TMI Tax Updates - e-Newsletter
May 7, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Profiteering - purchase of 68766- Glass for GT 03-RO Gas Stove - benefit of reduction of rate of GST 28% to 18% not passed on - directed to reduce the price of the product and deposit profiteered amount - issuing incorrect invoices is an offence u/s 122(1)(i) - SCN issued as to why penalty should not be imposed as per the provisions of Section 122 of the CGST Act, 2017 r.w. Rule 133(3)(d) of the CGST Rules, 2017
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GST:
Profiteering - Courier Service - increase in the courier charges rate from ₹ 69.50/- to ₹ 80/- - There was no reduction in the rate of tax on supply of “Courier Service” instead there was increase in the rate of tax from 15% in pre-GST regime to 18% in post-GST regime - provisions of Section 171 of CGST Act, 2017 can not be invoked - no Profiteering
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Income Tax:
Stay of demand - SEBI had noticed several disturbing features in Petitioner's activity of buying and selling derivatives - the loss as claimed by the Petitioner for set off, is not genuine - Petitioner can not avoid recovery of tax by offering to pay a mere 20% of the disputed amount - directed to deposit 50% disputed tax
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Income Tax:
Reassessment u/s 147 - original assessment u/s 143(1) - material has been received from the Information Wing - assumption of jurisdiction in this case cannot be faulted, particularly since the respondent has, in the reasons for re-opening, cited tangible material upon which he rests his belief of escapement of income - writ dismissed
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Income Tax:
Revision u/s 263 - additional depreciation u/s 32(1)(iia) - AR has not placed any evidence / material on record to show that the additional depreciation claimed was subject matter of examination by the A.O. during the course of assessment proceedings and thereafter deduction was granted - revision upheld
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Income Tax:
Assessment of income of the estate of a deceased person u/s 168 - status of executor - law is very clear, if there only one executor then the executor shall be treated as an individual and where there is more than one executor the executors shall be treated as an Association of person (AOP).
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Income Tax:
Levy of penalty u/s 271(1)(c) - assessee has surrendered and agreed for the additions at the assessment stage merely to buy peace of mind and to avoid further litigation - no explanation for any of the issues nor any documentary evidences - penalty sustained in view of Explanation-1 to Section 271(1)(c)
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Income Tax:
Loan received assessed as income u/s 68 - loan received from companies - loans were taken for a period of two months and have been repaid back with interest - Tax has also been deducted at source on the interest paid - The documents filed in support of identity, creditworthiness and genuineness have not been disputed by the revenue authorities at any stage - no addition
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Income Tax:
Re-assessment u/s 147 - no failure on the part of the assessee to disclose all the relevant facts truly and fully for assessment - AO cannot have a mere re-appreciation of the same facts or a review of existing material on a mere change of opinion and take a different view of the matter - limitation of 4 years is a protection of whimsical and arbitrary re-assessment proceedings
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Income Tax:
Registration u/s 12AA - while considering registration u/s 12AA, the CIT(E) was required only to determine the objects of the society which undoubtedly were charitable in nature - No error in the findings of Tribunal - no substantial question of law arises
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Income Tax:
Capital gain u/s 45(4) in partnership firm on retirement of a partner - Section 45(4) would not be attracted on the retirement of partners and consequential allotment of their share in the assets in the Assessee Firm
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Income Tax:
Applicability of Section 115JB on banking Company - Scope of amendment in 115JB by Finance Act, 2012 - 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company - neither declaratory nor classificatory but make substantive and significant legislative changes which are admittedly applied prospectively
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Customs:
Rate of duty - warehoused goods - The rate of duty in case of goods cleared for a warehouse u/s 68 as per the provisions of Section 15 (b), will be that applicable on the date on which the Ex-Bond Bill-of-Entry for home consumption has been filed.
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Customs:
Import of prohibited goods - Multi-function Digital Photocopiers and Printers - imported goods are liable for confiscation but ordering absolute confiscation is not justified
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Customs:
100% EOU - cut flowers cleared to domestic market - The SCN is issued in terms of the B-17 Bond executed by them with the customs authorities is not time barred - terms of the Bond provisions of recovery of interest and penalty are available - Non-quoting or mis-quoting of the provisions of law will not make Show Cause Notice or adjudicating order invalid or illegal
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IBC:
Initiation of Corporate Insolvency Resolution Process - financial creditor - If there were any doubt in the nature of transaction, same got cleared as even according to Respondent interest was paid on the advance money - debt in question fell within the purview of ‘financial debt’- initiate Insolvency Resolution Process
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Service Tax:
Refund of accumulated input tax credit - since the services were used for the purpose of maintenance and repair of UPS systems and air conditioners and not for construction of any civil structure, such works contract service should merit consideration as input service for the purpose of the benefit of refund/rebate claim.
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Service Tax:
Brand Promotion services - amount payable to players - the prize money was not given by the franchisee, it’s rather the money received from BCCI directly for winning and not towards any services - the prize money could never be included in the taxable value - But, however, since there was no service at all, the above question is just academic.
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Service Tax:
Works Contract - Demand of service tax - The provision does not use the word ‘railways’ for public carriage or that the railways should be government railways. - The definition uses the words “railways” only. Therefore, the execution cannot be restricted to the government railways which are used for public transport of passengers or goods.
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Service Tax:
Demand of interest on amount collected as service tax but not deposited - Section 73B does not provide for demand of interest in case of any amount collected which is not required to be collected as service tax from any other person as provided in sub clause (2) of Section 73B
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Service Tax:
Valuation - inclusion of after-sales warranty expenses - ‘units’ and not ‘services’ are billed by the appellants to HP - Further, on the total of such amounts, VAT at the rate of 4% is also billed and added in the invoice - Demand of service cannot be sustained.
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Service Tax:
The appellant had collected service tax which it was not required to collect in law. The appellant, therefore has to forthwith pay the amount so collected to the credit of the Central Government. - Revenue may proceed to recover interest.
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Service Tax:
CENVAT Credit is admissible to the appellant on the duty paid on capital goods and service tax paid on input services used in the setting up of the new premises i.e. the Mall which is later provided on rent and service tax has been paid on Renting of Immovable Property Service and the input services used in providing the said output services.
Notifications
GST - States-
ORDER NO.05/2019 - dated
23-4-2019
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Karnataka SGST
Karnataka, Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019
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09/2019 - FD 47 CSL 2017 - dated
23-4-2019
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Karnataka SGST
Government of Karnataka appoints the 21st day of June, 2019, as the date from which the provisions of the Karnataka Goods and Services Tax Amendment Rules, 2019 rule 12 of Notification (4-W) No. FD 47 CSL 2017, dated the 18th February, 2019, published in the Karnataka Gazette, Extraordinary, Part-IVA, No. 122, dated the 18th February, 2019, shall come into force.
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08/2019 - FD 47 CSL 2017 - dated
23-4-2019
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Karnataka SGST
Seeks to notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No.(02/2019) No. FD 48 CSL 2017, dated the 7th March, 2019
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Order No. 5/2019 State Tax - dated
23-4-2019
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Meghalaya SGST
Meghalaya Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019
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ERTS(T) 4/2019/201 - 09/2018-State Tax (Rate) - dated
29-3-2019
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Meghalaya SGST
Seeks to amend MGST Act so as to provide for application of Composition rules to persons opting to pay tax under notification No.ERTS(T) 4/2019/40 Dated Shillong,the 7th March, 2019.
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ERTS(T) 4/2019/200 - 08/2018-State Tax (Rate) - dated
29-3-2019
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Meghalaya SGST
Seeks to amend MGST Act so as to notify MGST rate of certain goods as recommended by Goods and Services Tax Council for real estate sector.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (5) TMI 399
Extension of time period for filing of GST Tran-1 - transition to GST regime - transitional credit - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. List this matter on 02.07.2019.
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2019 (5) TMI 398
Extension of time period for filing of GST Tran-2 - transition to GST Regime - transitional credit - HELD THAT:- The respondents are directed to reopen the portal within one month from today. In the event they do not do so, they will entertain the GST TRAN-2 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - List this matter on 1.7.2019.
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2019 (5) TMI 396
Reopening of TRANS-1 form to update the opening stock CENVAT credit - HELD THAT:- The petitioner has admitedly filed the representation dated 29.03.2019, with enclosures, I am of the view that the petitioner should be granted an opportunity to pursue its case before the Nodal Officer - Petition allowed.
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2019 (5) TMI 395
Issuance and usage of 'C' forms post GST - Vires of Circular dated 17.08.2017 (Annexure-1) issued by the State Government - levy of GST on persons who are dealing with HSD - HELD THAT:- The circular dated 17th August, 2017, which is partially quashed by Punjab and Haryana High Court and has been approved by the Hon ble Supreme Court. Other High Courts also have taken a similar view - In that view of the matter, it will not be appropriate to now enforce the circular dated 17.8.2017 and the circular of 1st November, 2018 will prevail along with the judgments which are referred herein above, the authorities are bound to implement all decisions referred to above and we are approving the ratio laid bound those decisions and we direct the State Government to follow and act in accordance with the ratio of those decisions. Petition disposed off.
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2019 (5) TMI 360
Grant of anticipatory bail - Whether the petitioner/accused has committed the alleged offence or not is a matter which has been considered and appreciated only after investigation and the charge sheet is filed? - HELD THAT:- This Court in the case of Sri.Avainash Aradhya Vs. the Commissioner of Central Tax [ 2019 (3) TMI 373 - KARNATAKA HIGH COURT] has elaborately discussed the provisions of law and other aspects as to under what circumstances the bail has to be considered and granted. Those facts and circumstances are also similar to the present facts of the case on hand and as such I feel that if by following the said precedent by imposing some stringent conditions, if petitioner/accused is ordered to be released on anticipatory bail, it is going to meet the ends of justice. The petition is allowed and petitioner/accused No.2 is ordered to be released on anticipatory/bail in the event of her arrest.
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2019 (5) TMI 359
Profiteering - purchase of 68766- Glass for GT 03-RO Gas Stove - benefit of reduction of rate of GST not passed on - contravention of the provisions of Section 171 of the CGST Act, 2017 or not - HELD THAT:- Central Govt. vide Notification No. 41/2017- Central Tax (Rate) dated 14.11.2017 had reduced the rate of GST from 28% to 18% in respect of the above product with effect from 15.11.2017, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017 - it is revealed that the Respondent had increased the base price of the product from ₹ 1,640.62 to ₹ 1,779.66, when the rate of tax was reduced from 28% to 18% with effect from 15.11.2017. Thus, by increasing the base price of the product, post-GST, the benefit of reduction in tax rate was not passed on to the recipients. The total amount of profiteering during the period 15.11.2017 to 31.10.2018 is ₹ 13,973/- and this amount is inclusive of ₹ 535/- which is the profiteered amount in respect of the Applicant. Respondent is directed to reduce the price of the product as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, by making commensurate reduction in the prices, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Penalty - HELD THAT:- It is established from the facts that the Respondent had issued incorrect invoices while selling the above product to his customers as he had not correctly shown the basic price which he should have legally charged from them. The Respondent had also compelled them to pay additional GST on the increased price through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on - It is also established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the Act. Hence, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. In the interest of natural justice, notice may be issued to the Respondent to show cause as to why penalty should not be imposed on him as per the provisions of Section 122 of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, 2017 Application disposed off.
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2019 (5) TMI 358
Profiteering - Courier Service - benefit of reduction in the rate of tax not passed on - violation of the provisions of Section 171 of the CGST Act, 2017 or not - quantum of profiteering. HELD THAT:- There was no reduction in the rate of tax on supply of Courier Service after the implementation of GST, instead there was increase in the rate of tax from 15% in pre-GST regime to 18% in post-GST regime. The fact that the Respondent had increased his base price for providing courier service from ₹ 69.5/- to ₹ 80/- has no relevance in view of the fact that there has been no reduction in the rate of tax nor increased benefit on account of Input Tax Credit was available and hence the provisions of Section 171 of CGST Act, 2017 can not be invoked in this case. it is clear that there is no case of contravention of the provisions of Section 171 of the CGST Act, 2017 and hence we find no merit in the application filed by the above Applicant . Application dismissed.
