TMI Tax Updates - e-Newsletter
June 2, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of supply - Activity of Printing content supplied by the customers on photographic paper - Activity is in the nature of supply of service - classifiable under SAC 9989 and taxable at 12% - AAR
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Income Tax:
PE in India or not - Reseller Agreement does not create a principal-agent relationship between the Applicant and the Reseller - their relationship is on a principal-to-principal basis - applicant does not create a Permanent Establishment in India. - AAR
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Income Tax:
TDS liability u/s 195 - Income accrued in India - fees for technical services - thus Solutions provided by the Applicant without human intervention cannot be treated as provision of technical services - AAR
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Income Tax:
Penalty u/s 271C - delay in depositing TDS - there was reasonable cause on part of assessee for the default in remittance of tax deducted at source into the Government account on time - No penalty - AT
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Income Tax:
Valuation of closing stock of land - change in method of valuation - land under litigation/encroachment - cannot be valued at the cost or prevailing market price, rather its value would be very less due to defects and deficiency of not available to the assessee for immediate use neither be valued at nil - thus value is to be determined on the basis of the actual status - AT
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Customs:
Jurisdiction of the officer of DRI to issue show cause notice - whether or not officers of the DRI could have issued show cause notice? - HC directed the tribunal to adjudicate the matter on merit without being influenced by the decision in the case of Mangali Impex.
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Customs:
An offence under FEMA does not automatically result in invocation of provisions of customs Act. Thus the Act of buying and selling of foreign exchange in violation of FEMA, 1999, rules, regulation and guidelines issued under FEMA is not by itself sufficient to invoke charges under Customs Act.
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Customs:
Grant of registration for the project - Classification - custom duty demand - Project import - Since the project is classifiable as ‘Water Supply Project’ the benefit of the notification 14/2004-Cus will also be available.
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Customs:
Import of Human Hair - exemption from duty - If the intended purposes of these notifications, including the prescribed value addition etc. is complied with and there are no allegations of misuse or diversion of the imported goods, the larger substantive benefits of the notification should not be denied for a procedural requirement. - AT
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Customs:
Eligibility for exemption - Import of Asphalt Hot Mixing Plant - electronically controlled plant or electrically controlled plant - the departmental panel is not the authorised technical expert to conduct the test of the plant - report of the departmental panel cannot be accepted - benefit of exemption allowed. - AT
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Customs:
Failure to obtain import-export code (IEC Code) - there being no bar on imports of personal effects against bill of entry and without separate code, there is no flaw in the procedure for import. - AT
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Customs:
Grant of registration for the project - project relating to Water Supply project - The Project can be registered under the regulation by the Appellants even if the appellants are not a direct party to import contract. - AT
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Customs:
Classification of project - Difference between irrigation project and water supply project - movement and lifting of water from one point to another cannot be called an irrigation project but it can only be called a Water Supply project in that sense - AT
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Service Tax:
Rectification of mistake - scope of SCN - Tribunal allowed the ROM application and set aside the demand beyond the normal period of limitation wherein demand was confirmed for the entire period in the original order.
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Central Excise:
The expression 'twelve calendar months' would encompass exactly twelve months with any part of month computed as a month. Such expression cannot extend to 365 days which is used for reckoning term of one year.
Notifications
News
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GST revenue collection for May 2018
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India Signs Mutual Recognition Agreement (MRA) in Nursing with Singapore
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Integrated Logistics Division being created to facilitate exporters: Commerce Secretary
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Monthly Review of Union Government of India for the month of April 2018 for the Financial Year 2018-19
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Accounts of the Union Government of India (Provisional/Unaudited) for the Financial Year 2017-18
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New Technologies needed to solve Sanitation and Solid Waste Management issues in India : Shri Bindeshwar Pathak
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Income Tax Informants Reward Scheme, 2018
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Benami Transactions Informants Reward Scheme, 2018
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RBI Reference Rate for US $
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CCI decides two more Lesser Penalty cases relating to tenders of Pune Municipal Corporation
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver notified
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Two Day Thematic Seminar on ‘Water and Sanitation’ in a run-up to 3rd Annual Meeting of Asian Infrastructure Investment Bank (AIIB) begins in Pune , Maharashtra ; Experts call for a holistic and integrated approach on Water and Sanitation Management
Case Laws:
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GST
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2018 (6) TMI 38
Classification of supply - Activity of Printing content supplied by the customers on photographic paper - whether it is supply of goods or service and whether the activity carried out by the Applicant is taxable under HSN 4911 or SAC 9989? - Held that:- Supply of printed pictures and photographs and similar items, reproduced with the aid of computer or any other device, is classifiable under Heading 4911 of the First Schedule of the Custom Tariff Act, 1975 which is aligned to the GST Act for the purpose of classification. The photo prints supplied by them to their customers are not marketable commodities in the open market and as goods they have no value to persons other than the specific customer who provides the input content. Hence, it is clear that, the printed material have no value as independent goods - The Applicant, therefore, cannot be said to be supplying goods classifiable under heading 4911 of the Tariff Act. Ruling:- The activity carried out by the Applicant “printing of photographs from media” is classifiable under SAC 9989 and taxable at 12% under Serial No. 27 (i) of N/N. 11/2017 – Central Tax (Rate) dated 28/06/2017 (1135 – FT dated 26/06/2017 of the State Tax), as stood amended vide N/N. 31/2017 – Central Tax (Rate) dated 13/10/2017 (1795 – FT dated 13/10/2017 of the State Tax).
