TMI Tax Updates - e-Newsletter
May 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Input tax credit on motor vehicle - cash carry vans - used for cash management business - As the Members of the Advance Ruling Authority differ in respect of this question as raised by the applicant, appropriate reference is made to the Appellate Authority for Advance Ruling for hearing and decision on this question - AAR
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GST:
Scope of Supply - disposal of the scrap vehicles - supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. - AAR
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GST:
Levy of GST - providing the service of teaching to the students of Class Xlth and Xllth science - providing the coaching for entrance examination - The education service provided in the case is taxable @9% CGST and @9% SGST (i.e. @18%) - AAR
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GST:
Classification of Caesarstone - an article made from artificial stone - same would not be covered by the Chapter 25 and the Heading 2506 - Caesarstone imported by the applicant is to be classified under HSN code 6810. - AAR
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GST:
Levy of GST - reinstatement charges paid to Municipal Authorities - to carry out the excavation of roads for laying, repair and maintenance of electric supply lines - the activity cannot be held as related to sovereign function - liable to GST - AAR
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Income Tax:
Disallowance on account of service tax payable u/s 43B - the assessee was legally obliged to declare its turnover inclusive of service tax received. The assessee cannot be exonerated from its liability by saying that he accounted for the service tax received separately. - AT
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Income Tax:
Rejection of application for approval u/s 80G - The sufficiency of funds available with an institution seeking the approval is no where mentioned as condition to be looked into before granting approval - the primary conditions to be fulfilled are that it should be established for charitable purpose - AT
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Income Tax:
Exemption u/s 11 - advancing a loan to another charitable trust - nothing has been brought on record to establish that the common trustees have substantial interest in the other trust - the amount advanced cannot be held to be in violation of Sec.13(1)(d) - Sec.11(5) cannot be applied to present facts as the money advanced is not an investment but a loan - Exemption cannot be denied - AT
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Income Tax:
Accrual of expenditure - contingent liability which crystallized during the subsequent year - principal encashed the bank guarantee and recovered the amount - Merely because it was to be enforced after 7 days, it cannot be said that the liability has not been crystallized during the year - AT
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Income Tax:
Validity of reopening of assessment - Most of the wordings in the order disposing of objections of the assessee regarding reasons recorded seems to be arbitrarily worded without any specific finding or basis - re-assessment order quashed - AT
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Income Tax:
Rate of depreciation on printers - The claim by the assessee at 60% is acceptable - since in respect of percentage on depreciation claimed in respect of the very same machinery has been permitted for the earlier years, the the Revenue cannot take a difference stand - HC
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Income Tax:
Deduction u/s 80-IB - failure to file return u/s 139(1) within stipulated time - Benefit of deduction cannot be allowed based on the basis of belated return filed u/s 139(4) - HC
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Income Tax:
Reopening of assessment - service of notice to the Chartered Accountant of the petitioner Company is not service at all and participation of the petitioner Company by filing return and filing objection to the notice to the reasons to believe cannot be held to be a valid service of notice - HC
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Customs:
Penalty under Customs Act cannot be imposed on CHA and its directors in case of misdeclaration of value and description if no role is found in such contravention - AT
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Customs:
Valuation - import of Desk top Board classic series - rejection of transaction value - Tribunal upheld that re-determination of value based on NIDB data available in respect of contemporaneous imports.
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Customs:
Claim of Duty Drawback on supplies from DTA to EOU - eemed export drawback - supplier being claim cenvat credit, the method / route for claiming duty drawback - via fixation of Brand Rate - or via All Industry Rate of Duty Drawback - An unnecessary and uncalled for controversy was generated only because of the route chosen by the petitioner - claim of drawback allowed - HC
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DGFT:
Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments alongwith maintaining the Parent-Child relationship in the levels of packaging and their movement in supply chain — Extension of date of implementation.
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IBC:
Corporate insolvency process - authorization - as the Chief Executive Officer of the Bank has signed Form 1, the application under Section 7 of the ‘I&B Code’ cannot be rejected - AT
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Service Tax:
Demand of Interest in credit reversed - there was no suppression of fact on part of the appellant, therefore even for interest the SCN should have been issued within the normal period of one year from the date of reversal of CENVAT credit. - AT
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Central Excise:
Unjust enrichment - provisional assessment - The procedure regarding unjust enrichment of finalization of provisional assessment will be applicable to the provisional assessment made after 1999 and not before that date as the proviso to Rule 9B in the form of sub Rule 5 did not have a retrospective effect. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (5) TMI 645
Constitutional vires of Section 109 of the Central Goods & Services Tax Act, 2017 as also that of the Gujarat Goods & Services Tax Act, 2017 - main contention of the petitioners is that the Act envisages constitution of such Tribunals comprising of one Judicial and two Technical members. Notices issued. Since vires of Central legislation are under challenge, let there be notice to the Attorney General also.
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2018 (5) TMI 647
Levy of GST - reinstatement charges paid to Municipal Authorities - to carry out the excavation of roads for laying, repair and maintenance of electric supply lines. - activity related to sovereign function or not - It has been contended that the service falls under entry 4 of Notification No. 12/2017 -Central/State Tax (Rate) dated 28.06.2017 - Whether reinstatement charges paid to Municipal Authorities would be liable to GST? - Held that: - There is specific entry in N/N. 12/2017-Central/State Tax (Rate) dated 28.06.2017 - from Chapter 99, it is very clear that if any services, including the three services excluded in clauses (a) to (c) of the above entry, are provided by the Government or local authority to any business entity, they would not be eligible for any exemption under GST - the applicant has made a whole lot of arguments to hold that the recovering of charges for the restoration of the street or pavements amounts to a service activity in relation to a function entrusted to a municipality under article 243 W of the Constitution. However, we find that the arguments fail to make a point. There is no other entry in the Schedule contained in the N/N. 12/2017-Central/State Tax (Rate) for services exempted from GST which would cover the impugned transaction. Neither is a specific entry for the impugned transaction in the N/N. 11/2017-CentraI/State Tax (Rate) for services taxable to GST at various rates. In view thereof, the residuary entry no.35 of the N/N. 11/2017-Central/State Tax (Rate) covering “ services nowhere else classified” and attracting GST @18% [9% each of CGST and MGST] would be applicable. Levy of GST - whether access charges paid to Municipal Authorities would be liable to GST? - Held that: - The reinstatement charges apply towards restoration of excavation work on the roads carried out by the various business entities providing services such as gas, telephone, electricity, etc. The Guidelines for Trenching activity-2015 [No:AMC/ES/7725/11 Dated 18.12.2014 - policy guidelines for granting trench excavation permissions to underground service provider Utility agencies and Municipal agencies & the reinstatement of trenches] as provided by the applicant state that in addition to the regular RI charges, access charges for right of way will be recovered by MCGM from all utilities which lay underground services below MCGM roads - This statement helps to understand the position as respects MCGM [Municipal Corporation of Greater Mumbai]. That these charges would be exigible to GST is not doubtful even to the applicant and we agree with the same. To determine whether it is a composite supply by Municipal Authorities, the available information is insufficient as the question posed is in respect of Municipal authorities in general and not any specific Municipal Authority with complete details and therefore is not answered. Both the questions are answered in affirmative.
