TMI Tax Updates - e-Newsletter
May 31, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Profiteering - benefit of ITC and reduction in price of Flat - the Respondent though aware of the fact that the net benefit of ITC had to be passed on to his buyers had not passed on the entire benefit till the completion of the investigation by the DGAP - contravention of the provisions of Section 171(1) and committed an offence u/s 122(1) of the CGST Act and liable for penalty
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Income Tax:
TDS u/s 195 - DTAA with Uganda - professional services - the services received by the assessee from these three persons is covered by article 14 and therefore, the same cannot be included in article 12 - article 12(3)(b) specifically provided that the term fees for technical services does not include payments for services mentioned in articles 14 and 15 of this convention - neither TDS was deductible nor disallowance u/s 40(a)(i)
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Income Tax:
Gain on Sale of pent house - LTCG or STCG - possession of the flat is flowing from the terms and conditions mentioned in the buyer’s agreement itself hence the date of possession cannot be reckoned as a date of the acquisition of the flat for the purpose of computing the period of short term or long term - date of buyer’s agreement is the date for acquiring the rights in the property - LTCG
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Income Tax:
Penalty u/s 271(1)(c) - income accrued in India - in appeal in quantum proceedings has admitted by Honourable Delhi High court in the case of the assessee as substantial question of law - the issue becomes debatable - penalty cannot be levied
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Income Tax:
Speculation loss u/s 73 - it is apparent from computation that no part of the business of the assessee company consists of purchase and sale of the shares - Merely indulging in purchase and sale of shares for investment is not business activity in sale and purchase of shares of other companies for the purpose of this section - explanation to section 73 does not apply to the assessee company
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Income Tax:
Disallowance of foreign currency exchange loss treating speculative - the hedging of foreign currency was done on the basis of confirmed orders with the customers and past export performance which the bankers have duly verified and thereafter the forward contract were entered before the actual delivery of goods - intended to guard against losses through future price fluctuations - business loss
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Income Tax:
Addition of commission income - accommodation entry provider - commission income with respect to the transaction entered into by the entry operator are required to be taxed in the hands of the assessee company, provided the same have already not been taxed in the hands of entry operator otherwise it will amount to double addition - remanded to AO to ascertain this fact
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Income Tax:
Revision u/s 263 - No enquiry was undertaken by CIT - Order of the Pr. CIT only contains the conclusion arrived that the order of the AO is erroneous but gives no indication that the Pr. CIT undertook any enquiry before arriving at such conclusion which indeed the jurisdictional requirement u/s 263 - revision correctly set aside by ITAT
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Income Tax:
Assessment u/s 153C - The addition/disallowance made are on the ground that no TDS has been made and hence, the provisions of Section 40(a)(ia) attracted - disallowances are not based on any material found during the course of search - assessments in question are bad in law
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Income Tax:
Revision u/s 263 - issue of fresh share in lieu of investment in shares - once, the AO has found that a transaction is not in terms of any money after the detailed inquiry and getting the entire records from these 15 companies, then how the CIT had reached to a conclusion that the AO has failed to investigate the genuineness and creditworthiness of source - there was no lack of enquiry or non-application of mind by the AO
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Income Tax:
Reassessment u/s 148 - neither the A.O nor the CIT(A) has made any enquiry from the Institution regarding certificate for tuition fees for the entire course - reasons being silent as to the specific facts, the vague allegation shows that action has been taken mechanically on the basis of alleged report of investigation wing, and, not on independent application of mind - Reassessment is non east of law
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Income Tax:
Gain on sale of shares - capital gains or business income - buy back of shares by the borrowers - the object of trading in shares was lacking in as much as the financial collaboration agreement itself prescribed that the shares shall be bought back by the private promoter after a specified period at a defined consideration - realization from such investments was Capital gains
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Customs:
Mis-declaration of imported goods - appellant had claimed classification as fabric containing 85% or more by weight of textured polyester filaments which was also accepted by Textile Committee - The customs authorities chose to revise the classification based on a test report of the Dy. Chief Chemist after testing of the remnant samples - Dy. Chief Chemist cannot overrule the earlier test results
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Customs:
Safe Guard duty on import of aluminium foil - certificate containing description of goods indicated that it was of “silver colour” which is usually the colour of normal aluminium foil - none of the documents produced before the Customs Authorities for customs clearance reveal the description of item was colour coated aluminium foil - not eligible for exemption from Safe Guard duty
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Customs:
Restraint from encashing the bank Guarantee - goods imported by PEL (steel plates) for supply to NTPC was eligible for deemed exports however due to scraping of project NTPC agreed to pay the duties leviable on the said imports - the respondents cannot continue to withhold the bank guarantee after accepting the the payment from NTPC
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Customs:
Exemption from CVD - distinction between “ore” and “concentrate” - the goods were described as “ore” by foreign supplier and the appellant have simply followed the said description - the entire duty demand was available as cenvat credit to the appellant themselves hence there is no intention to evade payment of duty - redemption fine substantially reduced and penalty set aside
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IBC:
Withdrawal of petition - Applicant and the Debtor Company have never been qualified as a “Wilful defaulter” - Section 12A prescribes that the Adjudicating Authority may allow the withdrawal of application with the approval of 90% voting share of the CoC - first time in the two and half years (Approx.) that a Resolution Applicant is withdrawing a Resolution Plan which is approved by the CoC with majority vote - application allowed
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IBC:
Distribution of assets - Workmen dues - by virtue of EPF Act and section 34(4)(a)(iii) of the Code, the charge will remain in force against the assets of the corporate debtor until it has been paid off before making any payment to any entity falling under waterfall mechanism devised u/s 53 of the Code - Liquidator to pay off the PF dues in priority to all other claims payable by the Corporate Debtor in liquidation
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IBC:
Corporate Insolvency Resolution Process (CIRP) against guarantor - corporate debtor admittedly being corporate guarantor to the money borrowed by the principal borrowers against payment of interest, it is a financial debt falling under Clause 8(i) - the person in default u/s 5(8)(i) is a company as envisaged under Section 3(7) of the Code, therefore this creditor can initiate section 7 proceedings against this corporate debtor
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Service Tax:
Swachh Bharat Cess (SBC) paid on input services has to be available as Cenvat Credit and the same can be discharged by utilising Cenvat Credit and the appellant is therefore entitle for the refund of it.
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Central Excise:
Classification of goods - Bulk Milk Cooler - confirmation of duty merely on the basis of allegation in the SCN without ascertaining the fact is wrong.
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Central Excise:
CENVAT Credit - capital goods/inputs or not - M.S. Plates, M.S. Channels, H.R. Coils, M.S. Angles etc. - no manner of doubt that respondent-assessee is entitled to Cenvat Credit in respect of items used as structural support for capital goods prior to the amendment of Explanation 2 to Rule 2 (k) by notification dated 7.7.2009 - amendment is applicable only prospectively
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Central Excise:
Non-payment of Central Excise Duty - manufacture of Ready Mix Concrete (RMC) at construction site OR other places - no evidence was produced that the ready mix concrete was manufactured at site rather than Pen and Pagdhe and moved thereafter to the construction site - not eligible to the benefit of the said notification No. 4/97-CE dated 1.3.1997
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Central Excise:
Appeal u/s 35-G of the Central Excise Act - The order of the adjudicating authority is a reasoned and well considered order analysing the evidence adduced before him - concurrent findings of fact recorded by both the original adjudicating authority, and the CESTAT affirming the order of the adjudicating authority, do not suffer from any such infirmity - no substantial question of law arises
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VAT:
Classification of goods - The 'bumpers' and 'hoods' may add to the convenience or effectiveness but are not essential in themselves as to without which the Tractors, which we are presently concerned with, cannot work.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (5) TMI 1608
Interest payable for delayed payment of GST - erroneous calculation - HELD THAT:- It is pointed out that against the total tax liability of ₹ 3.31 crores the interest liability works out to 8.19 crores which makes it unreasonable and erroneous. Notice. Mr. Harpreet Singh, Advocate accepts notice for the Respondents - Till the next date, no coercive action be taken against the Petitioner for non-payment of the interest amount. List the matter before the Registrar on 5th August, 2019 for completion of pleadings - List the matter before the Court on 30th September, 2019.
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2019 (5) TMI 1607
Profiteering - purchase of a flat in the Respondent's project East Crest - benefit of Input Tax Credit (ITC) and reduction in price of flat had not been passed on - contravention of section 171 of CGST Act, 2017 - HELD THAT:- The Respondent has denied the benefit of the ITC to the buyer of the flats being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017, where he had not only collected more price than the entitled amount but also collected more GST on the increased amount. The Respondent though aware of the fact that the net benefit of ITC had to be passed on to his buyers had not passed on the entire benefit till the completion of the investigation by the DGAP. The above act of the Respondent appears to be deliberate and conscious violation of the provisions of the CGST Act, 2017, thus he has committed an offence under Section 122 (1) of the CGST Act, 2017 and therefore he is liable for imposition of penalty. Imposition of penalty - HELD THAT:- Perusal of the notice dated 29.08.2018 issued to the Respondent shows that he has been intimated that it was proposed to impose penalty under Section 122-127 of the CGST Act, 2017 read with Rule 133 of the CGST Rules, 2017 and also to cancel his registration if the allegation of profiteering was proved against him, however, no specific instances of violation of the above Sections have been mentioned in the above Notice - Therefore, the proposed imposition of penalty under the above Sections and cancellation of his registration is not sustainable unless specific allegations how he had violated the provisions of the above Sections are levelled against him. Therefore, the above notice is ordered to be withdrawn to the extent that it proposes to impose penalty on him as per the provisions of the above Sections and the Rule. A fresh notice be issued to him as to why the penalty prescribed under Section 122 (1) of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him as he had issued incorrect tax invoices to the flat buyers by charging more amount than what he could have charged and further charged additional GST on this amount. The Respondent would have sufficient opportunity to state his defence on the above charge and he can also raise his other objections during the course of the hearing on the issue of imposition of penalty. A copy each of this order be supplied to the Applicants, the Respondent and Commissioners CGST/SGST of Karnataka state for necessary action. File be consigned after completion.