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Income Tax
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2018 (6) TMI 37
TDS liability u/s 195 - Income accrued in India - fees for technical services - whether payments made on account of resell agreement are fees for technical services or royalty under India-US Treaty - DTAA - human intervention in providing technical services - withholding of tax - Held that:- On the issue of human intervention in providing technical services, we agree with the principle held in Bharti Cellular Limited [2008 (10) TMI 321 - DELHI HIGH COURT] as also upheld by the Apex Court [2010 (8) TMI 332 - SUPREME COURT OF INDIA] that a human element is a pre-requisite for characterizing a service as a technical service and consequently treating payments for the same as fees for technical services. The Solutions provided by the Applicant without human intervention cannot be treated as provision of technical services. What is important to consider is whether there is any human intervention while rendering of ‘Solutions’ and not in providing customer support or training. The Solutions are independently provided by the use of technology and that too, sophisticated technology which operates on an automatic and continuous basis. That does not mean that the Applicant, which operates on such facilities, is rendering any technical services as contemplated in the definition of the term FTS. - thus Solutions provided by the Applicant without human intervention cannot be treated as provision of technical services. In view of the above, the payments received by the Applicant from Akamai India for content delivery solutions are held to be outside the scope of ‘fees for technical services’ within the meaning Explanation 2 to clause (vii) of section 9(1) of the Act. Taxability under the India-USA DTAA - Held that:- Solutions provided by the Applicant to the customers only enable faster content delivery of the customer’s website, etc. to the end users - thus consideration received by the Applicant from Akamai India cannot be considered to be in the nature of fees for technical services as referred to in Article 12 of the India-US DTAA. Whether the payments made are royalty in nature? - Held that:- Since the equipment is used by the Applicant itself or to provide Solutions to Akamai India which are re-sold to the India customers, and Akamai India / Indian customers are not granted any right to use any equipment, the transaction is not covered under the definition of royalty - thus when payments under Reseller Agreement are not towards any IPR/Trademarks, it cannot be covered within the definition of royalty for the purpose of taxability. Whether the applicant have PE in India - Held that:- Reseller Agreement does not create a principal-agent relationship between the Applicant and the Reseller - their relationship is on a principal-to-principal basis. Hence none of the conditions enumerated in Article 5(4) are satisfied - applicant does not create a Permanent Establishment in India. Since no income arises in the hands of the Applicant in India, there is no requirement to withhold tax u/s 195 of the Act - Decided in favor of assessee.
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2018 (6) TMI 36
TPA - arm’s length price adjustment in respect of royalty payment - as per tribunal no necessity for benchmarking in respect of royalty transactions - Held that:- It is apparent from the impugned order that there is no discussion as regards the applicability or otherwise of the decision in case of Sony Ericsson Mobile Communications India Pvt. Ltd. (2015 (3) TMI 580 - DELHI HIGH COURT) while deciding the question of separately bench marking royalty where royalty paid was already a part of the operating cost. Further, there is strength in the assertion of the appellant as regards non-hearing on the grounds raised in the memorandum of appeal which is apparent on a bare perusal of the impugned order.- thus the matter is set aside and fit case to be remanded with a direction to decide afresh.
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2018 (6) TMI 35
Reopening of the assessment u/s 147 - change of opinion - unexplained investment - Held that:- Assessment was completed under Section 143(3) based upon the valuation report of an approved valuer - inspection have been conducted after 7 years of assessmen by the Departmental valuer and difference in value of unexplained investments was found - since the report given by the Departmental valuer is only an estimate and based on such estimation, there cannot be any reopening and if the same is permitted, it would amount to a clear case of change of opinion - case is dismissed - Decided in favor of assessee.
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2018 (6) TMI 34
Stay on recovery of demand - disallowance of entire purchase expense on account of no permanent establishment in India - order directing the petitioner to deposit 20% of the disputed tax - Held that:- The order directing the petitioner to deposit 20% of the disputed tax is non-reasoned and non-speaking - thus petitioner has to deposit 15,00,00,000/- in the three AYs. Since the amount of ₹ 5,00,00,000/- is to be deposited within 7 days, there would be stay of recovery of impugned demand by coercive steps till the next date of hearing.
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2018 (6) TMI 33
Unaccounted payment made for purchase of land - addition on the basis of material found during the search - Held that:- As during the year under consideration assessee has purchased only 7.4 vighas of land - also the undisclosed amount was covered under the total disclosure of ₹ 5 lakhs made by the assessee in the return pursuant to search - thus no question of law arises - appeal is dismissed.
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2018 (6) TMI 32
Validity of re-opening of assessment u/s 148 - Income escaping assessment u/s 147 - assessee has shown the "interest income" as "business income" and claimed set off from carried forward business loss - Held that:- No tangible material was existing before the AO that could prove that interest income assessed as business income in earlier years should be taxed under the head income from other sources - in the absence of any valid reasons re-opening of assessment u/s 147 cannot be exercised - Decided in favor of assessee. Disallowance of provisions for doubtful debts in computing MAT u/s 115JB - Held that:- AO has no power to disturb the figures shown in the P & L a/c. prepared in accordance with Part II and III of the Schedule VI of the Companies Act - AO was unable to prove that provision were for unascertained liability - hence the disallowance must be deleted as followed in case of APOLLO TYRES LTD. VERSUS COMMISSIONER OF INCOME TAX [2002 (5) TMI 5 - SUPREME COURT] - no justification for issuing a notice u/s. 148 - Decided in favor of assessee.
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2018 (6) TMI 31
Addition on account of the interest income - Disallowance of interest expenses and depreciation allowance against interest income from fixed deposits - Held that:- Interest expenses on overdraft facility taken against fixed deposits, have not been incurred in the earning of interest on FD - thus it cannot be allowed as deduction against the interest income on fixed deposits u/s 57 - Decided against the assessee. Depreciation claimed by the assessee against such interest income on fixed deposits - Held that:- Since the assessee has withdrawn the claim of depreciation in his return submission therefore, there is no reason to adjudicate the same - Hence dismissed.