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2018 (5) TMI 646
Classification of Caesarstone - an article made from artificial stone - MGST Act - whether the product "Caesarstone" imported by the applicant can be classified under HSN Code 2506 or 6810? Held that: - Chapter 25 covers the naturally occurring quartz which has undergone changes without changing the structure of the product. The way the impugned product comes into existence should leave no doubt that the same would not be covered by the Chapter 25 and the Heading 2506. The rules for interpretation of the Customs Tariff would not apply herein as the Chapter 25 specifically excludes goods of the nature as the impugned product - the impugned product would not be covered by the Heading 2506. The entire description as appearing in the Customs Tariff Heading 6810 has been taken for the purposes of the GST entry. It, therefore, means that all item falling in the Customs Tariff Heading 6810 would fall in the description against the Heading 6810 for the purposes of the schedule entry under the GST Act - the Heading covers artificial stone. The impugned product is an article made from artificial stone. It is a product made using artificial or engineered stone. The product certification explains things, beyond doubt - It can, therefore, be understood as to why the impugned product is being cleared under the Heading 6810. We have also found a Ruling in respect of the product classification of Silestone TM (as seen above) agglomerated stone slabs under the Harmonized Tariff Schedule of the United States (HTSUS). The information about the product was thus - The slabs are composed of 93% quartz and 7% resm binder. After 'he slabs are imported. they are sold only to U.S distributors who use then to produce various counter tops. vanities and fireplace surrounds. It was held that the agglomerated quartz sheets are classified under subheading 6810.99.00, HTSUS, which provides for other articles of artificial stone. Ruling:- Caesarstone imported by the applicant is to be classified under HSN code 6810.
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2018 (5) TMI 649
Scope of Supply - supply of such motor vehicles as scrap after its usage - Whether supply of such motor vehicles as scrap after its usage can be treated as 'supply' in the course or furtherance of business and whether such transaction would attract GST? - rate of GST and/or Compensation Cess. Held that: - The disposal of the scrap vehicles for consideration is a sale and section 7 explaining the expression 'supply' covers supply of goods such as sale or disposal made for a consideration. Section 7, further, says that the supply has to be in the course or furtherance of business - The disposal of the cash carrying vans is a transaction in connection with or incidental or ancillary to the business of having a cash management network. As and when the vehicles become scrap, they have to be disposed off and the proceeds therefrom to be identified as income for the business which is reflected in the Profit & Loss Account of the business. Buying new assets and discarding the old and unusable assets is an activity in the course of carrying on of the business. There is a supply of cash vans, which are goods', for a consideration and the transaction is in the natural course of business. The transaction and the provisions are obvious - supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. Rate of GST and Compensation Cess - Held that: - whether the vehicles are sold as scrap and unusable OR sold as old vehicles is not found confirmed from any document. It is generally seen that there is surrender of the RTO Registration Book when the vehicles are disposed off as scrap. Hence, it needs to be ascertained as to whether the vehicles are sold as scrap. For vehicles sold as scrap which does not amount to sale of a vehicle as such, the rate of the material sold as scrap would apply - In absence of the requisite details, the applicant are directed to go through the N/N. 1/2017-CentraI/State Tax (Rate) and N/N. 1/2017-Compensation Cess (Rate), as amended from time to time. Ruling:- The question is answered in the affirmative. As regards rate of GST and/or Compensation Cess, the details being inadequate, the applicant may refer to the Notification No. 1/2017-CentraI/State Tax (Rate) and Notification No. 1/2017Compensation Cess (Rate), as amended from time to time. Input tax credit - whether Input tax Credit is available to CMS Info Systems Ltd. on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap? - Difference of opinion - Held that: - As the Members of the Advance Ruling Authority differ in respect of this question as raised by the applicant, appropriate reference is made to the Appellate Authority for Advance Ruling for hearing and decision on this question - matter referred to Appellate Authority for Advance Ruling.
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2018 (5) TMI 648
Levy of GST - activity of preparing students for entrance exams - whether the services related to providing the coaching for entrance examination will come in the ambit of Goods and Service Tax? - applicant has argued that the word "Education" and "institution" has not been defined in GST Act - N/N. 12/2017- Central Tax (Rate) dated 28/06/2017. Held that: - The applicant runs private institute, Simmple Shukla's Tutorials and is engaged in providing the service of teaching to the students of Class Xlth and Xllth science. This activity prepares the students for entrance examinations related to MBBS, Engineering and other science related examinations. However the institution "Simmple Shukla's Tutorials" is in no way covered in the definition of Educational institution as given in the above notification. The private institute does not have any specific curriculum and does not conduct any examination or award any qualification recognized by any law which would be covered in the above notification, The activity of applicant is not covered by the specific definition provided for interpretation of exemption notification. The education service provided in the case is taxable at the rate of 9 percent under CGST ACT and 9 percent SGST Act - question answered in affirmative.
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Income Tax
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2018 (5) TMI 633
Validity of reopening of assessment - non specification of reasons to believe - Held that:- As examine the documents placed before us namely reasons recorded, objections raised by the assessee and the order of the Department disposing of those objections, we do not find any direct nexus which is brought on record by the Department that on these factors the Assessing Officer believes or Assessing Officer necessitates that there is an income escaping assessment. Most of the wordings in the order disposing of objections of the assessee regarding reasons recorded seems to be arbitrarily worded without any specific finding or basis or even reader of that particular order cannot find a direct link as to why Department has reason to believe that income has escaped assessment so far as assessee is concerned. The objections of the assessee stating that certain wrong facts are recorded that is also not categorically rebutted by the Department. - Decided in favour of assessee.
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2018 (5) TMI 632
Accrual of expenditure - contingent liability which crystallized during the subsequent year - Due to the nonperformance of the contract the principal encashed the bank guarantee and recovered the amount. Assessee claimed the above sum as deduction as business expenditure - Deduction u/s 37(1) - Held that:- It cannot be said that above expenditure is not allowable to the assessee. It is not the case of the revenue that assessee is not engaged in the business of constructing bus shelters. That is the only business of the assessee. The above loss because of an event of the bank guarantee is also incurred by the assessee during the course of the business of the assessee. Therefore, it cannot be said to be capital expenditure even if the assessee failed to create requisite bus shelters. In fact, for that reason only the assessee was to provide the bank guarantee and same was encashed. Therefore, it cannot be said that the above expenditure is capital expenditure in nature. The order of the Hon’ble high court is rendered during the assessment year. Merely because it was to be enforced after 7 days, it cannot be said that the liability has not been crystallized during the year - the liability has been crystallized during the year only in view of the decision of the Hon’ble Delhi High Court, which was rendered during the year. Even otherwise if during the arbitration proceedings an award comes and assessee is also entitled to the benefit on account of allowability of this claim, same would be chargeable to tax under section 41 (1) - Merely because of these reasons, it cannot be stated that the claim of the assessee has not crystallized during the year. We allow the claim of the assessee of ₹ 208 Laces on account of encashment of the bank guarantee by the Delhi transport Corporation for non fulfilment of the work awarded to the assessee which is allowable to it as a business expenditure/loss. - Decided in favour of assessee
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2018 (5) TMI 631
Disallowance of provision for warranty expenses - whether the same is an ascertained liability and has been calculated based on technical estimates? - Held that:- The only dispute is whether the claim made by the assessee is a reliable estimate or not but in any case, it cannot be nil. Qualification in the audit report with respect to quantification is only because of non-availability of the reliable trend for the past years. The assessee has also disclosed in the notes on accounts the details of the warranty expenses. The assessee has also stated that expenditure incurred during the year is not separately identifiable. The lower authorities have not examined these details. The provisions of the warranty expenditure is required to be estimated based on the past experience of the assessee demonstrated on the basis of past warranty liability on similar type of contracts and further it can be proved by incurring the warranty expenditure in subsequent period to the sales. This exercise has not been done either by the assessee or by the revenue. Thus set aside the whole issue back to the file of the Ld. assessing officer with a direction to the assessee to prove before the AO how the warranty provisions have been made by the assessee along with the technical inputs received from the technical team of the assessee Disallowing full credit of taxes deducted at source and taxes paid by the appellant dismissing the grounds raised by the appellant - Held that:- As the amount of tax deduction at source and taxes paid by the assessee is required to be given credit from the tax liability determined by the Ld. AO if they are supported by the necessary evidences, hence we set aside this ground of appeal to the file of the AO with a direction to examine the claim made by the assessee of credit for tax deduction at source and advance tax paid.
