost of design in the value of the impugned goods - confiscation - penalty - Held that: - The original authority recorded that even after two months of filing Bill of Entry, the appellant did not come with full explanation to justify their initial declaration of value or bonafideness in not declaring the correct value. It is apparent and clear that the detailed investigation and follow up by the officers has brought out various facts which did not support the case for bonafine belief on the part of the appellants.
The non-inclusion of design charges is, admittedly, not in line with the valuation provisions.
The redemption fine imposed is 10% of the value of assessment and the penalty is 5% of such value. These cannot be considered as excessive.
Appeal dismissed - decided against appellant.
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2018 (3) TMI 516
Validity of assessment order - section 17 of the Customs act 1962 - self assessment - Held that: - As per the records available with this office, no speaking order on the reassessment was issued to the appellant - section 17 of the Customs act 1962 stands amended from 08/04/2011, whereby all assessments are now self-assessment by the importer.
The provisions of section 17(6) come into play whereby the proper officer is required to audit the a) self assessment of the B/E filed by the importer or b) reassessment by the proper officer without a speaking order - the learned Commissioner (Appeals) observed that the reassessment of Bills of Entry was required to be done only by passing a speaking order as per the conditions of Section 17(6) of the Customs Act, 1962 - the reassessment cannot be made without following the principles of natural justice.
Appeal dismissed - decided against Revenue.
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2018 (3) TMI 515
Misdeclaration of imported goods - it was alleged that the appellant had not declared the actual GSM of the fabrics - Confiscation - penalty u/s 112 (a) (ii) of the Customs Act - Held that: - there is variance in respect of at least around 40% of the goods imported, which cannot be considered to be negligible - Appellant cannot therefore get away without any imposition of penalty since there has been misdeclaration of the GSM in respect of such large quantity of the goods imported.
A reduced penalty of ₹ 1,00,000/- u/s 112 (a) (ii) of the Customs Act would meet the ends of justice - appeal allowed in part.
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2018 (3) TMI 514
Classification of imported goods - Bamboo Fiber - On the basis of the test report of the Textiles Committee, Chennai, it appeared to the Department that the goods imported are 61,759 kgs. of 100% Viscose (Rayon) Staple Fiber and merit classification under CTH 5504 1000 attracting Anti-dumping Duty of ₹ 5,52,935/- - whether classified as "Bamboo Fiber" under CTH 5504 9090 or are to be classified as 100% Viscose (Rayon) Staple Fiber under CTH 5504 1000?
Held that: - From the facts, it does not appear that the appellants have asked for any retest. This being so, when the goods are 100% Viscose (Rayon) Staple Fibre, they will have to be classified in the specific subheading in entry 5504-Artificial staple fibres, not carded, combed or otherwise processed for spinning namely “5504 10 00 – “of viscose rayon".
Confiscation - redemption fine - penalty - Held that: - he appellant have all through been contending that the goods made from bamboo fibre would fall within the residual entry of 5504 90 90. The suppliers have also invoiced the goods as bamboo fibre only - benefit of doubt will have to be given to the appellants that they have declared the goods under 5504 90 90 on the bona fide belief, albeit misconceived, that the goods would fall under that heading - confiscation, redemption fine and penalty set aside.
Appeal allowed in part.
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2018 (3) TMI 513
Jurisdiction - refund claim - The department is of the view that the jurisdictional office being Air Commissionerate, the refund claim filed before the Seaport, Customs is without jurisdiction - principles of Natural Justice - Held that: - The Seaport Commissionerate would have issued a SCN proposing to reject the refund claim on the ground of jurisdiction. Without putting notice to the appellants in regard to jurisdiction, the same has been dismissed. This is blatant violation of Natural Justice - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 512
100% EOU - conversion from EOU scheme to DBK Scheme - request for conversion rejected on the grounds that the Drawback and EOU Scheme can both be claimed under code 49 - Held that: - the very same issue has been decided by the Tribunal in the case of M/s. Sri Anjaneya Cottn Mills Ltd. [2018 (2) TMI 1137 - CESTAT CHENNAI], where it was held that the exporter is very much entitled for conversion of zero duty EPCG shipping bills to zero duty EPC scheme cum drawback scheme shipping bills - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (3) TMI 509
Business Auxiliary Service - export of services - promotion and marketing of products and services of the client - CENVAT credit for unregistered premises - credit denied on the ground that certain premises were not registered with the Department thereby making those input services used in such premises ineligible for credit - non-payment of interest on delayed payment of Service Tax - Held that: - the assessee-Appellants have provided marketing and promotion service which is, admittedly, covered under ‘Business Auxiliary Service’ - admittedly, the services are provided in pursuant to the agreement between the assessee-Appellants and RIM, Singapore, and the beneficiary is RIM, Singapore, who paid the consideration for such services. The legal position by now is well settled in such situation that the services are to be considered as exported out of India - decided in favor of appellant.
