TMI Tax Updates - e-Newsletter
May 21, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Chandigarh - E-way bill comes into effect w.e.f. 25-5-2018 - Central Government, rescinds the notification number G.S.R. 316(E) dated the 31st March, 2018 - Notification
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GST:
Dadra and Nagar Haveli - E-way bill comes into effect w.e.f. 25-5-2018 - Central Government rescinds the notification number G.S.R. 317(E) dated the 31st March, 2018 - Notification
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GST:
Daman and Diu - E-way bill comes into effect w.e.f. 25-5-2018 - Central Government rescinds the notification number G.S.R. 318(E), dated the 31st March, 2018 - Notification
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GST:
Rate of GST - Even though the meal, snacks, teas are provided to and consumed by the workers/ employees of the recipient, the applicant is providing service to the recipient and not to workers / employees of the recipient - it is not in the nature of service provided by a restaurant - The service is attracting Goods and Service Tax @ 18% (CGST 9% + SGST 9%) - AAR
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Income Tax:
TDS liability u/s 192 - no perquisite would arise in the hands of the employees for the assessment years in question. The legislation amended the said rule only for subsequent period to include even concessional education facility. - HC
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Income Tax:
Valuation of goodwill - the substitution adopted by the Assessing Officer suffered from greater vice. There was no basis for him to believe that the trademark and goodwill must value at the same level. - HC
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Income Tax:
Higher rate of depreciation on dumpers - @ 30% OR 15% - Even if the assessee had used such equipments and manpower for its direct mining operations for the contract, if it was so awarded, we wonder whether that would make any difference particularly in view of CBDT Circulars No. 609 and 652 - HC
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Income Tax:
Addition u/s 40A - excessive or unreasonable expenditure - Deduction from the income of payments of commission made to the Directors/Managing Director of the respondent assessee - There is no yardstick or guideline for judging when the expenditure incurred by the assessee would be excessive or unreasonable. - No additions - HC
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Income Tax:
Defective return 139(9) - return was filed by the assessee without accompanying completed audit report and its accounts - Assessee failed to request all the authorities for condonation of delay - Tribunal thus correctly rejected the assessee's appeal on this score. - HC
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Income Tax:
Deduction u/s 80IB(10) - substantial portion of the assessee's profit was not derived from development of housing project - the assessee had utilized about 20% or less of the permissible FSI - bifurcation of profits arising out of such activity and that arising out of the net sell of FSI must be resorted to - HC
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Income Tax:
Interest u/s 234B - Interest for defaults in payment of advance tax - whether interest should be charged on the amount after considering refund which was issued on passing intimation u/S.143(1)(a) - Demand of interest set aside - HC
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Income Tax:
TDS u/s 194I or 195 - last mile payment in lieu of availing a standard facility of hiring of one pair of optical dark fibre to provide last mile end connectivity - the assessee’s three payments to be in lieu of standard facilities only not to be taken as royalty - no TDS liability during the relevant period - AT
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Customs:
Penalty u/s 114A and 114AA of CA, 1962 - Valuation of imported goods - the enhancement of value was done on the basis of contemporaneous import, it cannot be said that the Director has done anything to mis-declare the value - neither the penalty on the appellant company nor on the Director was imposable. - AT
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Customs:
Refund of SAD - Goods are liable for sales tax but only under certain conditions the Appellant-assessee can sell the goods without payment of sales tax. An exemption from sales tax thus would not make the place of Dadra as the area where no sales tax is chargeable on sale or purchase of goods - AT
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Customs:
Exemption from anti-dumping duty - import of Glazed/Polished Procelain tiles - Without any detailed investigation, merely on assumption basis, the Revenue came to the conclusion that the goods were not manufactured by M/s Southern Building Materials and Sanitary Co. Ltd. - there is no substance in the allegation of the Revenue - Confiscation and redemption fine set aside - AT
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Customs:
Stay on imposition of Redemption Fine - permission to take the vessel “ABAN-IV” out of India - If the order of redemption fine is stayed it will result in bypassing the directions of Hon’ble High Court - Tribunal is not the proper forum to seek relaxation in conditions imposed by Hon’ble High Court - AT
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Customs:
Classification of imported goods - Projectors - whether classified under CTH 85286100 as "Projectors solely or principally used with Automatic Data Processing Machines" or under 85286100 as the imported goods have features which are in addition to those which are normally found in goods covered under 85286100? - to be classified under 85286100 - AT
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DGFT:
Change in import policy of Peas from 'Free' to 'Restricted' - Implementation of Notification No.4 dated 25.4.2018- reg.
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Indian Laws:
Right to file the appeal and have the said appeal decided on merits, if it is filed within the period of limitation, is conferred by the statute and that cannot be taken away by imposing the condition of deposit of an amount leading to dismissal of the main appeal itself if the said condition is not satisfied - Position would have been different if the provision of appeal itself contained a condition of pre-deposit of certain amount. That is not so. - SC
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Service Tax:
Refund of unutilized CENVAT credit - nexus of input services with export - There is no dispute about the fact that the services have been consumed by the Appellant in rendering export services whether directly or indirectly and hence there is no reason to deny the refund claim of the same. - AT
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Service Tax:
Classification of services - distinction between renting and hiring - Appellant is required to bear the cost of running the buses so hired, including the salary to be paid to the drivers and they are remunerated on the basis of kilometer run only - the possession and control of the vehicle has remained with the Appellant and hence cannot be termed as renting of cab/ bus. - AT
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Service Tax:
Liability of service tax - GTA Service - monthly bills cannot be equated with the term "consignment notes" - where no consignment note is issued by the GTA, demand cannot be confirmed - the service would also not fall under the category of cargo service - AT
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Service Tax:
Classification of services - construction of petrol pumps for ‘Indian Oil Corporation Ltd. - whether the service rendered by the appellant is classifiable under the Head ‘Works Contract’ or ‘Erection Commissioning & Installation Service? - To be classifiable under the Heading Works Contract - AT
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VAT:
Input tax credit - A reading of Section 11 would indicate that only a registered dealer would have the benefit of input tax credit - credit was rightly denied before the registration but after the commencement of business - HC
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2018 (5) TMI 1181
Rate of GST - applicant is having business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories - whether rate of tax on their supplies made to the recipient would be 12% or 18%? - applicability of Circular No. 28/02/2018GST dated 08.1.2018. Held that: - the service recipient has engaged the applicant for running of the canteen for their workers / employees. The rates for the meal, snacks, tea have been fixed and payable by the recipient. Menu is required to be decided by the canteen committee of the recipient. It is, therefore evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor catering service. Even though the meal, snacks, teas are provided to and consumed by the workers/ employees of the recipient, it is clear from the foregoing discussion that the applicant is providing service to the recipient and not to workers / employees of the recipient. From the nature of service provided by the applicant, as is evident from the copy of agreement, it is clear that it is not in the nature of service provided by a restaurant, eating joint including mess, canteen. Therefore, the clarification issued vide Circular No. 28/02/2018GST dated 08.1.2018 is not applicable. The service of catering is provided by the applicant to the recipient and the fact that the meal, snacks, tea etc. are consumed by the workers / employees of the recipient would not alter the nature of service provided by the applicant. Ruling:- The supply of services by M/s. Rashmi Hospitality Services Private Limited (GSTIN 24AACCR5234QIZ2) is covered under Sr. 70) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/201 7-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax @ 18% (CGST 9% + SGST 9%).
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2018 (5) TMI 1180
Release of seized vehicle - evasion of SGST and CGST - The State challenges the order, since it is passed overlooking Rule 140 of the SGST Rules - Held that: - In the absence of any challenge against the rules, the goods and vehicle can be released only in accordance with Rule 140 - interim order modified directing to release the goods and vehicle either on furnishing the bank guarantee or depositing the amount demanded - appeal disposed off.
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Income Tax
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2018 (5) TMI 1182
TDS u/s 195 - commission payment for the business activity accruing and airing in India - obligation on the part of the assessee to deduct tax at source in relation to the commission payment made to its foreign Commission Agent - Held that:- Explanation inserted with retrospective effect provides that obligation to comply with subsection [1] of Section 195 would extend to any person resident or non-resident, whether or not non-resident person has a residence or place of business or business connections in India or any other persons in any manner whatsoever in India Once the conclusion is arrived that such payment did not entail tax liability of the payee under the Act, as held by the Supreme Court in the case of GE India Technology Centre P. Limited [2010 (9) TMI 7 - SUPREME COURT OF INDIA], sub-section [1] of Section 195 of the Act would not apply. The fundamental principle of deducting tax at source in connection with payment only, where the sum is chargeable to tax under the Act, still continues to hold the field. In the present case, the Revenue has not seven seriously contended that the payment to foreign commission agent was not taxable in India. - Decided against revenue
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2018 (5) TMI 1177
TDS liability u/s 192 - amount paid towards part payment of tuition fees of children of its employees made to Anandalaya Education Society, which imparts education - perquisite in the hands of the employees of the assessee, as per provision of Section 17 [2] - Held that:- Contributions to the Anandalaya Education Society is towards the deficit of the fees towards wards of the employees, and therefore, rule 3 [e] would not apply to the facts of this case and hence, no perquisite would arise in the hands of the employees for the assessment years in question. The legislation amended the said rule only for subsequent period to include even concessional education facility. Therefore, Rule 3 [2] read with Section 17 of the Act cannot be said to have been violated and the assessee cannot be held liable to recover tax under Section 201 [1] to the extent the tax is due from its employees. Hence, findings of the Tribunal that assessee has failed to deduct tax at source on such contributions in terms of provision 192 read with Section 17 of the IT Act appears to be not correct or legal. Assessee cannot be said to be a defaulter of the amount and liable under Section 201 [1] of the I.T Act or to make payment of interest leviable under Section 201 [1A] of the Act. - Decided in favour of assessee.
