TMI Tax Updates - e-Newsletter
July 16, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Highlights / Catch Notes
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GST:
Levy of GST/NIL rate of duty - processes undertaken on agricultural produce - all other processes which are done after acquiring the stage of first marketability fall outside the scope of exemption clause pertaining to agriculture produce.
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GST:
Levy of GST - If the liaison office in India does not render any consultancy or other services directly/indirectly, with or without any consideration and the liaison office does not have significant commitment powers, then the reimbursement of expenses and salary is not liable to GST.
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GST:
Liability of GST - place of supply - determination of place of supply has been kept out of the purview of Authority for Advance Ruling (AAR) stipulated under the provisions of section 97(2) of the CGGST Act, 2017.
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GST:
Input Tax Credit (ITC) - seeking credit packaging material which is to be used in exempted supply, till they are into their stock - no ITC could be claimed on the packaging material used for the said exempted supply of seeds. Whereas, if the applicant supplies only packing material to own branches in other States, then the ITC involved in purchase of such packing material could be availed as per section 17(2) of CGGST Act, 2017.
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Customs:
Refund of Terminal Excise Duty (TED) - The fact that the petitioner could or could not get refund under the CENVAT Credit Rules or under the provisions of the Central Excise Act is not relevant - The argument that since excise duty was not paid via cash but was paid by utilizing the CENVAT credit route and hence, the petitioner would not be entitled to claim refund is unsustainable.
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Customs:
100% EOU - demand of customs duty foregone on the excess quantity of imported scrap - manufacture - after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of “inputs as such” - Demand cannot sustain.
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Service Tax:
Validity of SCN - when the proceedings have already been initiated before the VCES scheme, the show cause notice for short payment would have been issued only in terms of Section 73 of the Finance Act, 1994.
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Service Tax:
Goods Transport Agency service (GTA) - There is no dispute in the facts of the present case that the individual truck owners do not issue any consignment notes. The debit notes issued by the appellant indicating the freight payable cannot be considered as a consignment note as per Rule 4B ibid. - No service tax liability.
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Service Tax:
Levy of service tax - recovering consideration from its employees for providing canteen services - scope of 'service' - service tax not levied, since the activity does not fall under the scope of term 'service'.
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Service Tax:
Refund claim - unjust enrichment - once the refund amount has been shown as an expenditure in the books of accounts, accordingly it enters into the cost of the service, then inevitably the burden of tax is passed on to customers/others, and consequently hit by the principles of unjust enrichment.
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Central Excise:
Refund claim - unjust enrichment - Appellant has claimed the deduction of the amount claimed as refund by them as expense in his profit and loss account, i.e. as a deduction u/s 43B of the Income Tax Act, 1961 - The only possible way to pass the bar of Unjust Enrichment is that the disputed tax /duty is not expenses off in the accounts, but booked as ‘Receivables’ - refund not allowed.
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Central Excise:
CENVAT Credit - input service - group insurance policy for employees - once a finding of fact is arrived that the insurance policy is primarily for the personal consumption of the employee than the said policy shall go out in totality from the definition of the input service
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VAT:
Classification of goods - dyes and chemicals, Ammonia Victoria blue, rhodamine, methyl violet, oil blue, oil green and croum scarlet - since the goods are sold as dyes, taxable accordingly.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (7) TMI 884
Levy of GST/NIL rate of duty - processes undertaken on agricultural produce - Manufacture/ marketability - Cleaning of the various Agriculture produce like Saunf (Fennel) Dhaniya (Coriander), Jeera (Cumin seeds), etc. or the like goods which are brought to them by the farmers or by the traders - Entry S. No. 24 (i)(i)(c) of N/N. 11/2017 Central tax (Rate) dated 28/06/2017 and Entry No. 54(c) of N/N. 12/2017 -Central Tax (Rate) dated 28/6/17.
