TMI Tax Updates - e-Newsletter
June 8, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Computation of capital gains - Disallowance of brokerage u/s 48 - burden was on the assessee to demonstsrate that the expenses had been incurred - brokerage commission is paid by way of a cheque - deduction allowed. - HC
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Income Tax:
Addition u/s. 68 - the addition u/s. 68 is not called for as such because it is a case where one asset gets replaced by another asset and not of cash credit.
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Income Tax:
Depreciation on intangible assets being “business and commercial rights” - payment made by the assessee in the form of compensation for acquiring mining rights in the land is intangible assets and hence depreciation is allowed.
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Income Tax:
Disallowance of loss on sale of shares of associated concern - speculation loss - only the loss resulting from the activity of sale and purchase of shares of other companies which is a part of the business of the assessee could be treated as speculation loss
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Income Tax:
Late fees u/s 234E - Condonation of delay in filing appeal - When TDS returns/statements have been filed by assessee for each quarter online and orders have been served upon assessee online for payment of the late fees, then the assessee is required to take steps within the reasonable period as per law.
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Income Tax:
TDS u/s 194C - ascertaining the nature of payment - these facts are exclusively in his knowledge and he is only privy to it and how the AO will be knowing these things and therefore the assessee has to bring material to substantiate what he claims.
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Income Tax:
Capital gain on transfer of shares outside India - For applicability of Explanation 5 of the section 9 it is sufficient to state that the explanation covers the non residents and not a resident entity - AT
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Income Tax:
Reopening of assessment - when a specific direction has been given by the Additional Commissioner u/s 144A of the Act for passing an order u/s 143(3) of the Act on a specific issue, assessment cannot be reopened on the same issue - AO has no power of review - AT
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Income Tax:
Notice u/s 147 issued beyond stipulated time limit - validity of service of notice - Merely signing the notices cannot be equated with the issuance of notice as contemplated u/s 149 - The process of issue of notice will be completed only when the envelope containing the notice is handed over to the Postal Authorities - AT
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Income Tax:
Applicability of section 50C - objection of the assessee against the value adopted by the stamp valuation authority - It is not optional for the Assessing Officer to make reference to DVO and the right of the assessee under section 50C is a statutory right. - AT
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Income Tax:
Nature of land sold - agricultural land - where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation.- AT
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Income Tax:
Exemption from the provisions of Section 115JB being a sick company - Assessee is covered by Section 17 of SICA and therefore, the company is exempt from the provisions of Section 115JB, being a sick company - AT
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Income Tax:
Appellate authorities power to consider the claim not made in the return - assessee is entitled to raise not merely additional legal submissions, before the appellate authorities, but also entitled to raise additional claim before them and further appellate authorities have discretion to permit such additional claims. - AT
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Customs:
Validity of Notifications - Extension of ADD - extension of Anti-Dumping Duty for the one year pending the Sunset Review - The period of three months under Rule 18(1) can be read only in the case of original notification for Anti-Dumping Duty and not for the Sunset Review. - HC
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Customs:
Misdeclaration of goods evading Anti dumping duty - goods found were “cold rolled” stainless steel as against declaration of “hot rolled” - the declaration regarding the nature of the product before Customs becomes a misdeclaration due to which the extended period of limitation can be invoked.
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Customs:
Import of machines - Actual user conditions - The imported machine was used for intended purpose of road only once for a small contract - duty confirmed for Post Import Violation of the condition.
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Customs:
Mis-declaration of goods - Even assuming that it is for an EOU, and there was change in transport mode still fact of non-declaration of the machinery in the bill of entry remains - confiscation and penalty confirmed - AT
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Service Tax:
Service tax on sale of statistical data (statistical service subscription) - transaction of sale of data - it is a transaction of pure sale of data and thus no service tax can be charged on the same.
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Service Tax:
GTA service - non-issuance of consignment note - the Transporters cannot be called ‘Goods Transport Agency’ and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp).
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Service Tax:
Classification of services - Finishing Work - From the nature of the work orders, it is found that the same does not appear to include supply of material alongwith service and as such do not merit classification under the ‘Works Contract Service’.
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Central Excise:
Quantum of pre-deposit u/s 35F - Deposits made during the pendency of the proceedings, or even after the order-in-original is passed, have to be taken into consideration for determining and deciding whether condition of pre-deposit of 7.5% or 10% has been satisfied. Earlier deposits do not get obliterated and are not to be treated as inconsequential. - HC
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Central Excise:
Classification of goods meant for Construction Industry - Ready Mix (Dry Mix) manufactured under the brand name “Roofit mix” - the impugned product can only be classified in CETH 3214.00 prior to 1.3.2005 and 3214 90 10 thereafter.
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Central Excise:
GTA Service - CENVAT credit - input services - Outward transportation of goods up to the buyer’s premises - credit is eligible up to 01.04.2008 and after such date, the assessee is not eligible for credit - credit not allowed.
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Central Excise:
Manufacture - the activity performed by the appellants in respect of circular diffusers and jet diffusers do not amount to manufacture - AT
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Central Excise:
Manufacture - assembly at site - tower clock - cannibalization - each clock tower is a separate entity and the clock designed for one tower cannot be dismantled and moved and fitted to any other tower without cannibalization - demand set aside - AT
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Central Excise:
Penalty u/s 11AC of CEA, 1944 - it is not a case of wrong availment/utilization of cenvat credit but the demand under Rule 6(3A). Therefore, Rule 14 is not applicable - there is no specific provision unlike in the case of duty evasion or wrong availment of credit for imposition of penalty under Section 11AC.
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Central Excise:
Penalty on partner - Firm already penalized - The appellant also tried his best to conceal the relevant records and played a pivotal role in evasion of duty with the help of middlemen, second stage dealers and buyers. - Levy of penalty confirmed
Articles
Notifications
DGFT-
10/2015-2020 - dated
7-6-2018
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FTP
Amendments to Foreign Trade Policy 2015-20 - Extension to Integrated Goods and Service Tax (IGST) and compensation Cess exemption under EOU scheme till 01.10.2018 — regd.
GST - States-
3/2018 (State Tax) - dated
5-6-2018
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Delhi SGST
Notifying the National Academy of Customs, Indirect Taxes and Narcotics, Deptt. of Revenue, Ministry of Finance as the authority to conduct the examination.
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10/2018 - dated
31-5-2018
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Nagaland SGST
Seeks to extend the due date for filing of FORM GSTR-6 for the months from July 2017 till June 2018.
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9/2018 - dated
28-5-2018
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Nagaland SGST
Seeks to notify NACIN as the authority for conducting the examination for GST Practitioners under GST
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8/2018 - dated
18-5-2018
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Nagaland SGST
Seeks to extend the due date for filing of FORM GSTR-3B for the month of April_2018.
Income Tax-
25/2018 - dated
30-5-2018
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IT
U/s 35(1) (ii) of IT Act 1961 Central Government approved for organization M/s Indian Institute of Science Education and Research, Kolkata
SEZ-
S.O. 2262(E) - dated
28-5-2018
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SEZ
Inclusion of new members in CSEZ Authority – Amendment in Notification Number S.O. 1590(E) dated 22nd April, 2016
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S.O. 2261(E) - dated
24-5-2018
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SEZ
Central Government de-notifies an area of 11.53 hectares, making resultant area as 27.31 hectares, at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bengaluru East Taluk, Bengaluru in the State of Karnataka
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S.O. 2257(E) - dated
23-5-2018
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SEZ
Central Government de-notifies an area of 7.40 hectares, thereby making resultant area as 2.60 hectares at Kesarapalli Village, Gannavram Mandal, Krishna District, in the State of Andhra Pradesh
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (6) TMI 301
Tender inquiry for award of contract - tender inquiry has been rejected on the ground that GST number had not been furnished - Held that:- Clause 8 (v) of the Standard Bidding Document calling upon each bidder to submit last filed GST return along with GST number would be construed as an essential term of the contract - The petitioner having admittedly not complied with such condition, there would be no infirmity as regards rejection of his technical bid - petition dismissed.
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Income Tax
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2018 (6) TMI 299
Penalty u/s 271(1)(c) - revision of the assessment u/s 264 - Held that:- It is a settled legal position that the burden is on the assessee to prove non-concealment against additional income disclosure in the revised return. In the instant case, no explanation was offered for not having disclosed income earlier. Thus, for the above reasons, we find that the order passed by the Tribunal was perfectly correct and the questions of law framed for consideration, are to be answered against the assessee and in favour of the Revenue. Revision 264 - Held that:- Though there is an observation regarding the order passed by the ITAT confirming the penalty proceedings in the Section 264 order, we find that is not the reason for rejecting the revision petition, but on facts, the Commissioner has recorded findings and confirmed the order passed by the Assessing Officer. We find there are no good grounds made out by the assessee to dislodge the factual findings recorded by the Commissioner in the impugned order under Section 264 of the Act
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2018 (6) TMI 295
Revision order passed u/s 263 for the order passed by the AO u/s 153A - “Deemed dividend” addition under Section 2(22)(e) - Held that:- The power to revise u/s 263 is where the order passed is erroneous and prejudicial to the interest of the Revenue. In the present case, the reassessment order passed u/s 153A, the same is neither erroneous nor prejudicial to the interest of the Revenue - thus order passed by the Ld. CIT cancelling assessment and directing the AO to frame the assessment afresh is bad in law followed by the decision in case of PR. CIT CENTRAL -1, DELHI VERSUS SHRI MAHESH KUMAR GUPTA [2016 (12) TMI 684 - DELHI HIGH COURT]. - Decided in favour of assessee.