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2018 (5) TMI 1176
Reopening of assessment - additional ground raised - validity of reasons recorded by the Assessing Officer - Held that:- Information from the Value Added Tax Department of Mumbai was placed for his consideration. This information contained list of allegedly bogus purchases made by various beneficiaries from Hawala dealers. Assessee was one of them. As per this information, he had made purchases worth ₹ 3.21 crores (rounded off) from such Hawala dealers during the financial year 2010-11. According to the Assessing Officer, this information 'needed deep verification'. AO recorded that the information required deep verification. In plain terms therefore, the notice was being issued for such verification. His later recitation of the mandatory words that he believed that income chargeable to tax has escaped assessment, would not cure this fundamental defect. Revenue however urged us to read the reasons as a whole and come to the conclusion that the Assessing Officer had independently formed a belief on the basis of information available on record that income in case of the assessee had escaped assessment. Accepting such a request would in plain terms require us to ignore an important sentence from the reasons recorded viz. 'it needs deep verification'. - Decided against revenue.
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2018 (5) TMI 1175
Valuation of goodwill - transfer of trademark and technical knowhow - whether goodwill would be reduced to nil - Department contended that the assessee had deliberately under-valued the goodwill since the gain arising out of transfer of such asset was exigible to capital gain tax as compared to trademark where no tax was leviable - Held that:- The reflected sale consideration in an agreement between the transferor and transferee in such a situation cannot be lightly tampered with. The Assessing Officer in addition to having discarded such valuation, adopted a rather simplistic method of substitution of book mean of the transferred value of trademark and the goodwill and projected the resulting figure as a consideration for transfer of goodwill. If the assessee’s adoption of the sum of ₹ 15.67 lakhs as valuation for goodwill was not backed by any material or data on the record, the substitution adopted by the Assessing Officer suffered from greater vice. There was no basis for him to believe that the trademark and goodwill must value at the same level. This Court in case of Parle International Limited [2016 (8) TMI 658 - GUJARAT HIGH COURT] has frowned upon the Assessing Officer discarding the disclosed consideration in an agreement by doubting its genuineness without there being any supporting material on record.
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2018 (5) TMI 1174
Disallowance of deduction u/s 80IA (4) - assessee undertaken road development project, as entered into an agreement with Gujarat State Road Development Corporation which was incorporated by the Government for the special purpose - Assessee contended that the GSRDC was performing all the functions of the State Government and therefore the concession agreement executed by GSRDC should be treated to have been entered into by the State Government - Tribunal deleted the disallowance of deduction made by the Assessing Officer - Revenue argues that the agreement entered into between the assessee and GSRDC does not fulfill this condition since GSRDC is neither State Government, Central Government or any statutory body. Held that:- Act of 1999 makes detail provisions for awarding contracts for infrastructure development within the State through private participation. In the process, the Government could take assistance of a Government agency or a specified Government agency. The selection of the person would either be on the basis of competitive public bidding as provided in section 9 of the Act or through direct negotiations as provided in section 10. The Act of 1999 also lays down broad parameters of the concession agreement that such a person would enter into with the Government, Government agency or the specified Government agency as the case may be. GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2(e) of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the Government, land for such purpose was alloted by the Government. The concession agreement which GSRDC executed was approved by the Government. It was under the Government Resolution that the assessee would collect toll upon completion of such project. Upon the completion of the project period, the entire infrastructure so developed would vest in the Government. Signatory to the applicant may be GSRDC for all practical purposes and in essence, it was the agreement between the assessee and the State Government. Rigid interpretation of this provision as canvassed by the Revenue would only result into the assessees involved in genuine infrastructure development projects for and on behalf of the Government or local authorities would be denied the deduction merely on the ground that the State Government had created a nodal agency for working out the finer details and nittygritty of such infrastructure development. The purpose of creating such nodal agencies as well as the legislative intent of granting deduction to the assessee engaged in developing, maintaining or operating any infrastructure projects for Central or State Government or local or statutory authorities would frustrate.- Decided against revenue.
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2018 (5) TMI 1173
Deduction incurred as product development expenses - revenue deduction - whether it has enduring benefits to the assessee and hence was capital expenditure in nature? - Held that:- Assessee who was engaged in manufacturing textile products, had expended the amount in question for product development undertaken by a sister concern of the assessee on its behalf. The research work did not involve development of a new product or even a new technique or technology to manufacture existing product more efficiently. He is aimed at improving the quality of the existing products of the assessee. Essentially thus, the expenditure was for the assessee's existing business and was for the purpose of improving the quality of the existing products. As rightly pointed out by the counsel for the assessee, in somewhat similar situations, three High Courts have held that the expenditure should be treated as revenue expenditure. See Commissioner of Income tax, Faridabad v. Escorts Auto Components Ltd. [2008 (3) TMI 248 - PUNJAB AND HARYANA HIGH COURT], Commissioner of Income tax, Bangalore v. Tejas Networks India (P.) Ltd [2014 (10) TMI 364 - KARNATAKA HIGH COURT] and Commissioner of Incometax I v. ACL Wireless Ltd. reported in [2013 (12) TMI 1160 - DELHI HIGH COURT] - Decided in favour of assessee.
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2018 (5) TMI 1172
Higher rate of depreciation on dumpers - @ 30% OR 15% - nature of business of the assessee as transporter - Tribunal confirming the findings of the CIT [A] that the assessee is entitled to higher rate of depreciation @ 30% - Held that:- From the material available on record though the assessee essentially was awarded contract for providing specialized equipments and trained manpower for mining and transportation of excavated minerals on hire, the terms of the tender and the eventual contract awarded would suggest that the assessee was given the work of mining. The assessee was essentially required to provide equipments and manpower on hire. In view of such discussion, we find no error in the view taken by the Tribunal. Even if the assessee had used such equipments and manpower for its direct mining operations for the contract, if it was so awarded, we wonder whether that would make any difference particularly in view of CBDT Circulars No. 609 and 652 and the decision in case of I.C.D.S Limited v. Commissioner of Income-Tax & Anr. [2013 (1) TMI 344 - SUPREME COURT]. However, when this issue does not arise for direct consideration, we need not conclude the same. No error in the view taken by the Tribunal - Decided against revenue
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2018 (5) TMI 1171
Reopening of assessment - Whether no additions are made by the AO in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him? - Reasons to believe - Held that:- In the present case, the reason for reopening the assessment was described in the stock reported by the assessee in its books of account, as compared to the stock reported to the bank. Assessee’s contention before the AO was that this discrepancy was on account of transit of stock. Contrary to what was canvassed before us, we do not find that the AO accepted such explanation of the assessee. He merely recorded it and thereafter, examined the materials on record. Two things emerge from such exercise; firstly, he did not accept the assessee’s declared evaporational loss of raw materials and secondly, he noticed that the assessee was unable to produce the books of accounts on the ground that the Sales Tax Department had impounded them. He, therefore, proceeded to frame the best judgment assessment. He was of the opinion that the Gross Profit shown by the assessee was low. He made adjustments by citing reasons, which resulted into the additions being made. No where can we see that the Assessing Officer accepted the assessee’s contention that the stock discrepancies stood explained. AO noted that in view of the Gross Profit addition, the evaporational loss has not been separately added. Gross Profit addition, being global in nature, would also include the stock discrepancy. No where do we find that the AO dropped his prime objection to the stock discrepancy cited as a reason for reopening the assessment. - No question of law arise.
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2018 (5) TMI 1170
Interest levied u/s 201 [1A] - non deduction of tds on interest on Deep Discount Bonds to HDFC Bank - Held that:- Following additional issues that the Tribunal may examine upon remand, which we propose to provide, are as under :- [A] Whether the HDFC Bank as a payee has deposited entire tax arising out of such payment in advance, and therefore, the ratio laid down in a decision of this Court in case Commissioner of Income-Tax v. Rishikesh Apartments Coop. Housing Society Limited [2001 (6) TMI 17 - GUJARAT High Court ] would apply. [B] In absence of any such advance payment, should the assessee not pay interest on delayed deposit of tax by the payee, as clarified by the Supreme Court in the case of Hindustan Coca Cola Beverages Private Limited [2007 (8) TMI 12 - SUPREME COURT OF INDIA ]. [C] If need be, in other words, if the answer to these questions is against the assessee, the Tribunal would be required to examine the assessee’s legal contention that in any case, looking to the nature of payments in question, liability of the assessee to deduct tax at source did not arise at all.
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2018 (5) TMI 1169
Disallowance under section 40A(3) - AO's opinion that the assessee would have inflated the purchase expenditure by raising bogus claims - Bogus purchases - gp ratio determination - Held that:- When the Assessing Officer had doubted the genuineness of the expenditure, he would require bringing to tax the profit element so avoided by the assessee. As noted, the Commissioner of Income Tax (Appeals) while limiting the additions, brought the assessee's declared gross profit ratio at the same rate as in the previous year which was even otherwise in tune with the percentage of the assessee's doubtful purchases. - Decided against revenue
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2018 (5) TMI 1168
Admit Tax Appeal for consideration of the following substantial question of law: [A] Whether the Appellate Tribunal was justified in allowing the claim of additional depreciation u/s.32(1)(iia) solely on the ground that allowance u/s.32 was to be provided as per Section 57( ii) and (iii) even though the assessee was not engaged in the manufacture or production of article or things after 30.09.2005, which is a condition precedent to allowance of additional depreciation ?