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2018 (6) TMI 30
Initiation of penalty u/s 271(1)(c) - exemption u/s 54F claimed in excess - non specification of charge - Held that:- Penalty was levied without mentioning the specific charge i.e whether on the grounds of concealment of income or furnishing of inaccurate particulars of income - thus following the case of SNITA TRANSPORT (P.) LTD. VERSUS. ASSISTANT COMMISSIONER OF INCOME-TAX [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] penalty u/s 271(1)(c) is not sustainable - Decided in favour of assessee.
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2018 (6) TMI 29
Undervaluation of the closing stock of land - change in method of valuation - whether the value of land under litigation/encroachment cannot be adopted at Nil? - Held that:- Since the land is under encroachment and litigation it cannot be valued at the cost or prevailing market price, rather its value would be very less due to defects and deficiency of not available to the assessee for immediate use - also it cannot be valued at nil - thus value is to be determined on the basis of the actual status in each case and it cannot be valued applying a standard para-meter - hence the issue is set aside to the record of the AO for fresh adjudication as relying of assessee's own case [2011 (6) TMI 954 - ITAT JAIPUR]- Assessee appeal allowed for statistical purpose.
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2018 (6) TMI 28
Addition u/s 69 - cheques not encashed for sale of land - cancellation of sale deed - Held that:- AR demonstrated before us with copy of the Deed of Transfer by sale dated 29.03.2010 and also copy of cancellation deed dated 27.02.2013. Further AR submitted that a civil suit has been filed before the Civil Judge, Senior Division II, Seraikella-Kharsawan in TS No.18/2010, dated 30.11.2015, where the sale deed was cancelled and the final order has been passed in favour of the assessee. After considering the facts and legal position and the civil suit and the litigation which was fought by the assessee in the court it is held there was no occasion to bring these fact on record - hence the issue is remitted back to the file of AO for completeness of the information also assessee shall be provided adequate opportunity of being heard - Assessee's appeal allowed for statistical purposes.
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2018 (6) TMI 27
Initiation of penalty u/s 271C - delay caused in depositing the tax deducted at source - reasonable cause for delay - Held that:- As per section 273B no penalty shall be imposed u/s 271C if the assessee is able to prove that there was reasonable cause for depositing TDS - Tribunal had primarily allowed the appeals of the assessee by holding there was reasonable cause as mandated u/s 273B - thus there was reasonable cause on part of assessee for the default in remittance of tax deducted at source into the Government account on time, and therefore, that the penalty u/s 271C of the I.T.Act is not warranted - Decided in favor of assessee.
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2018 (6) TMI 26
Unexplained value of jewellery found during search conducted u/s 132 - addition to returned income - jewellery found within the limits prescribed by the CBDT - Held that:- In view of the judgement of the Hon'ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni [2014 (5) TMI 1002 - RAJASTHAN HIGH COURT] - the assessee has not been assessed to wealth tax and the gold jewellery found was within the permissible limits contained in the CBDT circular dated 11.05.1994, also the jewellery were not seized - thus it was held that no addition thereafter was justifiable - Decided in favor of assessee.
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Customs
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2018 (6) TMI 23
Jurisdiction of the officer of DRI to issue show cause notice - whether or not officers of the DRI could have issued show cause notice? - justification for order of Remand - Whether CESTAT was justified and correct in law in passing an order of remand to the original adjudicating authority to first decide the issue of jurisdiction, after decision of the Supreme court in Civil Appeal preferred against the decision of Delhi High court in Mangali Impex Limited v. Union of India, [2016 (5) TMI 225 - DELHI HIGH COURT]? Held that:- The Delhi High court in the case of Mangali Impex Limited versus Union of India, [2016 (5) TMI 225 - DELHI HIGH COURT] has held that DRI was not competent to issue show cause notice and hence the order-in-original passed thereafter would be void and illegal - the decision and ratio in Mangali Impex has been stayed by the Supreme Court in the case of Union of India versus Mangali Impex Limited, [2016 (8) TMI 1181 - SUPREME COURT]. The question whether or not officers of the DRI could have issued SCN and its effect on the final order is an issue which has to be examined and considered by the Tribunal. The Tribunal, instead of deciding the said issue on merits, has passed an order setting aside the order-in-original to await the decision of the Supreme Court in the appeal preferred in the case of Mangali Impex - Once an order-in-original is set aside, it would mean that the entire adjudication proceedings may have to be undergone again. This would be true even if ratio in Mangali Impex is not accepted. The question of law is accordingly answered in favour of the Revenue and against the assessee with an order of the remand to the Tribunal.
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2018 (6) TMI 22
Foreign exchange quantification to be taken abroad - Buying and selling of Foreign Exchange - invocation of provisions of customs Act justified or not? - appellant engaged in the productions of films - illegal issue of Foreign Exchange - Whether the Foreign Exchange was legally issued/drawn or exported by the noticee under FEMA? - Whether the carrier of foreign exchange violated the provisions of Customs Act? - The defence of appellants is that they were even otherwise permitted to carry such quantity of foreign exchange abroad. Held that:- The provisions of Rule 4 & 5 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 puts restriction on drawal of currency only for transaction listed in Schedule II & III. No permission is need for drawal of currency upto $ 25,000/- for the purpose of business visit in terms of S. No. 8 of Schedule III. It is apparent that the currency was issued without following the due diligence and knowingly violating the provisions for the purpose of obtaining business with full knowledge of both buyer and seller of currency. An offence under FEMA does not automatically result in invocation of provisions of customs Act. Thus the Act of buying and selling of foreign exchange in violation of FEMA, 1999, rules, regulation and guidelines issued under FEMA is not by itself sufficient to invoke charges under Customs Act. For charges under Customs Act to survive there has to be shown an active part or abetting in movement across Customs borders in terms of Section 114 of the Customs Act. The rate of the M/s Sohil Maklai Entertainment Pvt. Ltd. and the three carriers who had admittedly carried the currency out of India - defence of M/s Sohil Maklai Entertainment Pvt. Ltd. is that it was merely a procedural violation - Held that:- It is apparent that there was no reason to smuggle the currency out as they were even otherwise legally entitled to purchase the said amount and take out of India for the purpose of shooting abroad - I is apparent that while M/s Sohil Maklai Entertainment Pvt. Ltd. could have legally obtained the foreign exchange and also exported the same for stated purpose it followed shortcuts as advised by Shri Anand Kulkarni resulting in FEMA offence as well as Customs offence. Penalties - Held that:- The rate in illegal export with full knowledge is established in case of all appellants. - it is apparent that though they violated the law but they only saved themselves the procedural hassles. They were even otherwise entitled to carry the currency abroad legally by following due procedures - penalties imposed on appeals are relatively harsh - quantum of redemption fine as well as penalties reduced to Rs. two lakhs each. Redemption fine imposed is reduced to Rs. five lakhs. - Decided partly in favour of assessee.
