TMI Tax Updates - e-Newsletter
March 29, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Disallowance being 1/10th Global Depository Receipts - whether the GDR is nothing but increase in the capital and expenses relating to the same is capital in nature? - Section 35D(2)(iv) categorically deals with the expenses in connection with the issue, or public subscription of shares and debentures of the Company. - grievance of the AO is ill conceived - AT
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Income Tax:
Interest accruing on FDRs treated as income from other sources - since the assessee is not having any other source of income de horse this business undertaking which was not set up, interest income earned by the assessee till 31/03/2011 cannot be brought to tax - to be reduced from the cost of project - AT
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Income Tax:
Reopening of assessment - receipt of accomadation enteries - without forming a prima facie opinion, on the basis of such material that income has escaped assessment the AO can not assume valid jurisdiction to initiate proceedings and to issue notice u/s 147/148 - Notice u/s 148 quashed - AT
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Income Tax:
Penalty levied u/s 271(1)(c) - excess claim of deduction u/s 35(2) - the assessee has made a bonafide legal claim which cannot be said to be fallacious or flippant and malafide - no penalty - AT
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Income Tax:
Validity of notice u/s 143(2) - no notice u/w 143(2) was served upon the assessee which a mandatory conditions - impugned assessment order dated 28.12.2011 is quashed being bad in law and void ab initio. - AT
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Income Tax:
Disallowance of Depreciation by reducing Written down value of assets by subsidy received - incentive received by the assessee is not covered under the provisions of Explanation 10 to section 43(1) - Consequently, the subsidy amount received by the assessee is not to be reduced from the cost of assets. - AT
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Income Tax:
Levy of interest u/s. 234B and 234C - MAT - after 07.1.2011 position became very clear that the assessees to be taxed u/s. 115 JB would also have to pay advance tax - interest should be levied for the default of March installment only and not for the earlier three installments. - AT
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Customs:
Rejection of refund of amount paid under protest - Unjust Enrichment though the imported goods were used for the manufacturing of fertilizers - the incidence of duty has not been passed on is not contested by the Revenue - Refund allowed - AT
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Customs:
Seeking conversion of free shipping bills to Drawback shipping bills - a power given by Sec 149 of the Customs Act 1962 to the officers under a statute can not be curtailed by a Circular issued by CBEC - AT
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Customs:
Under-valuation - if the adjudicating authority has to come to such a conclusion, there has to be a findings that the appellant importer had paid additional amount to the exporters in some way or other with proper evidence. In the absence of any evidence it is not possible to accept the statement that the transaction value and the declared value were not actual transaction value - AT
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Customs:
Valuation - inclusion of royalty paid to parent concern - agreement does not talk about or restrict the appellant to purchase or procure raw materials only from the parent concern - in absence of any such evidence, the loading of the value of by the amount of royalty paid by the appellant is not in consonance with the law settled by the higher judicial fora. - AT
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Service Tax:
Transport of passengers on domestic routes through its helicopters - the contracts were invariably between the appellant and the charter parties who hired appellant’s helicopters for the purpose of transporting passengers. - prima facie services clearly fall within the ambit of STGU - AT
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Service Tax:
Eligibility for refund of accumulated CENVAT credit - Rule 5 of CCR - there was no taxability of any service provided by respondent prior to registration. Accordingly, input credit was not possible to be utilized for which that was accumulated. - credits were accumulated prior to registration - No refund can be granted - AT
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Service Tax:
Club or association service - without ascertainment of the receipts as quid pro quo for an identified service, demand of tax on amount transferred from an individual to an entity merely because the individual happens to be a member, on the one hand, and the recipient happens to be club/association on the other, does not meet the test of having rendered taxable service. - AT
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Service Tax:
Demand of Service tax - the terms of the contract being very clear as an indivisible one, vivisection for the purpose of levying service tax on ‘erection, installation and commissioning service' is incorrect. Since the project is in relation to transmission and distribution of electricity up to 26th February 2010, the demand for service tax is not correct in law. - AT
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Central Excise:
SSI Exemption - Clubbing of clearance value of the proprietaryship firm with the private limited company -, it is evident from the records that there was no manufacturing activity in other units - clubbing upheld - AT
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Central Excise:
Refund claim - Once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the Cenvat credit on such inputs - No reversal can be claimed before amendment to Rules - credit reversed wrongly to be allowed as refund - AT
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VAT:
Allowability of refund/adjustment of CST with interest - the assessee is clearly entitled either to the refund of the said tax paid by it under a mistake of law and fact, or at least, an adjustment of the said wrong deposit of tax @ 2% on the branch transfers - HC
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VAT:
Adequate rebut of Legal presumption - Deemed sale drawn by the authorities under Section 46(15)(d) of the AGST Act - the authorities have failed to discharge the obligation - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (3) TMI 926
Disallowance of advertisement expenses as prior year's expenses - Held that:- There is no dispute that the related invoices are issued at the fag end of preceding previous year. The point of dispute really is as to the point of time when these invoices were served upon the assessee. The liability for payment would crystallise, so far as the assessee is concerned, when the bills are received by the assessee. As there is no finding on this aspect, and with the consent of the parties, the matter is remitted to the file of the Assessing Officer for fresh adjudication, in the light of our directions and observations as above, after giving yet another opportunity of hearing to the assessee on this point, in accordance with the law and by way of a speaking order. We direct so.- Decided in favour of assessee Admissibility of deduction in respect of debts written off - Held that:- So far as the onus, of proving that amounts have actually become bad and unrecoverable, is concerned, the matter is now settled, in favour of the assessee, by Hon'ble Supreme Court in the case of TRF Limited vs. CIT [2010 (2) TMI 211 - SUPREME COURT]. As long as the assessee has actually written off the debts, which is not even in dispute before us, the assessee is eligible for deduction under section 36(1)(iii). That leaves us with only two amounts i.e. ₹ 12,00,000/- as advance given for buying the office and ₹ 12,750/- given as house rent advance. There is no dispute that these amounts have been given during the ordinary course of business and the amounts have actually become bad and recoverable. Such being the undisputed facts, in our considered view, the loss being incidental to carrying on the business, the assessee is entitled to deduction of these amounts as business loss. In view of these discussions, the assessee's grievance against the disallowance of ₹ 81,31,389/- is upheld.- Decided in favour of assessee Disallowance being 1/10th Global Depository Receipts - whether the GDR is nothing but increase in the capital and expenses relating to the same is capital in nature? - Held that:- what the Assessing Officer has overlooked is that there is no bar on capital expenses being amortised under section 35D. Section 35D deals with amortisation of expenses over a period of ten years and such an amortisation is not dependent upon the expenses being revenue in nature. Section 35D(2)(iv) categorically deals with the expenses in connection with the issue, or public subscription of shares and debentures of the Company. In view of these discussions, in our considered view, grievance of the Assessing Officer is ill conceived. As regards learned Departmental Representative's reliance on Hon'ble Delhi High Court's judgement in the case of CIT vs. Hindustan Insecticides Limited (2001 (2) TMI 75 - DELHI High Court), suffice to say that the short issue in that case was whether fee for enhancing share capital can indeed be amortised under section 35D(2)(iii) and that is not even the claim of the assessee before us. - Decided in favour of assessee