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2018 (5) TMI 640
Cancellation of Registration u/s 12AA(3) - Tribunal set aside the cancellation - Held that:- In the present facts, we find that the Tribunal has rendered a finding of fact that the respondent is not carrying on any activity in the nature of trade, commerce or business to be hit by the proviso to Section 2(15) of the Act. This finding of fact has not been shown to be perverse in any manner. Thus, in the present facts, the question for consideration does not give rise to a question of law. Question stands concluded by the decision of this Court in North Indian Association (2017 (3) TMI 37 - BOMBAY HIGH COURT) and Khar Gymkhana (2016 (6) TMI 489 - BOMBAY HIGH COURT) against the Revenue.
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2018 (5) TMI 639
Reopening of assessment - valid service of notice - serving notice to the Chartered Accountant (CA) - Change of address in the PAN - service of notice on the address given in the ITR returned with the mark as "left" - burden of proof that notice was issued - period of limitation - Held that:- Burden to establish that notice under Section 149(1)(b) read with Section 148(1) has been issued to the petitioner was on the Revenue which the Revenue has failed to discharge, as the Revenue has clearly failed to establish that the notice was issued on or before 31-3-2016 on the assessee / petitioner's correct address and it was dispatched on or before 31-3-2016 and it was put to the proper serving officer for serving in accordance with law. Therefore, no hesitation to hold that no notice under Section 149(1)(b) read with Section 148(1) was issued to the petitioner well within the period of limitation on or before 31-3-2016 on the officially notified correct address available in the official record for service of notice to the petitioner which is a jurisdictional fact and condition precedent for initiation of assessment proceeding under Section 148(1) of the IT Act. No hesitation to hold that no notice was served to the petitioner under Section 148(1) of the IT Act and service of notice to the Chartered Accountant of the petitioner Company is not service at all and participation of the petitioner Company by filing return and filing objection to the notice to the reasons to believe cannot be held to be a valid service of notice as held by the Delhi High Court in Chetan Gupta's case (2015 (9) TMI 756 - DELHI HIGH COURT) and, therefore, it cannot be held that the petitioner was served with notice under Section 148(1) of the IT Act - decided in favour of assessee
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2018 (5) TMI 638
Deduction u/s 80-IB denied - appellant did not file its return for the relevant assessment year within the period prescribed u/s 139(1) - non filing return on time - seeking extension of time - Held that:- When the governing provision expressly mandates that no such deductions shall be allowed unless the assessee filed his returns of income “on or before the due dates specified under” Section 139 (1), there is no question of referring to the extended period permitted under Section 139(4) to seek the benefit. Indeed, if the embargo were not as strict as is evident from the relevant provision, the entirety of Section 139 would have been mentioned in the relevant expression in Section 80AC which would have included within its sweep the extended period under sub-section (4) thereof. But in such provision referring only to sub-section (1) of Section 139 of the Act, the reference to the other provisions of Section 139 must be understood to have been excluded. See judgment of Shelcon Properties P. Ltd. [2015 (3) TMI 579 - CALCUTTA HIGH COURT] - Decided against assessee.
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2018 (5) TMI 630
Denying registration granted u/s 10(23C) - Denying the exemption u/s 11 & 12 - violation of mode of investment in terms of section 11(5) by advancing a loan to another charitable trust - Held that:- As per provisions of section 13(1)(d), it is only the income from such investment or deposit which has been made in violation of section 11(5) of the Act, that is liable to be taxed and violation under section 13(1)(d) does not result in the denial of exemption under section 11 to the total income of the trust - Similarly, as per the provisions of section 13(1)(c), it is only the income or value of the property misused by trustee that is liable to be taxed and violation under section 13(1)(c) will not automatically result in denial of exemption under section 11 of total income of the trust. - As regards the provisions of section 13(2), the same being an extension of the provisions of section 13(1)(c) / 13(1)(d), the violations there under will be dealt with on similar lines as the violations under section 13(1)(c) / 13(1)(d) of the Act. On the basis of the above discussions and plethora decisions referred to hereinabove, we are of the considered opinion that Ld.CIT(A) erred in denying benefit available to assessee and registration granted u/s 10(23C) of the Act. For withdrawal of exemption u/s 11 on such funds advanced as loan to another trust sum of ₹ 1,54,40,000/- was a loan given to another Trust. Neither the object of assessee before us has been disputed, nor that of the recipient trust by authorities below. CIT(A) has overlooked the applicability of Sec.13(2)(a) to the facts of present case. Admittedly the money has been advanced as a loan to other trust for which assessee has not received any securities or interest. The said sum has been returned by the other trust during financial year ending on 31.03.2008 to assessee. Authorities below are alleging that these are common trustees and therefore s.13(1)(d) of the Act comes into play. But nothing has been brought on record to establish that the common trustees have substantial interest in the other trust. Thus the amount advanced cannot be held to be in violation of Sec.13(1)(d). Sec.11(5) cannot be applied to present facts as the money advanced is not an investment but a loan. - Decided in favour of assessee.
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2018 (5) TMI 629
Computation of long term capital gain - acceptance of sale consideration - addition u/s 69 - Held that:- The assessee declared long term capital gain of ₹ 2,54,25,861/- and claimed exemption u/s. 54 of the Act in his return of income. According to AO, no compliance was made in response to notices issued u/s. 143(2) and 142(1) of the Act, 1961. The assessee declared capital gain of ₹ 95,38,120/- in the revised return of income. AO found capital gain is under valued capital gain. The AO made addition on account of unexplained cash credit u/s. 69A of the Act. CIT(A) has on an examination of facts at para 4.3 of his order come to conclusion that, the sale consideration of the property is ₹ 3,20,000/-. This could not be contradicted by the ld.DR. Hence, we uphold this finding. In our view the ld. CIT(A) rightly deleted the addition u/s. 69 of the Act. Hence, these grounds of the revenue are dismissed. CIT-A justification in directing the AO to consider the assessee’s claim of exemption u/s. 54 - Held that:- We find that the assessee sold land & building bearing new plot No. 2960, new Khata No. 145 measuring an area of 9.96 dcml. ( approx 6 kathas) situated at Kasidih, P.S Sakchi, Jamshedpur to Shri Jai Prakash Singh for a total consideration of ₹ 3,20,00,000/-, which was accepted by the CIT-A. There is no dispute with regard to sale consideration and receipt of above sale consideration by the assessee from the orders of AO and CIT-A. We are inclined to uphold the finding of the CIT-A in remanding the issue to the file of AO for verification of claim u/s. 54 of the Act. - Decided against revenue
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2018 (5) TMI 628
Estimation of net profit - Rate of estimation of income in the hands of the firm - contention of the learned AR is that while estimating the profit a separate deduction is to be given for interest and salary paid to the partners of the assessee - Held that:- As decided in M/s. Adarsh Construction [2015 (3) TMI 1318 - ITAT HYDERABAD] it is only the method of assessing the income of the assessee firm which either has to be done by accepting the voluntary return filed under section 139(1) or it has to be regularly assessed under section 143(3) or best judgment assessment is to be made under section 144. The final outcome of the assessment of the income of the assessee firm calls for consequential imposition of tax and realisation thereof. The statutory deductions thus which are available to the assessee firm cannot be taken away of snatched away from the firm merely because their books of account have been rejected and best judgment assessment has been made’ Salary and interest, which is given to the partners in terms of the partnership deed, the tax liability of the said amount shifts upon the partners and cannot be taken as tax liability of the firm. The applicability of section 28(v) cannot be excluded in the matter of best judgement assessment in respect of an assessee firm. It was the specific case of the assessee that the partners were working partners and they were entitled to salary and interest, as per terms of the deed in accordance with section 40(b). - Decided against revenue. See Indwell Construction [1998 (3) TMI 121 - ANDHRA PRADESH High Court] Addition made on account of payment of EPF beyond specified due date - Non-payment of employees contribution to the account of Government within due date - Held that:- CIT(A) correctly considering the submissions of the assessee restricted the addition, upto ₹ 20,498/- and allowed the remaining portion of the addition on being satisfied the said contribution was paid before the due date of filing of the return of income in terms of the decision of the Hon’ble Supreme Court in the case of Alom Extrusion Ltd. [2009 (11) TMI 27 - SUPREME COURT ]
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2018 (5) TMI 627
Addition being sundry creditors u/s. 68 - purchases have been accepted as genuine - Held that:- AO is wrong in making the impugned addition on account of sundry creditor, which are related to purchases and the same also accepted by the AO as genuine. Without rejecting the purchases, the sundry creditors cannot be treated as income of assessee. Case of Ms/ Standard Leather Pvt. Ltd. [2016 (9) TMI 1437 - ITAT KOLKATA] to be followed. - Decided in favour of assessee.