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Income Tax
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2019 (5) TMI 1606
Revision u/s 263 by CIT - fundamental requirement for assumption of jurisdiction u/s 263 - No enquiry by CIT undertaken - ITAT set aside the impugned order by the Pr. CIT. - HELD THAT:- Order of the Pr. CIT only contains the conclusion arrived at by the Pr. CIT that the order of the AO is erroneous but gives no indication that the Pr. CIT undertook any enquiry before arriving at such conclusion. Indeed the jurisdictional requirement of Section 263 of the Act does not appear to have been kept in mind in the present case by the Pr. CIT. Consequently, the Court finds no error having been committed by the ITAT in setting aside the said order of the Pr. CIT. No substantial question of law arises
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2019 (5) TMI 1605
Gain on sale of shares - correct head of income - capital gains or income from business - buy back of shares by the borrowers - AO held that the basic intention of holding equity shares by the assessee was to earn interest on the loans advanced and therefore held that the transaction could not be classified as capital gain and further held that it was in the ordinary course of business of the assessee and related to its primary object of financing and was therefore clearly business profit of the assessee. HELD THAT:- On identical issue, it was held by this Court in CIT vs. Punjab Agro Industries Corporation Limited [ 2014 (1) TMI 490 - PUNJAB HARYANA HIGH COURT] that the Tribunal rightly considered the facts that investment made in the shares of companies which were jointly promoted by the assessee alongwith the private entrepreneurs, was with the basic object of promoting agro/horticulture based industry in the State of Punjab and not as a dealer in shares with the object of trading. Infact, the object of trading in shares was lacking in as much as the financial collaboration agreement itself prescribed that the shares shall be bought back by the private promoter after a specified period at a defined consideration. Therefore, realization from such investments was liable to be taxed under the head Capital gains and not as business activity. Disallowance on account exempt income - dividend claimed exempt by holding the activity of the assessee as investment and not trading in shares - HELD THAT:- Tribunal after examining the matter recorded that the Finance Act, 2003 inserted clause (34) to section 10 which deals with income which is exempt from taxation and does not form part of the total income at all excluding the income by way of dividend from the purview of taxation. At the same time, Section 115-O was inserted in the Act making the companies distributing dividend to pay tax at a specified rate thereon. Thus, taxation of dividend changed hands from the recipient to the payer of dividend by virtue of this amendment brought about in the Act. The case of Brook Bond India Limited [ 1986 (9) TMI 2 - SUPREME COURT] did not apply to the present case since it related to the assessment years 1955-56 when the position of law vis a vis taxation of dividend was governed by the Income Tax Act, 1922 which taxed dividend in the hands of the recipient. It was further recorded that since the dividend income was exempt from tax, the provisions of Section 14A of the Act disallowing expenses incurred for earning the same were attracted. For that limited purpose, the issue was restored back to the AO to decide the same in accordance with law after giving due opportunity of hearing to the assessee. The findings recorded by the Tribunal on all the issues are findings of facts which have not been shown to be illegal or perverse by the learned counsel for the appellant-revenue, warranting interference by this Court. Thus, no substantial question of law arises.
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2019 (5) TMI 1604
Assessment u/s 153C - absence of any incriminating material found or seized - date on which the books of accounts or documents or assets seized during the course of search proceedings - computation of the block of six years preceding the AY relevant to the previous year /in which the search was conducted - HELD THAT:- The satisfaction of the A.O of the assessee i.e the person other than the searched person was recorded on 15.01.2014. As such, the period of six years was to be reckoned from the date of recording of such satisfaction , which would thus take within its sweep the period relevant to Assessment Years: 2008-2009 to 2013-2014. Accordingly, as per the ld. A.R, the case of the assessee for the year under consideration i.e. A.Y.2007-2008 would not fall within the scope and gamut of the period for which assessment proceedings u/s153C could be framed. As per the facts stated by the ld. A.R before us, we find substantial force in his contention that the year under consideration viz. A.Y 2007-08 does not fall within the period for which assessment u/s 153C could be framed. Accordingly, we direct the A.O to verify the factual position as regards the date on which the books of accounts or documents or assets seized during the course of search proceedings were delivered by the A.O of the searched person to the A.O of the assessee i.e the person other than the searched person. Apart there from, in case the A.O of the searched person and that of the assessee is the same person, then the date of recording of satisfaction by the A.O in the file of the assessee i.e the person other than the searched person, shall be taken as the relevant date for reckoning the period of six assessment years for which assessments could have been framed u/s 153C. In case, the claim of the assessee that the year under consideration vis. A.Y.2007-2008 falls beyond the scope of six assessment years from the aforementioned date of recording of satisfaction or receiving of documents or assets seized or books of accounts by the A.O of the assessee, as the case may be, then the assessment framed by the A.O shall stand vacated. The Additional Ground of appeal raised by the assessee is allowed in terms of our aforesaid observations. Additions based on contents lying in the locker - HELD THAT:- We find that the assessee in his statement which was initially recorded during the course of the search seizure proceedings u/s.132(4), dated 20.11.2012, had specifically stated that the contents lying in the locker were belonging to him. In fact, a perusal of the assessment order reveals, that the assessee on being confronted with the aforesaid documents viz. Annexure-A/1 to A/4 had specifically admitted that the same were required by him in the course of his business to get orders from the customers to prove the genuinenity of the supplier parties. On a perusal of the specific replies to the queries as regards the seized documents viz Annexure-A/1 to A/4, it can safely or rather inescapably be concluded that the said documents belonged to the assessee. As such, we are not inclined to accept the contention of the ld.A.R that the assessee was in no way connected with the documents which were found and seized during the course of search proceedings from his locker No.596 with M/s Gold Sukh Safety Vaults Ltd., 65 Vithalwadi, Mumbai-400002. Computing the commission income of the assessee @3% of the aggregate of the turnovers of the respective 53 concerns - Assessee was involved in the business of providing/arranging accommodation entries for third parties - HELD THAT:- The lower authorities have failed to prove on the basis of any irrefutable documentary evidence that all the 53 parties on whose turnovers for the respective years the commission income of the assessee as a facilitator/bogus entry provider had been worked out were involved in the business of providing accommodation entries. The very basis for working out the brokerage income in the hands of the assessee cannot be accepted on the very face of it. Further, as observed by us hereinabove, as the basis for working the commission @3%/0.05% by the AO/CIT(A), is also not backed by any supporting material, therefore, the same does not inspire much of confidence as regards the estimation of the commission income of the assessee, and thus cannot be summarily accepted on the very face of it. The matter has not been appreciated by the lower authorities in the right perspective. Admittedly, we though are in agreement with the observations of the lower authorities that the assessee was engaged in the business of facilitating/providing of accommodation entries, however, the very basis for quantifying the estimation of such commission income does not find favour with us. Be that as it may, in our considered view, the matter requires to be restored to the file of the A.O with certain specific directions. Undisclosed silver weighing 11.2 Kgs and cash - undisclosed income of the assessee for the previous six assessment years - HELD THAT:- As we have restored the issue as regards the quantification of the undisclosed income of the assessee to the file of A.O for fresh adjudication for the year under consideration and the preceding years, therefore, in all fairness the said issue is also restored to his file for adjudicating the same afresh. In case, the assessee is able to substantiate in the course of set aside proceedings that he had sufficient funds available with to explain the investment made towards the value of 11.2 kg of silver jewellery and the cash of ₹ 11,00,000/- found from his locker no. 596 during the course of the search proceedings, then the addition to the said extent towards unexplained investment shall stand deleted. We do not find favour with the claim of the ld. A.R that the lower authorities had not given any basis for taking the value/upholding the value of the seized silver at ₹ 7,23,060/-. Rather, as is discernible from the records, we find that the assessee had categorically stated in his statement recorded during the course of the search proceedings that the 11.2 kg of silver jewellery that was found and seized from his locker No. 596 during the course of the search proceedings, was of a value of ₹ 7,23,060/-. We thus reject the contention of the ld. A.R that there is no basis for taking the value of the aforesaid 11.2 kg of silver jewellery by the A.O at ₹ 7,23,060/-.
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2019 (5) TMI 1603
Speculation loss u/s 73 - according to the AO short term capital loss and long term capital loss is a speculation loss - according to the assessee the provisions of section 73 does not apply to the assessee as assessee is falling into the exception - no part of the business of the assessee company consists of purchase and sale of the shares - HELD THAT:- On looking at the computation of total income filed by the assessee before the learned assessing officer it has business income of loss, long-term capital gain exempt u/s 10(38) and exempt dividend income. The long-term capital gain which is exempt under section 10 (38) as well as the exempt dividend income which is also exempt under section 10 (34) of the income tax act does not enter into the computation of the total income but is an exempt income. Therefore the only income which is chargeable is under the business income. Therefore it is apparent that no part of the business of the assessee company consists of purchase and sale of the shares. Merely indulging in purchase and sale of shares for investment is not business activity in sale and purchase of shares of other companies for the purpose of this section. Such is the mandate in case of Standipack P Ltd V CIT [ 2012 (10) TMI 131 - CALCUTTA, HIGH COURT] . In view of this we reverse the orders of the lower authorities and hold that explanation to section 73 does not apply to the assessee company - Decided in favour of assessee.