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2016 (3) TMI 925
Transaction of speculation income and short term capital gain - whether are not genuine - treating sales proceeds of share of Crazy Infotech as income from other sources - Held that:- The assessees before us are beneficiary of accommodation entry provided by Shri Mukesh Chokshi and his associates. Before us, the assessee has not contradicted the factual finding recorded in the impugned order, thus, considering the totality of facts, we find no infirmity in the impugned order, confirming the assessed income as income from other sources. - Decided against assessee
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2016 (3) TMI 924
Interest accruing on FDRs treated as income from other sources - commencement of business - Held that:- In the facts of the present case, where the entire funds available with the assessee company is in respect of the business undertaking being set up by the assessee company, previous year will start only after the setting up of the business undertaking and not before that and the interest income from the FD is not an independent source of income de horse the business undertaking because the earning of interest income is not the object of the assessee company and the funds were not arranged by the assessee company for earning interest income and therefore, the previous year in the facts of the present case will start on setting up of the business and thereafter, if the assessee is having any interest income then the same will be taxable under the head income from other sources and after the commencement of the business, the income from operation will be taxable under the head income from business but it cannot be said that interest income is a separate and new source of income de horse the business undertaking and therefore, the previous year in respect of interest income starts on the date of purchase of FD. In our considered opinion, on the date of purchase of FD, no new source of income has come into existence because in our considered opinion, the source of income is business undertaking and therefore, the requirement of starting of previous year in the facts of the present case is setting up of business which has not happened till 31/03/2011 in the present case and therefore, any income from this source cannot be brought to tax before the setting up of business is completed resulting into start of the previous year. in the facts of the present case, the previous year has not yet started in respect of the business undertaking of the assessee for generation of power and since the assessee is not having any other source of income de horse this business undertaking which was not set up, interest income earned by the assessee till 31/03/2011 cannot be brought to tax till the assessment year 2011-12 because the business was not set up and therefore, previous year has not commenced. We, therefore, delete the addition made by the Assessing Officer and confirmed by CIT(A) and hold that such interest income should be reduced from the cost of project instead of taxing it as an income from other sources. - Decided in favour of assessee
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2016 (3) TMI 923
Reopening of assessment - receipt of accomadation enteries - Held that:- It is pertinent to mention that once from the details received from the DIT (Inv.) the dates on which alleged accommodation entries were provided is known to the AO, it would not have been difficult for the AO, if he had infact undertaken the exercise of verification of assessment records of the assessee to make a reference to the manner in which those disputed entries were provided or mentioned in the books of accounts of the assessee, which must have submitted along with respective return of income filed for AY 2004-05. In the event of examination of assessment records the AO could verify the stand of the assessee that the alleged amount received is the sale proceeds of shares which were held as stoke in trade as opening balance in the beginning of the financial period which was also taken into account in the sales and duty reflected and recorded in the P & L a/c. The basic requirement is that the AO must apply his mind to the materials in order to have reason to believe that the income of the assessee has escaped assessment and without forming a prima facie opinion, on the basis of such material that income has escaped assessment the AO can not assume valid jurisdiction to initiate proceedings and to issue notice u/s 147/148 of the Act. - Notice u/s 148 quashed - Decided in favour of assessee
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2016 (3) TMI 922
Disallowance of interest u/s 40a(ia) - retrospectivity - whether any TDS has been deducted and deposited to the Central Government Account? - Held that:- In view of the dicta valid down in CIT Vs. Ansal Land Mark Township [P] Ltd [2015 (9) TMI 79 - DELHI HIGH COURT]the insertion of second proviso to section 40(a)(ia) of the Act is declaratory and curative in nature and it has retrospective effect from 1.4.2005 being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance Act [No. 2] 2004. From the operative para 6.7 of the first appellate order, it is apparent that the ld. CIT(A) upheld the disallowance by holding that the proviso, inserted by Finance Act 2012, w.e.f 1.4.2014 is not applicable to A.Y 2009-10. But in view of proposition rendered by the Hon'ble High Court of Delhi, it is settled that the proviso to section 40(a)(ia) of the Act being declaratory and curative is applicable from 1.4.2005 which is the date of insertion of sub-section (ia) of section 40(A) of the Act. Hence, view taken by the AO for making disallowance and basis on which the same was upheld by the ld. CIT(A) is not sustainable in view of the dicta of Hon'ble Jurisdictional High Court. Thus, we are inclined to hold that the benefit of the proviso to section 40(a)(ia) of the Act is available for the assessee for A.Y 2009-10 as the AO could not controvert the fact supported by the certificate of the payee M/s Kotak Mahindra Pvt. Ltd stating that the payee has enclosed the said amount in its income in the return filed u/s 139 of the Act and has paid tax due on its income declared in the return. In this factual matrix the proviso to section 40(a)(ia) of the Act having retrospective effect from 1.4.2005 come into play to rescue the defaulter assessee and thus disallowance made by the AO and upheld by the ld. CIT(A) is demolished. - Decided in favour of assessee
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2016 (3) TMI 921
Penalty levied u/s 271(1)(c) - addition made u/s 35(2) alleging that assessing knowingly and consciously has made an excess claim of deduction u/s 35(2) in spite of the fact that the R & D unit at Chennai was not approve by DSIR - Held that:- Adverting to the facts of this case, we find that the assessee has neither concealed the particulars of income nor has furnished inaccurate particulars of income warranting levy of penalty u/s 271(1)(c) of the Act in respect of this amount of ₹ 26,53,420/. Penalty proceedings operate in a different sphere because different parameters apply for levy or non-levy of penalty in contrast to the quantum additions which operate in an entirely different sphere. In case any legal or valid claim is made, which is not found to be correct by the authorities, it would not automatically lead to levy of penalty as discussed above. It is not a case where the assessee has not disclosed full and final facts rather assessee has claimed deduction u/s 35(2) of the Act. The ld.AR has relied on numerous decisions in support of his contention. The case of the Revenue is that this is a clear case of furnishing inaccurate particulars of income which the assessee has done with the aim to evade payment of tax. Before we discuss the cases relied on by the parties, we would like to mention that the assessee has made a full and true disclosure of income and has made a claim for deduction. Hence, the assessee has made a bonafide legal claim which cannot be said to be fallacious or flippant and malafide. This fact has not been disputed by the Revenue. Be that as it may, we are of the considered opinion that in case a valid claim based on law is made by the assessee after disclosing full and true facts, and the same is rejected and addition is made qua that amount, it would not tantamount to either concealment of income or furnishing of inaccurate particulars of income automatically - Decided in favour of assessee
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2016 (3) TMI 920
Disallowance of reimbursement of expenses - non deducted tax at source with regard to such payments - withholding of tax - Held that:- FAA had rightly held that section 40(a)(i)had no role to play regarding the payments made by the assessee to overseas companies. Secondly, services in the nature of recruitment or placement agency do not come under the purview of fees for included services within the meaning of Art.12(4)(b)of the DTAA. We would also like to mention that the retrospective amendment to section 9 cannot change the tax withholding liability with retrospective effect. In the cases of Virola International (2014 (2) TMI 653 - ITAT AGRA) it had been clearly held that liability to deduct tax cannot be implemented retrospectively. The assessee had acted as per the provisions of Act that were applicable at the time of making the payment and in the case under consideration there was no liability on part of the assessee to deduct tax for the payment made. Considering the above, we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity. So, confirming his order, we decide effective ground of appeal against the AO.