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2018 (5) TMI 626
Additional depreciation u/s. 32(1)(iia) on items installed in the various outlets - proof of manufacturing activities - Held that:- As obvious from the financial statement that about 91% of the Revenue is collected by the assessee from manufacturing activities and 9% thereof is earned from restaurant. Also, the equipments or plants are installed at those premises. AO has not brought any material on record to show that those plants are installed at any office premises or any residential accommodation in the nature of guest house. It is also a matter of common knowledge that Air Conditioners are required at manufacturing outlets to keep the sweets also in proper condition over and above refrigerators. Electricity distribution penal also cannot be said to be installed at residential place. No material is brought on record by the AO that the outlets do not manufacture sweets. It is of paramount importance that the AO has granted normal depreciation on all those items holding them to be plant and machinery. Assessee has satisfied the conditions for additional depreciation. No justification to interfere with the order of the CIT(A) for allowing additional depreciation, as claimed by the assessee. - Decided in favour of assessee.
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2018 (5) TMI 625
Rejection of application for approval u/s 80G - rejection of claim as assessee society has sufficient disposable funds available with it and no reason was given for seeking funds by way of donation, as appropriate - proof of charitable activities - Held that:- The sufficiency of funds available with an institution seeking the approval is no where mentioned as condition to be looked into before granting approval. Rightly pointed out by the assessee the primary conditions to be fulfilled are that it should be established for charitable purpose, carrying out only charitable activity and should not be for the benefit of any caste or religion. The facts emerging from the order of the CIT(E) itself is that the assessee society is registered u/s 12AA of the Act as a charitable society entitled to claim exemption u/s 11 of the Act and has also been granted approval u/s 10(23C)(vi) of the Act making it eligible to claim exemption under the said section as university/institution established wholly for the purpose of imparting education and not for the purpose of generating profits. CIT(E) has not given any cognizance to the above facts and has in fact not examined the eligibility of the assessee to grant of approval vis a vis the conditions set out in section 80G(5) - Restore the issue back to the Ld.CIT(E) to reconsider the application for grant of approval strictly in the light of the conditions set out in section 80G(5) - Decided in favour of assessee for statistical purposes.
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2018 (5) TMI 637
MAT - making adjustments for working the book profit u/s 115JB by adding the Advance Against Depreciation (AAD) to the book profit? - Held that:- We are of the considered view, which fact is not disputed, that the same are squarely covered by the judgment in National Hydroelectric Power Corporation Ltd. vs. Commissioner of Income Tax(2010 (1) TMI 281 - SUPREME COURT) as held AAD was an income received in advance. It was a timing difference. Therefore, clause (b) of Explanation 1 to section 115JB (2) of the act was not applicable to AAD. Provision for leave encashment - whether is an ascertained liability and hence not to be included to book profit? - Held that:- The matter is squarely covered by the judgment rendered in Commissioner, Income tax vs. H.P. Tourism Development Corporation Ltd. [2013 (6) TMI 97 - HIMACHAL PRADESH HIGH COURT] as held that the provision for meeting the liability for encashment of earned leave by the employee is an admissible deduction. Eligibility to claim deduction u/s 80IA - excess provisions for bonus and sundry balance written back treated as income derived from the eligible business of generation of power - Held that:- No substantial question of law arise for consideration for the reason that the matter has been remanded back by the appellate authority to the Assessing Officer. As such, as mutually agreed on this limited question, the matter be considered by the appropriate authority now dealing with the issue pursuant to an order of remand. Allowance of deduction u/s 80IA - treating the interest income earned by the assessee from HPSEB as income from generation of power and hence eligible income - Held that:- The matter is squarely covered by the judgment rendered in Commissioner of Income tax vs. Jai Prakash Hydro Power Ventures Ltd. [2017 (5) TMI 1560 - ALLAHABAD HIGH COURT]
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2018 (5) TMI 636
Rate of depreciation on printers - to be allowed at normal rate or at enhance rate @60% - whether the printers would be included within the term 'computer' as contained in old Appendix I Clause III(5)? - entry in the depreciation table specifically says, computers including computer software - Held that:- It is a claim for depreciation and if two views are possible, one which is in favour of the assessee should be preferred. Going by the usage of the equipment purchased by the petitioner, we have to take a decision. In paragraph 6 of the order passed by the Commissioner of Income Tax (Appeals), it has been stated that it can be inferred that the machines computer printers under consideration can either be called computers-printers, since a lot of independent functions done by the computers are done by these printers and they can be called an integral part of the computer system. Therefore, the Commissioner of Income Tax (Appeals) came to the conclusion that it should be treated as part of the computer and an accessory to the Computer. This factual finding cannot be dislodged by us, as no material has been placed by the Revenue before this Court. The claim by the assessee at 60% is acceptable. Thus, for the above reasons, we find that since in respect of percentage on depreciation claimed in respect of the very same machinery has been permitted for the earlier years and affirmed by the Division Bench, the the Revenue cannot take a difference stand. - Decided in favour of assessee.
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2018 (5) TMI 635
Addition made for the broken period as undisclosed income - Estimate of proportionate income on the basis of the income disclosed for the AY 1999-2000? - double taxation for same block assessment year - Held that:- It may not be necessary for us to decide the questions of law involved in these Appeals, when the apprehension of the assessees being, they should not be taxed twice for the same block assessment period. Thus, it would be sufficient for us to clarify this aspect of the matter. Question left open with a direction to the Assessing Officer to ensure that the assessees should not be taxed twice for the same block assessment period from 01.04.1988 to 20.09.1998. Addition of membership fee paid to Andhra Club as undisclosed income - whether the payment effected by them for acquiring the membership in a Social Club should be allowed? - Held that:- After considering the factual matrix and re-appreciating, what was placed before the Commissioner of Income Tax Appeals, in our opinion, rightly held that the personal expenses cannot be allowed as business expenditure, more so, when there was no evidence so as to prove that the membership of the Social Club was acquired for entertaining the customers. Thus, the second question of law, involved answered against the appellant therein.