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2018 (6) TMI 294
Addition u/s. 68 - deduction u/s. 54F - addition of sale consideration u/s 45 - Held that:- Entire sale consideration has been offered as gross income and thereafter deduction u/s. 54F has been claimed. Taxing sale consideration once u/s. 45 and again u/s. 68 amounts to double taxation. Therefore, the addition u/s. 68 is not called for as such because it is a case where one asset gets replaced by another asset and not of cash credit. AO has not doubted the possession of shares by the assessee through the gift as stated by the assessee. AO has raised the issue of taxability of income u/s. 64 as evident from the impugned order. However, she has not concluded this issue. The assessee received shares through the gift from her husband as detailed in the assessment order; thus, the income derived from transfer of such shares has to be assessed in view of the provisions of section 64(1)(iv) and not 68, which the Ld. CIT(A) has done. Thus, there in the assessee’s case, the issues relating to the working of LTCG and deduction u/s. 54F loses relevance, therefore, Ld. CIT(A) refrained himself in deciding these issues. Accordingly, the addition u/s. 68 in the hands of the assessee was rightly deleted by the Ld. CIT(A). - Decided against revenue
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2018 (6) TMI 293
Disallowance u/s 14A - non identification of expenses - Held that:- Identical issue has been decided by ITAT, Delhi, A-Bench, in the case of same assessee for A.Y. 2009-2010 [2017 (11) TMI 1545 - ITAT DELHI] as held AO has not even identified any specific item of expense he merely says that explanation of assessee is not correct as huge investment is made. There is no satisfaction of terms of s. 14A read with Rule 8D. Assessee is right in submitting that disallowance is also against the principle of consistency in the absence of any facts. - Decided in favour of assessee
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2018 (6) TMI 292
Reopening of assessment u/s 147 - validity of reasons to believe - reopening was made “on going through the assessment record” - ACIT issued directions to the AO u/s 144A of the Act on 12.11.2010, directing him to examine the issue of loss on sale of land - Held that:- As in the case of Motilal R.Todi vs ACIT [2015 (11) TMI 181 - ITAT MUMBAI] when a specific direction has been given by the Additional Commissioner u/s 144A of the Act for passing an order u/s 143(3) of the Act on a specific issue, assessment cannot be reopened on the same issue - AO has no power of review - he cannot on the basis of the same material available in the assessment record come to different conclusion - thus reopening is bad in law for the reasons that there is no tangible material which has come to the possession of the AO, subsequent to passing of an order u/s 143(3) - reopening of assessment cannot be done to correct each and every mistake if any committed in the assessment order - hence decided in favor of assessee.
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2018 (6) TMI 291
Condone the delay in e-filing - manual filing appeal before CIT(A) - Held that:- Facts and circumstances of the present case are identical to the decision of the Tribunal in the case of Ritu Verma vs. ACIT (2017 (8) TMI 1383 - ITAT DELHI)therefore, respectfully following the said precedent, direct the CIT(A) to condone the delay in dispute and also in the interest of justice, set aside the issues in dispute to the file of the Ld. CIT(A) with the directions to decide the same afresh, under the law, after giving adequate opportunity of being heard to the assessee and decide the appeal on merit and pass a speaking order.
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2018 (6) TMI 290
Grant of approval u/s 10(23C)(vi) rejected - no registration u/s. 12A of the Act had been granted to the assessee by the Ld. CIT - proof of charitable activities - Held that:- following the judgement in assessee's own case title BHARTIYA GRAM SEWA NIKETAN UDYOG MANDAL C/O. M/S. RRA TAX INDIA VERSUS CCIT, DEHRADUN [2018 (2) TMI 54 - ITAT DELHI] wherein as held the main objects of the trust are to encourage backward and discarded people towards education and social development works, helping children by providing education and livelihood to them etc. The same was at no point amended by the assessee. Also the trust runs a college that helps in enhancing the future of students by providing the education and making available the diploma courses. Thus the approval u/s. 10(23C)(vi) of the Act is hereby granted - Decided in favour of assessee.
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2018 (6) TMI 289
Appellate authorities power to consider the claim not made in the return - Held that:- Hon’ble Apex Court in Addl. CIT vs. Gurjargravures (P) Ltd. [1977 (11) TMI 1 - SUPREME COURT] wherein, it was held that the assessee is entitled to raise not merely additional legal submissions, before the appellate authorities, but also entitled to raise additional claim before them and further appellate authorities have discretion to permit such additional claims. Thus, respectfully following the above precedents, remand the issue in dispute to the file of the AO to examine the claim of the assessee afresh and decide the same in accordance with law by considering the revised computation and give proper opportunity of being heard to the assessee. The Assessee is also directed to fully cooperate with the AO
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2018 (6) TMI 288
Capital gain on transfer of shares outside India - incidence of levy u/s. 45 - applicability of section 9 income deemed to accrue or arise in India - eligible transfer u/s 2(47) - Held that:- There was no transfer of capital asset u/s 45 - assessee had transferred the Interest/(stake)in itself outside India to SSPL - thus the concept of ‘creating of interest in any assets in any manner’ and transferring‘interest/stake’ was not part of the word ‘transfer’. As far applicability of Explanation 5 of the section 9 is concerned, it is sufficient to state that the explanation covers the non residents and not a resident entity. There is no doubt that the assessee is a resident company. A citizen is perfectly entitled to exercise his ingenuity so to arrange his affairs as may make it possible for him legally and lawfully not to pay tax - thus for not extending cooperation the assessee should be dealt with relevant provisions of the Act. But, for that tax liability cannot be fastened to it without establishing the basic fact of existence and transfer of capital asset - hence we reverse the order of the FAA and decide effective ground in favour of the assessee.
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2018 (6) TMI 287
Additions for capital gains on sale of land u/s 50C - reference to DVO - Held that:- In view of the judgement in case of SUNIL KUMAR AGARWAL VERSUS COMMISSIONER OF INCOME TAX, SILIGURI [2014 (6) TMI 13 - CALCUTTA HIGH COURT] we set aside the order of learned CIT(A) and restore the matter back to the file of the AO for fresh adjudication of the entire issue on merits after referring the matter to DVO for valuation - AO/DVO shall admit all necessary evidence submitted by the assessee and adequate opportunity of being heard in accordance of principles of natural justice shall also be given to the assessee. Additions made for bogus purchase - Held that:- Unusually long credits were given by these parties and payments vis-a-vis purchases do not reveal normal purchase transactions happening in normal course of business . The onus was on the assessee to have proved genuineness of purchases and consumption/utilisation of material for business purposes. The assessee could not discharge primary burden and the amount was also surrendered during assessment proceedings. Under these circumstances and keeping in view factual matrix of the case we are not inclined to interfere with the order of learned CIT(A) which we confirm. The assessee fails on this ground.
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2018 (6) TMI 286
Addition on account of contingent liability - Held that:- As before the lower authorities the assessee’s case was that it has provided 10% of the contract value as future expenses on defect liability by debiting to the profit and loss account. This has been held to be a contingent liability. It was not the case of the assessee before the lower authorities that it was a retention money by the contractor. The assessee is trying to build a new case which it could not do so at the time of second appeal hearing. - Decided against assessee
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2018 (6) TMI 285
TPA - Rejection of returned income - selection of comparables - application of Safe Harbour Rules - Held that:- The safe harbour rule are not arm’s length prices, but in the nature of presumptive taxation, which generally enthuse taxpayers to opt for the same, as a compromise for not having to be involved in protracted litigation - thus CIT(A) rejected the plea of the assessee for consideration of safe harbour rules and dismissed the same. Method of determining ALP - Held that:- The principle of TNMM class for functional compatibility and not product compatibility - assessee performed the search on “Non electrical Machinery' and Base Metals” and HCL also belonged to the same category of industry - It did not matter whether it manufactured steel or copper - such difference in product would not result in significant divergence in profitability - further TP provisions do not bar from taking Government Company as comparable. Computation of Arm's Length Price - Held that:- The borrower was situated in Thailand and there was an economic turmoil in the region which affected borrower’s capacity to borrow - this would have increased the credit worthiness and credit rating of the AE in Thailand, enabling to borrow from Siam Bank at a lesser rate - therefore, charging of premium over and above the rate of interest charged by Siam Bank to its AE in Thailand, is justified. Corporate guarantee provided to its AEs - Held that:- Following the judgement in case of BARTRONICS INDIA LTD. VERSUS DY. COMMISSIONER OF INCOME TAX, CIRCLE – 1 (2) , HYDERABAD. [2017 (9) TMI 1649 - ITAT HYDERABAD] it is held that corporate guarantee is not considered as an international transaction. Disallowance of 5% of general expenses - Held that:- CIT(A) found that that the expenses under the head “ General Expenses’ under the head Miscellaneous Expenses was booked at ₹ 4,10,64,429/- and not the amount of ₹ 6,61,00,053/- as taken by the AO - thus he disallowed 5% of the expenses booked under the head general expenses - we are in agreement with the observations made by the CIT(A) in this regard. Non-deduction of TDS for payment made u/s 40(a)(ia) - Held that:- Assessee had neither made an application before the Assessing Officer u/s.195(2) nor had filed the requisite details as mandated u/s.195(6), therefore, in our opinion, the CIT(A) rightly upheld the action of AO - thus appeal of the assessee is dismissed. Disallowance of foreign travel expenses - Held that:- We restrict the disallowance on foreign travel expenses to 10% as against 15% made by the AO and confirmed by the CIT(A). Accordingly, this ground of appeal of the assessee is partly allowed. Deduction u/s 80IA - Held that:- where any goods manufactured by the eligible undertaking is transferred to the other undertakings of the same assessee then for the purpose of computing the profits and gains of the eligible undertaking which would be allowable as deduction u/s.80IA of the Act. Accordingly, we remit the disputed issue to the file of AO, who shall examine and verify the issue afresh after providing adequate opportunity of hearing to the assessee Nature of income - amount paid by the assessee to UM Cables - Held that:- A trading receipt may contain a fraction of sum as taxable income, but in other cases such as interest, commission, transfer of rights of patents, goodwill or drawings for plant and machinery and such other transactions, it may contain large sum as taxable income under the provisions of the Act. It cannot be said that the amount paid by the assessee to UM Cables was in the nature of income in its hands.
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2018 (6) TMI 284
Levy of fee u/s 234E - delay in filing TDS statement which was inserted from 01.06.2015 - Scope of amendment to act - Held that:- As prior 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E of the Act. The provision of Section 234E of the Act is charging provision i.e. substantive provision which could not be applied retrospectively, unless it is expressly provided in the Act, to levy the late fee for any delay in filing the TDS statement for the period prior to 01.06.2015. The counsel for the assessee has rightly contended that in the absence of enabling provisions u/s 200A of the Act, such levy of late fee is not valid relying on the decisions in the cases of CIT vs. Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT] Substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. - decided in favour of assessee.