Whether the activity of the applicant covered by Entry S. No. 24 (i)(i)(c) or S. No. 24(i)(iii) of Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 attracting NIL rate of tax? - Whether the activity of the applicant covered by Entry S. No. 54(c) or Entry No. 55 of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 attracting NIL rate of tax? - Held that:- Applicant M/S Rara Udyog, Jaipur has a cleaning plant installed at E-144. RIICO Industrial Area Bagru. Jaipur and undertakes removing of various impurities from various products such as saunf (fennel), dhaniya(coriander) jeera (cumin seeds) etc. or like goods brought to them for cleaning process - As per Entry no. 24(i)(i) of the Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and the Entry No. 54(c) of the Notification No. 12/2017 Central tax (Rate) dated 28/06/2017 NIL rate of GST is provided on those processes which are carried at Agriculture Farm and which do not change the essential characteristics of the Agricultural Produce but only make it marketable for primary market .i.e. first marketability. It limits the processing only to that extent which makes it marketable for primary market. Hence all other processes which are done after acquiring the stage of first marketability fall outside the scope of above clause - Secondly and most importantly processes undertaken on agricultural produce such as tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce, should be carried out at Agricultural Farm i.e. all given processes must necessarily be undertaken at Agriculture Farm only then it would attract NIL rate under GST.
Applicant M/S Rara Udyog, Jaipur has himself stated that it has a cleaning plant which clearly suggests that it undertakes specialized activity of cleaning using specific machines and equipments which are installed at its premises and away from Agricultural farm - Thus As per Entry no. 24(i)(i) of the Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and the Entry No. 54(c) of the Notification No. 12/2017 Central tax (Rate) dated 28/06/2017 NIL rate of GST is Applicable on given processes only if undertaken at an agriculture farm and not otherwise.
The activity of mechanized cleaning does not fall under intermediate production process as job work in relation to cultivation of plants. Intermediate production process as job work in relation to cultivation of plants usually relates to agricultural operations directly related to production of any agricultural produce such as cultivation, harvesting, threshing, plant protection, testing, and supply of farm labour etc., carried out at agricultural farm - the activity of mechanized cleaning at an installed plant is not covered under the above clause too and does not attract NIL rate of Tax.
Ruling:- The activity of the applicant i.e. M/s Rara Udhyog, Jaipur is not covered by Entry S. No. 24 (i)(i)(c) or S. No. 24(i)(iii) of Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 AND Entry S. No. 54(c) or Entry No. 55 of Notification No 12/2017 -Central Tax (Rate) dated 28/6/17 & will not attract NIL rate of tax.
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2018 (7) TMI 883
Levy of GST - Liason office established in India - no consideration for services charged - supply of services - place of supply - Whether the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V.(HO) to the liaison office established in India is liable to GST as supply of services, especially when no consideration for any services is charged/ paid? - Held that:- Except proposed liaison work, this office in India would not undertake any activity of trading, commercial or industrial nature nor would they enter into any business contracts in its own name without RBIs prior permission. There is no commission/ fees being charged or any other remuneration being received/ income being earned by the office in India for the liaison activities/ services rendered by it - The HO, Netherlands reimburses the expenses incurred by the applicant for their operations in India which are in the nature of salary, rent, security, electricity, travelling etc. The applicant does not have any other source of income and it is solely dependent on the HO for all the expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons.
When the applicant/liaison office is working as per the terms and conditions as mentioned, the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V to the liaison office, is not liable to GST, as no consideration for any services is being charged by the liaison office.
Whether the applicant i.e. the Liaison Office is required to get registered under GST? - If it is assumed that the reimbursement of expenses and salary claimed by liaison office is a consideration towards a service, then what will be the place of supply of such service? - Held that:- The liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service - As there are no taxable supplies made by the Liaison office, they are not required to get registered.
Ruling:- If the liaison office in India does not render any consultancy or other services directly/indirectly, with or without any consideration and the liaison office does not have significant commitment powers, except those which are required for normal functioning of the office, on behalf of Head Office, then the reimbursement of expenses and salary paid by M/s Habufa Meubelen B.V. (HO) to the Liaison Office, established in India, is not liable to GST and the applicant i.e. M/s Habufa Meubelen B.V. Jaipur, is not required to get itself registered under GST.
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2018 (7) TMI 882
Liability of tax/GST - place of supply - manpower supply services to NTPC BHEL Power Projects Pvt. Ltd. - Input Tax Credit - Levy of IGST or CGST and SGST - intrastate or interstate transaction?
