TMI Tax Updates - e-Newsletter
May 16, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Taxabilitiy of Undisclosed income found during search - it is but natural that if any concealed income has been found at the time of search and survey, it has to be distributed among all the family members who were carrying on business. - SC
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Income Tax:
Rejecting application seeking exemption u/s 80G(5)(vi) - Carrying out the activities outside India - CIT(E) was correct in denying the approval under section 80(G)(vi) in absence of approval of competent authority under section 11(1)(c) - AT
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Income Tax:
Entitlement to challenge the validity of initiation of proceedings u/s 147 in which challenged the validity of order passed u/s 263 - the assessee is always obliged to prove the receipt of share capital with premium etc. to the satisfaction of the AO, failure of which calls for addition u/s 68 of the Act. - AT
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Income Tax:
Capital gains - LTCG or STCG - though the assessee claimed to have converted the asset in to investment in books of accounts, it continued to claim the maintenance expenses as business expenditure. Even otherwise also from the date of conversion of the asset it was held as capital asset in the hands of the assessee for less than 36 months - To be taxed as STCG - AT
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Customs:
Valuation - second hand machine - Cone Machine - Chocolate Depositing Plant and Lentil Plant - The quantum of redemption fine imposed on BBL and the penalties imposed are commensurate with their acts and omissions. - AT
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Customs:
Valuation of exported goods - analysis of departmental laboratory, unless challenged, has to be accepted as true and correct. Since the value/price of the iron ore fines is based upon the Fe content of the consignment, the value was, in our opinion, correctly worked out by the lower authorities. - AT
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Corporate Law:
The expression 'Financial Debt' in section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the 'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and Government dues. - Tri
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Service Tax:
Health and fitness services - There is a very clear distinction between fitness centres or unisex saloons, which provide different types of services to the customers. Their focus is mostly on beauty rather than on maintenance of health. - Revenue appears to have fallen into an error in mixing up both - HC
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Service Tax:
Demand of service tax on transfer charges - transfer of plot is subject to payment of transfer fee - the appellants are liable to be taxed under the category of renting of immovable property, on receipt of this consideration - AT
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Service Tax:
Renting of immovable property - Assessee is liable to pay service tax in respect of such one time amounts received in respect of lease granted for less than 30 years - AT
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Service Tax:
Imposition of penalties u/s 77 (2) and 78 of the FA, 1994 - appellant has not been able to justify non-filing of returns with the department or informing the department as to the tax liability that arose, which was not discharged - penalties confirmed - AT
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Central Excise:
Refund of CENVAT credit - clearances made to 100% EOU - deemed exports - denial on the ground that the supplies made to EOU cannot be considered as actual physical exports - rejection of refund is unjustified - AT
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Central Excise:
CENVAT credit - input - bogus registered dealer - No cross examination of the registered dealer was granted to the appellant to reveal the truth - Cenvat Credit cannot be denied to the appellant on the basis of deficient investigation - AT
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Central Excise:
Re-credit of CENVAT credit, reversed earlier - Merely, because the decision is in the form of a letter, it cannot take away the right of appeal from the aggrieved person - the decision of the Assistant commissioner dated 25.01.2013 is an order appealable before the Commissioner (Appeals) - AT
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Central Excise:
Levy of penalty - clandestine removal - Appellant was fully aware of the fact that the transaction would be going to be a paper transaction and not real transaction, itself indicate that culpable mental state of the Appellant - however the quantum of penalty reduced - AT
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VAT:
Classification of sunglasses - Fastrack brand sunglasses/ sunglasses cannot be said to be “medical device” merely because they are protectives - HC
Articles
Notifications
Circulars / Instructions / Orders
News
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INDIA’S FOREIGN TRADE: April, 2017
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Department of Expenditure, Ministry of Finance takes Key Initiatives in the last three years
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Pay IT dues in advance at RBI or at authorised bank branches – June 2017
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RBI asks taxpayers to pay dues in advance
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Rupee gets macro data lift, up 23 paise at 64.08
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Auction for Sale (Re-issue) of Government Stocks
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RBI Reference Rate for US $
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DRI busts smuggling racket, seizes 44 kg of gold
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GST implementation to have far reaching implications for the Indian Economy RBI releases State Finances: A Study of Budgets of 2016-17
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Implementation of the expanded India-Chile PTA
Case Laws:
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Income Tax
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2017 (5) TMI 641
Exemption / deduction u/s 10A - Held that:- In view of the judgment passed in CIT v. Yokogawa India Limited [2016 (12) TMI 881 - SUPREME COURT] and other connected matters, this appeal is dismissed. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.
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2017 (5) TMI 640
Exemption / deduction u/s 10A - Held that:- In view of the judgment passed in CIT v. Yokogawa India Limited [2016 (12) TMI 881 - SUPREME COURT] and other connected matters, this appeal is dismissed. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.
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2017 (5) TMI 639
Interest income - undisclosed income - addition based on seized documents - full value of the pronotes seized at the time of survey should have been taken into account and not 30% - Held that:- From the order of the first appellate authority, we find that the Assessing Officer had examined some of the borrowers mentioned in the pronotes and they have categorically stated that the amount advanced is 50 per cent. or less which explanation has been accepted by the first appellate authority and confirmed by the Tribunal. The Department has failed to bring on record any material to the contrary except the seized documents which, in our considered opinion, could not absolve the Department or give any right to negate the view taken by the first appellate authority and the Tribunal. So far as the income divided among the family members of the respondent-assessee is concerned, we find that all of them were carrying on same business from the same premises. Therefore, it is but natural that if any concealed income has been found at the time of search and survey, it has to be distributed among all the family members who were carrying on business. Thus the impugned order of the High Court [2005 (12) TMI 85 - MADRAS High Court ] does not call for any interference.
