TMI Tax Updates - e-Newsletter
July 15, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Penalty u/s 271(1)(c) - Merely because, the assessee did not preferred any appeal against the said disallowance does not make it an inadvertent mistake - penalty confirmed - AT
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Customs:
Revocation of Customs Broker Licence - when the impugned show cause notice has been issued beyond the statutory period, the same cannot be sustained for want of jurisdiction - HC
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Service Tax:
Validity of adjudication order / order in original - service of letters at wrong address - OIO has set aside giving liberty to the respondents-authorities to pass appropriate orders after giving an opportunity of hearing to the petitioner - HC
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Service Tax:
Denial of refund claim - in the second proceedings original authority has found that a portion of the refund claim was time-barred - once all the refund claims and their fate had attained finality in the order of the Commissioner (Appeals), no further action could have been taken - AT
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Service Tax:
Construction Service - Notification No. 1/2006-ST dated 01.03.2006 - Denial of CENVAT Credit - The intention of the Government is also express, that it is not to disallow the CENVAT Credit for the previous period as there is no such specific bar in the subsequent Notification no. 1/2006 - AT
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Central Excise:
For the purpose of classification of mineral oils other than Kerosene cleared through PDS, these products will also be classified under CETH 2710.29, as held by various judicial pronouncements, but for the purpose of benefit under exemption notification 75/84-CE only those categories of Kerosene will be eligible which are distributed though PDS. - AT
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Central Excise:
Merely on the basis of power consumption norm and that too when there are serious doubts about its correctness, duty demand cannot be confirmed against an assessee - AT
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Central Excise:
Cash refund of pre deposit made by making debit in CENVAT Credit register - pre-deposit amount voluntarily paid cannot be allowed by way of cash refund and said refund is to be allowed by way of re-credit in cenvat account - AT
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Central Excise:
Clandestine manufacture and removal of goods - the case of clandestine removals cannot be held as established on the basis of few parallel invoices recovered from a third party - AT
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Central Excise:
Credit on the basis of forged invoice – The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged - levy of penalty confirmed - AT
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Central Excise:
SSI Exemption - use of brand name / house-mark - Voltarc symbol which was being used on the wrapper and packer was reflecting only the name of the company and not the trade mark of the product - benefit of exemption allowed - HC
Articles
Notifications
Customs-
33/2015 - dated
13-7-2015
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ADD
Extension of validity of Notification No. 30/2011-Customs, dated the 4th March, 2011 for a further period of one year i.e. upto and inclusive of the 13th July, 2016.
Income Tax-
1/2015 - dated
10-7-2015
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IT
Extension of time limit for submitting ITR-V for electronically filed returns for A.Y. 2013-14 and A.Y. 2014-15, latest by 31st Oct.2015.
SEZ-
S.O. 1749(E) - dated
22-6-2015
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SEZ
De-notification of an area of 6.173 hectares of Special Economic Zone for information technology and information technology enabled services at Village Kalwara, Newta Tehsil Sanganer, District Jaipur in the State of Rajasthan
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S.O. 1748(E) - dated
22-6-2015
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SEZ
Additional area of 11.4477 hectares included - Special Economic Zone for handicraft sector at, Village Kalwara, Tehsil Sanganer, District Jaipur, in the State of Rajasthan
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (7) TMI 452
Demand includes interest levied under Section 234(b) - an application for waiver in that regard is pending before the Commissioner of Income Tax at X Mumbai, as per Annexure P-3 - Held that:- As apprised that the amount of interest is about ₹ 15 lacs. Barring the interest amount, the rest of the amount shall be deposited in the Department by end of August, 2015.
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2015 (7) TMI 451
Penalty under section 271(1)(c) of the Income Tax Act, 1961 - Held that:- One of the conditions is that the assessee makes a statement under sub-Section (4) of Section 132 that the assets unearthed have been acquired out of his income which has not been disclosed so far in his returns of income already filed. The difficulty arises by the use of the expression “to be furnished before the expiry of time specified in sub-Section (1) of Section 139”. A confusion is likely to arise as to whether the departure has been sought to be made by the legislature only for those cases where the statement as regards undisclosed income was made pertaining to a previous year for which time to file return under Section 139 had not expired. But that was not the intention because the expression “unless” appears after Clauses (a) and (b) of Explanation which provides for imposition of penalty. Therefore, ‘unless’ has to apply to the provision for imposition of penalty. Therefore, the aforesaid expression “to be furnished” has to be interpreted as ‘‘required to be furnished”. Only in that case the Section will make a meaning otherwise the Section does not make any meaning. We are supported in our view by the judgment of the Madras High Court in the case of C.I.T. Vs. SDV Chandru reported in [2003 (12) TMI 40 - MADRAS High Court ] wherein a Division Bench opined that “ The additional words which refer to the time specified in section 139(1) are only a reiteration of the legal requirement regarding the time within which returns should normally be filed.” - Decided against the revenue.
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2015 (7) TMI 450
Eligibility of deduction u/s 80IA of the Income Tax Act 1961 - Revenue generated or the profit derived by the power undertaking - Dispute in rate at which electricity supplied will be computing the benefit under the section - Held that:- Eligibility of deduction u/s 80IA of the Income Tax Act 1961 - We are, as such, unable to hold that the benefit under Section 80IA is not available to the assessee because the power generated was consumed at home or by other business of the assessee. It is now well-settled that a statute granting incentives for promoting growth and development should be construed liberally so as to advance the objective of the provision and not to frustrate it. Refer cases of Tata Iron Steel Company Ltd. and Ors. –Vs- State of Bihar reported in [1962 (9) TMI 49 - SUPREME COURT ] and Textile Machinery Corporation Limited –Vs- CIT reported in [1977 (1) TMI 3 - SUPREME Court ]. - Decided against the revenue. Rate dispute - The benefit under Section 80IA was intended to encourage the business of generating power. An entrepreneur who wants to avail the benefit of Section 80IA cannot hope to get any benefit more than what has been contemplated by the Act. It was a fortuitous circumstance that the entrepreneur in this case has a home consumption of electricity which any other entrepreneur engaged in the generation of electricity would not have. But that cannot be a reason why two entrepreneurs engaged in the same business will get benefit at rates computed differently. In order to avoid any such discrimination, the legislature has taken care to provide that the price which can be charged has to be the same, which electricity would fetch in the open market. The last submission, advanced by Mr. Khaitan that this point was not taken by the appellant, has not impressed us. The point is certainly involved in the appeal because the CIT (A) reversed the finding of the assessing officer that the rate at which electricity was supplied by the Andhra Pradesh State Electricity Board “cannot be taken as the market rate within the meaning of Section 80IA”. The learned Tribunal has upheld that finding. The revenue is in appeal. The decision to reverse the finding is based on a wrong determination of a substantial question of law and is therefore amenable under Sub-Section (6) of Section 260A of the I. T. Act, 1961. Moreover when this Court is satisfied that the case involves the aforesaid question, it has a corresponding duty to decide the same. - Decided in favour of revenue. In Net, appeal is partly allowed.