Held that:- In terms of section 96,103(1) (a) and 103 (1) (b) of CGGST Act, 2017 Authority for Advance Ruling, Chhattisgarh is not the proper authority to pronounce the ruling regarding the availability or otherwise of ITC to a firm which is registered and situated at a place outside the State of Chhattisgarh - Similarly, section 97(2)(c) of CGST Act, 2017 stipulates that ruling as regards time and value of supply of goods or services or both, can only be raised before AAR for advance ruling. It is precisely for this very reason also, that determination of place of supply has been kept out of the purview of Authority for Advance Ruling (AAR) stipulated under the provisions of section 97(2) of the CGGST Act, 2017.
The application merits rejection, being out of the purview of matters or questions specified in sub-section (2) of section 97 of CGGST Act, 2017 read with section 96,103(1) (a) & 103 (1) (b) of CGGST Act, 2017.
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2018 (7) TMI 881
Input Tax Credit (ITC) - seeking credit packaging material which is to be used in exempted supply, till they are into their stock - ITC while transferring goods between their 'own branches - multiple taxes on transfer of goods to other branches of the applicant
Held that:- As per provisions of section 17(2) of CGGST Act, 2017 any registered recipient can claim ITC to the extent of taxable stock or taxable outward supply shown in their returns. The registered recipient cannot claim ITC on the amount of taxable supply component included in the total amount of exempted supply. The amount of unclaimed ITC shall also be reversed in the electronic ledger of the same month - If the applicant supplies seeds (exempted item) in packaged form using such packing materials (taxable item), to its own branches in other States, then no ITC could be claimed on the packaging material used for the said exempted supply of seeds. Whereas, if the applicant supplies only packing material to own branches in other States, then the ITC involved in purchase of such packing material could be availed as per section 17(2) of CGGST Act, 2017.
Ruling:- The applicant is not entitled to ITC on the packing material used for packaging seeds, while making such exempted supply of seeds to their own branches and to other purchasers.
They are however, entitled for ITC (of the tax involved in the purchase of such packing material) on the exclusive taxable supply of such packing material made to their own branches in other States, in terms of section 17(2) of Chhattisgarh Goods and Service Tax, Act 2017.
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Income Tax
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2018 (7) TMI 904
Allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A - Held that:- SLP dismissed.
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2018 (7) TMI 875
Estimation of 8% on account of alleged bogus purchases - Held that:- We find the same to be quite just and reasonable in the circumstances of the case since the assessee was engaged in construction activities and could not carry out the same without actual consumption of material. Therefore, we find no infirmity in the stand of lower authority in this regard. Moreover, the issue has already been dealt with by this Tribunal in assessee’s appeal wherein the estimation has been found to be reasonable. Ground Numbers 1 & 2 stands dismissed.
Disallowance on account of Sales promotion Expenses - Held that:- Assessee has miserably failed to substantiate the expenditure with supporting vouchers / documents and all the expenditure was in cash. The complete onus, in this regard, was on assessee which he has failed to discharge. Therefore, the addition to the extent of 20% of expenditure in question i.e. ₹ 5,98,650/- stand confirmed by us. The same works out to ₹ 1,19,730/-.
Addition on account of valuation of closing stock - Held that:- Revenue is unable to controvert the fact that the assessee was consistently following the same method of accounting for valuing the closing stock. Further the difference in the valuation is arising only on account of the fact that Ld. AO has considered Total Saleable Area as against Total Constructed Area taken by assessee while arriving at the valuation. We are of the opinion that the cost is incurred vis-à-vis Total Constructed Area out of which Saleable Area may be less in view of the fact that some land is occupied / given free of cost by the assessee. One more aspect is the fact that any change in valuation of the closing stock would be tax neutral in nature in the sense that the same would impact the opening stock of the subsequent year and would go on reduce the profits of the subsequent year.
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2018 (7) TMI 874
Addition of Interest payment as not for the purpose of business - claim of deduction of interest expenditure - Held that:- This appeal is to be dismissed as there is no merit in the appeal filed by the assessee and there is no material on record to prove that assessee has carried out any business in connection therewith these interest expenditure - Only bald statement have been made not supported by evidence to contend that the assessee is engaged in business of NBFC. Both the authorities below have concurrently held that no business activity was carried out by the assessee and there was no nexus between the interest earned and interest expended by the assessee.
