TMI Tax Updates - e-Newsletter
July 1, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS on SMS charges - sale of SMS credits - the activity carried on in the instant case does not fall under the definition of ‘work’ in terms of section 194C as it does not involve any human intervention - AT
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Income Tax:
Revision u/s 263 - mandation for the AO to apply Rule 8 - Rule 8D is not automatic and can be resorted to by the AO only as a measure of last resort. - Revision order quashed - AT
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Income Tax:
Withdrawal of deduction u/s 80IC on transport charges & transport subsidy - whether a mistake apparent from record in terms of section 154 - It is a highly debatable issues which cannot be resolved in the proceedings u/s 154 - AT
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Income Tax:
Higher rate of depreciation on account of hiring of vehicles - Since the issue in the instant case is a highly debatable issue, i.e. whether the assessee is entitled to higher rate of depreciation on account of hiring of vehicles, therefore, we are of the considered opinion that it is not a case for rectification u/s.154 - AT
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Income Tax:
Agricultural income - assessee had expressed its inability to substantiate the same on the ground that he has not maintained any books of account. Under these circumstances, the entire agricultural income declared by the assessee cannot be accepted. - AT
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Income Tax:
Disallowance u/s 14A - no dividend income has been received during the year under assessment nor it has borrowed any funds to invest in the share to earn the dividend income, the question of making disallowance by invoking provisions u/s 14A read with Rule 8D does not arise - AT
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Customs:
Condonation of delay of 19 years in filing an appeal - Recovery of penalty - The present appeal is barred by time as the same has been filed after the expiry of more than 19 years and that too without seeking condonation - appeal dismissed. - AT
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Customs:
Discrepancy in furnishing of IGM (import manifest or import report) - Goods (transit cargo) were not mentioned in IGM - As there is no fraudulent intention, the confiscation is illegal - redemption fine and penalty waived - AT
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Customs:
Refund of SAD - Once such ingredient of the Sale of Goods Act, 1930 is complied with, in that circumstance, sales can be said to have been effected. Otherwise it is a mere case of stock transfer in the guise of sale - matter remanded back - AT
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Service Tax:
Refund of service tax paid on Construction of complex service wrongly - even if service has been paid under the mistake of law, the period of limitation of one year is applicable - AT
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Service Tax:
Import of Intellectual Property Services (IPR services) - there can be no liability to service tax under the head of IPR services in respect of an Intellectual Property Right that is not recognised by the law in India. - AT
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Service Tax:
Franchise Service - appellant gave right to use its name for running pre-primary and preparatory schools - scope of the definition of “Franchise” given in Section 65(47) of the Finance Act, 1994 during the relevant period - appellant has made out a strong case for full waiver of pre-deposit - stay granted - AT
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Service Tax:
Levy of service tax under the sub-contract agreement - validity of proof of payment of tax by the principal obtained through RTI upheld - When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - AT
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Central Excise:
The cenvat credit on photocopy of the Courier Bill of Entry cannot be denied as the same is a proper document under Rule 9 of the Cenvat Credit Rules 2004. - AT
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Central Excise:
As the bagasse and pressmud are non-excisable, the question of reversing 5% or 10% of the value of goods does not arise as the common inputs not used in the manufacturing of waste - AT
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Central Excise:
Refund - unjust enrichment - excess excise duty paid due to the failure of computer software cleared to their depots - Since the goods have not been sent to third party on the basis of such invoices, it cannot be said that the duty has been recovered from the buyers - Refund allowed - AT
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Central Excise:
Classification - No marks cream/lotion are ayurvedic medicines and duty is chargeable under ETH 3003.39 of CET - Nigh Skin care cream is classifiable under CETH 3304.00 of CETA. - AT
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Central Excise:
Refund - Rule 5 of the CENVAT Credit Rules, 2004 - Refund was rejected on the ground that the average export clearance of final products of the appellant in the preceding quarter was less than 50% of the total clearance and did not satisfy the condition in Notification No. 5/2006 (C.E.) N.T. dated 14.3.2006 - The interpretation resorted by the authorities is incorrect - refund allowed - AT
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Central Excise:
Valuation - the value u/s 4 does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods - entry tax paid by the appellant is not includible in the value for excise duty. - AT
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
News
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Change in Tariff Value of Crude Palm Oil, Rbd Palm Oil, Others – Palm Oil, Crude Palmolein, Rbd Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Calendar for Auction of Government of India Treasury Bills (For the Quarter ending September 2016)
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Government Notifies Rules regarding Fair market value and reporting requirement for Indian concern - Indirect transfer provisions - section 9(1) of the Income-tax Act, 1961
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RBI Reference Rate for US $
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Cabinet approves Implementation of the recommendations of 7th Central Pay Commission
Case Laws:
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Income Tax
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2016 (6) TMI 1087
Disallowance u/s. 40(a)(ia) - non TDS on SMS charges - Held that:- We find that the nature of services rendered by the two parties are just to provide an Internet platform wherein the software of stock broker gets automatically interfaced with Internet platform without any human intervention and SMS gets automatically generated and sent to customers of assessee. It can at best be considered only as these two parties selling SMS credits to the assessee. It is nobody’s case that the transactions fall under the ambit of section 194J of the Act. In order to apply the provisions of section 194C of the Act, there should be two main ingredients – (i) the existence of contract (whether oral or written) and (ii) such contract should be for carrying out any work requiring the human intervention. In the instant case, there is no contract entered into by and between the assessee with two parties as we find that SMS credits sold by two parties were just consumed by the assessee on need basis. We find that the activity carried on in the instant case does not fall under the definition of ‘work’ in terms of section 194C of the Act as it does not involve any human intervention - Decided in favour of assessee Eligibility for getting rebate u/s. 88E - Held that:- We direct the Ld. AO to disallow the rebate u/s. 88E of the Act at 10% on the claim of the assessee and grant relief for the remaining amount. See Destiny Securities Ltd. Versus Deputy Commissioner of Income Tax [2016 (6) TMI 880 - ITAT KOLKATA]
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2016 (6) TMI 1086
Revision u/s 263 - mandation for the AO to apply Rule 8D - According to CIT the AO ought to have made disallowance u/s 14A of the Act in terms of Rule 8D of the Rules - Held that:- Invoking of Rule 8D of Rules is not automatic and that the AO u/s 14A of the Act has the discretion to substitute the computation of disallowance u/s 14A as made by the assessee is under estimation. The satisfaction contemplated u/.s 14A (2) of the Act is not merely restricted to rejecting the claim made by the assessee and the disallowance to be made u/s 14A of the Act but also includes substituting the claim made by the assessee on any other reasonable basis as the AO deem it fit. In such circumstances the correctness of the AO’s judgment can be reviewed but it cannot be said that the AO had no jurisdiction to do so and AO ought to resort only to the provision of Rule 8D of the Rules. In other words Rule 8D is not automatic and can be resorted to by the AO only as a measure of last resort. For the reasons given above, We quash the order u/s 263 and allow the appeal of the assessee.