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2016 (3) TMI 919
Validity of notice u/s 143(2) - Held that:- When the envelope containing notice u/s 143(2) of the Act issued against the assessee was not received by the office concern for service upon the assessee then it cannot be presumed that the same was validly served upon the assessee. Per contra, under above noted facts and circumstances it can safely be presumed that the revenue department could not establish the very fact of valid service of notice upon the assessee u/s 143(2) of the Act within the prescribed limit mandated by proviso to section 143(2) (ii) of the Act i.e. on or before 30.9.2010. Therefore, we are inclined to hold that no notice u/w 143(2) of the Act was served upon the assessee which a mandatory conditions for valid scrutiny assessment u/s 143(3) of the Act. Therefore, impugned assessment order dated 28.12.2011 is quashed being bad in law and void ab initio. - Decided in favour of assessee
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2016 (3) TMI 918
Disallowance u/s. 80 IB - whether assessee is not engaged in manufacturing activity as required for claiming the deduction u/s 80IB as per AO -Held that:- Assembling of different products which are giving rise to a new product and which has become a new name in the market and functiothern will be regarded as “manufacturing activity" thus liable for 80IB deduction. See Commissioner of Income-tax Versus Jackson Engineers Ltd. [2009 (12) TMI 649 - Delhi High Court] - Decided in favour of assessee
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2016 (3) TMI 917
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. - Decided in favour of assessee
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2016 (3) TMI 916
Penalty u/s 271(1)(c) - disallowance from prior period expenditure - CIT(A) deleted the penalty - Held that:- There is no dispute on facts. It appears that the assessee received a salary credit. It would accordingly debit a net prior period expenditure. The Assessing Officer held that it ought to have added back gross prior period expenses instead of net amount. The CIT(A) holds that there is revenue implication as the same is only rearrangement exercise of expenses. We further find from case 119 forming assessee’s profit and loss account for the year ending on 31- 03-1998 that it has already disclosed the impugned netting exercise. We reiterate that the instant case is that of furnishing of inaccurate particulars of income as held by the Assessing Officer (supra). We observe in these facts that once the assessee has disclosed all the true and correct particulars leading to mere re-computation of disallowance of prior period expenditure without any new evidence being discovered in the course of scrutiny, the same cannot be perceived as an instance of furnishing of inaccurate particulars of income. CIT(A) has rightly deleted the impugned penalty arising from disallowance from prior period expenditure. - Decided in favour of assessee Section 35D disallowance - Held that:- It is to be seen that this amount has arisen because of giving consequential effect to appeals and revisions in assessee’s own case in the preceding assessment years. The same relate to preliminary and preoperative expenditure written off. The initial claim was for ₹ 1,11,62,284/-. The Assessing Officer took clue from appeal orders and revisions for re-computing the same to be of ₹ 14,00,936/- after allowing expense of ₹ 97,61,348/-. We hold in these facts that the assessee’s books raised the impugned claim in tune with that made in the earlier assessment years. We are of the view that such a course of action cannot be held to be an act of furnishing of inaccurate particulars of income.- Decided in favour of assessee Excess remuneration paid to assessee’s Managing Director - Held that:- The assessee had claimed total remuneration of ₹ 68,23,940/- pending approval from the Govt. of India. The relevant particulars pertaining to the relevant post facto approval aspect already forms the part of the paper book at page 130. The ld. authorized representative states in the course of argument that this approval only in assessment year 2001-02 for ₹ 53,17,000/- resulting in treatment of the balance amount of ₹ 15,06,940/- which was recovered and offered for taxation in the succeeding assessment years. The Revenue is unable to rebut this factual position. We conclude in this factual backdrop that the assessee has followed past practice by claiming its MD’s remuneration subject to Govt’s approval which cannot be taken an act of furnishing of inaccurate particulars of income u/s. 271(1)(c) of the Act. - Decided in favour of assessee
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2016 (3) TMI 915
Addition on account of accrued interest on NPA u/s.43D - Held that:- The assessee being a co-operative bank was also governed by the Reserve Bank of India and thus the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to co-operative banks. The provisions of section 45Q of the Reserve Bank of India Act, 1934, have an overriding effect vis-à-vis income recognition under the Companies Act. Hence, section 45Q of the 1934 Act shall have the overriding effect over the income recognition principle followed by co-operative banks. Hence, the Assessing Officer has to follow the Reserve Bank of India Directions, 1998. Thus, the deletion of the additions on account of interest on sticky advances was justified. - Decided in favour of assessee Addition on account of amortization of premium on investment - Held that:- Pune Bench of the Tribunal in the case of Bhavani Urban Co-op Bank Ltd.(2013 (7) TMI 987 - ITAT PUNE ) allowed similar claim of the assessee. Therefore, respectfully following the decision of the jurisdictional High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] and in absence of any distinguishable features brought to our notice by the Ld. Departmental Representative, we set-aside the order of the CIT(A) on this issue and direct the AO to delete the disallowance. - Decided in favour of assessee
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2016 (3) TMI 914
Denial of deduction u/s.80IA - claim for initial assessment year - that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. See CIT Vs. See Velayudhasamy Spinning Mills (2010 (3) TMI 860 - Madras High Court ) - Decided in favour of the assessee.
