TMI Tax Updates - e-Newsletter
May 20, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
GST Rates for Supply of Goods
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Income Tax:
Benefit of Income Declaration Scheme, 2016 only to the persons who are not covered u/s 132 - The scheme of 2016 will not override the provisions of the Income Tax Act and the scheme which has come by way of limited purpose cannot prevail over the Income Tax Act. - HC
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Income Tax:
Revision u/s 264 in favor of assessee - Claim for refund of excess Tax paid/waiver of interest under Sections 234A, 234B and 234C denied - reason assigned for rejection was, the return was not voluntarily filed by the petitioner but consequent upon survey conducted u/s 133A - revision order quashed - matter restored before CIT - HC
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Income Tax:
Method of accounting - A switch over in the midst of financial year ought to be permitted by the authorities only in exceptional cases where the same poses no difficulty whatsoever in computing income and the switch over is justified. The burden to establish the same must rest heavily upon the assessee who desires the switch over in the midst of the financial year. - HC
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Income Tax:
Addition on account of cash deposit in the bank account - It is not explained why assessee was making deposits in his bank account on different dates of different amount and why full amount was not deposited in his bank account at the earliest. This itself create a serious doubt in the explanation of the assessee of availability of the cash through his grandmother - additions confirmed - AT
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Income Tax:
Deduction u/s. 10A - applicability of the circular after assessment year 2009-10 - Finance (No. 2) Act, 2009 has made amendment with retrospective effect from 01-04-2009 by substituting the year 2011 with 2012. Although, corresponding amendment has not been made in the circular, however, in view of amendment made to the provisions of section 10A, the circular would apply to the assessment year under appeal, as well. - AT
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Income Tax:
Computation of capital gain - If after such reference, the value fixed by the stamp valuation authorities is still to adopted, ignoring the lower value fixed by the DVO then the purpose of reference to the DVO itself is lost. - AT
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Income Tax:
Disclosure of additional income before settlement commission u/s 245C(1) - whether for every year mentioned in the application there should be a disclosure? - fundamental test of "full and true disclosure" - there need not be disclosure of additional income in every year that is covered by the application.
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Customs:
Entitlement to interest on refund - respondents are liable to refund the amount on expiry of three months from 18.11.2002 to the petitioner ie. the date of the order of the Appellate Tribunal, even if the application was submitted at a later point of time - HC
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Customs:
Misdeclaration of goods - undervaluation - It is a fact of common sense that the branded goods are priced much more than the local non-leather Chinese shoes. As such, the value of the goods declared by the assessee would definitely be on the lower side - AT
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Customs:
Penalty u/s 114A and 114AA - Focus product scheme - licence issued against the fake shipping bills - the appellant was vigilant as per the maxim EX ALUN DANTI CAUTELA - appellants have purchased the licence from the market for import of the goods being the vigilant buyer - penalties set aside - AT
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Service Tax:
Refund claim - export of services - mere fact that the appellant has been promoting and marketing foreign universities within India and then getting prospective students enrolled for various courses in those universities does not mean that services to foreign universities were consumed within India - refund allowed - AT
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Service Tax:
Packaging Activities - Liability of tax - the respondent shown the cost and an amount of 10% for supply of goods. Since these supply involve sale with profit of 10%, the said activity cannot be covered for service tax liability - AT
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Service Tax:
Mandap keeper services - renting out the halls / open spaces/ theaters and auditoriums to their clients are allowed for temporary occupation for a consideration - the services rendered by the appellant gets covered u/s 65(105)m of the FA, 1994. - AT
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Service Tax:
Business Auxiliary Services - the appellants are not engaged in procuring any input service for the telecom operators. In fact, they are developing the contents and supplying the same to the telecom operators on a revenue sharing model - Demand of service tax under BAS set aside - AT
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Service Tax:
Reverse charge mechanism - Telecommunication services - outbound roaming services - Foreign Service provider has not been granted with any licenses under the Indian Telegraph Act 1885 and hence cannot be considered as a Telegraph Authority under the provisions of the Indian Telegraph Act 1885 - Demand of service tax set aside - AT
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Central Excise:
Imposition of penalties on partners of manufacturing firm u/r 26 of CER - non-payment of Central Excise duty by the partnership firm, M/s Allied Electricals - It is not correct to say that the penalties now imposed on the partners/ appellant will amount to double penalty for the same offence.- AT
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Central Excise:
Adjustment of sanctioned refund amount against arrears of Central Excise duty of lessor company - the lease deed provisions have no relevance or application to justify the adjustment of sanctioned refund amounts payable to the appellant, against the arrears standing against M/s Kalani Industries - AT
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VAT:
Liability of tax on purchase of Supari - Merely because the Department for some reason could not collect tax on the sale of ‘supari’ u/s 10 would not mean absence of ‘levy’ or ‘liability’ conferring right to levy tax u/s 12. - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2017 (5) TMI 849
TPA - TCS as not an appropriate comparable - Held that:- The Court finds merit in the contention of Mr. Kamal Sawhney, learned counsel for the Respondent, that as far as profile of the Assessee was concerned, it was not involved in software development at all but only in BPO activities. This apart the size and scale of TCS's operations makes it an inapposite comparable vis-a-vis the Petitioner. The Court is not convinced that the ITAT has committed any error in holding that TCS is not an appropriate comparable as far as determining of the arms length price of international transactions involving the Assessee is concerned. No substantial question of law
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2017 (5) TMI 848
Application under section 245C(1) to Settlement Commission - petitioner contends that the total unaccounted amount declared (over Rs. 10 crores) should have been accepted - Held that:- The revenue had successfully opposed the application, contending that the assessee had not made full disclosure and that the amount declared had never belonged to him, but rather to M/s. Dolphin Developers Ltd, who had accepted cash but not declared it. This was accepted by ITSC. The petitioner has given his explanation and version as to why such rejection was unjustified and how such amount belonged to him. However, this court is of the opinion that the petitioner's contentions are entirely factual. Unless there is a manifest unreasonableness or perversity in the ITSC's order, the court cannot substitute its reasoning with that of the said body. The ITSC's findings here are based upon an analysis of the facts such as that the ABC's identity was unknown and that there was a certain degree of amorphousness in its functioning. Furthermore, the clear linkages between the amounts disclosed before the ITSC and the amounts declared by M/s. Dolphin Developers Ltd. was discernable. This court cannot review or second guess the findings of fact as would an appellate court. Given these parameters, the inference of facts having regard to the totality of circumstances, this court is of the opinion that the findings of fact which the ITSC rendered cannot be set aside or interfered with. The writ petition has to fail and is, therefore, dismissed.
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2017 (5) TMI 847
Capital gain computation - consideration received - pro-rata transfer of land - Transfer exigible to tax by reference to Section 2(47)(v) read with Section 53-A of the Transfer of Property Act, 1882 - JDA entered by assessee - Held that:- We find no infirmity in the order of the learned CIT (Appeals) in directing the Assessing Officer to recompute the short term capital gain on the amount actual received by the assessee. We find that the aforestated directions have been given by the CIT (Appeals) following the judgment of the Hon'ble Punjab & Haryana High Court on the identical issue in case of Shri C.S. Atwal [2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT ] This fact is not denied even by the Revenue. Since the issue has been decided by the higher authority and the learned CIT (Appeals) has passed the order following the decision of the Hon'ble Jurisdictional High Court, we find no reason to interfere in the same. In view of the same, all the grounds raised by the Revenue are dismissed.
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2017 (5) TMI 846
Stay of demand - pre-deposit - Held that:- In the light of the Office Memorandum issued by the CBDT, especially keeping in view the fact that the dispute is between Government of India and Company/Department owned and controlled by the State Government and also in the light of the order dt. 25/3/2017, is of the opinion that in case the assessee deposits 15% of the outstanding demand, all the appeals shall be heard on merits.
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2017 (5) TMI 845
Benefit of Income Declaration Scheme, 2016 - Whether the IDS, 2016 is a self contained code and can the designated authority go beyond the scope and mandate of the same? - Held that:- It will not be out of place to mention here that in the taxing statutes, the Court has to be very slow in interpreting the statutes where intention of the legislature is to curb the evasion of tax. This is a peculiar case where the Government has granted the benefit under the scheme only to the persons who are not covered under Section 132 of Act and other proceedings. If the class which has been debarred under the scheme and any person acquiring the same debar during the scheme can be granted the benefit of the scheme, the answer in is 'No'. The terms are not which are prohibited by law prior to launching of the scheme. If anybody acquired any disqualification during the scheme, has to be treated equal otherwise that will create two class. The scheme of 2016 will not override the provisions of the Income Tax Act and the scheme which has come by way of limited purpose cannot prevail over the Income Tax Act. In that view of the matter, the order passed by designated authority is just and proper. We are in complete agreement with the view taken by the learned Single Judge.
