TMI Tax Updates - e-Newsletter
April 20, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Zero rated supply or not - supply from the shop located in the Security Hold Area of the IGI International Airport - supply to an International outbound passengers holding international boarding pass – when goods are exported by Air, the export will be completed only when goods crosses airspace limits of its territory or territorial waters of India - AAR
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Income Tax:
Addition being the difference in receipts as per the Profit and Loss Account and as per AS-26 - addition was made solely based on the AIR information without bringing any cogent evidence on record to suggest that the assessee received income from the said parties especially when the assessee is denying any transactions with those parties - addition directed to be deleted - AT
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Income Tax:
TDS u/s 194J - Data Circuit / Broadband / Multi-Protocol Label Switching (“MPLS”) charges - In the absence of any human intervention for transmitting the DATA through such DATA link satellite link line, the payments made for utilizing such services was not in the nature of technical services governed by section 194J - AT
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Income Tax:
Unexplained share capital receipts - one of the directors attended the proceedings on behalf of the investor companies. - the allegation that the share applicant companies do not exist holds no water. No merit in the additions made by the A.O - AT
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Income Tax:
Transfer Pricing Adjustment - if under both the scenarios, no interest has been charged on similar nature of receivables, then it has to be reckoned that the transaction with the related party meets the arm’s length requirement vis-à-vis, the transactions with the unrelated third parties - addition made by the TPO is directed to be deleted. - AT
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Income Tax:
Valuation of the closing stock of scrap - AO is not justified in valuing the closing stock of packing materials representing scrap based on the scrap sales made in subsequent years ignoring the principles of valuation of stock as enumerated in AS 2 issued by ICAI which is also mandated to be followed u/s 145A of the Act. - AT
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Income Tax:
TDS u/s 194J - Audit fees - Disallowance made u/s 40(a)(ia) - non deduction of tds - the name of the payee (i.e the auditor) is very well known to the assessee in order to make provision for audit fees by crediting to the said auditor’s account - we are not inclined to accept the arguments of the ld AR that the audit report is signed after the end of the year - demand conirmed - AT
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Customs:
Valuation - levy of CVD on the basis of MRP - imported Digital Video Projectors and Decoders - leasing of projector - there is no sale involve, hence the CVD cannot be charged on the basis of RSP/MRP in terms of Section 4A of the Central Excise Act, 1944. - AT
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Customs:
Penalty u/s 114(A) - appellants have wrongly claimed the exemption as the goods imported was not meant for manufacture of optical fiber cable - It cannot be said that the appellants had any mala fide intention of fraudulently claiming the benefit of exemption notification - No penalty - AT
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Customs:
Maintainability of appeal before Tribunal - 100% EOU - issue of payment of Duty Drawback - the appeal is not maintainable before the Tribunal as the same is barred by provisions of Section 129A of Customs Act, 1962 - AT
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Corporate Law:
The holding Board Meeting without calling one of the directors of the company and general meeting was held without notice to the contesting respondents for increase of authorised share capital in the EOGM held on 28.11.2013 is invalid. - AT
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Indian Laws:
Recovery of outstanding dues - Filing of the FIR and even of the proceedings under Section 138 Negotiable Instruments Act did not debar the plaintiffs to avail the civil remedy to recover the outstanding amount. The defendant’s arrest pursuant to the cancellation of bail did not absolve him of the liability to pay the outstanding dues. - HC
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IBC:
Corporate Insolvency Resolution Process - there is a plausible dispute between the parties in regard to execution of contract involving supply of material as well as rendering of works at the site - The claim set up by the Appellant does not fall within the definition of operational debt - AT
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IBC:
Insolvency resolution by operational creditor - the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an application under section 9 of the I&B Code in terms of Rule 5 of Transfer Rules, 2016. In such circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and 434 of the Companies Act, 1956 stands abated. - AT
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Service Tax:
Business Auxiliary services - Service of ‘commercial advisor’ - When the services provided in India and used outside India and payment of such services received by the service provider in convertible foreign exchange then it will be treated as Export of Services under Rules, 2005. - AT
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Service Tax:
Extended period of limitation - The department thus was in knowledge of the fact that the Appellant is not paying service tax on its activities - SCN was issued after 28 months of issuance of summon and 48 months of surrender of registration - extended period not invocable. - AT
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Service Tax:
GTA service - no consignment note is issued - when the vehicles are hired on monthly basis and the charges are not based upon destination but on kms basis, it cannot be said that the services involved are of Goods Transport Agency. - AT
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Service Tax:
Classification of service - activities involved civil construction, site preparation, road work, pump installation, piping, soil work etc. for their petrol pump retail outlets - Since the activities undertaken by the appellant involves both the execution of the job and for supply of goods, the same appropriately falls under the taxable category of “Works Contract service”. - AT
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Central Excise:
CENVAT credit - outdoor catering service - Period post 01.04.2011 - outdoor catering services are used by appellant in relation to the business of manufacture and not for any personal use or consumption of employees and credit remains allowed - AT
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Central Excise:
Valuation - inclusion of bought out items in assessable value - The nuts and bolts etc. are optional item which is sold as a bought out item to the customers, which is nothing but a trading activity. Therefore, the same cannot be considered as extra consideration towards the manufacture of excisable goods produced by the respondent. - AT
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Central Excise:
Valuation - enhancement of value - revenue neutrality - if duty had been paid by the appellants at the time of clearances, the same would have been available as cenvat credit in the hands of the buyer. Even of the appellants pay the differential duty, the same will be available as credit to the buyer. On this count also the issue is revenue neutral. - AT
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Central Excise:
Valuation - supply of Hydrogen gas through pipeline - inclusion of maintenance and operating charges on pipeline owned and maintained - demand for the normal period confirmed - AT
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Central Excise:
Refund claim - unjust enrichment - appellant had paid more duty at the time of clearance from the factory to depot, but have ultimately charged and realized less duty on the sale effected from the Depot - The refund has been denied simply based on presumptions, which is not tenable. - Refund allowed - AT
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Central Excise:
CENVAT credit - factitious purchase of raw material - fake invoices - There is no allegation by Revenue that the appellant sourced copper from any alternative source and apparently appellant have produced dutiable goods by using of copper and cleared the same on payment of duty - credit denied, however penalty waived - AT
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VAT:
Powers of the review under Section 25 of MVAT Act, 2002 cannot be exercised unilaterally. That before exercising such powers, service of valid notice is condition precedent. If such notice is not served on proper person in accordance with Rule 87(1) of the MVAT Rules, 2005, Reviewing Authority does not get jurisdiction to review the order - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (4) TMI 938
Zero rated supply or not - supply from the shop located in the Security Hold Area of the IGI International Airport - supply to an International outbound passengers holding international boarding pass – applicable rate of 28% or otherwise - Held that:- the goods can be said to be exported only when they cross the territorial waters of India and the goods cannot be called to be exported, merely on crossing the Customs Frontiers of India. “export of goods” has been defined under Section 2(5) of the IGST Act, 2017 as taking goods out of India to a place outside India. The India is defined under Section 2(56) of the CGST Act as “India”. Hence, when goods are exported by Air, the export will be completed only when goods crosses airspace limits of its territory or territorial waters of India. Decision of Supreme Court in the case of Collector of Customs, Calcutta V/s Sun Industries [1988 (4) TMI 49 - SUPREME COURT OF INDIA] followed. – Though, this case was against the revenue allowing duty drawback to the exporter, but since the term “taking out to a place outside India” has been discussed by the apex court in this case, the same has been followed. Further, the decision of the Supreme Court in the case of Hotel Ashoka (INDIAN TOURISM DEVELOPMENT CORPN. LTD.) [2012 (2) TMI 62 - Supreme Court of India] distinguished on the ground that - the Hon’ble Supreme Court had interpreted the scope of Section 2(11) of the Customs Act, 1962 under which “Customs area” were defined. No doubt, the duty free shops may be established beyond the Customs Frontiers of India. However, the issue in the present case is whether the said duty free shops are outside India i.e. whether they are “beyond airspace on territorial waters of India”. The applicant is not taking goods out of India and hence their supply cannot be called “export” under Section 2(5) of the IGST Act, 2017 or “zero rated supply” under Section 2(23) and Section 16(1) of the IGST Act, 2017. Accordingly, the applicant is required to pay GST at the applicable rates.