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2016 (3) TMI 913
TDS u/s 194I - non deduction of tds on lease premium paid - demand raised u/s 201(1)/201(lA) - Held that:- As decided in ITO (TDS) -3, Pune Versus Shri Ajay N. Yerwadekar [2015 (11) TMI 1382 - ITAT PUNE ] where the lease premium paid to PCNTDA was a pre-condition for entering into the lease agreement, the same not being paid consequent to the execution of the lease agreement, cannot be said to be payment in lieu of rent as envisaged under section 194 I of the Act. In addition, the assessee had paid stamp duty on the market value of the plot represented by the lease premium and the said finding of the CIT(A) having not been controverted by the learned Departmental Representative for the Revenue, we find no merit in the appeal filed by the Revenue - Decided in favour of assessee
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2016 (3) TMI 912
Disallowance of deduction u/s 80P - interest income received by the assessee co-operative society on investments made in deposits in Jalna Dist. Central Co-operative Bank Ltd. - Held that:- The issue arising before us is similar to the issue before the Tribunal in ITO Vs. M/s. Kundalika Nagari Sahakari Patsanstha Maryadit (2016 (2) TMI 879 - ITAT PUNE ) and following the same parity of reasoning, we hold that the assessee is eligible for the claim of deduction under section 80P(2)(a)(i) of the Act in respect of interest received on deposits made in Jalna District Central Co-operative Bank Ltd - Decided in favour of assessee
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2016 (3) TMI 911
Addition made on account of HTM securities - Held that:- The assessee is entitled to the claim of deduction on account of amortization of premium paid on Government securities held in HTM category. - Decided in favour of assessee Addition on account of Ex-gratia payment - Held that:- where the assessee in recognition of the services provided to its retiring employees make certain exgratia payments in recognition of their services, which are not based on any scheme or instruction formulated by the employer assessee, then the same partakes the nature of profit in lieu of salary. The relationship between the assessee and retiring employees was admittedly as of employer and employee and the remuneration paid to such employees is part of the salary due to the said employee. Even the ex-gratia payment made by the assessee over and above the remuneration due to the employees partakes the character of profits in lieu of salary to such employee and is duly allowable as an expenditure in the hands of the assessee under section 37(1) of the Act. - Decided in favour of assessee
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2016 (3) TMI 910
Addition on account of accrued interest on Non Performing Assets u/s 43D - CIT(A) deleted the addition - Held that:- Hon’ble Bombay High Court in CIT Vs. M/s. Deogiri Nagari Sahakari Bank Ltd. [2015 (1) TMI 1218 - BOMBAY HIGH COURT ] has laid down the proposition that the interest accrued on NPAs is not taxable in the hands of assessee, in view of the guidelines issued by the RBI. No addition is warranted on account of interest accrued on NPAs. Accordingly, we uphold the order of CIT(A) in deleting the addition made on account of interest accrued on NPAs. - Decided in favour of assessee Addition made on account of amortization of premium on government securities - Held that:- The assessee is entitled to the claim of deduction on account of amortization of premium paid on Government securities held in HTM category. See Commissioner of Income Tax-2, Mumbai Versus HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] - Decided in favour of assessee
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2016 (3) TMI 909
Disallowance of Depreciation by reducing Written down value of assets by subsidy received - treatment of subsidy received by the assessee - Held that:- The comparison of the Package Scheme of Incentives, 1993 and Package Scheme of Incentives, 2001 reflects that two schemes are similarly offered for establishing SSI units in under-developed areas. Under the first Scheme, in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT (2015 (3) TMI 1151 - ITAT PUNE), the assessee therein had established a unit in the district of Aurangabad. However, the assessee before us has established a unit in the district of Jalna. The claim of the assessee before us has been that though the quantification of the claim is linked to the cost of fixed assets, however, the provisions of Explanation 10 to section 43(1) of the Act are not to be invoked since the incentive has been given to the assessee for establishing a unit and not for meeting the cost of fixed assets. In view of the ratio laid down above we hold that there is no merit in the orders passed by the authorities below. The assessee had received the subsidy for setting up a unit in the specified area and such subsidy received by the assessee is a capital receipt in the hands of assessee, cost of which is not to be reduced from the written down value of fixed assets. Further, the CIT(A) had placed reliance on series of decisions, which were also relied upon by the CIT(A) while deciding the appeal in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT (supra). The Tribunal has considered the said reliance and had decided the issue holding that the incentive received by the assessee under Package Scheme of Incentive, 1993 in the form of subsidy was not covered under the provisions of Explanation 10 to section 43(1) of the Act. Following the same parity of reasoning, we hold that the Package Scheme of Incentives 2001 is similar to the Package Scheme of Incentives, 1993 and the incentive received by the assessee before us is not covered under the provisions of Explanation 10 to section 43(1) of the Act. Consequently, the subsidy amount received by the assessee is not to be reduced from the cost of assets. The Assessing Officer is thus, directed to re-work the depreciation allowable in the hands of assessee on the aforesaid assets. - Decided in favour of assessee
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2016 (3) TMI 908
Addition u/s 69C - Held that:- The 5 parties should be treated differently as these parties are undisputedly the non-suppliers of the raw materials needed for the contracts. It is evident from the fact that assessee itself offered such claims as unaccounted ones in the past. We cannot appreciate as to how these 5 parties, who do not have the capacity to supply the raw material, have got capacity to supply the same in the year under consideration. considering the background of the purchases from these parties, the onus is on the assessee to demonstrate that the purchases amounting to Rs ₹ 12,01,91,407/- are genuine and not the unexplained ones. CIT (A) is directed to adjudicate this issue of addition of ₹ 1,00,86,929/- made u/s 69C of the Act afresh. It was separately made by the AO by giving reasoning and by passing a speaking order on this issue, whereas the CIT (A) treated the same on par with other suppliers In summary, we are of the opinion, considering the orders of the Tribunal in many cases of additions involving the Sales Tax Department, the disclosure of blacklisted suppliers and when the Assessing Officer failed to discharge the onus as discussed above, the additions made u/s 69C amounting to ₹ 12,01,91,407/- out of total addition of ₹ 13.03 Crs is required to be deleted. CIT (A) is directed to examine this issue and pass a speaking order on the issues relating to the aspects of GP and the other independent addition of ₹ 1,00,86,929/- after gathering relevant facts from the survey statements, if any. CIT (A) shall grant a reasonable opportunity of being heard to the assessee as per the set principles of natural justice.