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2017 (5) TMI 638
Disallowance of interest expenditure - whether the investments in sister concerns served any business purpose? - Held that:- The investment in sister concerns in the shape of share application money was to the tune of ₹ 20,32,60,000/-. The assessee was having current liabilities and profits to the tune of ₹ 17,41,39,750/-. The total non interests bearing funds available with the assessee were at ₹ 49,43,04,638/-. Out of the total funds on which no interest was paid by the assessee amounting to ₹ 49,43,04,638/-, the assessee had advanced ₹ 20,32,60,000/-. Thus, there was sufficient non-interest borrowing funds out of which the assessee had advanced/invested in sister concerns. It was further recorded that in the assessment year 2012-13 also, the assessee had sufficient interest free funds to make investment in the group companies relying upon the decision of the Apex Court in Hero Cycle Private Limited Vs. Commissioner of Income Tax (Central) [2015 (11) TMI 1314 - SUPREME COURT OF INDIA] and Commissioner of Income Tax-I, Ludhiana Vs. M/s Abhishek Industries Limited, Ludhiana (2006 (8) TMI 123 - PUNJAB AND HARYANA High Court ). - Decided in favour of assessee.
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2017 (5) TMI 637
Validity of reopening of assessment - Held that:- In the absence of any tangible material, which can be the only basis for reopening a completed assessment, the Revenue could not have issued the impugned notice. As to the applicability of General Motors India Private Limited's case (2012 (8) TMI 714 - GUJARAT HIGH COURT ), the court is of the opinion that the view taken is sound and an added factor inhibited the Revenue from reopening the assessment. The benefit of carrying forward the depreciation was, in one sense, limited by the pre-existing ruling that can be done for eight years. All that amendment did with effect from April 1, 2002 was to remove the cap which meant that the previously limited benefit was now not subjected to such restrictions. In the light of the foregoing discussion, the impugned notice cannot be sustained. It is hereby quashed along with all proceedings emanating therefrom. - Decided in favour of assessee.
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2017 (5) TMI 636
Arm’s length compensation paid @2.5% on account of corporate guarantees - Held that:- AO had made the addition purely on ad-hoc basis without making any study of comparables whereas assessee has carried out proper transfer pricing study and had arrived at the benchmarking value at Nil. Our attention was also drawn on the transfer pricing study report submitted by the assessee before the lower authorities. According to the Ld. Counsel, no addition was required to be made as per the transfer pricing study report. Thus, the addition @1% has been made by the assessee voluntarily with a view to curtail the litigation. Under these circumstances, Hon’ble ITAT has accepted the claim o the assessee in right spirit and as a matter of consistency; the same view should be allowed to be adopted in this year also. We agree with the submissions of the Ld. Counsel since a view has already been taken by the Tribunal after proper deliberations and analysis of facts of this case. Thus, as a matter of consistency, we hereby follow the view taken by the Tribunal for AYs 2009-10 2010-11 and direct the AO to accept the addition @1% as has been proposed by the assessee. Determining the arm’s length price pertaining to subscription and redemption of preference share capital by re-characterising the same as interest from loan and thereby computing notional interest thereon - Held that:- In this ground assessee is aggrieved by the action of the lower authorities in denying the benefit of carry forward of current year’s capital loss on account of preference shares. This ground is consequential to the issue of characterization of preferential shares as interest free loans. Therefore, this ground is restored back to the file of the AO with the direction to verify the facts and follow the aforesaid order of the Tribunal for AYs 2009-10 & 2010-11. This ground may be treated as allowed, for statistical purpose. Disallowance of interest u/s 36(1)(iii) - Held that:- Tribunal decided this issue in favour of the assessee for AYs 2009-10 & 2010-11 wherein held where the assessee has substantial own funds, then presumption is that assessee has given advance to its sister concern from its own funds. The view taken by the Tribunal is applicable on the facts of this year as well. Therefore, respectfully following the order of the Tribunal, this ground is allowed in favour of the assessee and the AO is directed to delete the disallowance on account of interest. Short credit of TDS - as submitted by assessee that the AO should be directed to grant additional TDS credit of the said amount as per form 26-AS filed by the assessee along with rectification application date 23-03-2017 - Held that:- We find force in the request of the assessee and, therefore, direct the AO to verify the facts and grant the benefit of TDS, as per law. The AO should also dispose of the rectification application pending in this regard.
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2017 (5) TMI 635
Revision u/s 263 - issue of cash payment exceeding ₹ 20,000/- and the invocation of provision of Section 40A(3) not considered by AO - Held that:- As perused the paper book filed by the assessee wherein the questionnaire of the Assessing Officer to the assessee in course of assessment proceedings is produced at pages 36 to 38. The questionnaire does not call for any details of cash payment exceeding ₹ 20,000/-. Nor there is any question raised by the Assessing Officer calling for the details of the payments made to Baba Hardasmal Communication Pvt. Ltd., hence, the contention of the assessee before us that the Assessing Officer has taken a conscious decision not make disallowance u/s 40A(3) after examining the ledger account of Baba Hardasmal Communication Pvt. Ltd. is not correct. Since books of account of the assessee clearly show payment in excess of ₹ 20,000/- to a person on a single day, necessarily the same has to be disallowed u/s 40A(3) of the Act, unless the assessee is able to prove that it comes within the mitigating circumstances prescribed under Rule 6DD of the I.T. Rules 1962. Since assessee does not have a case that the cash payment exceeding ₹ 20,000/- is exempt by virtue of the situation enumerated in Rule 6DD of the I.T. Rules 1962, we are of the view that CIT is justified in passing revisionary order u/s 263 of the Act. - Decided against assessee.