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2018 (6) TMI 21
Grant of registration for the project - Classification - custom duty demand - Project import - project relating to Water Supply project - appellants to be granted registration when they are not direct party to the import contract ? - registration denied no contract between the importer and the supplier and that the project is an irrigation project and not a water supply project - Held that:- The regulation does not require the importer to enter into contract with foreign supplier. It merely require existence of a contract under which imports are made - If the Project Import Regulation 1986 do not mandate any such condition the same can not be imposed by the terms of Customs Manual - The Project can be registered under the regulation by the Appellants even if the appellants are not a direct party to import contract. Classification of projects - project relating to Water Conductor System - Difference between irrigation project and water supply project - whether the items imported by them are classifiable as Irrigation project under heading 98010012 or as Water Supply Projects notified vide N/N. 42/96 Cusdt 23.7.96 under heading 98010019? - N/N. 14/2004-Custom dated 8.1.2004 - Held that:- This Water Conductor System only relates to the lifting of water from one point and through pump houses and pipelines supplying to the recipient tanks at destination. Thus the entire project may be of Irrigation, but the part we are dealing with is only related to movement and lifting of water from one point to another. Thus it cannot be called an irrigation project but it can only be called a Water Supply project in that sense. Revenue has argued that since the project of the appellant is just lifting and supplying the water the same is not covered by the said expression. Revenue has relied on the decision of Tribunal in case of Pratibha Industries [2004 (9) TMI 278 - CESTAT, MUMBAI] - Held that:- It is seen that the facts in the said case are significantly different. In the said case the goods imported were not machineries but were pipes and therefore they were not covered under chapter heading 9801. In the instant case the goods imported are machineries and term Water Supply Project has been described in the explanation. Thus the facts of case are different. Revenue also argued that even if it is a water supply project it would merit classification as Irrigation project as it is part of an irrigation project - Held that:- the entire irrigation project has not been imported. Just one component of the irrigation project has been imported therefore the ratio of the said decision does not apply - Had the complete irrigation project been imported then all components forming part of the irrigation projects would have been classified as irrigation project. Benefit of N/N. 14/2004-Custom dated 8.1.2004 - Held that:- Since the project is classifiable as Water Supply Project the benefit of the notification 14/2004-Cus will also be available. Appeal dismissed - decided against Revenue.
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2018 (6) TMI 20
Import of Human Hair - duty exemption benefit under Notification No.32/97-Cus - Classification of imported goods - job-worker - misstatement or suppression of facts - Department took the view that the goods were not supplied free of cost by the foreign supplier but at a cost thus they would not be entitled to duty exemption benefit - Held that:- The appellant has complied or satisfied all the mentioned requirements, however has allegedly fallen foul of the requirement that imported raw materials should have been supplied to him free of cost. From perusal of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods), Rules 1996, it emerges that while such application is required to be made under Rule 4 of the Rules ibid to the Assistant / Deputy Commissioner of Central Excise and countersigned by the latter, the said document is then required to produce before the Assistant / Deputy Commissioner of Customs to allow benefit of exemption notification claimed by importer and also debit the quantity and value of imports made under a particular consignment before allowing the benefit of exemption notification - In this back and forth movement of documents between the Customs and Central Excise authorities with constant updation of the nature and quantity of goods imported and of the exemption notification availed, there cannot be any allegation that appellants have mis-stated or suppressed the fact of availment of Notification 32/97-Cus. and in particular the fact of the raw materials having been invoiced to appellants at some cost. All the requirements and conditionalities of the notification have been complied with or satisfied by the appellant. There is no dispute that appellant has not satisfied or complied with the requirements of Notification No.32/1997-Cus. After this dispute, the appellants have switched over to advance authorization scheme and carrying out the very same activities of job work and export of the resultant goods, without running with the Customs. It is only the words free of cost in the Notification that have caused them the niggles which led to this appeal. Notifications like 32/97-Cus. and schemes like advance authorization etc. and nothing but incentives and schemes approved by the Legislature and for the purposes of enhancing the export quotient of our country. If the intended purposes of these notifications, including the prescribed value addition etc. is complied with and there are no allegations of misuse or diversion of the imported goods, the larger substantive benefits of the notification should not be denied for a procedural requirement. The appellants are very much eligible for the exemption benefit under N/N. 32/1997-Cus. - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 19
Penalty on proprietorship firm of appellant - proprietorship firm under the same name of different proprietor - name of firm was fraudulently used by some other importer, who was actual importer and fraudulently obtained IEC - appellant became the proprietor of the firm on 13.06.2008 on death of her father - Held that:- The National Paper Agency against whom the order has been passed is not the present appellant i.e. National Paper Agency, under the proprietorship of Ms. Binal Damji Boricha. Therefore, Ms. Binal Damji Boricha has no locus standi to come in appeal against the order passed against National Paper Agency, wherein the present appellant was not the proprietor - In case of proprietorship, the name of the proprietorship firm is considered as fictitious; the identity of proprietor is recognised. Therefore the proprietorship firm under the same name of different proprietor is different from the proprietorship of the same name of another proprietor. The impugned order cannot be enforced on the present proprietor of National Paper Agency i.e. Ms. Binal Damji Boricha. However, the order is very much enforceable against the actual importers who fraudulently imported the goods by misusing the IEC and PAN no. of Shri Damji K. Boricha, for the reason that the import was made in August and September 2008 - appeal stands infructuous; hence disposed of.