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2016 (6) TMI 1085
Withdrawal of deduction u/s 80IC on transport charges & transport subsidy - whether a mistake apparent from record in terms of section 154 - Held that:- If transportation charges are excluded from the business profits on which the deduction u/s 80IC of the Act is to be allowed then the corresponding expenses will also have to be excluded in which case profits of the business will get reduced to the extent of difference between the transportation charges received by the assessee namely ₹ 8,70,91,329/- and the transport charges incurred by the assessee namely ₹ 8,43,77,509/-. It is not possible for the AO to exclude the entire receipts on account of transport charges only from the profits eligible for deduction u/s 80IC of the Act. We are of the view that the question as to whether the transport chares on finished goods could be considered as profits derived from an undertaking u/s 80IC of the Act and what is to be excluded as to whether the gross transport charges received or the net transport charges received are highly debatable issues which cannot be resolved in the proceedings u/s 154 of the Act. The CIT(A) has taken note of this principle has followed the decision of the Hon’ble Supreme Court in the case of M/s. Mepco Industries Limited vs CIT [2009 (11) TMI 24 - SUPREME COURT ] wherein the principle that debatable issues cannot be the subject matter of proceedings u/s 154 of the Act has been reiterated. In the light of the judicial pronouncements referred to above we are of the view that CIT(A) was fully justified in cancelling the order u/s 154 of the Act. Order of CIT(A) is accordingly upheld and this appeal of the revenue is dismissed. - Decided in favour of assessee
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2016 (6) TMI 1084
Higher rate of depreciation on account of hiring of vehicles - rectification of mistake - AO reduced the depreciation from 30% to 15% by resorting to provisions of section 154 - Held that:- When an assessee receives hire charges/rental receipt on account of hiring of vehicles the issue relating to rate of depreciation is a debatable one. The Hon’ble Supreme Court in the case of Volkart Brothers and others (1971 (8) TMI 3 - SUPREME Court ) has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. It has also been held by various decisions that rectification proceedings u/s.154 cannot be initiated on debatable issues. Since the issue in the instant case is a highly debatable issue, i.e. whether the assessee is entitled to higher rate of depreciation on account of hiring of vehicles, therefore, we are of the considered opinion that it is not a case for rectification u/s.154 of the I.T. Act. We, therefore, are of the considered opinion that the AO could not have reduced the depreciation from 30% to 15% by resorting to provisions of section 154 of the I.T. Act. The Ld. Counsel for the assessee also made a statement at the bar that in the subsequent year although the assessee has claimed such higher rate of depreciation at 30%, however, no proceedings u/s.154,163/148 has been initiated. In this view of the matter, we set aside the order of the CIT(A) and direct the AO to delete the addition made by him. - Decided in favour of assessee
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2016 (6) TMI 1083
Agricultural income - source and proof of undisclosed income - Held that:- We find the assessee before the CIT(A) has explained that it is owning 27 Acres of land. It is also a fact that during A.Y. 2007-08 the AO in the order passed u/s.143(3) has accepted the agricultural income of ₹ 5,24,332/-. Similarly, in A.Y. 2008-09, the agricultural income of ₹ 5,56,528/- has been accepted in the order passed u/s.143(1). However, it is also a fact that in A.Y. 2009-10 as against ₹ 4,37,498/- declared by the assessee as agricultural income, the AO had disallowed an amount of ₹ 1 lakh and the assessee has not challenged the same. We further find for the impugned assessment year although the assessee has declared agricultural income of ₹ 4,52,530/-, however, the assessee had expressed its inability to substantiate the same on the ground that he has not maintained any books of account. Under these circumstances, the entire agricultural income declared by the assessee cannot be accepted. At the same time, the disallowance of ₹ 1 lakh made by the AO appears to be on the higher side. Considering the totality of the facts of the case, disallowance of ₹ 50,000/- out of the agricultural income declared by the assessee in our opinion will meet the ends of justice. Disallowance u/s 14A - Held that:- Following the above decision the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT ) has held that where assessee’s capital and free reserves are higher than the investment in tax free securities, it would have to be presumed that investment made by the assessee would be out of the interest free funds available with assessee and no disallowance is warranted u/s.14A. Since the capital of the assessee in the instant case is admittedly much more than the investment in shares, the dividend income of which is tax free, therefore, respectfully following the decisions of the jurisdictional High Court cited (Supra) we hold that no disallowance of interest u/s.14A is required. So far as the administrative expenses is concerned, we find the AO has disallowed ₹ 30,475/- which has been upheld by the CIT(A). Although it