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2017 (5) TMI 634
Disallowance of interest paid to NBFCs and finance charges as per provision of section 40(a)(ia) - Held that:- In the light of order in the case of R.K.P. Company (2016 (7) TMI 447 - ITAT RAIPUR) wherein held that in the case of non deduction of tax, it is proper to remit the matter to the file of AO for limited verification as to whether recipient of payment has included the same in his computation of business income offered to tax, we restore this issue back to the file of the Assessing Officer with a limited direction to examine whether the payee ‘NBFCs’ have included the interest paid by the assessee in its return of income and paid the tax on the same. The assessee is at liberty to submit certificate in Form No.26. - Decided in favour of assessee for statistical purposes. Disallowance of Car running & maintenance expenses, Office telephone and traveling expenses and mess expenses - Held that:- CIT(A) after considering the preceding years gross receipt and expenditure held that adhoc disallowances is not warranted for the relevant assessment year. The gross profit of the current assessment year is more than the G.P. of the previous assessment year. The book result of the assessee was accepted and no specific defects were pointed out. The gross receipt for the current assessment year had increased to ₹ 14.86 crores from ₹ 12.26 crores in the previous assessment year. The expenditure claimed under the various heads (under dispute) are less in the current assessment year compared to the expenditure allowed in previous assessment year. Therefore, no adhoc disallowance of ₹ 1,44,666/- and ₹ 50,000/- are warranted in the facts and circumstances of the case. - Decided against revenue
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2017 (5) TMI 633
Rejecting application seeking exemption u/s 80G(5)(vi) - CIT (Exemption) has pointed out that the applicant primarily intends to carry out the activities outside India and the applicant has not submitted any approval u/s 11(1)(c) - Held that:- On combined reading of section 80G(5)(vi) and section 11(1)(c) of the Act, the approval under section 80G is subject to grant of approval under section 11(1)(c) of the Act. In the instant case, since such approval is not in place, the requirement of section 80G(5)(vi) cannot be said to be satisfied. Therefore, the issue is not that the scope of activities should be restricted to India and it cannot be carried out outside of India. The issue is limited to carrying out the activities outside India after seeking approval from competent authority u/s 11(1)(c) of the Act. The ld CIT(E) was therefore correct in denying the approval under section 80(G)(vi) in absence of approval of competent authority under section 11(1)(c) of the Act. Applicant has simply collected funds and has not carried out any significant charitable activities - Held that:- Regarding the activities carried out by the appellant towards achievement of its charitable objectives, the CIT(E) has stated that the assessee has entered into memorandum of understanding with Digital Empowerment Foundation on dated 10.08.2015 with a focus to benefit the inaccessible people in the villages of India with wireless connectivity.” Further, the ld CIT(E) noted that the assessee has alloted funds of ₹ 26,35,440/- for solar work at Guatemala City and ₹ 51,94,250/- for solar work at Philippine. The ld CIT(E) therefore acknowledges all these facts and the only reason stated to be non carrying out any significant activity by the assessee. In our view, given the fact that the assessee has only been incorporated around an year back and there are actions which are taken by the assessee towards achieving its charitable objectives which are not doubted, the approval under section 80G cannot be denied solely on this ground and to this extent, we do not concur with the ld CIT(E). The fact remains that the assessee has not obtained the approval under section 11(1)(c) of the Act and in absence of the same, the application under section 80G(5)(vi) has rightly been rejected by the ld CIT(E). The appeal of the assessee thus stands dismissed.
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2017 (5) TMI 632
Bogus purchases - Held that:- As decided in assessee's own case for previous AY 2010-11 AO made addition without any basis and the Id. CIT(A) after proper consideration of facts and circumstances and after allowing opportunity to present their respective stands to the A.O as well as to the assessee dismissed the disallowance and there was no reason to disallow interest to the companies from whom the purchases were made. Consequently, we are unable to seen any ambiguity, perversity or any other valid reason to interfere with the impugned order and thus we uphold the same - Decided in favour of assessee. Disallowance of loss on bogus trading - Held that:- Since we have held that the purchases made from Colourshop Trading Co. Pvt. Ltd. and M/s Induja Traders Pvt. Ltd. are not bogus purchases, the sales made out of such purchases cannot be treated as bogus sales. It is ordered accordingly. Disallowance of interest paid to Hawala operators - Held that:- The AO, in the previous year, when the loan was received had not disallowed same as not genuine, having not disallowed the principal as not genuine, there is no justification for making any disallowance of interest paid to the above parties. It is also relevant to mention that interest was paid to above mentioned parties for the Assessment Year 2010-11. For identical reason the Assessing Officer had disallowed the interest paid for A.Y. 2010-11. The disallowance made by the Assessing Officer for Assessment Year 2010- 11 was deleted by the CIT(A) and same was confirmed by the Tribunal. Thus we hold that the Assessing Officer is not justified in disallowing interest paid.
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2017 (5) TMI 631
Entitlement to challenge the validity of initiation of proceedings u/s 147 in which challenged the validity of order passed u/s 263 - Held that:- The re-assessment proceedings have been initiated only for the purpose of verification and examination which is not the scope of reassessment proceedings. It would be the case of rather reasons to suspect rather than reasons to belief that there was escapement of income. It is a case of the AO seeking to make fishing and roving inquiry without any basis. We have no hesitation in concluding that initiation of reassessment proceedings in the present case was not valid as the mandatory requirement of such 147 has not been satisfied. We therefore hold that reassessments orders for A.Y.2007-08 and 2008-09 dated 30.12.2011 were invalid. Consequently order passed u/s 263 of the Act dated 21.03.2014 for A.Y.2007- 08 and 2008-09 are also held to be invalid and quashed. Revision u/s 263 - addition u/s 68 - AO failed to examine as to why such high premium was paid by a person acquiring shares of the assessee company - Held that:- As to whether enquiry into high share premium ought to have been made by the AO and also as to what was the justification for such high premium could to be investigated by the AO at all because the 1st proviso to Sec.68 of the Act inserted by the Finance Act, 2012 w.e.f. 1-4.2013 was only prospective in operation, we are of the view that since section 68 covers `any sum credited’ in the books without any exception, which, inter alia, includes share capital, it cannot be held that the examination of share capital with premium etc. was earlier outside the ambit of section 68 and now this amendment has brought it into its purview. The amendment has simply made express which was earlier implied. We are therefore of the view that the assessee is always obliged to prove the receipt of share capital with premium etc. to the satisfaction of the AO, failure of which calls for addition u/s 68 of the Act. The argument with regard to non application of mind by the CIT is without any basis as all show cause notice u/s.263 of the Act were issued by him and ultimately he has passed the impugned order. There is no material brought on record to show that the CIT acted without application of mind. We therefore reject this argument on behalf of the Assessee. We are therefore of the view that the order u/s.263 of the Act is valid and proper in so far as it relates to AY 2009-10
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2017 (5) TMI 630
Date of reckoning of acquisition of the property for the purpose of computation of capital gains - LTCG or STCG - What would be the period of holding of the asset-whether it would relate back to the date when (personal) capital asset was converted in to business asset a few years back or the date of conversion now from business asset back to capital asset? - Held that:- In the instant case, the appellant has acquired the property in 1988-89 and 1991-92, the property remained in the hands of the assessee company as stock in trade and the property was transferred as investment in the books of accounts during the FY 1994-95 and sold in 1996-97. The Assessing Officer also observed that the assessee was dealing in real estate and all the expenses have been claimed regularly as business expenses and have been allowed too. During the A.Y 1997-98 also the assessee has also paid MMDA plan submission charges of Rs,15300/- and claimed as deduction. The above finding of the AO shows that though the assessee claimed to have converted the asset in to investment in books of accounts, it continued to claim the maintenance expenses as business expenditure. Even otherwise also from the date of conversion of the asset it was held as capital asset in the hands of the assessee for less than 36 months. CIT (A) rightly held the asset as short term capital asset and the gains should be taxed as short term capital gains since the holding period was less than 36 months from the date of conversion of stock in trade in to the capital asset. Accordingly, we uphold the order of the Ld. CIT (A) and dismiss the assessee's appeal.