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2018 (6) TMI 18
Eligibility for exemption - Import of Asphalt Hot Mixing Plant - electronically controlled plant or electrically controlled plant - Benefit of N/N. 21/2002-Cus. - Case of Revenue is that the plant imported by the appellant is electrically controlled, and not eligible for benefit under exemption entry no. 230 of N/N. 21/2002-Cus. - Conclusion of the revenue is based on the report of the departmental panel - whether the appellant being importer of Asphalt Hot Mixing Plant with electronic controls and Bag type filter arrangement is eligible for N/N. 21/2002-Cus. (S.No. 230)? Held that:- The appellant admittedly imported Hot Mixing Plant which was declared as Asphalt Hot Mixing Plant with electronic controls and Bag type filter 125TPH in the bill of entry. On perusal of invoice the description is also same as declared in the invoice. Therefore it is clear that the supplier also declared the plant having electronic control system. From the report of SGS it is clear that the plant imported is electronically controlled. In the report, the basis for conclusion being electronically controlled is also given i.e. the operation of the plant is controlled by PLC. In view of the report even if it is accepted that some part of the plant is operated electrically it cannot take away the characteristic of the plant being controlled electronically. Correctness of reliance placed by the revenue on the departmental panel - Held that:- Firstly the departmental panel is not the authorised technical expert to conduct the test of the plant. Instead of this the revenue should have taken a report/opinion from independent technical expert. Secondly, even if the department's opinion is accepted that PLC installed it controls the operation of the plant electronically. Therefore, the report given by the departmental panel cannot be accepted. Since we made an opinion that the plant imported by the appellant is electronically controlled, therefore we do not see any violation of the condition of the notification - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 17
Fraud - fraudulent obtaining of Advance Licenses - Penalty u/s 112(a) of the Customs Act, 1962 on Shri Mahesh Purushotam Patel who is a Chartered Accountant and the other one Shri Sudesh Dagadoba Nanaware - it was alleged that the entire modus operandi of the fraud was created by these two appellants - Held that:- Shri Mahesh P. Patel has issued the solvency certificate on the basis of balance sheet which was not signed by the Chartered Accountant. Therefore, he was not supposed to issue any certificate which is not based on the audit of books account. On the basis of the certificate issued by the Chartered Accountant, Shri Mahesh P. Patel, M/s. Spectrum Fabrics obtained the advance licence fraudulently which resulted in huge revenue loss of ₹ 1.46 crores customs duty to the Government exchequer - penalty on Shri Mahesh P. Patel upheld. Penalty imposed on Shri Sudesh D. Nanaware - Held that:- He is a consultant for obtaining the advance licence from DGFT. As per his advice, the entire fraud was committed - also, the appellant Shri Sudesh Nanaware, being a consultant, has admitted the pre-decided plan for committing the fraud - penalty upheld. Equal amount of penalty u/s 114A against M/s. Spectrum Fabrics - adjudicating authority had not gone into this aspect - Held that:- In the show cause notice, penalty under Section 114A was proposed. However, the adjudicating authority has neither discussed the issue of penalty under Section 114A nor any order was passed in the operative portion of the order - this issue first needs to be considered by the adjudicating authority - matter on remand. Appeal dismissed - decided against appellant.
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2018 (6) TMI 16
Failure to obtain import-export code - Validity of import for not being in possession of import export code - Valuation of imported goods - ceramic tiles and sanitary ware - enhancement of value based on contemporaneous imports - Levy of additional duty - Rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Differential duty demand - Held that:- The appellant had procured the goods for personal use and for transacting in personal goods, the Foreign Trade Policy permits a generic code to be employed. Accordingly, there being no bar on imports of personal effects against bill of entry and without separate code, there is no flaw in the procedure for import. Determination of value for the purpose of additional duty - enhancement of value - Rule 6 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 - Held that:- It is surprising that rules pertaining to section 4A of Central Excise Act, 1944, which deals with goods manufactured in the country have been invoked in relation to imports without such rules being acknowledged either in the Customs Act, 1962 or the Customs Tariff Act, 1975. Additional duty of customs is a specific levy authorised by section 3 of the Customs Tariff Act, 1975. The taxing provision is self contained and makes reference, for determination of value, to section 14 of Customs Act, 1962. There is, therefore, no scope for insinuation of any rules that does not claim parentage from either of these two statutes or, at least, by adoption in either of these - the determination of value for the purpose of additional duty is without basis in law and is not tenable - the enhancement of value for ascertainment of customs duty both basic and additional, fails to meet the test of legality. For want of information of contemporaneous imports, rule 9 of the rules has been resorted to enhance the value of 'sanitary ware', in proportion to that adopted for 'tiles'. This is neither justifiable nor logical; the procedure in law does not permit application of an enhancement in one set of articles to be adopted for another. No attempt appears to have been made to follow the letter and spirit of rule 9 of the said rules. The enhancement of value in the imports effected in the impugned order is without sanction of law - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1
Jurisdiction of the officer of DRI to issue show cause notice - whether or not officers of the DRI could have issued show cause notice? - Justification for order of remand - Whether CESTAT was justified and correct in law in passing an order of remand to the original adjudicating authority to first decide the issue of jurisdiction, after decision of the Supreme court in Civil Appeal preferred against the decision of Delhi High court in Mangli Impex Limited v. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT]? - respondent prays for some time to obtain instructions - Relist on 23rd May, 2018.