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2018 (5) TMI 634
Review petition - “mistake or error apparent” - appeals have been decided taking into account the issue of depreciation of assets and other grounds have not been considered - Held that:- When the appellant has not addressed this Court on the issue, this Court has passed an order on the issue of depreciation of assets. There is no error apparent on face of record warranting review. Apex Court in the case of Haridas Das Vs. Usha Rani Bank (Smt) and Ors. [2006 (3) TMI 686 - SUPREME COURT] has held that rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason. In the present case, there is no error apparent on the face of the record and the petitioner in fact under the guise of review is challenging the order passed by this Court, which is under review. In the present case the petitioner has not been able to point out any error apparent on the face of the record, on the contrary this Court has decided the case on merits.
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2018 (5) TMI 599
Short deduction u/s. 192 - 'assessee in default' u/s. 201(1) - allowing exemption u/s. 10(5) towards the reimbursement of LTC/LFC claims of its employees - Held that:- In the present case the employees of the assessee-Bank have travelled outside India and raised claims of their expenditure incurred therein. There is no dispute that the assessee-Bank may not be aware with the plan of travel of its employees initially, however, at the time of settlement of LTC/LFC bills, the employees should have placed comprehensive details before the assessee-Bank as to where they have travelled/visited and raised the claims, that means to say, the assessee-Bank was well aware of the fact that its employees have travelled in foreign countries too by availing LTC/LFC for which they were not entitled for exemption u/s. 10(5). Such being the scenario, the assessee-Bank cannot now plead that it was under the bonafide belief that the amounts claimed were exempt u/s. 10(5). Thus, the Assessing Officer(TDS) was within her domain to term/charge that the assessee- Bank was under obligation to deduct TDS on such payments. Since the assessee-Bank had failed to do so, the A.O.(TDS) had rightly treated the assessee an 'assessee in default' u/s. 201(1) of the Act. The assessee had relied on various case laws for the proposition that its estimate is bona fide and it cannot be held to be an 'assessee in default' u/s. 201(1) of the Act. This contention of the assessee is without legal basis, since the assessee had made no effort to prove how its belief was formed that such foreign travel expenses would come within the ambit of sec. 10(5). Respectfully following the ratio of the decision in the case of Syndicate Bank (2017 (4) TMI 533 - ITAT BANGALORE), we dismiss the appeals filed by the assessee.
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2018 (5) TMI 624
Disallowance on account of service tax payable u/s 43B - assessee has not debited the expenditure as service tax to the profit and loss account - recording of turnover of services without inclusion of service tax in violation of section 145A - Held that:- Assessee has to pay service tax within due date as set out under the above provisions either by way of cash/cheque or by way of availing CENVAT credit as per Rules as stated above, but the assessee did not do so. The liability of service tax had also arisen as per the point of Taxation Rules. As per method of accounting, the assessee has also not included the service tax received by him in the turnover. In fact, the assessee was legally obliged to declare its turnover inclusive of service tax received. The assessee cannot be exonerated from its liability by saying that he accounted for the service tax received separately. The ld. CIT(A) has rightly disallowed the same u/s. 43B of the IT Act. - Decided against assessee.
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2018 (5) TMI 623
Levy of penalty u/s 271D r.w.s. 269SS - assessee has received a payment of ₹ 50 lakhs by way of cash as a loan from directors - Held that:- Both the Directors have contributed the share application money to the assessee company in the year 2011 and subsequently, the shares were allotted to the share applicants. This is evident from the balance sheet of the assessee. D.R. could not controvert the fact that the assessee company had received the share application money and allotted the shares subsequently. Case of ITO Vs. Sunder Synthetics (P) Ltd [2015 (11) TMI 918 - ITAT HYDERABAD] followed. - Decided in favour of assessee.
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2018 (5) TMI 622
Validity of reopening of the assessment - addition on account of sale proceeds of shares of M/s Talent Infoways Ltd. by treating the transaction as bogus - claim of exemption u/s 54F of the Act against the long term capital gain arising from sale of shares M/s Talent Infoways Ltd. - indepedent application of mind by AO - Held that:- Sufficiently of correctness of material is not required to be considered at the stage of initiation proceeding u/s 147/148 of the Act. Therefore, if the material available with the AO is prima facie sufficient to form the belief that the income chargeable to tax has escaped assessment then it is immaterial whether the said material subsequently found to be not sufficient for making the addition, the commencement of reassessment proceeding cannot be held as invalid if the same is sufficient to form the belief at the time of initiation. Accordingly, hold that the Assessing officer has applied his mind on the relevant material comprising of return of income filed by the assessee, the transaction of purchase and sale of shares, claim of long term capital gain as well as deduction u/s 54F of the Act in light of information received from DDIT Udaipur along with the report of the DDIT Mumbai - Decided against assessee Undisclosed income - bogus share purchases - Held that:- This matter requires a proper investigation and verification of the relevant facts particularly the prevailing market price or fair market price of the shares of M/s Talent Infoways Ltd. at the time of alleged purchase as well as at the time of alleged sale of shares. Further, if the shares were dematerialized before the same were sold then the holding of the shares cannot be disputed as at the time of dematerialized and the purchase consideration can be considered on the date of dematerialization after considering the prevailing market price or fair market value of the shares on that date. Since, the transfers of purchase and sale are all market transactions and therefore, a proper investigation and inquiries is needed in this case. Accordingly the issue is set aside to the record of the AO for conducting the proper inquiry and for adjudication of issue without relying on the statement of Shri Mukesh Choksi alone.
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Customs
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2018 (5) TMI 620
Claim of Duty Drawback on supplies from DTA to EOU - deemed export drawback - supplier being claim cenvat credit, the method / route for claiming duty drawback - via fixation of Brand Rate - or via All Industry Rate of Duty Drawback - The petitioner is insisting that it is entitled to claim the duty drawback as per Column 'B' of the All Industry Rate of Duty Drawback Schedule notified by the Department of Revenue, whereas, the respondents are of the view that the petitioners can obtain refund only after submission of documentary evidence in respect of the customs duty paid and getting the same fixed through the route of brand rate fixation. - Scope of policy circular dated 30th October, 2013 Held that: - Circular dated 30th October, 2013 seeks to interpret the Rules to mean that an exporter once having availed the All Industry Rate of drawback at the time of export, cannot file an application for determination of the Brand Rate of drawback under Rule 7. As discussed earlier, on a plain reading of the Drawback Rules, we do not find any such prohibition as is sought to be culled out by the CBEC in its Circular dated 30th December, 2011. The CBEC whilst clarifying the said Drawback Rules, has imposed limitations/restrictions which are clearly not provided for in the Rules and has the effect of whittling down the Drawback Rules. Under the garb of clarifying the Rules, the CBEC cannot incorporate a restriction / limitation, which does not find place in the Drawback Rules. In the applications made by the petitioner, it has very clearly stated that it has purchased partial polyester yarn during the period for which the application for duty drawback is made by making payment of excise duty and education cess from the two suppliers. That is treated as deemed export and entitled for benefit of duty drawback at All Industry Rate. The drawback is 4% as specified in Box 'A' when no CENVAT Credit is availed and 4% in Box 'B' when CENVAT Credit is availed. When the same rate is presented in Box 'A' and 'B', the exporter is entitled for drawback and the issue of input credit availed or not is not relevant. Once there was no dispute about the entitlement of the petitioner, then, we do not see why the petitioners were denied the benefit. The petitioner has also pointed out, and to our mind, rightly, in the application as also the grounds of this petition that they are otherwise entitled to drawback at the rate mentioned in Column 'B'. That could not have been denied by relying upon the policy circular dated 30th October, 2013 and relying upon Para 805 of FTP 2009-2014 In any event, the rejection is not in tune with the policy and the HBP. An unnecessary and uncalled for controversy was generated only because of the route chosen by the petitioner. We do not see how merely for this alleged fault or deficiency could the whole claim have been denied. The conclusion of the respondents that the refund of duty drawback for customs duty on inputs can be made only by way of brand rate of fixation and hence, the claim for refund as per Column 'B' of the All Industry Rates of Duty Drawback Schedule is rejected cannot be sustained. Petition allowed - decided in favor of appellant.