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2018 (5) TMI 1167
Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- It cannot be disputed and indeed it is not disputed that Annexure-E notice dated 19.12.2011 has been issued by the assessing officer alleging ‘concealment of particulars of income or furnishing inaccurate particulars of income’ as ground for initiating proceedings for which purpose the appellant was called upon to appear and defend the proceedings under Section 271 of the Income Tax Act. In the case of similar facts involved in the case of Commissioner Of Income Tax & another Vs. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c) i.e., it was for concealment of income or for furnishing of incorrect particulars of income. Thus the Division Bench has laid down that notice of the type which is issued in this case cannot be sustained in law and consequently penalty proceedings would stand vitiated that were based on such notice. - Decided in favour of assessee
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2018 (5) TMI 1166
TDS u/s. 195 - payment of legal professional fees to non resident - non deduction of tds - Held that:- Tribunal noted that the assessee had made payments to professional law firms by way of Consultancy Fees. Such firms did not have any fixed base available in India. The Tribunal, therefore, had recorded that under such circumstances, looking to the Double Taxation Avoidance Agreement between the two countries, the recipient of the fees had no tax liability in India. That being the position, no question of law arises. TDS u/s. 195 - payment of clinical and analytical testing charges to non-resident - TDS liability - Held that:- The recipient of the fees did not have permanent establishment in India. This Question is therefore also not considered. Depreciation on Hummer Car - as per revenue car was in the name of the Director and there was no evidence to show that the same was used wholly and exclusively for the purpose of business - Held that:- Case of the assessee was that the payment for purchase of vehicle was made by the Company, though the car was registered in the name of the Director. This Court under similar circumstances in the case of Commissioner of Income-Tax v. Aravali Finlease Limited, reported in [2011 (8) TMI 814 - Gujarat High Court] ruled in favour of the assessee. This question is, therefore, not considered. Questions [A], [B], [C], [D1], [E], [F], [G] and [I] arise for our consideration. Tax Appeal is, therefore, admitted for consideration of these substantial questions of law
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2018 (5) TMI 1165
Transfer Pricing Adjustment - interest on loan to Sun Pharma Global Inc (AE) at London Inter Bank Offer Rate (LIBOR) Plus 2% Rate which is almost equal to the Prime Landing Rate or American Bank lending rate - Held that:- We notice that the amount involved is merely ₹ 40,000/-. Looking to the smallness of claim, the question is not considered. Addition u/s 14A - Held that:- CIT (A) gave partial relief but made disallowance under section 14A of the Act. In further appeals by the Revenue as well as by the assessee, the Tribunal uphold applicability of section 14A of the Act but provided that Rule 8D formally may be applied. In that view of the matter, this question does not arise at the hands of the Revenue. We make it clear that we have already admitted Revenue's contention regarding non-applicability of section 37 of the Act. Such question would not be influenced by non-entertaining this question. Disallowance of provision for leave encashment u/s. 43B - Revenue contends that in view of section 43B of the Act, such provision would not be allowable deduction - assessee relies on the judgement of Exide Industries Ltd and another v. Union of India and others [2007 (6) TMI 175 - CALCUTTA High Court] and the Tribunal, by the impugned judgement, noted that the SLP against such judgement is pending before the Supreme Court - Held that:- We recognize the genuine difficulty in view of sub-section (6) of section 153 now amended. Mere admission of this question in this Tax Appeal will also not solving the issue since this would give rise to chain of proceedings out of the order that the Assessing Officer may be compelled to pass within the statutory time frame. This issue is placed before the CIT (A) who would dispose of the proceedings once the judgement of the Supreme Court in the Revenue's appeal against such judgement of Calcutta High Court is rendered. This question is disposed of accordingly.
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2018 (5) TMI 1164
Addition made in respect of investment in land - ITAT deleted the addition - Held that:- Assessee had paid through cheques a total sum of ₹ 22,02,100/to one Sherin Co. Op. Hsg. Soc. Ltd. during the period between 28. 7. 2003 to 31. 1. 2005. CIT(Appeals) also noted that entire amount was repaid by Sherin Co. Op. Hsg. Soc. Ltd. in different cheques during the period between 2.6.2005 to 5.12.2005. The Revenue did not have any further material to suggest that though the assessee might have exited from the land deal, Sherin Co. Op. Hsg. Soc. Ltd. had eventually sold the land to third party and in the process, the assessee had extracted its share of profit. The Tribunal therefore, accepted the assessees' contention that the loose documents did not refer to the actual receipt of onmoney since the documents itself carried a title “PROJECTIONS” and further that the Assessing Officer had nothing to discard the assessees' theory that these land deals did not eventually materialise. Essentially the Tribunal having referred to the materials on record and come to factual conclusion, in our opinion, no question of law arises. Addition made in respect of unaccounted income in the form of on-money from sale of shops at Himalaya mall - ITAT deleted the addition - Held that:- The assessee pointed out that many of these shops were not tenanted thereby suggesting that these shops did not have ready income generating potential. CIT(Appeals) and the Tribunal both accepted the assessees' viewpoint. There was no concrete material suggesting that in the sale of remaining shops also, the assessee had accepted the on-money. Merely because in rest of the sales, the assessee had admitted having received on-money, such admission cannot be projected for the remaining area where there was no such matching material found or admission made by the assessee. This was the view of the Tribunal. Significantly, the seized material did not include any reference of on-money with respect to these remaining shops. This issue therefore, is virtually factual. CIT(Appeals) and Tribunal having concurrently held in favour of the assessee, we do not entertain this issue. - Revenue appeal dismissed.
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2018 (5) TMI 1163
Revision u/s 263 - capital gain - did assessee receive sale consideration of ₹ 4,43,52,100/- out of such sale? - Held that:- In the sale deed, the assessee did pose as a seller and sale consideration stated to have been paid by the purchaser Gatil Properties Ltd was undoubtedly ₹ 4,43,52,100/-. However the entire amount was never received by the assessee. It was a confirming party- Melody Complex Pvt. Ltd which, under the agreement to sale, had a right to insist on purchasing the land or seek specific performance of the agreement and receive bulk of the sale consideration. Out of the total sale consideration, ₹ 4,04,77,669/- was received by such confirming party. When the assessee never received anything beyond ₹ 38,74,431/- originally agreed, question of charing capital gain from the assessee on a sum larger than the said amount of ₹ 38,74,431/- would not arise. It is true that in a short span, the parties to the said transactions showed spectacular appreciation in land price. If the Revenue was of the opinion that such unusual rise in the land price indicated non-genuineness of the transaction itself, no such angle has been probed. In any case, the remaining sale consideration of ₹ 4,04,77,669/- received by Melody Pvt. Ltd can always be taxed appropriately in the hands of the said recipient. We fail to see how the Commissioner could have held the assessee answerable for capital gain for a sum which she never received.
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2018 (5) TMI 1162
Addition u/s 40A - excessive or unreasonable expenditure - Deduction from the income of payments of commission made to the Directors/Managing Director of the respondent assessee - Held that:- Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal only in a case which involves substantial questions of law, it is not open for this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. In the instant case, Section 40A(2)(a) provides that if the officer is of opinion that expenditure to inter alia a Director of a company was excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment was made or the legitimate needs of the business, occupation of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as was considered by him to be excessive or unreasonable would not be allowed as a deduction. There is no yardstick or guideline for judging when the expenditure incurred by the assessee would be excessive or unreasonable. The decision is left to the Assessing Officer. The decision is a subjective decision having regard to the facts of the case. No substantial question of law involved in these appeals.
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2018 (5) TMI 1161
Penalty u/s 271(1)(c) - undisclosed bank accounts and sizeable cash deposits in such bank accounts - Held that:- The assessee virtually admitted that cash deposits were undisclosed. The assessee only argued that not the entire tally of cash deposited in different accounts during the year but the peak credit thereof could be added under section 68 of the Act. The Assessing Officer accepted such a contention and added a sum of ₹ 19,55,500/to the income of the assessee. It is true that during the assessment proceedings the Assessing Officer also accepted the assessee's contention of derivative loss as business loss. By offsetting such added income against the business loss, assessment did not give rise to any fresh tax demand. Nevertheless, the Assessing Officer initiated penalty proceedings because of concealment of income and particulars thereof. Even in such penalty proceedings, the assessee did not offer any explanation about the cash deposits in his different undisclosed bank accounts. In that view of the matter, the Assessing Officer was justified in imposing penalty which was levied at the minimum 100% of the tax sought to be evaded. There is nothing on record to suggest that the assessee agreed to the addition of such income to cutshort the litigation in view of the fact that in any case, even after making the additions, there would be no tax liability in the hands of the assessee. Even if we were to accept the assessee's contention that such surrender was to avoid protraction of the litigation and which is often times referred to as “to buy peace” as held by the Supreme Court in case of Mak Data P. Ltd (2013 (11) TMI 14 - SUPREME COURT), this would not necessarily avoid initiation of penalty proceedings. - Decided against assessee.
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2018 (5) TMI 1160
Defective return 139(9) - return was filed by the assessee without accompanying completed audit report and its accounts - Held that:- Tribunal noted that the assessee presented the audit report only on 9.3.2000 along with what the assessee described was a revised return which was beyond the time permitted for such purpose. The Tribunal also noted that under proviso to subsection( 9) of section 139, the Assessing Officer would have the power to condone the delay in removing the defects. At no stage before the AO, before the CIT(Appeals) or before the Tribunal also, any attempt was made by the assessee to seek such a condonation. The Tribunal thus rejected the assessee's appeal on this score. This has given rise to the first question of law. Section 44AB applicability - Held that:- The assessee had not furnished the audit report previously. The assessee's return was required to be accompanied by the report of the audit as referred to in section 44AB of the Act. This was clearly not done. The Assessing Officer was within his rights to raise this defect in the return and seek its rectification. The assessee failed to rectify or even failed to make out grounds why the same was not done earlier. Discretion of the Assessing Officer under the proviso to subsection( 9) to condone delay is wide enough and could be exercised even without a formal application by the assessee for such purpose. The onus would be on the assessee to atleast lay down sufficient grounds before the Assessing Officer to enable him to exercise such discretion. The record shows that the assessee made no such attempt. The Tribunal committed no error in confirming the view of the revenue authorities. This question is answered against the assessee. Excise duty tantamount to income - Held that:- When the assessee evades payment of excise duty, undoubtedly, the same would be an additional element of profit on the product as compared to the one which has suffered the excise duty. This excise duty component which should have gone to the State exchequer would be an additional margin which may be shared by the purchaser and seller. In a given case, therefore, the assessee's contention that entire addition of excise duty element was not justified, may require closer examination. However, going by the total addition and the turnover through such clandestine sales, we do not find any reason to disturb the Tribunal's ultimate conclusions. Subject to above observations, this question is also decided against the Revenue. Addition u/s 69 made in respect of initial investment in unaccounted transactions - Held that:- Facts on record would show that such purchases did not arise during the year under consideration. The Tribunal therefore, rightly deleted the addition in the present year. This question is also therefore, decided against the Revenue. Investment in the peak credits invoking provisions of Sec. 69 - reduction being ˝ of addition on the ground that profit earned on sales consideration would have been routed in the business for making unaccounted purchases - Held that:- Tribunal did not accept the Revenue's stand in its entirety and held that income would continue to be generated through out the year and not at the end of the year alone. In absence of any other evidence, the Tribunal split the year in two parts for generation of such income and therefore believed that atleast 50% of the purchases would have been made through assessee's income for the same year and thereby slashed the addition by half. The view of the Tribunal requires no interference. Proper cogent reasons have been given. This question is also decided against the Revenue.