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2015 (7) TMI 449
Addition on account on expenditure on undisclosed construction - Ignoring the expert opinion of the valuation officer - Held that:- A perusal of the paperbook would go on to show that the houses were situated at different places in the town of Ludhiana and as noticed, the construction was also at various stages and the Tribunal had rightly granted the benefit of the margin that some houses were half complete whereas the valuation had been done for the finished houses and additions were made accordingly. Thus, the questions which are sought to be raised for consideration are not questions of law, as such, but are pure questions of fact. The Tribunal being the final forum for deciding such issues, has rightly exercised this discretion by adding a sum of ₹ 15 lacs each, to both the brothers, over and above the income which was declared and in the opinion of this Court, no substantial question of law, thus, arises for consideration. - Accordingly appeal dismissed.
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2015 (7) TMI 448
Adjustment in relation to the international transaction of sale of goods to Associated Enterprises - Not allowing range benefits - Disallowance of expenses due to non deduction of TDS - TDS on reimbursement - Held that:- The undisputed facts remain that the Transfer Pricing Officer as well as a DRP have rejected the transfer pricing study conducted by the assessee and comparables adopted for computing the arm’s length price. The TPO carried out his own study restricting the study to a single financial year as per the Rule of 10B(4) of the Income Tax Rules, 1962 .The TPO also rejected the comparables on the basis that the pumps and valves cannot be compared. However, while conducting the transfer pricing study, the AO compared the assessee with industries which were engaged in the manufacturing of valves. During the course of hearing, it was pointed out by the ld.counsel for the assessee that the valves that are sought to be compared by the TPO are functionally different, entirely a different product, although it is named as valve. Although, it is true that the method adopted is TNMM, under this method the product is broadly compared. However, in the present case, the TPO has sought to compare the valves which is a consumer product with the industrial product of the tested party, which in our view, would not give a true picture of the profit. Under these facts, it would subserve the interest of justice if a TPO conduct a fresh study comparing the same or similar product, so that a fair picture of the profit could be arrived in order to ascertain whether the TP adjustment is required to be made or not. Therefore, we hereby set aside the order of the authorities below and restore these issues before the TPO for conducting a fresh transfer price study for the purpose of finding out the nature of product, its market, geographical location, etc. as given under OECD guidelines regarding the comparability of the comparables. While doing so, the TPO would afford opportunity to the assessee for submitting fresh T.P. study comparables. Disallowance of expenses due to non deduction of TDS - Accordingly, the Assessee claimed a deduction for the expenses as shown in the table referred in para 2.4 above in the financial year in which the taxes have been deducted and deposited in the Government Treasury, i.e., in the Assessment Year 2009-10. The Assessee inadvertently mentioned the Assessment Year as A.Y. 2009-10 and not as A.Y. 2008-09, in the challans used for depositing the taxes deducted on the above referred payments. The AO observed that on verification of challans furnished by the Assessee, all the challans were for Assessment Years 2009-10 and 2010-11. Further, the AO also observed that all the TDS payments made by the Assessee during the period under consideration pertains to Assessment Year 2009-10 as per TDS challans produced by the Assessee and that the Assessee has not produced any TDS challan showing Assessment Year 2008-09. The Assessee requests that the AO be directed to allow the deduction claimed amounting to ₹ 45,99,634 being expenses pertaining to Assessment Year 2008-09, but on which, taxes have been deducted and paid for in the financial year relevant to the assessment year under consideration. Since the DRP has directed the AO to verify the claim of the assessee, we do not see any reason to interfere with the order of the DRP, the same is hereby upheld. Thus, ground No.3 of assessee’s appeal is rejected. TDS on reimbursement - There is no dispute with regard to the fact that law is well settled that in case, any payment is in the nature of reimbursement of expenditure, then no tax is required to be deducted. Therefore, we admit the addition ground of the assessee and restore the same to the file of AO for verifying whether the impugned disallowance is in the nature of reimbursement of expenditure. The assessee is directed to place the material evidences before the AO to demonstrate that the impugned disallowance is in the nature of reimbursement. In case, the assessee fails to do so, the AO would will be free to make the disallowance. Thus, this additional ground raised by the assessee is allowed for statistical purposes. - In the result, the appeal of the assessee is partly allowed for statistical purposes.
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2015 (7) TMI 447
Validity of reassessment proceedings - Disallowance u/s 36(1)(iii) of Income tax Act, 1961 - Charges of interest bearing funds advanced for non-business purposes - Reopening is not permissible on the basis of borrowed satisfaction rather there should be live link with the formation of belief and conclusion for escapement of income - Held that:- Validity of reassessment proceedings - We find that there was no new tangible material with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment, thus, in view of the decision from Hon'ble Rajasthan High Court [2008 (5) TMI 276 - RAJASTHAN HIGH COURT] reopening is not permissible on the basis of borrowed satisfaction rather there should be live link with the formation of belief and conclusion for escapement of income. The ratio laid down by Hon'ble jurisdictional High Court in Aventis Pharma Ltd. vs ACIT [2010 (3) TMI 317 - BOMBAY HIGH COURT ] supports our view. Even after 01/04/1989, concept of 'change of opinion' was not removed. The totality of facts clearly indicates that no new material came to the possession of the Assessing Officer leading to conclude that the income has escaped assessment, thus, issuance of notice for reopening and reassessment order passed u/s 143(3) r.w.s.147 of the Act was rightly held to be unsustainable in law. The existence of tangible material is necessary to ensure against an arbitrary exercise of power, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income tax (Appeals). Disallowance u/s 36(1)(iii) of Income tax Act, 1961 - Considering the fact that the assessee had its own funds more than the loans given to its subsidiaries and also in the absence of any nexus establishing that the interest bearing 'borrowed funds were given us interest free to its subsidiaries, we hold that the disallowance of interest is not justified. Therefore, interest is allowable under section 36(1)(iii) of the Act. - Decided against the revenue.