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2018 (5) TMI 619
Demand of education cess - There is no issuance of SCN - Held that: - The provisions of Finance Act, (2) 2004 relating to levy of education cess on excisable goods provides that the provisions of Central Excise Act, 1944 and the rules made thereunder, would be applicable for any dispute arising on levy and collection of education cess - the lower authorities should have issued a show cause notice to appellant before proceeding ahead in the matter. The appeal is disposed of by way of remand to the Adjudicating Authority to reconsider the issue afresh - appeal allowed by way of remand.
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2018 (5) TMI 618
Refund claim - doctrine of unjust enrichment - provisional assessment - Held that: - The amendment to Section 18 of the Customs Act 1962 as regards doctrine of unjust enrichment will apply to the assessments finalised under Section 18 was incorporated on 13.07.2006. The applicability of these provisions of unjust enrichment for the consignments imported and put on provisional assessment prior to that date was because of litigation before various judicial forums - appeal dismissed - decided against Revenue.
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2018 (5) TMI 617
Liability of interest on belated refund - relevant date - adhoc exemption for import of TMBP coils at concessional rate of duty. Held that: - the said refund claim is correct and needs to be accepted as the Apex Court in the case of Ranbaxy Laboratories Limited [2011 (10) TMI 16 - Supreme Court of India] has settled the law which holds that interest has to be paid to a refund seeker if the refund is not sanctioned within 3 months from the date of filing of the said claim - the lower authorities directed to grant interest on appropriate rate to SAIL in accordance with the law - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 616
Valuation - rejection of transaction value - import of Desk top Board classic series - the quantity mentioned in the invoice did not tally with the actual description of the goods in respect of the Intel core duo processors - Held that: - On scrutiny of the NIDB data available in respect of contemporaneous imports, the values as mentioned above are rightly adoptable for redetermining the value of the impugned goods in terms of Rule 5 of the Customs Valuation Rule, 1988 - the due consideration was shown towards aspects like physical characteristics, quantity, make, model, sale at the same commercial level. In view of these facts, the adoption of value of identical goods as discussed in the show cause notice is upheld. Since there is misdeclaration of value; the confiscation of goods ordered is also upheld, and redemption fine in lien of confiscation seems to be in consonance with the numerous decisions of the Tribunal, accordingly, the confiscation is upheld, as also the redemption fine imposed. Penalty u/s 112 of CA - Held that: - the ends of justice would be met, by upholding the penalty but the same is reduced to ₹ 3 lakh from ₹ 28,10,331/-. Appeal disposed off.
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2018 (5) TMI 615
Penalty u/s 114 and 114AA of the Customs Act, 1962 - wilful acts of omission and commission of misdeclaration of the value - Held that: - the Adjudicating Authority has not been able to pinpoint specifically the role attributable to appellants herein to hold them on charge of abetment of misdeclaration - Similar issue had come up before the Tribunal in the case of Somaiya Shipping Clearing Pvt. Ltd., [2005 (12) TMI 151 - CESTAT, MUMBAI], wherein the Tribunal held that penalty under Customs Act cannot be imposed on CHA and its directors in case of misdeclaration of value and description if no role is found in such contravention - penalty cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 614
100% EOU - Violation of import conditions - import of capital goods and raw materials - demand alongwith penalties - personal penalties on Shri A.G. Subbarayan, AGM, Nagarjuna Aqua Exports Limited - granting depreciation to the main appellant in respect of the demands raised on capital goods. - Held that:- in respect of clearances of prawns to DTA, without payment of applicable duties, we hold that during the period upto 11.05.2001, the excise duty on sale of shrimp seed was chargeable under main section 3(1) of Central Excise Act, 1944 and during the period till 11.05.2001, excise duty was nil - the demands raised on point No. 1, to the extent they are for the period prior to 11.05.2001, are set aside and for the period post 11.05.2001, demands are confirmed as provisions of section 3(1) of Central Excise Act, 1944 were amended to hold that any goods brought to any other place are liable to Central Excise Duty. - This is the law which has been settled by Hon’ble Apex Court in the case of NCC Blue Water Products Limited. [2010 (9) TMI 13 - Supreme Court of India] Clearance of shrimp seed to non DTA - It is an admitted fact that shrimp seeds which were cleared by utilising such material was cleared in DTA - the demands confirmed by the adjudicating authority as customs duty on the inputs is correct and in consonance to the law. Demand of customs duty on the capital goods not found in the factory premises - Held that: - there is nothing on record to show that the said goods were stolen or washed away during flood. In the absence of any evidence, we are of the view that the demands confirmed by the adjudicating authority needs to be upheld. At this juncture, Revenue’s appeal for enhancing the said demands on the ground that depreciation granted by the adjudicating authority seems to be erroneous as the capital goods were not found in the factory premises, is an argument which needs to be rejected as there is no dispute that these capital goods were brought into EOU as per notification No. 196/94 - Cus, installed and were used. If that be so, the depreciation allowed by the adjudicating authority seems to be in consonance with the Board Circular on the point. In view of this, we find no merits in the appeal filed by Revenue. Time limitation - Held that: - appellant being an 100% EOU had given an undertaking and executed a bond for adhering to the conditions of the N/N. 196/94 and as recorded, has violated the conditions - argument on limitation is rejected. Confiscation and redemption fine upheld - penalty reduced. Regarding personal penalty - Held that:- appeal stands abated due to demise of the individual on 13.09.2006 - appeal disposed off as abated. Appeal disposed off.
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Corporate Laws
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2018 (5) TMI 621
Winding up petition - outstanding eligible debt - Held that:- The settled legal position is that the debts claimed should be payable by the respondent company. It is only where the respondent company raises a bona fide dispute then no winding up petition would lie. As noted the respondent company has failed to show any bona fide dispute. Accordingly, admit the present petition and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers ‘Statesman’ (English) and ‘Veer Arjun’ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing.
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Insolvency & Bankruptcy
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2018 (5) TMI 641
Misconduct by Insolvency professional - Held that:- Ms. Ruia has engaged in acts that have brought disrepute to the noble profession of IP and severely compromised her status as a fit and proper person. The overall conduct of Ms. Ruia, is not unbecoming of an IP. The DC concludes that Ms. Ruia has contravened the provisions of clauses 1, 2, 5, 10, 12, 24, 25 and 27 of the Code of Conduct for Insolvency Professionals under the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 read with regulation 7(2)(b) of the said Regulations and section 20 of the Code. Ms. Ruia has repeatedly misled the stakeholders, the Board and the DC. She has compromised her status as a fit and proper person and damaged the reputation of the profession. Her conduct, which is violation of various provisions of the law, as explained above, cannot be ignored. The DC, however, notes that Ms. Ruia is new to the insolvency profession and she has stated that till date she has not undertaken any process under the Code. Disciplinary Committee, in exercise of powers conferred under section 220 (2) of the Code read with sub-regulation (8) of regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby suspends the registration of Ms. Bhavna Sanjay Ruia, Insolvency Professional [Registration No. IBBI/IPA-002/IP-N00371/2017-2018/11065] for a period of one year. It sincerely expects that Ms. Ruia will use this one year to strengthen her competency and ethical standards.