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Income Tax
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2018 (4) TMI 935
TPA - comparable selection - inclusion of a comparable Modicare Limited and the exclusion of the other comparables, (which are involved in trading in similar products) - Held that:- The appeal should be re-examined by the ITAT; it should be addressed on these two aspects i.e. firstly, the appropriateness of including Modicare Ltd. having regard to the availability of data with respect to the different product segments, and secondly, involving the comparable, the functional difference with respect to its marketing strategy (i.e. discount, transportation costs, insurance and performing the warranty function). Having regard to the factors mentioned the ITAT is also directed to re-examine whether and to what extent adjustment can be reasonably made, having regard to the available data in respect to the trading comparables offered for ALP determination, for all the relevant years by the assessee. It is also directed to consider the feasibility again having regard to the available data for all the concerned assessment years- marking appropriate adjustments (including with respect to the working capital adjustments as is sought to be urged by the assessee) in regard to the trading comparables offered by the assessee for these given years.
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2018 (4) TMI 934
Settlement under the Samadhan Scheme - grievance of the Petitioner is that the Designated Authority has computed disputed income on the basis of tax paid, while in terms of Section 87(e) and (f) of the Samadhan Scheme the disputed income has to be arrived at on the basis of tax unpaid on the date of filing declaration under Section 88 of the Samadhan Scheme - Held that:- Authorities under the Samadhan Scheme have to implement scheme in terms of the its provisions. Circulars/clarifications issued by the CBDT even for the purpose of appropriate administration of the scheme cannot be inconsistent with the provisions of the scheme which is legislative enactment. This Petition is disposed of by directing the Respondents to recompute – income and thereafter calculate the amount payable by the Petitioner for settlement under the Samadhan Scheme. The Designated Authority is directed to complete entire exercise of computing disputed income and the amount payable for settlement as expeditiously as possible and within a period of six weeks from today and as the Petitioner had paid the amounts as computed by the Designated Authority in his certificate dated 10.2.1999, the Designated Authority shall refund excess paid by the Petitioner, if any, as so found on re-computation of the amount payable after computing disputed income on the basis of unpaid taxes.
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2018 (4) TMI 933
Disallowance u/s 14A - Held that:- In view ratio of decision of Hon‟ble Supreme Court in the case of Maxopp Investment Limited (2018 (3) TMI 805 - SUPREME COURT OF INDIA) we hold that Section 14A of the 1961 Act is applicable even if the assessee had made strategic investments in subsidiary companies and the same cannot be excluded - decided against the assessee. Section 14A disallowance applicability - investments in "IDFC Cash fund - Super Inst Plan C – Growth‟ - contentions of the assessee Sh. Hiro Rai, the growth funds invested by the assessee does not declare dividend which could be claimed as an exempt income nor any other exempt income arises from the said growth funds, and hence question of applicability of Section 14A does not arise - Held that:- It is critical and important for the AO to go through the scheme of issue of IDFC Cash fund - Super Inst Plan C – Growth fund which was issued by IDFC , in which the assessee has claimed to have invested ₹ 72.64 crores, and then to arrive at conclusion whether the assessee is entitled to receive any exempt income from said growth fund issued by IDFC as per terms of the scheme . Thus after evaluation of terms and conditions of the scheme to arrive at conclusion as to applicability of Section 14A r.w.r. 8D2(iii) of the 1962 Rules . The assessee is directed to file the entire scheme of issue of IDFC Cash fund - Super Inst Plan C – Growth, before the AO. The matter is set aside and restored to the file of the AO for fresh adjudication on merits in accordance with law after considering the submissions of the assessee/evidence filed by the assessee which shall be admitted by AO in the interest of justice
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2018 (4) TMI 932
Addition being the difference in receipts as per the Profit and Loss Account and as per AS-26 - Held that:- As seen from the case of M/s. A.F. Ferguson & Co. v. JCIT [2015 (1) TMI 306 - ITAT MUMBAI] as held that in the absence of any material brought by the Revenue that the assessee has received amount more than the professional fee which has been declared by him in the Profit and Loss Account additions solely based on AIR information are not sustainable. In the case on hand also addition was made solely based on the AIR information without bringing any cogent evidence on record to suggest that the assessee received income from the said parties especially when the assessee is denying any transactions with those parties. In the circumstances, we reverse the order of the Ld.CIT(A) and direct the Assessing Officer to delete the addition made on account of alleged difference in income. Addition u/s 14A - Held that:- Proposition that there should not be any disallowance u/s. 14A when the investment was made in subsidiaries as a strategic investment is no more good law in view of the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. Thus, this argument does not hold and liable to be rejected - this matter has to go back to the Assessing Officer for verification of accounts and for decision, keeping in view the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT), HDFC Bank [2014 (8) TMI 119 - BOMBAY HIGH COURT] and ACIT v. Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] thus, we restore this matter to the file of the Assessing Officer and to decide the issue keeping in view the decisions and after verification of the accounts of the assessee. Addition on account of expenditure in respect of programs and film rights by treating the purchase cost of programs and film rights as intangible assets and allowing deprecation @25% on the same - Held that:- This issue has been decided in favour of the assessee by the Coordinate Bench in the assessee’s own case for the Assessment Year 2008-09 [2015 (8) TMI 612 - ITAT MUMBAI] wherein addition/disallowance was deleted by the Tribunal.
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2018 (4) TMI 931
TDS u/s 194J - disallowance of Data Circuit / Broadband / Multi-Protocol Label Switching (“MPLS”) charges under section 40(a)(ia) for non deduction of tds - Held that:- As decided in assessee's own case for A.Y.2010-11 [2016 (2) TMI 1164 - ITAT MUMBAI] as held merely because for maintenance purpose certain human intervention was provided, cannot lead to the surmise that the DATA link charges paid to various telecom service providers, were in the nature of technical services governed by the provisions of section 194J - DATA link charges were paid for utilizing the standard facilities which were provided by the individual service providers by way of use of technical gadgets which were made available vide DATA link satellite link line established from one service provider to be carried over to the other service provider, does not involve technical services as there was only interconnection of the networks to the equipments of other service providers. In the absence of any human intervention for transmitting the DATA through such DATA link satellite link line, the payments made for utilizing such services was not in the nature of technical services governed by section 194J - Decided in favour of assessee Disallowance of net enhancement and customization expenses (after allowing depreciation at the rate of 60%) - Held that:- As per our considered view, as technology keeps evolving, no enduring benefit arises and thus payments made for application software are revenue in nature. No merit for the disallowance of net enhancement and customization expenses.- Decided in favour of assessee Disallowance of net repairs and maintenance expenses after allowing depreciation at the rate of 10% - Held that:- After going through the nature of expenditure incurred on repairs and maintenance, we found that same is revenue in nature. No merit for the disallowance so made by the AO on account of repairs and maintenance. Disallowance made on account of lease rent expenses - Held that:- The issue is squarely covered by the order of the Tribunal in assessee’s own case for the A.Y.2010-11 as held at by following AS-19 the assessee has complied with the provisions of the Act, that AS-19 provides that in case of operating leases, the lease rent payment has to be treated as an allowable expenditure
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2018 (4) TMI 930
Unexplained share capital receipts - A.O. issued notices u/s. 133(6) of the Act to the share applicant companies which were returned unserved - Held that:- As seen that not only the directors are common but also the director of the appellant company is also a director of the share applicant companies. Therefore, it can be safely concluded that the impugned transaction is not between strangers. We find that the Assessing Officer and the First Appellate Authority has completely ignored the direct evidences which justify the share application money and the share premium. The direct evidence are in the form of confirmations by the share applicant companies, their bank accounts, and most importantly one of the directors Shri Rajesh Agarwal attended the proceedings on behalf of the investor companies. We find that the A.O. has disbelieved the existence of the share applicant companies on the basis of the questions asked to Shri Rajesh Agarwal which questions in our opinion are irrelevant. A perusal of the bank statements of the share applicant companies clearly shows that no cash was found to be deposited prior to the issue of cheque - It was brought to the notice of the A.O. and the First Appellate Authority that Samrat Dealcom Pvt. Ltd. was converted into LLP on 25.07.2014, Breeze Mercantile Pvt. Ltd. was converted into LLP on 24.03.2015 and Shristi Barter Pvt. Ltd. was converted into LLP on 01.01.2015. Moreover, the attendance of one of the directors Shri Rajesh Agarwal has been recognized by the A.O., therefore the allegation that the share applicant companies do not exist holds no water. No merit in the additions made by the A.O. and confirmed by the First Appellate Authority - Decided in favour of assessee.