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Income Tax
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2019 (5) TMI 357
Stay of demand against the recovery - collecting 20% disputed tax pending appeal - order of assessment pending appeal filed by the Petitioner before the CIT (A) - HELD THAT:- We are of the opinion that the normal formula contained in CBDT circular of collecting 20% disputed tax pending appeal, cannot be applied in the present case. It emerges from the record that the Petitioner's transactions are subject-matter of proceedings before the SEBI. In an interim order, after bi-parte hearing, the SEBI had noticed several disturbing features in Petitioner's activity of buying and selling derivatives. The SEBI had expressed strong prima-facie opinion that this is a case of contrived loss. In other words, the loss as claimed by the Petitioner for set off, is not genuine. We do not think that the Petitioner can avoid recovery of tax by offering to pay a mere 20% of the disputed amount. At the same time, recovering entire tax pending appeal would also be harsh. The CBDT circular dated 31/07/2017 gives sufficient discretion to the departmental authorities to govern the situation pending appeal. Nevertheless, such discretion cannot be exercised in an unjust manner. Considering the facts and circumstances of the case, on one hand looking to the strong prima-facie case against the Petitioner and on the other hand the fact that the Petitioner's first appeal before the Commissioner is pending, we dispose of the petition with the following directions: (i) The Petitioner shall deposit 50% disputed tax with the Department which would include the amounts already deposited / recovered so far. This condition shall be fulfilled latest by 06/06/2019. (ii) For the remaining 50%, the Petitioner shall provide security to the satisfaction of the Assessing Officer. (iii) The Petitioner shall file an undertaking that these conditions will be fulfilled. Such undertaking shall be filed latest by 10/05/2019 in the Registry of this Court. iv) Upon such undertaking being filed and in anticipation of the conditions being fulfilled, there shall be stay against the recovery till the disposal of the appeal by the Commissioner.
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2019 (5) TMI 356
Reopening of assessment u/s 147 - dispute regarding effective service of notice u/s 148(1) - substantial question of law - Tribunal relegated the matter to the Assessing Officer to examine the matter afresh - HELD THAT:- In the order under appeal the Tribunal having taken note of the fact that the assessee's had a very little time to put forth their defense, set-aside the impugned order; and had directed the assessing officer to examine the matter afresh, leaving it open to the assessees to raise all such contentions as were available to them in law. Exercise of discretion by the Tribunal, to remand the matter to the Assessiong Officer, cannot be said to have caused prejudice to the assessees. 9. Interference, in proceedings under Section 260-A of the Act, is warranted against the order of the Tribunal, only if the said order gives rise to a substantial question of law. The order under appeal, whereby the assessment order was set-aside and the Assessing Officer was directed to examine the matter afresh, leaving it open to the assessee's to put forth their defense on all aspects, does not give rise to any such substantial question of law warranting an appeal, under Section 260-A of the Act, being entertained. Appeal dismissed.
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2019 (5) TMI 355
Applicability of Section 115JB on banking Company - scope of rectification u/s 154 - Scope of amendment in 115JB by Finance Act, 2012 - HELD THAT:- These amendments in section 115JB are neither declaratory nor classificatory but make substantive and significant legislative changes which are admittedly applied prospectively. The memorandum explaining the provision of the Finance Bill, 2012 while explaining the amendments under Section 115JB of the Act notes that in case of certain companies such as insurance, banking and electricity companies, they are allowed to prepare the profit and loss account in accordance with the sections specified in their regulatory Acts. To align the Income Tax Act with the Companies Act, 1956 it was decided to amend Section 115JB to provide that the companies which are not required u/s 211 of the Companies Act, to prepare profit and loss account in accordance with Schedule VI of the Companies Act, profit and loss account prepared in accordance with the provisions of their regulatory Act shall be taken as basis for computing book profit u/s 115JB. This explanation starts with the expression For the removal of doubts . It declares that for the purpose of the said section in case of an assessee company to which second proviso to section 129 (1) of the Companies Act, 2013 is applicable, would have an option for the assessment year commencing on or before 1st April, 2012 to prepare its statement of profit and loss either in accordance with the provisions of schedule III to the Companies Act, 2013 or in accordance with the provisions of the Act governing such company. To our mind, this is some what curious provision. In the original form, sub- section (2) of section 115JB did not offer any such option to a banking company, insurance company or electricity company to prepare its profit and loss account at its choice either in terms of its governing Act or as per terms of Section 115JB. Secondly, by virtue of this explanation if an anomaly which we have noticed is sought to be removed, we do not think that the legislature has achieved such purpose. In plain terms, this is not a case of retrospective legislative amendment. It is stated to be clarificatory amendment for removal of doubts. When the plain language of sub- section (2) of Section 115JB did not permit any ambiguity, we do not think the legislature by introducing a clarificatory or declaratory amendment cure a defect without resorting to retrospective amendment, which in the present case has admittedly not been done. In the result, we hold that sub- section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. We answer the question No.2 in favour of the assessee and against the revenue. In view of this, question of correctness of the order of rectification passed by the Assessing Officer becomes unimportant. Question No.1 is therefore not answered. All the appeals are dismissed.
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2019 (5) TMI 354
Capital gain u/s 45(4) in partnership firm on retirement of a partner - dissolution/reconstitution of partnership firm - valuation of the assets and liabilities of the firm and allottment of assets among the retiring and continuing partners took place - as per assessee properties obtained by the retiring partners through a family arrangement was not transfer for the purpose of capital gain - whether Section 45(4) applies on retirement of a partner from the partnership business? - whether the word otherwise , it would take into its sweep not only cases of dissolution of partnership firm but also cases of reconstitution of a partnership firm on retirement of a partner - HELD THAT:- Hon'ble Supreme Court in CIT VERSUS R. LINGMALLU RAGHUKUMAR [ 1997 (1) TMI 74 - SUPREME COURT] had held that on retirement, the settlement to a partner of his share in the assets of the partnership after deduction of liabilities is not assessable to capital gains. In the present case, very significantly, there was only a reconstitution of the partnership firm by retirement of two partners and admission of another partner. The partnership firm continued. It must also be further noted that the assets of the firm originally belonged to the father of the retiring / continuing partners and there was only a division of the assets on retirement in accordance with their entitlement on the shares in the partnership. As pointed out earlier, the National Company was originally a sole proprietorship concern started by N.Munuswamy Mudaliar. It was in the business of construction and assets had been acquired even at that particular point of time. The two daughters and two sons-in-laws of N.Munuswamy Mudaliar were subsequently admitted as partners and on division of the assets, it can also be arguably pointed out that one daughter and one son-in-law were allotted a share which they were otherwise legally entitled to out of the holdings N.Munuswamy Mudaliar. In view of the peculiar facts of the case in hand, we hold that the provisions of Section 45(4) would not be attracted on the retirement of the two partners and consequential allotment of their share in the assets in the Assessee Firm. We therefore answer the substantial question of law in favour of the Assessee and against the Revenue.
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2019 (5) TMI 353
Registration u/s 12AA - registration denied on ground that there is no expenses for propagation of Yoga, non filing of return of income, non availability of land and holding of Bhandara - both objects and genuineness of activities need to be examined at the time of granting registration - effect of inclusion Yoga in the definition of charitable purposes by Finance Act, 2015 with effect from 01.04.2016 - HELD THAT:- Examining the finding of the CIT(E) that there were no expenses attributable to propagation of Yoga in financial statements, it may be noticed that the salary to main Yoga Teachers was not paid as they were rendering the services without any salary as depicted in the details of salary paid. The plea of the revenue that kitchen expenses were incurred for Bhandara for public would show that the activities of the trust were not genuine. In this regard, it is recorded that the said expenses were incurred for all students or teachers of the Society and sometimes for public which was a plausible explanation and it cannot be brushed aside to hold that the activities of the assessee were not genuine. The holding of Bhandara cannot be a ground to reject the registration unless it was proved that it was for any non-charitable activity or was exorbitant. So far as non-filing of return for the assessment year 2013-14 was concerned, we find that in this year, the assessee had incurred a loss of ₹ 5 lakhs and if the assessee had not filed the return for the said assessment year being loss, it could not be inferred that the activities of the assessee were not genuine. Even the CIT(E) had held that the assessee was owner of the land measuring 51 kanals and the rest of the land was in the name of other persons. The said land was sufficient for imparting Yoga training. The Tribunal had held that while considering registration u/s 12AA, the CIT(E) was required only to determine the objects of the society which undoubtedly were charitable in nature. Still further, the assessee during the proceedings had filed sufficient evidence regarding Yoga activities being carried out and had filed supporting evidence vide letter dated 14.7.2016 but the CIT(E) had failed to appreciate the same. Accordingly, the Tribunal had rightly directed the CIT(E) to grant exemption u/s 12AA to the assessee. No error could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal warranting interference by this Court. No question of law, much less, substantial question of law arises in the appeal. - Decided against revenue
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2019 (5) TMI 352
Deduction in respect of export business u/s 80 HHC - Deduction in respect of profits retained for export business - scope of proviso inserted in Section 80HHC by the Taxation Law (Amendment Act, 2005) with retrospective effect from 01.04.1998 - HELD THAT:- As decided in M /S AVANI EXPORTS ANR. [ 2015 (4) TMI 193 - SUPREME COURT] we find that in essence the High Court has quashed the severable part of third and fourth proviso to Sec.80HHC (3) and it becomes clear therefrom that challenge which was laid to the conditions contained in the said provisos by the respondent has succeeded. However, to make the position crystal clear, we substitute the direction of the High Court with the following direction: Having seen the twin conditions and since 80HHC benefit is not available after 1.4.05, we are satisfied that cases of exporters having a turnover below and those above 10 cr. Should be treated similarly. This order is in substitution of the judgment in Appeal.
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2019 (5) TMI 351
Re-assessment u/s 147 - original assessment u/s 143(3) - limitation of 4 years for re-opening - failure on the part of the assessee to disclose all the relevant facts truly and fully for assessment - deduction u/s 80IB(10) - HELD THAT:- The Assessing Authority cannot have a mere re-appreciation of the same facts or a review of existing material on a mere change of opinion and take a different view of the matter and he is not permitted to undertake the re-assessment proceedings. The condition of 4 years provided in 1st proviso to Section 147 of the Act is a protection in favour of the Assessee against the whimsical and arbitrary re-assessment proceedings initiated by the Assessing Authorities beyond this limitation of 4 years, except where the escapement of income has resulted on account of failure on the part of Assessee to disclose the material particulars. We find that the Assessee had made true and full disclosure and had consciously made only a proportionate claim u/s 80IB(10), which was rightly allowed by the Assessing Authority at the time of original assessment proceedings u/s 143(3) and therefore after the expiry of 4 years in 2010, the impugned notice u/s 147/148 for AY 2003-04 issued on 31.03.2010 was not a valid initiation of the re-assessment proceedings. We are of the considered opinion that the learned Single Judge was justified in quashing the impugned re-assessment proceeding and there is no merit in the present appeal filed by Revenue. - writ appeal by Revenue is dismissed.
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2019 (5) TMI 350
Reopening of assessment - material received from the Information Wing on the basis of which the present proceedings have been initiated - HELD THAT:- Return filed by the petitioner was not taken up for scrutiny initially, and only an intimation under Section 143(1) has been issued, it is of the view that the assumption of jurisdiction in this case cannot be faulted, particularly since the respondent has, in the reasons for re-opening, cited tangible material upon which he rests his belief of escapement of income. In reference to case of Rajesh Jhaveri [ 2007 (5) TMI 197 - SUPREME COURT] there is no merit in this writ petition and the same is dismissed. The order of re-assessment dated 29.11.2017 thus stands revived in the light of the rejection of the objections of the petitioner dated 19.02.2018. The petitioner seeks and is granted liberty to challenge the order of re-assessment dated 29.11.2017 before the Commissioner of Income Tax (Appeals). Since the petitioner has been litigating against the proceedings for re-assessment from 19.12.2017 when it filed the first writ petition challenging the order of reassessment, the appeal shall be received by the Commissioner of Income Tax (Appeals), if filed within two weeks from today, without reference to limitation.
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2019 (5) TMI 349
Capital expenditure under 35D(1) and (2) - Applicability of Section 43A - increase of cost on fluctuation of foreign currency - HELD THAT:- Applicability of Section 43A stands already settled in favour of the assessee, by virtue of the law declared by the Supreme Court in Oil Natural Gas Corporation Ltd., Dehradun through Managing Director Vs. The Commissioner of Income Tax, Dehradun [ 2010 (3) TMI 81 - SUPREME COURT] . This being the position, there cannot be any further dispute in this regard and the surviving issue is only with regard to the one with reference to Section 35D of the Income Tax Act. This Court finds that no finding on merit has been arrived at by the Tribunal and it is only an 'open remand'. It is quite possible for the Revenue to raise all the relevant contentions including the 'question of law', if any, before the AO, even with reference to Section 35D. No prejudice is caused in any manner. That apart, in so far as no finding has been rendered by the Tribunal as to the applicability of Section 35D it cannot be said that the appeal involves any 'substantial question of law' so as to call for interference of this Court in exercise of the power under Section 260A of the Income Tax Act.