CENVAT credit for unregistered premises - Held that: - it is only a technical lapse - credit cannot be denied - decided in favor of appellant.
Liability of interest - Held that: - the book entries made between the associate companies is one of the criteria to decide the receipt of consideration for the transaction between the associate companies. Such provision was brought in under Section 67 w.e.f 10.05.2008 - no interest liability can be accrue on the entry already made as debit or credit, but available in the books on the date of amendment - decided in favor of appellant.
Appeal allowed - decided in favor of appellant-assessee.
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2018 (3) TMI 508
Business Support Services - providing infrastructural and administrative support facilities to the visiting doctors & consultants - Service Tax liability - Held that: - similar dispute came up before the Tribunal in the case of Sir Ganga Ram Hospital & Ors. Vs CCE, Delhi [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that there is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure - appeal dismissed - decided against Revenue.
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2018 (3) TMI 507
Liability of service tax - works contract - strengthening/replacing/realigning the security fence in the Indo-Pakistan International Border; repair and maintenance of roads inside Thermal Power Station, Suratgarh; Construction of residential accommodation for Rajasthan State Police; certain other misc. work like False ceiling in the conference rooms of military station headquarters - Held that: - such construction of residential accommodation for own use is not liable to be taxed - Tribunal in Khurana Engineering Ltd. [2010 (11) TMI 81 - CESTAT, AHMEDABAD] held that construction of employees quarters for Income Tax Department though done through CPWD and carried out by the appellant contractor cannot be taxed as construction of residential complex. The same are for use by the Income Tax Department for their staff.
Present construction of residential accommodation for use by the Police Department for their personnel is excluded from the taxable activities under construction of complex service - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 506
Applicability of Rule 6 (3) (i) of CCR 2004 - CENVAT credit - provision of taxable as well as exempt services - non-maintenance of separate records - Held that: - Admittedly, the appellant chose to follow payment of 5% in terms of Rule 6 (3) (i) for exempted goods. However, when pointed out later, that the same will apply for exempted services also (trading) the appellant chose to come out the scheme and pay the full duty liability on the exempted goods post 2011 and also reverse full credit of common input services post 01/04/2011, proportionate Cenvat credit pre 01/04/2007. On these facts, we note that the appellant did proceed and follow the option of reversing the credit on proportionate basis or full credit on common input services which satisfies the condition for one of the options under Rule 6.
Admittedly, reversal of credit of proportionate amount prior to 01/04/2011 on common input services and fully post 01/04/2011 and payment of full duty liability on goods otherwise eligible for Notification 64/95-CE (post 2011) substantially satisfies the condition to be followed by an assessee in case of availing credit on common input services.
The Hon’ble Supreme Court in CCE & CUS vs. Precot Meridian Ltd. [2015 (11) TMI 323 - SUPREME COURT] examining reversal of credit after a period of almost 6 years held that such subsequent reversal will amount to non-utilization of credit and consequences of such non-utilization will follow.
The appellants cannot be asked to pay 5% of value of exempted services when they have reversed proportionate/all the credit available on common input services - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 505
C & F Agent service - various considerations received from their clients - liability of service tax - Held that: - It is clear that these expenses/charges incurred/paid by the appellants to various third parties are later reimbursed on actual basis by their clients - In the present case, there is no service identified except charges which are reimbursed by the clients.
Regarding tax liability of reimbursement expenses, the Tribunal in various cases held that such expenses incurred by the assessee on behalf of the clients, which were later reimbursed on actual basis cannot be includible for discharge of service tax liability.
Appeal allowed - decided in favor of appellant.
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2018 (3) TMI 504
Renting of immovable property service - Whether appellant is liable to pay service tax under the category of ‘maintenance of repair service’? - penalty - Held that: - the department had issued an earlier show cause notice on the very same set of facts and allegations. Therefore, they cannot allege suppression of facts with intent to evade payment of service tax - the adjudicating authority is directed to recalculate the demand giving the benefit of CENVAT credit if any.