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2018 (6) TMI 283
Addition u/s 14A r.w.r 8D - Held that:- As decided in CHUDGAR RANCHODLAL JETHALAL TRADE PVT. LTD. VERSUS THE DCIT [2015 (4) TMI 437 - ITAT AHMEDABAD] the provisions of Rule 8D are applicable for the year under consideration and in the light of the decision of Joint Investments Pvt Ltd Versus CIT [2015 (3) TMI 155 - DELHI HIGH COURT] and in view of the fact that the disallowance worked out by A.O u/s. 14A is more than the exempt income and disallowance u/s 14A r.w.r. 8D cannot be made in excess of exempt income - the disallowance is restricted to the dividend income earned by the appellant - Decided in favour of assessee
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2018 (6) TMI 282
Denial of deduction claimed u/s. 54/54F - AO rejected assessee’s claims on the ground that the assessee has made a new claim of exemption u/s 54F without filing revised return - Held that:- Hon’ble Supreme Court in GOETZE (INDIA) LIMITED VERSUS COMMISSIONER OF INCOME-TAX [2006 (3) TMI 75 - SUPREME COURT] clearly stated that the power of AO is restricted to admit a new claim only if such claim is made by filing revised return of income. However, in the same decision, the Court further reiterated that the findings of the Court in any way does not impinge the powers of the appellate authorities to admit new claim if necessary facts regarding such claim is already available before the AO. In this case, admittedly, all necessary facts required for deduction u/s 54F are already available before the AO as the assessee has made a claim u/s 54 - since the provisions of section 54 / 54F are beneficial provisions, which need to be construed liberally so as to allow the benefit, if other conditions specified in the said sections are fulfilled. Hence, we are of the considered view that the AO was erred in not allowing assessee’s claim of deduction u/s 54F. Hence, we set aside the issue to the file of the AO and direct him to admit assessee’s alternate claim of deduction u/s 54F and allow such claim if assessee has fulfilled all conditions specified therein. - Appeal filed by the assessee is allowed, for statistical purpose.
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2018 (6) TMI 281
Exemption from the provisions of Section 115JB being a sick company - MAT provision applicability - Reopening of assessment - Held that:- Issuance of certificate u/s. 17 of the SICA does not arise as the Board stand dissolved consequent to repeal of the Act. So, the insistence of AO and the CIT(A) for a certificate under that Act is not proper. Since the provisions of Section 115JB have not been amended, to that extent the repealed SICA Act is applicable so it has to be applied. Therefore, it is to be considered that assessee is covered by Section 17 of SICA and therefore, the company is exempt from the provisions of Section 115JB, being a sick company. This contention of assessee is accepted. The amount added to the P&L A/c being capital receipt should not have been brought to tax there are Co-ordinate Bench decisions on the issue having held that the amount of capital receipt which otherwise not taxable cannot be taxed u/s 115JB. The recent one is in the case of M/s. JSW Steel Limited Vs. ACIT [2017 (4) TMI 47 - ITAT MUMBAI] relied upon by assessee. There is merit in assessee’s contention but that becomes academic only as there are contradicting views on this subject and we need not go into that issue for the simple reason that assessee being a sick company, provisions of Section 115JB are not applicable. The Coordinate Bench has already held so in earlier proceedings. Why AO has to reopen the assessment is not understandable. Considering the facts of the case, we hold that assessee-company is not covered by the provisions of Section 115JB and therefore, the grounds raised by assessee are accordingly allowed.
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2018 (6) TMI 280
Validity of reopening of assessment - notice u/s 147 issued beyond stipulated time limit - maximum time limit for issuance of notice - Held that:- Merely signing the notices cannot be equated with the issuance of notice as contemplated u/s 149 - the date of issue would be the date on which the same were handed over to the Post Office for the purpose of booking, for the purpose of effecting service on the assessee - The process of issue of notice will be completed only when the envelope containing the notice is handed over to the Postal Authorities in Kolkata which is only on 05.04.2015 and therefore, the notice u/s 148 of the Act even though dated 31.03.2015 has to be taken as issued only on 05.04.2015, which action of Assessing Officer is clearly barred by limitation and as such cannot be sustained. - Decided in favor of assessee.
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2018 (6) TMI 279
Disallowance of provision for legal and professional charges - TDS provision adherence - Held that:- Parties have been identified - thus the matter needs to be adjudicated afresh hence we restore the matter to the files of the A.O. -the A.O. shall look into the party-wise details of the provision created for software development and testing charges and shall also examine whether the TDS provision has been duly complied with - A.O. shall take a decision after affording a reasonable opportunity of hearing to the assessee. Disallowance under section 36(1)(va)on late payment of employees’ contribution to PF and ESI - Held that:- Contribution towards PF and ESI u/s 36(1)(va) cannot be allowed as a deduction if the said payment has been made after the due dates specified under the respective statutes - this ground of assessee is dismissed. Travelling and accommodation expenses on behalf of its AEs - Held that:- Expenses were incurred by the assessee on behalf of and for the benefit of its AEs and thus would come within the meaning / explanation of international transaction in section 92B - hence AO cannot impute interest on balance outstanding from its AEs. As regards the claim of the assessee that a period of six month should be considered as reasonable for making recovery of cost incurred by it from the AE, we are of the view that such a plea cannot be entertained - A period of 60 days is reasonable period within which the expenses ought to have been recovered by the assessee from its AEs - thus AO is directed to impute the interest on the outstanding amounts for a period exceeding 60 days at any point of time during the year in consideration Adoption of rate of interest - Held that:- Since the expenditure has been incurred in Indian currency and not in dollars thus adoption of LIBOR is rejected - weightage average interest of SBI-PLR on FDs has been worked out by the DRP at 8.15%. We are of the considered view that only 8.15% should be adopted while calculating ALP interest on the amounts outstanding from the assessee’s AEs.
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2018 (6) TMI 278
Escapement of income requiring reopening of the assessment u/s 148 - Nature of land sold - STCG - Held that:- In the computation of income, the assessee has taken the net figure after reducing the interest on loans and development charges and therefore, the assessee has actually taken the sale consideration at ₹ 44,12,500 only and there was no escapement of income in computation of the STCG. Therefore, there is no escapement of income requiring re-assessment u/s 147. In the revised return filed in response to section 148 has claimed the land as agricultural land. AO has also accepted that as per the revenue records, these lands are agricultural lands but the only reason for not accepting the said contention is that the assessee has not carried on any agricultural operations. In the case of CIT vs. Smt. Debbie Alemao and 2.Joaquim Alemao, (2010 (9) TMI 560 - BOMBAY HIGH COURT) has held that where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation. The reason given by the AO for not accepting the assessee’s contention is not sustainable. - Decided in favour of assessee.
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2018 (6) TMI 277
Unaccounted investment - addition based on entries recorded in the diaries seized - addition proposed by Spl. Auditor - Held that:- Even though assessee explained that the transactions pertain to the firm, the same seems to have been not examined properly by the AO or by the CIT(A). On the addition proposed by Spl. Auditor the transactions were reportedly by cheque and as clearing (clg) is mentioned, it is easy to verify the said transactions with reference to the corresponding bank entries, either in assessee’s bank pass book or in the firm’s bank accounts. This exercise has not been done and amount of ₹ 3,03,455/- has been added in the assessee’s hands ignoring the assessee’s explanation. When assessee explained that amount of ₹ 9 Lakhs was meant for purchase of cement that can be verified from the books of the firm, which was in the construction activity. The diary being maintained in Telugu. The same could have been analysed and examined to see whether the contentions of assessee are correct or not. Since this exercise was not been undertaken by the AO or by the Ld.CIT(A), who could not read Telugu, we are of the opinion that the issue can be re-examined by the AO after giving due opportunity to assessee to explain the transactions vis-à-vis the books maintained by assessee or in the firm’s hands - Appeal of assessee is allowed for statistical purposes.
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2018 (6) TMI 276
Additions made on account of gifts found in survey - Held that:- In none of the gift deeds/declarations the assessee was involved either as a donor or as a donee - under the circumstances where the donees as well as the donors were identified and even responded to the verification process by the AO, the addition of the gifts amounting to ₹ 72,13,000/- in the hands of the assessee is unwarranted and without any basis - thus revenue failed to prove that money either belonged to the assessee or had come to the assessee after being gifted by the donee - AO directed to delete the addition. Additions on account of unexplained stock of gold found in survey - Held that:- AO has not correctly understood the issue and made the addition on wrong appreciation of facts - AO confused the stock of 8862.18 gms and 5925.37 gms i.e. 5935.37 gms were found physically during the course of survey and 8862.18 gms was as per the computer print out at the time of survey as belonging to the customers - CIT(A) has taken a correct view of the matter by into the stock records , reconciliation etc and thus deleted the addition - we do not find any reason to interfere with the order of the CIT(A) and thus addition is deleted. - Decided against revenue
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2018 (6) TMI 275
Disallowance of loss on sale of shares of associated concern - speculation loss - Held that:- The loss is not speculative loss in terms of explanation to section 73 as the assessee is not engaged in the sale and purchase of shares of other companies - Following the judgement in case of CIT VERSUS STANDIPACK PVT LTD [2012 (10) TMI 131 - CALCUTTA, HIGH COURT] wherein it has been held that only the loss resulting from the activity of sale and purchase of shares of other companies which is a part of the business of the assessee could be treated as speculation loss - the ground of revenue is dismissed. Depreciation on intangible assets being “business and commercial rights” - compensation paid by the assessee to land owners for acquiring the mining rights in the land - Held that:- Following the decision of Hon’ble Delhi High Court in the case of Areva T AND D India Ltd. vs. DCIT & CIT vs. Jai Parabolic Spring Ltd. [2012 (4) TMI 79 we are of the considered view that expression “Business or commercial rights of similar nature” specified in section 32(1)(ii) of the Act, includes other intangible assets also which is not mentioned as it is not possible to specify each item - thus payment made by the assessee in the form of compensation for acquiring mining rights in the land is intangible assets and hence depreciation is allowed - the ground of revenue is dismissed. Addition being royalty paid in financial year 2001-02 - Held that:- A perusal of the order of appellate authority reveals that the assessee paid advance in the March 2002 in respect of the next financial year which was duly adjusted and claimed by the assessee in the assessment year 2003-04. The issue has been discussed at length by the Ld. CIT(A) and only thereafter allowed the appeal of the assessee. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) Invisible loss in the raw material - Held that:- Percentage of yield and invisible wastage depend on several factors as has been mentioned hereinabove such as quality of cotton, fly generated during manufacturing process, moisture contents in the cotton etc. and the percentage of invisible waste cannot be standardized as the inputs in the textile division depends on the various factors - AO has not pointed out any defects and deficiencies in the books of account and simply relying on the percentage of invisible gain in the earlier year disallowed the invisible waste during the year which is not correct and can not be sustained. - Decided against revenue
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2018 (6) TMI 274
Reopening of assessment u/s 148 - capital gain addition - eligibility of reasons to believe - Held that:- Datewise capital account is placed wherein all the credit and debit entries which showed that at the beginning of the year the credit balance was ₹ 1,94,64,671/- whereas at the year end the capital account was overdrawn. A perusal of all these evidences on record reveals that the AO has examined all the materials at the time of original assessment proceedings u/s 143(3) and therefore there is no fresh tangible material before the AO to form a reason to believe that income of the assessee has escaped. The present case which is a mere formation of belief on the basis of re-examination of the same records which were available at the time of original assessment proceedings and therefore nothing less than a change of opinion which is not permissible under the IT Act. - Decided in favour of assessee.