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2018 (5) TMI 1159
Deduction u/s 80IB(10) r.w.s. 80IB(1) - profits derived from sale of unutilized FSI - element of profit derived from the business activity of development and construction of housing project - Held that:- For the reasons recorded in case of Moon Star Developers [2014 (4) TMI 1042 - GUJARAT HIGH COURT] wherein held if there has been considerable underutilization, if the assessee can point out any special grounds why the FSI could not be fully utilized, the case may stand on a different footing - in cases where the utilization of FSI is way short of the permissible area of construction, looking to the scheme of section 80IB(10) of the Act and the purpose of granting deduction on the income from development of housing projects envisaged, bifurcation of profits arising out of such activity and that arising out of the net sell of FSI must be resorted to - none of the assessee have made any special ground for non-utilization of the FSI - Decided in favour of Revenue.
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2018 (5) TMI 1158
Deduction u/s 80IB(10) - income from sale of unutilized FSI - substantial portion of the assessee's profit was not derived from development of housing project - Held that:- As already noticed that the assessee was in the process of developing three housing projects viz. Subhlaxmi, Samruddhi, Bhagyalaxmi. In such projects, considering the land area and the permissible FSI of 1.6, the assessee was entitled to carry out total construction of 20198 sq.mtrs, 11426 sq.mtrs and 13130 sq.mtrs respectively. As against this, the assessee had actually carried out construction of 4538.13 sq.mtrs, 2212.42 sq.mtrs and 2639.26 sq.mtrs respectively in these projects. That left unutilized FSI of 15659.87 sq.mtrs, 9213.58 sq.mtrs and 10490.74 sq.mtrs respectively. Thus, in each of the projects, the assessee had utilized about 20% or less of the permissible FSI. It was in this context that the Assessing Officer had raised objection of the assessee's profit being derived through sale of unused FSI. Such an issue was examined by this Court in case of Commissioner of Income Tax vs. Moon Star Developers reported in [2014 (4) TMI 1042 - GUJARAT HIGH COURT] in cases where the utilization of FSI is way short of the permissible area of construction, looking to the scheme of section 80IB(10) of the Act and the purpose of granting deduction on the income from development of housing projects envisaged, bifurcation of profits arising out of such activity and that arising out of the net sell of FSI must be resorted to - none of the assessees have made any special ground for non-utilization of the FSI - Decided in favour of Revenue.
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2018 (5) TMI 1157
Interest u/s 234B - Interest for defaults in payment of advance tax - whether interest should be charged on the amount after considering refund which was issued on passing intimation u/S.143(1)(a) - Held that:- In order to address the mischief as in the present case, the legislature found it necessary to insert section 234D to the Act. Reference is made to subsection (4) of section 143 providing that where a regular assessment under section 143(3) or section 144 is made, any tax or interest paid under section 143(1) shall be deemed to have been paid towards such regular assessment and if no refund is due on regular assessment or the amount refunded under section 143(1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded would be deemed to be tax payable by the assessee. Despite this, the legislature was of the opinion that in a case where refund is already granted upon processing return under section 143(1) of the Act but in eventual assessment it is found that the refund granted is in excess or that return does not give rise to any refund claim at all, the existing statute does not provide for levying interest. Clearly the legislature was of the opinion that even with the aid of the provisions of subsection (4) of section 143 of the Act, the existing provisions cannot be so interpreted as to levy interest in such a case. It is well settled that interpreting a statutory provision, one of the useful external aids is to ascertain what was the position prior to enactment of the statute and what mischief the statute seeks to address. If the very object of inserting section 234D to the Act was to address a situation which was inadequate to levy interest in a case like the present one, interpretation advanced by the Revenue must be rejected. If we accept the contention of the Revenue that existing section 234B of the Act already covered such a situation, insertion of section 234B of the Act would be rendered meaningless and the provisions of section 234D superfluous. Appeal allowed.
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2018 (5) TMI 1156
Claim of deduction of expenditure incurred on account of commission paid disallowed - allowable busniss expenses - whether assessee company has indulged in colorable device? - Held that:- In the present case, we find that the assessee’s group concern has won a bid from the Government. After winning the bid, it has gotten the contract transferred under the name of the assessee-company. The assessee company has duly executed the contract with the assistance of the group concerned. In such factual background, sums paid as consideration/commission to the group concern cannot be said to be colorable devise. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2018 (5) TMI 1155
Addition u/s 68 - Held that:- AR referred to the paper book evidence in the audit report at page 1 to 11 and also the statement of loan creditors along with income tax details from page 12 to 30 disclosed in the income tax returns and computation of income and their financial statements. AR emphasized that the creditors are genuine and creditworthiness of the transaction and identity of the parties can be proved. AO has overlooked these facts. We are of the opinion that the assessee should be provided an opportunity of explain this loan creditors along with documentary evidence, filed before us and before the AO. Hence, we restore this issue to the file of AO for reconsideration Disallowance of 1% of purchase material - Held that:- Assessee has claimed certain expenditure in respect of material purchase but failed to support with evidence before the assessing authority, therefore, the AO has no alternative but to make the disallowance on the basis of estimated percentage. Even before us, the AR could not submit the details in respect of purchases which has been called for the lower authorities. Accordingly, we are of the opinion that the CIT(A) having considered these facts and the findings of AO has confirmed the action of AO which is in accordance with law - Decided against assessee Contract expenses - AO has disallowed 1% of total purchases of materials and also disallowed contract expenses on adhoc basis @2% of the total expenses - Held that:- As the assessee is a going concern and has been claiming from the earlier years, therefore, considering the overall aspects and circumstances and the trade practices followed by the assessee, we are of the opinion that the disallowance of 2% of work expenses where AR’s submission is that work expenses are subject to the provisions of TDS and has been deducted, are on higher side. Accordingly, we set aside the order of the CIT(A) and restrict the addition to the extent of 1% of work expenses and order accordingly. Payment by cheque - Held that:- We considering the material facts and submissions of the assessee are of the opinion that the assessee has issued the cheque in favour of the creditor which is not in dispute. Therefore, we are of the opinion that the matter has to be examined by the AO and accordingly, we remit this issue to the file of AO to verify the transaction
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2018 (5) TMI 1154
Revision u/s 263 - AO assessed the rental income as Business Income - Held that:- AO, with due application of mind, accepted the stand of the assessee and took one of the possible view in the matter and assessed the rental income as Business Income. This being the case, the order could not be said to be erroneous or prejudicial to the interest of the revenue so as to justify invocation of proceedings u/s 263. The action of AO, may be prejudicial to the revenue but the same could not be termed as erroneous since the view taken by him was one of the possible view with due application of mind. Therefore, the prime twin conditions viz. erroneous and prejudicial to the interest of the revenue, in our opinion, have remained unfulfilled and therefore, invocation of proceeding u/s 263 was not justified. - Decided in favour of assessee.
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2018 (5) TMI 1153
Penalty u/s 271AAA - AO no where directed the assessee to disclose manner or to substantiate such manner showing the earning of undisclosed income admitted during the course of search - Held that:- As during the course of search statement of assessee was not recorded. It was of Anil Bholabhai Patel and no such specific question was asked. CIT(A) has reproduced statement of Shri Anil Bholabhai in the impugned order and observed that under identical circumstances penalties imposed on other group persons have been deleted. Department failed to demonstrate that the assessee was confronted with conditions enumerated in section 271AAA either during the course of search or during the assessment proceedings. In the absence of any such direction from the AO, it could not be expected from the assessee to explain the manner in which such income was earned. Therefore, to my mind the assessee has fulfilled all conditions contemplated in sub-section (2) of section 271AAA of the Act and no penalty deserves to be imposed upon the assessee. - Decided in favour of assessee.
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2018 (5) TMI 1152
Revision u/s 263 - Penalty under Section 271(1)(c) set aside by AO - assessee filed the revised return after the search operation in the case of AMN Jewellers Pvt. Ltd. and offered the value of the jewellery for taxation - Held that:- When the assessee offered the income voluntarily and offered the same for taxation and the source of acquisition of such jewellery was also explained before the Assessing Officer as the gifts from relatives, friends and parents, which are accepted, there is no need to proceed further with penalty proceeding. As It cannot be said that the view taken by the Assessing Officer is erroneous and prejudicial to the interests of Revenue. This Tribunal is of the considered opinion that the view taken by the Assessing Officer for dropping the penalty proceeding initiated under Section 271(1)(c) of the Act is one of the possible views supported by the judgment of Apex Court in Suresh Chandra Mittal (2001 (6) TMI 63 - SUPREME Court). Therefore, it is not justified for the Administrative Commissioner to substitute his view by setting aside the order of the Assessing Officer dropping the penalty proceeding initiated. Therefore, we are unable to uphold the orders of the Commissioner. Accordingly the orders of the Administrative Commissioner passed under Section 263 of the Act are set aside and that of the Assessing Officer dropping the penalty proceeding are restored. - Decided in favour of assessee
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2018 (5) TMI 1151
Addition made on estimate basis as bogus expenditure - assessment u/s 153A - expenses incurred for transportation charges - Held that:- AO required the assessee to produce the supporting documents for the expenses incurred for transportation charges. The assessee produced ledger copy. Therefore, the Assessing Officer disallowed 10% of the total expenses, which was confirmed by the CIT(A). D.R. could not point out any material which was unearthed because of the search. Thus, it is observed that the addition made on estimate basis was not based on any search material. - Decided in favour of assessee.