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2018 (4) TMI 929
Reopening of assessment - non-supply of the reasons to the assessee - Held that:- In the present case, non-supply of the reasons to the assessee is in direct violation of ‘GKN Driveshafts - 2002 (11) TMI 7 - SUPREME Court’, debarring him from exercising his legal right to file objections against the issuance of the reassessment notice. Conveying the gist of the reasons to the assessee nowhere serves the purpose, as objections, if required to be filed by the assessee, are to be against the reasons proper and not any ‘gist’ of such reasons. Section 124(3)(b) is not at all applicable to the facts of the present case. Section 124 concerns the territorial jurisdiction of the AO, whereas the grievance of the assessee in the present case is regarding the issuance of the notice u/s 148. Too, undisputedly, in response to the notice u/s 148, the assessee requested his original return filed to be treated as one in response to the notice u/s 148. Thererfore, it cannot be said that no return was filed in response to the notice u/s 148. The AO, in fact, has proceeded to frame the assessment on such return only - Decided in favour of assessee
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2018 (4) TMI 928
Disallowance of cost of Production of TV serials and programmers - revenue v/s capital expenditure - Held that:- As decided in assessee’s own case for AY 2011-12 A.O. [2018 (4) TMI 859 - ITAT HYDERABAD] as directed to treat the expenditure incurred by the assessee on cost of production of TV programmes as revenue expenditure. Depreciation on Film Software Library @ 25% by treating it as an intangible asset - Held that:- As decided in assessee’s own case [2018 (4) TMI 859 - ITAT HYDERABAD] this issue is covered in favour of the assessee wherein as remanded the issue to the file of the AO to examine the issue of valuation of the asset and thereafter to allow depreciation @ 25% treating the software library as an intangible asset. We find that the CIT (A) has only followed the direction of the ITAT in holding that, subject to the revaluation of the asset, the depreciation is to be allowed at 25% as claimed by the assessee
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2018 (4) TMI 927
Revenues earned on account of provision of geophysical and geological services for processing of 2D/3D seismic data - apply the deemed profit rate of 10% u/s 44BB or to bring the revenue to tax u/s 115A of the Act - section 44BB applicability - Held that:- In the facts of the present case it has not been disputed by authorities below that activities carried on by assessee are not directly associated with prospecting, extraction or production of mineral oils. On a combined reading of sections 44 BB, 44DA and 115 A of the Act, we are of the considered view that all these sections relating to royalty/FTS operate in different fields. Where assessee is imparting services which could be a simple royalty or FTS then the same would be taxed under section 9(1)(vi)/(vii) read with 115A, but where assessee is imparting any services in relation to exploration of mineral oil then the royalties/FTS would be taxable under section 44 BB of the Act. As section 44 BB are specific provisions in relation to specific services, it would prevail over the other provisions dealing with royalties/FTS. From the list of services considered by Hon’ble Supreme Court while deciding the issue in the case of ONGC vs. CIT (2005 (12) TMI 46 - UTTARANCHAL HIGH COURT) the activity carried on would indicate that pith and substance of each of the contracts/agreements is connected with prospecting, extraction or production of mineral oil. And the assessee before us is also rendering services which is connected with similar activities of prospecting, extraction or production of mineral oil. No hesitation in holding that the payments received by assessee have to be assessed under the specific provision of section 44 BB and not 115 A of the Act. - Decided against revenue
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2018 (4) TMI 926
Transfer Pricing Adjustment - re-characterizing of the outstanding receivables from overseas AEs as loan facility - imputing interest at the rate equal to annual average yield of 5 year ‘BB’ rated bond by considering all the receivables to be outstanding for over 365 days - account of receivables due to the assessee from its assessee for the services rendered - Held that:- It is seen that in the case of unrelated party transaction, there are huge delays and in some cases it has gone up more than 1700 days. The period of outstanding receivables is ranging between 38 days to 1718 days and in most of the invoices, average delay is more that 300 days. If there are similar nature of transaction with comparable uncontrolled transactions and also with related parties, then there is an internal CUP to bench mark the controlled transaction with comparable uncontrolled transaction. Under CUP price charged or paid for the services provided in a comparable uncontrolled transaction is taken into consideration and it is the adjusted price paid for availing services which constitutes the benchmark for comparison with the price paid for availing of any services in an international transaction. If there are similar transactions of services with related parties as well as unrelated parties and the price charged or paid are comparable, then it is taken to be at arm’s length price. Thus, if under both the scenarios, no interest has been charged on similar nature of receivables, then it has to be reckoned that the transaction with the related party meets the arm’s length requirement vis-à-vis, the transactions with the unrelated third parties. Accordingly, we hold that no interest can be imputed on receivables with the AE and accordingly, the addition made by the TPO is directed to be deleted. - Decided in favour of assessee.
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2018 (4) TMI 925
Disallowance towards sales promotion expenses - Held that:- In the instant case, it is not the case of the ld AO that the expenditures incurred in the form of giving diaries, medical planners, medical representative bags etc were in the nature of expenditure prohibited by MCI regulations. In any event, these expenditures were incurred much prior to the introduction of the CBDT Circular and MCI regulations itself. We have already held that the genuinity of the expenditure and business purposes thereon were not doubted by the revenue herein - We further hold that the applicability of the Circular 5/2012 could only be prospective in nature and cannot be made applicable for the Asst Year under dispute before us. We allow the claim of write off of the assessee in the sum of ₹ 1,18,23,353/- as deduction in Asst Year 2005-06 - Decided in favour of assessee Addition made u/s 41(1) - Held that:- When the entire balance outstanding in the sum of ₹ 39,90,797/- is reflected as receivable in the books of CABL, which is also assessed by the very same AO, there cannot be any cessation of liability on the part of the assessee. We find that the ld AO had only forced the assessee to cease the liability payable to CABL. Had the ld AO verified the records of CABL which is also assessed in his office / circle only, he could have understood the truth. Without doing the same, the action of the ld AO by making an addition u/s 41(1) of the Act is not warranted and accordingly deserves to be deleted. TDS u/s 194J - Disallowance made u/s 40(a)(ia) towards audit fees - non deduction of tds - Held that:- In the instant case, the assessee had made provision for audit fees to the account of the payee which fact has been mentioned by the ld CITA. Hence the provisions of section 194J of the Act are clearly attracted and non-deduction of tax at source would automatically invite disallowance u/s 40(a)(ia) of the Act. The statutory auditor is appointed in the annual general meeting of the company by the shareholders and would hold office till the conclusion of the next annual general meeting. Hence the name of the payee (i.e the auditor) is very well known to the assessee in order to make provision for audit fees by crediting to the said auditor’s account. Hence we are not inclined to accept the arguments of the ld AR that the audit report is signed after the end of the year. Accordingly, the Ground raised by the assessee is dismissed. Validity of reopening the assessment - valuing the closing stock of scrap - Held that:- In the instant case, the purported income ie valuing the closing stock of scrap which was discovered subsequently during the course of reassessment proceedings, can be brought to tax, only if the escaped income i.e business loss claimed by the assessee, which triggered, in the first instance, the issuance of notice u/s 148 of the Act, is assessed to tax. As stated above, during the reassessment proceedings, the ld AO agreed with the contentions of the assessee that it had indeed done business activity and hence the business loss was allowed to be set off with other income. In this scenario, the ld AO would be precluded from making any other addition towards the new source of income as prima facie his reason to believe that income had originally escaped assessment had failed. Even on merits, from the facts narrated and explanations given hereinabove, we find that the ld AO is not justified in valuing the closing stock of packing materials representing scrap based on the scrap sales made in subsequent years ignoring the principles of valuation of stock as enumerated in AS 2 issued by ICAI which is also mandated to be followed u/s 145A of the Act. Hence no addition towards valuation of closing stock could be validly made in the reassessment even on merits in the instant case. - Decided in favour of assessee.