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2017 (5) TMI 844
Revision u/s 264 in favor of assessee - Claim for refund of excess Tax paid/waiver of interest under Sections 234A, 234B and 234C denied - reason assigned for rejection was, the return was not voluntarily filed by the petitioner but consequent upon survey conducted under Section 133A - Held that:- The respondent/Authorities are in agreement on one fact that belated returns cannot be revisited. But under Section 147 of the Act, the Assessing Officer is authorized to assess reasonable income escaping assessment within a period of four years of returns. That being so, the returns filed by the petitioner which was within the limitation of four years was within the propriety of Assessing Officer, which was overlooked by him. Then it follows that the Revisional Authority had every authority over the returns and revised returns of the petitioner, though was not assessed by the Assessing Officer. Instead of disposing off the revision petition on its merits, it is disposed with a sweeping remark that no order is passed by the Assessing Officer. This Court in the matter of A. Balakrishnan v. General Manager, Hindustan Machine Tools Ltd. [2007 (2) TMI 172 - KARNATAKA High Court] held that the Income-tax authorities are duty bound to process a return claiming refund even though filed beyond the period prescribed under Sections 139(1) and 139(4) of the Income-tax Act, 1961, said finding was upheld by the Division Bench of this Court. In the matrix on hand, the revisional authority restrained from exercising its jurisdiction for the sole reason that there was no assessment of the returns/revised returns by the Assessing Officer and the same was not proper and it needs to be quashed and matter has to be considered on merits. Thus the petition is allowed
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2017 (5) TMI 843
Revision u/s 263 - disallowance under section 14A - Held that:- we notice that the issue on the merits has been decided in favour of the assessee in State Bank of Patiala's case (2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT ). The amount of disallowance under section 14A was restricted to the amount of exempt income only and not at a higher figure. Once that was so, we do not consider it appropriate to discuss the scope of section 263 of the Act as the same has been rendered academic in view of the issue being answered in favour of the assessee on the merits. Thus, no substantial question of law arises. Consequently, the appeal stands dismissed.
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2017 (5) TMI 842
Assessment u/s 153C - no proper recording of satisfaction by the Assessing Officer to issue notice under section 153A - Held that:- During the course of the hearing it was suggested to the respondent/assessee through its counsel that having regard to the categorical statement in the note that : "During the course of search and seizure documents/papers pages 1 to 31 of annexure A-28 seized by Party R-2, annexures A-56, A-57 and A-58 seized by party 04 are found to belong to M/s Satkar Fincap Ltd., C-I05, Ramdutt Enclave, Uttam Nagar, New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invocable in this case", the Income-tax Appellate Tribunal's findings and conclusion cannot be sustained. Referring to assessee's submission that having regard to these facts the Income-tax Appellate Tribunal's findings with respect to no proper recording of satisfaction under section 153C of the Act may be set aside and the matter be remitted for consideration on the merits of the assessee's appeal, we, accordingly, set aside the Income-tax Appellate Tribunal's findings with regard to absence of any satisfaction under section 153C and as a consequence remit the appeals for consideration by the Income-tax Appellate Tribunal on the merits.
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2017 (5) TMI 841
Method of accounting - switch over from the mercantile to the cash system in the midst of the accounting year - whether the Tribunal was right in holding that the assessees could not adopt a cash system of accounting in respect of the commission received from MAL? - Held that:- Under the second agreement, although the commission was fixed at 1.5 per cent. The receipt thereof may well have been the subject matter of controversy and uncertainty, inter alia, on account of clauses 11 and 13. The controversy and the disputes could lead to litigation which in turn would be resolved only after years. The assessees, therefore, would not at any given point of time know with any degree of certainty as to the amount that they would be entitled to during the financial year. The uncertainty of receiving the amount, the quantum of the amount and the time of receipt are crucial factors in the assessees decision as to which of the accounting systems ought to be followed. The assessee was, therefore, entitled to switch over from one system to the other.In these circumstances, the assessees were entitled to follow a different system of accounting in respect of their transactions under the new agreement although with the same party, namely, MAL. A switch over in the midst of an accounting year, especially in such cases, could lead to skewed results. An assessee could then avoid paying the correct advance tax by following the cash system at first and then justifying the non-payment or short payment by switching over to the mercantile system. Further, the assessee could do this, theoretically at least, more than once leaving the entire assessment in a state of uncertainty and confusion. This would considerably fragment an assessment year. Apart from placing a burden on the Assessing Officer and the other authorities under the Act in carrying out the assessment in terms of time and resources, it would pose considerable difficulties in carrying out the assessment. The authorities would understandably be far more reluctant to accept a switch over in the midst of the financial year. Their decision to refuse to accept the switch over in the midst of financial year ought not be interfered with lightly. A switch over in the midst of financial year ought to be permitted by the authorities only in exceptional cases where the same poses no difficulty whatsoever in computing income and the switch over is justified. The burden to establish the same must rest heavily upon the assessee who desires the switch over in the midst of the financial year. The reference to the first question, therefore, is answered in favour of the Revenue in so far as it relates to the assessees' right to switch over from the mercantile to the cash system in the midst of the accounting year. - Decided in favour of the Revenue
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2017 (5) TMI 840
Levy of penalty u/s 271(1)(C) - non mentioning of inaccurate particulars as given by assessee - proof of concealment and furnishing of inaccurate particulars - Held that:- Perusal of the quantum assessment order reveals that the penalty has been initiated without specifying the limb i.e. furnishing of inaccurate particulars of income / concealment of income for which the penalty was being initiated as both the limbs, as per settled legal propositions, are different connotations and carry different meaning. The same also becomes clear from the language of show-cause notice which states that the assessee have concealed the particulars of income or furnished inaccurate particulars of income. Even the show-cause notice did not specify the limb / offence for which the penalty was being initiated. Finally, the penalty has been levied for filing of inaccurate particulars of income leading to concealment of income which shows inconsistent thinking on the part of AO. Undisputedly, the AO was required to specify the exact charge for which the assessee was being penalized which he has failed to do so and the same has resulted into taking away assessee’s valuable right of contesting the same and thereby violates the principles of natural justice. In the case of CIT Vs. Smt. Kaushalya [1995 (1) TMI 25 - BOMBAY High Court ], the Hon’ble jurisdictional High Court observed that the notice issued under Section 274 must reveal application of mind by the Assessing Officer and the assessee must be aware of the exact charge on which he had to file his explanation. It was further observed that vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity to contest the same. - Decided in favour of assessee.
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2017 (5) TMI 839
Disallowance under Rule 8D(ii) on account of interest expenses - addition u/s 14A - primary onus/burden to prove - Held that:- As observed from the perusal of the audited financial statement of the assessee that the “investments” of ₹ 45.83 crores are held as ‘investment’ and not as ‘stock in trade’ and hence the issue of applicability of section 14A of the Act to ‘stock in trade’ do not need require adjudication by us. As per section 14A of the Act where any expenditure is incurred by the assessee in relation to the income which is not includible in total income of the assessee such expenses shall not be allowed as expenditure. Thus, disallowance of such expenditure incurred in relation to earning of income which does not form part of total income under provisions of this Act shall be computed having regard to accounts of the assessee as provided in section 14A(2) of the Act. The matter needs to be set aside and restored to the file of AO for re-computing the disallowance u/s. 14A of the 1961 Act of the expenditure incurred in relation to the earning of income which does not form part of the total income having regards to the accounts of the assessee in accordance with our above directions. The assessee is directed to produce working of disallowance of expenditure incurred in relation to the earning of income which does not form part of the total income having regards to the accounts of assessee as is contemplated u/s 14A of the 1961 Act. The primary onus/burden is on the assessee to produce such working as the said facts are especially in the knowledge of the assessee. If the AO is not satisfied with the working as is submitted by the assessee as such disallowance cannot be worked out keeping in view accounts of the assessee, the AO will be justified in invoking Rule 8D of the 1962 Rules - Decided partly in favour of assessee for statistical purposes.
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2017 (5) TMI 838
Disallowance of provision for depreciation in value of government securities as per RBI guidelines - Held that:- We find that the aforesaid issue is squarely covered in favour of assessee in its own case for AY 2007-08 and AY 2009-10 as held depreciation in value was allowable even if specific instructions of the board were not there. Circular and instruction of the CBDT being squarely applicable on facts of assessee’s case, so CIT(A) was justified in allowing the same which needs no interference from our side. - Decided in favour of assessee. Premium amortization expenses on Government securities - Held that:- The issue is squarely covered in favour of assessee by the decision of the Hon’ble Gujarat High Court in case of CIT vs. Rajkot District Co-operative Bank Ltd.[2014 (3) TMI 110 - GUJARAT HIGH COURT] - Decided in favour of assessee. Claim of loss towards provision of standard assets - Held that:- Hon’ble Apex Court in the case of Southern Technologies Ltd.(2010 (1) TMI 5 - SUPREME COURT OF INDIA ) has clearly observed that by way of special provision under s.36(1)(viia), the banks are allowed to claim deduction subject to a ceiling or a limit. As per section 36(1)(viia), the banks are entitled to claim deduction certain prescribed percentages of the average advance made by the rural branches of such banks. However, relevant facts about the advance by the rural branch requires to be verified in the light of section 36(1)(viia) read with Rule 6ABA of the Income Tax Rules, 1963. Accordingly, we consider it expedient that the issue is revisited by the AO de novo in accordance with law in the light of provisions of section 36(1)(viia) of the Act after giving proper opportunity of being heard to the assessee.