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2019 (5) TMI 348
Addition u/s 40A - payments made to the Employees' Welfare Trust to meet the transportation expense - diversion of funds - HELD THAT:- This issue was dealt in detail by this Court in the assessee's own case in respect of the assessment year 1994-95, in the appeal preferred by the Revenue [ 2019 (4) TMI 79 - KERALA HIGH COURT] . This Court held that the view taken by the Tribunal, that the assessee had effected the said payment so as to meet the transportation expense of the employees and had the said task not been undertaken by the Employees' Welfare Trust, it would have been the liability of the assessee, by virtue of the service conditions, was correct and sustainable. We answer the position accordingly, in favour of the Assessee and against the Revenue. Dis-allowance of depreciation on the enhanced cost of equipments - foreign exchange rate fluctuations - mandate of Section 43A - increase in liability was artificial and did not represent any actual payment - HELD THAT:- CIT(A) took a stand in favour of the assessee and held that the instance would clearly fall within the ambit of Section 43A and in turn, directed the Assessing Officer to grant the relief, which was sought to be challenged by the Revenue before the Tribunal. It was brought to the notice of this Court that the issue was squarely covered in favour of the assessee, by virtue of the rulings rendered by the Supreme court in Commissioner of Income Tax, Delhi vs. Woodward Governor India P.Ltd [ 2009 (4) TMI 4 - SUPREME COURT] and Oil and Natural Gas Corporation Ltd, Dehradun, through Managing Director vs. Commissioner of Income Tax, Dehradun. [ 2010 (3) TMI 81 - SUPREME COURT] . In the light of the dictum laid down by the Apex Court, we held that the challenge raised by the Revenue was devoid of any merit and no substantial question of law was involved. The said finding and reasoning will govern the field in this case as well. Disallowance of interest on borrowed funds - interest free advance to a subsidiary company - HELD THAT:- As per the assessment order, the assessee was having a large extent of income and this being the position, the amount that was lent to the sister concern, being only ₹ 2.43 crores, it was not open for the Revenue to have contended that the amount advanced came from the borrowed funds of the assessee. The analysis done by the Tribunal order reveals that the finding was rendered on the basis of the relevant facts borne out from the materials on record. The said finding on fact does not lead to any question of law, much less any substantial question of law.
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2019 (5) TMI 347
Substantial question of law - Addition u/s 36(1) - debts actually written off - excluding the income from the Bangkok branch from the total income India- Thailand DTAA - HELD THAT:- Both the issues have been remanded back to the Assessing Officer to consider both the issues afresh. Since it is only remand order, we are of the clear opinion that no substantial question of law can be actually said to be arising from the said order of learned Tribunal. The matter is open before the Assessing Officer, who of'course is expected to take a considered view in proper manner after giving due opportunity of hearing to the Assessee. Learned counsels were unable to inform as to whether any order has been passed or not by the Assessing Authority so far pursuant to the remand order passed by the learned Tribunal on 14th December 2007. Thus, we return the aforesaid questions of law unanswered, lest it affects the exercise of discretion by the Assessing Officer.
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2019 (5) TMI 346
Principles of natural justice denied - Rectification u/s 154 - no opportunity to represent the case to assessee - in CIT(A) order, it does not reflects that the notices of the hearing have ever been served upon the assessee or not and even mode of service has not been specified - HELD THAT:- The principle of Audi Alteram Partem is the basic concept of the principle of natural justice and has not evolved from the constitution but evolved through civilization and mankind and is the concept of common law, which implies fairness, reasonableness, equality and equity. In India, the principles of natural justice are the grounds of Article 14 and 21 of the Constitution. Article 14 enshrines that every person should be treated equally. In the landmark case of Maneka Gandhi vs. The Union of India [ 1978 (1) TMI 161 - SUPREME COURT] it has been held by Constitution Bench of the Apex Court that the law and procedure must be of a fair, just and reasonable kind. The doctrine ensures a fair hearing and fair justice to both the parties. Under this doctrine, both the parties have the right to speak. The aim of this principle is to give an opportunity to the parties to defend themselves. Before the court, both the parties are equal and are entitlement of equal opportunity to represent them. If the order is passed by the authority without providing the reasonable opportunity of being heard to the person affected by it adversely will be invalid and shall be liable to be set aside. Coming to the instant case, the principles of natural justice have not been followed, as it is fundamental principle of law that no one can be remain un-heard, therefore in the peculiar facts of circumstances of the case, we are inclined to set aside the order passed by the CIT(A) and restore the matter back to the file of the CIT(A) for decision afresh, suffice to say while affording proper opportunities of being heard to the assessee. We also direct the Assessee/Appellant to extend its full cooperation and participation in the appellate proceedings before the CIT(A) as and when required and in case of further default, the assessee shall not be subjected to any leniency. Appeals filed by the Assessee/Appellant stands allowed for statistical purposes.
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2019 (5) TMI 345
Levy of penalty u/s 271(1)(c) - Addition u/s 68 - case was selected for scrutiny - Surrender of income - assessee s disclosure was not voluntary but under compulsion when cornered by the A.O. at the assessment stage - HELD THAT:- It is an admitted fact that the case was selected for scrutiny and A.O. raised questionnaire to the assessee and called for the explanation of assessee on all the above four issues. The assessee instead of explaining any of the above issues or to file any documentary evidences in support of the same, surrendered the amounts in question for taxation. Therefore, clearly show that assessee made the surrender of the above amounts in question only when A.O. has confronted the assessee with above issues and cornered the assessee at the assessment stage. Thus, the assessee did not make any voluntary surrender of the amounts in question. Assessee had concealed the material facts and given incorrect statement of fact in the return of income. The assessee provided incorrect facts which were marshaled by the A.O. It would show that assessee s disclosure was not voluntary but under compulsion when cornered by the A.O. at the assessment stage. The assessee did not offer any explanation on any of the above issues either at the assessment stage or at the penalty proceedings. Explanation-1 to Section 271(1)(c) is clearly attracted. Had the case would not have been selected for scrutiny assessment, the assessee would not have surrendered the amount in question for the purpose of taxation. The assessee, therefore, had guilty mind and show that assessee concealed the particulars of income from the Revenue Department which invited penalty proceedings under section 271(1)(c) of the I.T. Act, 1961. - Decided against assessee.
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2019 (5) TMI 344
Levy of penalty u/s 271 (1) (c) - CIT(A) confirmed the penalty so levied by the Assessing Officer for both the years in the exparte order passed by him since none appeared before him despite service of notice - HELD THAT:- It is an admitted fact that due to non appearance before the CIT(A) despite sufficient opportunities granted by him, CIT(A) in the exparte order passed by him confirmed the penalty so levied by the AO. Considering to restore the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate his case. The assessee is hereby directed to appear before the CIT(A) and explain his case failing which the CIT(A) is at liberty to pass appropriate orders as per law. We hold and direct accordingly. - Appeal of assessee allowed for statistical purpose.
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2019 (5) TMI 343
Addition u/s 36(1)(iii) - assessee has not able to proved the nexus between interest free funds and interest free advances - HELD THAT:- The internal cash accrual of ₹ 87,84,446/- as profit and ₹ 7,62,94,157/- by way of depreciation during the year under consideration is also evident on record. During the assessment year 2011-12, the assessee has not given any advance to the land lords but in the earlier years advance of ₹ 25,89,060/- was paid out of the total interest free funds available with the assessee. Further the entire borrowing is term loan against capital assets, thus, the borrowing is used for the purpose of business and therefore, the question of disallowance does not arise in term of the ratio laid down in the matter of Taparia Tools Ltd-vs-CIT [ 2015 (3) TMI 853 - SUPREME COURT]. In that view of the matter, we find no justification of the addition made by the authorities below. Hence, the same is deleted. This ground of appeal is thus allowed. ESI PF with regard to contribution by employee u/s 36(1)(va) - assessee has to pay the amount of employee s contribution towards PF/ESI to the Government account within the due date specified in the concerned Act - HELD THAT:- The assessee has failed to credit the same within the stipulated time and in that view of the matter considering the judgment passed in the matter of CIT-vs- South India Corporation Ltd. [ 1999 (10) TMI 44 - KERALA HIGH COURT] as well as the judgment pronounced by the Jurisdictional High Court in the case of [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] the revenue has disallowed the amount of Employees Contribution of ESI PF to the tune of ₹ 1,89,774/- and added back to the total income of the assessee. No infirmity in such order passed by the authorities below hence assessee s ground of appeal fails.
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2019 (5) TMI 342
Penalty u/s 271(1)(c) - disallowance of proportionate interest expenditure incurred on borrowed funds - HELD THAT:- A conspectus of the Explanation Section 271(1)(c) makes it clear that the statute visualized the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. AO may be justified in making estimated disallowance in quantum proceedings, such disallowance of expenses, that too on estimated basis, could not automatically fall within mischief of Section 271(1)(c). While a claim towards expenditure may not found acceptable in quantum proceedings, such disallowance cannot invite by way of penalty. When all material facts relevant to the said claim were placed on record, the presence or absence of commercial instinct in a given case is a matter of inference. Such adverse inference against assessee would not attract imposition of penalty. The claim of expenditure towards interest made at best be taken as erroneous claim by the assessee. Such claim made in a bonafide manner cannot lead imposition of penalty. Although such claim may not be maintainable for the purposes of quantum proceedings however, in the absence of any falsity per se in such claim, making an incorrect claim for deduction is not at par with concealment or inaccurate particulars of income. Decision in the case of CIT vs. Dalmia Dyechem Industries Ltd. [ 2015 (7) TMI 619 - BOMBAY HIGH COURT] relied to submit that the penalty cannot be imposed unless the action of the assessee per se is dishonest, malafide and amounting to concealment of facts. There, being no concealment of fact per se imposition of penalty is not justified. The penalty, in our view, is clearly not maintainable in the absence of any contumacious or dishonest conduct. Consequently, we set aside the order of the CIT(A) and direct the AO to delete the penalty on disallowance of estimated interest expenditure - Appeal of the assessee is allowed.
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2019 (5) TMI 341
Assessment of income of the estate of a deceased person u/s 168 - status of executor - Special provisions which deal with the Executors of the Estate of a Deceased person - Assessee to be treated as an individual or BOI/AOP - wrong status in ITR - HELD THAT:- We note that the executor/assessee due to ignorance of law has first of all applied for PAN in the status of BOI and thereafter while filing the return of income electronically faced the glitches/problem in the software, which has automatically taken the status of the executor as that of Firm; and consequently there was mismatch between the return of income as well as 143(1) intimation. In this case, the law is very clear, if there only one executor then the executor shall be treated as an individual and where there is more than one executor the executors shall be treated as an Association of person (AOP). And since Shri Narendra Kumar Khajanchi is discharging his duties as an Executor, the contingency mentioned in the Will of late Shri Hemraj Khajanchi has not risen and so Shri Narendra Kumar Khajanchi is the only Executor of the Will, and, therefore, the status of executor in this case is that he shall be treated as an individual and not as AOP as erroneously classified by AO. It is true that the confusion has arisen to start with because of the ignorant action of the assessee when he applied for the PAN in the status of BOI and thereafter glitches in the software of department as discussed above. However, it has to be kept in mind that there is no estoppel against law. Shri Narendra Kumar Khajanchi is the only executor of the Will and is discharging his duties as an Executor, and therefore has to be treated in the status as an individual as per sec. 168 and when he is treated as an individual according to applicable tax slab during AY 2011-12 the assessee is having only business income to the tune of ₹ 46,741/- which falls below the threshold exemption limit of ₹ 1,60,000/- and, therefore, no tax is payable as per law. Thus the appeal of the assessee is allowed.
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2019 (5) TMI 340
Revision u/s 263 - additional depreciation u/s 32(1)(iia) - apprehension of the assessee that various observations are made which make it obligatory on the part of the AO to disallow the claim of additional depreciation - HELD THAT:- We find that the claim of additional depreciation u/s 32(1)(iia) was granted to the assessee without any deliberation. The learned AR has not placed any evidence / material on record to show that the additional depreciation claimed was subject matter of examination by the A.O. during the course of assessment proceedings and thereafter deduction was granted. Since deduction u/s 32(1)(iia) was granted without any deliberation by the Assessing Officer, we are of the view that the assessment order dated 16.02.2016 is erroneous and prejudicial to the interest of the revenue. Therefore, the CIT had correctly invoked his revisionary power u/s 263. - Decided against assessee We are not aware of the fate of the order of Cochin Bench of the Tribunal in the case of Cochin Frozen Food Exports Pvt. Ltd. [ 2012 (4) TMI 757 - ITAT COCHIN] . We are also not aware of the processes undertaken in that case whether it is identical / similar to the processes undertaken by the assessee in the instant case. The Assessing Officer shall compare the processes undertaken by the assessee in the instant case and that of the assessee in Cochin Frozen Food Exports Pvt. Ltd. (supra). In other words, the Assessing Officer shall independently come to a conclusion whether there is a manufacture or production of a new article or thing in the facts of the instant case, irrespective of the observation made by the CIT. With these observations, we dispose off the matter.