The contention of the ld. AR that the appellant had not furnished details as required by the department does not hold water for the reason that the letter requesting for details has been issued by the department only on 13.12.2007 which is much after the normal period. Taking these facts into consideration, we are of the view that the penalty imposed is unwarranted and requires to be set aside.
Appeal allowed in part.
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2018 (3) TMI 503
Classification of services - coaching and training services - Department was of the view that the said services would fall under "Commercial Training Coaching Services" - Held that: - the fees is paid directly to the university by the students in the form of demand draft.
The identical issue has been agitated before CESTAT Chennai in the appeal filed by JMC Educational Trust Vs CC Trichy [2010 (9) TMI 509 - CESTAT, CHENNAI]. In the said case, the appellants therein were also obtaining degrees from Alagappa University through Distant Educational Programmes, where the Tribunal had set aside the demand of service tax holding that training and coaching provided by the appellant therein is an essential part of a course or curriculum of a university.
Also, the definition of "commercial training or coaching centre services" as defined under Section 65 (27) of the Finance Act, 1944 during the period of dispute contains a provision excluding "pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force" - From the documents available in file, we note that the appellant has been authorized as a Study Centre under a Memorandum of Understanding entered into with Alagappa University on the basis of Distance Education Council (DEC) guidelines issued under the IGNOU Act, 1985 - appellant would be exempted from service tax levy.
Appeal allowed - decided in favor of appellant.
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2018 (3) TMI 502
Business auxiliary services - foreign commission agent - The department was of the view that commission of 1.8% received is subject to levy of service tax - Held that: - M/s.Wega has appointed the appellants to provide service of co-ordinating the shipments and for liaison work. M/s.Wega has offered to pay 1.8% of the invoice value as remuneration for the services - Though the amount is paid by the local manufacturers to the appellants, this amount belongs to M/s.Wega as the local manufacturers pays only 3.2% and retain the balance to be paid to appellant - the said amount is out of the purview of taxable services - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 501
Broadcasting Service - demand of service tax - Held that: - appellants were engaged in the uplinking of the video signals relating to lottery draws organized by the Royal Government of Bhutan through earth station physically located in Bhutan. The activity carried out by the appellant was confined to this act of uplinking of signals on the satellite. That no service tax is chargeable to such activities in relation to uplinking of signals.
It is deemed fit that the matter be remanded to the adjudicating authority to reconsider the issue, after giving the appellant an opportunity to produce the documents furnished along with the miscellaneous application - appeal allowed by way of remand.
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2018 (3) TMI 500
Principles of Natural Justice - Business Support Services - Held that: - the appellants have been deprived of natural justice to pursue their case both by way of reply to the SCN and also by representation in personal hearing, as they had shifted their address. Hence without going into the merits, the matter is remanded back to the adjudicating authority for denovo consideration - appeal allowed by way of remand.
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2018 (3) TMI 499
Penalty - Erection, Commissioning and Installation work - Held that: - The assessee has not produced any evidence to establish that the assessee was a sub-contractor and that the main contractor has discharged the service tax liability. In the absence of such proof, the claim of the assessee cannot be considered. The category of impugned services in Erection, Commission and Installation Services and it shows the Maintenance and Repair Services were part of it, as a composite contract - penalty u/s 76 is unwarranted.
Appeal dismissed.
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2018 (3) TMI 498
Mandap keeper service - Appellants are having facilities of Training hall with all equipments and facilities for giving training to Non-governmental Organisations (NGO) as well as to others for conducting programmes - The department after conducting survey felt that their activity of letting out the hall would attract service tax and they were addressed to register with the department for service tax on 17.1.2005.
Held that: - As per section 67 (32) of the Finance Act, “convention” means a formal meeting or assembly which is not open to the general public, but does not include a meeting or assembly, the principal purpose of which is to provide any type of amusement, entertainment or recreation - till 1.5.2006 taxable service in respect of convention service was laid down as ‘to a client, by any commercial concern in relation to holding of a convention, in any manner’. With effect from 1.5.2006, the words “commercial concern" was substituted by the words “person" and w.e.f 16.5.2008, the words “to a client” was replaced by the word “to any person”. There is no dispute that appellants are a charitable, non-profit organization and for the period at least upto 1.5.2006, appellant cannot be called a “commercial concern” and hence there cannot be any tax liability till that date in respect of “convention service”.