is the submission of the Ld. Counsel for the assessee that no expenditure has been incurred, however, the same cannot be accepted in toto. It cannot be said that no expenditure has been incurred for supervising and monitoring the investments made by the assessee. Considering the totality of the facts of the case, disallowance of ₹ 15,000/- in our opinion will meet the ends of justice. We accordingly modify the order of the CIT(A) and direct the AO to disallow an amount of ₹ 15,000/- u/s.14A r.w. Rule 8D. Business loss - Disallowance of rejecting the appellant's claim of deduction u/s. 28 or section 37(1) - Held that:- For claiming the business loss, the onus is always on the assessee to prove that the amounts written off in the books is infact business loss. The assessee has to prove that he has taken reasonable steps for recovery of the same and was unsuccessful and nothing can be recovered from the party for which he has written off the same as business loss. However, from the submission made by the assessee, it does not appear that the assessee has conclusively proved that the amount has been written off after taking reasonable steps for recovery of the same. Before the AO the assessee has not made any such claim and although it was argued before the CIT(A) he has rejected the claim of the assessee on the ground that these amounts written off are not in the nature of expenditure and therefore cannot be allowed u/s.37(1) of the Act. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction that these amounts are in the nature of business loss
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2016 (6) TMI 1082
Disallowance u/s 14A - whether section 14A read with Rule 8D is applicable when the assessee company has neither borrowed any money to be invested in shares nor earned any exempt dividend income during the year under assessment? - Held that:- Merely, on the basis of fact that during the preceding years as well as succeeding years, assessee company has earned the dividend income, the disallowance u/s 14A read with Rule 8D cannot be made because earning of dividend on investment in shares depends upon the company performance etc. AO, without rejecting the books of account, computed the deemed expenses at 0.5% of average investment and also computed the interest expenses in the face of the undisputed facts that assessee has not borrowed any funds for the purpose of investment in shares during the year under assessment. Admittedly, when the AO and ld. CIT (A) have not disputed the books of account as well as tax audit report and computation of income which apparently proved the contention of the assessee that no dividend income has been received during the year under assessment nor it has borrowed any funds to invest in the share to earn the dividend income, the question of making disallowance by invoking provisions u/s 14A read with Rule 8D does not arise. Thus when the assessee company has not incurred any expenditure to earn the exempt income, no disallowance can be made u/s 14A of the Act read with Rule 8D of the Rules, hence the impugned order passed by the ld. CIT (A) is not sustainable in the eyes of law. - Decided in favour of assessee
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2016 (6) TMI 1081
Entitlement to cost of inflation index - inheritance of property - cost of inflation index from the year of inheritance of property and not from the date it was held by the previous owner - Held that:- The assessee inherited the property on 04.08.2010. The said property was purchased by the assessee’s father before 1981. After the death of the assessee’s father, the property was inherited to the assessee along with other co-owners. Accordingly, the cost of indexation to be applied as on 1.4.1981, after fixing the value of the asset as on 1.4.1981 and it cannot be said that the assessee acquired property under dispute only on 04.08.2010 on the death of the assessee’s father so as to compute the capital gains. In other words, capital gains has to be assessed as long term capital gains by fixing the cost of asset as on 1.4.1981 and thereafter applying the cost of inflation index in terms of sec.49(1)(iii)(a) of the Act. It needless to say that same view was taken in the case of CIT Vs. Manjula J.Shah reported in (2011 (10) TMI 406 - BOMBAY HIGH COURT ) Decided in favour of assessee. Allowability of deduction u/s.54EC - Held that:- The issue is squarely covered by the judgement of jurisdictional High Court in the case of CIT Vs. C.Jaichander reported in [2014 (11) TMI 54 - MADRAS HIGH COURT ] wherein it was held that legislature by Finance (No.2) Act, 2014, with effect from 01.04.2015, inserted after existing proviso to sub-section(1) of Section 54EC second proviso, as per which investment made by an assessee in long term specified asset, out of capital gains arising from transfer of one or more original asset, during financial year in which original asset or assets are transferred and in subsequent financial year does not exceed fifty lakhs rupees. In this case, the assessee invested in REC Capital gains tax saving bonds on 31.01.2012 at ₹ 50/- lakhs, and on 31.05.2012 at ₹ 50/- lakhs. In view of jurisdictional High Court cited above, we are inclined to hold that the claim of assessee wherein the assessee has invested ₹ 50/- lakhs within six months of date of sale, but in two different financial years, is entitled for deduction u/s.54EC of the Act.- Decided in favour of assessee.