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2016 (3) TMI 907
Levy of interest u/s. 234B and 234C - MAT - Advance payment of Tax - Held that:- We find that the levy of interest u/s. 234B and 234C in case of companies governed by MAT provisions was finally settled by the Hon'ble Apex Court in M/s Rolta India Ltd. case [2011 (1) TMI 5 - SUPREME COURT OF INDIA], that before that the assessees were under bona - fide belief that they had not to pay advance tax as per the provisions of sec. 207/208 of the Act, that after 07. 1. 2011 position became very clear that the assessees to be taxed u/s. 115 JB would also have to pay advance tax. Considering the peculiar facts and circumstances of the case, we are of the opinion that interest should be levied for the default of March installment only and not for the earlier three installments. The AO is directed to recalculate the interest accordingly. - Decided partly in favour of assessee
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2016 (3) TMI 906
Disallowance made under section 40(a)(ia) - non-deduction of tax on the rent and advertisement charges paid by the assessee - Held that:- This Bench is consistently holding that in case of disallowance under section 40(a)(ia) for non-deduction of tax at source the amounts outstanding as on 31st March of the accounting year only have to be disallowed and not the amounts which were already paid during the year, in view of the decision of Special Bench of the Tribunal in the case of Merliyn Shipping & Transports Vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM).Respectfully following the said decision, we restore this issue for limited purpose of verification to the Assessing Officer as to whether the amounts were paid during the year or outstanding as on 31st March of the accounting year. The Assessing Officer is directed to verify and disallow only the outstanding amounts as on 31st March of the accounting year. Disallowance under section 10B of the Act - delay in filing return - Held that:- As in this case assessee filed return of income on 15.10.2010 which is beyond the due date for filing return of income i.e. 30.09.2009 under section 139(1) of the Act for the assessment year 2009-10. Thus, respectfully following the Special Bench decision in the case of M/s. Saffire Garments [Saffire Garments] wherein held wherein it is held that proviso to section 10A(1A) and section 10B is mandatory and not merely directory, we reject the grounds of the assessee and sustain the order of the Commissioner of Income Tax (Appeals) in rejecting the claim for deduction under section 10B of the Act. - Decided against assessee
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Customs
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2016 (3) TMI 891
Classification - Import of stainless steel scrap - Whether the goods imported are scrap or flanges - Appellant contended that consignment was non-serviceable and could not have been used in any other machine/machinery - Held that:- the appellant had produced certificate of Chartered Engineer before the adjudicating authority as well as the first appellate authority. Also the appellant had placed an order for stainless steel scrap which was to be melted and used for manufacturing of bars and billets and not for trading purpose. Therefore, the claim of the appellant seems to be genuine and the flanges in question which were found in the stainless steel scrap seems to be scrap only and unserviceable. The certificate issued by a Chartered Engineer which was done so at the behest of lower authorities, is not disputed by the first appellate authority. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 890
Rejection of refund of amount paid under protest - Unjust Enrichment though the imported goods were used for the manufacturing of fertilizers - Import of 2 catalysts charges claiming benefit of Notification No. 66/94-Cus but denied by the Department - In urgency appellant cleared consignment by paying duty on imports under protest - Held that:- the fertilizers manufactured by the respondent are under strict price control regime and the subsidy for the production cost is borne by the Central Govt., all stake holders are aware exemption was granted to such kind of import of fertilizers. Also the certificate produced by the respondent of a Chartered Engineer indicating that the incidence of duty has not been passed on is not contested by the Revenue. Therefore, the refund claim is not to be rejected. - Decided against the revenue
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2016 (3) TMI 889
Seeking conversion of free shipping bills to Drawback shipping bills as per CBEC Circular No. 04/2004-CUs dt 16/01/2004 as per the provision of Sec 149 of the Customs Act 1962 - Rejected Appellant contended that after amendment under Notification No. 39/2003-Cus dt 19/6/2003 appellant became eligible for DBK with respect to exports of LPG & petroleum products exported to Nepal Oil Corporation Ltd. when exports are made through specified 'LCS' and payments are received in Indian Rupees. Held that:- by relying on the ratio of Man Industries (India) Ltd Vs. CC (EP) Mumbai [2006 (3) TMI 513 - CESTAT, MUMBAI] in the case of Metallic Bellows (I) Pvt Ltd Vs CC (Exports) Nhava shera [2008 (3) TMI 198 - CESTAT MUMBAI], the case to be remanded back to the lower authorities. Therefore, a power given by Sec 149 of the Customs Act 1962 to the officers under a statute can not be curtailed by a Circular issued by CBEC and to be remanded back to allow conversion of free shipping bills to Drawback shipping bills under Sec 149 ibid, if otherwise permissible, independent of CBEC Circular dt 16/1/2004. Decided in favour of appellant by remand
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2016 (3) TMI 888
Demand of differential duty - Under-valuation and mis-declaration of goods - Transaction value rejected of imported ball valves and check valves - Held that:- the methodology adopted by the adjudicating authority for redetermination of the value of the imported consignments is totally on presumption and surmises. The adjudicating authority has come to a conclusion that imported ball valves contained brass content of 76% and iron content of 24%, zinc content in zinc ball valves is of 65% and iron content is of 35%. In the entire case records nothing found anything which indicates that the content as recorded by the adjudicating authority is supported by any evidence. Therefore, this finding of the adjudicating authority is not in consonance of the law. There is nothing on record to indicate that samples were drawn from the consignment and sent for testing to Dy. Chief Chemist and Examiner of the Department to ascertain the contents of brass and zinc. It is also surprising to note that the adjudicating authority has relied upon only the statement of Shri S.K. Dhawan to hold that the valves were having brass and zinc content as mentioned. The adjudicating authority has rejected the transaction value as filed by the appellant without any reasoning or finding. The submission of appellant importer that they had submitted details of contemporaneous imports of the same goods and the value seems to be more or less is same as declared by the appellant importer is not addressed to and also the adjudicating authority has not recorded a single sentence of finding on such contemporaneous import detail given by the appellant. Also the appellant importer had submitted details of contemporaneous imports of the same goods and the value seems to be more or less is same as declared by the appellant importer is not addressed to and also the adjudicating authority has not recorded a single sentence of finding on such contemporaneous import detail given by the appellant. The adjudicating authority has come to a conclusion that there was under-valuation as the appellant importer did not produce the manufacturer’s invoice nor catalogue which is totally not in consonance with the law, as these consignments were cleared by the same department when the bills of entries were filed and the documents as produced were accepted as correct at that time. If the authorities had entertained any doubt, they should have called for these documents at the time of clearance of the consignments. Also the adjudicating authority has recorded that the declared value were not actual transaction value paid or payable by the importer; are incorrect findings as they are not evidenced in any form; if the adjudicating authority has to come to such a conclusion in the impugned order there has to be a findings that the appellant importer had paid additional amount to the exporters in some way or other with proper evidence. In the absence of any evidence it is not possible to accept the statement that the transaction value and the declared value were not actual transaction value. Therefore, Demand of differential duty can not be raised and the impugned orders are set aside as unsustainable. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 887
Valuation - Whether the raw materials imported by the appellant from their parent concern needs to be loaded with the value of royalty paid by them to parent concern - Import of parts and components from their collaborator under agreement - Held that:- the agreement is titled as a technical know-how agreement. The entire agreement is in respect of the finished goods to be manufactured by the appellant in their factory from the technical know-how received from parent concern. The said agreement does not talk about or restrict the appellant to purchase or procure raw materials only from the parent concern. Also the first appellate authority has not brought on record any evidence to indicate that there was restriction imposed on the appellant to procure the raw materials only from the parent concern. Therefore, in absence of any such evidence, the loading of the value of by the amount of royalty paid by the appellant is not in consonance with the law settled by the higher judicial fora. - Decided in favour of appellant
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Corporate Laws
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2016 (3) TMI 882
Oppression and mismanagement - Held that:- It is crystal clear that the Company Petition was filed by the Petitioners/Non-Applicants based on the allegations of acts of oppression and mismanagement on the part of the Respondents and this implies that the Respondent Nos.2 & 3 were not having control over the affairs of the Company. This is further confirmed by the fact that in any annual return, the Respondent Nos.2 & 3 were not shown as Promoters. As admitted by the Applicant Advocate as well as the Petitioners/Non-Applicants Advocate, there has been restraint Order dated 15.12.2010, whereby interim injunction has been imposed from holding the general meetings of the Company. Consequently, the financial statements for the years 2010-11, 2011-12 & 2012-13 have not yet been filed. In this regard, there is nothing on record to show as to whether either of the rival parties has approached the Court seeking direction/ modification of the aforesaid restraint Order so as to facilitate the filing of the annual returns and financial statements by holding AGM to meet the statutory compliances. On the contrary, the Applicant (Respondent No.3) and Petitioner No. 1, without making some Company Application in the pending legal proceedings since 2010 before this Hon'ble Board seeking directions/reliefs as to filing of the financial statements and invocation of Sections 164 and 167 of the Companies Act, 2013, have claimed to be Promoters and new Directors have been appointed. As a matter of fact, there are controversial arguments as to whether there is Promoter in the Company, especially due to the claims of both the rival parties of having control over the state of affairs of the Respondent No. 1 Company. In addition, the provisions of Sections 164 and 167 of the Companies Act, 2013 have been notified w.e.f. 01.04.2014 and hence, consequential action under Section 167(3) accrues on non-filing of financial statements for three years commencing from 01.04.2014. In view of this legal position, the erstwhile Directors continue to be validly and legally appointed directors and hence, the said Board of Directors is competent to appoint the Advocate by following the provisions of law. As such, in the interest of justice, the prayers made in the instant Company Application are hereby disallowed.