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2017 (5) TMI 837
Addition on account of cash deposit in the bank account - unexplained sources - Held that:- Whatever contention was raised by assessee that cash belong to Smt. Saraswati Devi who in turn gave Smt. Vidya Devi and then given to the assessee have not been proved through any evidence or material on record. No independent witness has been produced to substantiate the fact that cash was actually given by Smt. Saraswati Devi. How a huge cash is kept by Smt. Saraswati Devi is not explained. If any cash amount is available to mother of the assessee which is alleged to have been given to the assessee, it is not explained why assessee was making deposits in his bank account on different dates of different amount and why full amount was not deposited in his bank account at the earliest. This itself create a serious doubt in the explanation of the assessee of availability of the cash through his grandmother. Filing a copy of ikrarnama and certificate from village Sarpanch will not prove the source of cash deposited in the bank account of the assessee. It therefore stands proved on record that assessee did not produce any evidence of source of cash deposits in his bank account. - Decided against assessee.
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2017 (5) TMI 836
Reopening of the assessment u/s 147 - addition made to capital gains by taking the sale consideration of the land at ₹ 40 lacs instead of actual sale consideration of ₹ 6 lacs - Held that:- It is clear that there was only a photo copy receipt which was made basis for reopening of the assessment which has no evidentiary value. Therefore Ad CIT should have verify the facts and applied his mind before granting approval to the reopening of the assessment. He has merely quoted in Column 12 “ I am satisfied” . It would be therefore clear from the fact of the case and on the basis of the aforesaid decisions relied upon by Ld. Counsel for assessee that the AdCIT has accorded his satisfaction in a mechanical way and as such the reopening of the assessment is wholly unjustified. In view of the above discussion it is clear that reopening of the assessment in the matter is wholly unjustified. - Decided in favour of assessee. 11. In view of the above discussions I set aside the orders of authorities below and quash the reopening of assessment in the matter. Resultantly additions made in the reassessment order stand deleted. There is no need to decide the other contentions raised by Ld. Counsel for assessee on merits.
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2017 (5) TMI 835
Validity of reopening of assessment - reopening after the expiry of four years - approval from competent authority - non independent application of mind - Held that:- As per the provision contained in Section 151 of the Act, the reopening after the expiry of four years from the end of the relevant assessment year can be done only after the satisfaction of the Commissioner or Pr. Commissioner or Chief Commissioner or Pr. Chief Commissioner but not on the approval of the Addl. Commissioner as has been done in this case. Thus the reopening beyond 4 years has been done by getting the approval of Addl. Commissioner and not from the Commissioner or Pr. Commissioner or Pr. Chief Commissioner. Therefore, the initiation of the proceedings u/s 148 of the Act was invalid. Also this case has been reopened by the AO only on the basis of the information gathered from DIT(Inv.), New Delhi and not by applying his own mind. Therefore, the reopening was not valid - Decided in favour of assessee.
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2017 (5) TMI 834
Revision u/s 263 - enhancing the long term capital gain - order erroneous or prejudicial to the interest of Revenue - Held that:- From going through the above series of events occurred during the course of assessment proceedings we observe that to a specific query raised during the assessment proceedings the assessee has given a specific reply which was accepted by the Ld.AO which resulted in fetching more Revenue to the income tax department because of applying the rate of land as on 01/04/1981 at ₹ 290 per sq.mt. as against ₹ 380 per sq.mt. originally shown by the assessee in the income tax return. There was a sufficient enquiry about the impugned transaction to which complete details were filed by the assessee to the satisfaction of Ld.AO which resulted in enhancing the long term capital gain originally shown by the assessee. Ld.CIT’s order u/s.263 of the Act is focusing on conducting additional enquiry on different pattern and also to apply fair market value of the land as on 01/04/1999 and alternatively he has mentioned about the comparable price of gold in 1999 which was quite similar to the basis taken by the valuer in the revised valuation report of Mr.P.K.Desai dated 10/08/2011 submitted during the course of assessment proceedings. In such case, where there is adequate enquiry and observations of the Ld.AO are clearly mentioned in the body of assessment order and view taken by him is permissible in law such order cannot be said to be erroneous or prejudicial to the interest of Revenue. CIT-A has wrongly assumed the jurisdiction u/s.263 of the AcT - Decided in favour of assessee.
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2017 (5) TMI 833
Scope of Rectification of mistake - AO issued notice u/s 154 requiring the assessee to explain as to why depreciation claimed by the assessee should not be disallowed as there was no generation of power - Held that:- AO has completed the assessment u/s 153A of the Act and hence all the facts were before him. The power generating unit did not function during the previous year. However, that would not itself justify the order passed by the AO u/s 154 of the I.T. Act. Since there is no mistake apparent on record and also relying on the ratio of the decision of the Delhi High Court in Capital Bus Service Pvt. Limited case [1980 (2) TMI 69 - DELHI High Court] wherein held The allowances for normal depreciation does not depend upon the actual working of the machinery; it is sufficient if the machinery in question is employed by the assessee for the purposes of the business and for no other business and it is kept by him ready for actual use. Thus we hold that the order u/s 154 passed by the AO is not correct and allow the assessee s appeal.
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2017 (5) TMI 832
Disallowance of claim of deduction u/s. 10A - profit earned by the assessee from its STP unit - Held that:- The Hon’ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Expert Outsource (P.) Ltd. (2011 (3) TMI 1428 - Karnataka High Court) has held that where the assessee has began operation prior to date of registration with STPI but export of goods commenced after registration with STPI, the assessee was eligible for deduction u/s. 10A and the ratio of CBDT Circular No. 1/2005 equally applies to the provisions of section 10A of the Act. The documents on record show that the entire turnover of the undertaking is from export. The ld. AR of the assessee has stated at the Bar that the STP unit commenced its business activities after relocating its office at new premises in May, 2009. During the financial year 2009-10, except for export turnover there was no other generation of income from STP unit. For the applicability of the circular after assessment year 2009-10 is concerned, we find that proviso to sections 10A and 10B have been amended from time to time and the date of allowability of deduction has been extended. Finance (No. 2) Act, 2009 has made amendment with retrospective effect from 01-04-2009 by substituting the year 2011 with 2012. Although, corresponding amendment has not been made in the circular, however, in view of amendment made to the provisions of section 10A, the circular would apply to the assessment year under appeal, as well. - Decided in favour of assessee.
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2017 (5) TMI 831
Computation of capital gain - CIT-A directed for adoption of the valuation as per the report of the District Valuation Officer which was lower than the value fixed by the stamp/registration authorities - Held that:- Once a reference was made to ld. DVO, invoking section 50C(2) of the Act, then the value fixed by the DVO alone has to be considered if it is lower than the value fixed by the stamp authorities. A reference under section 50C(2) to the valuation is always made on the behest of the assessee and an assessee will make a request for such a reference, only when he feels that value fixed by the stamp valuation authorities was on the higher side. If after such reference, the value fixed by the stamp valuation authorities is still to adopted, ignoring the lower value fixed by the DVO then the purpose of reference to the DVO itself is lost. In such circumstances, no circular of the CBDT can come to the aid of the Revenue. Once a valuation is given by the Valuation Officer in accordance with Sec. 50C of the Act, then such value alone can be adopted where it is lower than the value assessed by the stamp valuation authorities as held by Hon’ble Gujarat High Court in the case of Principal Commissioner of Income Tax vs. Ravjibhai Nagjibhai Thesia [2016 (9) TMI 645 - GUJARAT HIGH COURT]. - Decided against revenue
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2017 (5) TMI 830
Transfer pricing adjustment in respect of 'Provision for Research and Information Services - comparability - Held that:- The assessee is carrying on research from the internet based databases or other sources to compile the data, which is then customized/processed in accordance with the requirements of the requestor through a series of operations carried out by its Research Managers, Knowledge Experts, Practice Specialists and Senior Research Analyst etc. before finally transmitting it outside India after organizing into templates in Excel, Power Point etc. Thus, it is evident that the assessee is making value addition to the information accessed by it from databases etc. When we apply the requisites of KPO to the services rendered by the assessee under this segment, there remains hardly any doubt that the assessee is rendering KPO services under this segment involving huge expertise and skills. Thus companies functinally dissimilar with that of assessee need to be deselected from final list of comparable. Transfer pricing adjustment on account of interest on receivables - Held that:- It is simple that working capital adjustment is ordinarily computed by considering the average of the opening and closing values of inventories, receivables and payables. A transfer pricing adjustment on account of interest on delayed realization of invoice value has nothing to do with the closing or opening values. It depends on the period of realization on transaction to transaction basis. To put it differently, suppose an invoice is raised on 1st May; period allowed for realization is two months; and the invoice is actually realized on 31st December. Notwithstanding the fact that interest on such late realization would become chargeable for a period of 6 months (from 1st July to 31st December), but the amount of invoice will not be receivable as at the end of the financial year on 31st March. As such, this receivable would not have an impact on the working capital adjustment in any manner, but would call for addition on account of the late realization of invoice value for a period of six months. Following the orders in Ameriprise (2015 (8) TMI 652 - ITAT DELHI ) and Techbooks(2015 (7) TMI 473 - ITAT DELHI) we uphold the view taken by the TPO on this issue. Interest on late realization of invoices is directed to charged in line with the directions given in the above orders of the Delhi Bench of the tribunal. Treatment of foreign exchange (forex) gain/loss as an item of operating nature in the computation of the ALP - Held that:- We find merit in the contention raised on behalf of the assessee about the inclusion of foreign exchange gain/loss in the operating revenue/costs of the assessee as well as that of the comparables. When we advert to the nature of such foreign exchange gain earned by the assessee, it has not been controverted by the ld. DR that the same is in relation to the trading items emanating from the international transactions. If the foreign exchange gain/loss directly results from the trading items, we fail to appreciate as to how such foreign exchange fluctuation loss can be considered as non-operating. We are of the considered opinion that the amount of foreign exchange gain/loss arising out of revenue transactions is required to be considered as an item of operating revenue/cost, both for the assessee as well as the comparables. The ground taken by the Department is, therefore, dismissed.