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2019 (5) TMI 339
Deduction u/s 80IB in respect of profit from the Housing Project at Jodhpur namely ASHIANA AMARBAGH - HELD THAT:- As decided in assessee's own case [ 2017 (12) TMI 1391 - ITAT KOLKATA] and [ 2016 (3) TMI 84 - ITAT KOLKATA] allowing the claim of the assessee for deduction under section 80IB. Addition on account of cost of development - assessee had incurred substantial development cost in respect of its Housing Project ASHIANA AMARBAGH undertaken in Jodhpur, Rajasthan and the said cost was allocated by the assessee to the different phases of the Project - HELD THAT:- It is observed that even the AO in his assessment order did not pinpoint any defect or deficiency in such basis or method adopted by the assessee. As contended on behalf of the assessee before the CIT(Appeals) as well as before the Tribunal, the same basis or method was adopted by the assessee for allocating the development cost even in the earlier years and the same was accepted by the AO. No infirmity in the impugned order of the CIT(Appeals) accepting the basis or method adopted by the assessee consistently for allocation of development cost of different Phases of the Project and deleting the disallowance made by the Assessing Officer on this issue. The same is, therefore, upheld dismissing Ground No. 2 of the Revenue s appeal.
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2019 (5) TMI 338
Assessment order barred by limitation u/s 153A - Search and Seizure operations u/s 132 - matter travelled to settlement commission which was rejected - period of limitation u/s 153B read with Explanation thereto would be 60 days from the end of the month in which the said order was received - amendment to section 153B vide Finance Act,2017 - 60 days OR 1 year - ground taken first time before Tribunal - HELD THAT:- We find that issues raised in Grounds is a legal issue and has been raised for the first time before the Tribunal. There was no occasion with the Ld. CIT(A) to adjudicate this issue. Therefore in light of judgment of Hon'ble High Court in the case of CIT V/s Tolaram Hossomal [ 2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT] we set aside legal issue raised by the assessee for Assessment Year 2012-13 relating to the validity of the impugned assessment order whether being valid or invalid considering the limitation period provided under provisions of law for the completion of assessment proceedings. Ld. CIT(A) should accordingly decide the issue in light of the principle laid down by the Hon'ble Court. Loan received assessed as income u/s 68 - loan received from companies - accommodation entries from paper companies - taken for two months and interest was paid and TDS deducted - HELD THAT:- The assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. Further no incriminating material was found during the course of search which could clearly prove that the alleged transaction of receiving loan was an accommodation entry. The assessee s case further finds support the fact that the alleged loans were taken for a period of two months and have been repaid back with interest. Tax has also been deducted at source on the interest paid. The alleged transaction of receiving loan and being repaid back has been duly acknowledged by the cash creditors in the affidavit. The documents filed in support of identity, creditworthiness and genuineness i.e. Profit loss accounts, income tax returns, audit reports, affidavit of the cash creditors and identity proof have not been disputed by the revenue authorities at any stage. Ld. A.O seems to have made the addition without making any investigation after the loan was taken. The finding given in the impugned assessment order about the investment is during the period prior to taking the loan. We therefore in the given facts and circumstances of the case and respectfully following the judgments in the preceding paragraphs are of the considered view that the addition for unexplained cash credit of ₹ 1,80,00,000/- needs to be deleted. As regards the applicability of recent judgement of Hon ble Supreme Court in the case of PCIT vs. NRA IRON STEEL PVT. LTD. [ 2019 (3) TMI 323 - SUPREME COURT] heavily relied by Learned Departmental Representative, we observe the Principles laid down in para 11 of the said judgment are not applicable to the facts of the case at hand. Undisclosed Income received in cash by Sumati Kumar Kasliwal - HELD THAT:- Assessee had not pressed because himself offered this amount before Income Tax Settlement Commission. Our this finding of confirming the addition in the hands of Shri Sumati Kumar Kasliwal for Assessment Year 2013-14 will be for consideration while deciding the issue of unexplained share capital in the case of M/s. Pumarth Infrastructure Pvt. Ltd for Assessment Year 2012-13 in the subsequent adjudication of the remaining issues. - dismissed as not pressed Sale of shares assessed as income u/s 68 - addition was based on seized documents - sale of shares duly reflected in the books - purchases were not doubted - HELD THAT:- Ld. A.O has not doubted the genuineness of the purchase of the equity shares made by the assessee in the preceding financial year. It is established principle of law that if the purchases are genuine then only the difference between the sale and purchase amount can be subjected to tax. In the instant case the assessee has offered Short Term Capital Gain of ₹ 6,33,325/- for tax being the difference between the sale consideration of ₹ 3,06,32,825/- and the purchase/cost price of the equity shares sale of ₹ 2,99,99,500/-. Further all the necessary details about the identity and genuineness of the concern purchasing the shares from the assessee have been placed on record. Merely for not producing the directors of the alleged companies buying the equity shares cannot make the transaction in genuine. We therefore in the given facts and circumstances of the case are of the considered opinion that the assessee has successfully explained the amount of ₹ 3,61,22,825/- which includes ₹ 54,90,000/- being the amount received against sale of equity shares but returned back to the purchaser as the transaction could not be finalized and remaining amount of ₹ 3,06,32,825/- represents the sale consideration of sale of equity shares held by the assessee since last financial year and the amount of capital gain from sale thereof is duly offered to tax. We accordingly set aside the findings of lower authorities and delete the addition. - Ground of assessee is allowed Telescoping of additions sustained vis- - vis income surrendered - HELD THAT:- We set aside this issue to the file of the AO with a direction to verify the income surrendered by the various assesses as stated in the declaration dated 18.03.13 filed at the time of search and also the income tax returns of the various assesses mentioned there in settlement commission. The AO will verify whether credit of such income surrendered has been taken by the respective assessee or not and in case no credit has been taken then set-off of such income will be given in the hands of Sumati Kumar Kasliwal. With the aforesaid direction this ground of appeal is allowed for statistical purposes. Addition of Share Capital - treated as unexplained by the AO and confirmed by the CIT(A) - since identical addition arising out of the same loose paper has already been made in the hands of the appellants director Sumati Kumar Kasliwal and in the submission filed before this Hon ble Tribunal the said addition has already been accepted no addition need here - HELD THAT:- it will not be fair to make the addition of the same amount of ₹ 13,60,00,000/- in the hands of two assessee s in the same group concern even when one of the assessee Shri Sumati Kumar Kasliwal has already accepted the addition of ₹ 13,61,94,600/- being part of the total additions not pressed of ₹ 14,57,12,069/- and therefore the revenue authorities are free to collect the tax on the addition confirmed by us in the case of Shri Sumati Kumar Kasliwal even though the year of taxability of Shri Sumati Kumar Kasliwal is Assessment Year 2013-14 whereas the addition made in the case of instant appeal of M/s. Pumarth Infrastructure Pvt. Ltd is for Assessment Year 2012-13. We are conscious of the fact that the taxability of the year is different but looking to the connective transactions which very well speak by itself that the unaccounted income of Shri Sumati Kumar Kasliwal of ₹ 13.60 crores took shape of share capital and share premium of ₹ 13.60 crores in the hands of M/s. Pumarth Infrastructure Ltd. Even the Ld. A.O assessing the case of Shri Sumati Kumar Kasliwal while examining the seized paper at Page 61 63 of LPS B-1/5 made such observations. The observation of Ld. A.O supports our view that an unexplained income of ₹ 14,57,12,069/- inter alia including the amount of ₹ 13,61,94,600/- admitted as undisclosed income and offered to tax by Shri Sumati Kumar Kasliwal has its direct nexus with the addition of unexplained share capital of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd. As we have already confirmed the addition in the hands of Shri Sumati Kumar Kasliwal it will not be justified to sustain the addition of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd and the same deserves to be deleted. We accordingly orders and delete the addition of ₹ 13.60 crores made by the Ld. A.O u/s 68 of the Act on the basis of our finding that the addition for similar amount has already been confirmed by us in the hands of Shri Sumati Kumar Kasliwal. - Assessee ground allowed On money on sales of plots - HELD THAT:- The aforesaid issue has already been decided by this tribunal [ 2019 (3) TMI 631 - ITAT INDORE] confirming addition @ 25% of On-Money . From perusal of the above judgments common view has been taken thereby confirming the addition only for the profit element in On-Money . Respectfully following the above judgment and examining facts of the instances case we find that the On- Money has been received by the assessee company from its business activity of developing various projects. Undoubtedly against unaccounted On- Money there is also an element of unaccounted expenditure which cannot be brushed aside and further looking to the fact that in the very same Group concern addition confirmed by the ITSC is @ 25% of On-Money . Addition u/s 40A(3) - various expenses in cash, above ₹ 20,000/- - HELD THAT:- he assessing Officer alleged that the assessee has incurred cash expenses over and above ₹ 20,000/- and therefore is liable for disallowance u/s 40A(3) of the Act. Looking to the request of Ld. counsel for the assessee for setting aside the issue which goes opposed by the revenue authorities. We direct the Ld. AO to examine this issue of disallowance u/s 40A(3) of the Act for various expenses incurred in cash afresh after providing necessary opportunity to the assessee for filing documents and evidence in support of its claim that no disallowance is called for. Accordingly this issue for disallowance u/s 40A(3) of the Act is allowed for statistical purposes.
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2019 (5) TMI 337
Allowability of deduction claimed u/s 80IB - income generated from scrap sales - HELD THAT:- As in assessee s own case in assessment year 2009 10 [ 2016 (2) TMI 1230 - ITAT MUMBAI] has allowed assessee s claim of deduction. Following the aforesaid decision of the Tribunal, Commissioner (Appeals) has also allowed assessee s claim of deduction under section 80IB in respect of scrap sales in assessment year 2010 11. Facts being identical, respectfully following the decision of the Co ordinate Bench as referred to above, we uphold the decision of the Commissioner (Appeals) in allowing assessee s claim of deduction under section 80IB in respect of scrap sales in both the assessment years under appeal. Determination of arm's length price of corporate guarantee fee - Commissioner (Appeals) in restricting the arm's length price of corporate guarantee fee @ 0.5% - HELD THAT:- Commissioner (Appeals) in restricting the arm's length price of corporate guarantee fee @ 0.5% is in consonance with the decision of the Hon'ble Jurisdictional High Court in Everest Kento Cylinders Ltd. [ 2012 (11) TMI 1099 - ITAT MUMBAI] . In various other decisions also, different Benches of the Tribunal following the aforesaid decision of the Hon'ble Jurisdictional High Court have directed the Assessing Officer to determine the arm's length price of corporate guarantee commission @ 0.5%. That being the case, we uphold the decision of the learned Commissioner (Appeals) on the issue. Grounds raised are dismissed in both the appeals.
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2019 (5) TMI 336
Period of limitation for order u/s 201(1) and 201(1A) - tds u/s 195 not deducted for remitting the amount to the Mauritius company - order barred by limitation - HELD THAT:- The present appeal, we are on the issue of validity of the order passed under section 201(1) and 201(1A) of the Act. Undisputedly, the financial year involved in the present appeal is F.Y. 2006 07. AO has issued the show cause notice u/s 201(1) and 201(1A) on 28th March 2013, and passed the order under the said provision on 27th March 2015 - the issue has now been fairly well settled by a plethora of decisions including the decisions of the Hon'ble Jurisdictional High Court as cited by the learned Authorised Representative. While considering identical issue in Tech Mahindra Ltd. [ 2018 (6) TMI 1602 - ITAT MUMBAI] the Co ordinate Bench has held that the order passed under section 201(1) and 201(1A) of the Act after expiry of six years from the end of the financial in which payment was made is barred by limitation Undisputedly, the order passed u/s 201(1) and 201(1A) of the Act on 27th March 2015 is after expiry of six years from the end of the relevant financial year i.e., F.Y. 2005 06. That being the case, even as per the provisions of section 201(3) the order passed by the AO u/s 201(1) treating the assessee as assessee in default is grossly barred by limitation. - Decided in favour of assessee.