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PMLA
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2016 (3) TMI 881
Prevention of Money Laundering - Special Court after forming a prima facie opinion that an offence under Section 3 punishable under Section 4 of the 2002 Act was made out, has summoned the petitioner through warrants of arrest - summoning of an accused in the case of a non-bailable offence through ordinary process - Held that:- We are satisfied that the petitioner does not deserve to any protection against his arrest or subjection to the judicial custody for more than one reasons. Firstly, all the grounds now taken by him were very much available in the petition for the grant of pre-arrest bail which was dismissed by this Court on 10.9.2015. Secondly, there is no change in the circumstances thereafter which could possibly justify the petitioner's second attempt to evade judicial custody. The summoning of an accused in the case of a non-bailable offence through ordinary process and/or coercive means is discretion of the Court though to be exercised judiciously and by striking balance between the right to liberty vis-a-vis the legislative intendment in declaring the gravity of an offence. The only caveat is that the mode of securing presence cannot be resorted to mechanically. There ought to be due application of mind so that the reasons for invoking coercive means of securing presence are well elicited. The petitioner (Bally Singh Kandola) is statedly a U.S. Citizen. One kilogram heroin is alleged to have been recovered from him and his mother. He has different bank accounts in US and UK. He has been studying abroad though he is said to have admitted in his statement before the Directorate that his parents "did not file their income tax returns". Having regard to the gravity attached by the Legislature to the nature of offences defined under the 2002 Act especially the mandatory nature of Section 45 of the 2002 Act, it cannot be said that the summoning of the petitioner through warrants of arrest is a mechanical exercise or lacks the desired application of mind. The principles laid down by the Supreme Court in Inder Mohan Goswami's case are in the context of a private criminal complaint which originated out of a property dispute and the genesis of which lied in an agreement to sell between the accused and the complainant. These principles are distinguishable in a statutory complaint filed under the 2002 Act. The petitioner or his mother have failed to make out a case that the Designated Court ought to have summoned them through ordinary process. No case to interfere with the impugned order dated 21.7.2015 is made out.
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Service Tax
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2016 (3) TMI 905
Waiver of pre-deposit - Classification of service - Transport of passengers on domestic routes through its helicopters - Whether comes within the ambit of Section 65(105)(zzzo) or within supply of tangible goods for use (STGU), Section 65(105) (zzzzj) of the Act - Held that:- since there is no privity of contract between the appellant and the passengers who travel on appellant's helicopters and the contracts were invariably between the appellant and the charter parties who hired appellant’s helicopters for the purpose of transporting passengers. Therefore, the services clearly fall within the ambit of STGU. Invokation of Extended Period of Limitation - Proviso to Section 73 of the Act - Held that:- As on 16.5.2008, the date with effect from which STGU was introduced as a taxable service, transportation of passengers by air on domestic routes was not a taxable service. So the petitioner cannot therefore gainfully contend that it entertained a bona fide doubt whether services provided by it fall within STGU. Therefore, invokation of extended period of limitation sustains - stay denied
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2016 (3) TMI 904
Waiver of pre-deposit - Short payment of Service tax - Rendered services of manpower recruitment or supply agency by virtue of reverse charge mechanism - Whether the amount paid by the appellant to foreign companies towards social security services and on behalf of the employees who are seconded to India for functioning as the employees of the appellant is covered under manpower recruitment or supply agency services or not - Held that:- by relying on the judgment of Hon'ble High Court of Allahabad in the case of Computer Sciences Corporation India Pvt Ltd Vs CST Noida [2014 (4) TMI 252 - CESTAT NEW DELHI], in a situation like this, services will not fall under the category of manpower recruitment or supply agency services. Therefore, the appellant has made out prima facie strong case for wavier of the service tax liability under this category. - Matter disposed of
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2016 (3) TMI 903
Quantification of Service tax amount - Service tax on GTA services - Appellant contended that amount of service tax ₹ 38,694/- has already been paid by transporter, consignor and supplier of building material certified by the CA, so, cannot be demanded once again - Held that:- in the impugned order the Adjudicating authority has brushed aside the submission of the appellant only on the ground that no documentary evidence was produced. Once the appellant have claimed that certain amount of service tax has already been paid and C.A. also certified the same, if the Ld. Adjudicating authority is not satisfied, he could have very well asked for the additional evidence which he failed to do so. Therefore, the Adjudicating authority is directed to re-verify the submission, documents and C.A. certificate provided or to be provided by the appellant and arrive at correct liability of service tax in respect of GTA service. Demand of Service tax - Management, Maintenance or Repair services of building collected from Flat owner - Held that:- the collection of such maintenance charges is under the statutory provision of MOFA, 1963. According to which it is mandatory on the part of the builder that before handing over the building to the society the builder that before handing over the building to the society the builder has to maintain the building for which the builder engaged various service providers and payment made to such service providers was taken as re-imbursement from the flat owner. In this fact, the appellant is not liable for service tax as held in the case of Kumar Beheray Rathi vs. C.Ex, Pune-3 [2013 (12) TMI 269 - CESTAT MUMBAI], therefore, the service tax demand on Management, Maintenance or Repair service is clearly unsustainable. Imposition of penalty - Section 78 of the Finance Act, 1994 - Service tax on GTA service - Held that:- the appellant, after knowing about non payment of service tax on GTA, promptly paid the service tax alongwith interest which is much before the issuance of show cause notice. Therefore, penalty is not imposable in terms of section 73(3) of Finance Act, 1994, according to which if the amount of service tax alongwith interest is paid then no show cause notice should have been issued. Also the appellant have made out a case of reasonable cause, accordingly they are also not liable for penalty under Section 80. Therefore, the penalty related to service tax on GTA is waived off. - Appeal disposed of
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2016 (3) TMI 902