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2015 (7) TMI 446
Unexplained investment made in the capital and un-proved sundry creditors - CIT(A) deleted addition in assessment completed under section 143(3) read with section 263 - Held that:- On account of unexplained investment in the capital, it is observed that although, source of the said capital was claimed by the assessee to be the funds received from HUF, the same was not substantiated by the assessee before the A.O. by furnishing relevant documentary evidence and details. A perusal of the impugned order of the Ld. CIT(A) also shows that the explanation of the assessee as regards the source of capital being the funds received from HUF was accepted by him merely on the basis of the submission of the assessee that the HUF is regularly assessed to tax without there being any documentary evidence to support and substantiate the claim of the assessee that the amount of ₹ 5,32,930 was actually received from the HUF and that the same was duly reflected in the accounts of HUF. As rightly contended by the learned D.R., the HUF is a separate entity, different from the assessee and therefore, the onus is on the assessee to explain the source of capital claimed to be funds received from the HUF on evidence. The Ld. Counsel for the assessee at the time of hearing before us has not disputed this position. He, however, has contended that one more opportunity may be given to the assessee to establish the receipt of funds from HUF on evidence. Thus we consider it fair and proper and in the interest of justice, to give such opportunity to the assessee and since the learned D.R. has also not raised any objection in this regard, we restore this issue to the file of the A.O. for deciding the same afresh. - Decided in favor of revenue for statistical purposes. Addition on account of unproved creditors - Held that:- The Ld. CIT(A) treated the said creditors as proved relying on the details filed by the assessee for the first time before him showing that the balances outstanding as on 31st March, 2007 against the concerned creditors were paid in the subsequent years through cheques or DDs. As rightly pointed out by the learned D.R. from the relevant portion of the impugned order of the Ld. CIT(A), finding in this regard was given by the Ld. CIT(A) only in respect of 5 creditors out of the 13 creditors and that too without giving any opportunity to the A.O. to verify the claim of the assessee made before him for the first time that the relevant sundry creditors having been fully paid in the subsequent years, the existence of the said creditors was proved. Ld. Counsel for the assessee has also not been able to dispute this position clearly evident from the impugned order of the Ld. CIT(A). We, therefore, agree with the contention of the learned D.R. that this issue is required to be sent back to the A.O. for giving him an opportunity to verify the claim of the assessee from the relevant facts and figures that the entire amount in question payable to the 13 creditors was actually paid by the assessee in the subsequent years showing the existence of the said creditors on 31st March, 2007. - Decided in favour of revenue for statistical purposes.
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2015 (7) TMI 445
Assessment of income of assessee at 2.24% of gross receipts - CIT(A) admitting additional evidences in the form of details of comparable cases without providing any opportunity of rebuttal to the A.O. under Rule 46A - Held that:- In the case of ITO vs Radha Ballabh Nest Build Pvt. Ltd.(2015 (6) TMI 790 - ITAT DELHI), the Tribunal, on identical set of facts and circumstances, has upheld the order of the CIT(A) and the addition made by the AO has been deleted by upholding the order of the CIT(A) which adopted rate of 2.24% of the gross receipts from M/s PACL India Ltd. for estimation of net profit in a peculiar situation when the conclusion of rejection of books of accounts by the AO has been upheld by the CIT(A). The Tribunal has also upheld the conclusion of the CIT(A) in this regard and we are unable to see any valid reason to take a different view on the similar issue. We also respectfully hold that the benefit of the ratio of the decisions relied by the revenue is not available for the revenue as the facts and circumstances of these cases are clearly distinguishable from the factual matrix of the present case. Therefore, we hold that the present case of the assessee is squarely covered in favour of the assessee by the order of the Tribunal in the case of Radha Ballabh Nest Build Pvt. Ltd. (supra). - Decided against revenue.
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2015 (7) TMI 444
Sale of shares of Satyam Computers - 'Short-term capital gain' OR 'Business income' - Held that:- It is an undisputed fact that the assessee took delivery of such shares after making full payment and it was not a case of settling the transaction of purchase and sale of such shares during the settlement period itself. This is another reason to indicate that the intention of the assessee to hold them as Investment. Also the assessee was consistently holding some other shares as investment over a period of time and was regularly earning income from their sale by declaring profit as 'Short-term capital gain' or 'Long-term capital gain' depending upon the period of their holding. There is no doubt that shares of Satyam Computers were not purchased or treated as Investment in any of the earlier years, but at least this factor shows that the assessee was also engaged in the purchase of shares as Investment and showing profit from their sale under the head 'Capital gains'. This treatment of profit from sale of shares held as investment has not been disputed by the AO in the assessments made u/s 143(3) of the Act. The assessee has placed on record a copy of the assessment orders for immediately preceding assessment year in which there was 'Short-term capital gain' of ₹ 17.21 crore which has been accepted by the AO vide his order dated 29.12.2011. Similarly, there is an order passed u/s 143(3) for assessment year 2006-07 accepting that the assessee was engaged in the business as well as in investment of shares. A copy of such order dated 31.10.2008 is available on record from which it is manifest that there is no alteration in the character of income shown by the assessee. The principle of consistency in terms of the assessee holding shares as stock-in-trade as well as investment, cannot be lost sight of. CIT(A) rightly proceeded to accept the assessee's contention of purchasing the shares of Satyam Computers as 'Investment' rather than 'Stock-in-trade'. - Decided against Revenue.
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2015 (7) TMI 443
Exemption u/s 115WB - Fringe benefits Tax - FBT - Disallowance of expenses - Held that:- CIT(A) has observed that the action of the AO in treating the entire amount of expenses booked under the second category was not justified as these expenses were primarily in respect of car hire facilities for the employees during the weekends for which a separate arrangement was made as a regular shuttle service from home to office and back. - CIT(A) has further observed that as distinct from the regular facility for commutation of the staff from home to office and vice versa, separate facility was provided in respect of the employees who had to stay on in the office beyond the prescribed office time and who could not avail the benefit of regular shuttle service for the employees. - CIT(A) has also noted that the Ld. Counsel of the assessee was asked to furnish the details of expenses that were in respect of commutation of staff from home to office hours or during the weekends and other car hire facilities. - CIT(A) has rightly held that 75% of the expenses booked in the category 2 in respect of which disallowance was made by the AO could be attributed to the facility of commutation offered by the assessee to its employees from home to office and back and hence were exempt under the Exemption Clause under section 115WB(3). In view of above, we are of the view that the Ld. CIT(A) has rightly confirmed the addition to the extent of 25% of such expenses - No infirmity in impugned order - Decided against Revenue.
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2015 (7) TMI 442
Disallowance of depreciation - Depreciation @40% or 15% - Held that:- The material fact that the lorries were used in assessee’s own business and had never been hired clearly clinches the issue against the assessee - In view of the clear legislative mandate which permits higher depreciation only to vehicles which were given out on hire, the claim has rightly been rejected by the CIT(A). - Following decision of CIT vs Varindra Construction Company [2012 (4) TMI 332 - PUNJAB AND HARYANA HIGH COURT] - Decided against assessee.