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Customs
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2017 (5) TMI 659
Restoration of appeal - Held that: - the petitioner had made out sufficient cause for not remaining present when the order dated 23.2.2016 was passed, and hence, the Appellate Tribunal was not justified in not recalling its earlier order and restoring the appeal preferred by the petitioner. The court is of the view that sufficient cause has been made out by the petitioner for not remaining present before the Appellate Tribunal, either personally or through its representative, on the date when the ex parte order came to be passed. Petition allowed - the appeal is restored to the file of the Appellate Tribunal which shall be heard and disposed of on merits.
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2017 (5) TMI 650
Valuation - second hand machine - Cone Machine - Chocolate Depositing Plant and Lentil Plant - Held that: - there were no procedural irregularities in arriving at the assessable value of the impugned goods. The authority, in the impugned order, has gone into all aspects of the case and has arrived at well reasoned findings. - There is no dispute that the local Chartered Engineer did not have any credentials or was not recognised for such work. Nonetheless. the importer did not want to accept the price assessed by the local Chartered Engineer and instead insisted on acceptance of value on the basis of foreign Chartered Engineer Certificate. In the end, the original authority has worked out the assessable value on the basis of manufacturer's value suggested by local Chartered Engineer, applied principles of depreciation as laid down by CBEC and arrived at the derived total value of ₹ 50,54,047/- as representing the assessable value for these goods. The quantum of redemption fine imposed on BBL and the penalties imposed on BBL and on Shri Lakhbir Mutchall are commensurate with their acts and omissions. Appeal dismissed - decided against appellant.
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2017 (5) TMI 644
Valuation of exported goods - whether the appellate authority is correct in holding that invoice price for the goods exported and corroborated by bank realisation certificate is to be treated as value of the goods exported on which customs duty is payable or whether the value of the goods declared in the shipping bill at the time of exportation of the goods is to be considered as correct? Held that: - this bench has settled this issue in the case of Hira Steel Limited [2017 (1) TMI 11 - CESTAT MUMBAI], where it was held that, it is settled law that analysis of departmental laboratory, unless challenged, has to be accepted as true and correct. Since the value/price of the iron ore fines is based upon the Fe content of the consignment, the value was, in our opinion, correctly worked out by the lower authorities. - appeal allowed - decided in favor of Revenue.
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Corporate Laws
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2017 (5) TMI 662
Violation of various provisions of SAST Regulations of 1997 and 2011 read with Regulation 13(1) of Prohibition of Insider Trading Regulations, 1992 - Penalty imposed - Held that:- AO has not brought out any convincing and cogent evidence to support the finding that the noticee i.e. appellant acted as a PAC with Narois within the meaning of Regulation 2(e)(2)(i) of SAST Regulations, 1997. There is no material / evidence which can support the present findings of the learned AO. In fact, to some extent the learned AO has travelled even beyond the scope of show cause notice dated October 1, 2014. Therefore, we are constrained to hold that the learned AO has not satisfactorily examined and considered the contentions of the appellant raised during the proceedings before him, particularly pertaining to the question of ‘person acting in concert’ i.e. PAC for holding the appellant liable for violation of Section 7(1) of the SAST Regulations, 1997 read with Regulation 35 of SAST Regulations, 2011. In this view of the matter, penalty of ₹ 2,50,000/- imposed on appellant is set aside and restored to the file of learned AO for hearing this aspect afresh and deciding it as per law after giving an opportunity of hearing to the appellant in respect of the allegation under the SAST Regulations, 1997 read with those of 2011. Accordingly, the impugned order is upheld to the extent of imposition of two penalties of ₹ 2,00,000/- each for violation of Sections 11C(3) and (5) of the SEBI Act, 1992 whereas the penalty of ₹ 2,50,000/- under SAST Regulations, 1997 is set aside and the matter is remanded to the learned AO for a fresh look as directed hereinabove. The appellant is directed to deposit the penalty of ₹ 4,00,000/- within a period of four weeks from today failing which the respondent shall be at liberty to initiate appropriate proceedings to recovery of the said amount as per law.
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Insolvency & Bankruptcy
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2017 (5) TMI 663
Initiation of Corporate Insolvency Resolution process - qualification to maintain an application as an 'Operational Creditor' - Held that:- As evident from the perusal of the definition of 'Operational Debt' that it is a claim in respect of provision of goods or services including dues on account of employment or a debt in respect of repayment of dues arising under any law for the time being in force and payable to Centre or State Government or local authority. It is thus clear that debt may arise out of provision of goods or services or dues arising out of employment or dues arising under any law for time being in force and payable to the Centre/State Government. The framer of the Code have also defined the expression 'Financial Debt' in section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the 'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and Government dues. In the present case the debt has not arisen out of the provisions of goods or services. The debt has also not arisen out of employment or the dues which are payable under the statute to the Centre/State Government or local body. The refund sought to be recovered is necessarily associated with the delivery of the possession of immovable property which has been delayed. Whether the Petitioner could be regarded as an 'Operational Creditor' within the meaning of section 5(20)? - Held that:- The 'Operational Creditors' are those persons to whom the 'Corporate Debt' is owed and whose liability from the entity comes from a transaction on operations. The final report of the Committee in para 5.2.1 defines 'Operational Creditor' like the wholesale vendor of spare parts whose spark plugs are kept in inventory by Car Mechanic and who gets paid only after spark plugs are sold to acquire the status of 'Operational Creditor' so and so forth. The Petitioner in the present case has neither supplied any goods nor has rendered any service to acquire the status of an 'Operational Creditor'. We are further of the view that given the time line in the code it is not possible to construe section 9 read with section 5(20) & (21) of the Code so widely to include within its scope even the cases where dues are on account of advance made to purchase the flat or a commercial site from a construction company like the Respondent in the present case especially when the Petitioner has remedy available under the Consumer Protection Act and the General Law of the land. Therefore we are not inclined to admit the petition.