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Corporate Laws
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2018 (6) TMI 25
Winding up recalled - compromise or arrangement with creditors and members - Held that:- Section 391 of the Act deals with the power to compromise or make arrangement with creditors and members. This provision on its cursory reading by itself would reveal that it can have no application to the facts of this case where apparently even despite the publication of notice there are no other creditors apart from EDC and the State Bank of India and the petitioner all of whom have affirmed on oath that their respective dues have been settled by the company under winding up. Hence applying the judgment in Omprakash J. Mehra (2012 (11) TMI 246 - BOMBAY HIGH COURT), in the factual matrix and that there were no dues remaining to be settled, i find that this is a fit case for recall of the winding up order dated 26/06/2009 and to permit the withdrawal of the petition.
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2018 (6) TMI 24
Tribunal's power to review its order - mistake apparent from the record - Held that:- Tribunal in the order dated 29.05.2017 held that the question of limitation in this case is mixed question of fact and law. Delay aspect has to be considered at the final hearing, the authority of Ashok Kumar Khosla to file this petition is upheld subject to the challenge pending in other courts. This Tribunal also held that the controversy regarding convening of EOGM has to be decided only at the time of final hearing. A reading of the entire order of this Tribunal dated 29.05.2017 only indicate that this Tribunal was not inclined to dismiss the petition without there being a final hearing considering the facts and circumstances of the case. It is pertinent to mention here that original petition was filed before the Company Law Board in the year 2016. After the constitution of this Tribunal Applications challenging maintainability were filed by more than one respondent with a prayer to dismiss the main petition on the ground of limitation, alleging delay/latches, no cause of action etc. These applications filed by original respondents 1 and 2 cannot be considered under Section 420(2) of the Companies Act, 2013 or under Rule 11 of NCLT Rules since there is no mistake apparent from the record in the order dated 29.05.2017.
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PMLA
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2018 (6) TMI 14
Scheduled offence under the Prevention of Money-Laundering Act, 2002 - whether the alleged offence under Section 13(1)(e) r/w Section 13(2) of the Prevention of Corruption Act, 1988 was included in para 8 of the schedule of the Prevention of Money Laundering Act, 2002 by amendment to the said Act only in the year 2013? - provisional attachment - Held that:- Before passing the Provisional Attachment Order under Section 5(1) of the Prevention of Money-Laundering Act, 2002, notices were issued to the writ petitioners. Further, even while passing the Order of confirmation of Provisional Attachment Order by the Adjudicating Authority, statements of the writ petitioners were called for and they were also recalled to give evidence in the matter. Therefore, it cannot be said that the Provisional Attachment Order passed by the respondents/authorities and the confirmation order passed by the Adjudicating Authority of the said Provisional Attachment, are without following the due procedure and giving fair opportunity to the writ petitioners herein to submit their say in the matter. Therefore, there is no question of violation of principles of natural justice. As regards the notice dated 5.10.2016 issued to the petitioners for taking possession of the property, the writ petitioners have to challenge the same by preferring an appeal before the appellate Tribunal and they cannot directly approach this Court by filing the writ petitions invoking the extra-ordinary jurisdiction of this Court. When the provisions of the statute itself i.e., The Prevention of Money-Laundering Act, 2002 itself provides for challenging the said orders by preferring an appeal before the appellate Tribunal, as it is rightly submitted by the learned Additional Solicitor General appearing for the respondents/authorities, the writ petitions are not maintainable, since as per Section 42 of the Prevention of Money Laundering Act, 2002, only when a person is aggrieved by the decision or order of the appellate Tribunal, such person can approach this Court by preferring an appeal.
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Service Tax
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2018 (6) TMI 15
Denial of refund claims - Principles of natural justice denied - non application of mind - Eligibility for exemption by way of refund in respect of services received for authorized operations denied - SEZ unit - N/N. 12/2013 dt. 01/07/2013 - appellant argues that the impugned order has been passed without taking into consideration the facts and the legal provisions applicable to the case of the appellant - Held that:- The learned Commissioner (Appeals) has passed the impugned order without application of mind and without properly ascertaining the facts of each case - the impugned order has been passed without affording an opportunity of hearing which is violation of principles of natural justice. If the Commissioner(Appeals) has afforded an opportunity of hearing to the appellant, the appellant would have been able to bring forth all the submissions relating to these cases. But that has not been done - It is surprising that the rectification application filed by the appellant before the Commissioner(Appeals) pointing out the clerical mistakes and the errors in the impugned order were also not considered in accordance with law and has been dismissed summaril In view of these infirmities while passing the impugned order. The appeals of the appellant need to be remanded back to the Commissioner(Appeals) with a direction to examine the refund claims of the appellant with reference to Notification No. 12/2013 dt. 01/07/2013 after following the principles of natural justice by affording an opportunity of hearing to the appellant - appeal allowed by way of remand.
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2018 (6) TMI 12
Period of limitation - Time limitation of filing appeal - whether the appeal filed by the appellant before the first appellate authority is time barred or otherwise? - receipt of the Order-in-Original dated 15.07.2015 served on appellant by a responsible person in doubt - Held that:- The records of the departmental authorities do not instil a confidence that the Order-in-Original dated 15.07.2015 was in fact received by responsible person of appellant - the receipt of the Order-in-Original being questioned by the appellant and presumably and there being an element of doubt of the signature on the acknowledgement card, Order-in-Original received by them on 23.11.2015, the appeal filed before the first appellate authority on 14.01.2016 is well within the time limit - impugned order set aside. The matter needs reconsideration by the first appellate authority on merits inasmuch as the first appellate authority has not recorded any findings on the merits of the case - appeal restored.