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2015 (7) TMI 441
Rectification of order passed - penalty levied u/s 158BFA(2) - Held that:- Tribunal has considered the decision rendered by the co-ordinate bench in the case of Ekta Exports (2015 (4) TMI 617 - ITAT MUMBAI). The Tribunal has noted down that the Explanation 1 to sec. 271(1)(c) provides that an assessee can escape from penalty levied u/s 271(1)(c) of the Act, if the bonafides of the assessee are proved. The co-ordinate bench of Tribunal, in the case of Ekta Exports (2015 (4) TMI 617 - ITAT MUMBAI), had followed the decision rendered in the case of Nayan Builders and Developers Pvt Ltd Vs. ITO (2011 (3) TMI 46 - ITAT MUMBAI ), wherein it was held that the admission of substantial question of law by the Hon'ble High Court lends credence to the bona fides of the assessee. - Tribunal has also taken the view that the question of examination of bona fides of the assessee shall arise only in respect of penalty levied u/s 271(1)(c) of the Act, in view of the Explanation-1 given under sec. 271(1)(c) of the Act. Since the provisions of sec. 158BFA(2) does not contain any provision as that of Explanation 1 to sec. 271(1)(c) of the Act, the Tribunal took the view that the contention that "bona fides of the assessee" due to admission of substantial question of law by the Hon'ble High Court is not applicable in respect of penalty levied u/s 158BFA(2) of the Act. On appreciation of these legal points, the Tribunal did not follow the decision rendered by the co-ordinate bench in the case of Ekta Exports (2015 (4) TMI 617 - ITAT MUMBAI). - Tribunal has taken a conscious view of the matter by duly considering all the relevant provisions of the Act and accordingly we do not find any merit in the miscellaneous application filed by the assessee - Decided against assessee.
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2015 (7) TMI 440
Disallowance of advertisement expenses - whether the CIT(Appeals) is justified in confirming the disallowance of ₹ 8,07,123/- in respect of advertisement expenses - Held that:- genuineness and the quantum of the advertisement expenses incurred by the Assessee is not doubted. On perusal of the details of the expenses, we notice that these were expenses incurred in the normal course of business and does not partake the character of the capital expenditure. Primarily the Income tax authorities have disallowed 75% of the total advertisement expenses for the reason that the benefit of these expenses would have spilled over to the next year. These advertisement expenses are recurring expenses incurred for sales promotion. There is no enduring benefit by incurring these expenses. Hence we hold that the disallowance of ₹ 8,07,123/- is not justified on the facts of the case - Decided in favour of assessee.
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2015 (7) TMI 439
Rejecting the books of account - Maintainability of appeal - Monetary limit - Held that:- Board’s instruction or directions issued to the income-tax authorities are binding on those authorities, therefore, the department ought not to have filed the appeal in view of the above said provisions mentioned in section 268A of the Act since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. - It is noticed that the CBDT has issued Instruction No.5 of 2014 dated 10.07.2014, by which the CBDT has revised the monetary limit to ₹ 4,00,000/- for filing the appeal before the Tribunal. - in view of the CBDT Instruction No.5 of 2014 dated 10.07.2014 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal - Decided against Revenue.
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2015 (7) TMI 438
Transfer pricing adjustment - selection of comparables - Held that:- When both parties agree that the company M/s LAN ESADA Industries Ltd. is a comparable, then the correct financial data of that company as reflected by its annual report, which were not available before the TPO, has been rightly considered by the ld. CIT(A). We also do not find any merit in the submission of the ld. DR that pro rata data should not be taken. Comparables M/s Kushagra Software Limited to be excluded - Decided in favour of assesse. Bad debts - whether are extraordinary items and cannot be considered as operational cost and hence, they should have been removed before arriving at operational margins? - Held that:- While arriving at operational profit ratio, extraordinary items should be eliminated. Bad debts or provision for bad debts are extraordinary items and have to be eliminated for arriving at the operational profit. - Decided in favour of assesse.
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2015 (7) TMI 437
Disallowance u/s 40(a)(ia) - Payment of professional fees - TDS not deducted - Held that:- Issue has been decided in favour of the assessee inasmuch as the provisions of section 40(a)(ia) have no application when the amounts were paid by the assessee before the end of the accounting year. - Following decision of ITO Vs. Theekathir Press [2015 (4) TMI 616 - ITAT CHENNAI] order of the Commissioner of Income Tax (Appeals) is upheld. Disallowance of 50% land travelling expenses - assessee has not produced proper evidence in support of the expenses - Held that:- Commissioner of Income Tax (Appeals) considering the submissions of the assessee where the assessee submitted that evidences were produced and these expenses were incurred for levelling the access road to a property which was sold from which commission income was also returned by the assessee. The Commissioner of Income Tax (Appeals) also considered that invoices are self-made. Considering these submissions, the Commissioner of Income Tax (Appeals) restricted the disallowance to 50% of ₹ 7,60,150/- to ₹ 3,80,075/-. On reading of the order of the Commissioner of Income Tax (Appeals), we do not find any good reason to interfere with the same. - Decided against Revenue.
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2015 (7) TMI 436
Claim of deduction u/s 80IC of the Act - Applicability of section 115JB of the Act – Partial disallowance of 10% of turnover as profit on account of the market value of the brand – Held that:- In so far as the question of reduction of the eligible profits on account of ‘brand’ value is concerned, it is noticed that the AO attributed 20% of profits to the ‘brand’, which the ld. CIT(A) restricted to 10%. The Tribunal, on similar facts and circumstances, has held that there can be no question of restricting the amount of eligible profit on account of ‘brand.’ In the absence of any distinguishing feature having been brought to our notice in the facts for the instant year, vis-à-vis the preceding year, respectfully following the precedent [2014 (4) TMI 618 - ITAT DELHI], we direct that no deduction can be made from the eligible profits on account of ‘Brand.’ AO held that profits to the extent of 5% of the turnover of the company were attributed to the past experience, expertise and knowledge, etc., of related and connected persons and not to the eligible unit. That is how, he allowed deduction for a sum of ₹ 32.40 lac on account of salary paid to directors and, apart from that, he also allowed a further deduction of ₹ 23,27,164/-, being the amount in excess of salary paid to directors up to 5% of total turnover. This resulted into reduction in the amount of eligible profit to the extent of ₹ 23.27 lac. The Tribunal, for the immediately preceding assessment year, has approved the view taken by the ld. CIT(A) in not increasing the deduction for expenses up to 5% of the sale value. It can be seen from the assessment order that the assessee categorically stated before the AO that all the sales were made from manufacturing unit at Haridwar and the branch offices etc. were only engaged in sale promotion and rendering after-sales services for the warranty provided on the products. Even copy of VAT return in support of the claim that all the sales were made from Haridwar, was also placed before him. This fact is brone out from page 5 of the assessment order. Similar contention was made before the ld. CIT(A) as well to the effect that the entire sales were made from Haridwar unit and no income producing activity was carried out from any place other than the eligible unit. - In the absence of any material to controvert the above submissions, respectfully following the precedent, we uphold the impugned order in not limiting the amount of eligible deduction to 12% of the total profits. - However, appeal regarding applicability of Section 115JB is dismissed - Decided partly in favour of assessee.