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2019 (5) TMI 335
Assessment u/s 144 - AO does not have any proof of service u/s 143(2) - AO justification in issuing the notices on the addresses available on record - new address gathered from the ROC s website - HELD THAT:- Shape of the entry of dispatch of notice u/s 143(2) recorded in the Dispatch Register was not traceable in the office of the ITO Ward-1(1), Indore and which has now been traced out and available with the AO. Refereeing of CIT/DR argument that it was the duty of the assessee to intimate the AO about the change of address and therefore, the Assessing Officer was justified in issuing the notices on the addresses available on record and the Assessing Officer tried his best to serve the notice upon the assessee at the available addresses as mentioned in the order u/s 144 dated 29.12.2011 and subsequently, on the new address gathered from the ROC s website, thus, the Assessing Officer was not on default but the assessee was in default by not intimating the changed address to the Revenue Authorities and ld. CIT(A) failed to appreciate this aspect. Considering in the interest of justice and fair play, the Revenue deserves one more opportunity. Therefore, we deem it appropriate to set aside the order of the CIT(A) on this issue. The appeal is remanded back to the file of the CIT(A) with direction to consider the submissions of the Revenue afresh. CIT(A) would decide the appeal in terms as indicated hereinabove after affording due opportunity of being heard to both the parties as per law. Accordingly, the appeal filed by the Revenue is allowed for statistical purposes only.
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2019 (5) TMI 334
Exemption u/s 11 denied - charitable activity u/s 2(15) or not? - Addition of interest received on account of fixed deposits and savings account - Addition received on account of Goa Fest 2010 - HELD THAT:- We find that in the case of assessee not a single transaction is in nature of trade, commerce or business and the Goa Fest from the detailed facts enumerated above is abundantly and clearly wholly towards the advancement of Its objects which have been duly considered as being towards advancement of object general public utility, while granting registration u/s 12A. As relying on THE COMMISSIONER OF INCOME TAX-EXEMPTION VERSUS THE FERTILIZERS ASSOCIATION OF INDIA [ 2017 (11) TMI 805 - DELHI HIGH COURT] wherein held mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption. The dominant object of the assesses remains charitable and the aforesaid activities are only incidental to the main activity of the assesses. Also, the activities of the assessee are benefiting the public at large at submitted by the assessee. Furthermore, it is not the case of the department that any change in object had taken place in the relevant year so as to take that assessee outside the ambit of section 2 (15). The receipts regarding Goa Fest 2010 and interest received on money deposited is exempt u/s 11. The orders of the lower authorities are set aside and appeal of the assessee is accordingly allowed.
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Customs
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2019 (5) TMI 397
Import of prohibited goods - Multi-function Digital Photocopiers and Printers - violation of Foreign Trade (Development and Regulation) Act, 1992 - HELD THAT:- Admittedly, the importers are not in possession of any authorization / licence issued by the DGFT for import of such goods. As such, the goods are liable for confiscation in terms of Section 111(d) as has been held by the lower authorities. But it is seen that the original authority has ordered for absolute confiscation of these goods without extending option to the importers to redeem the goods on payment of redemption fine and penalties. Having concluded that the imported goods are liable for confiscation but ordering absolute confiscation is not justified, we are left with the task of deciding what would be the appropriate redemption fine and penalty to be imposed on the importers. We adopt the same yardstick in arriving at the redemption fine and penalty and order that imported goods may be allowed for clearance on payment of redemption at 10% and penalty 5% of the re-assessed value, besides payment of applicable Customs duty. Imposition of penalty under Section 114AA of FA - HELD THAT:- The proprietor is not different from the proprietory firm. Since the importing firm already stands penalized under Section 112(a) of the Act, we find no requirement to impose separate penalty on the proprietor under Section 114AA. Hence, penalties imposed on the proprietors are set aside. Appeal disposed off.
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2019 (5) TMI 394
Valuation of imported goods - rejection of declared value - enhancement of transaction value - Absence of contemporaneous imports - challenge to assessment orders - HELD THAT:- Initially value has been enhanced by the adjudicating authority on the basis of the alert issued by DGOV Alert Circular No.14/2005 dated 16.12.2015. The said alert cannot be the basis to reject the transaction value, in the absence of any contemporaneous import of the similar or identical goods during the relevant time. Also, after rejecting the declared value, no order under Section 17 (5) of Customs Act has been passed by the adjudicating authority. Thus, the LME price cannot be the basis to enhance the declared price, in the absence of any contemporaneous value of the imported goods is available on record - the transaction value has been enhanced arbitrarily without any evidence on record. The declared value of the imported goods declared by the appellants cannot be accepted - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 393
Project import - Finalization of contract - finalization of assessment - HELD THAT:- The Appellant is required to file all the documents to complete the assessment initially made provisional - However, in the present case, from the records, it is found that the Appellant in October 1996 enclosed a report from M/s IPCL through their letter dt.10.10.1996 addressed to the Assistant Commissioner (Customs) in response to the communication from Assistant Commissioner dt.23.09.1996. Neither the Revenue nor the Assessee thereafter pursued the matter to make the assessment final till 2010. During the intervening period, M/s IPCL, a Public Sector Undertaking, was taken over by M/s Reliance Industries Ltd and therefore, the relevant documents establishing the receipt and utilization of cables could not be procured by the Appellant from the said Company. Since the evidences are produced subsequent to the order of the learned Commissioner (Appeals), the matter needs to be remanded to the Adjudicating authority to consider these evidences or any other evidences that could be procured and submitted during the course of de-novo proceeding to establish that the imported goods have been supplied and used in the project registered with the Department under Product Import Regulation, 1986 - appeal allowed by way of remand.
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2019 (5) TMI 392
Rate of duty - warehoused goods - Filing of Bill-of-Entry for goods on importation - Section 46 of CA - whether for home consumption or for warehousing, a Bill-of-Entry has to be filed only under Section 46 ibid? - HELD THAT:- From the conjoint reading of Section 14 and Section 46 of the Customs Act, 1962, it becomes clear that whether the Bill-of-Entry is filed for home consumption or for warehousing, the rate of exchange that would be applicable would be that which is in force on the date on which such Bill-of-Entry is presented. In case of warehousing, this would mean that the exchange rate at the Into-Bond stage in a Bill-of-Entry for warehousing filed under Section 46 ibid, will apply. There is also a provision in Section 59 (2) ibid., to permit the importer to execute a general bond on any such amount as the competent authority may approve, in respect of warehousing of goods to be imported within a specified period. For clearance of the warehoused goods for home consumption, the Bill-of-Entry required to be filed as per Section 68 (a) ibid will have to be done so by the transferee only. So also, the import duty, interest, fine and penalties that may be payable as per Section 68 (b) ibid would also be the liability of the transferee and not of the original owner of the goods. In this case, the appellant is the original owner of the goods and Shri. Ramesh Balasaheb Jagtap is the transferee. Hence, such import duty that is required to be calculated on the assessable value under Section 14 ibid is calculated with reference to the rate of exchange as in force on the date on which the Bill-of-Entry was filed under Section 46 (for Into-Bond warehousing). The rate of duty in case of goods cleared for a warehouse under Section 68 as per the provisions of Section 15 (b), will be that applicable on the date on which the Ex-Bond Bill-of-Entry for home consumption has been filed. The appellant cannot be saddled with the demand upheld in the impugned order - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 391
Finalization of provisional assessment - assessment of CVD - Revenue is in appeal on the ground that the importers are not entitled for the benefit of Sl.No.172A of the Notification No.12/2012-CE dt.17.03.2012 whereas the importers are in appeal on the ground that they were not given the benefit reduced CVD in terms of Notification No.1/2011-CE dt.1.03.2011 - HELD THAT:- There is no ambiguity in the notification which has been relied upon by the importers. It is case based on facts and test conducted on these imported goods and no contrary test report produced by the Revenue against the test report of CIPET and the Commissioner (Appeals) has rightly allowed the benefit of Sl.No.172A of the Notification No.12/2012-CE dt.17.03.2012 to the importers of the imported goods in question. Also earlier consignment imported by the importers, the benefit of notification was granted on the basis of test report given by the CIPET. Therefore, there is no infirmity in the impugned orders quo allowing to the importers the benefit of Sl.No.172A of the Notification No.12/2012-CE dt.17.03.2012. Therefore, the Revenue appeals have no merit and the same are dismissed. CENVAT Credit - inputs/input service - benefit of reduced duty to pay 2% - HELD THAT:- The said issue has not been examined by the Commissioner (Appeals). Therefore, for the said limited purpose, the appeals are remanded back to the Commissioner (Appeals) to decide the issue on the basis of records produced by the importers - Appeal allowed by way of remand.
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2019 (5) TMI 333
100% EOU - cut flowers cleared to domestic market pending the permission from development commissioner - violation of terms of the B-17 Bond - case of appellant is that the confirmation of demand is without authority of law as no Section of Custom Act or Central Excise Act, has been invoke while confirming demand of duty - time limitation - HELD THAT:- The SCN is issued in terms of the B-17 Bond executed by them with the customs authorities. We find that in terms of the Bond provisions of recovery of interest and penalty are available. Therefore the SCN or the Order is not vitiated by the non-mentioning the particular authority in the form of Section or Rule. Non-quoting or mis-quoting of the provisions of law will not make Show Cause Notice or adjudicating order invalid or illegal. The Appellants contention in this regards is not acceptable for the reason that the Show Cause Notice issued for enforcement of the conditions of Bond, the Show Cause Notice is not time barred. Imposition of penalty - HELD THAT:- The issue was about the interpretation of provisions of custom Act, Exim Policy and the notification issued thereof. Learned Commissioner has dropped substantial portion of the demand as per the directions of CESTAT and on the basis of permission granted by the Development Commissioner at a later date - penalty set aside. Appeal disposed off.
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2019 (5) TMI 332
Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The disputed duty involved in this cases is below the monetary limit of ₹ 10 lakhs which has been notified by the Government vide Circular No.390/Misc./163/2010-JC (17-12-2015) dated 17th December, 2015 and F.NO.390/Misc./116/2017-JC dated 04.04.2018 - the appeal is dismissed under Litigation Policy.
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Corporate Laws
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2019 (5) TMI 390
Alteration of Articles of Association - change of status of the Company from 'Public Limited Company' to 'Private Limited Company' - HELD THAT:- Having regard to the facts and circumstances of the above case and since all the requisite statutory compliances having been fulfilled, the conversion of the status of the Company from Public Limited to Private Limited as per Special Resolution passed at the EoGM on 16.03.2018 is hereby approved in the interest of the Company and such change of status of the Company shall not cause any prejudice either to the members of the creditors of the Petitioner Company. The Petitioner is hereby directed to file with the Registrar of Companies, Hyderabad, a certified copy of the order of this Bench in the prescribed e-form together with a printed copy of the altered Articles of Association as also with requisite fee within a period of 15 days in terms of the provision of Section (2) of Section 14 of the Companies Act, 2013, read with Rule 161 of NCLT Rules, 2016.
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Insolvency & Bankruptcy
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2019 (5) TMI 389
Initiation of Corporate Insolvency Resolution Process - corporate debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - It is alleged that the respondent corporate debtor had availed various credit facilities but failed to pay- its dues to the Applicant Bank - the objection of the respondent that bank has not acted in terms of circular and guidelines of RBI and determined the account as NPA illegally; cannot be a ground to reject the application preferred by financial creditors under Section 7 of the Code, there being default in payment of financial debt. HELD THAT:- In the present case the applicant bank had sanctioned and disbursed the loan amount recoverable with applicable interest by entering into loan agreements with the corporate debtor. The corporate debtor had borrowed the credit facility against payment of interest as agreed between the parties. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest - In that view of the matter not only the present claim comes within the purview of 'Financial Debt' but also the applicant can clearly be termed as 'Financial Creditor' so as to prefer the present application under Section 7 of the Code. In the facts it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. In terms of Section 7(5)(a) of the Code, the present application is admitted - Moratorium also declared.
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2019 (5) TMI 388
Initiation of Corporate Insolvency Resolution Process - corporate debtor - sub-section (1) of Section 60 of the Code - appointment of an Interim Resolution Professional - It is the case of the respondent that there is no Financial Debt as defined under Section 5(8) of the IBC, 2016 as there is no consideration for the time value of the money and that the Applicant has failed to prove the same. HELD THAT:- The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the Financial Creditor is delineated under Section 7 of the Code, wherein only Financial Creditor / Financial Creditors can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors - The expressions Financial Creditor and Financial debt have been defined in Section 5(7) and 5(8) of the Code and precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money. In the present case it is reiterated that the applicant had sanctioned and disbursed the loan amount from time to time recoverable with applicable interest by entering into loan agreements with the corporate debtor. The corporate debtor had borrowed the credit facilities against payment of interest as agreed between the parties. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest - In that view of the matter not only the present claim comes within the purview of Financial Debt but also the applicant can clearly be termed as Financial Creditor so as to prefer the present application under Section 7 of the Code. In terms of Section 7(5)(a) of the Code, the present application is admitted - moratorium in terms of Section 14 of the Code declared.