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2017 (5) TMI 829
Disclosure of additional income - application for settlement under section 245C(1) - whether for every year mentioned in the application there should be a disclosure? - fundamental test of "full and true disclosure" - Held that:- We hold that there need not be disclosure of additional income in every year that is covered by the application. The principle laid down in the case of Airtech Private Ltd. [1994 (6) TMI 192 - INCOME TAX SETTLEMENT COMMISSION ] continues to hold good and we affirm it. We also hold in this regard that there is no change in law in 2007 or 2010 which would affect the conclusion drawn above. Whether in each of the years wherein additional income has been disclosed, there has to be additional tax liability? - Held that:- It can be said for sure that the additional tax liability as per the application should exceed the threshold limit as mentioned in proviso to section 245C(1) such that the application could be admitted. We are in agreement with the contention of the authorised representative that so long as the threshold limit of tax as laid down in section 245C is exceeded there is no requirement that there should be additional tax liability for every year for which additional income is disclosed. We therefore hold that there is no requirement in the law that in each year where the additional income has been disclosed there should be additional tax payable, so long as the threshold limit of tax as provided in section 245C(1) is exceeded. We also hold, in view of the discussion above, that the amendments brought about in the proviso to section 245C(1) read with section 245A(b) by the Finance Acts 2007 and 2010 have not affected the legal position as far as the question posed before us is concerned and therefore the decision of the Special Bench rendered in the case of Airtech Private Ltd. [supra] prevails and is good law.
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Customs
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2017 (5) TMI 879
Suspension of CHA licence - the appellant claims that the time limits strictly prescribed under CBLR 2013 for issuance of SCN is contravened - The adjudicating authority has issued the show cause notice under CBLR 2013 on 19/11/2015, after a gap of more than three months from the date of receipt of Offence Report - Held that: - Regulation 20(1) contemplates issue of Show Cause Notice to the customs broker by the Commissioner within a period of 90 days from the date of receipt of Offence Report. The issue of SCN is to be followed within a period of 90 days by submission of Inquiry Report by Asst. Commissioner/Dy. Commissioner and ultimate passing of the order by the Commissioner within a period of 90 days from the date of submission of Inquiry report - the initial SCN under Regulation 20 has been issued only on 19.11.2015 even though the Offence Report was received by the Commissioner of Customs, Delhi on 10.03.2015. Ninety days period has already expired on 09.06.2015. Hon’ble High Court of Madras, in the case of A.M. Ahamed & Co. Vs. CC (Imports), Chennai [2014 (9) TMI 237 - MADRAS HIGH COURT] has held that the whole proceedings are to be commenced within a time limit and also concluded within a time frame. The order of the lower authority which was issued without adhering to the time schedule is liable to be set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 865
Maintainability of petition - Release of seized goods - Held that: - the petitioner cannot seek indulgence of this Court by filing the present writ petition, more particularly, when he has chosen to file an appeal before the CESTAT, challenging the concurrent findings of the authority - petition dismissed being not maintainable.
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2017 (5) TMI 864
Entitlement to interest - relevant date for calculation of interest - refund of pre-deposit - whether the petitioner is entitled to get interest at the rate of 12% per annum on refund of pre-deposit of ₹ 1,15,15,214/- granted to the petitioner after the expiry of three months from the date of the order passed by the appellate Tribunal that is 18.11.2002 till the date of actual refund along with further interest on the delayed payment of interest? - Held that: - the petitioner is entitled to get refund of the amount within a period of three months of the disposal of the appeals in the assessee's favor - the manner in which the refund of the money to be made is clear from the notifications ie. within three months of the disposal of the appeals in assessee's favour. Therefore, respondents are liable to refund the amount on expiry of three months from 18.11.2002 to the petitioner ie. the date of the order of the Appellate Tribunal, even if the application was submitted at a later point of time, especially due to the fact that the notifications are not restricting the payment of interest from the date of submission of application. What will be the rate of interest that the petitioner is entitled to get? - Held that: - in the case of Kuil Fire Works Industries v. Collector of Central of Excise [1997 (9) TMI 105 - SUPREME COURT OF INDIA], it was held that, the pre-deposit made by the assessee was directed to be returned to him with 12% interest - the interest that is liable to be paid by the respondents is fixed at 12% per annum. Petition allowed - decided in favor of petitioner.
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2017 (5) TMI 863
Confiscation of goods with vehicle - smuggling - case of Revenue is that the respondent forged the documents of Sales Tax Officials - Held that: - In any event, the Customs Officers should have informed the Sales Tax Authorities in respect of the alleged forged documents for initiation of proceedings under the respective law - appeal dismissed - decided against Revenue.
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2017 (5) TMI 862
Classification of imported goods - valuation - Aluminum Composite Plates - whether classifiable under CTH 7610 or not? - Held that: - The impugned order decides the valuation aspect saying that the subject goods are not classifiable under CTH 7610 and therefore reliance on NIDB Valuation Data for CTH 7610 for the present consignment is irrelevant - As we have set aside the impugned order on classification and are sending the matter back to the Commissioner (Appeals) for fresh decision, the issue of valuation also would require fresh determination - appeal allowed by way of remand.
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2017 (5) TMI 861
Validity of DEPB licence - goods imported by the appellant under the cover of fake DEPB license No. 02602396 obtained fraudulently against forged documents - Demand of duty with interest - Penalty u/s 112 (a) of the CA, 1962 - extended period of limitation - Held that: - the DEPB license was forged and fake. Therefore, the appellant is not entitled to avail any benefit on the forged documents - The Tribunal in the case of Eastern Silk Indus. Ltd. Vs. Commissioiner of Customs (Airport) Kolkata [2015 (12) TMI 1299 - CESTAT KOLKATA], has held that A script obtained from the Licensing authority fraudulently cannot give licence to any transferee to avail any Customs duty exemption - In the present case, the Adjudicating Authority had given a finding that the appellant was not involved in the fraudulent activities. Therefore, the imposition of penalty is not warranted. As per the above decision of the Tribunal, demand of duty alongwith interest is liable to be upheld - appeal disposed off - decided partly in favor of appellant.
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2017 (5) TMI 860
Misdeclaration of goods - undervaluation - import of artificial leather shoes for gents and ladies - the supplier had sent branded goods which were not declared and the assessable value as also the MRP declared in the Bill of Entry cannot be accepted to be correct reflection of the facts - Confiscation - redemption fine - penalty - Held that: - As regards the valuation, we note that admittedly the goods were mis-declared i.e. instead of branded items, the same were declared as artificial leather shoe items. It is a fact of common sense that the branded goods are priced much more than the local non-leather Chinese shoes. As such, the value of the goods declared by the assessee would definitely be on the lower side. Redemption fine - Held that: - there is nothing on record to show the MOP of the goods. As such at this stage by taking into consideration the differential duty confirmed against the assessee we reduce the redemption fine to the extent of differential duty. Penalty - Held that: - the same has already been fixed on the lower side and does not require any interference. Appeal rejected - decided in favor of appellant as regards reduction in quantum of redemption fine - other matters decided against appellant.
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2017 (5) TMI 859
Rectification of mistake - the date of final assessment was wrongly mentioned as 01/06/2009, whereas the bills of entry relevant to the claims were only finally assessed in December, 2009. The final assessment of the said bills of entry were in terms of order dated 16/07/2009 - Held that: - the date of final assessment was not presented correctly during the course of argument and also in the appeal papers. Upon verification, it is seen that the date of final assessment should be the date of assessment of bills of entry finally. The relevant date should be reckoned from such date. Accordingly, while the legal principles as held in the final order are correct, the error in dates are to be corrected and consequential benefit, if any, are to be granted to the appellant - ROM application allowed.