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2015 (7) TMI 435
Addition made of bogus invoices - genuineness of purchase transactions - entire payment is made in cash - Held that:- Assessee miserably failed to show that these invoices were in any manner genuine. All the inquiries conducted by the AO amply proved that the assessee dejectedly failed to either produce any representative of this concern or substantiate its identity. Summons issued on the given address divulged that this party never existed at the address given on invoices. The telephone number mentioned on the invoices turned out to be fake. When M/s Ankit Electronics filed some confirmation before the AO at the later stages of the assessment through post, a copy of which is available on record, interestingly, telephone number was conspicuously absent this time from the letter pad of this party. All these facts lead to the only irresistible conclusion that the Invoices recorded by the assessee in its books of account were fake and bogus. It is the excess price shown, which should be added rather than the invoice value itself. When we consider the overall gross profit rate of the assessee, it comes to the fore that the current year’s GP rate at 3.96% dipped from the preceding year’s gross profit rate of 4.41%. In the absence of any independent reasons to justify decline in the GP rate, it is such reduction in the profit, which was sought to be achieved by over-invoicing transactions through fictitious bills raised in the name of M/s Ankit Electronics. - preceding year’s gross profit rate of 4.41% be applied on the total turnover of the assessee at ₹ 5,99,54,644/- for making addition towards the income which the assessee sought to conceal by raising fake invoices. This would mean sustenance of addition for a sum of ₹ 2,69,796 - Decided partly in favour of assessee.
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2015 (7) TMI 434
Modification of order [2014 (11) TMI 552 - ITAT AHMEDABAD] - Adjustment made to the income on account of international transactions with Associated Enterprises - Assessee submitted that the Tribunal agreed with the contention of the appellant that the manufacturing segment of the appellant cannot be further bifurcated into DTA and EOU, but it has not given clear directions to the CIT(A) to apply TNM Method by considering both the segments together - Held that:- assessee has not pointed out any mistake except that a prayer for specific direction to the ld.CIT(A). However, it is clarified that the ld.CIT(A) while deciding the issue would consider the observation of this Tribunal as made in para-28.3 of the order. - Appeal disposed of.
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2015 (7) TMI 433
Penalty u/s 271(1)(c) - assessee had two opportunities to add back this amount to its returned income. First when it filed the return of income, the assessee could have revised the return of income and secondly, when it filed return of income in pursuance to the notice u/s 148 of the Act. The assessee agreed for the addition only when it was pointed out by the AO during the course of reassessment proceedings regarding its claim in respect of a capital loss. Merely because, the assessee did not preferred any appeal against the said disallowance does not make it an inadvertent mistake. - It appears that the assessee was taking a chance whether its return would be selected for scrutiny assessment or not. Once, the return was accepted u/s 143(1) of the Act, the assessee took a sigh of relief without realizing that its return can be to be re-opened u/s 147 of the Act. Even after receiving notice u/s 148, the assessee continued to take a chance but this time could not get any success. - Following decision of Zoom Communication (P) Ltd [2010 (5) TMI 34 - DELHI HIGH COURT] - Penalty amount reduced - Decided partly in favour of Revenue.
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Customs
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2015 (7) TMI 455
Revocation of Customs Broker Licence - belated issuance of SCN - allegation that, it was found that the Customs Broker, the petitioner herein had attempted to assist and clear the impugned goods at a much lower value, to evade payment of applicable duties by suppressing the Load Port Chartered Engineer's Certificate and original purchase invoices of the subject machineries, which would have resulted a possible revenue loss to the Government, to the tune of ₹ 1.05 crores. Held that:- it is explicit that the show cause notice under Regulation 20(1) is required to be issued within 90 days from the date of receipt of the offence report as prescribed under Regulation 22. In the present case, the offence report was received on 29.08.2012 and the show cause notice was issued on 05.03.2015, by which, it is clearly revealed that it was issued beyond the period stipulated in Regulation 22(1). Therefore, when the impugned show cause notice has been issued beyond the statutory period, as rightly pointed out by the learned senior counsel for the petitioner that the same cannot be sustained for want of jurisdiction. - SCN set aside. In view of setting aside the impugned show case notice dated 05.03.2015, there is no impediment for the respondent to renew the Customs Broker Licence of the petitioner in terms of Regulation 9(1) of the CBLR, 2013. - Decided in favor of appellant.
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Corporate Laws
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2015 (7) TMI 454
Penalty for violation of provisions of Sections 15C, 15A(a) of SEBI Act, 1992 - Delay in resolve of investors’ grievances - Delay in filing appeal by 3182 days & 1036 days respectively - Held that:- The delay is condoned by allowing two miscellaneous applications and consequently both the appeal have been heard on merit . Section 15C of the SEBI Act enjoins upon SEBI to levy penalty on listed company which has failed to redress investors’ grievances within the specified time prescribed by the Board. Undoubtedly, it is to be done after affording reasonable opportunity to the company which has been duly done in the present two appeals. Keeping in view the seriousness of the matter, a penalty of ₹ 1 lac for each day during which such failure to redress investors’ grievances continues has been prescribed by law which can be levied upon the defaulter company subject to a maximum of ₹ 1 crore. In the present case, admittedly, the default to redress investors’ grievances in question has continued for years together. This is a blatant violation of law and the regulators’ orders in this regard. Even after passing of the impugned order dated May 9, 2005 no steps were taken to redress the investors’ grievances. As the investors’ grievances increased to 114, fresh letter was issued to the appellant on September 25, 2008 calling upon the appellant to redress investors’ grievances. As the appellant failed and neglected to redress investors’ grievances, proceedings were initiated and by impugned order dated March 25, 2011 penalty of ₹ 20 lac under Section 15C and penalty of ₹ 2 lac under Section 15A(a) of SEBI Act has been imposed. Penalty at the rate of ₹ 1 lac per day from September 25, 2008 till passing of impugned order dated March 25, 2011 for not redressing 114 investors’ grievances would be more than ₹ 1 crore, however, inspite of persistent default on part of appellant, Ld. adjudicating officer has taken a lenient view and imposed penalty of ₹ 20 lac under Section 15C and penalty of ₹ 2 lac 15A(a) of SEBI Act which cannot be said to be unreasonable or excessive. Argument of the appellant that it was a sick company and had only few employees and, therefore, investors’ grievances could not be redressed does not impress us, because, obligation under the SEBI Act to comply with investors’ grievances is made mandatory and for non compliance stringent penalty of ₹ 1 lac per day is prescribed. Therefore, irrespective of being a sick company and irrespective of their being only few employees, appellant was obliged to redress investors’ grievances from time to time. Moreover, above argument is a dishonest one as can be seen from the conduct of the appellants / its directors. As soon as SEBI passed an order on December 15, 2010 restraining appellants and its directors from entering the capital market till redressal of investors’ grievances pending since 2004, appellant took steps to redress all investors’ grievances immediately and applied for revoking the debarment order dated December 15, 2010. - Decided against the appellants.