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2019 (5) TMI 387
Initiation of Corporate Insolvency Resolution Process - confirmation of resolution plan - change of voting as made by some of the members of the Committee of Creditors - Regulation 26 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 . HELD THAT:- Under sub-section (3) of Section 30, the Resolution Professional is required to present to the Committee of Creditors for its approval such Resolution Plans which confirm the conditions referred to in sub-section (2). It is the Committee of Creditors which fix the date of voting and may approve the Resolution Plan by vote of not less than 75% (now it is 66%) of voting shares of the Financial Creditors , after considering its viability and feasibility and such other requirements as may be specified by the Board - As per sub-section (5) of Section 30, the Resolution Applicant is required to attend the meeting of the Committee of Creditors in which the Resolution Plan of the Applicant is considered. The Committee of Creditors is required to notice the Resolution Plan to find out its viability and feasibility apart from the financial matrix and in appropriate cases may ask the Resolution Applicant to improve the plan. The date of approval for Resolution Plan is fixed by the Committee of Creditors . They may fix the date of voting and in appropriate case they may extend the period of voting. There is no provision that once a voting is made, after the final result, if it comes to the conclusion finally in absence of approval of the plan, the Corporate Debtor may be ordered for liquidation. It is always open to the Committee of Creditors to change their opinion. The Resolution Process took place within 270 days and the Committee of Creditors had the jurisdiction to change its opinion in favour of the Resolution Plan to make it a success and Regulation 26(2) being directory which also stands deleted - impugned order set aside - the Resolution Plan being in conformity with Section 30(2) warranted approval by the Adjudicating Authority. The case is remitted to the Adjudicating Authority, Mumbai Bench, Mumbai to approve the plan in terms of Section 31 of the Insolvency and Bankruptcy Code, 2016 with modification i.e. that the plan is to be implemented within the period of 12 years as offered by the Successful Resolution Applicant - Appeal allowed.
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2019 (5) TMI 386
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - what step should be taken by the Liquidator during the Liquidation - HELD THAT:- It is clear that during the liquidation process, step required to be taken for its revival and continuance of the Corporate Debtor by protecting the Corporate Debtor from its management and from a death by liquidation. As the liquidation so taken up under the I B Code , the arrangement of scheme should be in consonance with the statement and object of the I B Code . Meaning thereby, the scheme must ensure maximisation of the assets of the Corporate Debtor and balance the stakeholders such as, the Financial Creditors , Operational Creditors , Secured Creditors and Unsecured Creditors without any discrimination. Before approval of an arrangement or Scheme, the Adjudicating Authority (National Company Law Tribunal) should follow the same principle and should allow the Liquidator to constitute a Committee of Creditors for its opinion to find out whether the arrangement of Scheme is viable, feasible and having appropriate financial matrix. It will be open for the Adjudicating Authority as a Tribunal to approve the arrangement or Scheme in spite of some irrelevant objections as may be raised by one or other creditor or member keeping in mind the object of the Insolvency and Bankruptcy Code, 2016. The liquidator is required to act in terms of the aforesaid directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench. Appeal disposed off.
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2019 (5) TMI 385
Operational debt or not - Operational Creditor - occurrence of default - Whether Operational Creditor delivered Demand Notice on the Corporate Debtor? - Whether there is existence of dispute and record of pendency of suit or arbitration proceedings? - compliance of sub-sections (1) to (4) of Section 9 of the Code - HELD THAT:- In the case on hand, since the Petitioner has not given the name of IRP, this Adjudicating Authority is appointing Mr. Pinakin Surendra Shah who has shown his address at A-201, Siddhivinayak Towers, Behind DCP Office, Next to Kataria House, Markarba, S.G. Highway, Ahmedabad having Registration Number as IBBI/IPA-002/IP-N00106/2017-18/10248 as Interim Insolvency Resolution Professional under Section 13(1) of the Code. This Adjudicating Authority directs the Petitioner to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(l)(b) of the Code. In view of the commencement of the Insolvency Resolution process with the admission of this Petition and appointment of the Interim Insolvency Resolution Professional, this Adjudicating Authority hereby declares moratorium under Section 13(l)(a) - the supply of goods and essential services to the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central Government. Petition disposed off.
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2019 (5) TMI 384
Initiation of Corporate Insolvency Resolution Process - operational creditor - Form 5 as prescribed in Rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The respondent-corporate debtor continued assigning work to the petitioneroperational creditor under good faith and an understanding that the rates will be rationalized reasonably in the meantime. The Adjudicating Authority cannot go into the issue as to whether this defence is correct or it may or may not be ultimately accepted, but such questions have to be decided in a full trial before the Civil Court. Simply, because some of the invoices paid by the respondent cannot rule out the possibility of a dispute in respect of unpaid invoices where the dispute was raised way back on 03.01.2018, much before the sending of the demand notice under Section 8 of the Code. The present is thus, a case in which there was a pre-existing dispute even before the demand notice was sent. The instant petition is therefore, rejected.
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2019 (5) TMI 383
Initiation of Corporate Insolvency Resolution Process - financial creditor - default of payment of financial debt or not - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There is no dispute in default of payment of financial debt, the application has been filed in Form 1 as prescribed in Section 4(1) of the Rules. The petitioner, therefore, has complied with the requirements of sub-sections (1) and (2) of Section 7 of the Code. To comply with the requirement of Clause (b) of Section 7(3) of the Code the petitioner-financial creditor in Part-III of the application proposed the name of Mr. Arunava Sikdar a registered Resolution Professional to be appointed as Interim Resolution Professional in case the application is admitted. The Resolution Professional has furnished the written communication in Form 2 as prescribed in Rule 9(1) of the Rules, which is at Annexure 6. All the necessary particulars as required in the Form have been furnished. It is certified that there are no disciplinary proceedings pending against him with the IBBI or ICAI or Insolvency Professionals Agency. He is appointed as the Resolution Professional in one case but not acting as Interim Resolution Professional/Liquidator in any other proceedings. The petition is liable to be admitted in terms of Clause (i) of Section 9(5) of the Code - The petition, therefore, is admitted and moratorium declared in terms of sub-section (1) of Section 14 of the code.
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2019 (5) TMI 382
Initiation of Corporate Insolvency Resolution Process - admission of the petition - default in repayment of the amount - Section 7 of Insolvency and Bankruptcy Code, 2016, R/w Rule 4 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. HELD THAT:- The Financial Creditor had already invoked the shares pledged by the Corporate Debtor. This was done in the year 2015. The value of shares invoked is ₹ 161.14 crores. Maybe arbitration proceedings pending before the Arbitrator appointed in this connection by the Hon'ble High Court of Kolkata and the Petitioner has not obtained any order in its favour when it filed the present petition under Section 7 of IBC to the effect that Corporate Debtor was liable to pay under RLA. The Financial Creditor is unable to establish the alleged debt and also the default. Application dismissed.
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2019 (5) TMI 331
Initiation of Corporate Insolvency Resolution Process - financial creditor - default in discharging the financial debt - Section 7 of the Insolvency and Bankruptcy Code, 2016 - The Appellant and the Respondent entered into an agreement for construction of a residential building on a turnkey basis which was abandon - advance money was given in pursuant to agreement - Respondent retained the money received from the Appellant as loan and started paying interest - HELD THAT:- Respondent has not denied the transaction which initially related to execution of a construction project for which the Appellant had disbursed amount of ₹ 1.5 Crores as advance money but on the project becoming commercially unviable got transformed into a financial debt and was treated so. Payment of interest thereon, as admitted by the Respondent is compatible with this proposition and speaks of no exception. The money disbursed by the Appellant cannot be said to have been bestowed upon the Respondent as largesse nor as alms. It was disbursed in pursuance of an agreement in the nature of a financial transaction against consideration of time value of money as the building raised in pursuance of such agreement would fetch fortunes for the Appellant. The project however fell through on account of market considerations. If there were any doubt in the nature of transaction, same got cleared as even according to Respondent interest was paid on the advance money. There is no impediment in holding that the debt in question fell within the purview of financial debt and the Appellant s status was that of a financial creditor and not an operational creditor as erroneously held by the Adjudicating Authority. Once we hold that the Appellant was a financial creditor qua the Respondent Corporate Debtor and the application under Section 7 being in the prescribed format and not being defective was required to be admitted on proof of default, we find that the Respondent has failed to discharge onus of proof of discharge of debt. The impugned order holding the Appellant as operational creditor and declining to initiate Insolvency Resolution Process on account of pre-existence of dispute is unsustainable - Application admitted.
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2019 (5) TMI 330
Initiation of Corporate Insolvency Resolution Process - Financial Creditor - Section 7 of Insolvency and Bankruptcy Code - HELD THAT:- The Corporate Debtor did not dispute the existence of financial debt and its default by them. These are only two facts required to be seen by this Adjudicating Authority while admitting the CIRP under Section 7 of Insolvency and Bankruptcy Code. In this case, Corporate Debtor admitted both the facts. The Financial Creditor suggested name of Mr. Rajesh Kumar Agarwal for appointment of Interim Resolution Professional. There is nothing on record to show that Mr. Rajesh Kumar Agarwal is facing any disciplinary enquiry at present. Since the application filed by the Financial Creditor is defect free. The application filed by the Financial Creditor under section 7 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Divine Alloys Power Co. Ltd. is hereby admitted - moratorium and public announcement in accordance with Sections 13 and 15 of the IBC, 2016 declared.
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2019 (5) TMI 329
Initiation of Corporate Insolvency Resolution Process - default in repayment of amount as against the loans availed by the Corporate Debtor - Section 7 of the Insolvency Bankruptcy Code - HELD THAT:- In view of the reasons aforementioned and the material furnished by the Creditor Bank, the Tribunal observes that there is a debt due and payable by the Corporate Debtor and that a default has occurred which the Corporate Debtor was responsible to pay. Therefore, we are of the opinion that the Applicant Bank has established that the amount in default committed by the Corporate Debtor is a fact and it is supported by the documentary evidence placed before this Adjudicating Authority. It is a fit case for admission - moratorium declared.
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2019 (5) TMI 328
Initiation of Corporate Insolvency Resolution Process - corporate debtor - financial creditor - HELD THAT:- Section 7(5) of the Code provides for admission of the application where the Adjudicating Authority is satisfied that (a) a default has occurred; (b) the application under sub-section (2) of Section 7 is complete; (c) there is no disciplinary proceedings pending against the proposed Resolution Professional. In view of the satisfaction of the conditions provided for in Sections 7(5) of the Code, the petition for initiation of CIRP in the case of M/s Agri Best Limited is admitted - moratorium declared.
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Service Tax
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2019 (5) TMI 381
Condonation of delay of 684 days in filing the appeals - sufficient cause for not having filed the appeal or not - HELD THAT:- On a perusal of the affidavit filed in support of the petitions, it is seen that though the affidavit contains five paragraphs, three paragraphs are devoted to the merits of the matter and in paragraph 4, the petitioner has blamed his staff who were looking after the service tax matters. There is no explanation for the 684 days delay - Further more, the conduct of the petitioner in the proceedings before the Tribunal clearly precludes us from exercising any discretion in favour of the petitioner. Petition dismissed.
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2019 (5) TMI 380
Refund of accumulated input tax credit - export of services - Benefit of N/N. 14/2016-C.E.(N.T.) dated 01.03.2016 - effect of notification, whether retrospective or prospective? - HELD THAT:- Rule 5 of the Cenvat Credit Rules, 2004 permits the service provider for claim of refund of service tax paid on the input services used/utilized for exportation of the output service. In exercise of the powers conferred in the said statutory provisions, the Central Government had issued the Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012, prescribing the procedure, safeguards and limitations for allowing the Cenvat benefit. The said notification, vide paragraph 3(b) has prescribed that the application in prescribed form shall be filed by the claimant before expiry of the period specified in Section 11B of the Central Excise Act, 1944. The said statute has provided for a time limit of one year from the relevant date for lodgement of the refund claim application. Relevant date prescribed therein is in context with situations envisaged under the Central Excise statute, concerning the excisable goods. The issue with regard to the relevant date for consideration of refund of service tax on export of service was also considered by the Hon ble Andhra Pradesh High Court in the case of Hyundai Motors (I) Engineering (P) Ltd., [2016 (7) TMI 1346 - ANDHRA PRADESH HIGH COURT], holding that the period of limitation of one year should be computed from the date of FIRC. With regard to the submissions of Revenue that the Notification No. 14/2016-C.E. (N.T.) is prospective in nature and the benefit provided there-under is not applicable to the claims filed prior to such date, it is the settle principle of law that the beneficial amendment to the statute should be given effect to retrospectively. Denial of the refund benefit of service tax paid on Real Estate Agent Service - HELD THAT:- Such service was used by the respondent for obtaining office premises for rendering the output service, which were exported by them. Since, nexus between the input and output services were established, such disputed service should qualify as input service for the purpose of taking of Cenvat Credit and subsequent refund thereof. Further, the correctness of availment of Cenvat Credit at the stage of filing of refund claim cannot be questioned, since the statute deals with the situation differently. Rebate claim - time limitation - Notification No. 11/2005-ST dated 19.04.2005 - HELD THAT:- It is an admitted fact on record that the respondent had complied with the conditions and the procedures laid down under the said notification - With regard to the period of limitation for filing of rebate claim, the issue is no longer res integra in view of Larger Bench decision in the case of Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE]. Though, the judgment was delivered in context with refund of service tax under Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012, but the concept of relevant date considered therein should equally be applicable to the case of rebate claims. Rebate claim - input service - works contract service used by them for repair and maintenance of UPS system, PAC units and air conditioners installed within the office premises and used in providing the exported output service - HELD THAT:- In the present case, since the services were used for the purpose of maintenance and repair of UPS systems and air conditioners and not for construction of any civil structure, such works contract service, in our considered view, should merit consideration as input service for the purpose of the benefit of refund/rebate claim. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 379
Non-payment of service tax - service tax/cess during September 2010 to January 2011 recovered but not deposited in the Government Account on due dates - suppression of facts - applicability of Section 73(3) of the Finance Act - HELD THAT:- Appellant has collected the service tax and has not paid the same into the Government Treasury and which was detected during the audit thereafter the appellant paid the entire service tax of ₹ 21,10,421/- and interest of ₹ 54,911/- and the same was appropriated. The appellant is not entitled to the benefit of Section 73(3) of the Finance Act because he has collected the service tax and has not paid and therefore the suppression on his part is proved. Penalty upheld - appeal dismissed - decided against appellant.