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2017 (5) TMI 858
Penalty u/s 114A and 114AA - Focus product scheme - licence issued against the fake shipping bills - Held that: - import license was purchased by the appellant from the market which was issued by the DGFT and the same was registered with the Customs authorities. Payment was made through the banking channel. Thus, the appellant was vigilant as per the maxim EX ALUN DANTI CAUTELA - appellants have purchased the licence from the market for import of the goods being the vigilant buyer - penalties set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 857
Valuation - import of items which are in the nature of Toys, Ash Tray, Soft balls etc - enhancement of value based upon the NIDB data - Held that: - demand of duty in respect of 30 declared items by enhancing their value on NIDB Data basis cannot be upheld - confiscation can also not be upheld. As regards Glass Chatons, it stands fairly admitted before us that the same were not declared by the importer. As such, we hold that such undeclared items are liable to confiscation and the importer is also liable to penalty - for the limited purpose of classification of the Glass Chatons, we remand the matter to the Original Adjudicating Authority for fresh decision - matter on remand. As regards the confiscation of the 30 declared items, in terms of Section 119 of the Customs Act, we find that there is nothing on record to show that the same were used for concealing the undeclared goods. Mere presence of the declared and undeclared items in the import consignment would not ipso-facto lead to the conclusion that declared items were brought only with the intention of concealing the undeclared items. As such, we hold that their confiscation is not called for, the same is accordingly set-aside. As regards the penalty on Shri Pankaj Gupta, Partner of the firm, we find that the partnership firm has already been held liable to penalty and as such imposition of separate penalty on the partner is not justified. As regards penalty on Shri Rohit Saran, we find that the same stands imposed only for alleged violation of CHA Regulations and not for the contravention of any of the provision of Customs Act - in the absence of any positive role played by CHA for abetment to the exporter in that case, penalty imposition for violation of CHA Regulations was set-aside. Appeal allowed - decided partly in favor of appellant and part matter on remand.
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Corporate Laws
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2017 (5) TMI 853
Demerger - Held that:- We are convinced that the petitioners and respondents cannot get along and conduct business of the company. Both the parties have agreed to the parting of the ways by giving exit to the petitioners. We hold that it would be just and proper that the respondent group namely, R-2 to R-13 and particularly R-2 and R-3, who are admittedly in the control of the affairs of the company be directed to buy out the shares held by the petitioners in the company at a fair price to be determined by an independent valuer. The instant petition therefore stands disposed of with the following orders: A. As discussed the alleged violators of section 314 namely, S.Gursimran Singh Grewal (R-3), S.Paramvir Singh Grewal (R-4), S.Saminder Singh Grewal (R-6), S.Mandeep Singh Grewal (R-10) and Mrs.Harsimran Dutta (R-11) are required to refund to the respondent company, the amount paid to them in excess of the permissible limits u/s 314 along with interest payable at the bank rate enhanced by 2% within 30 days of receipt of this order. For this purpose, the bank rate applicable as on 31st March of each of the financial year shall be taken. B. M/s Ernst & Young, 6th floor, Wing A & B, Worldmark-1, Aero city, IG1 airport Hospitality District, Opp. Holiday Inn, Mahipalpur, New Delhi 110037 is appointed from out of the list of valuers submitted by the petitioners and agreed to by the respondents, as an independent valuer for fair value of the shares held by the petitioners of the company. The cut- off date for determining the value of the shares will be 31.3.2007 i.e, the date nearest to the filing of the petition. While computing the share value, the Valuers Shall also consider the asset based valuation as the Respondent Company has a large asset base. C. The date of filing of the petition is April 2007. Hence, the said valuer will find out the fair value of the shares of the company as on 31.3.2007 on the basis of going concern by all recognised methods and applicable rules and regulations as applicable on the said date in this regard. D. The parties are directed to extend every cooperation to the said Valuer. The company shall submit all the necessary documents and papers for the purpose of valuation as desired/required by the said Valuer. E. The valuation report shall be prepared within 90 days from the date of receipt of copy of this order. F. Copy of the report shall be supplied to the parties who shall be entitled to file their respective objections, if any, to the valuation of the shares. After receipt of the objections the valuer shall dispose of the same within four weeks and shall prepare a comprehensive/speaking supplementary report dealing with each and every objection. Thereafter, the Valuer shall send final report to the parties. G. After determination of the value of the shares, the respondents 2 to 13 shall pay the amount to the petitioners, other than those who have withdrawn from the petition and whose application for withdrawal is pending (as per (he petitioners' shareholding proportions) within 30 days thereof and upon receipt of the amount, the petitioners shall execute all the documents/deeds necessary for the transfer of the shares held by the petitioners of the company in favour of the respondents and/or their nominees within two weeks. H. In case, the respondents decline to purchase the shares of the petitioners as aforesaid at the determined share value, the petitioners shall have the right to purchase the same from the respondents. The procedure and the time line as detailed above shall be followed. I. The remuneration of the Valuer shall be negotiated and paid by the company in three equal instalments. First instalment shall be paid on the commencement of the valuation process and the second instalment shall be paid after submission of the valuation report by the Valuer within the stipulated period. The third and final instalment shall be paid to the valuer after submission of the final report together with objections and the supplementary report.
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Insolvency & Bankruptcy
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2017 (5) TMI 854
Insolvency resolution process - default in making the payment of operational debt - petitioner is an 'Operational Creditor' within the meaning of Section 5(20) - period of limitation - Held that:- A perusal of the paper book shows that the Operational Creditor has placed on record a copy of the demand notice dated 08.01.2017 (P/8). There is an affidavit filed by Mr. Sandeep Gupta that the aforesaid demand notice has not been responded to. It is further clear that the statement of accounts maintained by the Operational Creditor has also been placed on record along with the master data of the Corporate Debtor. The copies of the post dated cheques and the invoices showing the "funds insufficient" issued by the Bank dated 16.05.2014 (page 51), dated 23.06.2014 (page 53) have also been placed on record. Therefore, we find that the requirements of Section 9 are substantially fulfilled. The liability to pay has also not been disputed in view of the facts that the Operational Creditor had received seven post dated cheques in lieu of full and final settlement dated 21.01.2014 (page 57). We are further of the view that the claim is within the period of limitation of three years as the earliest cheque dishonoured is dated 15.03.2014 and the present petition was filed on 01.03.2017. We are of the view that it is a fit case for triggering the insolvency resolution process. Accordingly, we initiate the insolvency resolution process. As the interim resolution professional has not been named, we appoint Shri Vivek Goyal practicing Chartered Accountant (Mobile No. 98155-22553) who is duly registered with Insolvency Bankruptcy Board (IBBI/IPA-001/IP-00089/2016-17/1117). The provisional insolvency professional shall take immediate steps in terms of Section 14 as there would be a 'Moratorium' on the Corporate Debtor. The insolvency resolution professional shall also take steps and perform his duties in terms of Section 15, 17 & 18.
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FEMA
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2017 (5) TMI 852
Violation of Section 3 of FEMA, 1999 - Held that:- In the present case, the remitter and investor are different and are not in accordance with the Regulations made by the Reserve Bank of India under the Act. The remittance 1 and remittance 2 were made by the person other than the investor and are in direct contravention of Regulation 5 of FEMA (Permissible Capital Account Transactions) Regulations, 2000. From the perusal of record, it is clear that in the instant matters, there is contravention of the provisions of Section 3 (b) .Section 6(2), 6(3)b & Section 42 (1) of FEMA, 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000, Paragraph 8 of schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, and Para 9 (1) (A) of schedule to the Foreign Exchange Management (Transfer one! Issue of Security by a Person Resident outside India) Regulations, 2000. We agree with the observations of the Adjudicating Authority expressed in para nos. 73 to m of the Adjudication Order. SCNs 1 to 4 were rightly issued. The penalty amount, if any deposited by the appellants as pre-deposit will be adjusted and the balance amount will be paid by them individually within a period of sixty days from the date of communication of the order, failing which the Enforcement Directorate may recover in accordance with law. With these directions, the instant appeals are disposed of with some modification in the amounts of penalties imposed against all the appellants taking into consideration all the facts and circumstances of the case.
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Service Tax
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2017 (5) TMI 898
Jurisdiction - Review of an order - Review petitioner had filed W.P.Nos.6599- 6600/2015 seeking for quashing of show cause notices dated 20.02.2013 – Annexure-A and 22.05.2014 –Annexure-B which relates to the period 2010-11, 2011-12 and 2012-13 whereunder respondent-authorities had proposed to raise demand for service tax as indicated in the said show cause notices. This Court, by order dated 09.03.2015 dismissed the writ petitions as premature by reserving liberty to the petitioner to file reply to show cause notices - Held that: - issue regarding jurisdiction to impose service tax on the petitioner and Legislative competency having been challenged, same was required to be examined, adjudicated and answered by this Court and this exercise was not undertaken - As such, order passed by this Court on 09.03.2015 requires to be reviewed - petition allowed - decided in favor of petitioner.