It is also not the allegation that such meetings or assembly were held for the principal purpose to provide any type of amusement, entertainment or recreation. This being the case on record, the activities of the appellant cannot fall within the ambit of Mandap Keeper service.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (3) TMI 497
Penalty - appellant were not having any manufacturing premises and had obtained registration with the sole purpose of enabling to issue ARE-1 for the purpose of claiming rebate by others - CENVAT credit - Held that: - it is an admitted position that all the persons involved were aware that there was no manufacture taking place at the premises of M/s Sofina Fashion. Not duty was being paid and no goods were cleared from M/s Sofina Fashion. Documents were being generated to show payment of duty with the intention of claiming fraudulent rebates. The main beneficiary of the entire fraudulent were three exporting firms namely, M/s Karishma Overseas, M/s Krishna Exports and M/s Sheetal Exports, and M/s Sofina Fashion was used as a tool for these purposes - plea of leniency to the three exporters does not merit consideration and the same is rejected.
Reversal of CENVAT Credit from M/s Sofina Fashion - Held that: - even the show-cause notice clearly mentioned that there was no movement of any goods to or from registered premises of M/s Sofina Fashion. There was no generation and/or maintenance of any documents for M/s Sofina Fashion except ARE-1. Therefore, there was no operation and maintenance of CENVAT account by M/s Sofina Fashion at any stage - the charge of availing or utilizing credit by M/s Sofina Fashion on the ground that they had generated fraudulent ARE-1 cannot be upheld.
Penalty on M/s Sofina Fashion under Rule 15(2) of CENVAT Credit Rules, 2002 - Held that: - in absence of any wrong availemnt or utilization of CENVAT Credit, penalty under Rule 15(2) of the CENVAT Credit Rules, 2002 cannot be imposed.
Appeal allowed in part.
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2018 (3) TMI 496
SSI exemption - brand name - clearance of goods by the appellant bearing brand name of ‘Diamond Gold’ and ‘Decotech’ - The department’s case is that these brand names did not belong to the appellant and hence any goods bearing such brand name will not be entitled to benefit of SSI exemption - Held that: - The deed of assignment itself is the disputed aspect in the present case. If the deed of assignment is taken into account, it appears that the appellant will be entitled to the benefit. But before such a conclusion can be arrived at, it is necessary to verify the amendment to the original deed which has not been done by the original adjudicating authority - the matter needs to go back to the original authority to verify these deeds and then to arrive at revised conclusion.
Demand which has been made on the basis of 42 loose slips which were recovered during the course of investigation of the goods. Since we remand the matter, this aspect may be re-examined by the original authority and revised orders passed after extending the opportunity of hearing to the appellant.
Appeal allowed by way of remand.
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2018 (3) TMI 495
Liability of duty - scrap which gets generated at the job worker's premises while processing rough castings for the appellant - Held that: - the provisions of Rule 4 (5) (a) do not stipulate return or accountal of scrap generated at the job worker end. This much has been admitted even by the jurisdictional original authority in his findings with reference to denial of cenvat credit in another proceedings.
For clearances made under Rule 4 (5) (a) due compliance has been reported. Return of waste and scrap or payment of duty on such waste and scrap is not part of such compliance.
Appeal allowed - decided in favor of appellant.
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2018 (3) TMI 494
Principles of Natural Justice - plea of cross-examination rejected - Clandestine removal - Held that: - the Commissioner (Appeals) has taken note of various decisions of the Tribunal and observed that when the statements have been relied by the department for confirmation of the demand, much prejudice is caused to the respondent by not allowing them to cross-examine the witnesses - appeal dismissed - decided against Revenue.
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2018 (3) TMI 493
CENVAT credit - various input services - denial on account of nexus - Held that: - the eligibility of credit in respect of most of the services have been decided in the case law relied upon by the appellant. However, it requires verification as to whether subject services are eligible for credit after going through the invoices.
When invoices are proper and there is no dispute with regard to consumption of services and payment of service tax, the credit availed on ISD invoices are to be allowed if otherwise in order - the issue requires reconsideration - appeal allowed by way of remand.
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2018 (3) TMI 492
CENVAT credit - input services - Event Management Service - penalty - Held that: - these services are eligible input services since they are utilized for promoting sales of the vehicles manufactured by the appellant - matter remanded to the original authority for the limited purpose of confirming the quantum of such credit that can be availed, by causing verification of the documents.