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Service Tax
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2017 (5) TMI 673
Charges collected by the appellant from the allottees of land - taxability - substantial part of the demand against the appellant in various proceedings, relate to their service tax liability on lump-sum premium amount, received by them from the allottees on allotment of land on long term basis - Held that: - In view of the introduction of new Section 104 in the Finance Act, 1994 the appellant’s liability on such consideration no longer exists. The one time payment received for grant of long term lease of 30 years or more of industrial plot, is not liable to service tax for all the periods covered in the present proceedings. However, we hold that the appellants are liable to pay service tax in respect of such one time amounts received in respect of lease granted for less than 30 years - the appellants are liable to service tax on the premium received on leasing of land for the periods of less than 30 years. Renting of immovable property service - Held that: - Regarding tax liability of the appellant on the economic rent received by them from 01/07/2010, we find that on the similar matter, this Tribunal has examined this very same issue in the case of Greater Noida Industrial Development Authority [2015 (4) TMI 661 - ALLAHABAD HIGH COURT] and upheld the service tax liability on such charges. The said decision of the Tribunal has been upheld by the Hon’ble Allahabad High Court as noted earlier in this order. As such, we hold that the appellants are liable for service tax on the lease rent/economic rent received periodically, on the lands allotted for industrial purpose for the period post 01/07/2010. Management, maintenance and repair services - Held that: - repair and maintenance of roads is exempted from payment of service tax in terms of Section 97 of the Finance Act, 1994. The said exemption has been made applicable from 16/06/2005 upto 26/07/2009. Thereafter exemption Notification 24/2009-ST dated 27/07/2009 and Notification No. 54/2010-ST dated 21/12/2010 are applicable - any charges are collected by the appellants towards repair and maintenance of roads, the same shall not be liable to service tax under the category of management, maintenance and repair service. Charges collected from allottees with reference to provision of various services other than management, maintenance of roads - Held that: - no exemption is available. The claim of the appellant that they have undertaken the said maintenance as a governmental authority and, hence, not liable to tax, is not tenable - appellant are liable service tax for the period prior to 30/01/2004 as no exemption is available to them. Transfer charges as per Rule 18 of RIICO Rules - The Revenue demanded service tax on such charges either under ‘real estate agent service’ or under ‘renting of immovable property service’ - Held that: - the transfer of allotment is enabling the transferee to obtain the land on lease and it is an integral part of lease arrangement. As such, the said consideration is to be considered as a taxable value received for rendering taxable service of renting of immovable property. Wherever demand of service tax on this income is with reference to this tax entry, the appellant is liable to pay. Extended period of limitation - Held that: - the appellants are a Government company. The issues dealt with above are involving interpretation of legal provisions. Some differing views are already on record. As a Government agency it is not incorrect to assume that the appellant did not have any malafide intend to mis-represent or suppress facts from the tax authorities in order to evade the tax - extended period not invoked - demand limited to normal period. Penalties - Held that: - the penalties imposed on the appellant are also liable to be set aside, as there are no malafide intention. Subject to production of evidence that the appellants have charged gross amount which is inclusive of service tax and the arrangement with the service recipient/the documents support such assertion, the appellant should be allowed to calculate the tax liability in terms of the said provision.
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2017 (5) TMI 672
Health and fitness services - In the order impugned in the writ petition, the 2nd respondent has not disputed the claim of the petitioner that they have registered themselves under Section 12AA of the Income Tax Act as a charitable institution. But what the 2nd respondent did was to go by the definition of the expression charitable institution found in the definition part of the notification dated 20.06.2012 - distinction between fitness centres or unisex saloons - Held that: - the petitioner satisfies both the limbs indicated in sub-clause (a) and (b) of Clause (i) of para-2(k). The petitioner is allegedly indulging in public awareness and the petitioner is also indulging in the spreading of public health by way of care and counselling. Therefore, even on the basis of the findings recorded in para-30.2 it is not possible to conclude that the activities carried on by the petitioner would not fall within para-2(k) of the exemption notification. An important aspect to be taken note of is that under Serial No.2 of the exemption notification health care services by a clinical establishment is exempted from payment of service tax. Any institution, which provides services by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy comes within the definition of health care services. That the petitioner renders such services is not in doubt even from the findings recorded by the 2nd respondent herein - Where the 2nd respondent appears to have gone wrong is that the 2nd respondent has taken the services provided by the petitioner for the wellbeing of an individual, as something out of the purview of the diagnosis or treatment. The 2nd respondent has fallen into an error in thinking so, due to a fundamental misconception that is normally prevalent in society. While Allopathic system of medicine is only for diagnosis and treatment of illness, many of the indigenous system of medicines, seek to prevent rather than prescribe. An exemption notification, which is understood by the respondents to confer a benefit upon the clinical establishments, cannot be made inapplicable to a holistic health care institution such as the petitioner herein, as the same would tantamount to killing our indigenous system of health and well being - A system of medicine which focused mainly on healthy living and not merely a prolonged existence cannot be denied the benefit of the exemption notification on the basis of a misconception that a clinical establishment is one that would treat people after they fall ill and not one which will prevent people from falling ill. There is a very clear distinction between fitness centres or unisex saloons, which provide different types of services to the customers. Their focus is mostly on beauty rather than on maintenance of health. The 2nd respondent appears to have fallen into an error in mixing up both - the case of the petitioner would fall clearly within the purview of the exemption notification, the 2nd respondent has made a distinction, which did not exist except in his mind and in the paper. Petition allowed - decided in favor of petitioner.