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2016 (6) TMI 1080
Penalty u/s 271(1)(c) - quantum addition deleted by the tribunal - Additions were made on account of interest and short term capital gain - Held that:- there are series of decisions of the Tribunal wherein it has been held that if the quantum addition is deleted by the Tribunal then in such cases assessee should not be visited with penalty u/s 271(1)(c) of the Act for concealment of income or furnishing of inaccurate particulars of income. In appeal before us, we observe that out of total addition of ₹ 62,78,505/-, penalty on the addition of ₹ 50,185/- has already been deleted by us and for the remaining amount of addition i.e. ₹ 62,28,320/- (Rs. 8,79,320/- + ₹ 53,49,000/-) as the quantum addition has been deleted by the Tribunal for Asst. Year 2002-03 vide order dated 21.06.2013, and so no penalty is to be sustained u/s 271(1)(c) of the Act. Accordingly, we do not find any reason to interfere with the order of ld. CIT(A), we uphold the same. - Decided in favour of assessee
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2016 (6) TMI 1079
Disallowance the interest under section 36(1)(iii) - whether the funds have been withdrawn by some of the partners of the assessee firm which is not the business purposes of the assessee? - Held that:- In the instant case, borrowed funds have been presumably utilized for the withdrawal by some of the partners. However, in the same vein, the overall capital continues to remain positive and therefore allowability of interest in the case of the assessee is squarely covered by the decision of the Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd., (2009 (1) TMI 4 - BOMBAY HIGH COURT ). Thus, contentions advanced by the Ld. AR for the assessee merits acceptance - Decided in favour of assessee Disallowance invoking section 69C - Held that:- CIT(A) has directed the Assessing Officer to reconcile the difference between the entries made in the books of account qua the TDS certificate while drawing conclusion on the issue. We find no infirmity in such direction given as a matter of fair play. Accordingly, we remit the issue back to the file of the Assessing Officer for de novo examination on the issue in accordance with law after giving proper opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes Allowability of loss - Held that:- We find ourselves in agreement with the directions given by the CIT(A). Winding up of a unit of business is different from winding up the entire business operations. The bad debt is allowable expenditure under section 36(1)(vii) of the Act provided it has been incurred in course of trade and debt or part thereof has been taken into account while computing the income of the assessee in the earlier years. In view of the aforesaid legal position, we remit the issue to the file of the Assessing Officer for de novo examination of the issue. The Assessing Officer shall allow the aforesaid claim on being satisfied that the debts were incurred in the course of trade and conditions as per section 36(1)(vii) r.w.s. 36(2) of the Act are satisfied - Decided in favour of assessee for statistical purposes
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2016 (6) TMI 1078
GP addition on the unrecorded purchases - Held that:- We find that the purchase details from its sister concerns M/s Maklai Timber Mart on 31-03-2007 amounting to ₹ 17,38,951/- while the bank loan vide OD of ₹ 18 lakhs was transferred to the sister concern on 28th September, 2006 which has been claimed as against the purchases made on the last day of March, 2007 and in support the assessee company has filed copies of delivery challans which are not signed by any person. The assessee company submitted that the difference of ₹ 12,62,184/- in the purchases shown as per the P&L account and the sundry creditors was due to the typing error which has occurred as the miscellaneous purchases should be ₹ 28,29,668/- instead of ₹ 38,05,716/-. The assessee company is trying to justify the above differences due to the typing error. We have also found that the learned CIT(A) has not given any notice to the assessee company before enhancing the assessment in the appellate proceedings before the learned CIT(A) , whereas directions were given by the learned CIT(A) to the A.O. to add some GP on the unrecorded purchases on the grounds that the assessee company might have earned profit by selling the purchases out of books. In our considered view, interest of justice will be best served if all the issue of additions made by the A.O. are to be set aside to the file of the AO for de novo determination of all the issues on merit after taking into account the relevant evidences and explanations submitted by the assessee company with respect to the purchases made by the assessee company keeping in view of the stock movement vis-à-vis sales made by the assessee company and then arrive at the actual differences which remained after quantitative reconciliation of the stock including examination and verification of genuineness of the purchases made from sister concern Maklai Timber Mart. - Decided in favour of assessee for statistical purposes.
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2016 (6) TMI 1077
Disallowance u/s 14A - Held that:- Respectfully following the decision of Tribunal in assessee company’s own case in immediately preceding assessment year 2009-10 whereby the issues were decided in favour of the assessee company as set out above , we also hold that no disallowance u/s 14A of the Act is called for , once there is no exempt income received or receivable by the assessee company during the relevant previous year. - Decided in favour of assessee
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2016 (6) TMI 1076
Revision u/s 263 - non-inclusion of MODVAT credit to the closing stock - Held that:- AO had raised specific query in the notice issued u/s.142(1) of the Act. The queries raised by the AO were replied by the assessee and these details also formed part of the tax Audit Report that were filed by the assessee before AO. Thus, it can be seen that after making the necessary queries with respect to the issues under consideration and on receiving replies from the assessee, the AO was satisfied with the submission of Assessee and, therefore no additions were made by the AO. We find that the Hon’ble Apex Court in the case of CIT vs. Max India Ltd. reported at (2007 (11) TMI 12 - Supreme Court of India ) has held that where two views are possible and the ITO has taken one view with which CIT does not agree, the order of the AO cannot be treated as erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO is sustainable in law. Further on the issue of considering MODVAT credit as income, we find that the Hon’ble Apex Court in the case of CIT vs. Indo Nippon Chemicals Co.Ltd.(2003 (1) TMI 8 - SUPREME Court ) has held that unavailed MODVAT credit cannot be construed as income and there is no liability to pay tax on such MODVAT credit. Before us, Revenue has not brought any material record to demonstrate that the view taken by the AO was an impermissible view and was contrary to law or was upon erroneous applications of legal principles necessitating the exercising of revisionary power u/s.263 of the Act. In view of the aforesaid facts, we are of the view that in the present case Ld.CIT was not justified in resorting to revisionary powers u/s.263 of the Act - Decided in favour of assessee