Penalty - Held that: - there was no malafide in availing the disputed credits, hence there is a reasonable cause for having taken the credits, albeit wrongly, in respect of Award Scheme Event, which they were not eligible - penalty to be set aside.
Appeal allowed - decided in favor of appellant.
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2018 (3) TMI 491
100% EOU - Cenvat Credit - denial on the ground that tractors are not capital goods as defined under CCR 2004 since not installed within the factory premises - denial of benefit of notification No.22/2003 - Held that: - procurement of raw materials and process for such procurement is integral part of manufacture. That tractors used for transportation of raw materials and also for returning the remnant sand to the beach is part of the manufacturing process and that without such activity, the respondents cannot carryout the manufacturing activity. The definition of ‘capital goods' given in CCR, 2004 relates to 'capital goods' on which credit can be availed.
In CCE Vs Kejriwal Bee care Ltd. [2011 (1) TMI 422 - CESTAT, NEW DELHI] the Tribunal observed that, when the notification does not provide the definition of capital goods, the same has to be construed as used in common parlance.
Appeal dismissed - decided against Revenue.
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2018 (3) TMI 490
100% EOU - penalty u/s 11AC and Rules 9(2), 173Q and Rule 226 of CER 1944 - discrepancies in the clearances of rejects by the appellants to the DTA - Held that: - Even after remand, the adjudicating authority without taking into cognizance the said observations of the Tribunal has imposed equal penalty. On such score, the penalty imposed under section 173Q requires to be set aside.
The disputed period is October, 1994 to March, 1999. The provisions of section 11 AC were introduced with effect from 28.09.1996 only. Therefore, the said provision can be applied only from such date - the penalty under section 11AC for the period prior to 28.09.1996 cannot sustain.
Appeal allowed in part.
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2018 (3) TMI 489
Classification of goods - Tapioca Starches, ‘Native' as well as 'Modified' - N/N. 06/2002-CE, dated 01.03.2002 and N/N. 03/2006-CE, dated 01.03.2006 - whether classified under CETH under 11.08 or under CETH 3505? - the Revenue's case is that during the period 2003-04 to 2006-07, the appellant have cleared Modified Starch, under the guise of Native Starch.
Held that: - the Native Starch and Modified Starch are two different products and conversion of one into another requires certain additional procedures to be adopted by the manufacturer. There is nothing on record, by way of documentary evidences that such processes were actually undertaken by the appellant during the period in question so as to convert the Native Starch to Modified Starch.
The appellant have explained all the technical aspects and have contended that in the case of Modified Starch, dried starch had to be subjected to heating for several hours in a reactor vessel and the resultant product is "Pyrodextrin". The authorities have failed to appreciate the said fundamental distinction between the Native and Modified Starches. Similarly, the conclusion in respect of use of Sulphur di-oxide solution is erroneous, inasmuch as, the same is for usage and proper extraction of milk from the tuber and the ISI Standard allowed 100 PPM of Sulphur di-oxide in Native Starch. Similarly the Revenue's reference to viscosity of Native Spirit being around 44-55 seconds only is not appropriate.
The adjudicating authority is primarily going by the statement of the buyers, in the absence of any other evidence to reflect that the appellant was actually manufacturing and clearing the Modified Starch. The fact that the adjudicating authority has extended the benefit to the assessee on the finding that they were clearing Native Starch in some cases lead to the inevitable conclusion that the appellant was manufacturing Native Starch also, which was being sold by them to his various customers, who needed the said Native Starch. In such a scenario, based upon the statement of some of the buyers, no conclusions can be made as to the clearances of the Modified Starch in the guise of Native Starch.
The material relied upon by the Revenue for confirming the demand against them is not sufficient to come to an adverse finding, the test report would form valid and legal documents so as to adjudge the dispute in either way. It is not understood that when the samples were drawn by Revenue in the presence of the appellant and sent to the chemical examiner for testing, then why the results of the same were not provided to the assesse.
There is virtually no evidence worth upholding, produced by the Revenue so as to conclude that what was cleared by the appellants during the period in question was not Native Starch but was Modified Starch.
The Native Starches cleared by the appellants were in fact Native and not Modified Starch, their clearance value cannot be added in the clearance value of Modified Starch, in which case, the clearance value of Modified Starch would remain within the exemption limit of small-scale exemption notification - demand of duty set aside - penalty set aside.
Appeal allowed - decided in favor of appellant.