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2017 (5) TMI 897
Construction of complex services - liability of tax - 10 individual houses built for Rajasthan Housing Board in the NRI scheme - Held that: - Sharing facilities provided by local Authorities available to all residential units by way of road, street lights, park, water supply unit does not make the residential unit covered by the tax entry u/s 65 (91a) of the FA, 1994 - the impugned order failed to justify the categorization of the construction carried out by the appellant, with reference to 10 independent houses, as construction of residential complex in terms of the above tax entry - demand set aside. Works Contract Service - composition scheme - Held that: - the appellants did opt for the said scheme and have paid service tax under the said scheme - all consideration received under the said works contract should be eligible for composition scheme. Penalties imposed on appellants also set aside. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 896
CENVAT credit - clearance of capital goods as such to different units - goods not received back within 180 days - Rule 3 (5) of CCR, 2004 - Held that: - in the absence of any allegation of diversion of capital goods for other than intended purpose or their clearance to third party, the Revenue is not justified in denying credit on such capital goods which are admittedly installed and utilized for providing taxable output service - Considering the nature of output service provided by the appellant, all over the State of Rajasthan, it is not correct to presume that the credit availed capital goods should be installed/available in a single registered premises - demand of credit set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 895
Renting of Immovable Property Services - benefit of N/N. 06/2005-ST dated 01.03.2005 - property owned jointly - Revenue is of the view that as the appellants have jointly let out the property and total rent received on the property is more than threshold limit of N/N. 06/2005-ST dated 01.03.2005 ibid, therefore, the appellants are liable to pay service under the category of Renting of Immovable Property Services - Held that: - the issue has already been dealt by this Tribunal in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel [2015 (9) TMI 790 - CESTAT MUMBAI], where on similar issue benefit was extended - the demand of service tax is not sustainable as the appellants are entitled for benefit of N/N. 06/2005-ST dated 01.03.2005 ibid - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 894
SEZ developers - Refund claim - Banking and Financial Services - Real Estate Agents and Consultant Services - Held that: - the said services were consumed by the appellant as an unit/developer in SEZ during the relevant period, When there is no dispute that services are consumed in a SEZ the question of rejecting the refund claim in itself is incorrect. - list of services which are used for authorized operation in a SEZ Includes these two services i.e., Banking and Financial Services and Real Estate Agent services - on a request made by appellant, the office of the Development Commissioner by letter dated 20.11.2012 informed appellant that i e, Banking and Financial services and Real Estate Agent Services are authorized services from the date of application i e. , December 2008 onwards - services are authorized for refund - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 892
Refund claim - rejection on the ground of non-fulfilment of the condition of the N/N. 17/2009-ST dated 7.7.2009 as the relevant details of shipping bills etc. were not mentioned in the respective invoices of service provider - Held that: - reliance was placed in the case of in the case of Principal Commissioner of S.T. Vs. R.R. Global Enterprises Pvt. Ltd. [2016 (9) TMI 636 - ANDHRA PRADESH HIGH COURT] where it has been held that if notification puts the requirement of fulfilment of the condition it cannot be waived as mere procedural - when the condition of N/N. 17/2009-ST has not been fulfilled, the impugned order is sustained - appeal dismissed - decided against assessee.
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2017 (5) TMI 891
Renting of immovable property service - demand - case of appellant is that since the Central Bank of India has already paid the service tax the demand should be reduced to that extent - Held that: - on the rent paid by the Central Bank of India against the premises, the bank was discharging the service tax - I do not agree with the lower authorities’ rejection of this claim of the appellants only on the ground that letter is not sufficient to prove the payment of service tax. If the lower authority has any doubt on this letter, he could have asked report from the Jurisdictional service tax department of the bank whether the payment of service tax shown as paid by the bank is correct or otherwise - the demand must be reduced to the extent of the service tax paid by the Central Bank of India. The matter is remanded to the original authority to requantify the service tax demand by reducing the service tax paid by the Central Bank of India - appellant deserves the waiver of penalty by invoking Section 80 - appeal allowed by way of remand.
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2017 (5) TMI 890
Renting of Immovable of Property Service - abatement of property tax - Held that: - the property tax has been discharged on the property from where the appellant is conducting its business, the deduction on account of property tax amount paid are available and finding of lower authorities rejecting the same are unsustainable. Penalty u/s 76 of FA - Held that: - since the issue was in dispute and retrospective amendments was made and one of the issue is still pending before the apex Court, the appellant has made out a justifiable cause for setting aside the penalty as per Section 80 of the FA, 1994 as applicable during the relevant period - penalties set aside. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 889
CENVAT credit - Intellectual Property Rights Service - Information Technology Software Service - reverse charge mechanism - it is alleged that the appellant should have distributed the service tax credit to the various units situated across the country and should not have availed CENVAT credit only at Pune - Held that: - the services on which CENVAT credit has been availed are being used for providing output services is not in dispute. If at all Pune unit of the appellant distributes this credit to various other units on pro-rata basis CENVAT credit was available to the other units also and it is also not in dispute that during the period the other units were also discharging service tax liability in cash also. Therefore, the entire exercise would have been revenue neutral - rejecting the claim of CENVAT credit of the appellant is unsustainable - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 888
Rectification of mistake - appellant had taken a specific plea that service tax liability needs to be recalculated based upon the cum tax value of the commission paid - the Bench has not addressed to this specific plea taken and submits that if his plea is allowed - Held that: - this plea of the appellant in that case that the amount paid needs to be considered as cum tax value has been upheld by the Apex court in the case of COMMR. OF CEN. EXCISE & CUS., PATNA Versus M/s ADVANTAGE MEDIA CONSULTANT & ANR. [2008 (10) TMI 570 - SUPREME COURT] - Respectfully following the same, we hold that in the case in hand, our final order needs correction/rectification of mistake to the extent as mentioned - ROM application allowed - decided in favor of appellant.
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2017 (5) TMI 887
Refund claim - promotion and marketing of universities located in India as well as abroad - export of services or not? - rejection of refund claim on the ground that the services provided by the appellant do not qualify as export of services specially when the services were provided and used in India, therefore, they cannot be regarded as ‘export’ - Held that: - mere fact that the appellant has been promoting and marketing foreign universities within India and then getting prospective students enrolled for various courses in those universities does not mean that services to foreign universities were consumed within India - There is no dispute that service recipients are foreign universities and they are located outside India and payment for such services has been received in foreign currency. From the totality of facts and circumstances, there is no doubt that these services were provided from India and used outside India - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 886
Erection, Commissioning or Installations service - appellants are involved in laying electrical cables along side roads and providing single point light fitting at the houses of beneficiaries under Kutir Jyoti Yojna/Scheme of the Government of Rajasthan - whether the appellant liable to pay tax under the entry Erection, Commissioning or Installations service? - Held that: - the contracts executed by the appellants are composite in nature with supply of materials also. As such, the appellants are not liable to service tax for the period prior to 1.6.2007 - Even for the period after 1.6.2007, we note that the activities carried out by the appellant viz. laying of cables under or along side of roads and laying of electrical cables upto the distributions points of residential or commercial locations or complexes, are clarified to be not liable to any tax as per the Board’s Circular dated 24.05.2010 - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 885
Packaging Activities - Liability of tax - The appellants are engaged in packing parts of tractors viz. “bumpers” - Held that: - the respondent shown the cost and an amount of 10% for supply of goods. Since these supply involve sale with profit of 10%, the said activity cannot be covered for service tax liability - appeal dismissed - decided against Revenue.
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2017 (5) TMI 884
Providing / hiring and renting out the halls / open spaces/ theaters and auditoriums to various parties - The appellant contested the allegations stating that they being statutory body, exempted from payment of service tax and in any case extended period cannot be invoked against them as they were under bonafide belief that they are not liable to pay service tax - whether appellant is required to discharge the service tax liability under the category of ‘mandap keeper services’ or otherwise? Held that: - Definition of mandap keeper services u/s 65 (67) clearly indicates that a person who allows temporary occupation of a mandap for a consideration for organizing any official, social or business functions such activity is taxable. Appellant is not disputing the fact that renting out the halls / open spaces/ theaters and auditoriums to their clients are allowed for temporary occupation for a consideration - the services rendered by the appellant gets covered u/s 65(105)m of the FA, 1994. Extended period of limitation - Held that: - appellant being BrihanMumbai Municipal Corporation and a statutory body, could not be held to have been suppressing the facts with intent to evade service tax liability - extended period not invocable. The demand of service tax can be upheld for the normal period of limitation and not for the extended period - adjudicating authority is directed to recompute the tax demand for the normal period of limitation and intimate the same to the appellant for discharge of the same - appeal allowed by way of remand.