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2019 (5) TMI 378
Modification in remand order - case of appellant is that the remand order of the first appellate authority may be modified to the extent that all issues may be left free for the original authority to decide including the penalty therein - HELD THAT:- The events have moved further after the appellant filed this appeal and the impugned order was followed by a Denovo adjudication order by the lower authority. Ld. Consultant submits that they propose to appeal against the Denovo adjudication order before the first appellate authority but have not done so yet. They still have time to file an appeal. There is no reason to set aside the impugned order of the first appellate authority. This Bench cannot take a decision on whether the first appellate authority is correct in upholding the penalty or otherwise, without deciding on the merits of the case itself. Since the entire demand has now been confirmed in the Denovo adjudication order and is likely to be appealed before the first appellate authority, the matter can be decided at his level. The appeal filed by the appellant is dismissed as infructuous.
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2019 (5) TMI 377
Brand Promotion services - tripartite agreement - Indian Premiere League Playing Contract - tripartite agreement between the Board of Control for Cricket in India (BCCI), franchisee and the assessee the terms and conditions of which are common in respect of all the players/assessees except the remuneration - existence of employer-employee relationship or not - change of opinion - the service subsequently sought to be taxable under Business Support services - HELD THAT:- The employer-employee relationship cannot be disputed and that therefore, the decision in the case of SOURAV GANGULY VERSUS UNION OF INDIA OTHERS [ 2016 (7) TMI 237 - CALCUTTA HIGH COURT] relied on by the Ld. Consultant for the assessees which decision has been followed in SHRI KARN SHARMA VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., MEERUT-L [ 2018 (4) TMI 111 - CESTAT ALLAHABAD] , COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, GOA VERSUS SHRI. SWAPNIL ASNODKAR [ 2018 (1) TMI 266 - CESTAT MUMBAI] is squarely applicable to the present case also. A set of services alleged to be falling under BSS by the Revenue is also held to be covered under another set of services namely Brand Promotion Services. Admittedly, the brand promotion service was introduced w.e.f. 01.07.2010 and as observed as having been argued by the Ld. DR in paragraph-6 above of this order, cannot be made use to fit into another service ie., the categorization of the same set of activities under two different services for two different periods is not permissible. Having taxed under BSS, the Revenue should not have changed its stands for a different period when there is no change in the nature of services alleged. The decision of the Hon ble Kolkata High Court in the case of SOURAV GANGULY VERSUS UNION OF INDIA OTHERS [ 2016 (7) TMI 237 - CALCUTTA HIGH COURT] is required to be followed, there exists employer-employee relationship, the players are paid remuneration and therefore, there is no service which is liable to be brought under the tax net for both the periods under the alleged heads - there cannot be liability under BPS and consequently, the assessee s appeals are required to be allowed and the same are allowed. Working of the taxable value where the Revenue sought to include, for the year 2011-12, the prize money - HELD THAT:- It is not disputed by the Revenue that the prize money was not given by its franchisee, it s rather the money received from BCCI directly for winning and not towards any services - the prize money could never be included in the taxable value - But, however, since there was no service at all, the above question is just academic. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 376
Commercial or Industrial Construction Service - Works Contract Service for construction of railway sidings/tracks - composite contracts - demand of service tax - period from October 2004 to June 2007 - demand of interest on amount collected as service tax but not deposited - HELD THAT:- The execution of works in respect of roads, Airports, Railways, Transport Terminals, bridges, tunnels, dams and ports are excluded from the purview of levy of the said category of service. The department relies upon the definition of Railways contained in Section 2(31) of the Railways Act 1989. It has to be mentioned that the definition of the services in Section 65(25b) or Section 65(105)(zzzza) does not make any differentiation between a Government railway or a non government railway. These sections merely uses the word railways . The Railways Act defines government railway under section 2(20). Government railway means a railway owned by the Central Government . Section 2(25) of the Act defines a non-governmental railway . It means a railway other than a Government railway. The definition of Commercial or Industrial Construction Service and Works Contract Service contained in Section 65(25b) or Section 65(105)(zzzza) does not state that only these airports, railways, bridges, tunnels owned by government are excluded. In the case of INTERNATIONAL METRO CIVIL CONTRACTORS VERSUS C.S.T. -SERVICE TAX - DELHI [ 2018 (9) TMI 1073 - CESTAT NEW DELHI] , the Tribunal has observed that the works of civil engineering contraction, mechanical and electrical installation, tunnel ventilation and station air conditioning etc. had been in relation to the construction of Delhi Metro Rail Corporation, was not liable to tax. The Tribunal in various decisions has held that Section 65(25b) or Section 65(105)(zzzza) of the Finance Act, 1994 does not use the word railways for public carriage or that the railways should be government railways. The definition uses the words railways only. Therefore, the execution cannot be restricted to the government railways which are used for public transport of passengers or goods. The demand of service tax under Commercial or Industrial Construction Service or Works Contract Service for the period from October 2004 to June 2007 and August 2007 to October 2009 respectively for construction of railway sidings/tracks cannot sustain and require to be set aside. Demand of Interest - HELD THAT:- Section 73B does not provide for demand of interest in case of any amount collected which is not required to be collected as service tax from any other person as provided in sub clause (2) of Section 73B - the demand of interest in respect of the amounts collected under Commercial or Industrial Construction Service/Works Contract Service and Site Formation and Clearance Service cannot sustain and require to be set aside. Imposition of penalty - HELD THAT:- The appellant has put forward the reasonable cause for failure to pay service tax - it is a fit case to invoke Section 80 of the Act ibid - penalties set aside. Appeal allowed in part.
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2019 (5) TMI 375
Valuation - Maintenance or Repair Services - inclusion of after-sales warranty expenses in assessable value - whether the activity carried out by the appellants herein will be in the nature of a service transaction which would be exigible to service tax under the Finance Act, 1994 or otherwise? - HELD THAT:- It is definitely not the case that the appellants are facilitating procurement of inputs for enabling the assembly of desktop PCs by M/s. HP India. So also, the appellant is not providing any after-sale service for repair or maintenance of HP products. That responsibility has been given to Redington India as per the agreement between HP and Redington. M/s. Foxteq (appellants herein) will invoice HP by the first week of every month for the services performed (and accepted by HP) during the previous month unless a different schedule is expressly stated in Exhibit-B. Thus, it is clear that the appellant is raising invoices each time only when goods are supplied to Redington on behalf of HP. It is also mandated that if VAT is payable by HP, then such amount payable shall clearly be indicated in Foxteq s invoice to HP and further, that the appellant must not invoice HP for any other taxes. The payment by HP to appellant is also made on receipt of the invoices. The decision of the adjudicating authorities holding that the impugned activities of the appellant would fall within the mischief of Section 65(19)(iv) of the Finance Act, 1994 and that they would be required to discharge service tax liability under that category on the value of the amounts received thereon, cannot be sustained. Appeal disposed off.
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2019 (5) TMI 374
Short payment of service tax - Erection, Commissioning and installation service - service of Erection of Foundation of Tower and Commissioning and Installation of BTS of Mobile Towers for M/s. Nokia India Pvt. Ltd. and M/s. Ericsson India Pvt. Ltd. - HELD THAT:- The Supreme Court in Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT ] examined whether service tax can be levied on indivisible works contract prior to the introduction of work contract service on 1 June 2007 by the Finance Act 2007 that expressly makes such contracts liable to service tax - In paragraph 17 of the judgment, the Supreme Court observed that the assessees were correct in their submission that the works contract is a separate species of contract distinct from contracts for services simpliciter recognised by the world of commerce and law as such, and has to be taxed separately as such . The Supreme Court ultimately held that prior to 01 June 2007 there was no charging section specifically levying the service tax only on works contract and prior to this date, service tax could be levied only on contracts simpliciter and not composite indivisible works contract. It is clear from the agreements entered into between the appellant and M/s. Nokia India Pvt. Ltd. and M/s. Ericson India Pvt. Ltd. that the contracts were indivisible works contract - In view of the decision of the Supreme Court, no levy of service tax could, therefore, be imposed prior to 1 June 2007. The appellant could not have been asked to discharge the service tax liability as no service tax could be levied on Works Contract Service prior to 1 June 2007. Service tax collected but not paid - HELD THAT:- Section 73 A of the Finance Act which came into effect from 18 April 2006, provides a complete answer to this issue. Section 73 A deals with service tax collected from any person to be deposited with Central Government. While sub section (1) deals with service tax collected in excess of the service tax assessed or determined, sub section (2) deals with any person who has collected any amount which is not required to be collected from any other person, in any manner as representing service tax. Sub section (2) in such a situation would be applicable. Such a person is required to forthwith pay the amount so collected to the credit of the Central Government - Section 73 B deals with interest on amount collected in excess. The present is, therefore, clearly a case where the appellant had collected service tax which it was not required to collect in law . The appellant, therefore has to forthwith pay the amount so collected to the credit of the Central Government. Recovery of interest under sub-section (3) of the Section 73A - HELD THAT:- The department could not have issued a notice under section 73 A of the Act as it is by this order that the Tribunal is holding that the appellant was not required to collect any service tax in law during the relevant period. We, therefore, leave it open to the Revenue to now proceed, if it so decides in accordance with the provisions of 73A and B of the Finance Act by issuing a notice under sub section (2) of 73 A of the Act. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 373
Time Limitation - Non-payment of service tax - Stall charges - events conducted abroad claiming export of services and media charges - penalty u/s 77 and 78 of FA - HELD THAT:- From the facts on record, it is very much evident that the allegations of short payment of service tax was brought up against the respondents after audit and verification of Profit and Loss Account and Trial Balance. The difference between the taxable value shown in the ST-3 returns filed for the period 2003-04 to 2007-08 and the P L account was alleged to be suppressed and non declared value and hence the tax liability of ₹ 39,04,099/- was proposed thereon and, which was confirmed by the adjudicating authority with interest thereon - even before the adjudication stage, the respondent has been contending that no tax is required to be paid both on stall charges and export services. It is not the allegation that assessee had not filed ST-3 returns. There are no justifiable reasons or grounds to allege suppression or fraud etc. with intention to evade payment of tax on the part of the assessee. Even as early as 23.09.2004, assessee had submitted a letter addressed to the department wherein they had informed the scope of nature of their activities - the Commissioner (Appeals) is correct in ordering that the extended period of limitation cannot be invoked in this case and that the SCN will only be valid for the normal period of limitation. Media charges - HELD THAT:- The Commissioner (Appeals) has correctly concluded that services rendered by the assessee under Section 65(105) (zzzm) ibid, namely services provided in relation to sale of space for advertisement in print media are exempted from paying service tax as per provisions of law during disputed period. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 372
CENVAT Credit - inputs/capital goods/input services - construction and later maintenance of the mall during the period October, 2007 to March, 2012 - Time limitation - HELD THAT:- CENVAT Credit is admissible to the appellant on the duty paid on capital goods and service tax paid on input services used in the setting up of the new premises i.e. the Mall which is later provided on rent and service tax has been paid on Renting of Immovable Property Service and the input services used in providing the said output services. The demand is also not sustainable being barred by limitation as the details of availing of the Cenvat Credit of the duty paid on Capital goods and service tax paid on input services used in setting up of the Mall and used for providing the output service has been intimated to the department in April 2010. Appeal succeeds both on merit and limitation
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2019 (5) TMI 371
Non-payment/ short-payment of service tax - construction of residential and commercial complex services - composite contract. Demands made under category of CICS / CCS - HELD THAT:- The demands in these impugned orders which relate to composite contract will not be liable to service tax prior to 1.6.2007 by virtue of the Apex Court judgement in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] and even for the period post-1.6.2017 as held in REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] - demand do not sustain. Demand made under MMRS - HELD THAT:- The amount received from buyers which would be passed on to the owner s association formed, will not be consideration for any service - demand do not sustain. Demand made under RIPS - Period Post-01.06.2007 (June 2007 to March 2008) - HELD THAT:- Matter remanded to the original authority to substantiate their claim that they are entitled to avail cenvat credit of service tax paid by the owners of the property. Demands made under CICS / CCS - Period Post-01.06.2007 - HELD THAT:- The demands relating to composite works contract along with interest for the period 2008-09 cannot sustain in view of this Bench decision in REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] and same will require to be set aside - Although there is an allegation that appellants have wrongly adjusted excess service tax paid, it has been clarified by the appellants that they have not adjusted any excess service tax paid by them, rather, they have not paid service tax on the amounts received during the period from May 2008 to March 2009 as these amounts have been appropriated towards cost of the land sold - The allegation of the department that irregular adjustment has been done by the appellants fails to convince us. Demands made under CICS / CCS - denial of abatement on the ground that the appellant had availed cenvat credit - HELD THAT:- The demands relating to composite works contract along with interest for the period 2009-10 to 2011-2012 cannot sustain in view of this Bench decision in REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] and same will require to be set aside. Demand relating to composite works contract along with interest - HELD THAT:- The aforesaid demands relating to composite works contract along with interest for the period 10.09.2004 to 30.04.2007 cannot sustain in view of this Bench decision in REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] and same will require to be set aside. Demand ₹ 24,09,527/- with interest under MMRS on the amount collected as corpus fund - Period April 2007 - HELD THAT:- Such amount received from buyers which would be passed on to the owner s association formed, will not be consideration for any service - demand do not sustain. Appeals disposed off.