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2019 (5) TMI 1602
TDS u/s 195 - commission paid to foreign commission agent - Addition u./s 40(a)(ia) - as per assessee foreign agents rendered services out of India for procurement of the orders from the overseas buyers and for getting approval of the goods - PE in India - HELD THAT:- There is no dispute that the agents being located outside India and not resident of India were canvassing sales for the assessee for customers abroad. It is an admitted position by the AO himself that the agents are not resident in India further to make disallowance AO did not establish that they have any permanent establishment in India. Therefore it is not a case where the non-resident agents are carrying on any business activity in India. Assessee has engaged the services of non-resident agents outside India on pure commercial considerations for its sales outside India and also to pursue the payments to be made by the purchasers as located abroad. AO has also not established that what is the business connection of those agents in India in terms of provisions of section 9(1) (i). AO has merely mentioned these section but the criteria for satisfying them have also not been established. Even Otherwise Section 9(1)(i) is applicable on the net the profits of a non - resident which can reasonably be attributed to operations carried out in India. In the prsesnt case the agents have not carried out any operations in India. He also did not specify that what kind of services in the nature of Managerial, Technical or consultancy rendered by these agents to assessee to fall the services under the definition of Fees for technical services u/s 9 (1) (vii) . The principle still holds good that the payments to non-resident are liable for tax in India only if they satisfy the test of chargeability in India. In the present case the ld AO has not established it. - Decided in favour of assessee
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2019 (5) TMI 1601
Penalty u/s 271(1)(c) - income for taxation in India - income accrued in India - payments received by the appellant from Prasar Bharti were in nature of fees for technical services - DTAA between India and Singapore - debatable issue - Whether the payments received by the appellant from Prasar Bharti be treated as business receipts? - CIT-A deleted the penalty levied - HELD THAT:- On looking at the assessment order passed u/s 143 (3) of the income tax act the assessing officer has treated the same income as fees for technical services as per page number 7 of the assessment order. The total income accrued to the assessee of INR 5 2626383/ is taxable at the rate of 20% as held by the assessing officer. Nothing in the assessment order itself that AO has recorded any satisfaction with regard to the fact that the assessee has furnished inaccurate particulars of income or has concealed the income. The learned assessing officer has merely stated that the penalty proceedings u/s 271 (1)( c) may be initiated separately. Therefore, there is no specific charge in the assessment order with respect to the satisfaction about the fault committed by the assessee. The quantum appeals have been admitted by the honourable Delhi High Court [ 2013 (8) TMI 1108 - DELHI HIGH COURT] , therefore even if the lower authorities have concurrently decided an issue taking same view, the issue becomes debatable. On such a debatable issue penalty cannot be levied. We also found that the ld CIT (A) has correctly relied up on the decision of Honourable supreme court in case of Reliance petro products Limited [ 2010 (3) TMI 80 - SUPREME COURT] in deleting the penalty as held that otherwise it would be that in every case of return where the claim made by the assessee is not accepted by the assessing officer for any reason it will invite the penalty u/s 271 (1) (C) which is not the intention of the legislature. Therefore we confirm the order of the learned CIT A in deleting the penalty levied u/s 271 (1) ( C ) - Decided in favour of assessee.
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2019 (5) TMI 1600
Addition on account of undeclared commission income - accommodation entry provider - HELD THAT:- The commission income with respect to the transaction entered into by the assessee are required to be taxed in the hands of the assessee company, provided the same have already not been taxed in the hands of Sri SK Jain. We direct the assessee to show before the learned assessing officer that commission income earned by Sri SK Jain on these transactions of the accommodation entries have already been offered by him as income in his hands. If the assessee shows that same have been already taxed in the hands of Sri SK Jain, then commission with respect to the above accommodation entries will not be added in the hands of the assessee as it will amount to double addition. If the assessee fails to show that commission income has been offered by Sri SK Jain on these accommodation entries as income in his hands , then the assessing officer is directed to retain the addition of INR 12,000,000 in the hands of the assessee company. Accordingly ground number 1 and 2 of the appeal of the AO is allowed with above direction. Addition u/s 14A - there being no dividend income earned by the assessee during the year - HELD THAT:- As found that assessee has not earned any exempt income during the year and therefore there is no question of making any disallowance u/s 14 A of the income tax act. Therefore we find no infirmity in the order of the learned CIT A in deleting disallowance. Accordingly ground of the appeal of the AO is dismissed.
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2019 (5) TMI 1599
Gain on Sale of pent house - LTCG or STCG - co-ownership in property - period of holding of the pent house has to be reckoned from the date of allotment of the property i.e 13.10.2005 and not from the date of possession in 2012 - HELD THAT:- Possession of the flat is flowing from the terms and conditions mentioned in the buyer s agreement itself. Thus, in our opinion the date of possession cannot be reckoned as a date of the acquisition of the flat for the purpose of computing the period of short term or long term. We are in tandem with the contention of Mr. Ajay Wadhwa that, even if the date of allotment is not to be treated as the date of acquisition, but the date of buyer s agreement dated 8.3.2006 is the date in which the assesee has acquired the rights in the property. Accordingly we direct the AO to treat the date of acquisition of the flat / property on 8.3.2006. As never in dispute by the revenue that assessee did not had a valuable right in the property which is a capital asset under the Income Tax Act and it is this capital asset which has been sold by the assessee in this year. Thus, we hold that, firstly it is a transfer of a long term capital gain; and secondly, the same has to be taxed as long term capital gain. Consequently ground No. 1 to 6 is allowed. Allowability of Interest expenses - interest paid on loan borrowed to the extent of the assessee s share in the property up to the date of possession - HELD THAT:- Both the authorities have tried to co-relate the ownership of the property way back in 8.3.2006 for which he has made fully payment after taking loan from the bank. The Act which provides that any expenditure incurred wholly and exclusively in acquisition of asset or cost of any improvement therein has to be allowed by deducting from the full value consideration received or agreed as a result of transfer of the capital asset. If the capital asset has been transferred in this year , then up to the date of transfer, the cost of acquisition and improvement has to be allowed. This issue is also covered by the other decision of the Hon ble Delhi High Court in the case of CIT vs. Mithlesh Kumari [ 1973 (2) TMI 11 - DELHI HIGH COURT] wherein the Hon ble High Court has allowed the full interest paid from the period up to the date of sale and therefore, the ratio will apply as binding precedence. Thus, we direct the AO to allow the interest up to the date of sale. Allowability of other expenses - expenses incurred by the assessee over the period of time which has been claimed towards cost of acquisition - HELD THAT: - From the perusal of the above expenses, we find that certain expenses are directly related to the cost of the improvement for example Govt. Tax , cost of electric meter, cost of BTU meter, HVAC charges, service charges, stamp duty charges. However charges like maintenance charges, electricity charges and other charges cannot be held to be any expenditure incurred wholly and exclusively connected with the transfer of cost of acquisition. Therefore, AO has directed to examine these expenses and allowed the same u/s 48 in the computation of long term capital gain. Allowability of penalty, Commission and maintenance charges - AO has disallowed the said expenses on the ground that they are in relation to the capital asset and not in the business account - HELD THAT: - In so far as penalty in concerned Ld. Counsel admitted that same has already been disallowed by the assesee in the computation of income, therefore, further disallowance leads to total addition on the same amount. We find the contention of the Ld. Counsel is correct and therefore, we direct the AO to remove the disallowance because assessee has already added back in the computation of income. Commission addition - Ld. Counsel pointed out AO while computing the short term capital gain has reduced the commission and therefore, if income is to be computed as long term capital gain then same treatment should be given. We find substance in the arguments of the Ld. Counsel , if the nature of commission has is in relation to the transfer of capital asset then while computing the long term capital same should be allowed. However, in respect to maintenance expenses which were for the upkeep of the flat the same would not be allowed as a part of cost of acquisition of capital asset and therefore, same cannot be allowed. Appeal of the assessee is partly allowed.
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2019 (5) TMI 1598
TP adjustment - analysis of advertisement, marketing and sales promotion (AMP) expenses by applying Bright Line Test - international transaction or not ? - TPO held that AMP expenses of sales in case of assessee was at 8.43% which was higher than average AMP expenses incurred by comparables, thereby making an adjustment - HELD THAT:- Since basis on which adjustment has been made being Bright Line Test itself has been rejected in case of Sony Ericson India P.Ltd [ 2015 (3) TMI 580 - DELHI HIGH COURT] and no further interference is called for at this stage. On perusal of TP order it is observed that Ld.TPO made an effort to analyse whether AMP expenditure is an international transaction or not. It is very interesting to note that Ld.TPO observes that assessee has been licensed the brand Adidas by its domestic AE (Adidas India Pvt. Ltd). He also reproduces relevant extract from the agreement, wherein it is recorded that Adidas India Pvt. Limited is the exclusive owner of trademark Adidas and enjoys all proprietary rights related thereto. We cannot ignore the submission of the learned DR that the matter is pending before Hon'ble Apex Court and the decision of Hon'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. However, if the above decisions of Hon'ble Jurisdictional High Court in Soney Ericson Mobile Communications (supra) and Maruti Suzuki Inida Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT] which are under consideration before the Hon ble Apex Court is modified or reversed by the Hon ble Apex Court, then the Assessing Officer would pass the order afresh considering the decision of Hon ble Apex Court. Ground allowed for statistical purposes. TP adjustment with relation to export of goods - HELD THAT:- As observed that assessee had imported finished goods amounting to ₹ 13,76,26,854/- out of which, goods worth ₹ 45,64,209/- has been exported back due to its slow moving nature. The percentage of goods exported is approximately 3.3%. In our opinion as the percentage of goods that was returned back as slow moving is within the permissible limits of less than 10%. Even otherwise the gross margin earned by assessee from imported goods is in excess of 40% vis- -vis the margin earned by assessee from imported goods is in excess of 40% vis- -vis the margin earned by AE from sale with third party in case of slow moving goods exported by assessee.We are therefore of considered opinion that no adjustment is called for in this regard. Deduction of bad debts written off being disallowed - HELD THAT:- There are plethora of decisions by various Courts and Hon ble Supreme Court wherein it has been held that a legitimate claim of assessee should be allowed even if it is raised during assessment proceedings. There is no dispute with the Department that said amount has been written off in accounts of assessee. However merely because it was not claimed in return of income, will not vitiate right of assessee to claim it during pendency of assessment proceedings. Ld.TPO is directed to allow the claim of assessee as per law. Disallowance of interest expenditure u/s 36(1) - HELD THAT:- Assessee has submitted that during year under consideration a sum of ₹ 2,08,31,000/- was shown recoverable as opening balance as on 01/04/2006 from AE. As observed that Ld.AO blindly made addition without appreciating the fact that interest was not charged due to commercial expediency. Respectfully applying ratio laid down by Hon ble Supreme Court in case of S.A.Builders vs. CIT [ 2006 (12) TMI 82 - SUPREME COURT] we do not find any infirmity in the view taken by Ld.CIT(A) and the same is upheld.