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2015 (7) TMI 453
Charges of oppression and wilful misstatement u/s 397 & 398 - Wilful termination of MOU - Impact of Arbitration clause in agreement - Doctrine of Severability - Held that:- This Doctrine of Severability will come into operation when the agreement has come into effect. Here the respondents filed this application saying though this agreement entered into has not been given effect, it has to be referred to arbitration for the reason that MoU has arbitration clause notwithstanding the fact whether it is given effect or not. When Dhanuka group made allotment to their group, Tulsian group filed this CP saying that earlier CP was disposed of taking MoU into consideration, the petitioner also agreed for withdrawal of earlier CP because the MoU proposed a solution to earlier allotments arbitrarily made to the Respondents apart from a proposal for investment from Gaggar group. But whereas these Respondents after disposal of earlier CP, turned around and made further allotments without giving any opportunity to the petitioners to participate in right issue. Looking at this scenario Dhanuka group causing Tulsain group withdraw earlier CP on the MoU with a proposal to set right earlier allotment, thereafter turning around and making allotment to their group at a price far lower than the price at which the shares were allotted to Tuisain group, I am of the view if it is not oppression, what else would become oppression? In view of the same, I am of the view that the acts of the respondents prima facie amount to prejudice to the rights of the petitioners, hence this arbitration clause is not binding upon the petitioners. The remedy available under sections 397 & 398 is statutory remedy, unless the lis is strictly within the Arbitration Clause, the court is under no obligation to refer the matter to Arbitration. Since the petitioner elected remedy u/s 397 & 398 proceedings, the Respondents cannot ask for implementation of clause under MOU dated 11.02.2012. The grievances of the petitioners are not covered by either MoU or Arbitration clause of MoU, because the alleged acts cannot be coined as mere violation of the clauses of the MoU, they are, I believe, beyond the ambit of MoU and arbitration clause amounting to oppression against the petitioners, hence I dismiss the relief sought under section 8 of Arbitration and Conciliation Act, 1996. - the petitioners failed to make the parties against whom serious aspersions are made and sought reliefs - they are not even named anywhere in the petition, hence the reliefs sought against non-parties are here by dismissed as envisaged under Order 1 Rule 9 of CPC. - Decided partly in favour of appellant.
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Service Tax
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2015 (7) TMI 469
Waiver of pre-deposit - tribunal refused to grant stay in respect of penalty and interest - judgmental error - assessee has deposited amount of service tax as per the direction of the tribunal - Held that:- The simple arithmetic, which ought to have been carried out by the Tribunal to verify the tax amount and the interest that is required to be paid has not been undertaken by the Tribunal. The Tribunal was carried away with the fact of the petitioner himself paying ₹ 98,14,993/- on 03.11.2014 and thereby assuming that there was a non-compliance of the orders of this Court dated 09.09.2014. Obviously, the factual matrix, which has been set out above does not lead to such conclusion being drawn by the Tribunal as correct. In the facts of the present case and considering the fact that total demanded amount and interest have already been deposited, interest of justice would require to allow the petitioner to avail the right of appeal. - Relief granted - decided in favor of assessee.
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2015 (7) TMI 468
Validity of adjudication order / order in original - service of letters at wrong address - assessee contended that notice preceding passing of final order was not served on the petitioner thereby the petitioner was deprived of an opportunity to put forth their grievance on merits of the matter - Recovery proceedings - - Held that:- it cannot be said that the Department was not aware of the correct address of the petitioner and it is an admitted fact that both the show cause notice and final order were dispatched to the wrong address resulting in violation of the statutory requirement of service notice for the purpose of fastening liability of service tax on the petitioner. The procedure of service of notice and passing orders as enumerated in the Central Excise Act, 1944 has been made part of the service tax by virtue of Section 83 of the Finance Act. In that view of the matter, the impugned order dated 30.05.2014 cannot be sustained, and accordingly, the same is set aside giving liberty to the respondents-authorities to pass appropriate orders after giving an opportunity of hearing to the petitioner - writ petition allowed - Decided in favor of assessee.
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2015 (7) TMI 467
Denial of refund claim - in the second proceedings original authority has found that a portion of the refund claim was time-barred which shows that there was no proper verification of documents. - Non fulfillment of conditions prescribed in the Board's Circular No. 97/08/2007 dated 23.08.2007 - Held that:- the application for refund was rejected by the Assessing Authority. It was, however, allowed by the Appellate Authority. It is not in dispute that no further appeal was taken therefrom. The said order, therefore, attained finality. It matters little as to whether the application for refund was in the prescribed form or not. In any case once all the refund claims and their fate had attained finality in the order of the Commissioner (Appeals), no further action could have been taken except the option of appealing against that decision and recover the lost ground which has been missed. I also agree with the submissions that this is a case where the decision of the Hon'ble Supreme Court in the case of Kamlakshi Finance Corporation Ltd. [1991 (9) TMI 72 - SUPREME COURT OF INDIA] is applicable and therefore the order should have been simply implemented. - Appellant would be eligible for the interest after 3 months from the date of filing the claim in this case so that another round of litigation is not initiated by not granting the interest by the original authority
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2015 (7) TMI 466
Construction Service - Notification No. 1/2006-ST dated 01.03.2006 - Denial of CENVAT Credit - Held that:- Appellant have rightly taken credit for the input services received and availed admittedly prior to 01.03.2006 although credit for the same have been taken on 01.04.2006, subsequent to coming into force of Notification No.1/06, following the ruling of the Hon'ble High Court of Bombay in the case of Tata Engineering & Locomotive Company Ltd. (2003 (1) TMI 124 - HIGH COURT OF JUDICATURE AT BOMBAY). The intention of the Government is also express, that it is not to disallow the CENVAT Credit for the previous period as there is no such specific bar in the subsequent Notification no. 1/2006. This view is further fortified by the view taken by CBEC Circular with respect to brought forward CENVAT Credit under Rule 6 sub Rule 3 when the disability of utilisation of 20% was removed. - Decided in favour of assessee.
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2015 (7) TMI 465
Recovery of already granted refund - Original invoice not produced - Held that:- Appellant contended that the department recovered back the amount of ₹ 4,00,670/- which was earlier granted to them. Ld.Counsel made submission that there was agreement between Honda Motor India Pvt.Ltd. and Honda Motor and Scooter India Pvt.Ltd. to provide IT related services i.e. sharing of server. They have issued invoices to Honda Motor and Scooter India Pvt.Ltd. She also pointed out that certificate was issued by chartered accountant of Honda Motor and Scooter India Pvt.Ltd. confirming that they have not received any service against the invoice issued by the appellant. - appellant have made out a prima facie case in their favour and balance of convenience is in favour of the appellant - recovery of already granted refund is liable to be stayed - Stay granted.
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Central Excise
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2015 (7) TMI 462
Rectification of mistake - Clandestine manufacture and removal of goods - Notification No.24/2005-CE(NT), dt.13.05.2005 - Validity of nomination of Chief Commissioner, Central Excise Vadodara - Held that:- order dated 30.10.2006 issued by CBEC, Ministry of Finance is not found enclosed with the ROM application filed and was also not produced during the course of hearing when the order [2015 (2) TMI 1006 - CESTAT AHMEDABAD] was passed. Copy of the same alongwith its covering letter dated 22.11.2012 was produced before the Bench during the hearing held today. It is observed from the order [2015 (2) TMI 1006 - CESTAT AHMEDABAD] that appeals were dismissed for for a proper authorisation not only on the ground that appropriate order/ notification from the appropriate authority, authorising the Chief Commissioner to sign the review order, was not existing but also dismissed on other procedural requirements on the basis of cases decided by coordinate benches indicated in order dated 24.10.2014, passed by this Bench. Any contrary decision now brought on record was not relied upon before the Bench while deciding the main appeal and not even mentioned in the ROM application. - As the ground raised now were not existing/raised at the time of deciding the main appeal, therefore, it can not be said that there was any mistake apparent from the face of records - Rectification denied.