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2016 (6) TMI 1075
Disallowance of exemption claimed u/s. 54 - plot had been purchased on 21.05.2007, well before the date of sale of capital asset - assessee constructed a house on the plot, which was completed on 29.04.2009 - AO observed that assessee’s claim would amount providing him with a window of four years for meeting the conditions of section 54, which was not the intention of the provision - Held that:- The language of section 54 comprehends that the asset transferred should be a residential building, and the asset invested it should also be a residential building, and the investment should be made within the time specified therein. The time specified in this case, within one year before and two years after, is the period between 9.3.2007 and 9.3.2010. The investment which is eligible for deduction would therefore, be restricted to ₹ 17,50,674/- on account of plot, and ₹ 8,12,464/- on account of construction. After careful consideration of the letter and spirit of section 54, it was rightly held that the assessee is entitled to the exemption under section 54 of ₹ 25,63,138. Hence, the ld. CIT(A) gave the partial relief on this issue on the right footing. Therefore, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on the restriction of addition in dispute, hence, we uphold the finding of the ld. CIT(A) on this issue. - Decided against assessee Addition u/s. 40(a)(ia) - failure to deduct tax at source from professional fees paid - Held that:- CIT(A) has deleted the addition made by the AO u/s. 40(a)(ia) of the Act on the ground that assesse has deducted tax in all cases where the fees for professional services exceeded ₹ 20,000/-. Therefore, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on the addition in dispute and hence, we uphold the finding of the ld. CIT(A) on this issue - Decided against revenue
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2016 (6) TMI 1074
Penalty u/s. 271(1)(c) - Addition on account of disallowance of u/s. 14A - Held that:- First Appellate Authority has passed a well reasoned order, because the assessee has paid taxes on the issue of disallowance u/s. 14A and assessee has not concealed the facts nor any inaccurate particulars filed. We find that the AO had made addition out of these information filed in the Tax Audit Report and the assessee has disclosed all the facts in the Tax Audit Report in Form No. 3CD under section 44AB of the I.T. Act. Therefore, Ld. CIT(A) has rightly deleted the penalty in dispute, which does not need any interfere on our part - Decided in favour of assessee
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2016 (6) TMI 1073
Appeal is admitted on the following substantial question of law:“ Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the order of CIT(A) Mumbai in deleting the following addition: (i) Transfer fees; (ii) Rent received from Telecom Companies; and (iii) Advertisement charges on the ground that they are covered by the concept of mutuality under the Act?”
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Customs
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2016 (6) TMI 1102
Condonation of delay of 19 years in filing an appeal - Recovery of penalty - it was submitted that, appellant was not in India and was in Oman along with his family. Appellant came to India on 06.11.2010 for a brief period. Appellant through his brother came to know on 30.12.2013 that some Sale Notice has been issued for the Sale of Immovable Property and then he came to India and tried to obtain the copy of the order - It was further submitted that limitation for filing appeal would start from the date of receipt of the copy of the impugned order - Held that:- service of the impugned order dated 30.03.1994 on the appellant has been proved by the Department by producing the acknowledgment signed in proof of the receipt though the signature on the acknowledgment is disputed by the appellant. Appellant also produced the copy of the passport to show that at the relevant time he was not in India. Appellant may not be in India but his agent on his behalf can receive the copy of the order and in law it will be deemed to be the service on the appellant. The law cited by the appellant is not applicable to the facts of the case whereas the law cited by the AR is squarely applicable to the facts of the present case. The present appeal is barred by time as the same has been filed after the expiry of more than 19 years and that too without seeking condonation - Appeal dismissed.
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2016 (6) TMI 1101
Discrepancy in furnishing of IGM (import manifest or import report) - Goods (transit cargo) were not mentioned in IGM - confiscation of goods and levy of redemption fine - levy of penalty - Held that:- The facts presented by the case do not reveal any fraudulent intention. Further there is no such finding made in the impugned order. The confiscation is on the ground of failure to declare the Lube oil against the Same Bottom Cargo in the Form / IGM. As per sub-clause (3) of Section 30, the officer ought to have given an opportunity to the appellants to amend or supplement the IGM as all other documents are in order. As there is no fraudulent intention, the confiscation is illegal - redemption fine and penalty waived. - Decided in favor of appellant.
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2016 (6) TMI 1100
Refund of SAD - payment VAT, CST on sales - Revenue says that because of the fiction of self raised in the invoices by the appellant in respect of sales, that created doubt in the minds of the appellate authority. Therefore, refund was denied - Held that:- Once such ingredient of the Sale of Goods Act, 1930 is complied with, in that circumstance, sales can be said to have been effected. Otherwise it is a mere case of stock transfer in the guise of sale. If the authority is satisfied that sale has been effected and appropriate VAT/sales tax thereon has been paid into the Treasury, the appellant cannot be denied refund of Additional Duty of Customs suffered on the imports. Matter remanded back for verification.