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2017 (5) TMI 883
Business Auxiliary Services - the appellants were engaged in developing and supplying contents like news, cricket scores, jokes, etc. to various telecom companies on revenue sharing basis - non-payment of service tax - Revenue entertained a view that these types of value added services with reference to news, cricket score, astrology, jokes, etc. are to be considered under the taxable category of “Business Auxiliary Service” - Held that: - the appellant is promoting the service provided by the mobile operator is without any factual basis. Admittedly, the arrangement is on principal to principal basis, wherein the appellants develops and provides certain contents to be transmitted by the mobile telecom operators to their various subscribers, as a value added service. The consideration for providing such contents were fixed as percentage of income obtained by the telecom service providers - the appellants are not engaged in procuring any input service for the telecom operators. In fact, they are developing the contents and supplying the same to the telecom operators on a revenue sharing model - the impugned order did not legally justify the tax liability of the appellant under the category of “Business Auxiliary Service”. Management, Maintenance or Repair Services - the appellant shall develop, operate and maintain online sites of BCCL - Revenue entertained a view that the appellants were engaged in management, maintenance and repair of software and accordingly, are liable to pay service tax - Held that: - A plain reading of the agreement and the scope of the activities by the appellant, will indicate that they are not involved in any software, repair or maintenance. They are involved in a comprehensive service of designing and managing the online publication for BCCL - the website per se is not a computer software - On careful consideration of the scope of activities undertaken by the appellant, we are of the considered view that the same will not fall under the scope of management/maintenance/repair of software. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 882
Reverse charge mechanism - Telecommunication services - outbound roaming services received from the foreign telecom service provider - whether the services provided by the overseas service provider is conforming to the telecommunication services defined under sub clause (zzzx) of section 65(105) ibid? - Held that: - in order to fall under the taxable category, service provider must be a Telegraph Authority - in order to be considered as Telegraph Authority, the person has to be granted a license under the first provisio to sub section (1) of section 4 of the India Telegraph Act 1885. Admittedly in this case the Foreign Service provider has not been granted with any licenses under the Indian Telegraph Act 1885 and hence cannot be considered as a Telegraph Authority under the provisions of the Indian Telegraph Act 1885. This Tribunal in the case of TCS E-Serve Ltd. [2014 (6) TMI 655 - CESTAT MUMBAI], by relying on the circular dated 15.07.2011 has held that services provided by any person who is not a Telegraph Authority, is not liable to service tax either u/s 66 or u/s 66A ibid. Demand set aside - appeal allowed - decided in favor of assessee.
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Central Excise
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2017 (5) TMI 881
Imposition of penalties on partners of manufacturing firm u/r 26 of CER - non-payment of Central Excise duty by M/s Allied Electricals - penalties u/s 11AC have already been imposed on the appellant - Held that: - Penalty u/r 26 can be imposed on any person, who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules; shall be liable to a penalty not exceeding the duty on such goods or [two thousand rupees], whichever is greater. It is clear on plain reading of the above-mentioned provisions and the facts of the case penalties under Section 11AC and Rule 26 operate in different fields. It is not correct to say that the penalties now imposed on the partners/ appellant will amount to double penalty for the same offence. It is clear that the provisions involved are different and the nature of offence sought to be penalized is also different. The penalties imposed on the appellants are reduced to ₹ 50,000/- each, u/r 26 of CER, 2002 - appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 880
100% EOU - DTA sale subject to permission from the Development Commissioner Noida SEZ - The Revenue authorities took the view that the goods cleared in DTA by the assessee were not conforming to the permission granted by the Development Commissioner for DTA sale - demand - whether the DTA clearance made by the assessee were in terms of the LOP granted by the Development Commissioner? - Held that: - The DTA sale of finished products is permissible in terms of para 6.8 of the FTP 2009-14. The Development Commissioner has granted permissions for DTA sale from time to time on the basis of the export obligation fulfilled by the assessee in various Financial years - it is necessary for the Customs authorities to monitor and ensure that the concessional rate of duty in terms of notification no. 23/2003-CE is extended only to the goods cleared in DTA by the EOU within the limits specified by Development Commissioner. It is a corollary to the above statement that the limit upto which concession is permitted is required to be determined in the same terms in which the permission for DTA sale has been given by the Development Commissioner. The entitlement for concessional duty is required to be evaluated strictly in terms of the various permissions granted by the Development Commissioner. We note that in the impugned order dated 20.02.2015 the method adopted for determining the concessional duty benefit is not in accordance with the specific permissions granted by the Development Commissioner. We also note that the stand adopted by the Ld. Commissioner (A) in the impugned order dated 19.04.2016 is also strictly not in conformity with the DTA permission. The impugned orders are required to be set aside and the issue remanded back to the Ld. Jurisdictional Commissioner for re-determining the eligibility for the concessional N/N. 23/2003-CE strictly in terms of the permissions granted by the Development Commissioner - appeal allowed by way of remand.
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2017 (5) TMI 878
Adjustment of sanctioned refund amount against arrears of Central Excise duty of lessor company - Held that: - the appellants have not succeeded or acquired the business or trade of the arrears holder and even have not purchased any property of the arrears holder. They have simply entered into a lease agreement with reference to one of the properties of the arrears holder. This cannot make the appellants liable for any Central Excise duty arrears standing in the name of the owner of the land M/s Kalani Industries - the lease deed provisions have no relevance or application to justify the adjustment of sanctioned refund amounts payable to the appellant, against the arrears standing against M/s Kalani Industries - adjustment not allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 877
MODVAT/CENVAT credit - Plates, Channels, Shapes & Section, Sheets, Angles, Bar, Iron & Steels, etc. falling under Chapter Heading 72 of Schedule to CETA, 1985 - eligible inputs or not? - Held that: - the ruling by Hon’ble High Court of Rajasthan in the case of Union of India Versus Hindustan Zinc Ltd. [2006 (5) TMI 44 - HIGH COURT RAJASTHAN] is squarely applicable in the present case, where it was held that MS/SS Plates used in workshop meant for repair and maintenance of machinery which are used for manufacture of final product are eligible to avail Modvat credit - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 876
Refund claim - Denial of refund on account of the appellants have claimed duty drawback - Held that: - the refund claim of services used for export of goods cannot be denied to the appellants claimed duty drawback - refund allowed. Refund claim - Inland Haulage Charges - CHA Service - Clearing and forwarding Agent Service - denial on the ground that the services do not qualify as port services - Held that: - the Inland Haulage Charges, CHA Service and Clearing and Forwarding Agent Service have been received by the appellants for export of goods at port and are covered under port services - refund allowed. Refund also denied on the ground that the appellant has not produced the payment of proof of payment of service tax - Held that: - As the invoices of the above services are on record showing payment of service tax. In that circumstances, on this ground refund claims cannot be rejected to the appellant. Refund claim - Road Transport Service - denial on the ground that there is no co-relation of invoices issued by the service provider or the goods transporter - Held that: - the adjudicating authority is directed to verify the documents for the service received by the appellants and corresponding invoice of service provided by the goods transporter and to ascertain the fact, whether the invoices produced by the appellants are for transportation of goods their factory to the port for export - matter on remand. Appeal allowed - decided partly in favor of assessee and part matter on remand.
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2017 (5) TMI 875
CENVAT credit - eligible input services - CHA services - courier services - clearing and forwarding agent service - Held that: - it appears that the subject services viz. CHA service, courier service and clearing and forwarding agent service are eligible input service on which the assessee appellant is entitled to take Cenvat credit - for CHA services, reliance placed in the case of Mundra Ports & Special Economic Zone Ltd. Vs. CCE, Rajkot [2008 (9) TMI 117 - CESTAT AHEMDABAD], where it was held that input service of CHA is eligible to be claimed as Cenvat credit by the assessee - in respect of Courier services, the Tribunal decided in the case of CCE & Cus, Vapi Vs. Apar Industries Ltd. [2010 (8) TMI 407 - CESTAT, AHMEDABAD] that for the service tax paid for the input service of courier, assessee is entitled to claim Cenvat credit - in respect of clearing and forwarding agent service, there is again a decision by the Tribunal in the case of Ashirvad Pipes Pvt. Ltd. Vs. CCE, Bangalore [2013 (12) TMI 1268 - CESTAT BANGALORE] whereunder C&F agent service is found to be eligible service for claiming Cenvat credit by the assessee - credit allowed - decided in favor of assessee.
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2017 (5) TMI 874
CENVAT credit - tubes and tyres - denial on the ground that at the material time i.e. after 29.01.2004, the appellants were not selling the complete wheel assembly to Piaggio Ltd., but were putting tubes and tyres on the wheel rims on job work basis. He argued that in these circumstances, credit of the tubes and tyres cannot be availed by the respondent - Held that: - In view of the fact that the data submitted to the Commissioner (Appeals) has not been examined in detail and the explanation given by the respondent was accepted without fully examining the said data the impugned order is not a speaking order - the matter remanded to Commissioner (Appeals) to re-examine the data and the explanation given by the respondent - appeal allowed by way of remand.
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2017 (5) TMI 873
Second round of appeal - Manufacture - whether the doubling of single yarn is amount to manufacture and liable to duty? - whether double yarn manufactured from duty paying single yarn is eligible for exemption under N/N. 35/95-CE? - Held that: - Ground was not raised earlier - submission of the Ld. Counsel that doubling of yarn is amount to manufacture and whether the appellant is entitle for exemption N/N. 35/95-CE cannot be raised at this stage - However as regard the re-quantification of the duty. The adjudicating authority was not barred from making correct quantification not only by considering modvat aspect but also on other quantification therefore matter is remanded to the original adjudicating authority for re-quantification of the correct duty liability as claimed by the appellant that the duty liability is of ₹ 4,82,504/- and not ₹ 16,47,067/- - appeal allowed by way of remand.