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2017 (5) TMI 665
CENVAT credit - input services - denial on the ground that the invoices of input services are in the name of the head office and the appellant have not obtained input service distribution registration at the relevant time - Held that: - even though the invoices are in the name of head office, services were received and used in or in relation to the manufacturing and the business activity of the appellant unit as they have only one manufacturing unit. As regard non obtaining registration, the ISD registration is only procedural requirement for the purpose of distributing the CENVAT credit to the various units of the assessee - This tribunal time and again has held that merely because ISD registration is not obtained CENVAT credit cannot be denied to the assessee's manufacturing unit or to the output service provider. Denial also on the ground that services used at different locations - Held that: - even though the services were received at their different location, the CENVAT credit is allowable on the ground that all the locations are working in or in relation to storages and or sale of the goods manufactured by the appellant unit, therefore as per the definition of input service existed during the impugned period, the activities related to the business is also defined as input service therefore for this reason CENVAT credit can also not be denied. Denial also on the ground that appellant also carried out trading activity - Held that: - Cenvat credit proportionate to the percentage of trading turnover, as per the satisfaction of the adjudicating authority is recoverable from the appellant - However, no penalty to be charged on the said proportionate credit. Denial also on the ground that the in certain cases the invoice of the service providers do not bear the registration number - Held that: - there is no allegation that under the said invoice service tax was not discharged therefore merely because registration number of the service provider has not been mentioned, this alone cannot be reason for the denial of credit - Non mention of the registration is merely procedural lapse, for this reason substantial benefit of CENVAT credit cannot be denied. The appellant is entitle for the CENVAT credit except the CENVAT credit proportionate to trading turnover - appeal allowed - decided partly in favor of assessee.
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2017 (5) TMI 661
Business Auxiliary Services - receipt of commission - the decision in the case of Competent Automobiles Co. Ltd. Versus Commissioner of Service Tax [2017 (3) TMI 376 - DELHI HIGH COURT] contested - SLP dismissed.
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2017 (5) TMI 660
Maintainability of appeal - alternative statutory remedy - Whether the CESTAT erred in upholding the denial of refund claimed by the appellant for the period 16.10.1998 to 01.09.1999 in respect of service tax paid by it? - Held that: - It is seen that the Petitioner was before the Supreme Court with its petition under Article 32 of the Constitution, which was a remedy available to the Petitioner and rightly availed by it. Merely because it did not choose to exhaust a statutory remedy which was also available, does not preclude the Appellant from seeking legal redress by filing a writ petition directly in the Supreme Court - the Court answers the above question in the affirmative by holding that the CESTAT erred in upholding the denial of refund claim by the Appellant for the period 16th October, 1998 to 1st September, 1999 in respect of service tax paid by it on the clearing and forwarding services availed by it - refund allowed. - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 654
Maintainability of appeal - appeal was dismissed by Commissioner (Appeal) on acccount of time limitation - Whether it was open for Tribunal to look into merits of order of Adjudicating Authority when order in appeal before Tribunal passed by Commissioner (Appeal) was such, whereby appeal was dismissed by Commissioner (Appeal) on the ground of limitation? - Held that: - The scope available for Tribunal was, whether Commissioner (Appeal), decided appeal by dismissing on the ground of limitation, correctly or not, and if it finds that appeal was within the period of limitation or within condonable period of limitation, it could have remanded matter to Commissioner (Appeal) to decide appeal on merits but there was no scope of looking into correctness of Adjudicating Authority's order and even set aside the same - Matter is remanded to Tribunal to examine, whether appeal preferred by Assessee was within the period of limitation or within condonable period of limitation - appeal allowed by way of remand.
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2017 (5) TMI 653
Consulting Engineering Service - scope of services - CBEC Circular No. B 43/5/97-TRU dated 02.07.1997 - activity of providing Design, Drawing and Documents etc under the contact for supply and erection of 6 Moulded LPG Storage Systems-Bullets to M/s IOCL - Whether service tax is chargeable in the category of Consulting Engineers Service on the activity of providing Design, Drawing and Documents etc under the contact for supply and erection of 6 Moulded LPG Storage Systems-Bullets to M/s IOCL, Barauni? - Held that: - the demand pertains to the period prior to 2006 and the appellants are a company. In these circumstances the appellants do not come under the definition of consulting engineer in terms of Section 65(31) of the Finance Act 1994. Thus the demand under the head of Consulting Engineercannot be sustained against a company. The proceeding cannot therefore be sustained against the appellant and demand of tax, interest and penalties has to be set aside. Whether service tax is chargeable in the category of Consulting Engineers Service on similar activities undertaken by the appellants in respect of other clients under the Purchase Orders/Contracts during the period 1997-1998 to 2001-2002? - Held that: - All contracts in the disputed period are similar to the contract produced by the appellant in case of IOCL - the demand under the category of consulting engineering service dropped. CBEC Circular NO.B.43/5/97-TRU dated 02-07-1997 does not deal with the services in the nature of works contract service where the Hon Apex court has held that no tax can be levied prior to introduction of works contract service. The assessee are not covered by definition of Consulting Engineer Service - appeal dismissed - decided against Revenue.
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2017 (5) TMI 652
100% EOU - refund claim - export of services - Information & Technology software service - Business Auxiliary Services - Business support services - Held that: - the credit on input services of all the services as mentioned, are eligible to be refunded and there is no dispute as to the documentation of the same as also the appellant being an exporter of output services - In an identical issue in respect of same assessee, as also other assessee, this Tribunal has held that refund needs to be sanctioned - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 651
Imposition of penalties u/s 77 (2) and 78 of the FA, 1994 - non-payment of service tax with interest - the case of appellant is that the law was not very clear during the period in dispute - Held that: - the appellant has not made out any case against the imposition of the penalties, in as much, he has not brought on record to what was the justifiable reasons for him to not to discharge the service tax liability after taking the registration from the department - On the limitation also, it is noticed that appellant has not been able to justify non-filing of returns with the department or informing the department as to the tax liability that arose, which was not discharged - appeal dismissed - decided against appellant.
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Central Excise
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2017 (5) TMI 671
Refund of CENVAT credit - clearances made to 100% EOU - deemed exports - denial on the ground that the supplies made to EOU cannot be considered as actual physical exports - Held that: - reliance was placed in the case of Commissioner Versus Amitex Silk Mills P. Ltd. [2008 (7) TMI 956 - SUPREME COURT], where it was held that deemed exports made by assessee-EOU to another EOU has to be treated on par with physical exports - rejection of refund is unjustified - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 670
CENVAT credit - duty paying invoices - the appellants did not obtained ISD registration before distribution of the credit by the Head office - Held that: - the Head office had Centralised Registration for payment of service tax. Later, from 11.03.2005 ISD registration was introduced. Therefore, it can be seen that the ISD registration is only to facilitate the distribution of credit. Failure to obtain ISD registration can be only a procedural lapse which has been rectified by the appellant on receiving the SCN - credit allowed - appeal dismissed - decided against Revenue.