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2019 (5) TMI 1597
Reopening of assessment u/s 148 - information received from DDIT Investigation - Borrowed information - unexplained sources of funds from which the assessee has made donations for his daughter - HELD THAT:- A perusal of the certificate shows that the tuition fees for the first year is ₹ 4 lacs and the total tuition fees for the entire course of four and half years is 18 lacs. I find that neither the A.O nor the CIT(A) has made any enquiry from the Institution regarding this certificate. Thus, the AO has acted mechanically and without any independent application of mind. It is also evident that while alleging cash payment , it is not even known or stated on which date and on what basis such sums was allegedly paid by assessee; the reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind. That reasons recorded are 'reason to suspect' and, is a mere attempt to carry out fishing and roving expedition. It is also noted that in the absence of specific and incriminating material much less tangible and, relevant material to form even prime facie belief that there was alleged payment is also apparent from the fact that the alleged document found and seized during the course of search/survey action u/s 132/133A does not reflect any figure and in the absence of any independent enquiry or examination of facts on record or noticing the content of alleged documents in the reasons recorded and, reasons being silent as to the specific facts, the vague allegation shows that action has been taken mechanically on the basis of alleged report of investigation wing, and, not on independent application of mind and therefore on this ground too, the proceedings are without jurisdiction. It is also noted that there is no live link or direct nexus between alleged material and, inference. It is a case of investigation in the garb of action u/s 148 on the basis that proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings u/s 147. Therefore, respectfully following the findings of the Co-ordinate Benches SHRI SHIV CHARAN GOEL VERSUS ITO [ 2018 (6) TMI 884 - ITAT DELHI] and MEGHA GUPTA VERSUS ITO [ 2018 (3) TMI 1767 - ITAT DELHI] , I am of the considered view that the proceedings initiated by invoking provisions of Section 147 of the Act are non east of law and without jurisdiction. Hence, the assessment is quashed. - Decided in favour of assessee
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2019 (5) TMI 1596
Disallowance of business promotion expenses u/s 37(1) - club membership fees of Appellant's representative - addition holding the same as expense not related to the business of Appellant - HELD THAT:- On being asked by the Bench whether said Mrs Lata Vaswani has rendered any consultancy/professional services to the assessee for which any bills/invoices were raised by her in favour of the assessee, the Ld. Counsel for the assessee replied in negative. The assessee also could not bring on record any agreement entered into between said Mrs. Lata Vasvani and the assessee to define commercial relationship of the assessee with said Mrs Lata Vaswani which could have proved that Mrs. Lata Vasvani was working for the assessee in any capacity to promote business of the assessee. It is also not demonstrated by the assessee that any business were infact generated by said Mrs. Lata Vasvani in favour of the assessee. It could also not been explained by the assessee reasons /justification for taking this club membership with MCA in the name of Mrs Lata Vaswani instead of taking the same in the name of the assessee or its directors/employees. Thus there is a complete failure on the part of the assessee to prove genuineness of these expenses and there is a failure to prove that these expenses were incurred wholly and exclusively for the purpose of business of the assessee. The assessee had failed to discharge the onus as was casted on the assessee by virtue of Section 37(1) and in our considered view, there is no merit in the appeal filed by the assessee which stood dismissed. - Decided against assessee
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2019 (5) TMI 1595
Assessment u/s 153C - no recording satisfaction during the assessment proceedings or thereafter of the searched party i.e., Jugal Kajaria (individual) - addition/disallowance made on the ground that no TDS has been made u/s 40(a)(ia) - HELD THAT:- No addition/disallowance can be made in an assessment made u/s 153C r.w.s. 143(3) , in the absence of any incriminating material being found during the course of search. The undisputed fact is that there was no incriminating material found during the course of search. The addition/disallowance made for both the assessment years are on the ground that no TDS has been made and hence, the provisions of Section 40(a)(ia), are attracted and on the ground that part of the expenditure claimed could not be substantiated with evidence. Both these disallowances are not based on any material found during the course of search. The assessments for both the Assessment Year have not abated. Accordingly, this ground of cross-objection of the assessee is allowed. - Decided in favour of assessee.
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2019 (5) TMI 1594
Rectification u/s 254 - Low tax effect - maintainability of appeal - monetary limit - HELD THAT:- One of the ground to dismissed the appeal is tax effect whereas the other ground is that the case of the assessee was duly covered by Hon ble ITAT by assessee s own case for the A.Y. 2010-11 [ 2018 (8) TMI 1813 - ITAT MUMBAI] . Since the matter of controversy has been adjudicated not only the based on Circular No.03/2018 dated 11.07.2018 but also based upon on merits being duly covered by decision of Hon ble ITAT in the assessee s own case for the A.Y. 2010-11 therefore, in the said circumstances, we are of the view that there is no mistake apparent on record. Hence, the contention of the Revenue nowhere came within the ambit of provisions u/s 254(2) of the Act, hence, the present miscellaneous application is dismissed.
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2019 (5) TMI 1593
Disallowance of foreign currency exchange loss treating speculative - loss on account of forward contracts in US Dollar-Rupee to hedge the export receivable in USD - AO alleged that claimed expenses is for buying and selling of US Dollar and the settlement is not by way of physical delivery - CIT-A deleted the addition - HELD THAT:- There was a direct and proximate nexus between the business operations of the import and export of goods and loss on forward contracts, because the hedging of foreign currency was done on the basis of confirmed orders with the customers and past export performance of the assessee which the bankers have duly verified and thereafter the forward contract were entered before the actual delivery of goods based on the purchase orders. Clearly the hedging contracts entered were incidental to the business of the assessee and were intended to guard against losses through future price fluctuations. As pointed out that in the earlier years in scrutiny proceedings such losses have been treated to be a business loss. CIT (A) has categorically noted that it was a complete party wise details of the purchase orders against which exports were made in USD during the year and also perused the copy of purchase orders exceeding USD 25,000. In fact assessee has exported goods during the year under consideration amounting to USD 19,67,954 as against availability of purchase orders amounting to USD 22,13,453. It cannot be held that the future contracts were not connected to the assessee s export and was a separate transactions de-hors the export of the assessee. Once the forward contracts for foreign currency was directly related to export and import and incidental to the business of assessee, then it cannot be held that it is in the nature of speculative transaction within the scope of ambit of section 43(5). See BADRIDAS GAURIDU (P.) LTD. [ 2003 (1) TMI 61 - BOMBAY HIGH COURT] - decided against revenue
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2019 (5) TMI 1592
Revision u/s 263 - notice issued alleging that AO had not examined the financial worth, genuineness and creditworthiness of transactions relating to introduction of share capital - assessee has not received any money in form of cash or cheque in lieu of share application or share premium; rather the assessee had received investments in form of equity shares - HELD THAT:- Here in this case, once there is no transaction in terms of any money, then there could be no question of seeing the creditworthiness by way of their annual revenue or income. The reason being, all these companies were holding investments right from the earlier years in the form of equity shares of various companies and the shares held as investment by them has been transferred to the assessee in consideration for allotment of equity shares. Thus, the source of shares received by the assessee is flowing from investments held by them in their balance sheet which have been part of their assessment records. Under the peculiar facts and circumstances of the case, we do not find any reason that there was any lack of enquiry done by the AO or non-application of mind qua the creditworthiness or genuineness of the transaction. Once, the Assessing Officer has found that a transaction is not in terms of any money after the detailed inquiry and getting the entire records from these 15 companies, then we are unable to appreciate as to how the CIT had reached to a conclusion that the Assessing Officer has failed to investigate the genuineness and creditworthiness of source of funds credited in the books of account of the assessee company. Here in this case, firstly , identity of the parties cannot be in dispute; secondly , the genuineness of the transaction is fully proven by the fact that these companies have given shares to the assessee in lieu of shares allotted to them; and lastly , there is no requirement to examine the creditworthiness of any sum advanced or invested by these companies because there is no transaction in terms of cash/money. The source of investment which has been transferred to the assessee company is flowing from their balance sheets as these shares were held by these companies as investment duly reflected in their balance sheets in earlier years. We do not find it a fit case wherein the Revisionary jurisdiction u/s. 263 could have been exercised in the light of the fact that the Assessing Officer had carried out detailed inquiry and examination directly from the parties in the course of assessment proceedings. Otherwise also, it is trite law that, if the ld. Pr. CIT was not satisfied with the inquiry conducted by the Assessing Officer, then at least he should have carried out some prima facie enquiry himself so as to reach to a conclusion that the inquiry conducted by the Assessing Officer was deficient or lacking. Without conducting any inquiry, Ld. PCIT cannot hold that the either the inquiry conducted by the Assessing Officer was insufficient or there is no verification of the evidences. Under these facts and circumstances the assessment order cannot be set aside on the ground that no inquiry has been made or such an order is erroneous and prejudicial to the interest of revenue. Accordingly, we quash the impugned revisionary order u/s. 263 and restore the assessment order. - Decided in favour of assessee.