So far as allowability of interest expenses in preceding years, principle of res judicata is not applicable to income tax proceedings - decided against assessee.
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2018 (7) TMI 873
Bogus purchases of diamonds - Addition based on the information from Investigation Wing - Held that:- AO has disallowed the purchases merely based on the information from Investigation Wing without making further enquiry. Even assessee was not given opportunity to cross examine the entry provider. There is no material brought by the AO on record to show that the assessee has made bogus purchases.
AO failed to establish that the assessee has made bogus purchases by bringing documentary evidence on record and, also, assessee was not given opportunity to cross-examine the entry provider. Therefore, we set aside the order of the CIT(A) and direct the AO to delete the addition made on account of purchases. Accordingly, the grounds raised by the assessee are allowed.
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2018 (7) TMI 872
Addition made towards unexplained sources for peak credits in ICICI Bank Account but not disclosed in the books of accounts - Held that:- As observed from the order of the Ld. CIT(A), there is credit for closure of deposits made in the account on 5.3.2007 which was also included for arriving the peak balance. It is not explained whether the sources of deposits were disclosed or not in the regular books of accounts. Therefore, while confirming the action of the Assessing officer for making the addition of peak credit balance, we direct the A.O. to work out the peak credit balance correctly, taking into the account of the cash deposits, cash withdrawals and the unexplained undisclosed entries in the bank account - remit the issue back to the file of the A.O. to rework the peak credit balance correctly. Appeal of the revenue on this ground is allowed for statistical purposes.
Gross profit addition on unaccounted purchases - CIT(A) restricted the addition to 15% of gross profit - Held that:- A.O. has not brought on record any comparable cases of others or the assessee’s own case in the earlier years for resorting for estimation of income @ 40.25%. Whereas, the CIT(A) has considered the comparable cases and observed that the rate of gross profit from copra was ranging from 4.68% to 13.25% in regular cases where the purchases and sales were accounted and accordingly, sustained gross profit estimation @ 15% of unaccounted purchases. No other evidence was brought on record by the D.R. and the A.R. to controvert the finding given by the Ld. CIT(A) to establish that the income from unaccounted purchases is less than 15%. No reason to interfere with the order of the Ld. CIT(A) and dismiss the appeal of the revenue as well as the cross objection of the assessee on this issue.
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2018 (7) TMI 903
Unexplained unsecured loans - addition u/s 68 - reasonable basis - guinity of claim - Held that:- SLP dismissed.
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2018 (7) TMI 902
Penalty u/s 271(1)(b)- assessee refused to answer the notice under Section 142(1) - accounts held in HSBC Bank - assessee was an attorney of some account holder - Held that:- SLP dismissed.
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2018 (7) TMI 901
Condonation of delay - removal of office objections - Held that:- Since the High Court has dismissed the appeal on the ground of non-removal of objections and no proper explanation was given for this purpose, We are not inclined to interfere. However, we make it clear that the findings of fact of the lower authority will not bind the petitioner in respect of other Assessment Years.
With the aforesaid observations this Special leave Petition is dismissed.
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2018 (7) TMI 900
Exemption u/s 11 & 12 denied - holding funds in non-specified modes - restoring back the matter to the file of CIT(E) for giving further time and opportunity to the assessee to convert the shares into specified assets within a specified period - withdrawing the notification and benefit u/s 10(23C) (vi) of the Act - Held that:- The Special Leave Petition is dismissed on the ground of low tax effect.
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2018 (7) TMI 876
Loss in the share transactions as not a speculative loss - assessee as an investment company - Held that:- On perusal of the assessment order, working evidences that the loss on trading in shares at ₹ 2.74 crores has been taken into account to arrive at income from business.
Thus, the basic premises on the part of the Revenue that the respondent assessee's income mainly consisted of income from business is factually incorrect. Once it is found as a fact in the order dated 17th September, 1998 of the Tribunal that the assessee's income mainly consisted of income from other sources as it forms 91.68% of its total income, then in the absence of any challenge to the finding of fact, it cannot be a subject of inquiry.