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2017 (5) TMI 669
Refund claim - CENVAT credit in respect of inputs used in the manufacture of final products which are cleared for export to SEZ units - rejection on the ground of time limitation - N/N. 5/2006 - Held that: - In case of export of goods, the relevant date is the date of export and in the case of SEZ units, it is taken as the date on which the goods are received in SEZ - the relevant date is the date on which goods were received in SEZ i.e. 20/06/2008. Therefore, refund claim dated 25/06/2009 is barred by limitation - appeal dismissed - decided against appellant.
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2017 (5) TMI 668
Interest - penalty - whether the appellants are liable to pay interest and penalty when the irregularly availed credit has been reversed before utilisation? - Held that: - the appellants though have reversed the credit, it is not brought out from the records whether they had sufficient balance during the relevant time - The original authority is directed to verify whether the appellant has sufficient balance in the CENVAT credit account during the relevant time of taking the credit till the reversal of credit - appeal allowed by way of remand.
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2017 (5) TMI 667
Job-work - assessee were not paying excise duty on job charges on the belief that the goods based on job work is not liable to duty - time limitation - penalty u/s 11AC - Held that: - appellant was knowing that the activity is amount to manufacture and liable to duty as they were discharged their duty on their own product and were not paying duty in respect of goods manufactured on behalf of the traders on job work basis. Therefore bonafide of the appellant is not proved. The case of the non payment of duty was detected through investigation carried out by the departmental officers and not by suo moto disclosure of the fact by the appellant - there is clear suppression of fact on the part of the appellant, therefore demand is not hit by limitation - For this reason penalty imposed u/s 11AC is also legal and proper, which do not require any interference hence the demand of duty and consequential penalty u/s 11AC are maintained. Confiscation - penalty - Held that: - the goods had been cleared and was not available for confiscation. Only those goods are confiscated which are available for confiscation and then only consequential redemption fine can be demanded. Redemption fine is for the purpose of redeeming the goods, if there is no goods available there no question of redemption the goods, accordingly non availability of the goods cannot confiscated nor redemption fine can be demanded - confiscation and redemption fine set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 666
CENVAT credit - MS Items - capital goods - Held that: - appellant produced evidence of having used the MS items for fabrication of support structure for reactors/heat exchangers, walk way to reactors, jackets for reactors and cable tray pipeline supports - the period involved is prior to 07.07.2009, hence credit remains allowed - the disallowance of credit is unjustified - decided in favor of appellant.
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2017 (5) TMI 664
Clandestine removal - SSI exemption - manufacture of button bits and hammers and parts of hammer assemblies - Held that: - the alleged discrepancies, consumption of the raw material and sale of the suppressed production has not been proved and department has not produced any corroborative evidence to counter this finding - It appears that all the 3 units are the legal entities registered with statutory authorities including Central Excise. They are located in different places and having the separate machineries. They are also doing the job works for their parties. Their accounts are independent, they are for the purpose of direct and indirect taxes. When it is so, the SSI exemption cannot be denied to the respondent company - appeal filed by department dismissed on account of absence of any corroborative evidence - decided against Revenue.
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2017 (5) TMI 649
Benefit of N/N. 30/2004-CE - benefit available provided the assessee has not availed CENVAT credit of the duty paid on inputs under the CENVAT Credit Rules 2002/2004 - denial on the ground that respondent had availed CENVAT credit on the common inputs which are used for the manufacture of textile and textile articles - Held that: - there is no dispute that the respondent had reversed the CENVAT credit attributable to the inputs which are consumed in the manufacture of final goods which are cleared by availing benefit of N/N. 30/2004-CE. The said N/N. 30/2004-CE only states about non-availment of the CENVAT credit of the duty paid on inputs. Reversal of credit subsequently by the respondent is accepted and such reversal of credit is held as satisfying the conditions of the notification by the Tribunal in the case of Omkar Textile Mills Pvt Ltd [2013 (10) TMI 1298 - CESTAT AHMEDABAD] - benefit available - appeal dismissed - decided against Revenue.
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2017 (5) TMI 648
CENVAT credit - MS sheets and MS plates - MS items used in the factory for in-house fabrication of components of plant and machinery in the cement factory - Held that: - similar issue decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where the Cenvat credit on steel plates and M.S. channels which were used for fabrication was allowed - credit allowed - appeal dismissed - decided against Revenue.