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2019 (5) TMI 1591
TDS u/s 195 - disallowance of payments made outside India u/s 40(a)(i) - render services for handling all operations including co-ordinating with Indian teams for maintaining, rectifying problems testing, upgrading/supporting customers, content providers, etc., at Uganda - independent personnel services or professional services - DTAA provisions - HELD THAT:- As held that article 14 of the Double Taxation Avoidance Agreement is more specific as it applies specifically to professional services provided by the individual resident whereas article 12 provides for residents of foreign countries and therefore article 12 is broader in scope and general in nature compared to article 14 of the Double Taxation Avoidance Agreement. We hold that in the facts of present case, the services received by the assessee from these three persons is covered by article 14 and therefore, the same cannot be included in article 12 because as per article 12(3)(b), it is specifically provided that the term 'fees for technical services does not include payments for services mentioned in articles 14 and 15 of this convention. In the present case, article 14 is applicable and therefore, the receipt of these three persons cannot be considered under article 12(3)(b) and as a consequence, the same is taxable in the country of resident, i. e., Uganda and therefore, no TDS was deductible u/s 195 and consequently, disallowance u/s 40(a)(i) is not justified
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2019 (5) TMI 1590
Depreciation on exclusive business rights (good will) - HELD THAT:- As decided in assessee's own case [ 2016 (3) TMI 590 - ITAT DELHI] AO is directed to grant the depreciation on the consideration for the purchase of the exclusive business rights which are to be treated as intangible assets - Decided in favour of assessee TP Adjustment - selection of MAM - Resale Price Method ( RPM ) OR Transactional Net Margin Method ( TNMM ) - Expenses directly attributable to the manufacturing activity - HELD THAT:- Only airconditioners are imported from AE and water cooler plus air cleaners are manufactured and no sales are made to the AE. The bench marking done by the TPO is on erroneous facts. Unless a proper bench marking is done the dispute cannot be decided. We find that the TPO has adopted TNMM as the most appropriate method by saying that the comparables are not clear and their operating profit margin is not capable of applying RPM as most appropriate method though the same comparables have been used for bench marking by applying TNMM. This contradiction needs to be examined once again. We restore this issue to the files of the AO/ TPO with a direction that the manufacturing activity should not be considered as part of international transaction. Expenses directly attributable to the manufacturing activity should be ignored and the comparables should be once again examined to decide whether RPM is the most appropriate method. The assessee is free to raise any other issue relating to the bench marking and the TPO is also free to decide the issue after giving a reasonable opportunity of being heard to the assessee. Ground treated as allowed for statistical purpose.
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Customs
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2019 (5) TMI 1589
Restraint from encashing the bank Guarantee -deemed exports - goods imported by PEL (steel plates) for supply to NTPC who agreed to pay the duties leviable on the said imports - HELD THAT:- The learned counsel appearing for the respondents states that the said amount was paid by NTPC under protest and since the Export Obligation Discharge Certificate has not been provided, the bank guarantee ought not to be released. This Court finds the aforesaid contention unmerited. Concededly, the bank guarantee was submitted by PEL to secure the revenue to the extent of ₹8,15,00,000/-. As against the said bank guarantee, NTPC has paid a sum of ₹19,91,83,067/-, as quantified by the concerned authority. There is no justification for respondent no.1 now to continue to withhold the bank guarantee. The respondents cannot continue to withhold the bank guarantee after accepting the said amount of ₹19,91,83,067/- - respondent no.1 is directed to forthwith return the bank guarantee to NTPC - Petition disposed off.
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2019 (5) TMI 1588
Safe Guard duty on import of aluminium foil - benefit of N/N. 71/2009-Cus. - HELD THAT:- Admittedly N/N. 71/2009 dated 19-06-2009 exempted colour laminated aluminium foil from Safe Guard duty w.e.f. 23-03-2009 and Appellant s import was made and goods were cleared in between the two dates but none of the documents produced before the Customs Authorities for customs clearance reveal the description of item was colour coated aluminium foil. Admittedly there no such occasion at the time of clearance to draw representative sample, as there was no dispute concerning application of Safe Guard duty on the imported goods which occurred due to subsequent notification with retrospective effect. The use of slash between two categories of goods brings confusion as to which of those two categories was imported vide invoice under reference. More importantly, the annexed document to such certificate containing description of goods indicated that it was of silver colour which is usually the colour of normal aluminium foil - the appellant failed to substantiate with cogent evidence that it had imported colour coated laminated aluminium foils to make it eligible for exemption from Safe Guard duty. Appeal dismissed - decided against appellant.
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2019 (5) TMI 1587
Exemption from CVD - Import of 'Ore' - benefit of N/N. 4/2006-CE dated 01.03.2006 and N/N. 12/2012-CE dated 17.03.2012 - time limitation - HELD THAT:- The distinction between ore and concentrate has been discussed in the numerous decisions. The Explanatory Notes available to HSN reproduced above also shows that the distinction is largely based on the nature of processes carried out on the ores. It is fact that the goods were described as ore by foreign supplier and the appellant have simply followed the said description. Moreover, the entire duty demand was available as cenvat credit to the appellant themselves. In these circumstances, we find that there is no intention to evade payment of duty. The appellant are not contesting the issue on merit. In view of above demand in so far as it relates to extended period is set aside. The corresponding interest also needs to be re-quantified. The redemption fine of ₹ 10 Lakhs in these circumstances appears excessive and the same is reduced to ₹ 10,000/- only. In view of lack of malafides, the penalty on M/s Panasonic Energy India Co. Ltd is set aside under Section 114(A). The penalty on Sh. Sunil S. Shah and S.K. Khurana is set aside under Section 112(a). The appellant have also undertaken not to seek refund of duty already paid as they have already claimed the cenvat credit of the same. Appeal allowed in part.
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2019 (5) TMI 1586
Mis-declaration of imported goods - goods declared as polyester texturised fabric which, upon detailed examination, was found to be incompatible with the description in the heading no. 5407 6190 of the First Schedule to the Customs Tariff Act, 1975 - scope of N/N. 36/2003-Cus dated 1st March 2003 - HELD THAT:- The SCN although dated 12th August 2003, is based upon a test report that, admittedly, pertains to 2004-05, which is inconceivable. Learned Authorised Representative submits that the date in the show cause notice appears to be erroneous and such discrepancy does not make any difference to the proceedings. We do find some merit in the submission as it would have been impossible to issue a show cause notice just a day after the bill of entry was filed; it would appear that the show cause notice was authored on some other date. Appellant had claimed classification as fabric containing 85% or more by weight of textured polyester filaments. It is seen that the Textile Committee did not find any contrary reason to suggest discrediting this contention. The customs authorities chose to revise the classification based on a test report generated through the Deputy Chief Chemist after testing of the remnant samples. We do not find any evidence of that test report in the records. The reliance placed on the results of testing by Deputy Chief Chemist is not acceptable. If at all, the proper procedure would have been for the remnant samples, after due notice to the importer, to be subject to re-test by the Textile Committee. Thus, report of the Deputy Chief Chemist cannot overrule the earlier test results - the re-classification, with consequent disallowance of the benefit of notification, is not proper in law. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1578
Refund of excess duty paid - import of palm acid oil - denial on the ground that the appellant has failed to produce any document to establish that the existence of duty paid by them has not been passed on to any person - It has also been prayed that the matter may be remanded to the learned Commissioner to decide the Appeal afresh - HELD THAT:- It is appropriate to remand the matter to the learned Commissioner to decide the Appeal afresh after taking into consideration the aforesaid decision of the Tribunal in the matter of M/S SURENDRA INDUSTRIES VERSUS CC, JAIPUR [ 2018 (4) TMI 978 - CESTAT NEW DELHI] where it was held that rejection of refund application by the authorities below, on the ground that the assessment order has not been challenged, cannot be sustained. Appeal allowed by way of remand.
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2019 (5) TMI 1577
Benefit of N/N. 36/2003 dated 1st March 2003 (serial no. 51) - procurement of polyester fabric made out of non-texturised polyester yarn , classifiable under heading no. 5407 6190 - HELD THAT:- The goods had originally been cleared on the basis of the report of the Textile Committee without any objection. Though the original authority had relied upon a second report from the Textile Committee, as well as from the Joint Director of Central Revenue Control Laboratory (CRCL), we find no evidence of these reports in the records. Moreover, it would appear that the reviewing authorities did not also have access to these reports to come to a conclusion that the first appellate authority had erred in discarding these. It is but natural that justice requires the importer to be placed on notice with specifics of remnant samples that needed re-testing, else, the truthfulness of that sampling remains questionable and the test thereon tainted. In view of the lack of any record to sustain the assertions in the appeal and the variance between the reports of the Textile Committee itself, Appeal is dismissed.