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Service Tax
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2016 (6) TMI 1108
Import of Intellectual Property Services (IPR services) - Reverse charge - revenue neutral exercise - payment for right to use/enjoy confidential/technical know-how and patents by overseas entities - out of the six different agreement, only the patent in respect of Investa Technologies s.a.r.l., is registered in India under the Patents Act 1970 - Held that:- If an intangible property right was to refer to a right which is recognised by any country, then the legislature would not have used the expression under any law for the time being in force. The legislature would have merely stated that an intellectual property right would mean any right to an intangible property. There would have been no need for it to qualify the same with a recognition under any law for the time being in force If any inventor does not seek protection of its intellectual property under the Indian laws, the same cannot be regarded as an intellectual property right for the purpose of taxing the grant of right to use such a right. The question whether such a service could be taxed under a different head is irrelevant and does not arise as there is no such case made out in the notice. - there can be no liability to tax under the head of IPR services in respect of an Intellectual Property Right that is not recognised by the law in India. Insofar as the agreement with Investa Technologies S.A.R.L. is concerned the same was entered into on 14.8.2004, prior to IPR services being brought into the net of service tax w.e.f 10.9.2004. The service itself having been rendered prior to the introduction of the levy, the mere fact that payments for the same were made on a staggered basis over a period of time cannot be a ground for levying service tax merely with reference to the date on which payments were being made. Further, the entire dispute being revenue neutral, there could have been no intention to evade payment of duty and consequently the extended period of limitation was per se not invokable. Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1107
Waiver of pre-deposit - Franchise Service - appellant gave right to use its name for running pre-primary and preparatory schools - scope of the definition of “Franchise” given in Section 65(47) of the Finance Act, 1994 during the relevant period - it was contended that as per one of the condition during the relevant period, franchisee was under an obligation not to engage in selling or providing similar goods or services or process identified with any other person - Held that:- As is seen the demand pertains to the period 1.4.2004 to 15.6.2005 when condition No.IV in the definition of franchise given in Section 65(47) ibid was very much in existence and prima facie is not satisfied. Consequently, in view of precedent CESTAT judgement in the case Saanj and Savera Educational Welfare Trust vs. C.S.T., Delhi [2015 (10) TMI 1053 - CESTAT NEW DELHI], appellant has made out a strong case for full waiver of pre-deposit - stay granted.
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2016 (6) TMI 1106
Refund of service tax paid on Construction of complex service wrongly - period of limitation - payment of service under mistake of law - it is submitted that, appellants carried out such construction activities for themselves and for their own purposes and not for any one else - Held that:- this Tribunal in the case of XL Telecom Ltd [2006 (3) TMI 641 - CESTAT, BANGALORE] has held that even in respect of illegal levy, refund claim has to be filed within the time limit prescribed under the Central Excise Act 1944. The judgments relied upon by the counsel for the appellant is not applicable in the facts and circumstances of this case and moreover the judgment of the Hon’ble Karnataka High Court in the case of CCE Vs KVR Constructions [2012 (7) TMI 22 - KARNATAKA HIGH COURT] was held to be not a good law by the Hon'ble Karnataka High Court in subsequent decision in the case of MCI Leasing Pvt Ltd [2011 (9) TMI 447 - KARNATAKA HIGH COURT]. - Period of limitation of one year is applicable - Decided against the assessee.
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2016 (6) TMI 1105
Implementation of final order of the tribunal - cargo handling service - In the order, Tribunal has upheld the adjudication order to the extent of confirmation of the service tax demand alongwith interest made within the normal period of limitation and has also set aside the penalty imposed in the adjudication order in terms of Section 80 of the Finance Act, 1994. - Held that:- There are no documents available on records to show that the operation of Final order dated 08/12/2011 [2011 (12) TMI 205 - CESTAT, NEW DELHI] of this Tribunal has either been stayed or overruled by any higher Courts. Therefore, the Department is duty bound to implement the order of the Tribunal. As such, in terms of Rule 41 of CESTAT Procedure Rules, 1982, we direct the Original Authority to implement the Final Order dated 08/12/2011 of this Tribunal within a period of three months from the date of receipt of this order.
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2016 (6) TMI 1104
GTA service - claim of exemption where gross amount charged on an individual consignment transported in a goods carriage does not exceed ₹ 750/- or ₹ 1500/- extended period of limitation - appellant have taken categorical stand that they have bonafide belief that exemption of Notification No. 34/2004 is applicable to them in respect of transport of goods if freight per truck load does not exceed ₹ 1500/-. Despite this correspondence the department has issue the show-cause notice on 28th January, 2009 for the period 2006-07, hence the extended period was invoked. Held that:- The appellant took clear stand that as per their belief they are entitled for the exemption for the reason that only in case of transportation charge exceed ₹ 1500/-, it is chargeable to Service Tax but in the case of appellant, the freight charges ranging from ₹ 750/- to ₹ 1500/-. Moreover, the issue was not free from doubt and the same was finally decided in the case of Bellary Iron & Ores Pvt. Ltd. [2009 (12) TMI 150 - CESTAT, BANGALORE]. In these circumstances, we do not find any suppression of fact on the part of the appellant, hence the demand of longer period by invoking proviso to Section 73(1) is not sustainable. Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1103
Levy of service tax under the sub-contract agreement - validity of proof of payment of tax by the principal obtained through RTI - The appellant defended the notice contending that the main contractor NGRI has discharged the service tax liability on the amount received from the client and that therefore they are not liable to pay any service tax under the subcontract agreement. - conduct of drilling shot holes, seismic job services and topographical survey - On behalf of Revenue, the learned AR vehemently argued that appellant failed to establish that service tax liability was discharged by the main contractor, NGRI. That the information/reply received under RTI Act from NGRI is not conclusive proof of payment of tax and cannot be accepted Held that:- The information / document made available by the Public Information Officer (PIO) is something which is already recorded in the official records of the public office/authority. On receiving application, the PIO just furnishes a copy of the information contained in the records kept in proper custody. Section 3 of RTI Act states that every citizen shall have the right to information and may obtain the same by submitting an application. The information so received shows that NGRI has paid service tax on the same services. The information having been provided by a public office under the provision of Right to Information Act, 2005, I do not find any reason to disbelieve the same. When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - Demand set aside - Decided in favor of assessee.