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Customs
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2018 (4) TMI 924
Exemption from CVD - N/N. 30/2004-CE dated 9.7.2004 - whether the goods imported by the appellant is exempted from payment of CVD by applying the excise exemption N/N. 30/2004-CE dated 9.7.2004? - Held that: - In the said notification, condition was provided that the manufacturer should not avail the CENVAT Credit on the inputs or capital goods used for manufacture of goods on which the exemption is claimed - In the facts of the present case, the goods are imported, hence the condition of non-availment of CENVAT Credit on inputs and capital goods does not get fulfilled. Benefit cannot be allowed - appeal dismissed - decided against appellant.
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2018 (4) TMI 923
Valuation - levy of CVD on the basis of RSP/MRP - leasing of projector - The case of the department is that the leasing of projector is amount to sale in terms of Standards of Weights and Measures Act, 1976 - whether the imported Digital Video Projectors and Decoders given on lease to the Theater Owners for using in display of the movie is liable for CVD on the basis of valuation under Section 4A of the Central Excise Act, 1944? - Held that: - the appellant imported Digital Video Set, which can be used only for displaying the movie in the theater. The same is not sold in the retail market. The arrangement of providing the Digital Video Projectors to the Theater owners under Lease Agreement and the lease rental is charged under the agreement. An identical fact is involved in the case of Bharti Telemedia Ltd. [2015 (9) TMI 1196 - CESTAT MUMBAI], where it was held that Set Top Boxes imported as Customer Premises Equipment (CPE) and supplied to customer’s premises does not involve the sale and the proprietary in the goods remained with the supplier. In that fact it was held that there is no sale involve, hence the CVD cannot be charged on the basis of RSP/MRP in terms of Section 4A of the Central Excise Act, 1944. CVD cannot be charged - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 922
Penalty u/s 114(A) of the Customs Act, 1962 - case of the Department is that the appellants have wrongly claimed the exemption as the goods imported was not meant for manufacture of optical fiber cable - Held that: - though the appellants have claimed the exemption Notification, but they have not mis-declared the description of the goods, the eligibility of the notification is based on interpretation, therefore, merely claiming the exemption notification does not amount to mis-declaration particularly when the goods were correctly declared. It cannot be said that the appellants had any mala fide intention of fraudulently claiming the benefit of exemption notification - it is a fit case for waiver of penalty imposed u/s 114(A) of the Customs Act, 1962. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 921
Penalties u/s 112(b) of the Customs Act, 1962 on M/s Maharashtra Steel Rolling Mills (P) Ltd., who was one of the noticee - Held that: - in the case of M/s Sanvijay Rolling & Engg. Ltd. and others, this Tribunal remanded the matter to the adjudicating authority for fresh decision - Since the issue whether the penalty u/s 112(b) of the Customs Act, 1962 should be imposed on M/s Maharashtra Steel Rolling Mills Pvt. Ltd. is consequential to the demand against Sanvijay Rolling & Engg. Ltd., this matter also deserves to be remanded to the adjudicating authority - appeal allowed by way of remand.
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2018 (4) TMI 920
Maintainability of appeal before Tribunal - 100% EOU - issue of payment of Duty Drawback - case of Revenue is that this is a case of claim of drawback and therefore, the appeal is not maintainable before the Tribunal, in terms of proviso (1) to Section 129A of the Customs Act - whether the appeals are maintainable before this Tribunal or not? - Difference of Opinion - majority order. Held that: - Section 129A of Customs Act, 1962 bars the jurisdiction of the Tribunal in respect or any order which relates to, among other things, payment of drawback. If the order impugned before the Tribunal relates to payment of drawback, the Tribunal will not have jurisdiction to decide the same - in the impugned order, has decided the issue whether the appellant is 100% EOU or not, and since the appellant has made the same plea in the present appeal, the present appeal is maintainable in terms of Section 129A. Duty Drawback - Held that: - to decide the issue of eligibility of drawback, it is necessary to first decide the issue of the status of the appellant – whether they are a 100% EOU or not. The two issues are not totally independent issues. The issue of status of the appellant has to be resolved in order to decide the fundamental issue of entitlement of drawback to the appellant. The pith and substance of the dispute in the appeal is about payment of drawback. The present case will fall within the category of orders against which the appellate jurisdiction of the Tribunal is barred. In view of the decision of the third Member, the appeal is not maintainable before the Tribunal as the same is barred by provisions of Section 129A of Customs Act, 1962
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Corporate Laws
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2018 (4) TMI 919
Oppression and mismanagement - Held that:- Appellant no.1 had responded to all allegations and had pointed out that the payment to Barkha lnds had been made in the normal course of business and respondent no.2's allegation that the company did not need such service/ software was baseless; that the amount debited to SCA International was the commission earned by respondent no.1 company, i.e., income generated by the company and not money taken from or allegedly diverted from the company; that the fixed deposits were encashed to meet a liability of ₹ 2.5 Crores of respondent no.1 as on 31st March 1998; that the shares of appellant no.3 held by respondent no.1 company were transferred to KSB Engineers Pvt. Ltd. against receipt of full consideration vide cheque No.762618 dated 30th June 2004 for ₹ 5 Lakhs and Cheque No.762619 dated 30th June 2004 for ₹ 750,000/ and that the transaction was carried out with the full knowledge of the board of directors. The Company Law Board has in its order noted these responses at Para 17: Re sale of Spectron Shares to KSB engrs , Para 19 : Re Barkha lnds , Para 20 : Re SCA International and Para 21 : Re the encashment of the fixed deposits and at Para 18 : Re the facts , figures and explanation re catering expenditure. However, thereafter in Para 50 of its order the CLB merely records a bald finding that “As regards the allegation of misappropriation of fund and siphoning off of funds to the Respondents own concerns, the Respondents hove failed to refute the specific allegations made in that regard.” It has to be noted that even the allegations of misappropriation and siphoning off by respondent no.2 were generally bald unsubstantiated allegations. Moreover, the CLB has, in the order noted and recorded responses/explanations offered by appellant no.1. Thereafter, without dealing with the same, the CLB has in an error apparent concluded that “the Respondents have failed to refute the specific allegations made in that regard”. In the aforesaid context of facts, allegations and pleadings, the CLB's finding is totally unreasoned, discloses an error apparent and is ex facie perverse. The impugned order, therefore, is unsustainable and requires to be set aside and is hereby set aside, with costs.