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2018 (6) TMI 273
TP adjustment in respect of counter guarantee given - corporate guarantee given on overdraft facility - Held that:- In respect of corporate guarantee given on overdraft facility, following the order passed by Tribunal in AY 2008- 09, we direct the Assessing Officer to restrict TP adjustment to 0.5% of average amount of loan outstanding during the year. In respect of counter guarantee given by the assessee for the guarantee given by IDBI Bank on behalf of Taj TV, we agree with the contentions of learned AR that non-fund based facility cannot be treated at par with the the fund based facility. We notice that in the case of Asian Paints (India) Ltd [2016 (11) TMI 258 - BOMBAY HIGH COURT] @0.20% has been held to be appropriate by the Tribunal. Accordingly, we direct the Assessing Officer to compute TP adjustment in respect of counter guarantee given at 0.20% of the amount of counter guarantee. Disallowance made u/s. 14A - Held that:- The own funds available with the assessee as at the beginning and end of the year, were more than the value of investment during those dates. Hence, as per the decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], no disallowance out of interest expenditure is called for as per Rule 8D(2)(ii) of the I.T Rules. Disallowance to be made under rule 8D(2)(iii) out of administrative expenses, only those investments which have yielded exempt income have to be considered for working out the average value of investments, as per decision rendered by Delhi Special Bench of the Tribunal in the case of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. As stated earlier that the assessee has furnished a statement of working of disallowance under Rule 8D(2)(iii) by considering only those investments which have yielded exempt income, as per which the disallowance worked out to ₹ 32.71 lakhs, i.e. more than the amount disallowed by the assessee. Hence for the limited purpose of verifying the above said statement, we restore this issue to the file of the Assessing Officer. If the is satisfied with the workings given by the assessee, the disallowance u/s. 14A of the Act should be restricted to ₹ 41.33 lakhs, i.e. the voluntary disallowance made by the assessee should be accepted. Otherwise, the AO may take appropriate decision in accordance with the law.
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2018 (6) TMI 272
Late fees u/s 234E for delay in filing the quarterly TDS statements as per Section 200A Fee - Appeal time barred - Held that:- Levy of fee under section 234E for default in furnishing statements is mandatory. No appeal provided against order under section 234E before Ld. CIT(A). According to submissions of the assessee, the A.O. intimated that orders levying fees under section 234E is available on line. Therefore, Ld. CIT(A) correctly noted that assessee used the same email ID which have been used for filing of the return for each quarter in the year under reference. Therefore, Ld. CIT(A) rightly held that the impugned orders have been served upon assessee through online and there is no reason why the orders did not reach the assessee. The contention of assessee has been rightly rejected by the Ld. CIT(A). No sufficient cause have been explained for the delay in filing the appeals before the Ld. CIT(A). CIT(A) correctly held that appeals are time barred and same were accordingly dismissed. When TDS returns/statements have been filed by assessee for each quarter online and orders have been served upon assessee online for payment of the late fees, then the assessee is required to take steps within the reasonable period as per law. When the appeals are not maintainable before Ld. CIT(A), the same would also be not maintainable before the Tribunal. - Decided against assessee
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2018 (6) TMI 271
TDS u/s 194C - Addition against the individual labour charges during the statutory limit of execution for individual one - no TDS was deductible because the amount disbursed to nine labourers included cost of material, travel reimbursement and wages to individual labourers which cannot attract sec. 194C - Held that:- The onus is on the assessee to discharge the facts which has been given in the break-up because these facts are exclusively in his knowledge and he is only privy to it and how the AO will be knowing these things and therefore the assessee has to bring material to substantiate what he claims. It has to be kept in mind by the AO that merely because nomenclature of expense is given as ‘Labour Charges Paid’ does not conclusively determine the character and nature of the expense claimed. The AO has to decide the issue based on evidence/materials brought before him in accordance to law. So, with these observations, we are inclined to set aside the order of CIT(A) and remand this issue back to AO for de novo examination in the light of facts and law in accordance to law, after giving opportunity to assessee. - Appeal of assessee is allowed for statistical purposes.
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2018 (6) TMI 298
Cash payments made in violation of Section 40A(3) - payment made in cash and without deducting tax at source - Held that:- As per Rule 6DD payment by assessee is made in a village or town, which on the date of such payment, is not served by any bank - since no adequate evidence to invoke the benefit under Rule 6DD(g) of the Act had been presented by the assessee - thus the order passed by the appellate Tribunal is set aside by remanding the matter before the relevant CIT(A) for fresh adjudication.
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2018 (6) TMI 297
Computation of capital gains - Disallowance of brokerage u/s 48 - Held that:- Property was in Bangalore, the brokerage was paid for the services rendered to the assessee - such expenditure would be permissible for the transfer of an asset, but the burden was on the assessee to demonstsrate that the expenses had been incurred - thus AT was satisfied that brokerage commission is paid by way of a cheque - hence deduction is allowed. Trading liability u/s 41(1) - Held that:- Here was no question of adding the amount received by the assessee from her father for purchasing a house property to her income since section 41(1) (a) does not apply here - Decided in favor of assessee.
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2018 (6) TMI 296
Deduction u/s 80IA - deductions of profits and gains from industrial undertakings or enterprises engaged in infrastructure development - Held that:- An assessee can claim the benefit of deduction only upon a notification pertaining to the industrial park or special economic zone being published by the Central Government and it is on AO to ascertain whether the terms as to the completion of the project have been complied by assessee before allowing the benefit - thus it is directed that Revenue will prepare the paper-books and file them within eight weeks. Interest on loan given to sister concern - Held that:- Whether an entity is associated with another or not is essentially a question of fact - thus the tribunal came to a conclusion that the other concerns were sister concerns of the respondent assessee and this aspect of the matter does not fall for any consideration.
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2018 (6) TMI 300
Special audit under Section 142(2A) - service of notice - whether the assessment proceedings would have abated if the order under Section 142(2A) was passed on 30th March, 2013 and was received or served on or after 1st April, 2013? - as decided by HC a communication takes place when the order is dispatched or “sent out” and is made known or public and Service of the letter dated 30th March, 2013 with the ‘Terms of Reference’ would be effective communication - as contented from the photocopy of the Receipt Register that it was done on 31.03.2013 but the said date is afterward tempered with a change to 30.03.2013 which according to him is clear from the manner in which the date is written. Held that:- Issue notice, returnable in four weeks. In the meantime, there shall be stay of the direction in the impugned order.
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2018 (6) TMI 270
Long term capital gains on sale of land - nature of land - Whether the land sold was agricultural land? - Held that:- Whether the land is agricultural bear mainly on the nature or character of the land, and not merely on the actual user - assessee has no intention to do any agricultural operation in impugned land - thus it appears that assessee did not file any explanation before A.O. that property in question is agricultural land - decision of the Hon'ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim (1993 (9) TMI 10 - SUPREME Court) squarely apply to the facts of the case - thus there is no merit in appeal of assessee hence dismissed.
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2018 (6) TMI 269
Deduction u/s.10B - claim denied as assessee company is not involved/carried out any such of export business which is covered u/s.10B - nature of business of the company - CIT(A) gave relief to the assessee on the basis that assessee was having unit in SEZ and same was approved by the development Commissioner - Held that:- Both the lower authorities have been failed to ascertain that what assessee is actually doing and just bury the lead. Assessee is claiming that he has been doing research and development in pharmaceutical in the export drug related services. Assessee claimed that they fall in the category of back office operation and in the audit report it is also mentioned that assessee is doing research and development work related to drugs and healthcare. But both authorities have not ascertained to the effect that what actually assessee is doing. Therefore, we set aside the orders of the CIT(A) in both appeals and remit this matted back to the file of the ld. AO to decide the nature of business of the company. - Decided in favour of revenue by way of remand.
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2018 (6) TMI 268
Applicability of section 50C - Reference of matter to DVO - whether the word "may" really provides discretion to the Assessing Officer even when the assessee has protested the valuation for stamp duty purpose? - Held that:- In sum and substance the matter under section 50C is the part of the head "Income from capital gains" and therefore the preliminary objection raised by the assessee is rejected. Request or objection of the assessee against the value adopted by the stamp valuation authority by the Assessing Officer is against the spirit of section 50C of the Act. It is not optional for the Assessing Officer to make reference to DVO and the right of the assessee under section 50C is a statutory right. In the circumstances and facts of the case we find no infirmity in the order of the learned Commissioner of Income-tax (Appeals) that the Assessing Officer should have considered the objections raised by the assessee against the same and should have referred the matter to the DVO under sub-section (2) of section 50C of the Act
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2018 (6) TMI 267
Benefit of Section 80P(2)(d) on the dividend income - Held that:- Since both the authorities have not seen the Memorandum of Association or any other evidence in respect of the institutions where the investments were made; therefore, we deem it appropriate to set aside this issue to the file of the Assessing Officer. The Assessing Officer shall decide the status of the institutions where the investments were made by the assessee. If they were found to be co-operative societies, then deduction as per Section 80P(2)(d) would be granted; otherwise, he will decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.