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Wealth tax
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2018 (3) TMI 488
Addition to net wealth - cash seized from the Assessee and kept in PD account of the Commissioner of Income Tax cannot be considered as 'cash-in-hand' in the hands of the Assessee for computation of his net wealth under Wealth Tax Act, 1957 - Held that:- Once it has held that amount deposited in a Bank in PD Account of the Commissioner of Income Tax, is not cash in hand, but cash in bank, then it cannot be added to the net wealth of the Respondent.
Therefore, in view of the Apex Court's decision in KCC Software Ltd. (2008 (1) TMI 12 - Supreme Court of India) the view taken by the Tribunal in the impugned order does not give rise to any substantial question of law.
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Indian Laws
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2018 (3) TMI 511
Recovery of compensation from petitioner - Warrants of attachment - Section 138 of the Negotiable Instrument - Held that: - similar issue decided in the case of Kumaran Versus State of Kerala & Anr [2017 (5) TMI 372 - SUPREME COURT OF INDIA], where it was held that despite the petitioner having undergone the default sentence, the petitioner would remain liable to pay the compensation amount awarded by the Court while sentencing the petitioner. By merely undergoing the default sentence, the accused cannot claim discharge of the liability to pay the compensation amount - petition dismissed - decided against petitioner.
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2018 (3) TMI 510
Benefit of provisions of Sections 131 and 131-A of the Negotiable Instruments Act, 1881 - The cause of action in the suit is that the plaintiff/bank paid under a forged bank draft to the defendant no. 1/bank and therefore defendant no. 1/bank is liable for conversion and receiving the amount under the forged bank draft and thereafter paying most of the amount to defendant no. 2 - Whether the plaintiff bank is entitled to the relief claimed? - Whether there is any cause of action against defendants? - Whether the defendant no. 1 was negligent in opening the account in the name of Majit Singh Sethi as alleged in the plaint and if so, to what effect? - Whether the plaintiff-bank is entitled to claim interest, if so, at what rate and for what period?
Held that: - Supreme Court in the case of Kerala State Cooperative Marketing Federation [2004 (1) TMI 714 - SUPREME COURT] shows that ordinarily once there is undue haste and lack of proper verification in opening of a bank account, a collecting banker will not be able to seek exemption of its liability by relying upon the provisions of Sections 131 and 131-A of the Negotiable Instruments Act. Want of good faith and negligence of a banker is not only with respect to opening of an account but also with respect to operation of the account and there cannot be large cash transactions in the account immediately after opening of the account and if it is so found then the collecting banker would have to be held guilty of negligence and want of good faith and thereby disentitled to avoid its liability by taking the defence under Sections 131 and 131-A of the Negotiable Instruments Act.
The opening of the account, crediting of the amount of bank draft in the account of defendant no. 2 by defendant no. 1/bank and withdrawal by the defendant no. 2 of the total amount of ₹ 75,00,000/- is to be taken as part and parcel of the same transaction and an integral scheme - the defendant no. 1/bank cannot take the benefit of the statutory provisions of Sections 131 and 131-A of the Negotiable Instruments Act.
Whether the suit is bad for non joinder of necessary parties? - Held that: - it is the moneys of the plaintiff/bank which were converted by the defendant no. 1/bank and therefore it was the defendant no. 1/bank who became independently liable to the plaintiff/bank and not to Bank of Montreal. This is to be taken with the fact that a contributory negligence of a paying banker does not absolve a collecting banker such as defendant no. 1/bank once there is found want of good faith and negligence in opening of an account by the collecting banker - the issue decided in favour of the plaintiff/bank and against the defendant no. 1/bank.
The defendant no.1/bank is liable as the plaintiff/bank has proved that the subject bank draft allegedly was a forged bank draft of Bank of Montreal, the defendant no. 1/bank is guilty of want of good faith and in fact has acted negligently in opening the account of defendant no. 2, the transactions of withdrawal of large amounts of ₹ 75,00,000/- took place within four days of opening of the account of defendant no. 2 by the defendant no. 1/bank etc. All these aspects are all part and parcel of the same integral scheme/transaction showing lack of good faith and existence of negligence of the defendant no. 1/bank in opening the bank account of defendant no. 2
The plaintiff/bank will be entitled to pendente lite and future interest from the defendants at 12% per annum simple. Plaintiff/bank is also held entitled to costs of the suit in its favour and against the defendants - The defendants are held jointly and severely liable to pay the decreed amount to the plaintiff/bank - suit disposed off.
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