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2015 (7) TMI 461
Classification of LABFS and LARO manufactured by IOCL - Whether the same is classifiable under CETH 2710.29 as claimed by the appellants or the same should be classified elsewhere as not Kerosene - whether the benefit of Notification No. 75/84-CE will be admissible to the products LABFS and LARO manufactured by the appellant - Held that:- even if is not known as Kerosene will be classified under 271029. From the description of Kerosene given in tariff heading 2710, product like mineral colza and turpentine substitute are not held to be classifiable under 271029 as they are classified under 271091 and 271092 etc. The description given in CETH 2710 is interpreted by the judicial pronouncements that mineral oils meeting with the parameters specified, will be classified under 2710.29 even if they are not known as Kerosene in common parlance. In view of above it is held that products LABFS and LARO will be classifiable under 2710.29 as claimed by the appellant. It is practice that in case of any doubt or ambiguity, taxing provision is normally construed in favour of the assessee but when it is case of granting some exemption then there should be strict interpretation and in case of any doubt or ambiguity the benefit must go to the State. The word Kerosene used in the exemption Notification 75/84-CE therefore, cannot be understood by taking recourse to parameters given to Kerosene , under CETH 2710. The word Kerosene has to be understood with respect to interpretation/ understanding attributed by those who deal in Kerosene . This is the ratio laid by the Hon'ble Supreme Court in the case of IOCL vs. CCE, Vadodara [2010 (10) TMI 7 - SUPREME COURT OF INDIA], and is relevant Product LABFS and LARO are not cleared as Kerosene at all and only used for the purpose other than for illuminant oil for burning lamps or other domestic use. The ratio of the law laid down by the Hon'ble Supreme Court in the case of IOCL vs. CCE, Vadodara (supra), word Kerosene used in exemption notification No. 75/84-CE will have to be understood only with that category of Kerosene which is distributed through PDS as Kerosene . For the purpose of classification of mineral oils other than Kerosene cleared through PDS, these products will also be classified under CETH 2710.29, as held by various judicial pronouncements, but for the purpose of benefit under exemption notification 75/84-CE only those categories of Kerosene will be eligible which are distributed though PDS. - Decided partly in favour of assessee.
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2015 (7) TMI 460
Demand of duty on estimated production based on power consumption - period of 01.04.2001 to 31.03.2004 - During this period the factory of the appellant company was not paying any duty and was not registered with the Central Excise Department, as it was availing full duty exemption. - Penalty u/s 11AC - Held that:- When the Department itself had appointed the Centre of Energy Studies and Research for carrying out a survey of the appellant s cement plant and determining their power consumption ratio and when the Institute has submitted a report mentioning their power consumption as 212 unit per M.T. it is totally incorrect for the Commissioner to discard this opinion of an expert and arrive at his own power consumption norm of 155 units by assuming that during the period from 01.04.2001 to 31.03.2004 the appellant had also used electricity generated by the DG sets for which we do not find any evidence. In fact, the Department itself in its appeal against Commissioners order disputes the Commissioners findings regarding generation of electricity from D.G. sets. Merely on the basis of power consumption norm and that too when there are serious doubts about its correctness, duty demand cannot be confirmed against an assessee, when there is no other corroborative evidence of unaccounted purchase of raw-material and clearance of unaccounted production. In view of this, we hold that the duty demand for the period from 01.04.2001 to 31.03.2004 based on the power consumption norm is not sustainable and set aside. However, the duty demand of ₹ 16,57,293/- for the period from 01.04.2004 to 27.10.2004 alongwith interest and equivalent penalty under section 11AC is upheld. - Decided partly in favour of assessee.
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2015 (7) TMI 459
Cash refund of pre deposit made by making debit in CENVAT Credit register - Exemption under Notification No.30/2004-CE dt. 9.7.2004 - textile yarn - Denial of refund claim - Held that:- both pre-deposit and the subsequent voluntary payment of the demand was paid through debit in cenvat credit. The appellant s main plea for refund in cash is that as they cannot utilize the credit and they are availing full exemption. They relied Tribunal s decision in the case of Raymond Ltd. Vs CCE (2011 (6) TMI 530 - CESTAT, MUMBAI) and the Tribunal decision in CCE Vs Ashok Arc (2005 (8) TMI 128 - HIGH COURT OF JHARKHAND AT RANCHI) where the Tribunal upheld the refund of deposit made through RG-23A Part-I sanctioned in cash. I find in the above cases the Tribunal had allowed refund in cash only on the ground that assessee was not in a position to utilize the credit as the unit was closed. In the case of Raymond Ltd. (2011 (6) TMI 530 - CESTAT, MUMBAI) relied by the appellant, I find that the said order was reviewed and appealed by Revenue before Hon’ble Hon’ble High Court of Bombay wherein the High court considering substantial question of law had duly admitted Revenue appeal reported in [2014 (6) TMI 897 - BOMBAY HIGH COURT], therefore, the said decision is not applicable to the facts of the present case. Appellant neither closed their unit nor their registration is cancelled and they are fully viable and functioning and producing Denim fabrics and clearing for domestic as well as for exports and also discharging service tax liabilities. Therefore, I am unable to accept the appellant s contention that refund of pre-deposit and voluntary duty payment should be paid in cash only - pre-deposit amount of ₹ 10 lakhs and ₹ 20,63,023/- voluntarily paid cannot be allowed by way of cash refund and said refund is to be allowed by way of re-credit in cenvat account. - Decided in favour of Revenue.
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2015 (7) TMI 458
Clandestine manufacture and removal of goods - documents recovered from the third party, which are not accepted by the appellant - Held that:- For the purpose of clandestine removal, there has to be clandestine manufacture. We find on perusal of the record, that the Revenue authority, despite having engaged themselves in massive investigation, has not brought on record a single evidence of procurement of other major raw materials required for manufacture of Frit, either in the form of entries in the books of accounts or in the form of statements of supplier of the other major raw materials. It is undisputed that for manufacturing of Frit (the final product) major raw material is Quartz which is approximately 45% of the total inputs going in the manufacturing of Frit . We find from the records that Revenue has not produced a shred of evidence, to indicate that the appellant had been procuring Quartz without accounting them in books of account nor is there any evidence to indicate that other raw materials were also procured without recording them in books of accounts. There has to be an illicit manufacture of goods to indulge in clandestine removals for which extra raw-material, extra manpower, transportation of finished goods, cash payments etc are required to be established with a reasonable degree. In the absence of any corroboration on above factual details, the case of clandestine removals cannot be held as established on the basis of few parallel invoices recovered from a third party. Impugned orders demanding duty as alleged clandestine removal with equal penalty deserves to be set aside. However, duty demand of ₹ 24,905/- in respect of shortage of finished goods found at the time of search of factory on 3.7.2001 is required be confirmed with equal penalty. Penalty imposed on Shri Manan K Shan, Director of the main appellant, is also set aside as on merit appeal has been predominantly decided in favour of the main appellant. - Decided partly in favour of assessee.