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Customs
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2018 (6) TMI 266
Maintainability of appeal - alternative remedy - disputed question of facts - Provisional release of goods - whether communication dated 28th May, 2018 was an order passed under Section 110A of the Act? - Counsel for the petitioner accepts that an order under Section 110A of the Customs Act can be made subject matter of an appeal - Held that:- We are not inclined to entertain the present writ petition and leave it to the petitioner to invoke the statutory appellate remedy. Disputed questions of facts are involved as is apparent from the chequered history. Preliminary question and issue would be regarding to valuation of Hops Pellet imported from Germany. Consignment was imported in February, 2016. The show cause notice was issued on 23rd January, 2017. Request for provisional release was made after 18 months of seizure. Without making any comments on merits, we leave it to the petitioner to invoke statutory appellate remedy - petition dismissed as not entertained.
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2018 (6) TMI 265
Validity of Notifications - Extension of ADD - extension of Anti-Dumping Duty for the one year pending the Sunset Review - extension of Anti-Dumping Duty for the five years pursuant to the Sunset Review determination - Whether with the initiation of Sunset Review before expiry of the five year levy, there is an automatic extension of Anti-Dumping Duty for the Sunset Review period? - Would a separate notification be required extending the levy of Anti-Dumping Duty before expiry of the original five year period? - Would a notification of levy of anti-dumping duty for another five years after the expiry of the Sunset-Review Period be valid? Held that:- The Government itself was desirable that the Sunset Review exercise should be completed before the expiry of the first five year levy and in any case, the extension of levy should be completed within one year after the first five years as required under the duty regime. It requires the Domestic Industry to file the Sunset Review petition before the expiry of the period for which the Anti-Dumping Duty is in existence. No such application is to be entertained by the Designated Authority if it is filed in less than 90 days of expiry of the levy. The reasons and the grounds for sympathetic consideration staked in the respondents’ affidavit cannot be a ground for extension of the time schedules, in the realm of international trade regime. The transparency that envisaged the statute must be respected. The Act, the Rules and the Implementing Agreement sanction a legal regime for protective measures but not for protectionism. The N/N. 17/2013 issued 60 days after the expiry of the levy of Anti-Dumping Duty under the first five year period, would be non-est because it sought to extend a levy which had lapsed on 04.05.2013. The second proviso to section 9A(5) of the Act is an enabling provision granting the Central Government the authority to continue Anti-Dumping Duty pending the outcome of the Sunset Review for a further period not exceeding one year - In the present case, the original levy came to an end on 04.05.2013. The levy had a limited life and unless fresh life was infused in it before its predetermined expiry date, it could not be deemed to have been extended. Infusion of fresh life into the levy for a period of one year requires a fresh notification, in addition to the notification for initiation of the Sunset Review. That not being so, in the present case the levy under impugned Notification is without authority, hence it has to be and is set aside. Likewise the second notification imposing Anti-Dumping Duty for a period of five years too cannot be sustained because it has to be issued within the period of first five years or in the extended one year period of Sunset Review in which the earlier existing duty has been extended. Rule 18(1) does not and cannot be read to lend any authority or power to the Central Government to issue Customs Notification No. 35/2014. It is illegal and, accordingly, set aside. The period of three months under Rule 18(1) can be read only in the case of original notification for Anti-Dumping Duty and not for the Sunset Review. Initiation Notification No. 15/1/2013 dated 30.04.2013, Final Finding dated 29.04.2013 and the Customs Notification Nos. 17/2013 and 35/2014 issued on 05.07.2013 and 24.07.2014 are set aside - Petition allowed.
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2018 (6) TMI 264
Quantum of penalty u/s 114A of CA, 1962 - misdeclaration of goods evading Anti dumping duty - warehoused goods - It was found that six consignments out of the imported material were “cold rolled” stainless steel as against declaration of “hot rolled” - invocation of extended period of limitation - Held that:- It is difficult to believe that the appellant-assessee was not aware of the fact that the goods were cold rolled and not hot rolled. The appellant-assessee being the said business is obviously aware of the product and its price in the market. In these circumstances, the assertion of the appellant-assessee that they were not aware that the product was cold rolled, cannot be accepted - the declaration regarding the nature of the product before Customs becomes a misdeclaration due to which the extended period of limitation can be invoked. Confiscation - Held that:- It is a settled law that the confiscation cannot be made unless the goods are physically available for confiscation. It is seen that no seizure was made. The goods were only detained and later provisionally released - confiscation of only the goods which were detained and provisionally released can only be ordered. Testing of samples - case of appellant-assessee is that testing of samples was not done in respect of all the Bills of Entry, as no material in respect of certain Bills of Entry was available for testing - Held that:- The charge regarding misdeclaration is based on the testing of samples from the consignments detained in the warehouse. No conclusion regarding misdeclaration can be made in respect of Bills of Entry in respect of which no material was available for the purpose of testing at warehouse - the demand of duty and the redemption fine in lieu of confiscation needs to be revised. The matter is remanded to the adjudicating authority for redetermination - appeal allowed by way of remand.
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2018 (6) TMI 263
Import of machines - Actual user conditions - Post Import Violation of the condition - Exemption to contract for construction of road - Benefit of N/N. 21/2002 – Cus dt. 01.03.2002 - Power Paver Finisher SF-3000–Slip Form - the Appellant has used the machine only for 12 kms of road contract awarded by the NHAI and thereafter it was not used any of the projects as enumerated in the condition of the notification - Held that:- The imported machine was used for intended purpose of road only once for a small contract and after that period for construction of platform at Airport on contract awarded by AAI. Such contract of platform was neither awarded by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory or the machine was used for 5 years for the above contracts. The issue is squarely covered by the Tribunal judgments in case of Patel Engineering Ltd. [2013 (12) TMI 1146 - CESTAT MUMBAI], where it was held that The department has rightly issued show-cause notice to the appellant for violation of condition of their undertaking and thereby for denying the exemption under N/N. 21/2002. Benefit rightly denied - appeal dismissed - decided against appellant.
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2018 (6) TMI 262
Mis-declaration of goods - Confiscation - redemption fine - penalties - Import of second-hand solder based inspection machine - appellant failed to declare the said second-hand solder based inspection machine and did not present proper procurement certificate for the clearance of goods - benefit of N/N. 52/2003 allowed holding that subsequently the appellant produced procurement certificate, etc. - Held that:- It is an admitted fact that in the bill of entry which was presented there was no mention of the imported machinery "3D Solder Paste Inspection Machine". Even assuming that it is for an EOU, and there was change in transport mode still fact of non-declaration of the machinery in the bill of entry remains and in view of this I find that there is contravention/violation of provisions of Section 111(1) and (m) of the Customs Act, 1962 and the said machinery is liable for confiscation - Confiscation upheld. Redemption fine - penalties - Held that:- Considering the value of the machine which was imported but not declared the redemption fine seems to be reasonable and does not require any interference - Since the confiscation of the machinery is upheld and the redemption fine in lieu of confiscation is also upheld the consequent penalty on the appellant also needs to be upheld. Appeal dismissed - decided against appellant.
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2018 (6) TMI 261
Refund of Customs Duty - denial on the ground of unjust enrichment - Held that:- The Chartered Accountant has categorically stated that the amount of ₹ 1,28,979/- is excess of customs duty paid and not being passed on to any buyers - it is conclusively evidenced that the appellant had not passed on the amount to the buyers - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (6) TMI 260
Service tax liability - Club and Association Services - mutuality of Interest - insertion of Section 96J vide amendment made in the Finance Act, 1994 w.e.f. 08/04/2011 - Business Exhibition Service - Held that:- For the period before 31/03/2008, the new Section 96J of Finance Act, 1994 exempts the service of club and association from payment of service tax on the membership charges collected by such associations - For the period from 1st April 2008 the issue is no more res-integra and reliance placed in the case of SPORTS CLUB OF GUJARAT LTD. VERSUS UNION OF INDIA [2009 (8) TMI 667 - GUJARAT HIGH COURT] where it was held that Merely because the clubs are exempted from the levy of income-tax, the respondents could not impose service tax, unless and until the same is permissible under the law. It has now become an elementary principle of law that the question of estoppel cannot arise nor the principle thereof can be applied as against the provisions of law - demand under this head set aside. Service tax on sale of statistical data (statistical service subscription) - transaction of sale of data - Held that:- The appellant provide various kind of data pertaining to automobile industry after collecting the same from various sources. This data is available to members as well as non-member on payment of certain charges - it is a transaction of pure sale of data and thus no service tax can be charged on the same. Business Exhibition Service - demand of service tax - Held that:- From the record produced by the appellant it appears that service tax has fully been discharged by M/s CII (who has actually organized the auto-expos) in this case. Since the M/s CII have discharged their service tax liability, the same amount cannot be charged to service tax twice - however, there are some differences between the amount of revenue sharing certified by M/s CII and the amount which is shown as receipt from the such exhibition in balance sheets of the appellant for various financial years (which are also subject matter of the present show cause notices and order-in-originals) - Since, this is only a matter of fact which is to be verified by the field level officers, we are inclined to send the proceedings for denovo adjudication only on the question of service tax demand under category of Business Exhibition Service - matter on remand. Appeal disposed off.
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2018 (6) TMI 259
Utilization of CENVAT credit - service tax on GTA Service - Payment of service tax by debiting CENVAT credit account - output service - GTA Service - appellant contended that till 21.4.2006, GTA service was deemed to be output service (before issue of N/N. 21/2006-CE NT) hence, utilization of CENVAT credit is proper - Held that:- Before the omission of Explanation to Rule 2(p) of the CENVAT Credit Rules by N/N. 21/2006-CE (NT) by N/N. 21/2006-CE (NT), GTA services were deemed to be output service, therefore, there was no bar on the utilization of CENVAT credit for payment of such service tax - Abatement on GTA Services - N/N. 32/2004-ST dated 3.12.2004 and N/N. 1/2006-ST dated 1.3.2006 - It was alleged that the appellants paid service tax on behalf of GTAs without having such declaration or endorsement on the consignment note to the effect that they have not availed CENVAT credit - Held that:- Admittedly, the owners of tempos, who carried out transportation for the appellants were not registered with the Central Excise or Service Tax department; therefore, the question of availment of CENVAT credit by them is a misnomer, there was no way that they could have availed the credit. Therefore, mere absence of endorsement on the invoices does not make the appellants ineligible for the availment of the substantial benefit i.e., abatement. The lower authorities have not appreciated all the issues raised therein by the appellants and there have been calculation errors also. In these circumstances, it will be in the interest of justice that the issue should be verified again with available documents and reliefs as claimed by the appellant be allowed to them - appeal allowed by way of remand.