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2019 (5) TMI 1576
Refund of duties paid in excess - benefit of N/N. 94/96-Cus dated 16th December 1996 - denial of refund on the ground that MODVAT Credit availed - HELD THAT:- Appellant had discharged duty liability on re-import as though the goods had been imported for the first time. There can be no doubt that the excess duty collected was required to be dealt with in accordance with section 27 of Customs Act, 1962. N/N. 94/1996-Cus does not impose any condition pertaining to availment of MODVAT credit; indeed, except in certain exemption notifications dealing notably with export promotion schemes, the law relating to customs does not make any reference to MODVAT, or to its successor CENVAT, credit. To the extent that the notification is silent on this aspect, the lower authorities, exercising jurisdiction under Customs Act, 1962 could not have made any reference to, or imposed, any condition not contemplated in the exemption notification. Just as exemption notification are to be strictly construed against the importer so, too, must there be no latitude vested with officers of customs to enforce any condition on whim or according to their wisdom. CENVAT credit is availed on entry of eligible goods in the factory of manufacture. There is no evidence here of such availment and there is mere presumption of availment, and extent, of such credit. Under the relevant rules, credit availed on goods that are not used in the factory should be reversed and in the event of failure to reverse consequences under other specific statutory provisions would arise . That cannot be read into the provisions of Customs Act, 1962 to deny refund of duty paid in excess of that which was to be collected and held to be so by the Tribunal. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (5) TMI 1585
Initiation of Corporate Insolvency Resolution Process (CIRP) - default in payment of loans extended to the principal borrowers - section 7 of Insolvency Bankruptcy Code, 2016 - Whether or not the creditor can initiate CIRP process under this Code against the guarantor company falling within the definition of company as envisaged under the Companies Act, 2013 especially when guarantee is given against the loans availed by a partnership firm and proprietary concerns and whether or not this debt is barred by limitation as stated by the Corporate Debtor counsel? HELD THAT:- It is an admitted case that the principal borrowers availed loans from the Creditor Bank against the payment of interest on the guarantee given by the debtor, it is an admitted fact that since the principal borrowers failed to repay the loans availed by them, the creditor notified this fact to the debtor/guarantor, against which the debtor has also failed to discharge the liability, it is an admitted fact that all three principal borrowers acknowledged the debt payable by the principal borrowers on 3.10.2016, likewise the debtor has not even disputed the Creditor Bank sending demand notices to the principal borrowers, the Creditor Bank sending recall notice to the principal borrowers and the guarantors. Whether or not any debt is a financial debt, it does not entail who the parties are, the only requisite to determine that it is a financial debt is as to whether or not the obligation falls within the ambit of any of the sub clauses of clause 8 of section 5 of the Code. Once it is proved that the debt falling within the ambit of debt payable along with interest which is disbursed against the consideration for the time value of the money and debt falling under any of the sub-clauses mentioned in clause 8 of section 5 of the Code, then it becomes financial debt as envisaged under clause 8. In this case, the corporate debtor admittedly being corporate guarantor to the money borrowed by the principal borrowers against payment of interest, it is a financial debt falling under sub-clause (i) of Clause 8. In this case, the person in default as per sub-clause (i) of clause 8 of section 5 is a company as envisaged under clause 7 of section 3 of the Code, therefore this creditor can initiate section 7 proceedings against this corporate debtor. Indeed this corporate person in respect to this case will not be treated as corporate guarantor referred in clause (5A) of section 5 of the Code read with section 60(2) (3) of the Code. It is a case independently filed relying on Clause 8(i) of Section 5 of the Code. This Corporate Debtor clearly falls within the definition of Corporate Person because it is a company falling within the definition of because it is a company incorporated under the Companies Act, 1956 Act/Companies Act, 2013 as the case may be as envisaged under Clause 20 of Section 20 of the Companies Act, 2013. Therefore, this liability falls within the definition of Section (5)(8)(i) of the Code and since the Corporate Debtor is a Corporate Person, it makes no difference as to whether the Corporate Person stood as guarantor to an individual or a Corporate Person, and so long as the obligation in respect of a claim is due from a Corporate Person falling within the definition of Financial Debt, then it is obvious that the Creditor can proceed under section 7 of the Code against such Corporate Person, here the Corporate Debtor being a Corporate Person falling within section (5)(8)(i) of the Code, this Petition is maintainable against the Corporate Debtor. Time Limitation - HELD THAT:- It is true that this Corporate Debtor has not executed fresh Guarantee Deed in respect to the loans availed by all three Principal Borrowers within three years before filing this Company Petition. But it is true that this Corporate Debtor executed individual Guarantee Deeds on behalf of each of the Principal Borrowers at the time these Principal Borrowers availed loans from the Creditors - It is a settled proposition of law as long as the debt has remained alive against the Principal Borrower, the liability of the Corporate Debtor need not be renewed from time to time so long as Principal Borrower keeps either acknowledging or making part payments within three years before proceeding against the Guarantor. Therefore, merely by not executing the fresh guarantee deed against each of the accounts, it cannot be said that the Creditor cannot proceed against the guarantors in respect to the loan account to which it has not executed fresh guarantee within three years before proceeding against the Corporate Debtor. Petition is admitted - Moratorium declared.
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2019 (5) TMI 1584
Withdrawal of petition - whether an Applicant who has filed a petition u/s 10 is entitled to withdraw its own petition u/s 12A of the Code, especially when the said applicant has furnished the impugned Petition(CP 1362/2018) and now offering a onetime settlement as a Director in the suspended management of the Debtor Company? HELD THAT:- Section 12A is inserted w.e.f. 06.06.2018 which prescribes that the Adjudicating Authority may allow the withdrawal of application admitted either u/s 7 or u/s 9 or u/s 10, on an application made by the Applicant with the approval of 90% voting share of the CoC. The first reaction during the course of hearing of this Bench was that how it is justifiable on the part of an applicant who has moved a Petition u/s 10 to declare itself insolvent (as happened in this case) at one point of time and thereafter at a later stage suo-moto seeking permission for withdrawal of the said Petition? It has also been questioned that in this manner the procedure laid down in the provisions of the IBC may be wrongly utilized? How a person can be allowed to play with the precious time of a Court by moving a Petition with the prayer to commence CIRP and at the fag end of the process seeking permission of withdrawal of the said Petition? But, the answer is simple and single that the Code has now subscribed such procedure through which withdrawal is possible in respect of a petition filed u/s 10 of the Code. The condition subscribed is that on an Application made by the Applicant withdrawal can be allowed, if approved by 90% voting share of the CoC. On this point, the Applicant has clarified that as a Director of the Debtor Company the said Application u/s 10 was signed by him and now he is the signatory of this withdrawal application, hence qualified. Provisions of section 10 are unambiguous where a corporate debtor has committed a default, a corporate applicant thereof may file an application for initiating CIRP with the AA. The term corporate applicant is defined u/s 5 of Definitions of IBC , means a member of the corporate debtor company who is authorized to make an application for CIRP under the constitutional document of the Corporate Debtor or a person who has the control and supervision over the financial affairs of the Corporate Debtor - In the present case an admitted position is that Mr. Satyanarayan Malu is the person who has control and supervision over the financial affairs of the Corporate Debtor. It has also been clarified that he is one of the directors in the Board of the Corporate Debtor as well as duly authorized to act on behalf of the company. At the time when the Petition u/s 10 was filed, he was the signatory and now also signed this withdrawal application. This Application is submitted on 21.08.2018 by the Resolution Professional for approval of the Resolution Plan as prescribed u/s. 31(1) of The Insolvency Code - no adjudication under the provisions of The Code is now required because this Resolution Plan has become redundant.
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2019 (5) TMI 1575
Initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - non-conformity with the provisions of Section 8 and 9 of I B Code - HELD THAT:- Initiation of Corporate Insolvency Resolution Process at the instance of an Operational Creditor is provided for under the provision engrafted in Section 9 of the I B Code, whereunder an Operational Creditor may file an application before the Adjudicating Authority for initiating a Corporate Insolvency Resolution Process after complying with the statutory requirements of Section 8. The factum of Respondent No. 1 being appointed by Corporate Debtor as Assistant General Manager (Legal) on mutually agreed terms on a gross annual salary of ₹ 10 Lakhs in terms of Letter of Offer dated 10th January, 2014 is an admitted position in the case. Respondent No. 1 was required to join within seven days and letter of employment was to be issued subsequent to her joining. Though no such letter of employment required to be issued by the Corporate-Debtor is on record, it is the admitted position that Respondent No. 1 joined the organization viz. Corporate Debtor and rendered meritorious services in her capacity as AGM (Legal). No proof has also been educed to substantiate the contention that she was paid on an adhoc basis from time to time for the matters in which she was engaged and that such engagement was terminated w.e.f. November, 2015. In absence of proof of recall of letter of offer of employment to Respondent No. 1, and subsequent engagement as Retainer, the contention raised by the Appellant on this score deserves to be outrightly dismissed as a pure concoction, more so as the documents on record in general and the Letter dated 27th December, 2016 emanating from the Director of Corporate Debtor referred to hereinabove stares in the face of the Corporate Debtor. The defence raised by the Corporate Debtor before the Adjudicating Authority and the version put forth by the Appellant qua the claim of Respondent No.1, can be termed only as an attempt to wriggle out of the liability to deny the legitimate and legally payable claim of Respondent No. 1 and frustrate the Corporate Insolvency Resolution Process commenced at the instance of Respondent No. 1 on fabricated and concocted grounds. Appeal dismissed.
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FEMA
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2019 (5) TMI 1574
Release of property seized - Proceedings instituted pursuant to a complaint u/s 16(3) of the Foreign Exchange Management Act, 1999 (FEMA) - as alleged show cause notice issued by the concerned officer alleging contravention of the provisions of Section 3(b) of FEMA, read with Regulation 5(2)(c) of the Foreign Exchange Management (Manner of Receipt and Payment) Regulation, 2000 - HELD THAT:- Insofar as Indian currency is concerned, the same was transferred to the Income Tax Authority. Silver and silver articles, which were seized by the respondent. The petitioner claims that he has submitted all the requisite details as called upon to do so by respondent no.2, and has repeatedly requested the respondent to release the said goods. However, the petitioner s request has not been acceded to, as yet. He submits that the show cause notice issued on 03.01.2018 and the proceedings are illegal and the goods seized do no fall within the scope of FEMA. As stated that the petitioner had replied to the show cause notice on 25.01.2018; however, no further proceedings have taken place, thereafter. In view of the above, this Court is not inclined to entertain the present petition at this stage, as the show cause notice issued to the petitioner is yet to be adjudicated. The pending application is also disposed of. Given the facts of the present case, this Court directs the Adjudicating Authority to take a final decision as expeditiously as possible, and in any event within a period of six weeks from today after affording the petitioner a reasonable opportunity of hearing.
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2019 (5) TMI 1573
Stay petition - whether the appellants have been able to make out a prima facie case in their favour? - claim taken up with RBI for compounding - received inward foreign remittances from M/s. Infinity Financial Limited, Mauritius but failed to either intimate the Reserve Bank of India within 30 days of the inward remittance, or failed to issue shares to the foreign investors within the stipulated 180 days of the inward remittances - HELD THAT:- In this case, the appellants have not denied that they did not inform the RBI within the stipulated period as mandated by RBI, nor did they issue shares to the foreign investor within 180 days as again mandated by the RBI. Instead the money was diverted to buy properties and land in their name which was not the purpose of the inward remittance. In fact, in the stay petition the appellant at para 5 have accepted their liability which was not discharged. Their claim that they had taken up with RBI for compounding also does not strengthen their argument in as much as the RBI had returned their compounding application vide their letter dated 22.08.2012 but the appellants never considered filing an appeal or representation against the said letter of RBI. They, therefore, way back in 2012 had accepted the non-compounding by the RBI. They have pleaded financial hardship but have not submitted any document in support of the same. Thus find that the appellants have been able to make a prima facie case in their favour and hence the stay petition is rejected. Since their financial hardship plea is not backed by any documentary evidence, the same cannot be accepted. However, feel that the interests of justice would be served if the appellants are directed to predeposit 50% of the penalty levied within a period of two months from today.