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2018 (5) TMI 1150
TDS u/s 194I or 195 - whether payments pertaining to the first issue of last mile charges are liable for TDS deduction as fee for professional / technical services rather than rent u/s 194I? - Held that:- There is no denial of the basic fact that the assessee has made the impugned last mile payment in lieu of availing a standard facility of hiring of one pair of optical dark fibre to provide last mile end connectivity. It uses its own internet bandwidth in this entire exercise of involving only hiring of about optical as dark fibre. The Revenue fails to indicate that the said hiring creates any kind of right being vested in assessee’s favour regarding control of the equipment hardware. A coordinate bench in M/s Standard Chartered Bank vs. CIT [2011 (5) TMI 580 - ITAT, Mumbai] holds in similar circumstances that a payment made for availing equipment facilities of standard nature without any control on the corresponding hardware does not amount to royalty u/s 9(1)(vi) Explanation-2 clause (iva) of the Act. Revenue seeking to apply the relevant amended provision in Section 9(1)(vi) of the Act inserted by the Finance Act, 2012 with retrospective effect in impugned assessment year 2010-11 - Held that:- We find this issue to be no more res integra since hon’ble Bombay high in CIT vs. NGC Networks India Pvt. Ltd. [ 2018 (5) TMI 1148 - BOMBAY HIGH COURT] has already concluded the above amendment is not applicable with retrospective effect as per “rule of impossible compliance” since the liability to deduct TDS cannot be fastened on a deductor assessee after the end of relevant previous year. As asked the Revenue to specifically indicate any material suggesting the assessee to have any control over these three equipments of optical dark fibre, bandwidth for production and interconnective uses charges so as to involve royalty component in the impugned payments. There is no such materials. The CIT(A)’s has rightly concluded the assessee’s three payments to be in lieu of standard facilities only not to be taken as royalty - Decided against revenue
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2018 (5) TMI 1148
TDS u/s 194C OR 194J - disallowance of Channel Placement Fee - tds liability - disallowance u/s. 40(a)(ia) - Held that:- The amendment by introduction of Explanation 6 to Section 9(1)(vi) of the Act took place in the year 2012 with retrospective effect from 1976. This could not be have been contemplated by the Respondent when he made the payment which was subject to tax deduction at source under Section 194C during the subject Assessment Year, would require deduction under Section 194J of the Act due to some future amendment with retrospective effect. As under Section 40(a)(i) under which the expenditure has been disallowed by the Revenue, meaning of royalty as defined therein, is that as provided in Explanation 2 to Section 9(1)(vi) of the Act and not Explanation 6 to Section 9(1)(vi) of the Act. Thus, the disallowance of expenditure under Section 40(a)(i) of the Act can only be if the payment is 'Royalty' in terms of Explanation 2 to Section 9 (1)(vi) of the Act. Undisputedly, the payment made for channel placement as a fee, is not royalty in terms of Explanation 2 to Section 9(1)(vi) of the Act. Therefore, no disallowance of expenditure under Section 40(a)(vi) of the Act, can be made in the present facts - Decided in favour of assessee Whether Channel Placement Fee is not in the nature of royalty u/s. 9(1)(vi) and so the tax is not required to be deducted u/s. 194J of the I.T. Act ? - Held that:- In view of the appeal not being entertained on question (a), as pointed out herein above, the issue raised in question(b) becomes academic. This is so, as irrespective of the nature of payment made in the present facts, no expenditure can be disallowed under Section 40(a)(i) of the Act in respect of fee paid for Channel Placement.
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2018 (5) TMI 1103
Penalty u/s.271(1)(c) - non specification of charge - Held that:- The manner of initiating and levying of penalty without making reference to the specific limb of clause (c) is unsustained. AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. Therefore, the penalty levied by the AO and confirmed by the CIT(A) is unsustainable on technical grounds. - Decided in favour of assessee Penalty u/s 271AAA - undisclosed investment in jewellery was found during the course of search which was not found recorded in the regular books of accounts - Held that:- Although the appellant had disclosed undisclosed income in the return filed after the search he did not disclose the manner of deriving the undisclosed income hence does not qualify for any immunity in terms of section 271AAA(2). The AO was fully justified in levying the penalty under section 271AAA - We agree with the contention of the appellant that undisclosed income would be only the value of undisclosed investment of ₹ 6,10,000/- found during the search and not ₹ 6,25,000/- offered by the appellant. Accordingly, amount of penalty u/s.271AAA being 10% of undisclosed income of ₹ 6,10,000/- would be ₹ 61,000/-. Penalty levied u/s.271AAA to the extent of ₹ 61,000/- is upheld on account of concealing the particulars of income. Ground raised by the appellant is hereby partly allowed.
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2018 (5) TMI 1102
Levy of penalty u/s.271(1)(c) - non specification of charge - AO initiated the penalty proceedings for the offence of ‘concealing the particulars of income’ and levied the same for furnishing inaccurate particulars' - Held that:- It is a case where the AO did not have clarity of thought and AO suffered from ambiguity in his mind with regard to the applicable limb of clause (c) of section 271(1) to the facts of the case. Therefore, we find the penalty order of the AO falls short of legal requirement on the issue of recording of satisfaction. Initiation of penalty proceedings is made for one limb and the penalty was levied for other limb. Such penalty order is unsustainable in law legally. The manner of initiating and levying of penalty without making reference to the specific limb of clause (c) is unsustained. AO is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. Therefore, the penalty levied by the AO and confirmed by the CIT(A) is unsustainable on technical grounds. - Decided in favour of assessee.
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Customs
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2018 (5) TMI 1149
Penalty u/s 114A and 114AA of CA, 1962 - Valuation of imported goods - enhancement of value on the basis of contemporaneous import - Held that: - No evidence was found that the appellants have suppressed the value and additional consideration was paid by some other means. Since the assessment was finalized in the Bills of Entry itself and duty was paid on the enhanced value, therefore, there was no reason to issue the show-cause notice. The show-cause notice was issued only for imposition of penalty under Section 114A. It is observed that the demand was neither raised nor confirmed under Section 28(1) of the Customs Act, 1962. Therefore, in absence of any determination of duty under Section 28(1), penalty under Section 114A cannot be imposed. Therefore, I set aside the penalty imposed under Section 114A. From the reading of Section 114AA, it is observed that if the person knowingly makes the false declaration or signs any such document then only he will be liable to penalty under Section 114AA - In the present case, there is no case that the Director of company has done any act which specified under Section 114AA. Even the enhancement of value was done on the basis of contemporaneous import, it cannot be said that the Director has done anything to mis-declare the value - neither the penalty on the appellant company nor on the Director was imposable. The penalty is not imposable either on the appellant company or on the Director - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1147
Benefit of N/N. 1(RE-2008)/2004-09 dated 11.4.2008 - Failure of customs authorities to issue notification on time - while policy was amended w.e.f. 1.4.2008, the notification of customs implementing the said change was issued on 9.5.2008 also 39 days after the issue of DGFT notification. Held that: - it is apparent that when the EXIM Policy was amended and notified the Government has taken the decision of revised customs duty under the EPCG from 5% to 3%. To enforce this decision, the Ministry of Finance, Department of Revenue was required to act in tandum with the DGFT and Ministry of Commerce - In the instant case, the appellants were also issued a license as well as authorization prescribing 3% rate of duty. In these circumstances, failure of customs authorities to issue notification on time cannot be held against the respondent - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1146
Refund of SAD - SCN issued on the ground that the imported goods were sold to various units in Dadra/ Silvassa and have not paid sales tax as all sales were made against sales tax form - Held that: - as per the terms of the declaration of the Notification in question, in order to avail exemption the declaration to the effect is “that sale of the goods will not be effected from a place located in an area where no tax is chargeable on sale or purchase of goods”. The area of Dadra in question from where the goods were sold is not an area exempted from Sales Tax. It is liable for sales tax but only under certain conditions the Appellant-assessee can sell the goods without payment of sales tax. An exemption from sales tax thus would not make the place of Dadra as the area where no sales tax is chargeable on sale or purchase of goods. Time limitation - Held that: - since the issue involved is of interpretation and has been subject of matter of dispute in many cases which were settled by the Tribunal, therefore no malafide intention can be attributed to the Appellant-assessees - demand is time barred. Enhancement of Penalty u/s 114A - Held that: - since the demand itself is set aside, the Revenue’s appeal, which is for penalty which is consequent to the demand, will not sustain - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1145
Exemption from anti-dumping duty - N/N. 72/2005-Cus dated 22.7.2005 and N/N. 73/2003-Cus dated 1.5.2003 - import of Glazed/Polished Procelain tiles - denial of exemption on the ground that he goods were not manufactured by M/s Southern Building Materials and Sanitary Co. Ltd. - Held that: - on going through the statement of Shri K.M. Alexender, Sr. Manager of Gera Development Pvt. Ltd., the assessee in the present case, it is found that Shri Alexender only stated the facts. However, he could not confirm that the goods were not manufactured by M/s Southern Building Materials and Sanitary Co. Ltd. Therefore, from the statement, it cannot be said that the assessee has accepted the allegation of the Revenue. Whether the goods were manufactured by M/s Southern Building Materials and Sanitary Co. Ltd.? - Held that: - the goods exported by M/s New Zhong Yuan Ceramics Import & Export Co. Ltd. were manufactured by M/s Southern Building Materials and Sanitary Co. Ltd. - Revenue has heavily relied upon the verification of internet, from which it can only be known that brand name embossed on the goods imported are belonging to XinZhong Yuan Ceramics Co. Ltd. i.e. XNY. - Without any detailed investigation, merely on assumption basis, the Revenue came to the conclusion that the goods were not manufactured by M/s Southern Building Materials and Sanitary Co. Ltd. - there is no substance in the allegation of the Revenue. Confiscation and redemption fine set aside - appeal allowed - decided in favor of appellant-assessee.
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2018 (5) TMI 1144
Stay on imposition of Redemption Fine - permission to take the vessel “ABAN-IV” out of India for the purpose of undertaking petroleum operation - Held that: - Redemption fine is an option which the applicant can choose not to exercise. No time limit has been prescribed in the impugned order for exercising the option. It is understood that staying the imposition of redemption fine would results in applicant getting full custody of the rig, which is the final relief that they are seeking in appeal. No one is forcing them to exercise the option of Redemption and in that context stay has no meaning - More so because the provisional release was granted with conditions imposed in terms of the order of Hon’ble High Court. If the order of redemption fine is stayed it will result in bypassing the directions of Hon’ble High Court - Tribunal is not the proper forum to seek relaxation in conditions imposed by Hon’ble High Court - application therefore rejected.