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2018 (4) TMI 918
Board of Directors rights terminating the office of 3rd respondent as director - Whether no notice was required to be given to that particular director against whom Section 283(1)(g) of the Companies Act, 1956 - sufficient notice to the shareholders within the meaning of Section 172 of the Companies Act - Held that:- Whenever any meeting is held, either Board meeting or General Meeting, duty is cast upon the persons holding meeting to send the respective notice with Agenda items as prescribed under the Companies Act. Since no such notice has been received by the 2nd and 3rd respondent, sending a calendar of events cannot be called as service of notice upon the 2nd and 3rd respondent and calendar is only a plan for the year giving indication to facilitate the planning by the parties to be available as and when the notice is received when the details of actual meeting have been finalised. Sending Notice with Agenda and documents does not get dispensed. Therefore, we hold that no notice was served upon 2nd and 3rd respondent. Increase of authorised share capital - We are not able to convinced that sending a calendar of events in advance and not sending any further notice for the particular meeting alongwith agenda and other necessary papers be treated as a valid notice either under law or as a good corporate practice. Therefore, we hold that that the holding Board Meeting without calling one of the directors of the company and general meeting was held without notice to the contesting respondents for increase of authorised share capital in the EOGM held on 28.11.2013 is invalid. Whether or not bringing an outsider as a shareholder is in violation of the Articles of Association and constitution of Private Limited Company? - As we have already held that increase in the authorised share capital is invalid, capital issued in pursuance of such increased capital cannot be sustained irrespective of whether proper procedure has been followed or not. Therefore, we are in agreement with the Tribunal that the allotment of shares to outsider is invalid. While invoking Section 283(1)(g) of the Companies Act, 1956, the Board of Directors must give notice to that particular director (against whom the section is being invoked) - we hold that date of meeting in the notice purportedly sent to 3rd respondent is different from the date shown in Form 32. Further we have already expressed our opinion that calendar of events is not a sufficient notice, non-attending of the meeting as per calendar of events cannot be held against a director for not attending for the purpose of vacating the office under Section 283(1)(g) of the Companies Act, 1956. Therefore, vacation of the office by the director in terms of Section 283(1)(g) is invalid. Form 32 filed showing 3rd respondent vacated office is also invalid. Looking to the impugned order directing take over of the company by the original petitioners No.1 and 2 and restoration of original petitioner No.2 as director, the original petitioners can ascertain from the records the infusion of funds by R5 towards loan and share capital. It would be reasonable and win win situation for both sides if the petitioners are directed to ascertain from records the infusion and utilization and if satisfied, immediately pay back the funds infused by R5 within two months of the order in these appeals. The disputes qua Respondent No.5 shall then rest at that stage. The forensic audit directed by NCLT will then be done for other Respondents. However, if the original petitioners, for any reason, do not pay back the funds infused by original R5 within the above period, Company should be liable to pay interest if the auditor later finds that amounts are liable to be refunded as per directions (iv) of the impugned order, in which case the three months clause put by the NCLT deserves to be deleted, ad directions modulated.
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Insolvency & Bankruptcy
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2018 (4) TMI 937
Corporate Insolvency Resolution Process - whether non-payment of advance could not give rise to a claim as an operational debt? - Held that:- The claim set up by the Appellant does not fall within the definition of operational debt, default in respect whereof would justify triggering of ‘Corporate Insolvency Resolution Process’ in terms of Section 9 of ‘I&B Code’. What emerges from record is that there is a plausible dispute between the parties in regard to execution of contract involving supply of material as well as rendering of works at the site. The mere fact that the Operational Creditor was entitled to mobilization advance prior to commencement of actual work in the wake of Corporate Debtors plea that no machinery or equipment was moved to the construction site raised a debatable issue which could be agitated before the Civil Court. This is apart from the fact that the claim set up by the Appellant in the final bill dated 4th September, 2017 and the notice under Section 8 of ‘I&B Code’ is at variance. This Appellate Tribunal is of the opinion that there is no legal infirmity in the impugned order. Appeal dismissed.
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2018 (4) TMI 936
Insolvency resolution by operational creditor - corporate insolvency procedure - Corporate Debtor has preferred these appeals on the ground that provisions of Rule 5 have not been followed, as no demand notice under sub-section (1) of Section 8 of the ‘I&B Code’ was issued, nor relevant information in terms of Part IV of Form 5 were provided by the ‘Financial Creditor’ - Held that:- Similar issue fell for consideration before this Appellate Tribunal in “M/s. Sabari Inn Pvt. Ltd. [2017 (12) TMI 834 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] wherein as held as the Respondent having failed to provide all the details as required under Form-5 as noticed above, the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an application under section 9 of the I&B Code in terms of Rule 5 of Transfer Rules, 2016. In such circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and 434 of the Companies Act, 1956 stands abated. Liberty is given to the 1st Respondent to issue fresh notice under sub-section (1) of Section 8 of the ‘I&B Code’ and on service of such notice if there is a debt and default or no dispute is raised, it will be open to the 1st Respondent to file fresh application under Section 9 of the ‘I&B Code’ after ten days of service of such notice.
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Service Tax
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2018 (4) TMI 914
Business Auxiliary services - Service of ‘commercial advisor’ for the purpose of the sales promotion and marketing of goods produced by the said foreign firm in India - export of service or not? - Held that: - in the present case the appellant is acting as commission agent of M/s. Aashmore Pvt Ltd, a foreign company who is the recipient of the service - the Board has also clarified by its Circular dated 24.02.2009 regarding the services used outside India. When the services provided in India and used outside India and payment of such services received by the service provider in convertible foreign exchange then it will be treated as Export of Services under Rules, 2005. The decision in the case of M/s Sumitomo Corporation India Pvt. Ltd. Versus CST, Delhi (Vice-Versa) [2017 (3) TMI 1366 - CESTAT NEW DELHI] covers the issue, where it was held that the services have been provided to foreign entities as per the agreement entered into and the beneficiary is such foreign entities. The amount as consideration for such services was also paid by the said foreign entities in convertible foreign exchange. Therefore, the services rendered by the appellants are squarely covered by the Export of Service Rules and there is no service tax liability on them. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 913
Classification of service - works are undertaken by them on Government Tenders and payments are received as per stage of completion of work - whether the services would be covered under Works contract service or under erection, commissioning and installation service? - Held that: - The Tribunal in case of Pioneer Fabricators Pvt. Ltd. Vs. Commissioner [2015 (12) TMI 1566 - CESTAT ALLAHABAD] has held that works of fixing of metal barriers on concrete foundation alongside highways essentially in nature of civil work and metal crash not classifiable as equipment under ‘erection, commissioning and installation services’ Applying the ratio of said Tribunal order, the services of Works Contract rendered by the Appellant is in respect of Roads and thus not chargeable to service tax for the period after 01.06.2007. Scope of SCN - Held that: - the SCN has been issued to the Appellant towards demand under the category of ‘erection, commissioning and installation services’ whereas the demands for the period after 01.06.2007 has been confirmed under the category of ‘Works Contract Service’ - when no demand was made from the Appellant under the category of ‘Works Contract’ in SCN, the adjudicating authority also could not have confirmed demand under said category - The adjudication order has thus traveled beyond the scope of SCN and therefore the demand is not sustainable. Extended period of limitation - Held that: - the Appellant in the year 2006 itself had surrendered the registration certificate on 15.03.2006 on the ground that their services do not fall under the category of “erection, commissioning and installation services ’. The department thus was in knowledge of the fact that the Appellant is not paying service tax on its activities - SCN was issued after 28 months of issuance of summon and 48 months of surrender of registration - extended period not invocable. Appeal allowed on merits as well on limitation.