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PMLA
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2019 (5) TMI 1572
Offence under PMLA - prosecution complaint against the dead person - release the property seized - HELD THAT:- There is no force for the respondent, the intent of the said provision is that in case the trial cannot be conducted by the reason of death of the accused or otherwise, the Special Court shall on an application moved by any party claiming to be entitled to the possession of a property in respect of which an order has been passed under sub-section (3) of section 8 of the Act in the offence of moneylaundering. Late Amlendu Pandey was not convicted in the matter. He was not charge-sheeted. As far as the mandate of sub-section 7 of section 8, no doubt, there is no dispute. However, in order to pass the order by the Special Court under the said provision, there must be a prosecution complaint against the person concerned. In the present case, the prosecution complaint has been filed against the dead person. Therefore, the complaint itself against the dead person is null void against the late Amlendu Pandey. The question of passing any order in the pending complaint against the dead person does not arise. Therefore, in the facts of the present case, the provision of sub-section 7 of section 8 cannot be revoked by the respondent in the absence of pending valid complaint against him. Admittedly, the prosecution complaint has not been filed in the above said appeal under section 8 of sub-section 3(a) of the Act even against the legal representative before the Special Court within the knowledge of the respondent. Thus, in case no action is taken under the provision of sub-section 3(a) of Section-8, the retention of seizure/ property lapses under the mandatory provisions of law. Therefore, the present appeal is allowed. The impugned order is set aside, the property
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Service Tax
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2019 (5) TMI 1571
Penalty u/s 78 as well as Section 77(1) (a) and 77(2) of Finance Act - service tax were paid before issuance of SCN - interest was deposited subsequent to passing of the order - no SCN issued in terms of in terms of Section 73(3) of the Finance Act - bonafide mistake or not - HELD THAT:- The appellant has not disputed the fact that they were collecting service tax from their client but were not crediting the same to the Central Government. The said fact came into light only when the audit was conducted in the assessee factory. It is only after detection, the appellant deposited the service tax. It is also on record that the interest on the said service tax was not paid by the appellant till the disposal of the appeal before Commissioner (Appeals). Sub Section 3 of Section 73 of the Finance Act states that wherein service tax has not been levied or paid, the person on the basis of his own ascertainment or on the basis of tax ascertained by Central Excise officers before servicing the notice pays the same and inform his jurisdictional Central Excise Authority, no show cause notice is required to be issued to him. However, the exception stands carved out by way of Sub Section 4 of Section 73 of the Act - Sub-Section 4 of the said section is to the effect that nothing contained in sub-section (3) shall apply to a case where service tax has not been levied or stand short levied or short paid by reason of fraud, collusion, willful misstatement, suppression of facts or contravention of any provisions with intent to evade payment of service tax. Whether it is a simple case of non-payment of service tax, which might have occurred on account of any bona fide belief entertained by the assessee? - HELD THAT:- Admittedly the appellant was collecting the service tax from their clients. However, instead of depositing the same with the exchequer, they were pocketing the said service tax amount so collected by him. This fact clearly reflects upon the mala fide of the appellant. It is a fraud committed on the exchequer and the provisions of Section 73(3), which are applicable only to an innocent assessee, would not apply in the present case - there exists no reasons to set aside the penalties imposed upon the appellant. Appeal dismissed - decided against appellant.
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2019 (5) TMI 1570
Classification of services - Business Auxiliary Services or Maintenance and repair service - service activities of Maintenance and Repairs as per the contract of Full Service Maintenance Agreements (FSMA) - HELD THAT:- The issue is settled in the case of COMMISSIONER OF CENTRAL EXCISE ST, LTU, DELHI VERSUS M/S. XEROX INDIA LIMITED AND VICE-VERSA [ 2018 (3) TMI 1006 - CESTAT CHANDIGARH] where it was held that for the period prior to 01.06.2007, no demand is sustainable under the category of Maintenance and Repair Service/ Business Support Service/ Business Auxiliary Service for the activity undertaken by M/s. Xerox as the services of Business Support Service and Maintenance and Repair along with material and the agreement cannot vivisect the amount of material supplied by M/s. Xerox. The assessee is not liable to pay the service tax under the category of Maintenance or Repair Service and the learned Commissioner has rightly dropped the demand under the category of Business Auxiliary Service - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1569
Liability of interest - excess utilization of CENVAT credit - Rule 6(5) of Cenvat Credit Rules, 2004 - HELD THAT:- The appellant has provided the taxable services as well as exempted services. It is fact that during the impugned period, the appellant was providing taxable services and well exempted services but there is restriction for utilization of credit upto 20% lying in their Cenvat credit account. Admittedly, the appellant has availed the credit more than 20% during the impugned period. With effect from 1.4.2008, the appellant became entitled to avail credit lying in their Cenvat credit account - reliance placed in the case of MUMBAI INTERNATIONAL AIRPORT PVT. LTD. VERSUS COMMR. OF C. EX., MUMBAI-V [ 2014 (6) TMI 625 - CESTAT MUMBAI] - the appellant is liable to pay interest from the date of utilization of Cenvat credit till 1.4.4008 - penalty also not imposable. CENVAT Credit - input services - guest services - staff welfare services - HELD THAT:- The said services have been availed by the appellant for providing output services and the same have been availed in the course of their business of providing output services - the appellant is entitled is entitled to avail credit on guest house and staff welfare expenses - credit allowed. Appeal allowed in part.
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2019 (5) TMI 1568
Refund of Swachh Bharat Cess (SBC) - input services used for providing export services - HELD THAT:- Swachh Bharat Cess is levied and collected for the purpose of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto but in the nature of Service Tax. That Service tax in the form of cess shall be in addition to any cess or service tax leviable on the taxable services under Chapter V of the Finance Act, 1994. In the same way from time to time issues were raised qua Education Cess, Secondary and Higher Education Cess and, Sugar Cess, Automobile Cess etc. which have also been imposed under different statutes and from time to time, as to whether they are in the nature of cess or tax /duty and ultimately those issues were got settled in favour of assessee either Hon ble Supreme Court or by the Hon ble High Court and those were held to be tax/duty. A tax recovered by the government goes into the Consolidated Fund of India which is utilised for all public purposes and no money out of the Consolidated Fund of India shall be appropriated except in accordance with law and for the purposes and in the manner provided in the Constitution. Whereas a cess or fee does not become part of the Consolidated fund and are earmarked for the purpose of services for which it is levied. A Cess can never become part of the Consolidated Fund - Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilising Cenvat Credit and the appellant is therefore entitle for the refund of it. Filing of two separate claims - HELD THAT:- It is only a procedural lapse and substantial benefit of refund cannot be denied to the Appellant on this ground. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1567
Refund of unutilized Credit - rejection on the ground that the claim pertained to the period before taking registration - HELD THAT:- The issue in dispute is no longer res integra and has been laid down to rest by a number of decisions and in particular the judgement of the Hon ble High Court in THE COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI VERSUS BNP PARIBAS SUNDARAM GLOBAL SECURITIES OPERATIONS PVT LTD. [ 2018 (6) TMI 676 - MADRAS HIGH COURT] wherein it has been held that registration of assessee s premises is not a pre-requisite for claiming credit of refund under Rule 5 of CCR, 2004. Refund is to be allowed - appeal dismissed - decided against Revenue.
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Central Excise
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2019 (5) TMI 1583
CENVAT Credit - capital goods/inputs or not - M.S. Plates, M.S. Channels, H.R. Coils, M.S. Angles etc. - said items were either used by the respondent in repair or maintenance of existing plant or in modification of their existing plant and machinery which are embedded to the earth - the conditions of move-ability and marketability to be accorded the status of goods fulfilled or not - period 2005-06 to August, 2008. HELD THAT:- The Revenue has relied upon the larger Bench decision of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] , wherein it was held that the explanation added to the definition of capital goods w.e.f. 07.07.2009 has to be held as explanatory and thus retrospective in nature. The said decision of the Tribunal was considered by the Honble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2015 (5) TMI 663 - GUJARAT HIGH COURT] , wherein the said decision was not approved by the Honble High Court and observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively. The Madras High Court in M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the cenvet credit on MS Rod, sheets, MS Channel, MS Plate etc. used for fabrication of structures to support various machines/capital goods. Thus, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to CENVAT credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning given by the Tribunal cannot be said to be not cogent or correct appreciation of evidence on record. We are of the view that ratio laid down by the M/S BAJAJ HINDUSTHAN LTD [ 2013 (3) TMI 365 - ALLAHABAD HIGH COURT] is not at all applicable under the facts and circumstances of the case. We have no manner of doubt that the Tribunal has rightly held respondent-assessee is entitled to Cenvat Credit in respect of items used as structural support for capital goods - appeal dismissed - decided against Revenue.
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2019 (5) TMI 1582
Principles of natural justice - cross-examinations of persons - Section 35-G of the Central Excise Act - HELD THAT:- The Tribunal is the final Court of fact and an appeal against the order of the Tribunal would lie to this Court only on a substantial question of law. While a perverse finding would undoubtedly give rise to a substantial question of law, in the present case, that the concurrent findings of fact recorded by both the original adjudicating authority, and the CESTAT affirming the order of the adjudicating authority, do not suffer from any such infirmity. The order of the adjudicating authority is a reasoned and well considered order analysing the evidence adduced before him. The concurrent findings of fact by both the authorities, which do not suffer from perversity, do not necessitate interference in an appeal under Section 35-G of the Act. Application dismissed.
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2019 (5) TMI 1581
Rectification of mistake - error apparent on the face of record - HELD THAT:- The Department has accepted that its typographical mistake apparent on record, the rectification is allowed. ROM Application allowed.