Once the finding of fact has not been challenged, it must follow that Section 73 of the Act which introduces a deeming fiction to define a speculation business will not apply as the bracketed portion in the Explanation carves out an exception so far as main income is from “Income from other sources”. Thus, in our view, the question has proposed for our consideration stands concluded by the decision of this Court in Darshan Securities Pvt. Ltd. [2012 (2) TMI 117 - BOMBAY HIGH COURT]
As in the present fact, the respondent is an Investment Company. Therefore, the question of law referred to us for our opinion is answered in the affirmative i.e. in favour of the respondent assessee and against the appellant Revenue.
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2018 (7) TMI 899
Block assessment passed u/s.158BD r/w. Section 158BC - period of limitation - Held that:- SLP dismissed.
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2018 (7) TMI 898
Penalty u/s 271(1)(c) - depreciation claim on expenditure in respect of mining right - wrong claim of depreciation - Held that:- SLP dismissed.
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2018 (7) TMI 897
Revision under Section 264 - scope of revision - review petition - Held that:- No ground to interfere with the impugned order. The special leave petition is, accordingly, dismissed.
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2018 (7) TMI 896
Assessment u/s 153C - non existence of satisfaction note - carbon copy of the satisfaction note of the AO of the searched person - Held that:- SLP dismissed.
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2018 (7) TMI 895
Validity of revision u/s 263 against non-existent entity - The statement of the Director of KPPL formed part of the assessment record - Held that:- SLP dismissed.
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2018 (7) TMI 894
Refund to petitioner - demand of tax dues against “M/s. Girilal Mamchan & Company” as rightly been recovered from petitioner - writ of mandamus commanding respondents to refund along with interest - whether liability of tax of Amrish Kumar Jain has rightly been appropriated from the funds seized from petitioner and kept in P.D. A/c by Revenue? - Held that:- On the peculiar facts of this case and also there is a delay of 259 days in filing the special leave petition we are not inclined to interfere with the judgment of the High Court. The special leave petition is dismissed on the ground of delay as well as on merits leaving the question of law open.
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2018 (7) TMI 893
Reopening of assessment - Long term capital gain addition - receipt of transfer of rights in land and the income relatable to such matter - Held that:- SLP dismissed.
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2018 (7) TMI 892
Opportunity of questioning the draft assessment order under Section 144C denied - opportunity of questioning the draft assessment order under Section 144C of the Act before the DRP - Held that:- SLP dismissed.
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2018 (7) TMI 891
Denial of deduction under Section 80-IC - profits of the Assessee were “more than ordinary” - denial by invocation of Section 80-IA (10) - what percentage of GP ratio should be considered to be ‘more than ordinary’? - Held that:- SLP dismissed.
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2018 (7) TMI 890
Addition of Long Term Capital Gain - Assessing Officer applying the market value
Deduction u/s 80IB (10) - whether project which is cleared as "residential plus commercial" project cannot be treated as housing project ?
Held that:- SLP dismissed.
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2018 (7) TMI 889
Genuineness of share loss claimed - disallowance of claim as numerous discrepancies were pointed out by the AO and the broker itself admitted to have provided accommodation entries - questions for the opinion of the court - whether the contracts with the brokers were genuine ? - Held that:- SLP dismissed.
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2018 (7) TMI 888
Expenses in relation to income not forming part of total income – section 14A – Constitutional validity of section 14A - Held that:- SLP dismissed.
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2018 (7) TMI 887
Revenue receipt or capital receipt - entertainment duty subsidy - applicability of decision in Sahney Steel and Press Works Ltd. v. CIT [1997 (9) TMI 3 - SUPREME Court] - Held that:- SLP dismissed in view of the judgment in Commissioner of Income Tax-I, Kolhapur v. M/s. Chaphalkar Brothers, Pune [2017 (12) TMI 816 - SUPREME COURT]
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2018 (7) TMI 886
G.P. estimation @ 3% - assessee has clearly violated the provisions of section 40A(3) - cash payments of above ₹ 20,000/were made for the purchases of waste paper - Held that:- SLP dismissed.