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2018 (5) TMI 1143
Valuation of imported goods - enhancement of value - finalization of provisional assessment - Jurisdiction of officers of Directorate of Revenue Intelligence to issue notice for finalisation of assessment - Held that: - Finalization of provisional assessment, and of assessment including re-assessment, under section 17 and 18 of Customs Act, 1962 is within the exclusive competence of the 'proper officer'; in the impugned order, the Commissioner of Customs (Import) has attended to that responsibility and, in doing so, adjudicated a notice issued by Additional Director General, Directorate of Revenue Intelligence for, inter alia, finalization of assessment under section 18 of Customs Act, 1962. Considering the criticality of competence to issue show cause notice, the ends of justice will be appropriately met if the impugned order is set aside and the matter remanded back to the adjudicating authority to be decided afresh after the question of jurisdiction of officers of Directorate of Revenue Intelligence to issue notice for finalisation of assessment is settled.
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2018 (5) TMI 1142
DEPB credit - mis-declaration of value of export goods to avail excess DEPB credit - Held that: - It is settled position of law that value of transactions of export/import are required to be done on the basis of the transaction value, as per Section 14 - In the present case, reasons for rejection of transaction value are not clearly forthcoming. It appears to us that the transaction value has been rejected only on the basis of the market enquires conducted with other local exporters. This cannot be a basis for rejection of transaction value, particularly in view of the fact that the foreign importer has remitted the proceeds of the export goods in full - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1141
Classification of imported goods - Projectors - whether classified under CTH 85286100 as "Projectors solely or principally used with Automatic Data Processing Machines" or under 85286100 as the imported goods have features which are in addition to those which are normally found in goods covered under 85286100? - N/N. 24/2005 Cus. dated 01.03.2005 - Held that: - In the case of Casio India Co. Pvt. Ltd. [2016 (12) TMI 379 - CESTAT NEW DELHI] the Delhi Bench of the Tribunal has considered the various features of the projectors similar to the ones imported by the appellant. It was held in the case that the specifications of the imported goods are for the projectors which are meant for use as data projectors and not as video projectors; therefore, goods would be covered by the description Projectors of a kind solely or principally used in an automatic data processing system of heading 8471, which is the description of the Customs Tariff Heading 85286100 for which the benefit of Notification No. 24/2005-CUS under its entry No. 17 would be available. We have also considered various other decisions on identical products in which the classification of the goods were ordered to be made under 85286100 as claimed by the appellant - It has further been held that the appellant will be entitled to the benefit of various notifications as far as benefit of basic customs duty is concerned - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (5) TMI 1139
Liability of service tax - GTA services - transportation of sugar cane - no consignment note or loading receipt is issued - reverse charge mechanism - Held that: - job of sugar cane harvesting and its transportation upto the appellant’s factory was entrusted to Sangh by the appellant and accordingly Sangh arranged all the vehicles and has done the job for the appellant and in turn has recovered the agreed charges/commission for the said job - job of harvesting and transportation is not mere transportation but is a package deal of harvesting and transportation of sugar cane by arranging the tractor and vehicle upto the appellant’s factory. In this activity, it is admitted fact that for the so called GTA service, no consignment note was issued. Therefore, the said service cannot be construed as a GTA service - In the case of Kranti SSK Ltd. [2017 (6) TMI 275 - CESTAT MUMBAI], this Tribunal relied upon the various judgments and held that no Service Tax is chargeable on the sugar mills for transportation of sugar cane and the appeal was allowed. The alleged service of GTA is not liable for Service Tax - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1138
CENVAT credit - input services used for output service i.e. export cargo handing service - providing of taxable as well as exempt services - invocation of Rule 6 of CCR 2004 - Held that: - Since the appellant paid service tax on the output service, denial of cenvat credit is incorrect - Though the adjudicating authority decided the matter on principle but did not verify factual aspect of amount of cenvat credit attributed to the exempted cargo handling service vis-a-vis service tax paid by the appellant in respect of export cargo handling service, if it is found to be correct that that appellant have paid service tax which is more than the cenvat credit attributable to the export cargo handling then the demand will not exist. Matter remanded to the adjudicating authority to decide the matter a fresh after verifying the records of the assessee - appeal allowed by way of remand.
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2018 (5) TMI 1137
Refund of unutilized CENVAT credit - rejection mainly on the ground that the services in question have no direct nexus with the output services - Held that: - all the services in question stands approved by the approval committee of SEZ as approved services. Under the cenvat credit Rules and the N/N. 5/2006 – CE (NT) there is no condition that in order to avail refund the assessee must show one to one co-relation of input service with the output services. Once the service has been used with the output service provider, the claimant becomes eligible for the refund. There is no dispute about the fact that the services have been consumed by the Appellant in rendering export services whether directly or indirectly and hence there is no reason to deny the refund claim of the same. Refund claim on Rent A cab Services - Held that: - the Appellant has used the same for their business purposes. Further the service was approved by the Approval committee as specified services in SEZ and were used in authorized operations - refund allowed. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1136
Benefit of N/N. 45/10 and 11/2010 ST - commercial and industrial construction service - manpower recruitment or supply agency service - Held that: - it is clear that all the services which are provided in relation to transmission of electricity are exempted. The transmission of electricity is carried out by the Maharashtra State Electricity Transmission Board and for transmission of electricity whatever services used, all those services are exempted under N/N. 45/10 and 11/10 - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1135
Manpower Supply Service - SCN was issued to the Appellant on the ground that they have not made timely payment of service tax in terms of Point of taxation rules; that they did not raise bills on completion of services and did not pay tax on advances received - Held that: - the revenue’s appeal has only been admitted and there are no further order. In such case, it is appropriate to remand the case back to the adjudicating authority to consider the facts of the case afresh - appeal allowed by way of remand.
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2018 (5) TMI 1134
Classification of services - distinction between renting and hiring - Appellants M/s Buthello Travels and M/s Buthello & Sons provided buses to the various Municipal Transport corporations for operating as Stage Carriage for transportation of Public - whether taxable under Rent A cab Scheme Operator Service or otherwise? - Held that: - in the present case the Appellants were giving buses on hire to the corporations. They were not renting the cabs to the corporation. The control and the possession of the buses remained with the Appellant. Hon’ble High Court of Uttarakhand in case of CCE Vs. Sachin Mehrotra [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] while differentiating between renting and hiring reached to the conclusion that “unless the control of the vehicle is made over to the hirer and he is given possession for howsoever short a period, which the contract contemplates, to deal with the vehicle, no doubt subject to other terms of the contract, there would be no renting”. In the present case, the control and possession of the vehicle has remained under the control of the Appellant. Apparently the Appellant is required to bear the cost of running the buses so hired, including the salary to be paid to the drivers and they are remunerated on the basis of kilometer run only - the possession and control of the vehicle has remained with the Appellant and hence cannot be termed as renting of cab/ bus. Time Limitation - Held that: - the Appellants were filing Service tax returns showing the services as exempted services. In such case when the services rendered by the Appellant were in the knowledge of the revenue and there is no reason to hold that the Appellant intended to suppress the nature of services, in that case no malafide intention can be attributed to the Appellants - extended period not invokable. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1133
Rejection of VCES-1 declaration - N/N. 32/2010-ST dated 22.06.2010 - the respondent had entered into a contract for supply, erection and commissioning of 33/11 KV sub-station with MSEDCL (Maharashtra State Electricity Distribution Co. Ltd.) - Held that: - to avail the benefit of N/N. 32/2010-ST, the provider of service should be either a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003, for distribution of electricity - this aspect of the notification has not been examined in the impugned order. It is not to clear as how the respondent falls under this category. Thus the impugned order is not comprehensive to the extent. The review order also does not challenge the applicability of CBEC Circular No. 123/5/2010-TRU dated 24.05.2010, the benefit of which has been granted to the respondents. Matter remanded for re-verification - appeal allowed by way of remand.
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2018 (5) TMI 1132
Rectification of mistake - the final order, which has held against applicant, did not incorporate certain submissions and the determination thereof; these are now sought to be incorporated in the light of this application - Held that: - the claim made by the appellant that the show cause notice had not been received by them is not tenable; even if that were acceptable, it is of little relevance to the outcome of the proceedings before the Tribunal - circular no. 31/2004 dated 11th May 2004 pertains to the Customs Valuation Rules, 1988 which lays down instructions for valuation of imported goods, is referred to, the extent to which it could advance the case was not brought out either in the grounds of appeal or in the oral submissions for which reason we had rendered our findings of not finding any merit without further elaboration. The decisions cited, which, being disposal of an application for stay and waiver of pre-deposit, is an interim order with neither precedent value nor persuasive value. Accordingly these were not referred to in the order passed by us. The application for rectification of mistakes does not have any bearing on our findings or on the outcome and is, therefore, not liable to be entertained within the scope of section 35C of Central Excise Act, 1944 - application for ROM dismissed.
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2018 (5) TMI 1131
Liability of service tax - GTA Service - consignment notes - whether the respondent had availed the service of goods transport agency' within the meaning of Finance Act, 1994? - Held that: - There is no doubt that the respondent is a 'cargo handler'. Operation of container freight station undertake loading and unloading, packing or unpacking of cargo, which conforms to the main limb of the definition in section 65(23) of Finance Act, 1994. There is an exclusion limit in the said definition extending to handling of export cargo, passenger baggage and mere transportation of goods. An invoice creates liability of debt on the part of the recipient of the service. A consignment note, on the other hand, carries with it a certain legal burden, the issuing of a consignment note is a contractual undertaking made to the entity that handed over the goods to the agency of responsibility for safe delivery at the stipulated destination, A consignment note also creates binding responsibility for each consignment. In the absence of any evidence of such responsibility having devolved on M/s VA Enterprises and the issue of monthly bills does not, ipso facto, creates such liability and the impugned order is not at fault for having held that tax liability does not arise. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1130
Demand of service tax - appellant had rendered the services of erection, commissioning and installation work for Andhra Pradesh Transco - whether taxable under the category of erection, commissioning and installation services or otherwise? - Held that: - It is seen from the Notification No. 45/2010-ST, exemption is granted to all taxable services relating to transmission and distribution of electricity provided by a person to any other person - the impugned order is unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1129
Business Auxiliary Service - commission agent - liability of service tax - Held that: - the appellant has rendered certain services for M/s. MKT Valves Pvt. Ltd., Hubli. They were procuring orders for sale of valves for their client and receiving commission for such activity - the activity is covered by the definition of "Business Auxiliary Service" during the relevant period and the appellant has acted as the commission agent of M/s. MKT Valves - demand upheld - appeal dismissed - decided against appellant.