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2019 (5) TMI 1580
Rectification of mistake - error apparent on the face of record - applicant submits that the order was pronounced in the open court as Appeal allowed , however in the order No. A/12089/2017 dated 28.08.2017, the order was passed as Appeal allowed by way of remand. - HELD THAT:- I find from the note-sheet, it is clear that Hon'ble Member (Judicial), after hearing the matter allowed the appeal. However, in the typed and signed order, the appeal has been allowed by way of remand, therefore, there is an apparent error. Accordingly, the order dated 28.08.2017 is recalled and taken up for fresh disposal as agreed by the ld. Counsel. CENVAT Credit - capital goods - steel structural items - HELD THAT:- Since the appellant is not pressing for three items i.e. Structural Steel/ MS Beams, Base Frame and Lighting protection mat, the demand to the extent of these goods stands confirmed, without going into merits of the case - demand upheld. CENVAT Credit - capital goods - Base Plate - HELD THAT:- The appellant have received the Base Plates as part of capital goods falling under Chapter heading 84779000. Since the classification of this item has not been challenged by the Revenue that it is falling under Chapter 84, the same is eligible for Cenvat credit as per definition of capital goods. Therefore, the credit in respect of Base Plate is allowed. CENVAT Credit - capital goods - Structure for creel loading system - HELD THAT:- The same is installed as structure which is exclusively used for rolling of material from one stage of manufacturing to other and therefore, it is clearly a part of material handling system and falling under the definition of the capital goods and hence the credit is admissible. Penalty - HELD THAT:- The issue of eligibility of Cenvat credit on identical goods was a matter of dispute for long and various contrary judgments were passed on the issue, it cannot be said that the appellant had a malafide intention - Penalty set aside. Appeal allowed in part.
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2019 (5) TMI 1579
Non-payment of Central Excise Duty - manufacture of Ready Mix Concrete (RMC) - benefit of N/N. 4/97-CE. - whether the ready mix concrete has been manufactured in Pen and Pagdhe and moved thereafter to the construction site or it was manufactured at site? HELD THAT:- The appellant could not place any evidence contrary to the findings recorded by the learned Commissioner that the ready mix concrete was manufactured not at site but at Pen and Pagdhe. Consequently, the appellants are not eligible to the benefit of the said notification No. 4/97-CE dated 1.3.1997 for the period in dispute. Penalty on Director - HELD THAT:- No specific evidence brought on record pointing out the role of the Directors towards wrong availement of benefit of the said notification intentionally. Since the order was directed to be confined for the normal period of limitation, there are no justification imposing personal penalty on the Director. The company s appeal is dismissed - the Director s appeal is allowed.
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2019 (5) TMI 1566
100% EOU - duty free raw material procured in terms of Notification No.52/2003-Cus dated 31 March, 2003 - denial of benefit on the ground that goods are cleared in DTA without payment of duty - HELD THAT:- The Revenue is not disputing the fact that the import of raw material could have taken place under the cover of other two Notification No.24/2005-Cus and 12/2012-CE. The Adjudicating Authority, before extending the benefit of the said two notifications to the respondents have referred to and relied upon the various decisions of the higher courts to hold that alternative pleas raised by an assessee are required to be considered. It is well settled law that if the benefit of the notifications is otherwise available to a assessee, even though not claimed at a time of the import of the goods, the benefit cannot be denied. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1565
Benefit of N/N. 7/94-CE dated 01.03.1094 - duty free procurement of sulphuric acid - diversion in open market and instead they purchased spent sulphuric acid which is being used by them in the manufacture of SSP - HELD THAT:- The entire case of the Revenue is based upon the statement of the Director admitting that the sulphuric acid procured by them without payment of duty in terms of N/N. 7/94-CE dated 01.03.1994 was cleared by them in the open market and instead they purchased spent sulphuric acide which was used by them in the manufacture of SSP. The said statement dated 10.04.1996 was subsequently retracted by him vide letter dated 14.04.1996 which was received by the Department on 17.04.1996 - Apart from above, there is no evidence on record indicating the sale of the sulphuric acid and the purchase of the spent sulphuric acid. It is well settled law that the retracted statements cannot be made the basis for holding against the assessee unless the same are corroborated in material particulars by independent and reliable evidences. In the absence of any evidence to the contrary, I find not merits in the Revenue s stand. As per the appellant such consignment of duty free procurement were verified by their Jurisdictional Central Excise officers and no discrepancies were ever found. The Commissioner (Appeals) observed that the said plea of the assessee does not hold water and is not sustainable inasmuch as the Jurisdictional Central Excise Officer have verified the quantity of the raw material and not the quality of the goods. However, the same reasoning of Commissioner (Appeals) acts prejudice to the Revenue s own case. The supplier in the present case was the manufacturer of sulphuric acid and not spent sulphuric acid. As such on this ground also the Revenue s case has no legs to stand. The Lower Authorities have not referred to any technical literature to show that the SSP can be manufactured even out of spent sulphuric acid. If the raw material specified in the Notification is sulphuric acid and not spent sulphuric acid, the said fact leads to an inevitable conclusion that it is only sulphuric acid which can be used for the manufacture of SSP. Revenue has not advanced any evidence to show that the SSP can be manufactured even out of the spent sulphuric acid. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1564
Refund of excess amount debited while filing the ER-1 Return - HELD THAT:- The debit of the excess amount was only an arithmetical/clerical mistake and the said amount paid by mistake cannot be termed as duty. It is deposit only. There is force in the contention of the appellants that although they have submitted the documents in support of their claim before the lower authorities but the same was not considered by any of the authority below. Matter remanded to the Adjudicating Authority to decide the issue afresh, after providing reasonable opportunity to the appellants and after taking into consideration the documents produced by the Appellants - appeal allowed by way of remand.
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2019 (5) TMI 1563
Classification of goods - Bulk Milk Cooler - whether classified under chapter heading No. 84342000 as Dairy Machinery ? - Benefit of N/N. 6/2006-CE dated 1.3.2006 - HELD THAT:- Applying the guidelines prescribed by the CBE C in its Circular No. 583/20/2001-CX dated 20.8.2001, the learned Commissioner came to the conclusion that the demand is not sustainable and accordingly dropped the proceedings. The Revenue filed the present appeal on the basis of a subsequent visit by the officers to the premises of one of the customers of the respondent, where the BMC has been installed. There is no justification in impugning the order of the learned Commissioner, who recorded the finding on the basis of allegation leveled in the show-cause notice, that the respondent had manufactured BMC at their premises; ascertained the factual position by deputing the jurisdictional Assistant Commissioner to the factory of the respondent. In our view subsequent visit at the customer s site, in no manner can establish that the BMC was manufactured by the respondent at their factory and cleared thereafter in knocked down condition to the customer s premises for commissioning and installation. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2019 (5) TMI 1562
Refund claim - subsequent cancellation of registration - DVAT Act - CST Act - denial of refunds on the ground of 'Zero Demands' - HELD THAT:- The judgment of this Court in On Quest Merchandising India Pvt. Ltd. [ 2017 (10) TMI 1020 - DELHI HIGH COURT ] read down Section 9 (2) (g) of the DVAT Act and precluded the Department from invoking it to deny input tax credit to a purchasing dealer who has bonafide entered into a purchase transaction with a registered selling dealer was issued a tax invoice reflecting the TIN number . In terms of the said decision, the above demands created for July 2012, December 2012 and May and June 2010 cannot be justified. The orders creating such demands simply state that the purchase made from a registered dealer could not be verified . This is not a good enough a reason to invoke Section 9(2)(g) of the DVAT Act as explained by this Court in its judgment in On Quest Merchandising India Pvt. Ltd. This Court sets aside the fresh demands created by the Respondents for the aforementioned periods i.e. May 2010, June 2010, July 2012 and December 2012 - Respondents are directed now to issue the refund orders for the aforementioned periods and ensure that the refund amounts are credited to the account of the Petitioner not later than 30th June 2019 - petition allowed.
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2019 (5) TMI 1561
Classification of goods - Rate of tax on accessories - tractor hood and front bumper - whether subjected to VAT @ 13% in terms of Entry No.90 in Part II of Schedule II of the Act 2002 or otherwise? - HELD THAT:- Entry 90 of Part II of Schedule-II relates to Tractors, Power Tillers, Threshers, Harvesters, Attachments and parts (including tyres, tubes and flaps) thereof. The attachments and parts thereof must be such as without which the Tractors, Power tillers, Threshers, Harvesters cannot be put to use. The 'bumpers' and 'hoods' may add to the convenience or effectiveness but are not essential in themselves as to without which the Tractors, which we are presently concerned with, cannot work. In PRAGATI SILICONS PVT. LTD. VERSUS COMMISSIONER OF C. EX., DELHI [ 2007 (4) TMI 263 - SUPREME COURT] while dwelling on the issue as to whether plastic nameplates are classifiable under headings 87.08 and 87.14 by falling within the scope of term parts and accessories of motor vehicle , their Lordships, were pleased to hold that It is evident therefore, that an accessory by its very definition is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product. In the case at hand, the classification/categorization of bumper and hoods arrived at by the Assessing Authority and upheld by the Tribunal that it is not an attachment of the Tractor when tested on the anvil of above analysis cannot be faulted with. Appeal dismissed - decided against appellant.
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2019 (5) TMI 1560
Restoration of penalty u/s 15-A(1)(c) of Sales Tax Act - restoration of penalty merely on the basis of difference in the turnover as per books and returns which was explained and accepted by the assessing officer in the assessment order - HELD THAT:- The perusal of record reveals that the applicant has submitted its revise return duly showing the sale of mustard oil of ₹ 15,53,515/- and also deposited the tax along with interest. Bare perusal of Section 15(A)(1)(c) of the Act shows that if any revisionist has concealed the particulars of his turnover or has furnished inaccurate particulars of such turnover then only penalty can be imposed under the Act. The case in hand, the revisionist has not only filed the revise return, but, also has deposited the tax along with interest before passing of the original assessment order or any penalty proceedings has been initiated against the revisionist. Once the revisionist has submitted the revise return which has been accepted by the Assessing Authority then it cannot be said that the revisionist had violated the provision of Section 15- A(1)(c) of the Act - Moreover, the revisionist has produced its books of account in which the sale of mustard oil value of ₹ 15,53,513/- was duly shown, therefore, levy of penalty under the said provision is not justified and is set aside. The question of law is answered in favour of the revisionist and against the Revenue - revision allowed.
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