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2018 (7) TMI 885
Depreciation of assets acquired by assessee trust - the capital expenditure is treated as application of income for charitable purposes - Held that:- In view of the decision in Commissioner of Income Tax- III, Pune v. Rajasthan and Gujarati Charitable Foundation Poona (2017 (12) TMI 1067 - SUPREME COURT) these Special Leave Petitions are also dismissed.
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2018 (7) TMI 880
Validity of order passed by the Settlement Commission u/s 245D - additional disclosure of income - Held that:- SLP dismissed.
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2018 (7) TMI 879
Validity of reopening of assessment - exceptional circumstances for petition - recourse to the statutory remedy available - Held that:- We are not inclined to interfere with the impugned judgment and order passed by the High Court.
However, the assessment proceedings including appellate proceedings shall be dealt with and decided strictly in accordance with law without being influenced by any of the observations made by the High Court.
With these observations, the Special Leave Petition is dismissed.
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2018 (7) TMI 878
Benefit of deduction u/s 10AA - modernization of existing unit or new undertaking - Held that:- SLP dismissed on the ground of delay as well as on merits.
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2018 (7) TMI 877
Expenses in relation to income not forming part of total income – section 14A – Constitutional validity of section 14A - Held that:- in the light of the order passed by this Court in Commissioner of Income Tax 5, Mumbai v. M/s Essar Teleholdings Ltd. Through Its Manager reported [2018 (2) TMI 115 - SUPREME COURT OF INDIA], this Petition has to be dismissed.
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Customs
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2018 (7) TMI 868
Refund of Terminal Excise Duty (TED) - Whether the petitioner who has manufactured and supplied goods (after payment of excise duty via the CENVAT credit route) to a 100% Export Oriented Unit (EOU) is entitled to claim refund of Terminal Excise Duty (TED)?
Held that:- Apart from anything else what emerges from the record is that the PRC’s decision is neither consistent nor even handed. Though the petitioner obtained refund of TED for the quarter April, 2011 to June, 2011 and July, 2011 to September, 2011 despite PRC’s earlier decision of 04.12.2012, the third application for the quarter October, 2011 to December, 2011 was rejected despite the facts and circumstances of the case being pari materia with other two quarters.
The goods which qualify as deemed exports are exempt from TED where supplies are made against ICB. However, where supplies are not made against ICBs refund of TED is to be given. This fact is reiterated in para 8.4 which speaks about various benefits available to supplier under paras 8.3(a), (b) & (c) to suppliers. Paragraph 8.5 of the FTP 2009-2014 also alludes to the fact that the supply of goods would be eligible for refund of TED in terms of paragraph 8.3(c) of the FTP provided the recipient of the goods does not avail of CENVAT credit or rebate on such goods.
The petitioner’s entitlement to refund of TED will be governed by the relevant provisions of the FTP as obtaining in the relevant period for which the claim was made. The fact that the petitioner could or could not get refund under the CENVAT Credit Rules or under the provisions of the Central Excise Act is not relevant for adjudicating upon the issue at hand. The Court, for adjudicating the issue at hand required to look at only the relevant provisions of the FTP.
The argument that since excise duty was not paid via cash but was paid by utilizing the CENVAT credit route and hence, the petitioner would not be entitled to claim refund is unsustainable as there is no bar in law in paying duty by utilizing CENVAT credit.
The impugned communication dated 21.04.2016, issued by respondent no.3, whereby the petitioner’s claim for refund was declined is set aside - petition allowed - decided in favor of petitioner.
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2018 (7) TMI 867
Penalty u/s 114AA of CA - mis-declaration of imported goods - case of Respondent is that the provision under section 114AA deals with situations of intentionally making or using any declaration, statement or document which is false or incorrect in the transaction of any business for the purpose of Customs Act, in present case there is no situation that the transaction was a paper transaction - Held that:- The Commissioner (Appeals) has rightly set aside the penalty under Section 114AA since the present case involves importation of goods and is not a situation of paper transaction - Appeal dismissed - decided against Revenue.