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2015 (7) TMI 457
Credit on the basis of forged invoice – Bogus purchase - Imposition of penalty - Held that:- as the investigation in the present case was started consequent to the investigation against SSMIPL by the jurisdictional Commissioner. We also note that there are some minor differences which have been highlighted by the learned counsels for the appellants. We have given considerable thought to those differences but in our view, those minor differences will not make any difference in the conclusion - appellant is a very well established company and producers of various steel and alloy steel items and, therefore, they would have far better knowledge about different types of scrap and it also appears that they are placing the order with certain gradation of scrap such as grade I, grade II etc. On receipt of scrap, gradations were analysed and indicated. We note that in respect of the invoices under discussion, none of the standard operating procedures made by the appellant themselves was followed. This itself indicates that there was a tactical support from some people within the organization. There is no explanation whatsoever from the appellant s side why the operating procedures prescribed by themselves were not being followed in these cases It is strange that the appellant has placed order to the three dealers of scrap but all the three dealers of scrap in turn got the invoices of SSMIPL. There are evidences that none of the goods have moved from the godown of SSMIPL and on the contrary there are evidences that the goods have moved from godown of such dealers. Further, while the excise invoices were raised by SSMIPL, the commercial invoices were raised by three dealers or appellant No.3,4 & 5. The main appellant was making payment to appellant No.3,4 & 5 and not to SSMIPL. Even after the issue of the show cause notice, the least that was expected was that the main appellant or appellant No.3,4 & 5 could have produced transporter and the drivers to prove that the goods have moved from the godown of SSMIPL and not from any other place. This has not been done for obvious reason as the goods have not moved from the godown of SSMIPL but from various other places. Goods covered by the invoices of SSMIPL have never moved to the main appellant s factory and some other goods have moved. The appellant cannot take the credit of the duty paid shown in such invoices. - Decided against the assessee. Levy of penalty on dealers / sellers issuing bogus invoice - Held that:- The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty. - Decision in the case of Bhagwati Steelcast Ltd. vs. CCE, Nashik reported in [2013 (1) TMI 123 - CESTAT MUMBAI] followed - Decided partly in favour of assessee.
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2015 (7) TMI 456
SSI Exemption - use of brand name / house-mark - the name VOLTARC has been inscribed on the packets/cartons - CESTAT concluded that the marks are not affixed on the goods and hence it cannot be said that others brand-name has been affixed - extended period of limitation - Held that:- the Tribunal did not find that there was any justification in applying the extended period of limitation, and thus, the appeal came to be allowed accepting the plea of the respondent that the Order-in- Original is barred by limitation. Further, the Tribunal also found that Voltarc symbol which was being used on the wrapper and packer was reflecting only the name of the company and not the trade mark of the product. The argument of the respondent that even in the classification list they were mentioning the same and the Voltarc was not a brand but a trade-mark was accepted. The Tribunal also came to the conclusion that the symbols that are used by both the companies are different and distinct in character. While the appellants used the symbol V with a dot with India written below the V in case of M/s.Voltarc Electrodes Private Limited, between two Vs, there is electricity sign below with the name Voltarc. It was also found that there was no mark on the product as such. Tribunal is correct in setting aside the demand - Decided against the revenue.
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CST, VAT & Sales Tax
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2015 (7) TMI 464
Detention order - goods detained at border - requisite documents as prescribed in Section 67 of the TNVAT Act - respondent himself has admitted that the goods are moved from one State to another State, without looking into the Invoice to check whether the TIN Number has been properly mentioned or not, the said authority hurriedly passed the impugned detention order. - Held that:- A cursory reading of the circular dated 17.07.2014 depicts that movement of goods accompanied with a valid invoice satisfies the provisions of Section 68 of the TNVAT Act and thus, there is no offence falling under Section 71(5)(a) of the TNVAT Act and that the composition of offence under Section 72 (1)(a) of the TNVAT Act is possible only in case of a dealer's failure to pay or attempt to evade any tax payable under the Act. It further states that failure to file monthly return for previous months is not an offence relatable to movement of the goods. Therefore, though, in the case on hand, requisite documents have been produced as stated above, the first respondent has not followed the above said procedure while detaining the goods. Further, this Court also, on perusal of the typed set of papers filed in support of the writ petition, is able to see the TIN Number mentioned in the Invoices, as it is admittedly mentioned as TIN No.33270460111 of M/s.Indian Oil Corporation Limited / Consignee, therefore, in such view of the matter, for the reasons stated above, the impugned order is deserved to be set aside. - Decided in favor of assessee.
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2015 (7) TMI 463
Set off claimed under Rule 41-D of the Bombay Sales Tax Rules, 1959 - The dealer is carrying on business of export of goods - tax paid on the consumables which were treated as components, parts and accessories of machinery - Whether the Tribunal was justified in confirming the reduction of set off by the Deputy Commissioner of Sales Tax by 1.5% by calculating the exports at 96.1% in place of 97.6% calculated by the Sales Tax Officer after excluding the sales of scrap? Held that:- We are concerned in the present case with the proviso below clause (2) of sub-rule (1) of Rule 41-D where the Legislature has clarified that where the turnover of sale of such manufactured goods consists principally of sales of waste or scrap goods, then the claimant-dealer shall not be entitled to any drawback, set-off or as the case may be, a refund under this Rule. It is not the conclusion drawn by both authorities in the present case that the turnover of sales of the manufactured goods and intended for export and in fact exported consisted principally of sale of waste or scrap goods. The words “consists principally of sales of waste or scrap goods” are completely ignored by both the Revisional Authority and the Tribunal. The dealer in this case has not been found to have principally dealt with waste or scrap goods. The exported goods were manufactured with the purchases of goods styled as raw materials that have been made by the dealer. In such circumstances, we do not see how the dealer was ineligible or not qualified for the refund under the Rule. A finding of fact, therefore, should have been rendered and in terms of this proviso. Equally, on the second aspect, the disentitlement comes in the case of a dealer in respect of purchase of goods which are used by him in the manufacture of goods treated as capital assets by him or parts and components of such capital assets. The Sales Tax Officer found that the dealer has not treated them as purchases of capital goods. - there is no discussion at all in both the orders as to why goods or assets were indeed not treated as capital assets by the dealer. The authorities ought to have indicated with clarity and precision as to what is meant by capital goods and which capital goods and of what description have been acquired. We are of the opinion that the authorities have completely misread and misinterpreted the Rules and the concurrent conclusion is not in accordance with law. - Decided in favor of assessee.
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