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2018 (4) TMI 912
GTA service - appellant entered into agreement with the owners of van to hire their Vehicles on hire charges at a fixed rate based on kilometer basis - Held that: - the Appellant has hired the vehicles on the kilometers basis and monthly bills are raised on the basis of Kilometers travelled by the Vans. In such case when the vehicles are hired on monthly basis and the charges are not based upon destination but on kms basis, it cannot be said that the services involved are of Goods Transport Agency. The charges are fixed not on the basis of destination or quantity of goods or any other basis but solely on kms the vehicles have run in a month. Obviously no consignment note is issued as the services is not of consignment to be taken to any particular destination and therefore the services would not fall under the category of Goods Transport Agency. The issue is squarely covered by the decision in the case of South Eastern Coal Fields Ltd. Versus C.C.E., Raipur [2016 (8) TMI 677 - CESTAT NEW DELHI], where it was held that in absence of consignment note services cannot be considered as GTA Service. The demands of service tax under the category of GTA does not sustain - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 911
Refund claim - time limitation - services of survey and exploration of minerals under reverse charge mechanism - Held that: - the Bench in the case of the respondent in RELIANCE INDUSTRIES Versus COMMISSIONER OF SERVICE TAX [2014 (1) TMI 257 - CESTAT MUMBAI], held that the assessee had not provided any services during the relevant period in question and hence having paid Service Tax on reverse charge mechanism are eligible for the refund. It was the submission of the learned Departmental Representative that this order of the Tribunal is in challenged and has been admitted by the Apex Court, hence the ratio cannot be relied on - This submission of the learned Departmental Representative will not carry the case of Revenue any further. On specific query from the Bench as to whether the Apex Court has granted any stay on the judgment and order of the Tribunal, both sides fairly submitted that there is no stay on the order dated 14.11.2013 of the Tribunal. It is settled law that unless stay is granted by higher judicial forum, as issue which is decided by coordinate Bench of the Tribunal needs to be followed in order to have certainty in fiscal matters. Impugned order upheld - appeal dismissed - decided against Revenue.
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2018 (4) TMI 910
Refund claim - time limitation - appellants paid the service tax and later realized that in view of exemption under Notification No. 13/2003-ST dated 20/06/2003 no tax is payable - whether the time limitation would be applicable to the case, as the said amount is not to be considered as a tax? - Difference of opinion - majority order. Held that: - In view of the decision by majority as recorded, time limit prescribed under Section 11B of the Central Excise Act, 1944 will govern claim for refund of service tax - The appeal file is returned to referral bench for a final decision.
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2018 (4) TMI 909
Waiver of pre-deposit - Valuation - inclusion of free services provided by M/s. Bharti Airtell and the services for which M/s. Bharti Airtell have charged certain amounts from the applicant - Whether the appellants be granted full waiver of pre-deposit of Service Tax, fine and penalty for stay of operation of impugned order as held by Member (Judicial)? - Difference of opinion - majority order. Held that: - M/s Airtel are discharging service tax on provision of such seats under the category of business support service. On perusal one of the sample invoice, I note that they have charged service tax from the appellant, which was also paid. It is not clear that whether any demand proceedings were raised against M/s Airtel in respect of such seats for which no monetary consideration was mentioned in the arrangement - the business support service provided by M/s Airtel is the first stage of verification which necessarily forms input service for the appellant and the provision of management, maintenance and repair service back to M/s Airtel. All these aspects require much closer scrutiny at the time of final disposal of appeal - the appeal may be admitted without insisting on pre-deposit for a final decision. In view of the majority decision the appeal can be admitted without insisting on pre-deposit. Accordingly, application for waiver of pre-deposit is allowed till disposal of the appeal.
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2018 (4) TMI 908
Pre-deposit - Whether the appellant is required to make the pre-deposit of 10% of service tax demand with respect to Optional Extended Warranty Service, as held by Member (Technical) that the appellant has not made out a prima-facie case for waiver of pre-deposit? - Difference of Opinion - majority decision. Held that: - the transaction entered into between the purchaser of motor vehicle and the manufacturing appellant in case of extended warranty is that the money is collected irrespective of whether the vehicle is attended or not and this is how it is different than the service for repair, reconditioning, restoration or decoration of the motor vehicle because in the case of repair, reconditioning etc. the monitory consideration is received by the service provider only after attending on the job of repair reconditioning etc - Therefore, the matter is debatable. In view of the majority decision the appellant-applicant is not required to make a pre-deposit of 10% of service tax demanded, under Section 35F of Central Excise Act, 1944 and the stay petition is allowed.
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2018 (4) TMI 907
Refund claim - service tax paid on amount which was available as abatement under GTA Service - refund rejected on the ground that the Appellant have themselves chosen not to avail the exemption given under the N/N. 32/2004 and hence not entitled for the refund - time limitation - scope of SCN - Held that: - The show cause notice was issued to them on the grounds of time bar. However the refund was rejected on the ground that the exemption cannot be claimed retrospectively. The lower authorities could not have firstly decided the issue on grounds which was not canvassed in the show cause notice - impugned order traveled beyond SCN. Time limitation - Held that: - In the present case vide letter dt. 07.12.2006 they were asked to reverse the credit and hence the claim was filed by Appellant on 14.06.2007 i.e within one year of the letter dt. 07.12.2006. The Appellant’s claim is thus cannot be held to be time bar. Appeal allowed.
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2018 (4) TMI 906
Classification of service - activities involved civil construction, site preparation, road work, pump installation, piping, soil work etc. for their petrol pump retail outlets - whether classifiable under Works Contract Service or under Erection, Commissioning or Installation service? - Held that: - M/s. HPCL deducted works contract tax (WCT) from the bills raised by the appellant. Since the activities undertaken by the appellant involves both the execution of the job and for supply of goods, the same appropriately falls under the taxable category of “Works Contract service”. Reliance placed in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 905
Refund claim - time limitation - N/N. 12/2013-S.T. dt. 1.7.2013 - Held that: - it is provided that the refund under the notification should be filed within 1 year from the end of the month in which the actual payment of service tax is made by SEZ unit to the service provider. The Learned Commissioner has not touched upon any of the clause(e) or (f) provided in the notification and he has held that the period of 1 year should be reckoned from the end of the quarter, applying the provisions of Section 11B - the Learned Commissioner should not have decided a case only on Section 11B of the Act, particularly when the specific provisions for limitation is provided under N/N. 12/2013-ST. The matter needs reconsideration - appeal allowed by way of remand.
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Central Excise
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2018 (4) TMI 904
CENVAT credit - fake invoices - denial on the ground that the vehicle number mentioned in the invoices are not transport vehicle and the transporter of the vehicles denied the transportation of goods - Held that: - no investigation was conducted from the drivers of the vehicle whether the goods have been transported to the factory premises of the appellant or not - proceedings against the appellant are not sustainable merely on the basis of the impugned investigation - Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 903
CENVAT credit - outdoor catering service - period involved is 2010-2012, which means that it includes both the periods prior to amendment and post amendment also. Period prior to 01.04.2011 - Held that: - In the period prior to 01.04.2011, the Ld. DR did not raise any objection for availment of CENVAT credit but is only agitating that the decision of Ultratech Cement Limited [2010 (10) TMI 13 - BOMBAY HIGH COURT] has been appealed against before the Hon’ble Apex Court and the decision on the same is still awaited - Considering the fact that for period prior upto 01.04.2011, the decision of the Hon’ble High Court of Bombay in the case of Ultratech Cement Limited has not been set aside by any Court. In that circumstances, the said decision is applicable as on date - the respondent has rightly availed the CENVAT Credit on outdoor catering services prior to 01.04.2011. Period post 01.04.2011 - Held that: - For the period post 01.04.2011, the issue has been examined by this Tribunal in the case of Hindustan Coca-cola Beverages Pvt. Limited [2016 (8) TMI 35 - CESTAT HYDERABAD], where it was held that outdoor catering services are used by appellant in relation to the business of manufacture and not for any personal use or consumption of employees and credit remains allowed - authorities below has rightly allowed CENVAT Credit on Outdoor catering service to the respondent. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 902
Valuation - inclusion of bought out items in assessable value - The case of the department is that nuts, bolts and other accessories supplied directly to the site, the value of the same should be included in the value of the towers - Held that: - the appellant is engaged in the manufacture of transmission line towers. The entire activity of the manufacturing is completed without the need of nuts bolts etc. The bought out nuts bolts were sent directly from the supplier to the customer’s site. Therefore, the same is obviously not taking part in the manufacture of the final product of the respondent. Any additional consideration can be included in the assessable value of the goods manufactured and sold - In the present case, the goods in question is transmission line towers, which is manufactured and sold by the respondent. The nuts and bolts etc. are optional item which is sold as a bought out item to the customers, which is nothing but a trading activity. Therefore, the same cannot be considered as extra consideration towards the manufacture of excisable goods produced by the respondent. The value of nuts bolts etc. is not includible in the assessable value of the transmission line towers manufactured by the respondent - appeal dismissed - decided against Revenue.