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2018 (5) TMI 644
Corporate insolvency process - ‘Financial Creditor’ has already filed application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Authorised Representative of the ‘Financial Creditor’ has not signed Form 1 of the Insolvency and Bankruptcy Application - Held that:- In this case, as default is apparent and the Adjudicating Authority is satisfied that a default has occurred, the application being complete, the Adjudicating Authority rightly admitted the application. In the present case, as the Chief Executive Officer of the Bank has signed Form 1, the application under Section 7 of the ‘I&B Code’ cannot be rejected. We find no merit in this appeal. It is accordingly dismissed.
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2018 (5) TMI 643
Corporate Insolvency Resolution Process - outstanding debt - Held that:- The Operational Creditor has complied with Section 9(3)(b)&(c) of the I&B Code, 2016, by filing Affidavit wherein, it has been deposed that the Operational Creditor has not received any notice of dispute regarding the pending amount from the Corporate Debtor. The Bank certificate issued by the Axis Bank dated 22.08.2017 has also been placed on record which is placed at page 81 of the typed set filed with the Application. The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Authority is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt claimed by the Operational Creditor. Therefore, appliction is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The moratorium is declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process.
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2018 (5) TMI 642
Corporate insolvency process - Whether the respondent succeeded in proving existence of a genuine dispute as alleged in the reply and whether there is existence of a dispute between the parties? - Held that:- The e-mail admittedly received by the applicant does not prove raising of any dispute regarding the quality of the goods received and accepted by the corporate debtor, but it indicates an apprehension of the debtor in regards rejection of the goods in turn supplied to RIL. There is no supporting proof to prove that RIL has rejected the alleged goods supplied to it. It is in the reply notice the corporate debtor raised objections regarding its liability. No pre-existing dispute established in this case on the side of the corporate debtor. The Corporate Debtor is therefore, found does not qualify within the meaning of the word ‘dispute’ and the objection is mere objection raising a dispute for the sake of dispute and /or unrelated to clause (a) or (b) or (c) of sub-section 6 of section 5 of the ‘I & B Code’. It is observed that the claim of the dispute was vague and motivated to evade the liability. The objections to the claim put forward by the corporate debtor being not sustainable and since the ingredients as provided under section 9(5) (a to e) are satisfied by the applicant for admission of this petition under section 9 of I&B Code it deserves to be admitted. Accordingly, the application is hereby admitted for initiating the Corporate Resolution Process and declare a moratorium and public announcement as stated in Sec.13 of the IBC, 2016
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Service Tax
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2018 (5) TMI 612
Refund of unutilized CENVAT credit - export of service under the category of BAS - Place of Provision of Service Rules - Held that: - In view of the various decisions relied upon by the appellant, the services rendered by the appellant under the category of BAS is Export of Service and therefore, the appellants are entitled to refund of CENVAT credit - credit allowed. Refund also denied on account of “inconsistency in the computation of amount eligible for refund” - Held that: - the original authority has not applied the formula in a correct manner on account of which the refund amount has been substantially reduced - for the subsequent period, the original authority has correctly applied the formula to determine the eligibility of refund and those orders are on record produced by the appellant - the original authority will reconsider and apply the correct formula for the purpose of determining the refund claim of the appellant - matter on remand. Refund claim - Event Management Service - Real Estate Agents - Supply of Tangible Goods services - Business Exhibition Service - Convention Services - denial on account of nexus - Held that: - Event Management Service falls in the definition of „input service‟ as has held by many decisions of the Tribunal and the High Court - reliance paced in the case of Endurance Technologies Pvt. Ltd. vs. CCE [2013 (8) TMI 601 - CESTAT MUMBAI]. As far as the “Real Estate Agents” and “Supply of Tangible Goods” services are concerned, the learned counsel did not press for these services, being small amount. Business Exhibition Service - Held that: - this service falls in the definition of „input service‟ as it is integrally connected with the output service - credit allowed. Convention Services - Held that: - this is also related with the business of the company and fall in the definition of „input service‟ as held in the case of IBM India Pvt. Ltd. vs. CCE [2014 (10) TMI 452 - CESTAT BANGALORE]. Refund claim also denied on the ground of procedural non-compliance - Held that: - the appellants have submitted the invoices and they have annexed the copies of the invoices along with the appeal papers but the same were not considered by the authorities and the appellant is still ready to produce the invoices if the matter is remanded to the original authority - matter on remand. Refund also rejected on the ground that the “invoices were addressed to unregistered premises” - Held that: - the decision of the Karnataka High Court in mPortal India wireless Solutions P. Ltd. vs. CST, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] wherein it has been held that registration with the department is not a pre-requisite for claiming the CENVAT credit - refund allowed. Refund of ₹ 30,415/- were rejected on account of “apparent error in the Order-in-Original” - Held that: - this is an apparent error and the appellant is entitled to refund of this amount ₹ 30,415/-. For the purpose of quantification of the refund, the matter is remanded back to the original authority to verify the invoices and other documents and thereafter decide the refund claims - appeal allowed by way of remand.
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2018 (5) TMI 611
Supply of Tangible Goods Service - renting of trucks to the lessees - Held that: - the appellant have given the trucks to the lessees on monthly rental charges. The appellant did not provide any facility such as driver, repair and maintenance, fuel etc. Once the truck is rented out the entire possession and control is of the lessees and during the renting period there is no interference of the appellant. Admittedly during the lease period of truck the right of possession of truck and effective control have been transferred to service recipient, therefore the service does not fall under the Supply of Tangible Goods Service - demand do not sustain. Extended period of limitation - Held that: - the adjudicating authority confirming the demand for the extended period is clearly beyond the show-cause notice, hence the demand for the longer period could not sustain. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 610
Interest in credit reversed - penalty - case of appellant is that the appellant had not utilised the CENVAT credit which was subsequently reversed on their own therefore the interest is not chargeable on the said CENVAT credit - time limitation - Held that: - In the present case the CENVAT credit pertaining to the period 2004-08 was reversed by the appellant in 2008 and declared in the ST-3 return, there was no suppression of fact on part of the appellant, therefore even for interest the SCN should have been issued within the normal period of one year from the date of reversal of CENVAT credit. Penalty - Held that: - though the appellant have availed the credit but they on their own reversed it and declared in their ST-3 return, in that case even the SCN for demand under Section 73(1) should not have been issued - there is no question of penal provision. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 609
100% EOU - Levy of service tax - reverse charge mechanism - business auxiliary services - Held that: - the issue is settled in favour of the assessee in the case of Hon’ble Bombay High Court’s judgment in the case of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service - the demand of service tax, interest and penalties for the period prior to 18.4.2006 are liable to be set aside. For the period after 18.4.2006, there is no dispute that the appellants have paid the appropriate service tax along with interest on 7.11.2007 i.e. before the issuance of show-cause notice. In such a situation, when the full service tax and interest thereon has been paid before the issuance of show-cause notice, demand cannot sustain. Penalty set aside. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 608
Valuation - gross amount of remuneration or commission received - Held that: - the issue of whether reimbursement of expenses by the service provider on behalf of the service recipient is no longer res integra in view of the judgment of the Larger Bench in the case of Sri Bhagavathy Traders [2011 (8) TMI 430 - CESTAT, BANGALORE], where it was held that What are costs for input services and inputs used in rendering services cannot be treated as reimbursable costs. Since the actual expenses made require verification as correctly pointed out by the learned AR, the matter is remanded back to the adjudicating authority to examine the matter afresh - appeal allowed by way of remand.