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2018 (5) TMI 1128
Liability of service tax - export of services or not? - the appellant was providing services to their foreign principal by helping them sell their products to their customers in India. The service commission received by the appellant is the remuneration for the sales of their principal‟s product in India. - Held that: - the appellants are providing the service of getting order from India for exporting of goods by the foreign principal and they are getting commission in convertible foreign exchange - in the present case, all the conditions as laid down in Rule 3(2) of Export of Service Rules, 2005 are satisfied. The services rendered by the appellant fall in the definition of "Export of Service" and therefore, the appellants are not liable to pay the Service Tax - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1127
Demand of service tax - security services - abatement of 75% - reverse charge mechanism - N/N. 30/2012-ST dated 20.6.2012 - Held that: - once the entire service tax has been paid by the service provider and the appellant has paid the share of 75% of the service tax to the service provider, there remains no tax due to the Government - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1126
Condonation of delay of 964 days in filing the appeal - Held that: - the appellant have discharged the entire Service Tax liability, therefore, it be said that the delay does not extend any benefit to the appellant by filing the appeal belatedly. Therefore, there is no intention of delaying the appeal to have undue benefit by the applicant. As regards the condonation of delay, the Court must take lenient view particularly in the present case when the applicant have discharged the entire Service Tax liability - delay condoned on imposition of cost. Application for COD allowed.
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2018 (5) TMI 1125
Demand of service tax - security services - It was noticed that the appellant is not discharging the service tax on the facilities such as medical expenses, vehicle, telephone, free accommodation provided, stationery expenses, etc., for the period from April 2009 to June 2012 as required under Section 67 of the Finance Act, 1994 i.e., on the gross value of all the consideration received. Held that: - the appellant is a Government of India entity engaged in providing security agency services to various PSUs. Further, there is no profit motive and business objective of the appellant is rendering the security agency service and they have paid the service tax after the adjudication order was passed and the prayer in the present appeal in only for dropping the demand of interest and penalty imposed under various provisions of the Finance Act. The penalty imposed vide the impugned order is not sustainable in law and therefore, by resorting to Section 80, the penalty imposed by the impugned order waived, as there was no intention to evade payment of service tax by the appellant - As far as liability to pay interest is concerned, I hold that the appellants are liable to pay the interest as held by the Commissioner (A) for the delay caused in payment of service tax. The original authority will quantify the amount of interest which the appellant is liable to pay for this purpose, for which purpose matter is remanded. Appeal allowed in part.
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2018 (5) TMI 1124
100% EOU - Refund claim - rejection primarily holding that the difference between the amount claimed as refund and amount debited in ST3 has to be deducted from the claim amount - Held that: - the appellant has lnadvertently short-debited in ST3 return to the extent of ₹ 27,64,742/- which the appellant has stated that they have rectified the defect but the documents were not produced before the authorities to justify the claim - case remanded to the original authority with a direction to examine the refund claim de novo after examining and verifying the documents which may be produced by the appellant in support of their claim - appeal allowed by way of remand.
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2018 (5) TMI 1123
Valuation - correct calculation of taxable turnover by the appellant, who is engaged admittedly in ‘Works Contract Service’ mainly doing electrical work (s) - Held that: - the computation of taxable value, in respect of ‘Works Contract’ is not at all legal, as the material component was calculated also in the Sales Tax assessment of the appellant/assesse. Further, the appellant-assessee had filed detailed paper book wherein they have given copy of various documents and copy of invoices, supporting the amount of material component, as they claimed. The matter is remanded to the Adjudicating Authority, who shall decide the matter afresh, considering the documents provided by the appellant - appeal allowed by way of remand.
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2018 (5) TMI 1122
Classification of services - construction of petrol pumps for ‘Indian Oil Corporation Ltd. - whether the service rendered by the appellant is classifiable under the Head ‘Works Contract’ or ‘Erection Commissioning & Installation Service? - Held that: - Commissioner (appeals) have erred in holding that Service Tax is payable under the head ECIS in spite of taking notice that goods/materials have been used in the execution of the construction contracts for petrol pumps for Indian Oil Corporation Ltd. - the appellant paid VAT on the material component utilised in such works contract. Accordingly, the work done by the appellant for Indian Oil Corporation Ltd. will be classifiable under the Heading Works Contract - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1121
Business Auxiliary Services - it was alleged that respondent had earned commission on sale of air tickets and insurance/other service for a total value of ₹ 27,31,732/- but failed to discharge tax liability of ₹ 1,06,147/- as provider of 'business auxiliary service' - Held that: - the respondent made bulk purchases of air tickets that were then assigned at market price to various successful candidates proceeding abroad - Tribunal in Greenwich Meridian Logistics (India) Pvt. Ltd v. Commissioner of Excise [2016 (4) TMI 547 - CESTAT MUMBAI] has held that a similar transaction in relation to cargo creates profit on sale and is not a consideration for taxable service. The provisions of Finance Act, 1994 are very clear; it is the service that is taxable and not a money transaction between two entities - Revenue has not been able to establish that the said activity of purchasing seats which have been sold to individual travelers are liable to be covered by the definition of 'business auxiliary service' in section 65(19) of Finance Act, 1994. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1120
CENVAT credit - denial on the ground that such grant availed on input services were distributed by the corporate office without taking out ISD registration and also on the ground of nexus - Held that: - In the case in hand, there is no dispute that the CENVAT Credit which has been availed by Chennai corporate office is the amount of service tax paid by the service providers and the said tax is not distributed to any other unit of the appellant - Hon'ble High Court of Gujarat in COMMISSIONER OF CENTRAL EXCISE Versus DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT] rejected the contention and held that credit is not deniable as non-registration of ISD is only a procedural irregularity - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (5) TMI 1178
Removal of Office objections - Held that: - Office objections to be removed on or before 9th May 2018, failing which the concerned matter/s will stand dismissed for non-prosecution without further reference to the Court.
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2018 (5) TMI 1119
Clandestine removal - branded chewing tobacco under the brand name of “Ratna” - M/s PZF is engaged in the manufacture of “Ratna” brand chewing tobacco. Finished goods with the same brand were found and seized from two godowns belonging to Shri Dinesh Gupta (Mittal). Packing materials bearing the brand name have also been seized from the premises of certain other buyers. Whether the seized goods have been manufactured and clandestinely cleared from the factory of M/s PZF? Held that: - no documents have been produced evidencing the licit nature of the seized goods - the Revenue has not brought any evidence on record regarding clandestine manufacture and clearance of the goods from the factory. No investigation appears to have been done in respect of procurement of raw materials or even the actual manufacture. The evidence, linking the seized goods to the factory of M/s PZF, is in the form of oral statements. Shri Purushottam Arya, Managing Partner admitted in his initial statements that seized goods were manufactured in the factory and cleared clandestinely without payment of duty but his statement was retracted subsequently. At the end of the buyers, both Shri Dinesh Mittal and Shri Dinesh Gupta in their statement have admitted that the seized goods were purchased from M/s PZF but without payment of duty. The statements of the buyers form a critical evidence in arriving at a decision in the present case - matter remanded to adjudicating authority to re-adjudicate the matter after following the procedure laid-down in Section 9D - appeal allowed by way of remand.