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2018 (6) TMI 11
Demand of Interest - quantification of Interest - Renting of Immovable Property service - Main grievance of the appellant is that the computation made by the adjudicating authority is incorrect which should have been as per the computation provided before this forum - Penalty - Held that:- The issue with regard to the interest is set aside to the file of the adjudicating authority who is to verify the computation as provided by the appellant and if the same is in accordance with law, then the same is required to be demanded, if the appellant has not paid so far - matter on remand. Penalty u/s 76 & 77 - Held that:- The Revenue has nowhere suspected bonafides of the appellant in not remitting the service tax. Section 80 makes it very clear that the penalty u/s 76 & 77 is not automatic, which definitely overrides both the provisions of Section 76 as well as Section 77. It is also not in dispute that the appellant had paid nearly 80% of the tax amount before the issuance of SCN - The appellant had made out a case and that it is a fit case to invoke the provisions of Section 80 especially in view of the fact that the appellant has not contested the service tax liability and interest thereon - penalty set aside. Part matter on remand and part in favor of assessee.
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2018 (6) TMI 10
Demand of service tax under reverse charge mechanism - enactment of Section 66A of the Finance Act, 1994 - technical inspection and certification and technical testing and analysis services - period 1.10.2003 to 31.3.2007 - Held that:- The service tax on the reverse charge basis from receipt of invoices from abroad has become taxable only with effect from 18.4.2006 when Section 66A of the Finance Act, 1994 was enacted. This has been decided by the Hon’ble Bombay High Court in the case of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] - the demand pertaining to the period upto 18.4.2006 is set aside. Penalty u/s 78 in relation to demand of service tax after 18.4.2006 - the service tax after 18.4.2006 is not disputed by the appellant, and service tax with interest paid before issuance of SCN - malafide intention to evade the service tax - Held that:- the issue of taxability of service provided from abroad was highly debatable issue and finally it was settled by the Hon’ble Supreme Court in 2009 which was reported in 2010. Therefore, till that time the issue was under litigation. Therefore, it cannot be said that the appellant had any malafide intention to evade the service tax - also, the appellant has discharged the service tax for the period after 18.4.2006 along with interest much before the issuance of show cause notice - penalty not warranted. Appeal allowed in part.
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2018 (6) TMI 9
Rectification of mistake - scope of SCN - Classification of services - SCN was issued proposing classification of service under ‘works contract service’ whereas in the order-in-original, the same service was classified under the head of ‘erection, installation and commissioning service’ - time limitation - Held that:- Since the SCN proposed classification under works contract and the appellant also during the argument admittedly claimed the classification under works contract and claimed the benefit of installation of street light on the basis that it is related to road construction, the order passed on the basis of the submissions made by the appellant and the finding cannot be found fault with and the same cannot be said to be an apparent mistake in the order - the issue of classification being a question of law, can be entertained by this Tribunal. Therefore, our order on the issue of classification being under works contract service does not bear any error therein. Extended period of Limitation - Held that:- In the ST-3 return in the column of exempted service, the value of works contract service was declared. In this scenario, it cannot be said that the appellant has suppressed the fact - the demand for the extended period beyond normal period will not sustain. ROM Application allowed in part.
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2018 (6) TMI 8
Rectification of mistake - certificate of Chartered Accountant was available but not produced - unjust enrichment - Whether document which was available but not produced before the Tribunal, can be considered by the Tribunal as rectification of mistake? - time limitation - Held that:- The issue of limitation has specifically been considered in para 5.2 of the order and thus there is no mistake as far as the issue of limitation. Non-production of certificate - Held that:- There is nothing in the said certificate of the Chartered Accountant to negate the arguments. In these circumstances, even if the certificate was produced, it could not have made any difference to the final order. ROM Application dismissed.
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Central Excise
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2018 (6) TMI 7
Clandestine removal - excesses of stock - confiscation orders - correctness of stock verification process, which was arrived on the basis of average weight of one of the products - Held that:- Admittedly there are no inventories produced by the Revenue. It is not only difficult but impossible to weigh such huge stock, without reflecting the same in the inventory - It has been held in number of Tribunal decision that the stock position having been arrived on the basis of average weight of one of the products and in the absence of inventories, cannot be held to be reflecting the correct stock position. A mere non accountal of goods in RG register would not invite confiscation of the same or imposition of penalty, in the absence of any evidence to show that the goods were meant for clandestine removal. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 6
Cenvatable services - Services of ‘Sales Commission Agents’ - input services or not? - whether the services of ‘Sales Commission Agents’ can be held to be cenvatable and the Service Tax paid on the same is available as a credit to the assessee? - Time limitation - Held that:- There is no stay of operation of various decisions of the Tribunal, which are in favour of the assessee and which stand referred to by Commissioner (Appeals). Infact nothing has been brought on record to show that said decision of the Tribunal wherein the judgment of Hon’ble High Court of Gujarat in the case of Cadila Healthcare Ltd.[2013 (1) TMI 304 - GUJARAT HIGH COURT] was considered, stand appealed against by them. In that case, the issue is fully covered in favour of the assessee. Period of limitation - no suppression of facts - extended period of limitation - Held that:- Demand is time barred inasmuch as the period involved is April, 2013 to February, 2016 whereas the show cause notice was issued on 10.08.2016 - Inasmuch as during the relevant period, all the decisions were in favor of the assessee, there can be no malafide on their part to avail inadmissible credit, in which case, extended period of limitation would not apply. Appeal dismissed - decided against Revenue.
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2018 (6) TMI 5
Depreciation on machinery removed to sister unit - Valuation - proof of possession of property - appellant claims that the duty has to be assessed by considering the depreciation on such machinery - Held that:- The impugned machineries were removed without obtaining permission and in violation of the terms and conditions of the notification. The goods were not in the custody or possession of the appellant as on the date of exit order dated 12.2.2004 or even on the date of visit of the officers on 5.1.2001. In such case, the appellant cannot claim the depreciation of the goods which they do not have possession or custody - appeal dismissed - decided against appellant.