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Central Excise
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2016 (6) TMI 1099
Entitlement to cenvat credit on the basis of photocopy of Courier Bill of Entry - Held that:- It is a fact that there is no dispute in the present case regarding the receipt of inputs and payment of duty on the final product and the eligibility of the appellant to avail the cenvat credit on the duty paid on inputs. The cenvat credit on photocopy of the Courier Bill of Entry cannot be denied as the same is a proper document under Rule 9 of the Cenvat Credit Rules 2004. See Controls & Drives Coimbatore (P) Ltd. Vs. CCE, Coimbatore reported in [2007 (11) TMI 57 - CESTAT CHENNAI ] - Decided in favour of assessee
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2016 (6) TMI 1098
Excise duty on bagasse and pressmud - payment of 5% or 10% of the value of exempted goods, i.e., bagasse and pressmud cleared by the appellant - Held that:- The issue is no more res integra as the bagasse and pressmud arising during the course of manufacturing of sugar. The Hon’ble Supreme Court in the case of UOI Vs DSCL Sugar Ltd., (2015 (10) TMI 566 - SUPREME COURT ) has held that bagasse and pressmud is a non-excisable products. Thus as the bagasse and pressmud are non-excisable, the question of reversing 5% or 10% of the value of goods does not arise as the common inputs not used in the manufacturing of waste. - Decided in favour of assessee
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2016 (6) TMI 1097
Refund claim - excess excise duty paid due to the failure of computer software cleared to their depots - unjust enrichment - Held that:- We find that so far as admissibility of refund claim is concerned, the records have been checked by the range officers, Deputy Commissioner as well as the Commissioner (Appeals) to their satisfaction. The grounds of appeals do not bring out any infirmity in the facts which have been verified. We do not find any infirmity in the verification done by the lower authorities. In so far as the unjust enrichment is concerned, it is not disputed that the goods were cleared only to their depots. Since the goods have not been sent to third party on the basis of such invoices, it cannot be said that the duty has been recovered from the buyers. In the circumstances, we find that the provisions of unjust enrichment cannot be invoked. - Decided against revenue
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2016 (6) TMI 1096
Classification - No marks cream/lotion - whether cosmetics chargeable to duty under ETH 3304.00 or as ayurvedic medicines under ETH 3003.39 of the Central Excise Tariff Act or not? - Held that:- The issue came up before this Tribunal in the case of Seagull Drugs (Ayurvedic) vs. CCE, Rohtak-2013 [2011 (10) TMI 92 - CESTAT, NEW DELHI] wherein this Tribunal has held that these items are ayurvedic medicines and duty is chargeable under ETH 3003.39 of CET. Therefore, we hold that the items in question are chargeable to duty as per ETH 3003.39. Nigh Skin care cream is classifiable under CETH 3304.00 of CETA.
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2016 (6) TMI 1095
Refund claim - Rule 5 of the CENVAT Credit Rules, 2004 - Refund was rejected on the ground that the average export clearance of final products of the appellant in the preceding quarter was less than 50% of the total clearance and did not satisfy the condition in Notification No. 5/2006 (C.E.) N.T. dated 14.3.2006. - Held that:- It is clear from the notification No. 11/2002-CE (NT) dated 11.02.2002 that the requirement of showing the value of export clearances to be more than 50% is applicable only to a manufacturer/assessee who wants to file refund claim more than once in a quarter. The interpretation resorted by the authorities is to the effect that every manufacturer who files refund claim under Rule 5 has to necessarily show that his export clearances are 50% or more which is an incorrect interpretation. The refund has been denied on such incorrect interpretation of the notification. The appellants have established a case in their favour - Refund allowed - Decided in favor of assessee.
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2016 (6) TMI 1094
Valuation - Includibility of entry tax in the assessable value of goods cleared from the bonded warehouse - Held that:- . We find that the learned Commissioner (Appeals) did not appreciate the facts of the case in correct legal perspective. The entry tax, as the name suggest, is on the entry of goods into Rajasthan. But the State Government categorically stated that the same can be collected and paid on the basis of prevalent market value of goods. The entry tax can be recovered through invoices at the time of sale. We find that the value under section 4 does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods. Hon’ble Supreme Court in Bombay Tyre International,(1983 (11) TMI 70 - SUPREME COURT OF INDIA ) held that sales tax, turnover tax and octroi where payable/paid should be allowed deduction. Thus we find that the entry tax paid by the appellant is not includible in the value for excise duty.
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2016 (6) TMI 1093
Excess paid duty adjusted towards the duty short paid - provisional assessments - Held that:- When there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid to the short payment have to be made. In conclusion, it is to be held that there is no bar in adjusting the excess paid duty towards the duty short paid. Consequently, the appeals succeed in favour of assessee
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2016 (6) TMI 1092
Valuation - Related person - nature of clearance - Held that:- Commissioner has examined the issue in details and found that the respondent is not a related persons to M/s IAFL. We further observe that in this case the respondent is making clearance in the open market also. As respondent is selling goods in the open market, the prices of the goods at which the goods are sold in the open market should be treated the transaction value but in the show cause notice it was not alleged against the respondent. We have also examined the show cause notice, in the show cause notice also the duty has been demanded on the concept of related person not at the prices on which the goods were sold in the open market. In the circumstances, if it is considered that the respondent as well as M/s. IAML are related person, in that circumstances also, duty cannot be demanded at the price at which M/s IAML has cleared the goods in the open market. In fact, when the price on which the goods are sold to independent buyers is available, the same is to be treated as transaction value. It is not the case of the Revenue that transaction value at which the independent buyers have purchased the goods be the transaction value, therefore, the impugned order having merits, accordingly, the same is upheld. - Decided against revenue
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2016 (6) TMI 1091
Confirmation of redemption fine and penalty - Held that:- In this case the charge against the appellant is that the goods were lying in their factory in finished condition without entry in RG-1 register. Therefore, plea of the learned Counsel for the appellant is contrary to the facts of the case. In the circumstances, the impugned order does not warrant any interference, the same is upheld and the appeal filed by the appellant is dismissed.