Seeking setting aside of penalty imposed under Section 76, 77 and 78 of the Finance Act, 1994 - Invokation of Section 80 of the Finance Act, 1994 - Evasion of Service tax liability on the amount collected as licence fee - Hiring out the shops if falling under the category of “Renting of Immovable Property” - Appellant discharged its entire service tax liability and also interest thereof during the pendency of proceedings - Held that:- the bonafide impression carried by the appellant herein cannot be called in doubt that being an autonomous body they are exempted from payment of service tax and hence did not obtain registration. Therefore, the appellant had made out a justifiable cause for non-discharge of service tax liability during the period in question, accordingly by invoking the provisions of Section 80 of the Finance Act, 1994, the penalties imposed are set aside. - Decided in favour of appellant
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2016 (3) TMI 901
Eligibility for refund of accumulated CENVAT credit - Rule 5 of the CENVAT Credit Rules, 2004 prior to their registration - Whether in absence of any condition in CENVAT Credit Rules, 2004 to the effect that registration under law is mandatory, credit accumulated is refundable or not - Held that:- there was no taxability of any service provided by respondent prior to registration. Accordingly, input credit was not possible to be utilized for which that was accumulated. Also credits were accumulated prior to registration. Therefore, respondents are not eligible for refund of accumulated Cenvat credit. - Decided in favour of department
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2016 (3) TMI 900
Demand of Service tax along with interest on the unpaid portion - Rendering of ‘business support services' and ‘club or association service - Appellant is in receipt of various amounts from its members and other persons for use of sporting, recreational and infrastructural facilities of the club in addition to entrance fees and periodical subscription for the period from April 2005 to September 2009 and sought to be taxed as ‘club or association service' as per section 65(105) (zzze) of Finance Act, 1994- Held that:- in view of the various decisions of Hon'ble Supreme Court, Hon'ble High Court and Tribunal, the demand of tax on receipts from members cannot sustain. Tax under Finance Act, 1994 is not on the entity or on amounts receipts by the entity - it is on specified taxable services and hence taxability can arise only to the extent that each transaction between the member and the club can meet the test of conformity with section 65(105)(zzze) ibid. Therefore, without ascertainment of the receipts as quid pro quo for an identified service, demand of tax on amount transferred from an individual to an entity merely because the individual happens to be a member, on the one hand, and the recipient happens to be club/association on the other, does not meet the test of having rendered taxable service. Also, interest, if any, on delayed payment shall be determined and paid. Penalty under Section 78 ibid is also modified to the amount of tax that is confirmed and penalty under Section 77 ibid is upheld. - Matter disposed of
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2016 (3) TMI 899
Demand of Service tax - Erection, installation and commissioning service - Appellant contracted with M/s MSETCL, which is work to be executed on turnkey basis in accordance with the composite contract comprising supply of components as well as labour - Held that:- turnkey contracts also include supply of goods necessary for execution of the projects. It is a normal practice in such a contract to provide a detailed breakup, with invoices raised to mirror the contents of the payments in the contract, for regular payments to be made to the contractor. Such a break up is a necessary input for management of the finance related to the work itself, especially when a work is executed over a longer period of time. It does not allow for vivisecting a contract. Vide Notification 45/10-ST, all taxable services rendered 'in relation to' transmission and distribution of electricity have been exempted from the purview of service tax. The expression 'relating to' is very wide in its amplitude and scope. Therefore, all taxable services rendered in relation to transmission/distribution of electricity would be eligible for the benefit of exemption under the said Notification for the period prior to 27.02.2010. Also in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the said Finance Act, the Central Government hereby directs that the service tax payable on said taxable services relating to transmission and distribution of electricity provided by the service provider to the service receiver, which was not being levied in accordance with the said practice, shall not be required to be paid in respect of the said taxable services relating to transmission and distribution of electricity during the aforesaid period. Therefore, the terms of the contract being very clear as an indivisible one, vivisection for the purpose of levying service tax on ‘erection, installation and commissioning service' is incorrect. Since the project is in relation to transmission and distribution of electricity up to 26th February 2010, the demand for service tax is not correct in law. - Decided in favour of appellant with consequential relief
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Central Excise
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2016 (3) TMI 898
SSI Exemption - Clubbing of clearance value of the proprietaryship firm with the private limited company - imposition of penalty on dummy units - Held that:- On perusal of the list of machineries, we find that these machineries were purchased during the period 1990 to 2001. The learned Advocate fairly submits that these lists were not placed before the Adjudicating authority. It is submitted that these lists were submitted before the Commissioner (Appeals). On a query from the Bench, the learned Advocate failed to place any evidence that these documents were placed before the Commissioner (Appeals). We find that the search was conducted in 2005 and the impugned order was passed in 2008. But the Appellant had not placed these documents before the lower authorities which are related to the period 1990 to 2001. The Assessee has not given any reasons as to why they have failed to disclose these evidences before the lower authorities and therefore, such evidence cannot be accepted before the Tribunal, at a belated stage. To sum up, it is evident from the records that there was no manufacturing activity in other units. Hence, the Adjudicating authority rightly clubbed the clearance value of other units with M/s BEW. Imposition of penalty on the dummy units cannot be sustained. According to the Revenue, the other units are dummy and therefore, imposition of penalties on the dummy units cannot be sustained. However, we find force that Shri Babubhai Mistry, Director of M/s CEPL and Proprietor of M/s BEW and Smt. Jasuben B. Mistry, Proprietress of the Assessee and Director of CEPL were involved directly in this evasion of duty. The learned Advocate submits that the quantum of penalty is excessive, which is required to be considered. We modify the impugned order to the extent that the demand of duty alongwith interest and penalty imposed on the Assessee is upheld. The penalties imposed on Shri Babubhai Mistry and Smt. Jasuben Mistry are reduced to ₹ 1 lakh (Rupees One Lakh only) and ₹ 50,000.00 (Rupees Fifty Thousands only) respectively. The penalty imposed on M/s CEPL and M/s Hitech, M/s BEW are set aside. The Assessee is entitled to pay penalty 25% of the duty alongwith entire amount of duty and interest within 30 days of communication of this order as provided under Section 11AC of Central Excise Act, 1944. The appeals of M/s Hitech, M/s BEW and M/s CEPL are allowed.