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2018 (6) TMI 258
GTA service - reverse charge mechanism - it was alleged that appellant have not paid service tax on the transportation charges paid to harvesting contractor towards the transport of sugarcane in trucks / tractors - non-issuance of consignment note - Held that:- The Appellant had awarded the work of harvesting and transportation of sugarcane to the individual persons. These individual contractors did not issue any consignment note / LR / Bilty. Thus looking to the nature of job involved and the facts that these individual contractors are not GTA, there is no reason to charge Service tax from the appellants under the category of GTA. The Tribunal judgment in case of NANDGANJ SIHORI SUGAR CO. LTD. Versus COMMISSIONER OF C. EX., LUCKNOW [2014 (5) TMI 138 - CESTAT NEW DELHI] has held that When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called ‘Goods Transport Agency’ and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp). Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 257
CENVAT credit - invoices addressed to Branch Offices, which were not registered - denial on the ground that they have availed Service Tax credit of Input Services invoices which were addressed to their branch offices - Held that:- The issue involved is covered by judgment of Tribunal in case of Manipal Advertising Services Pvt. Ltd. Vs CCE, Mangalore [2009 (10) TMI 434 - CESTAT, BANGALORE] wherein the credit in identical issue was allowed by holding that If a person is discharging Service tax liability from his registered premises, the benefit of Cenvat credit on the Service tax paid by the service providers cannot be denied to the appellant, only on the ground that the said invoices are in the name of branch offices - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 256
Classification of Services - services of Survey and preparation of project report for road projects - Consulting Engineering Service or otherwise? - Held that:- The Appellant firm is undisputedly not an Engineering Firm. The Proprietor is not a qualified engineer. Only for the reason that he is having skill and knowledge he cannot be considered as professionally qualified Engineer. Since the firm is not a qualified engineering firm therefore the service rendered by them are not covered under the category of Consulting Engineer Services. The Tribunal in case of CCE, Vadodara-II Vs SKP Projects (P) Ltd. [2015 (4) TMI 531 - CESTAT AHMEDABAD] has held that the services in question would fall under the category of survey and map making service. As the lower authorities have not properly appreciated the facts, it is appropriate to remand the case back to the Adjudicating Authority to consider the facts afresh and pass appropriate order - appeal allowed by way of remand.
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2018 (6) TMI 255
Utilization of CENVAT credit - Whether credit of service tax paid on commercial or industrial construction service or works contract is admissible for payment of service tax on output service i.e. renting of immovable property service as building constructed was rented out to various parties? - Held that:- This issue is no longer res integra as in case of Sai Samhita Storages P. Ltd. [2010 (4) TMI 484 - CESTAT, BANGALORE], it was held that the credit on construction service of a building where the output service is renting of immovable property service, has been held admissible - demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 254
Condonation of Delay of four years, nine months and twenty days in filing appeal - The taxable period involved in this case is from 01.05.2006 to 30.09.2009, the original order is dated 13.03.2012 and the order of the Commissioner (Appeals) is dated 28.01.2013 which was served on the applicant on 06.02.2013. Against this order, the applicant has filed appeal before the Tribunal on 01.03.2018. Held that:- Admittedly, the delay sought to be condoned is inordinate - Hon’ble Supreme Court in the case of Collector, Land Acquisition Anantnag and Another v. MST. Katiji and Others [1987 (2) TMI 61 - SUPREME COURT] has no doubt held that the legislature has conferred the power to condone the delay to enable the Courts to do substantial justice to parties by disposing of the matters on merits. In the case in hand the delay is inordinate, there is no effort to explain even in the application for condonation of delay that the applicant or any concerned person working for it was not aware of legal provisions as to the limitation. It is not even the applicant’s case that they tried seeking advice by which the delay has occurred. The explanation put forth in bits and pieces, would not take us anywhere to even appreciate the attempts by the applicant. It is not a fit case for exercising the discretion of condoning the delay - application for COD rejected.
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2018 (6) TMI 253
Interest accrued on lending by Financial Company - exempted services - The department has sought to recover an amount of 8%/6% of the value of interest which was considered as exempted services in terms of N/N. 29/2004-ST dated 22-9-2004 - Held that:- The notification exempts only part of value of taxable service that is interest. The main service provided by the appellant is “banking and other financial service” which includes one of the service i.e. lending. The lending per se is taxable but part of value of the lending service to the extend of interest is exempted therefore service is taxable only part of the value is exempted vide notification No. 29/2004-ST dated 22-9-2004 - In this fact entire basis of Revenue that interest being exempted service therefore Rule 6(3)(ii) is applicable is absolutely incorrect. In the present case lending service which is one of the banking and other financial service is taxable only part of the value of such service which represent interest is only exempted therefore Rule 6(3) has no application. The demand of 8%/6% raised by the adjudicating authority is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 252
Classification of services - Finishing Work - finishing work (wood and metal joinery & carpentry) relating to Automatic sliding door at Rajasthan State Co-operative Bank Head Office building in one work order - finishing work like fixing of doors & windows fixing pre-laminated particle board / decorative lamination etc. - Works Contract Services or Commercial or Industrial Construction Service - Held that:- The nature of the activity carried out by the appellant for Jaipur Development Authority was in the nature of finishing services. One of the work orders was for fixing of automatic sliding door at Rajasthan State Co-operative Bank’s head office building. The second work order was pertaining to fixing of doors & windows with pre-laminated particle board/decorative lamination, providing & fixing glazing in aluminium door, window etc. From the nature of the work orders, it is found that the same does not appear to include supply of material alongwith service and as such do not merit classification under the ‘Works Contract Service’. Appeal dismissed - decided against appellant.
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2018 (6) TMI 251
Refund of an amount paid by mistake - N/N. 25/2012 dated 20/06/2012 - Held that:- It transpires that at serial No. 25 exemption is granted to services provided to Government, local authorities of government authority in respect of sanitation conservancy, solid waste management - In the case in hand, it is not in dispute that the appellant herein has rendered the services to MIDC for garbage collection disposal thereof, it is found that the adjudicating authority was correct in allowing the refund claim filed by the appellant - Revenue is directed to refund the amount as has been ordered by the adjudicating authority - Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 250
Refund of CENVAT credit - various input services - exporter of services under the category of ‘Business Support Services’ - case of Revenue is that post April 2014, the definition of ‘input service’ has undergone a change which has deleted the services in relation to the business activity and is not to be considered as in or in relation to the business of the assessee - Held that:- The argument on behalf of Revenue in the grounds of appeal is without any merits as similar / identical issue of various other appellants and respondents was considered by the Division Bench of this Tribunal in the case of Commissioner of Service Tax. V. WNS Global Services [2016 (10) TMI 135 - CESTAT MUMBAI] and appeals were allowed in favor of assessee by holding that The claim of Revenue that input services do not have direct nexus to the business activity of respondent-asessee is a hollow claim - appeal dismissed - decided against Revenue.
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Central Excise
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2018 (6) TMI 248
Classification of goods meant for Construction Industry - Ready Mix (Dry Mix) manufactured by the respondents under the brand name “Roofit mix” - Whether classified under Chapter Heading 2505.00 of the First Schedule to the Central Excise Act, 1985 or under under CETH 32149010? - The assessee has claimed classification of the impugned product under CETH 2505 prior to 1.3.2005 and CETH 2520.00 w.e.f. 1.3.2005 - time limitation - penalties - Held that:- The impugned products are used as first layer in irregular brick works, first layer plastering in regular brick works etc. From the facts on record, it is not disputed that the ingredients that go into the impugned product are graded river sand, portland cement, white cement and lime stone powder in specific proportions along with some additions for water retention and crack free nature. Evidently, this mixture does not have a basis of calcium sulphate and hence it could not have come within the fold of CETA classification 2505.00 in the erstwhile Central Excise Tariff prior to 1.3.2005 - For the period w.e.f. 1.3.2005, corresponding CETH 2520 seeks to cover “Gypsum: Anhydrite; Plasters (consisting of calcined Gypsum or Calcium Sulphate) whether or not coloured, with or without small quantities of Accelerators or Retarders”. As clarified in the HSN, the products of heading 32.14 are “preparations of widely differing composition which are essentially characterised by the uses to which they are put; these preparations are usually put up in a more or less pasty form and in general they harden after application; however, some are in solid or powder forms; the products of this heading are usually applied with a caulking gun, a spatula, a trowel, a plasterer’s float or similar tools” - the impugned product can only be classified in CETH 3214.00 prior to 1.3.2005 and 3214 90 10 thereafter. Time limitation - Held that:- appellant cannot be charged with any of the ingredients for invoking extended period like suppression of facts, misstatement etc. - the confirmation of differential Central Excise duty with interest in respect of the proceedings initiated by SCN No.39/2008 dt. 10.03.2008 will have to be restricted only to the normal period of limitation - only for this limited purpose of quantification, matter is remanded. Penalties u/s 11AC and on the other Directors / Employees u/r 25/26 of the CER 2002 - Held that:- As the issue involved was interpretational, the penalties imposed on the assessee under Section 11AC of the Act and on the other Directors / Employees under Rule 25/26 of the Central Excise Rules, 2002 are set aside.
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2018 (6) TMI 247
GTA Service - CENVAT credit - input services - Outward transportation of goods up to the buyer’s premises - period involved is after 01.04.2008 - whether the appellant is eligible to avail the Cenvat Credit of service tax paid on the GTA service received by them for outward transportation of final products from the factory gate up to the premises of the buyer when the sales are on FOR basis? - penalty. Held that:- The said issue has been decided in the case of M/s. Ultratech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA] by the Hon’ble Apex Court, wherein it has been held that credit is eligible up to 01.04.2008 and after such date, the assessee is not eligible for credit - credit not allowed. Penalty - Held that:- Taking into consideration that the issue was under litigation and was in favour of assessee at the Tribunal level as also decided by various High Courts and got settled only by the decision of the Hon’ble Apex Court, the penalty imposed is unwarranted and requires to be set aside. Appeal allowed in part.