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Central Excise
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2019 (5) TMI 370
CENVAT Credit - input services - services used in the manufacture of electricity generation plant situated far off from the manufacturing unit building - extended period of limitation - HELD THAT:- This issue is settled in favour of the assessee by various decisions of the Tribunal - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VERSUS ENDURANCE TECHNOLOGY PVT LTD [ 2015 (6) TMI 82 - BOMBAY HIGH COURT] - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 369
Clandestine manufacture and removal - tangible evidence or not - demand based on mere inferences or unwarranted assumptions - HELD THAT:- Needless to say, a precise enumeration of all situations in which one could hold with certainty that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In the absence of any linkage of the factory of appellants, with the alleged Railway Receipts or third party private records or with third party statements, there are no grounds to presume any manufacture and clandestine removal of such huge quantities of cigarettes, especially when appellants operated under physical control of the department. The impugned order is liable to be set-aside on this ground alone. The demanded duty has been quantified by considering each Bag/ package/ bundle mentioned under an RR to be containing 2 cartons, each carton containing 48 Outers of 25 Packs of 10 cigarettes each. The duty which is levied on the concept of manufacture cannot be demanded on any presumptions and assumptions. It is on record that certain RRs, otherwise similar, were discarded as the same pertained to a period prior to commencement of production in LTCPL. This indicates to a vague criteria adopted for selection of evidences on the basis of which whole case is constructed. While going through the extracts of the diary recovered from the railway parcel agents, it can be seen that such diaries are not containing the name of LTCPL or any of its employee. There is no co-relation of the entries made in the diary with the RRs and allegedly manufactured quantities of Cigarettes. The RRs received from railways (LTCPL is not the consignor) was made the main basis to demand duty. The contents of consignments mentioned in RRs are PVC Bundles, Packaging Material, etc. It is alleged to be incorrect but the actual contents of the said parcel were not proved to be cigarettes through any direct evidence of seizure of parcels. Therefore, the Railway receipts cannot be the basis to make the case of clandestine removal of goods. Therefore, the said evidence is not admissible. Apart from lack of specific instances, dates, and quantifications, etc. the said statement(s) referring the managers of the factory is not corroborated with other cognate and admissible evidences. We note that there is a lack of investigation for tracing the managers of the factory -Shri Mohammed Hashmi or Shri Rijwan Khan for recording of their evidences though they have been made a noticee in the matter. There is no evidence to corroborate purchase or consumption of raw materials and there are no investigations of the other factory staff to corroborate the facts of alleged manufacture of goods and clearance - such statement cannot be made a sole basis to confirm charge of clandestine manufacture and clearance of alleged huge quantities of cigarettes, calculated on a presumptive basis. There is no evidence to establish manufacture and clandestine removal of alleged quantities by LTCPL on the basis of which demand of ₹ 657,50,888/- could sustain - demand set aside - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 368
CENVAT Credit - duty paying documents - credit availed on the basis of debit notes issued by their agent M/s K.R. Sons Pvt. Ltd. - credit availed on the basis of debit notes issued by M/s East India Petroleum Limited. - credit availed on the basis of the documents issued by M/s BEEKAY Corporation, M/s S J Polymers and M/s M M Polymers. HELD THAT:- There is no doubt that these invoices pertain to them although they were raised in the name of M/s K R Sons since each invoice also mention their name. He produces the sample of each of the invoice raised by M/s Visakhapatnam Port Trust at the Port and the declaration given by M/s K R Sons. Based on these documents, I find the documents match. The sample invoices and documents produced do not take care of the entire amount of credit in dispute. This is a fit case to be remanded back to the original authority to examine the issue - appeal allowed by way of remand.
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2019 (5) TMI 367
Clearance of M.S. pipes used for supply of water from Narmada rivers to various water treatment plants and from the said water treatment plants to storage facility - benefit of N/N. 6/2002-CE, dt.01.03.2002 and N/N. 8/2004-CE - Benefit of notification denied since the pipes were used beyond the first storage facility - HELD THAT:- The issue decided in the case of COMMISSIONER VERSUS ELCTROSTEEL CASTING LTD. [ 2008 (10) TMI 424 - CESTAT, KOLKATA] and confirmed by Apex Court in [2009 (8) TMI 1123 - SC ORDER], where it was held that the benefit cannot be denied on this ground - appeal allowed - decided in favor of appellant
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2019 (5) TMI 366
Area Based Exemption - extension of the unit or not - change of the ownership of the unit - benefit of N/N. 50/2003-CE dated 10.06.2003 - HELD THAT:- It is a fact on record that M/s SMI has stopped their production and the registration was surrendered on 17.06.2004. It is also a fact on record that the respondent purchased the machinery from M/s SMI. Although 71% shares have been held by the proprietor of M/s SMI, that does not mean the proprietor of M/s SMI and the respondent are one and same thing. In fact, the respondent is a private limited company and a director and company are two separate legal entities; therefore, it cannot be said that the respondent is an extension of M/s SMI. Moreover, the respondent had applied to the Department of Industries and commencement of commercial production certificate has already been issued to them, which shows that the respondent is a new industrial unit and qualifies the conditions of the notification 50/2003-CE dt. 10.06.2003 to avail the benefit of exemption notification. Benefit of notification rightly allowed - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2019 (5) TMI 365
Maintainability of petition - availability of alternative statutory remedy of appeal - Validity of assessment order - HELD THAT:- The petitioner is threatened with coercive recovery of the entire tax demand, in view of the fact that after the order of assessment is passed, the petitioner applied for rectification before the same Authority, such rectification application was decided sometime later. Though substantial relief was granted to the petitioner, the same does not fully satisfied the petitioner. It would be open for the petitioner to file appeal before the Appellate Authority. If the petitioner files such appeal latest by 31.5.2019, the same shall be entertained on merits - Petition disposed off.
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2019 (5) TMI 364
Attachment of Bank Accounts - whether the expression, Government revenue would include penalty which the dealer may or may not become liable to pay at a subsequent date? - HELD THAT:- The court is of the view that the matter requires consideration. Issue Rule returnable on 17th July, 2019.
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2019 (5) TMI 363
Interpretation of statute - scope of the term 'Undertakings' - Licensee - whether the authorities have been justified in holding that the DISCOMs., viz BSES, BSES (Y), NDPL and Transco to whom the assessees had made sales were not undertakings supplying electricity? HELD THAT:- The Delhi Vidyut Board (DVB) was deemed to be a licensee under the 1910 Act. This is because the Delhi Electricity Control Order ( DECO ) of 1959 was framed under provision of section 22 B of 1910 Act read with notification of Central Government dated 10.11.1959 to regulate transmission, distribution and utilisation of electricity and for maintaining the supply and securing equitable distribution of energy by all concerned in the Union Territory of Delhi. When functions to deal with electricity were delegated to Municipal Corporation of Delhi (MCD) under the Delhi Municipal Corporation Act 1957 as licensee, the Delhi Electricity Supply Undertaking (DESU) was functioning as undertaking of MCD and no Board was in existence. In the DERC Rules, Board was defined to mean DVB constituted under Section 5 of the Supply Act; Rule 2(f) defined DISCOMs to mean as companies with the principal object of engaging in the business of distribution and supply of electricity in the area as specified in Part II of Schedule H. Transferee was been defined in Rule 2(r) to mean GENCO , TRANSCO , DISCOMS and PPCL , in whom the undertaking or undertakings or the assets, liabilities, proceedings and personnel of the DVB stood transferred. The said DISCOMs (M/s NDPL, M/s BSES Rajdhani Power Limited, BSES Yamuna Power Ltd etc) distributed electricity in Delhi during the relevant period and Delhi Transco Ltd. transmitted electricity in Delhi during the relevant period. Therefore, they were licensees or at least deemed to be licensees under the 1910 Act. A conjoint reading of the provisions shows that the Supply Act did not repeal the 1910 Act; instead it stipulated that the provisions of the Supply Act were in addition to and not in derogation of the 1910 Act. Therefore, the deeming provisions of the 1910Act continued to be in force during even under the provisions of the2000 Act which remained in force. It is also a fact that the Electricity Act 2003 replaced the Indian Electricity Act, 1910, after 10th June, 2003; the DISCOMs were licensees under Electricity Act, 1910 and these licenses were never withdrawn even after coming into force of the said 2003 Act - From the reading of Rule 11(XII) it can be seen that a dealer is entitled to deduct the turnover of sales made by him to any undertaking supplying electrical energy to the public in Delhi under a license or sanction granted or deemed to have been granted under the Supply Act. Unlike an exemption granted through a notification, the effect of the rule is to exclude a species of transaction from calculation of taxable turnover. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 362
Compliance with the pe-deposit for maintainability of appeal - HELD THAT:- The appellant was required to pre-deposit 25% amount of the additional demand of tax liability as directed by the DETC(A) and the Tribunal as a condition precedent for hearing of the appeal, which was reasonable and justified - No illegality or perversity could be pointed out by the learned counsel for the appellant in the findings recorded by the Tribunal which may warrant interference by this Court. No question of law arises in the appeals. Appeal dismissed.
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2019 (5) TMI 361
Classification of goods - Himani Boroplus Antiseptic Cream - Himani Navratna Oil - Himani Boroplus Prickly Heat Powder - Himani Gold Turmeric Cream - Himani Nirog Dant Powder Lal - whether the above products manufactured and sold by the applicant company are classifiable under the Entry relating to 'Drugs and Medicines' i.e. Entry 11 Part IV of Schedule II? HELD THAT:- The classification of the products under the statute cannot be read into other statute. Each statute has to be interpreted on the basis of provisions contained therein and therefore, once M.P. Commercial Tax Act includes the articles manufactured by the applicant under Schedule II Part III at Entry No.41 and 49, the question of treating them under Schedule II Part IV Entry 11 does not arise. Entry 41 and Entry 49 include the products manufactured by the present applicant and the rate of tax is 12%. As the products manufactured by the present applicant falls under the specific entry under the schedule, the question of taking aid of the Central Excise Tariff Act, 1985 does not arise in light of the judgment delivered by the Division Bench of this Court in the case of State of M.P. Vs. Vicco Products (Bombay) [ [2017 (5) TMI 376 - MADHYA PRADESH HIGH COURT] ] and therefore, this Court is of the opinion that the products manufactured by the applicant company as it falls in Schedule II Part III at Entry No.41 and 49, tax has to be levied at 12% as it does not fall under Schedule II Part IV at Entry 11, the duty is certainly not at all levied at 8%. Reference answered.
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