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2016 (6) TMI 1090
Recovery proceedings against an invalid show cause notice - Held that:- On perusal of the report received from the department, it is a fact that the show cause notice has not been served on the appellants. We have also gone through the adjudication order dated 8.9.94. Initially the adjudication order does not mention that any show cause notice was issued to the appellant. The show cause notice was first time served to the appellant on 27.6.2001. The show cause notice was issued for the period August, 1993 to October, 1993 is time barred in view of proviso to section 11A . Therefore, we hold that in the absence of issuance of show cause notice within reasonable time as prescribed under the Act the proceedings against the appellant are not sustainable. Consequently, the impugned order is set aside and the appeal is allowed in favour of assessee
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2016 (6) TMI 1089
Reversal of cenvat credit - Demand at the rate of 8% of their clearances of their exempted goods during the period from April, 199 to June 2000 - Held that:- As per section 70 of Finance Act, 2010 an option was given to the assessee if they reverse prorata credit availed on inputs. In that circumstance, reversal of credit shall be sufficient and no penalty is imposable on the appellant. In this case also the appellant has already reversed the whole credit availed by them instead of prorate credit, the same is sufficient. In the circumstances, we set aside the impugned order demanding an amount of 8% on the clearance of exempted goods. Reversal of the credit made by the appellant is sufficient but the appellant is directed to pay interest for the intervening period as per applicable rate within the period of 30 days from today. In these circumstances, no penalty is imposable on the appellant.
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2016 (6) TMI 1088
Duty liability on waste removed by appellant as floor sweepings - appellant submitted that almost 90% of the waste generated during the process of manufacture is recycled and captively used. The remaining 10% of the waste is sold in the market. - Held that:- The appellant have filed detailed reply denying the liability to pay duty. It is seen that there is no evidence to establish that the floor sweepings cleared contained waste generated in process of manufacture. It is seen stated in the reply of the appellant that these items are not generated in manufacture, but are collected from the dustbins of various departments of their unit. The items include, waste of stationery papers, carbon papers, old used dhoties, wooden scrap, lose polythene waste (scrap of wrappers of packing inputs) and M.S.scrap (scarp of civil works item of iron and steel). Normally these cannot be said to be waste generated in the process of manufacture of BOPP films. Further, the appellants are clearing waste generated in process of manufacture and paying duty on the same. Taking note of the facts, we do not find any legal basis for the demand raised. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (6) TMI 1111
Validity of assessment order and appellate orders for the period 01.04.2009 to 30.10.2013 - challenge to the orders on the ground of limitation, and for violation of principles of natural justice - According petitioner, since the period of limitation under Section 21(4) of the A.P.Value Added Tax Act, 2005 (for short “the Act”) is four years from the end of the period for which assessment is to be made, the assessment order, for the period 01.04.2009 to 31.01.2010, is barred by limitation. Held that:- The jurisdiction, which this Court exercises under Article 226 of the Constitution of India, is supervisory and not appellate. Under Article 226 of the Constitution of India, this Court would not re-appreciate the evidence on record, or record findings on facts. The orders of the Assessing and Appellate Authorities do not, therefore, necessitate interference, except to the limited extent that the assessment made for the period 01.04.2009 to 31.12.2009 is barred by limitation. To this limited extent, the assessment order is set aside. In all other respects, it is upheld. - Decided partly in favor of petitioner.
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2016 (6) TMI 1110
Validity of recovery proceedings - Benefit of scheme granting reliefs to the sick industries from payment of amount of interest and penalty interest and penalty etc. - GVAT - petitioner has paid the entire amount as per the scheme - later the BIFR has dismissed the proceedings - Consequently recovery notices were issues by the respective authorities on the premises that the benefit of scheme was availed wrongly - petitioners mainly contended that action on the part of the respondent authorities is not only unjust and arbitrary but reflects clear non-application of mind. Held that:- only because of the fact that BIFR has terminated the proceedings straightway without examining any aspect, the authorities have issued notice and it appears that the impugned action is in clear breach of principles of natural justice. The fact of payment by the petitioner under the scheme which also acknowledged by the authority as reflected from various communications ought to have been considered before issuing impugned notice. The authorities directed to re-consider the case of the petitioner after granting a reasonable opportunity to the petitioner. It is expected that the respondent authorities before initiating any action in this regard, must grant reasonable opportunity to the petitioner and after hearing pass an appropriate order considering all material which may be produced before it. - decided partly in favor of petitioner.
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2016 (6) TMI 1109
Validity of recovery notice - period of limitation - maintainability of writ petition - notice towards arrears of Sales Tax due from him for the assessment years 1996-97 and 1999-00 was issued after a lapse of more than 2 decades - The petitioner came to know about rejection of the Appeal vide order dated 06.01.2004 only on receipt of statutory notice. Held that:- No doubt service of notice under Rule 58 is mandatory but when the Appeal is pending against the order passed by the Appellate Deputy Commissioner before the Tribunal, the validity of the orders passed by the 4th respondent and Appellate Deputy Commissioner cannot be gone into at this stage and, at best, the law laid down by the Courts in the above decisions are helpful to the petitioner in the pending Appeal before Tribunal but not in the present case. In the present case, no statutory violation is pointed by the petitioner except alleged non-compliance of Rule 58, which is the subject matter for decision by the Appellate Tribunal. Therefore, we find that no discretion can be exercised under Article 226 to declare that the orders passed by the 3rd respondent are illegal and arbitrary. - writ petition dismissed - Decided against the petitioner.
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