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2018 (6) TMI 246
Recovery of erroneous refund made - refund claimed in respect of freight beyond the place of removal on which the appellant has paid duty - Section 11A of the CEA 1944 - case of the appellant is that appellant’s claim has already been sanctioned and the same has not been challenged before the higher forum and therefore, the refund sanctioned by them has become final and the provisions of Section 11A are not applicable - Held that:- The issue has been examined by the Hon’ble High Court of Gauhati in the case of Jellalpore Tea Estate [2011 (3) TMI 11 - GAUHATI HIGH COURT], where it was held that Section 11A of the Act not applicable since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. Until and unless it is challenged, the provisions of Section 11A of the Act are not applicable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 245
CENVAT credit - demand of 6% of the value of exempted goods (waste cleared at nil rate of duty) - manufacture of dutiable as well as exempted goods - non-maintenance of separate records of inputs - Rule 6(3) of the Cenvat Credit Rules, 2004 - CBEC Circular No. 845/3/2007-CE dated 01.02.2007 - Held that:- The case of the Appellant is that they are availing proportionate cenvat credit at the end of the month. The said fact was bought in the knowledge of the adjudicating authority but the adjudicating authority has not given any heed to consider the same and in casual manner the adjudicating authority passed the order - the ld. Commissioner (A) has not given any finding to the claim made by the appellant that they are availing proportionate cenvat credit of inputs used in manufacture goods at the end of the month. It is required to be examined by the authorities below whether the appellant is availing proportionate cenvat credit of inputs at the end of the month which has been used in manufacture of dutiable goods and the same has not been denied by the authorities below - appeal allowed by way of remand.
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2018 (6) TMI 249
Requirement of Additional pre-deposit on second appeal - Section 35F of the CEA 1944 - whether as per Section 35F of the CEA 1944, the petitioner-assessee on filing of second appeal before the CESTST is required to make an additional pre-deposit of 10% of the duty and penalty in dispute, over and above 7.5% pre-deposit made for filing of first appeal before the Commissioner (Appeals)? Held that:- It is clear that a graded scale of pre-deposit has been provided. In case of first appeal, whether before the Tribunal or before the Commissioner (Appeals), 7.5% of the duty and penalty in dispute must be deposited. In case of second appeal before the Tribunal, the amount gets enhanced from 7.5% to 10%. Language of Section 35F of the C.E. Act is unchallenging and meaning of words and conditions placed is plain and lucid. Requirement is to pre-deposit 7.5% of the duty and penalty in dispute; and in case of the second appeal pre-deposit of 10% of the duty and penalty in dispute is mandated - Section 35F of the C.E. Act should not be construed by adding or substituting words to clarify and ironout assumed doubts. Intent as cogently reflected in simple words is that the assessee on second appeal should pre-deposit 10% of the total tax and penalty subject matter of the appeal. It is not to ignore the pre-deposit of 7.5% already made to file first appeal. There is logic in increasing pre-deposit by 2.5% when second appeal is filed, but we would be adding words to the plain and unambiguous provision if we stipulate that 10% pre-deposit will be over and above 7.5% pre-deposit made at the time of the first appeal - Deposits made during the pendency of the proceedings, or even after the order-in-original is passed, have to be taken into consideration for determining and deciding whether condition of pre-deposit of 7.5% or 10% has been satisfied. Earlier deposits do not get obliterated and are not to be treated as inconsequential. Equally pertinent is the second sentence in paragraph 3.1, which states that any shortfall from the amount stipulated in the Section shall have to be paid before filing of an appeal before the appellate authority. Inapplicability of section 35F of the CEA to appeals preferred before the Tribunal under Section 86 of the Finance Act - Held that:- The contention of the petitioner relating to inapplicability of section 35F of the C.E. Act, i.e. Central Excise Act, to appeals preferred before the Tribunal under Section 86 of the Finance Act, is without merit and has to be rejected. Section 35F of the CEA refers to appeals under Section 35(1) or Section 35 of the C.E. Act but this quotation and reference is to the C.E. Act. In the context of service tax appeals, Sections 85 and 86 of the Finance Act apply, albeit by virtue of Section 83 of the Finance Act stipulations and requirements of Section 35F of the C.E. Act will get attracted and apply. Maintainability of refund/rebate claim - Section 35EE of the CEA - Held that:- Reference to Section 33 EE of the C.E. Act in Section 83 of the Finance Act would not make any difference and the Tribunal continues to possess jurisdiction vide Section 86 of the Finance Act to decide matters relating to rebate or refund - decided against petitioner. The direction of the Tribunal that the petitioner must deposit additional 10% of the duty and penalty in dispute for the second appeal to be heard and adjudicated set aside - petition allowed.
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2018 (6) TMI 244
Utilization of unutilized credit - conversion of DTA to EOU - CBEC Circular No.77/1999-Cus. dated 18.11.1999 - Whether the appellants are entitled to utilize the input credit lying unutilized on the date of their conversion from DTA to EOU on 1.12.2006? - Held that:- Tribunal has been consistently holding that there was no provision prohibiting an EOU from availing balance of credit when the unit was converted into EOU from DTA - an EOU also manufacture goods for DTA clearances; in the absence of provisions requiring the DTA unit to reverse the credit balance at the time of its conversion into an EOU, the credit it had validly earned as a manufacturer continued to be available without any limitation of time or otherwise - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 243
Manufacture - the appellants engaged in the manufacture and clearance of circular diffusers and jet diffusers by removing of core, powder coating and reassembling of diffuser with core and clearing them as final products to their customers - it was alleged that the activity do not amount to manufacture - Excise duty demand - Held that:- appellant’s case is squarely covered by Tega India Ltd. [2004 (2) TMI 61 - SUPREME COURT OF INDIA], where it was held that in Circular dated 9th February, 1994 the Board has also clarified that galvanized pipes and tubes continued to be covered by the expression Tubes and Pipes and galvanization does not amount to manufacture - the activity performed by the appellants in respect of circular diffusers and jet diffusers do not amount to manufacture - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 242
Manufacture - assembly at site - tower clock - cannibalization - Activities of procurement from vendors, assembling, testing and installation of tower clocks for municipal and other organisations - Whether the activity amounts to manufacture - Principles of Natural Justice denied - Held that:- the original adjudicating authority has relied upon an investigation report submitted by the Superintendent of Yeshwanthpur Range and an opportunity was not given to the appellants to put forth their defence. Even if it is assumed that such an investigation report has been prepared on the basis of the documents submitted by the appellants and in consultation with them thereof, the adjudicating authority could have given a copy of such report to the appellants, so that the appellants could have defended themselves against the conclusions drawn thereof in the investigation report- the investigation report being very critical to the conclusions of the adjudicating authority, an opportunity should have been given to the appellants and any denial of such opportunity is a clear violation of principles of natural justice. Whether the appellant’s activities in the clock tower amounts to manufacture? - Held that:- Tribunal in the case of Aska Equipments Pvt. Ltd. vs. Commissioner of Central Excise [2006 (6) TMI 27 - CESTAT, MUMBAI] wherein it was held that demand raised on the assessee-traders involved in providing specifications relating to quality, etc., of lighting steel tower structures required to be manufactured by job workers was misdirected and therefore, unsustainable - demand set aside. The appeal succeeds on the issue of merits as well as on principles of natural justice - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 241
Valuation - sale in the course of Wholesale trade - Section 4(1)(a) of CEA - Whether the appellant adopted correct price of the caustic soda for clearance from one plant M/s Century Chemicals to another plant M/s Century Rayon which are the two plants of Century Textile and Industries Ltd. and thereby paid correct duty hereon? - Held that:- In the case where for goods used or consumed by the assessee or on his behalf in production of other articles, it is a general factory gate price at which the goods are sold in whole sale trade to independent buyers and under Section 4(1)(a) is to be adopted rather than price to some particular buyer /contract price - reliance placed in the case of SOMAIYA ORGANICS (INDIA) LTD. Versus CCE, ALLAHABAD [2009 (7) TMI 293 - CESTAT NEW DELHI], where it was held that while applying Rule 6(b)(i), it is the general factory gate price under Section 4(1)(a) to be adopted. The appellant has adopted the correct price - no demand can be made against the Appellant - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 240
Clandestine removal - excesses and shortage of stock - Fabrics - Demand of duty - penalty u/s 11AC of CEA - Held that:- The physical inspection of goods were carried out in presence of director on the day of visit on 23.02.2004, the daily stock was written up to 21.02.2004, whereas the raw material account was written up to 16.02.2004. The director admitted the above facts in his statement. It is also a fact that the appellant allotted marked same lot numbers again to the fabrics received from processing. There has been deliberate violation of central excise law by the appellant unit. No proper explanation has been given for above discrepancies and shortages of goods. In such circumstances, there is no reason to interfere with the impugned order - appeal dismissed - decided against appellant.