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2018 (5) TMI 607
Penalty - interest on delayed payment - tax paid belatedly after being pointed out, but interest on such delayed payment not paid - reason for such delay shown by appellant is financial difficulty - Held that: - The ground raised by the appellant that they had financial difficulties, on account of which the appellant could not pay the service tax, is not a valid ground as they have collected the service tax from their customers - the Tribunal in the case of Triton Communication Pvt. Ltd. [2005 (7) TMI 595 - CESTAT, MUMBAI] has held that financial crisis is not a reasonable cause for failure to pay tax. Appeal dismissed - decided against appellant.
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2018 (5) TMI 606
Commercial Training or Coaching Services - amount received from grants-in-aid - liability of service tax - Held that: - It has been consistently held by higher appellate forums that there can be no liability to service tax in respect of training programmes conducted on the basis of grants-in-aid received by the institutions set up by the Government for specific objectives - The Tribunal in the case of Apitco Ltd. Vs CST Hyderabad [2010 (7) TMI 176 - CESTAT, BANGALORE] has set aside the demand of service tax holding that service tax is not leviable on the grants-in-aid received by the assessee from the Central and State Governments given as project implementing agency of the Government - Appellants should be given suitable opportunities to present their case in a personal hearing and should also be permitted to submit additional submissions or evidence, if any, in support of their case. Penalties - Held that: - there is no gainsaying that the entire issue has arisen due to bonafide belief of the appellants that being a national institute set up by the Government their activities would not be exigible to service tax - no malafide or devious intent can be ascribed to the appellant for failure to discharge tax liability in respect of the above services to the extent applicable - penalties set aside. Appeal disposed off.
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Central Excise
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2018 (5) TMI 605
Unjust enrichment - provisional assessment - Validity of SCN - Whether tribunal is correct in holding that bar of unjust enrichment is not legally applicable to the provisional assessment cases before amendment to Rule 9B? Held that: - the entitlement to refund and finalization of the provisional assessment under Rule 9B of the Central Excise Rules, 1944 is independent from the provisions of refund under Section 11B of the Central Excise Act, 1944. Even if the amendment made by the notification 45/99 with effect from 25.06.1999, is noted, only the procedure established under subsection 2 of Section 11B of the Central Excise Act has been made applicable to the refund arising out of the finalization of the provisional assessment under Rule 9B of the Central Excise Rules, 1944. The procedure regarding unjust enrichment of finalization of provisional assessment will be applicable to the provisional assessment made after 1999 and not before that date as the proviso to Rule 9B in the form of sub Rule 5 did not have a retrospective effect. The doctrine of unjust enrichment therefore would not be attracted to the refunds pertaining to the finalization of the provisional assessment for the period prior to 1999 and sub Rule 5 to Rule 9B of the Central Excise Rule, 1944 will not operate retrospectively. In the present case the period in question is 1998-99 and the assessment was finalized on 04/06/2001. Applying the aforesaid principle, the principle of unjust enrichment could not be made applicable. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 604
Valuation of physician samples which are distributed free as part of marketing strategy, or as a gift or donation to doctors - Held that: - the issue has been examined in the case of Blue Cross Laboratories [2018 (3) TMI 619 - CESTAT MUMBAI], wherein identical submissions were examined, and it was held that Since no transaction value available, the assessment cannot be done under Section 4 (1) (a) and the assessment has to be done under Section 4 (1) (b). The assessment cannot be done under Section 4A as the said goods are not marked with MRP. Demand in so far as relates to clearance of physician’s samples is sustained - appeal dismissed - decided against appellant.
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2018 (5) TMI 603
CENVAT credit - inward freight - denial on the ground that appellant has availed CENVAT credit before the payment of service tax to the Government of India - Held that: - in the absence of any dispute that appellant has discharged the tax liability as per the provisions of service tax rules and there also being no dispute as to eligibility to avail CENVAT credit of the said service tax payable by them under reverse charge mechanism, availing CENVAT credit before few days in advance is only a procedural lapse - credit cannot be denied on this basis. Extended period of limitation - Held that: - the SCN was issued to the appellant by invoking the extended period while it is on record that appellant had regularly filed the monthly returns with the authorities indicating there on the availment of CENVAT credit for particular month - demand is time barred. Penalty - Held that: - since demand is time barred, penalty also do not arise. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 602
CENVAT credit - inputs - cement, steel, corner board, paper carrier, edge protector etc - 50% credit on capital goods - Held that: - as regards inputs, paper carrier rope is a consumable during the manufacturing activity of paper in the appellants factory - Corner board is used during the paper handling process - CENVAT credit on these inputs eligible. CENVAT credit on capital goods - entire credit availed in first year itself - Held that: - When there is no dispute as to the fact that they are eligible to avail CENVAT credit on the capital goods, at the most, the lower authorities could demand interest from the appellant for the CENVAT credit availed in excess in the first year but cannot deny the CENVAT credit equivalent to 50% of the amount involved. No penalty is required to be imposed on the appellant. Appeal disposed off.
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2018 (5) TMI 601
CENVAT credit - appellant had not received the goods of the description mentioned in the duty paying documents of the registered dealers - Held that: - The description given in the registered dealer invoice in the column of manufacturer tallies in the description given in the excise invoice in the registered dealers invoice and the description given in the commercial invoice is in accordance with the purchase order number reflected on all the documents - appellant cannot be put to any further strict proof as to call for the documents received by the dealer from the manufacturer and tally the description mentioned in the invoices raised by the registered dealer etc. - credit allowed. Time Limitation - Held that: - even if the records are audited, audit party will confine its findings to the cenvatable invoice and would not go into the documents like inward register and delivery challan and the audit party presumed that CENVAT invoice would tally with the physical description of the goods. Suffice to say that these findings are not in consonance with the law - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 600
Revenue neutrality - un-denatured alcohol/ethanol - classification of goods - Held that: - It can be seen that appellant had discharged more duty on un-denatured alcohol. If it is the case of Revenue that duty should not have been paid on un-denatured alcohol, then the amount which has been collected by Revenue needs to be refunded to the appellant as the amounts retained are not in accordance with the law - Since appellant’s Counsel is not pressing the point of classification of ethanol on the ground that appellant has already discharged the duty on final products un-denatured alcohol which they should not have, we hold that due to revenue neutral situation, entire case has become one of academic exercise of no consequence. Duty on captively consumed molasses - Held that: - appellant could have entertained the bona fide belief that they need not discharge duty on captively consumed molasses as they were paying duty on un-denatured alcohol/ethanol. Extended period of limitation - penalty - Held that: - there was a stand off between the appellant and department as to discharge of duty liability on un-denatured alcohol/ethanol and it was categorically disclosed in the periodical returns filed with department tends credence to plea that extended period could not have been invoked - the entire issue was that of mis-interpretation, hence penalty imposed on the appellants are unwarranted. Demand set aside - appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (5) TMI 613
Jurisdiction to award compensation - whether the CIC had the jurisdiction to award compensation under Section 19(8) of the Act for unjustified incarceration? - Held that: - It is at once clear from the scheme of Section 19 of the Act that the provisions of section 19(8) of the Act are an adjunct to the power of the CIC or the SIC to consider the appeal against the decision of the FAA. Such power is relatable to the question of furnishing the information (or denial thereof) in accordance with the provisions of the Act. The provision of Section 19(8)(b) of the Act duly empowers the CIC or the SIC as an appellate authority to compensate a complainant for any loss or other detriment suffered. The CIC has no jurisdiction to enter into the controversy whether respondent no.1‟s detention for the extended period was justified or not. This controversy is completely alien to and outside the purview of the Act. Petition disposed off.
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