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2018 (5) TMI 1118
CENVAT credit - duty paying documents - whether the appellant is entitled for CENVAT Credit on the strength of invoice issued by an importer, who is registered as first stage dealer? - N/N. 30/2016-CE dated 15.8.2016 - Held that: - the first stage dealer includes the importer who sells the goods imported by him under the cover of invoice on which CENVAT Credit has been taken - In the present case, the importer who is registered as first stage dealer issued the invoice, therefore, the importer is undoubtedly covered in the terms ‘first stage dealer’. Therefore, the invoices issued by first stage dealer in respect of indigenous goods or imported goods, the invoice issued by such first stage dealer is valid document for availing the CENVAT Credit. As regards the N/N. 30/2016-CE (NT), this is not an amendment notification, however, the same is a clarification issued for the reason that this notification was not given effect to amendment under the Rule 9(2) of CENVAT Credit Rules, 2002 - it cannot be interpreted that only on or after the date of 28.6.2016 this clarificatory notification was issued, the first stage dealer was not entitled to issue a cenvatable invoice in respect of imported goods - the invoice issued by the first stage dealer in respect of the imported goods is clearly a valid document in terms of Rule 9 of CENVAT Credit Rules, 2004 for availing the CENVAT Credit. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1117
Liability of Excise duty - by-product - fatty acid / soap stock - Held that: - issue has been decided by the Larger Bench in the case of M/s. Ricela Health Foods Ltd. & Ors. Vs. Commissioner of Central Excise, Chandigarh [2018 (2) TMI 1395 - CESTAT NEW DELHI], wherein it has been held that these are treated as waste for the purpose of exemption N/N. 89/95-CE and therefore not liable to duty - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1116
CENVAT credit - Unit-I had taken credit on the basis of the invoices of the suppliers which were issued in the name of their Unit-II - It appeared to Revenue that Unit-I and Unit-II are different taxable entities and as such the taking of such credit was objected to by the Revenue - extended period of limitation - Held that: - only dispute is regarding the mentioning of the Unit-I or Unit-II on the invoice and that taking of credit by the other unit. Such error appears to be by way of clerical error calling for no adverse inference. The SCN issued admittedly after more than 12(twelve) months invoking extended period of limitation is time barred as the conditions prescribed for invoking extended period are not available in this case. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1115
Refund claim - refund of the duty paid initially at the time of transfer of assets on the ground that the said amount has been paid twice - rejection of refund on the allegation that no documentary evidences corroborating excess reversal/payment made by the appellant - Held that: - it is clear that there was an excess payment of duty by Unit-2 at the time of transfer of assets to Unit-2A and thereafter, the appellant had to pay again the said amount of CENVAT credit by TR6 challan itself shows that duty was paid twice for which the appellant is entitled to get the refund and there is no need of production of any documents to substantiate the same when it is clearly admitted in the Order-in-Original that there was excess payment - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1114
Demand of excise duty - capital goods sold as scrap - CENVAT/MODVAT credit was not availed in the capital goods. Held that: - it is an admitted fact that the capital goods were procured prior to the introduction of MODVAT credit on capital goods and therefore, no credit was availed on the same at the time of procurement. The payment of duty on capital goods removed as such or removed as scrap, with reference to Rule 3 of CENVAT Credit Rules, 2004 arises only in a case where the assessee had availed credit on the capital goods which are removed from the factory. In the case of UOI vs. Hindustan Zinc Ltd. [2007 (3) TMI 198 - HIGH COURT RAJASTHAN] wherein it is clearly held that if the capital goods which are not the one subjected to availing of MODVAT credit by the manufacturer, no duty is payable on removal of its waste and scrap from its factory. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1113
Short payment of Central Excise duty - inclusion of margin of profit in the conversion charges/job charges - validity of SCN - Held that: - no such statement have been made to rely upon document (RUD) nor any invoice/bills raised by the appellant on Kanoria Chemicals have been made RUD in the show cause notice - Further we find from the copy of cost statement duly certified by the Chartered Accountant, have been annexed by the appellant - assessee in the appeal paper book, wherein it is demonstrated that the conversion charges received by the appellant from Kanoria Chemicals includes element of profit as their costing for each Financial Year is less per M.T. than the conversion charges received per M.T. The SCN is vague and at the same time misconceived - Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1112
100% EOU - appropriation of interest against the disputed demand, which was sub-judice before the High Court - Held that: - this issue is no more res integra and has been settled in favor of the assessee in the case of ABB Ltd. vs. CCE [2016 (6) TMI 441 - CESTAT BANGALORE], where it was held that the appropriation of refund amount towards duty demand pending in other cases which has not attained finality is not legal and proper - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1111
CENVAT credit - demand of reversal on the ground that some of the inputs are contained in wastes/floor sweeping so cleared by the appellants - Rule 6(3)(b) of the CCR - Held that: - Rule 6(3)(b) of the Cenvat Credit Rule is applicable only when duty exempted final product is manufactured and that floors sweepings, defective cakes/contaminated flour are not exempted final products, the demand of an amount under Rule 6(3)(b) by the department is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1110
CENVAT credit - write off of capital goods - Fixed asset destroyed in fire - Fixed assets/capital goods written off and cleared by the appellant from their factory - Fixed Assets/capital goods written off but not cleared by the appellant from their factory - rule 3(5B) of the Cenvat Credit Rules, 2004. Write off of Fixed asset destroyed in fire - Held that: - there are no records that the appellant was claiming that there was fire incident in the factory, Adjudicating authority has recorded that appellant had not produced copy of FIR or Police Panchanama in order to complete action - matter needs reconsideration by the adjudicating authority to come to a conclusion as to whether the demand of duty would sustain as capital goods destroyed/damaged in fire accident - matter on remand. Fixed assets/capital goods written off and cleared by the appellant from their factory - Held that: - the appellant had admitted damaged fixed assets were removed from the factory premises and the demand of duty needs to be upheld - the duty liability was discharged but there is a shortfall, the shortfall if any is required to be paid - demand upheld. Fixed Assets/capital goods written off but not cleared by the appellant from their factory - Held that: - In the absence of any such plea, adjudicating authority could not have addressed the same, keeping in mind that there is a specific decision on this point, in order to appreciate factual position, the matter is remitted back to the adjudicating authority to consider this point and to arrive at a conclusion - matter on remand. Appeal disposed off.
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2018 (5) TMI 1109
Interest on refund - relevant date, from which Revenue is liable to pay interest - Held that: - the respondent-assessee is eligible for interest on the amount after the expiry of three months from the date of refund application till the date cash refund - issue is settled in the case of Ranbaxy Laboratories Ltd. v, Union of India [2011 (10) TMI 16 - Supreme Court of India] wherein their Lordships have settled the law inasmuch as that interest liability arises on Revenue authorities after the expiry of three months from the date of application for refund - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1108
Valuation - inclusion of expenses on transportation of goods manufactured by them from factory to the sales depot - Held that: - It is very simple concept of transaction value that the expenditure incurred by the manufacturer is not the additional consideration and that, if an additional amount in addition to the transaction value is received from the buyer by the manufacturer then such amount is treated as additional consideration and only such amount qualifies for demand of differential Central Excise duty - amount need not be included in the assessable value - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1107
Manufacture - extraction of Catechins from Gambier extracts - it appeared to Revenue that main appellant was engaged in the said process of extraction of Catechins from Gambier extracts and availing benefit of Notification No. 67/1995-CE dated 16.03.1995 and not paying any Central Excise duty on Catechins - Held that: - the issue in the case of M/s The Indian Wood Products Company Limited, Shri K.K. Damani, Shri Krishna Kumar Mohta, Shri N.H. Aggarwal Versus Commissioner of Central Excise, Meerut-II [2018 (2) TMI 1099 - CESTAT ALLAHABAD], squarely covers the present situation, where it was held that It is undisputed fact that catechin were manufactured by Bareilly Chemicals Pvt. Ltd. and the main appellant used the said goods in the manufacture of their final product. Therefore, by no stretch of imagination use of catechin in the manufacture of Indian Katha can be treated as captive consumption and, therefore, the question of eligibility of main appellant for the benefit of Notification No. 67/1995 does not arise. M/s The Indian Wood Products Co. Ltd. was not liable to pay Central Excise duty on Catechins manufactured by M/s Bareilly Chemicals Pvt. Ltd. - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1106
Valuation - applicability of Rule 7 of Central Excise (Valuation) Rules, 2000 - appellants are selling their product partly at factory gate and partly through consignment agents by stock transferring of the goods on payment of duty - Held that: - when the goods are not sold at the factory gate but removed exclusively to a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold, the rule 7 is applicable - In the instant case, it is evident that the goods were partly sold at factory gate and duty was paid. Remaining goods were transferred to the consignment agent. Therefore, Rule 7 of Central Excise (Valuation) Rules, 2000, is not applicable in the instant case - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 1179
Mainatainability of application - delay in filing appeal - Held that: - the delay of two days was wrongly computed, though there was no delay in filing the appeal - application disposed off as infructuous.
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2018 (5) TMI 1105
Classification of goods - interlocking paving blocks and curb stones - Whether the Tribunal was right in holding that interlocking paving blocks and curb stones are bricks falling within entry 10(1) of Schedule II to the Gujarat Value Added Tax Act, 2003 and should be taxed accordingly? Held that: - Entry 10(1) of the schedule II to the VAT Act includes bricks of all kinds including fly ash bricks, refractory bricks, eco bricks and hollow block bricks. In plain terms, the intention of the legislature is thus to include all kinds of bricks within the fold of this entry. The entry is consciously and advisably worded widely - The bricks as understood in common usage and parlance need not require any description. Use of the paver blocks also in the recent times has become quite common. From the literature provided by the counsel for the parties, we gather that such interlocking paver blocks are made of concrete. They are used for making footpaths, used in gardens, passenger waiting areas, busstops and such other public places. These are prefabricated systematic blocks of definite sizes and shapes mostly come with self interlocking patterns. The paver blocks are also sometimes referred to as paver bricks. They are getting increasingly more popular for ground paving purpose. They are used predominantly in paving footpaths, gardens, sidewalks, busstops and other public places. These paver bricks are superior to the conventional bricks in number of ways including the durability, the ease of laying and removing. With the use of combination of shapes and colours, they can also be used for beautifying the place. One of the major advantages in use of these material is that these bricks are easy to remove enabling easy underground repair work. The Tribunal was correct in coming to the conclusion that paver blocks and curb stones are classifiable within entry 10(1) of Schedule II to the Gujarat Value Added Tax Act - appeal allowed - decided against Revenue.
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2018 (5) TMI 1104
Input tax credit - Whether the Tribunal was justified in denying the benefit of the first proviso to Section 16(2) for claiming input tax credit and thus rejecting the claim of input tax credit from the date of commencement of business; and ought not the Tribunal have granted the benefit as held in the binding precedent of Sales Tax Officer v. Kerala Curry House [2009 (12) TMI 856 - KERALA HIGH COURT]? Held that: - The Division Bench in the aforecited decision had categorically found that the deemed retrospective effect of registration granted from the date of commencement of business would only be for availing the benefit of clauses (a) and (b) of the proviso to Section 16(2). Clauses (a) and (b) are confined to payment of tax under Section 6(5) and opting for payment of tax under Section 8. This would not take in the input tax credit as claimed by the petitioner. A reading of Section 11 would indicate that only a registered dealer would have the benefit of input tax credit. The benefit conferred under the proviso to Section 16(2) as substituted in the statute book in 2009 only grants benefit for payment of tax under Section 6(5) and exercising an option for payment of tax under Section 8. The benefit of input tax credit does not flow necessarily from the proviso as substituted in 2009. Appeal dismissed - decided against assessee.
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Indian Laws
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2018 (5) TMI 1140
Non-compliance with pre-deposit - whether the order of the National Company Law Appellate Tribunal dismissing the main appeal itself of the appellant herein for non-compliance of the direction to deposit the amount as a condition for grant of stay, is justified and legal? - section 53B of the Competition Act, 2002. Held that: - provisions of Section 53B of the Act confers a right upon any of the aggrieved parties mentioned therein to prefer an appeal to the Appellate Tribunal. This statutory provision does not impose any condition of pre-deposit for entertaining the appeal. Therefore, right to file the appeal and have the said appeal decided on merits, if it is filed within the period of limitation, is conferred by the statute and that cannot be taken away by imposing the condition of deposit of an amount leading to dismissal of the main appeal itself if the said condition is not satisfied - Position would have been different if the provision of appeal itself contained a condition of pre-deposit of certain amount. That is not so. The Appellate Tribunal, which is the creature of a statute, has to act within the domain prescribed by the law/statutory provision. This provision nowhere stipulates that the Appellate Tribunal can direct the appellant to deposit a certain amount as a condition precedent for hearing the appeal. In fact, that was not even done in the instant case. It is stated at the cost of repetition that the condition of deposit of 10% of the penalty was imposed insofar as stay of penalty order passed by the CCI is concerned. Therefore, at the most, stay could have been vacated. The Appellate Tribunal, thus, had no jurisdiction to dismiss the appeal itself. Appeal restored which shall be decided by the Appellate Tribunal on merits.
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