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2018 (6) TMI 239
Clandestine removal - multiple invoices - the demand is mainly based upon photocopies of alleged parallel invoices seized from the premises of ex-employee of the Appellant unit Shri Suresh Rakhunde who in his statement stated that the said photocopies pertained to the clearances of goods - Appellant has contended that such fake invoices were fabricated by their ex-employee and no goods were cleared by them under such invoices. Held that:- Though the department has investigated the transporters and buyers of the goods, however they did not find copy of single original copy of such invoice from any of the buyers inspite of the fact that as the invoices showed 73 buyers of such goods. Thus in absence of any affirmation or evidence from the buyers of the goods the demand cannot be confirmed on the basis of photocopies of parallel invoices seized from the ex-employee or the transporter - no reason has been given as to why Shri Rakhunde has stored the photocopies of such parallel/ multiple invoices and for what purpose. He was neither instructed by the owner of the unit nor he was maintaining any record. Further except these photocopies no record was found. The photocopies are not corroborated with any evidence in the form of accounting records or any independent corroborative evidence from the Appellant’s premises or from any other place. Even the show cause notice does not bring out any statement of drivers/ truck owners/ who allegedly consigned such goods. It is not even appearing as to how they have received freight for such transportation and from whom. The above assertions made by the Appellant gives credence to the arguments of the Appellant that merely based upon uncorroborated photocopies of invoices whose veracity itself is highly doubtful, the demand against the Appellant would not sustain. As regard allegation that the Appellant cleared Low carbon Ferro Manganese under the cover of invoice of High Carbon Ferro Manganee, we find that the allegation is based upon the goods seized during transportation and statement of some of the buyers who allegedly stated that High Carbon Ferro Manganese cannot be used to manufacture welding electrodes - the Appellant has challenged the test report on the ground that it is not known as to from where the samples were drawn and what were the goods sent for testing - there is no reason to deny the claim of the Appellant as it is not forthcoming as to from where the samples were withdrawn and whether the samples were withdrawn in presence of Appellant - the test report cannot be relied upon. The revenue has not been established the charges of clandestine removal against the Appellant by any cogent and tangible evidence. The charges are based solely upon third party statements and alleged photocopies of fake/ multiple invoices with no corroboration with any independent evidence - duty demand with penalty do not sustain - Confiscation also not sustainable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 238
Clandestine removal - excesses of stock - enameled copper wire - Copper Scrap - retraction of statement - The appellant has contended the statement of Shri Sandeep Jain & Sameer Jain, director of Appellant unit were retracted by them - Held that:- When the fact of retraction by way of affidavit was appearing in the Show Cause Notice itself, in that case the inculpatory statements could not have been made the ground for alleging clandestine removal. The adjudicating authority in such circumstances should have followed the provision of section 9(d) of the Central Excise Act, 1944 i.e. the statement should have been examined for its relevancy only after examination-inchief of the person whose statements were proposed to be relied - The Adjudicating Authority should have also noticed the fact as to whether there is any corroborative evidence in form of removal of goods, Identification of buyer, transportation of goods, purchase of raw material, employment of labour, receipt of consideration towards alleged clandestine sale is also required to be taken into consideration for demanding duty. It is appropriate to remand the case back to Adjudicating Authority for denovo consideration - appeal allowed by way of remand.
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2018 (6) TMI 237
CENVAT credit - erection, commissioning and installation service - denial of exemption on the ground that it is not flowing from the SCN - Transmitting the electricity to the Grid - Services such as organizing of sugar cane development programme - SMS services to the farmer members - Hotel/travelling services - Held that:- The erection and commissioning of transmission line was undertaken for supply of electricity from MSETCL to the appellant’s factory. Such service is for transmission of electricity to the appellant which is foremost requirement for running manufacturing activity of sugar in the factory premises. Therefore, the credit is admissible. Transmitting the electricity to the Grid - separate SCN issued - Held that:- As per submissions of the learned Counsel, separate show-cause notice was issued for reversal of CENVAT Credit applying rule 6 of CENVAT Credit Rules, 2004. Therefore, that issue is separately decided in adjudication of those show-cause notices. Since that issue is not arising in the present case, I do not address the same. Services such as organizing of sugar cane development programme - Held that:- In the villages to educate farmers regarding carrying better production of sugar cane and good quality thereof, the appellant organized this programme by which education is given to the farmers. This programme is nothing but better cultivation of sugar cane which ultimately contributes in the higher and better quality of production of the sugar in appellant’s factory. Therefore, the said service has direct nexus with production. SMS services to the farmer members - Held that:- SMS services to the farmer members is also sharing the information in relation to time table of sugar cane harvesting, supply of sugar cane and payment against the same, which is directly related to the business of the sugar manufacturing. Hence, it is covered under the definition of inputs - credit allowed. Hotel/travelling services - Held that:- It is observed that the services are availed by the Director and officials of the appellant company for visit to various Govt. offices, customers in the course of manufacturing business. Therefore, the same has direct nexus with the appellant’s manufacturing activity - credit allowed. Appeal allowed.
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2018 (6) TMI 236
SSI exemption - use of Brand name of third party - Redemption fine - penalty - Held that:- As the appellant is using the brand name of third party and not paying duty thereon, the goods are held liable for confiscation. It is a fact on record that out of total value of the goods of ₹ 4,54,957/- the goods worth ₹ 76,544/- are agriculture equipments on which, no duty is payable by the appellant. In that circumstance, the total value of duty payable goods, after abatement is of ₹ 2,64,889/-, therefore, the redemption fine and penalty imposed on the appellant are on higher side - the redemption fine is reduced to ₹ 10,000/- and penalty is reduced to ₹ 5,000/-. Appeal allowed in part.
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2018 (6) TMI 235
Penalty u/s 11AC of CEA, 1944 - trading activity of bought out items - CENVAT credit in respect of common input service - The case of the department is that the appellant was supposed to reverse the CENVAT credit under Rule (3A) of the CCR 2004 attributed to the trading activity being an exempted service - applicability of Rule 14 - Held that:- As per Rule 6(3A), it can be seen that the only requirement is to pay the proportionate cenvat credit along with interest @ 24%. There is no provision for imposition of penalty. Rule 14 is applicable only in case where the cenvat credit is wrongly taken and utilized. In the present case, it is not a case of wrong availment/utilization of cenvat credit but the demand under Rule 6(3A). Therefore, Rule 14 is not applicable - there is no specific provision unlike in the case of duty evasion or wrong availment of credit for imposition of penalty under Section 11AC. Revenue relied upon the case of Bajaj Hindustan Ltd. [2013 (3) TMI 365 - ALLAHABAD HIGH COURT], where the issue was that the appellant had wrongly availed the CENVAT credit - the case is entirely different and do not apply to the present case. The penalty was wrongly imposed under Section 11AC - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 234
Demand u/s 11D towards recovery of reversal of cenvat credit from the buyers as Duty - Revenue is of the view that, as the appellant has recovered 8% of the value of exempted goods as duty from the buyers therefore, they are required to pay the said amount in terms of Section 11D of the CEA 1944 - Held that:- A similar issue has come up before the Larger Bench of this Tribunal in the case of Unison Metals Limited vs. CCE, Ahmedabad [2006 (10) TMI 171 - CESTAT, NEW DELHI], where it was held that (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application. As the amount collected from the buyers has already stand paid by the appellants, the provisions of Section 11D of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 233
Penalty on partner - Firm already penalized - appellant is a partner in a first stage dealer firm M/s Isha Enterprises, who is alleged to have issued bogus invoices without supply of the goods - suppression of facts - whether penalty can be imposed on the partner when the main firm has been penalized? - Held that:- The appellant was fully and deeply involved in the fraud of issuing of bogus invoices by M/s Isha Enterprises. The firm had issued these invoices passing on Cenvat credit to the buyers without supply of the goods and resorted diversion of goods without invoices. The appellant and other partners in the appellant’s firm have accepted that they were involved in the aforesaid malpractice and the buyers have accepted the receipt of invoices without supply of goods. The appellant also tried his best to conceal the relevant records and played a pivotal role in evasion of duty with the help of middlemen, second stage dealers and buyers. Penalty upheld - appeal dismissed - decided against appellant.
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2018 (6) TMI 232
Benefit of N/N. 03/2006-CE dated 01.03.2006 (Sr.No. 28) - instant foods mixes - Gota Mix, Khaman Mix, Dalwada Mix, Dhosa Mix, Gulab Jamun Instant Mix etc. - Reversal of CENVAT credit - packing materials - inputs contained in the final products lying in stock or in process - Held that:- The issue is no longer res integra and has been settled by this Tribunal in the case of COMMISSIONER OF C. EX., AHMEDABAD VERSUS RM FOODS [2009 (8) TMI 463 - CESTAT, AHMEDABAD], where it was held that Admittedly, the notification exempts instant food mixes. The products manufactured by the respondent are nothing but instant food mixes. After exempting instant food mixes, the notification goes to further elaborate the same by giving exemptions to such mixes when it used expression ‘such as’ - the appellants are eligible to the benefit of N/N. 03/2006-CE dated 01.03.2006. Reversal of CENVAT credit lying in balance in respect of packing materials - Held that:- The final products manufactured by the appellants were exempted vide N/N. 03/2007-CE dated 01.03.2007. The sub-rule (3) inserted in Rule 11 of CCR, 2004 by virtue of N/N. 10/2007-CE (N.T.) dated 01.03.2007 - On a plain reading of the said sub-rule, it is found that the appellant are required to reverse an amount of ₹ 1,64,185/- equivalent to CENVAT credit taken on packing materials, used in packing of semi-finished goods and material used in packing of finished products on, availing the exemption N/N. 03/2007-CE dated 01.03.2007 when the amendment in Rule 11 (3) came into effect from 01.03.2007. Penalty - Held that:- Since the SCN was issued for the normal period of limitation i.e. on 03.04.2007 and the issue relates to interpretation of law besides the appellant reversed the credit on 16.03.2007, that is, before issuance of SCN, therefore, imposition of penalty on the appellant is unwarranted and accordingly set-aside. Appeal allowed in part.
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2018 (6) TMI 231
Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - exemption sought by the appellant under area based exemption from 27.03.2010 to 26.03.2020 and it was allowed only upto 24.11.2013 - whether M/s. LPT has set-up a new manufacturing unit or continued with the manufacturing activity as has been undertaken by M/s. LEPL? - Held that:- It is clear that M/s. LEPL had stopped the production before amalgamation and had also plant and machinery were shifted to another place and Central Excise registration was also surrendered. M/s. LPT has started a new unit with new plant and machinery for manufacturing of new products - Similar issue came up before this Tribunal in the case of Wipro Enterprises Ltd vs. CCE, Shimla [2018 (2) TMI 787 - CESTAT CHANDIGARH], where it was held that the new unit is entitled for exemption from the date of start of commercial production. The facts of the present case are on better footing then the case of Wipro Enterprises Limited [2018 (2) TMI 787 - CESTAT CHANDIGARH] wherein the unit was a manufacturing unit and the same unit has started new manufacturing line in the same premises and this Tribunal held that the new unit is entitled for exemption from the date of start of commercial production - Admittedly, in this case, M/s. LPT started a new unit for manufacturing of mobile batteries, mobile chargers and accessories by installing new plant and machinery - Therefore, in the light of decision of Wipro Enterprises Limited, M/s. Luminous Power Technology Pvt. Limited (M/s. LPT) is entitled for exemption under N/N. 50/2003-CE dated 10.06.2003 from 27.03.2010 to 26.03.2020. Appeal allowed - decided in favor of appellant.
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