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2018 (4) TMI 901
Valuation - enhancement of value - case of Revenue is that respondent cleared the aforesaid goods at lower rate than those mentioned in their pricing circular and thus not followed the principles of transaction value in terms of Section 4 of the Central Excise Act read with Central Excise Valuation Rules, 2000 - Held that: - the Commissioner (Appeals) had allowed the appeal filed by the Respondent on the ground on revenue neutrality holding that if duty had been paid by the appellants at the time of clearances, the same would have been available as cenvat credit in the hands of the buyer. Even of the appellants pay the differential duty, the same will be available as credit to the buyer. On this count also the issue is revenue neutral. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 900
CENVAT credit - input services - freight charges for outward transportation of the goods cleared from the factory - Held that: - The transportation incurred for clearances of the goods from factory to the port is within the term of “clearances of goods up to the place of removal” therefore, GTA is a service in the present case covered under the definition of input service - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 899
Validity of SCN - Provisional assessment - Held that: - there is no dispute about the fact that the goods were cleared under Provisional assessment procedure under Rule 9B of Central Excise Rules. The Appellants had followed the procedure by executing Bond alongwith Bank Guarantee. Even the assessment was finalized and the differential duty was paid by the Appellant. The assessment was finalized vide Assessment order dt. 21.04.1996 - in between, the SCN dt. 17.01.996 was issued to Appellant. Clearly the issue of show cause notice during the provisional assessment was bad in law and hence not sustainable - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 898
Valuation - supply of Hydrogen gas through pipeline - inclusion of maintenance and operating charges on pipeline owned and maintained - Held that: - the operation and maintenance of pipe line is not related with transportation charges and hence are includible in assessable value - the purchase order issued by the NOCIL mentioned that the gas will be transported through pipe line and maintenance charges will be paid separately and the rates are ex-factory. Thus the demand on merit is sustainable. Extended period of limitation - Held that: - in absence of any fact showing malafide intention of Appellant to evade payment of duty, the demand raised by invoking extended period is not sustainable. Penalty u/s 11AC also set aside. Appeal allowed in part.
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2018 (4) TMI 897
CENVAT credit - input services - GTA Service - denial on the ground that such service was utilized by the appellant for its ex-work sale of goods - Held that: - in the case of ABB Ltd [2009 (5) TMI 48 - CESTAT, BANGALORE] the Tribunal has held that services availed by the manufacturer for out forward transportation of final product from the place of removal, should be treated as a input service, in terms of Rule 2(l)(ii) of the CCR 2004 - CENVAT credit should be available on GTA service is reasonable. Extended period of limitation - Held that: - Since the Department has not specifically adduced any evidence regarding the clandestine motive of the appellant in defrauding the Government Revenue, cenvat credit denied to the appellant by invoking the extended period of limitation cannot be sustained. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 896
CENVAT credit - inputs - denial of credit on the ground that news print paper was exempted in terms of N/N. 4/2006-CE dated 01.3.2006 as amended subsequently by the N/N. 4/2008 CE, upto the initial clearance of the 3500 MT - Held that: - that part of the clearance are to the newspaper, in which case, classification would be falling under sub heading 4801 which is not one of the specified in sub heading under Sl.No. 93 - Revenue cannot deny the benefit of the Sl.No. 93 to the assessee and again ask the assessee that they should have cleared their goods in terms of Sl. No. 90 - credit allowed. CENVAT credit - structural item - Held that: - the benefit on such items cannot be denied - credit allowed. Extended period of limitation - Held that: - Commissioner (Appeals) while disposing the appeal filed by the appellants has granted the benefit of penalty by setting aside the same on the finding that the adjudicating authority has not brought the fact of fraud, willful mis-statement, collusion or suppression of facts or contravention of any of the provision of Excise Act or Rules therein with intent to evade payment of duty - If the appellant authority has held absence of any malafide on the part of the assessee for setting aside of penalty, same ingredient would apply for the purpose of limitation - extended period not invocable. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 895
Clandestine removal - MS ingots and rolled products - shortage of goods - Held that: - In the absence of any evidentiary material, it is to be held that such shortage which according to the appellant were only on eye estimation basis and did not reflect the correct position - Otherwise also in the absence of any evidence to reflect upon the clandestine clearance of the final product, the findings arrived at by the lower authorities cannot be upheld. Confiscation of raw material - redemption fine - Held that: - there is no provision of confiscation of the raw material which has not been entered in the records - the Redemption fine set aside. Appeal allowed in toto.
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2018 (4) TMI 894
Clandestine removal - MS ingots - entire production was not reflected in the records - shortages of raw material - Held that: - It is well established that onus to prove clandestine removal is upon Revenue and same is required to be discharged by production of positive, corroborative and cogent evidence and cannot be made on the basis of assumption and presumption - Revenue has not recorded the statements of any production incharge of the company or any other employee of the Company relatable to production of goods or clearance of the goods. No statement of transporter or any of the customer is available on record - demand of duty set aside. Shortages of various raw materials found in the premises - Held that: - such shortages cannot lead to any conclusion of their clearance so as to ask for reversal of CENVAT credit - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 893
CENVAT credit - electricity supplied to the guest house and residential colony - production of electricity in its captive power generation unit - Rule 6(3) of CCR - Held that: - the residences located adjacent to the factory premises, which is located in a remote location and meant for the workers working in the factory. Similarly guest house is also located adjacent to the factory premises and is used for the visiting officials and or other persons in connection with the business of the appellant company - use of electricity in the residential colony and in the guest house was also for business purposes and no reversal of input credit is required under Rule 6 of CCR, 2004 - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 892
Refund claim - finalization of the provisional assessment - denial on the ground of unjust enrichment - Held that: - the observation of the learned Commissioner with reference to Section 12 B of the Act is misplaced, as there is no material on record to assume that the appellant have passed on more duty liability then what is indicated in its invoices - it is evident that the appellant had paid more duty at the time of clearance from the factory to depot, but have ultimately charged and realized less duty on the sale effected from the Depot. The refund has been denied simply based on presumptions, which is not tenable. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 891
CENVAT credit - outward freight from their factory to the place of buyer - time limitation - Held that: - the issue of CENVAT credit with respect to input service of transportation, with respect to clearance of final products from the factory gate to the premises of the buyer has been a contactitious issue during the relevant period - there is no contribution conduct and suppression of fact etc. on the part of the appellant as is evident from the faith of the show cause notice. The SCN is not maintainable as it has been issued for different period of limitation and accordingly will not apply for the normal period - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 890
CENVAT credit - factitious purchase of raw material - fake invoices - penalty - Held that: - there is no retraction. Nor there is any whisper in the reply to the SCN, that under undue influence/ coercion, he had to admit before the officers in his statement, as afore-mentioned wherein he stated the purchase were being looked after by the staff and it might be that only invoice was received and not goods - denial of credit upheld. There is no allegation by Revenue that the appellant sourced copper from any alternative source and apparently appellant have produced dutiable goods by using of copper and cleared the same on payment of duty. Penalties - Held that: - there is no case made out of any contumacious conduct or suppression of records. More so, there is absence of allegation for source of copper bars - penalties set aside. Appeal allowed in part.