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2016 (3) TMI 897
Refund claim - reversal of cenvat credit - amount paid by the appellants under misunderstanding of the law - Demand Cenvat credit as final products were exempted - Held that:- There is no provision in the modvat rules which provides for a reversal of the credit by the Excise authorities where it has been illegally and irregularly taken, in which event it stands cancelled or if utilised, has to be paid for. Once the input credit is legally taken and utilized on the dutiable final product, it need not be reversed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the Cenvat credit on such inputs. But the Cenvat credit availed on such inputs till the date of exemption, they vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. Therefore the authorities taking advantage of the notification exempting the final product cannot claim reversal of Cenvat credit either in respect of final product which have come into existence on the date of the notification or on the inputs stored in the godown or the work in progress and finished products. See Tafe Ltd. (Tractor Division) [ 2011 (3) TMI 67 - KARNATAKA HIGH COURT ] upheld by SC [ 2011 (9) TMI 952 - SUPREME COURT ] - Decided in favour of assessee
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2016 (3) TMI 896
Rebate claims entitlement - validity of demand raised - Held that:- No demand under Rule 8 (3A) can be raised without service of valid show-cause notice, giving an opportunity of hearing for adjudication, the provision being penal in nature. Secondly, I hold that under the circumstances in this case being short payment of duty, the provisions of Rule 8(3A) are not attracted and the ld.Commissioner (Appeals) has erred in upholding the appropriation of the purported demand under Rule 8 (3A). Thirdly, I hold that no appropriation under Section 11 of the Act, can be done without giving an opportunity of hearing to the appellant. The appropriation is bad on this score also. Thus, all the appeals are allowed with consequential relief and the impugned orders are set aside. The appellant will be entitled to refund of rebate with interest starting from three months from the date of sanction till the date of disbursement. - Decided in favour of assessee
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2016 (3) TMI 895
Rectification of Mistake - valuation - Tribunal remanded the matter to the Adjudicating Authority to decide after considering the facts and law of the case including the case laws cited by both the sides - Held that:- On perusal of the order dtd 28.10.2015, of the Tribunal, we find that in the present appeal, there was a factual dispute on the independent sale to the buyers. The Tribunal categorically recorded that the Adjudicating Authority had not given any finding on the facts and law of the case. The Ld Advocate appeared on behalf of the applicant also submitted that the part of the demand is after the amendment of Rule 8 of the Valuation Rules and therefore they are liable to pay duty after the amendment. In this perspective, the Tribunal remanded the matter to examine the whole issue. We do not find such findings in the earlier order of the Tribunal. So, there is no force in the submission of the Ld Advocate. Hence, the application filed by the applicant for rectification of mistake in Final Order cannot be sustained
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2016 (3) TMI 894
Supply to SEZ developer for their authorized office - whether can be treated as export and secondly whether demand of 10% of the value of the goods in terms of Rule 6(3)(i) is correct and legal or otherwise? - Held that:- As per the Hon'ble Karnataka High Court judgment in case of Fosroc Chemicals(India) Pvt. Ltd. (2014 (9) TMI 633 - KARNATAKA HIGH COURT), the issue is settled that even prior to amendment Notification No. 50/2008-CE(N.T.) the supplies made to SEZ Developer has been treated as export and accordingly manufacturer/supplier need not to pay 10% in terms of Rule 6(3)(i) of CCR,2004
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2016 (3) TMI 893
Valuation of the captively consumed different types of printed packing materials usually of paper and paperboard - Held that:- Firstly, we find that the costing of the product, cigarettes was also a disputed issue and for the period prior to the period in question in this case, the respondent were directed to prepare the costing and assessable value of the product on the basis of Assistant Director (Cost) recommendation dated 10/11/1993 which was done so by the respondent for the period prior to and also subsequently. It cannot be now said that the appellant had suppressed the entire material from the department for discharging short duty. Secondly, it seen that the respondent had produced various documents before the first appellate authority in order to justify their stand of the correctness of the valuation adopted and discharge of duty liability. There is nothing on record to show the said factual position is controverted by the Revenue.Also the first appellate authority has correctly come to the conclusion that there cannot be any suppression of facts or misstatement or collusion on the part of the respondent for invoking the extended period, for the simple reason that the final products manufactured by the respondent are cigarettes, which during the period, was under physical control of the departmental officer, who is regularly posted at the respondent's factory - Decided against revenue
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2016 (3) TMI 892
Eligibility to avail CENVAT Credit on the Service Tax aid on outward transportation of the goods for the period March, 08 to Dec, 09 - Held that:- Hon'ble High Court of Karnataka in the case of Madras Cement Ltd. Vs. Commissioner of Central Excise [2015 (7) TMI 1001 - KARNATAKA HIGH COURT] for the proposition that the CENVAT Credit is available to them if it is demonstrated that the goods are delivered at buyer's place and on delivery only the title gets passed on to the buyers
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CST, VAT & Sales Tax
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2016 (3) TMI 886
Allowability of refund/adjustment of CST with interest - In view of the amendment in Section 9(2) of the Central Sales Tax Act, 1956 by the Finance Act, 2000 - Collected CST @ 2% on the branch transfers made of carpet yarn from Bikaner to Bhadoi - Held that:- the Revenue has failed to establish that the transactions in question of carpet yarn sent under branch transfer or S.O.S. transfers from Bikaner (Raj.) to Bhadoi (UP) units of the same assessee amounted to inter-State sales made by the Assessee in the period of in question, and therefore, the levy of tax cannot be held to be justified. Therefore, the assessee is clearly entitled either to the refund of the said tax paid by it under a mistake of law and fact, or at least, an adjustment of the said wrong deposit of tax @ 2% on the branch transfers. - Decided in favour of assessee
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2016 (3) TMI 885
Period of limitation - Condonation of delay of 124 days - Section 5 of the Limitation Act, 1963 - Held that:- the appeal before the Tribunal against the order of DETC(A) could not be filed in time due to the death of the representative of the company dealing with the matter. When the charge was taken over by another person, immediately thereafter, steps for filing of appeal before the Tribunal were taken. There was no malafide intention on the part of the appellant. The explanation tendered by the appellant appears to be plausible. Thus, the delay of 124 days in filing the appeal before the Tribunal is condoned. - Matter remanded back
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2016 (3) TMI 884
Liability of tax - Narrow woven fabrics - As per 1st clarification dated 03.03.2008, no tax was leviable and product found to be exempted for the purpose of tax and as per 2nd clarification dated 25.06.2012, tax is leviable at the rate of 5% - Commissioner rejected the appeal for no jurisdiction of review - Held that:- the application has been rejected only on the ground the Commissioner has no jurisdiction. Hence, the matter is remanded back to the Commissioner for reconsideration of the clarification and thereafter he may take appropriate decision in accordance with law. - Matter remanded back
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2016 (3) TMI 883
Adequate rebut of Legal presumption - Deemed sale drawn by the authorities under Section 46(15)(d) of the AGST Act - Whether convincing evidence is brought on record or not - Held that:- neither the Revisional Authority nor the Assessing Authority had carried out any such exercise to weigh the impact of the evidence, on the legal presumption. Tax becomes payable only when a taxable transaction is carried out but under the legal presumption a deemed transaction can also be made liable to tax under the AGST Act. The Assessing Officer and the Revisional Authority has not applied their mind to determine whether the petitioners have successfully rebutted the legal presumption drawn by the taxation authorities and the assessment to tax is supported only on the basis of the legal presumption. Therefore the authorities have failed to discharge the obligation under the ratio of Sodhi Transport Company vs. State of U.P. [1986 (3) TMI 303 - SUPREME COURT OF INDIA]. Matter remanded back
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