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2017 (5) TMI 872
CENVAT credit - input service - construction of residential building in the factory premises for the employees - whether the Cenvat credit in respect of service of construction of residential building in the factory premises for the employees is admissible as input service or otherwise? - Held that: - the credit in respect of construction service of workers quarters in the factory premises of the appellant is admissible input service and the Cenvat credit is permissible - reliance placed in the case of Bajaj Hindusthan Ltd. Versus Commissioner of Central Excise, Meerut [2015 (9) TMI 1222 - CESTAT NEW DELHI], where the credit on construction service and/or service related to the residential building has been allowed - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 871
Penalty u/r 26 of CER - alleged suppression of facts, clandestine removal and evasion of duty - Held that: - As per the provisions of Rule 26 of Central Excuse Rules, 2002, element of personal knowledge or mens rea is an essential prerequisite for imposing the penalty thereunder - There are no specific documentary evidences or even the statements of these two Appellants indicating that they had a guilty mind, and they had personal knowledge and involvement in the evasion of duty/taxes - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 870
CENVAT credit - structural items namely angle, channels, sheets bar, beam etc. - denial on the ground that these inputs will not fall under the definition of capital goods - Held that: - identical issue decided in appellants own case Commissioner of Central Excise Versus M/s. ACC Ltd. [2016 (8) TMI 888 - CESTAT NEW DELHI], where it was held that the items in question were used in fabrication of the capital goods in which case even Larger Bench decision of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], which allows the credit, does not stand rebutted or even challenged by the Revenue - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 869
Principles of natural justice - Clandestine manufacture and removal - manmade fabrics - confiscation of goods - penalty - Held that: - when the assessee is requesting to release the documents withdrawn under Panchanama, it is incumbent on the adjudicating authority to return the documents particularly when the same is not relied upon. Even if it is relied upon, the documents have to be given to the assessee. Therefore, the denial of release of the documents on one or other pretext by the adjudicating authority is clear violation of principles of natural justice. In this fact, the matter needs to be remanded to the original adjudicating authority - appeal allowed by way of remand.
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2017 (5) TMI 868
Refund claim - Central Excise duty paid on the goods cleared by appellant and claimed as rebate / refund in respect of clearances made to SEZ unit - rejection of rebate claim on the ground of provisions of Rule 18 of the CER, 2002 are not applicable as the amount paid to the appellant does not amount to Central Excise duty - Held that: - the same issue was before the Division Bench in the appellant’s own case. Since the Division Bench has held in favour of the appellant on the same set of facts in appellant's own case AJINKYA ENTERPRISES Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2013 (6) TMI 610 - CESTAT MUMBAI], the ruling of the Division Bench is binding on me - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 867
Refund of excess amount of excise duty paid - job-work - It is the case of the appellant that they discharged excess duty on the lubricating oil manufactured and cleared on behalf of M/s Valvoline Cummins Ltd. - principles of unjust enrichment - Held that: - Since the entire central excise duty for which refund has been claimed is received by them from the principal manufacturer, the lower authorities are correct in coming to a conclusion that bar of unjust enrichment applies in this case - refund rightly denied - appeal dismissed - decided against appellant.
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2017 (5) TMI 866
Valuation - provisional assessment not done - appellant should have opted for provisional assessment, however, they have instead valued on ad-hoc by paying maximum of duty on estimated value and they paying differential duty after finalization of valuation - Held that: - there was no intention to suppress anything from the Revenue as they have paid the duty and the entire method was known to the Revenue - this method of valuation by the appellant was in full knowledge of the Revenue and there was regular correspondence on this issue - penalty u/s 11AC cannot be imposed - demand of duty upheld - appeal allowed - decided partly in favor of assessee.
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CST, VAT & Sales Tax
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2017 (5) TMI 856
Refund claim with interest - C-Forms not submitted - Held that: - refund claim will be processed within a period of two weeks from submission of C-Forms - as regards interest, the undertaking of the DVAT Department that such withheld amount will be paid, subject to the outcome of the decision of the case of Commissioner, Trade and Taxes v. Vizien Organics [2017 (3) TMI 485 - SUPREME COURT OF INDIA], within four weeks from the date of the said order of the Supreme Court is placed on record - petition allowed - decided in favor of petitioner.
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2017 (5) TMI 855
Liability of tax - Assessment Year 2009-2010 - business of ‘supari’ - stock transfer - levy of tax u/s 12 of the Act on the purchase value of ‘supari’ dispatched outside the State of Assam - petitioner claim that since the tax on ‘supari’ was leviable u/s 10 of the Act on its sale price, the petitioner was not liable to pay tax u/s 12 of the Act - Held that: - u/s 10 tax is leviable on ‘supari’ and u/s 12 tax can be levied only when the purchase is made from any person in the circumstances, in which, no tax u/s 10 is leviable on the sale price on such taxable goods - Admittedly, when the petitioner purchased ‘supari’, tax under Section 10 was leviable on its sale price. Therefore, the pre-condition for the applicability of Section 12 was wholly absent in the case at hand. Merely because the Department for some reason could not collect tax on the sale of ‘supari’ u/s 10 would not mean absence of ‘levy’ or ‘liability’ conferring right to levy tax u/s 12. Revision allowed - decided in favor of assessee.
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Indian Laws
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2017 (5) TMI 851
Offence under Section 506(2) of the Indian Penal Code - Held that:- A bare perusal of Section 506 of the Indian Penal Code makes it clear that a part of it relates to criminal intimidation. Before an offence of criminal intimidation is made out, it must be established that an accused had an intention to cause alarm to the complainant. Mere threats given by the accused not with an intention to cause alarm to the complainant, but with a view to deterring him from interfering with the work of construction of the wall, which was undertaken by the accusedapplicant, would not constitute an offence of criminal intimidation. In the entire FIR, there is no whisper of any allegation that the threats which were administered actually caused any alarm to the first informant and he felt actually threatened. In view thereof even none of the ingredients to constitute an offence under Section 506(2) of the Indian Penal Code are spelt out. Thus not convinced with the case putforward by the first informant so as to permit the police to continue with the investigation. The agreement provided for mutual obligations and it appears that on account of the disputes, the parties have not been able to strictly adhere to their respective obligations. The matter is at large before the Civil Court. The civil liability will be determined by the Civil Court on the basis of the evidence, that may be led by the parties. As noted above, the first informant has not initiated any civil proceeding. He has not even filed a counter claim in the civil suit filed by the accused persons. So far as the applicant of the connected application is concerned, she is the wife of the Chairman and Managing Director of the company. Let me assume for the moment that a, prima facie, case is made out of criminal breach of trust against the company and the other accused. I am of the view that the wife should not be held responsible in any manner by fastening vicarious liability. Even otherwise, no vicarious liability can be fastened on any person for an offence under the Indian Penal Code. In the result, both the writ applications succeed and are hereby allowed. The First Information Report being C.R. No.I2 of 2015 lodged at the Gandhinagar Zone Police Station, District: Gandhinagar is hereby quashed. All the consequential proceedings pursuant thereto stand terminated. Rule is made absolute.
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2017 (5) TMI 850
Exemption from liability of paying building tax under the Kerala Building Tax Act, 1975 - charitable institution - Held that:- The Hospital at present conducts heart-transplant surgeries, kidney-transplant surgeries etc. It conducts a number of camps in rural areas as its health check-up programs for creating awareness on blood donation, organ donation, pain and palliative care, free home-care treatment to patients belonging to BPL, free dialysis for deserving patients, etc. The moderate charges which the hospital is levying from its patients, is not for generating profit for the hospital, but only as a mechanism to facilitate free treatment for poor patients, and to treat others at very reasonable rates, as the major chunk of the patients of the hospital belongs to the lower strata of the society. The hospital is charging patients at the lower rate prevalent in other hospitals of its class in the State. With due respect to the Bench which rendered the judgment in S.H. Medical Centre Hospital [2014 (3) TMI 187 - SUPREME COURT], it appears that an error in interpreting Explanation I to Clause 1 of Section 3 of the Act has occurred in not noticing that it contains the word “includes” and not “means”. This error led to holding that ‘charitable purpose’ meant only ‘relief of the poor and free medical relief’. Relief to the poor and free medical relief is only one of the facets of charitable purpose and Explanation simply clarifies that too be a charitable purpose. However, the inclusive definition points out that relief to poor and free medical relief is not exhaustive as to what charitable purpose would mean. Thus, in order to find out the true scope of charitable purpose, one will have to look into the judgments of this Court, even if this very expression is examined in the context of the Income Tax Act. We respectfully disagree with the opinion of the Division Bench in S.H. Medical Centre Hospital [2014 (3) TMI 187 - SUPREME COURT]. The matter, thus, requires consideration by a Larger Bench.
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