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2018 (4) TMI 889
Remission of duty - Rule 21 of Central Excise Rules, 2002 - loss of molasses in storage for the sugar season - Held that: - the grounds given by the learned Commissioner, in the impugned order, for rejection of the remission claim are flimsy and nonest - The learned Commissioner had been unable to give any reason for rejecting the acceptance of loss by the State Excise Authority, who are in physical control of the molasses, under the relevant State Act and Rules - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (4) TMI 888
Service of notice - Whether in law and on facts, was the Tribunal right in setting aside the order of review dated 29.11.2012 holding that the notice in Form 309 issued in review proceedings was not properly served as per provisions of law hence no reason to go into genuineness of transactions? - Sub-section (2) of Section 27 of the Maharashtra Value Added Tax Act, 2002. Held that: - Powers of the review under Section 25 of MVAT Act, 2002 cannot be exercised unilaterally. That before exercising such powers, service of valid notice is condition precedent. If such notice is not served on proper person in accordance with Rule 87(1) of the MVAT Rules, 2005, Reviewing Authority does not get jurisdiction to review the order - It is settled law that want of valid service of notice being a condition precedent and foundation of jurisdiction of Sales Tax Officer, mere participation of the Respondent-Dealer in review proceedings cannot validate the review proceedings. In the case in hand, the Respondent-Dealer was served by one of the modes contemplated under Rule 87(1)(a)(b)(c)(d) and (e) of the MVAT Rules, 2005. There is nothing on record to indicate that the authorities resorted to substituted service after having formed the opinion that the Respondent-Dealer could not be served by one of the modes contemplated under Rule 87(1) - reviewing authority, had not acquired jurisdiction to review its order dated 11.6.09 and cancel the registrations under both the Acts since inception i.e. 14.08.09, for want of valid service of notice. The finding recorded by the Tribunal in paragraph 37 that notice for review has not been properly served on the Appellant cannot be faulted with - appeal dismissed - decided against Revenue.
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2018 (4) TMI 887
Works Contract - Mosaic - includibility of materials and labor used in execution of works contract - exemption under Section 3-B(2)(c) of the TNGST Act, 1959. Held that: - Appellate Authority and Tribunal are the final fact finding authorities and when the books of accounts were produced, the Appellate Authority has analysed the same and found that the dealers were having separate accounts for the materials that had been purchased and utilised in the course of works contract and that they have also maintained separate figures for various charges that had been incurred during the course of works contract. As per section 3B 2(B) of the TNGST Act '59, the amount for which any goods in the first schedule or second schedule are purchased from the registered dealers liable to pay tax under this Act and used in the works contract in the same form in which such goods were purchased are eligible for deductions - In a similar case before the High Court of Madras S. Chandrasekaran Versus State of Tamil Nadu [1990 (3) TMI 334 - MADRAS HIGH COURT], it was held that t is a works contract and in such case, the appellants come under section 3B and is eligible for various deductions. When the appellants is eligible for various deduction, he is also eligible for deductions under section 3B 2(b) and also other deductions that are available under Section 3B. Revision petition dismissed.
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Indian Laws
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2018 (4) TMI 917
Penalty u/s 43A of Competition Act, 2002 - Failure to notify a proposed combination as required under section 6(2) of Competition Act, 2002 - notification of acquisition of shares - Held that: - Section 42 of the Act deals with contravention of the orders of the Commission. Section 43A deals with the power to impose a penalty for nonfurnishing of information on combinations. Any person or enterprise who fails to give notice under section 6(2) of the Act to the Commission, the Commission, in such an event, is authorized to impose the penalty which may extend to 1% of the total turnover or the assets, whichever is higher. On first acquisition of shares, there was a failure to comply with the provisions of section 6(2) of the Act in regard to the acquisition of 24.46% of the shareholding. The provisions of section 6(2) were not at all complied with. Coming to the second acquisition of shares of 0.8% equity shares of MCFL, the dispute is as to whether the notifying within 30 days of the purchase was compliance of the provision as per provisions of section 6(2) it should have been notified before the acquisition. As a corollary, it was also argued that the equity shares purchased second time were placed in the Escrow Account - Held that: - It is apparent from section 6(2) of the Act that the proposal to enter into combination is required to be notified to the Commission. The legislative mandate is apparent that the notification has to be made before entering into the combination - The combination cannot be entered into and shall come into effect before order is passed by Commission or lapse of certain time from date of notice is also apparent from the terminology used in section 6(2A) which provides that no combination shall come into effect until 210 days have passed from the date of notice or passing of orders under section 31 by the Commission, whichever is earlier. When the transaction has been completed and acquisition has been made and the latter transaction has exceeded holding more than 25% by the second purchase, obviously prior permission was required, as discussed hereinabove, as its total shareholding increased to 25.3%. Thus, we have no hesitation to hold that the notification under section 6(2) of the Act has to be exante. The imposition of penalty under section 43A is on account of breach of a civil obligation, and the proceedings are neither criminal nor quasi-criminal. Thus, a penalty has to follow - appeal dismissed - decided against appellant.
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2018 (4) TMI 916
Functions under the Competition Act, 2002 - whether there is an abuse of such dominant position under Section 4(2)(c) where the respondent could be stated to have indulged in a practice resulting in denial of market access in any manner? Held that: - It can be seen that in the facts of the case, the broadcaster, namely respondent No. 5, had a broadcast agreement which was entered into for a period of one year from 1stAugust, 2010. This was sought to be terminated within the aforesaid period by the respondent by notices dated 19thJanuary, 2011 - on the present facts, there is an abuse of the dominant position enjoyed by the respondents 1-4 only for the reason that the broadcaster was denied market access on and after 19th February, 2011 until 1st August, 2011. The words “in any manner” one of wide import and must be given their natural meaning. This being the case, it is difficult to appreciate the reasoning of the Appellate Tribunal that, as the broadcaster and MSOs are not in competition with one another, the provisions of Sections 3 and 4 do not get attracted. The “dominant position” held by the respondent MSOs is clearly established for the purpose of Section 4 in the present case, and the Commission finding in that behalf is also not set aside by the Appellate Tribunal. Once a dominant position is made out on facts, whether a broadcaster is in competition with MSOs is a factor that is irrelevant for the purpose of application of Section 4(2)(c) which, as has been found by us, becomes applicable for the simple reason that the broadcaster is denied market access due to an unlawful termination of the agreement between the said broadcaster and the respondents 1-4. Penalty - Held that: - Section 4(2)(c) has been breached, yet the reason given by respondents 1 to 4 for termination being otherwise justifiable - no penalty should be levied. Appeal allowed.
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2018 (4) TMI 915
Recovery of outstanding dues which were admitted - cancellation of conditional bail - misappropraition of shares - The defendant’s only plea is that due to cancellation of conditional bail, MOU dated 03.04.2013 executed between the parties became null and void and its terms and conditions cannot be enforced - Held that: - When the defendant did not comply with the terms and conditions of the MOU executed before the court, the plaintiffs were within their right to avail legal remedies seeking cancellation of bail for violation of terms and conditions of MOUs. Learned Additional Sessions Judge committed no error in cancelling the conditional bail due to non-compliance of terms and conditions of MOU. The MOU did not debar the plaintiffs to avail civil remedies to recover the said amount. Settled position of law is that the criminal and civil proceedings are two different and separate independent remedies. Filing of the FIR and even of the proceedings under Section 138 Negotiable Instruments Act did not debar the plaintiffs to avail the civil remedy to recover the outstanding amount. The defendant’s arrest pursuant to the cancellation of bail did not absolve him of the liability to pay the outstanding dues. This Court finds no sufficient ground to grant leave to defend to the defendant - application dismissed.
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