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2017 (5) TMI 647
Penalty u/r 25 of the CER, 2002 - Clandestine removal - Held that: - the duty amount was deposited even before issuing the SCN. When it is so, the impugned order modified and penalty reduced to 25% of the duty amount as per provisions of Section 11AC of the CEA, 1944. The assessee will get the partial relief. Redemption fine - the depreciation has occurred so the value has gone down, being the old goods, request made for reduction of quantum of redemption fine - Held that: - we modify the impugned order and reduced the redemption fine to ₹ 15 lakhs only. The appellant will get the partial relief. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 646
100% EOU - validity of SCN - clandestine removal of the raw materials and finished goods - case of appellant is that that since on the same set of facts, SCN were issued earlier, therefore, the present demand notice for recovery of duty arising out of the same facts, is illegal and unsustainable - Held that: - From the SCN issued earlier, it is found that the same were issued demanding duty against the clearances of goods by M/s Cosmic Textiles Pvt. Ltd., where respective re-warehousing certificates were not produced. Later, on production of the certificate/evidences, the orders confirming the demands were set aside and the appeals were allowed by the learned Commissioner (Appeals) - The present SCN, on the other hand, refers to the allegation of illicit removal of the goods, from the M/s Cosmic Textiles Pvt. Ltd. unit without payment of duty and resorting into paper transaction to claim various export benefits. Thus, the present SCN which was issued after detailed investigation of the persons concerned, transporters, brokers etc cannot be said to be arising out of the same set of facts - present SCN is held to be legal and valid. Penalty - Held that: - the Appellant was fully aware of the fact that the transaction would be going to be a paper transaction and not real transaction, itself indicate that culpable mental state of the Appellant - however the quantum of penalty reduced. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 645
CENVAT credit - input - registered dealer is bogus - the registration certificate of the dealer has been cancelled on 19.02.2008 with retrospective effect - Held that: - It is not the case of the Department that appellant has not received the goods - no investigation has been conducted at the end of the appellant to ascertain they have received the goods or not. No investigation was conducted at the transporter of the goods or at the premises of the appellant to reveal the truth. No cross examination of the registered dealer was granted to the appellant to reveal the truth - Cenvat Credit cannot be denied to the appellant on the basis of deficient investigation - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 643
CENVAT credit availed fraudulently on the basis of bills of entry - it was alleged on the basis of statements that Bills of Entry were diverted to purchasers who did not avail CENVAT facility. These bills of Entry were given to appellant and others to facilitate the availment of credit without receipt of goods - Held that: - the appellants have produced the lorry receipt and weighment slips to show receipt of goods in the factory besides entries in RG-23 register to show that such goods have been received in the factory - Apart from, such statements which have been retracted or contradicted there is no iot of evidence to establish that the appellants indulged in fraudulent availment of CENVAT credit - reliance was placed in the case of M/s Akshay LPG Valves, V.K. Janaki Ram, M/s Jagadamba Engineering (P) Ltd., V.K. Janaki Ram Versus The Commissioner C & C.E, Hyderabad [2016 (6) TMI 762 - CESTAT HYDERABAD] - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 642
Re-credit of CENVAT credit, reversed earlier - letter rejecting request for re-credit was interpreted as appealable order - Revenue took a view that such letter cannot be considered as an appealable order and dismissed the appeal - whether the letter rejecting request of appellant for re-credit, could be treated as a speaking order which is appealable u/s 35(1) of CEA, 1944? - Held that: - Section 35(1) of CEA, 1944, says that any person aggrieved by any decision or order passed under the Act (ibid) can file an appeal u/s 35. The Section used the words ‘decision’ or ‘order’. Such decision can be communicated in the form of a letter also. Merely, because the decision is in the form of a letter, it cannot take away the right of appeal from the aggrieved person - the decision of the Assistant commissioner dated 25.01.2013 is an order appealable before the Commissioner (Appeals) - the matter is remanded to the Commissioner (Appeals) for reconsideration of issue on merits - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (5) TMI 658
Penalty u/s 51(6)/51(7)(c) of PVAT Act - detention of vehicle - Held that: - the assessee had placed reliance on the affidavit of Mr. Sarabjit Singh, driver who was driving the vehicle at the relevant time. He himself had admitted through his affidavit that he had crossed the ICC without generating the information - it was not the first transaction and even prior to that, the goods were being taken through that way. Thus, the mere excuse that the driver did not know about the location of the ICC, was not accepted. Further, the goods were carried away through a vehicle which was not used for carrying the goods. Consequently, the Tribunal rightly concurred with the findings recorded by the authorities below and dismissed the appeal filed by the appellant-assessee - penalty upheld - decided against appellant-assessee.
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2017 (5) TMI 657
Validity of notice issued by VATO u/s 59(2) of the DVAT Act, 2004 - refund - Held that: - The Court is of the view that the VATO in question who had first to record the reasons in file before issuing the notice u/s 59(2) of the DVAT Act failed to do so. It reflects lack of knowledge of the basic requirement of law prior to the exercise of statutory powers. There is no barrier to processing the claim for refund. If the VATO requires any document then he will inform the Petitioner in writing not later than one week from today. It is made clear that in any event the VATO will process the refund claim and pass appropriate orders for payment of the refund and interest directly into the Petitioner's account not later than ten days thereafter. Petition allowed - decided in favor of petitioner.
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2017 (5) TMI 656
Order of assessment - Refund claim - reopening of assessment while processing refund claim - Section 9(2)(g) of the DVAT Act - Held that: - with reference to Section 9(2)(g) of the DVAT Act, it requires to be noticed that it envisages a situation where a selling dealer fails to deposit the tax that has been collected or fails to lawfully adjust it against the output tax liability - The entire exercise is fraught with illegality and is an abuse of the process of the law by the VATO. The Court, accordingly, sets aside the default assessment order dated 11th April, 2017 - there being no other compliance pointed out by the VATO, there can be no justification for delaying the issue of refund to the Petitioner any longer - petition allowed - decided in favor of petitioner.
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2017 (5) TMI 655
Classification of sunglasses - interpretation of Entry 28A (ii) to Schedule II of the Gujarat Value Added Tax Act, 2003 - whether the Fastrack brand sunglasses are “medical devices ” and fall in Entry 28A (ii) of Schedule II to the VAT Act read with Entry 5 of the Notification dated 31st March 2006? - Held that: - “Spectacles, Correctives and Protectives” came to be deleted and only those medical equipments, devices and implants are specified to the “medical equipments, devices and implants” to be the “Medical equipments, devices and implants” for the purpose of the said Entry 28A of Schedule II to the Act. And therefore, use of spectacles, correctives and/or protectives would loose its significance. There is a material change in the earlier Notification dated 31st March 2006 and the subsequent Notification dated 16th May 2008. The words/entry in the schedule “more particularly item mentioned at Serial No. 5, specifies “Spectacles, Correctives and Protectives” has been deleted and as per the substituted Notification dated 16th May 2008, the “medical equipments, devices and implants shall be specified to be the medical devices and implants” for the purpose of the said entry 28A of Schedule II to the Act. Fastrack brand sunglasses/ sunglasses cannot be said to be “medical device” merely because they are protectives; more particularly, considering the Legislative intend to supersede the earlier Notification dated 31st March 2006 by a new Notification dated 16th May 2008. It cannot be disputed, while interpreting an entry in the taxing statute, the legislative intend to play an important role, some meaning as to be given to the intention of the Legislature in superseding the earlier Notification dated 31st March 2006 and bring in the new Notification dated 18th May 2008. If the intention of the Legislature was to continue to consider spectacles and protectives as “medical equipments, devices and implants” for the purpose of Entry 28A of Schedule II of the Act, there was no necessity to supersede the Notification dated 31st March 2006 to come out with a new Notification dated 16th May 2008. Appeal allowed - decided in favor of Revenue.
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