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2018 (6) TMI 4
Liability to pay duty on the goods cleared prior to 1.3.2002 - Effect of withdrawal of N/N. 3/2001-CE dated 1.3.2001 - Budget day clearances - removal of cotton plain reel hanks from the factory without payment of duty after withdrawal of exemption notification - Duty Demand - According to department, the appellant had removed cotton plain reel hanks from the factory after the withdrawal of exemption on 28.2.2002 without payment of central excise duty - whether the appellants are liable to pay duty on the goods cleared by them prior to 1.3.2002? - Held that:- Even if it is considered that the goods are cleared on 28.2.2002, the withdrawal of exemption by Notification No. 13/2002 dated 1.3.2002 would be effective as per the Notification only from 1.3.2002. Restrictions on removal of Capital Goods - Rule 30A of Central Excise (No.2) Rules, 2001 - the appellants have neither obtained permission nor filed undertaking - Held that:- Rule 30A provides that the manufacturer who intends to clear goods during the period mentioned in the Rule has to obtain permission and also file an undertaking - In the present case, there is no such undertaking filed by the appellant. Even if we consider that there has been procedural infraction on the part of the appellant in not taking permission from the Commissioner to clear the goods on Budget day, the notification rescinding the exemption has come into force only from 1.3.2002. Their clearances have been made on 28.2.2002 when the exemption notification was still in force - duty demand do not sustain. The Tribunal in the case of Vellamalai Tea Factory [2013 (12) TMI 394 - CESTAT CHENNAI] has considered an identical issue with regard to Budget day clearances and Tribunal after taking cognizance of Sections 3 and 4 of Provisional Collection of Taxes Act, 1931, held that duty cannot be collected for the clearances made by the appellant before midnight when the notification came into existence (1.3.2002). Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 3
Penalty u/r 27 of CER, 2002 -Belated filing of monthly returns in ER-1 - violation of Rule 12 (1) and Rule 12 (5) of CER, 2002, and Rule 9 (7) of CCR, 2004 - It is the case of the appellant that it did file its monthly ER-1 returns manually, without any delay but the respondent without verifying the same has imposed the penalty - Held that:- This aspect needs to be verified by the adjudicating authority as to the filing of manual returns. If the same is in time then that proves the bonafides as claimed by the appellant even with regard to its reasons for delay in filing ER-1 electronically and requires no penalty - appeal is allowed for statistical purpose.
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2018 (6) TMI 2
Clandestine manufacture and removal - manufacture of huge quantity - shortage of imported HM Scrap - reliance placed on the statements of Shri S P Gupta and Shri Darshan Singh - examination of statement as per the procedure laid down under Section 9D of the Central Excise Act, 1944 not done - Held that:- Considering the fact that statement of Shri S.P. Gupta and Shri Darshan Singh heavily relied by the adjudicating authority and the procedure laid down under Section 9D of the Act is violated, in that circumstance, the impugned order is not sustainable in the eyes of law - the matter is required to be re-examined in terms of Section 9D of the Central Excise Act, 1944 - directed to examine whether the appellant is having the capacity to manufacture such a huge quantity in such a short span of time and from where the electricity was procured to manufacture such a huge quantity and how the stock verification was done.- appeal allowed by way of remand.
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Indian Laws
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2018 (6) TMI 13
Inheritance of property - Execution of sale deed of subject properties in favor of appellant - HUF - defendant was not the sole owner of the subject properties but he was only a karta of the HUF which owned these properties - whether inheritance of property would construe HUF properties or self acquired properties? - Held that:- Since Sh. Prithvi Singh/late defendant no.1 inherited the properties from his father Sh. Ram Singh in the year 1943, in the hands of Sh. Prithvi Singh properties were having the character of HUF properties because inheritance by a person from his parental ancestors prior to the year 1956 makes the properties inherited not as self-acquired properties but as HUF properties, whereas inheritance by a person of a property from his parental ancestors after the year 1956 makes the inherited property as a self-acquired property of the inheritor and not as an HUF property. Whenever a property is inherited by a person from his paternal ancestors before the year 1956, the inheritance is as an HUF property and even if the inheritance is land which is subject matter of the DLR Act. Bhumidar under the DLR Act is nothing but an owner of the land because by the DLR Act all that happened was that the ownership of the land which had vested with private landlords came to be vested in the State and the owners of the land, or the lessees of the land as the case maybe, in fact became the lessees of the land under the government, with the lessees being called by the term ‘bhumidar’ under the DLR Act. Bhumidar therefore is nothing but an owner of the lessee rights in the land with the State being the owner/lessor. There is absolutely nothing whatsoever in the DLR Act that the bhumidar rights which are vested in a karta or a coparcener ceases to be the subject matter of HUF and that bhumidari land becomes the self-acquired property of the karta or the coparcener in whose name the land stands or is mutated - it is not the subject matter of the DLR Act to convert the HUF property into self-acquired property simply because the owner of lessee rights is under the DLR Act a bhumidar. The only object of the DLR Act was to do away the intermediary who was the private owner/landlord and the private owner/landlord, is now substituted by the government/State, with the private owner/landlord or the existing lessee of a property (in certain circumstances) of the private landlord, became the bhumidars under the DLR Act. The appeal is unnecessary harassment of the respondent nos. 1 to 6/plaintiffs and which is in furtherance of the illegal acts of execution of the subject sale deeds by Sh. Prithvi Singh in favour of the appellants/defendant nos.2 and 3 so as to deny the legitimate rights of the respondent nos. 1 to 6/plaintiffs in the subject properties - appeal is completely without merit and is dismissed.
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