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2018 (7) TMI 866
Rectification of Mistake - The applicant contends that though they had drawn attention to the decision of the Hon'ble Supreme Court in Union of India v. Param Industries Ltd [2015 (6) TMI 732 - SUPREME COURT] which comes to their rescue, the Tribunal had erroneously recorded that the adjudicating authority was required to follow the ratio in Jindal Industries v. Union of India [2002 (5) TMI 63 - HIGH COURT OF DELHI] - Held that:- It is seen that the directions are amply clear and the Tribunal has instructed that the ratio in re Jindal Industries, cited by Learned Authorized Representative, should be followed. We do not consider this to be an erroneous recording of submission but find this to be a deliberated direction to the adjudicating authority. The Tribunal may have erred in its judgement but it does not appear to have erred in the recording as claimed by Learned Counsel for applicant. Error of judgement, even if that were so, is not rectifiable by recall or rectification but only by appeal.
In any case, there is no detriment to applicant as the matter has been directed to be decided afresh. The adjudicating authority is bound to follow judicial precedent and a decision, if in their favor, can certainly be cited in the fresh proceedings which can be ignored by the original authority only at his peril.
Application is rejected as not warranting rectification.
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2018 (7) TMI 869
Principles of Natural Justice - effective opportunity of hearing before the respondent not afforded - alternative remedy of appeal - Held that:- There is no ground to interfere with the impugned order passed by the High Court - The special leave petition is dismissed.
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2018 (7) TMI 865
100% EOU - demand of customs duty foregone on the excess quantity of imported scrap - Manufacture - Whether the activity of segregation of imported mixed brass scrap into foundry and non-foundry grade, amounts to manufacture or otherwise? - Held that:- Circular of Board dated 10/05/2016 is a clarification on the issue of segregation of impurity, namely ,iron, steel, rubber, plastic, dust etc. from honey grade brass scrap imported, albeit in the context of Rule 3(5) of CENVAT credit rule 2004, but definitely applicable to the present case - From the above clarification, it is clear that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of “inputs as such”.
The process of segregation of imported mixed brass scrap, into foundry and non foundry grade by weeding out the impurities so as to prepare it or make it suitable to feed into the furnace for manufacture brass ingots, and then finished goods, is a process integrally connected to the manufacture of brass articles - Tribunal in the case of Singh scrap Processor Ltd. Vs, Commissioner of C.Ex. [2002 (4) TMI 114 - CEGAT, MUMBAI] held the process of removal of impurity results into manufacture. Accordingly, the non-foundry scrap cleared in DTA on payment of excise duty, cannot be construed clearance of imported scrap ‘as such’.
Payment of duty on the excess use/consumption scrap material, in the activity of segregation/manufacture of finished goods - Held that:- In the present case, the scrap generated during the course of segregation/manufacture of brass articles had been permitted to be cleared in the DTA by the Development Commissioner and the Appellant-assessee had cleared the scrap pursuant to the said permission and discharged appropriate excise duty on its sale. Hence, demanding customs duty foregone on the excess quantity of imported scrap worked out on the basis of the Norms fixed by the Committee is not sustainable in law.
Appeal disposed off.
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Corporate Laws
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2018 (7) TMI 871
Approval of a Scheme of Compromise and Arrangement between the applicant and a class of its creditors - Held that:- There are serious doubts about the manner in which the ex-directors have conducted their business. There are grave allegations about the ex-directors having sold immovable properties and received proceeds in their own accounts. They have also failed to hand over possession of all the flats/properties, vehicles, plant & machinery and cash in hand belonging to the company in liquidation to the OL. Clearly, the scheme lacks bona fide. It cannot be termed to be just, fair and reasonable. There is no cogent mechanism on record to show how the dues of the unsecured creditors is to be paid off. In fact the scheme cannot be even said to be a scheme as it fails to define a proper class of creditors.
I accordingly dismiss the present application.
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2018 (7) TMI 870
Arbitration proceedings - Held that:- In fact in the present case, it is Mrs.Sonia Khosla who has moved the petition before CLB ignoring the arbitration agreement. Interim orders were prayed for and were granted to Mrs.Sonia Khosla. It was Mr.Vikram Bakshi, one of the respondents who filed the application under Section 8 of the Arbitration Act stating that there is an arbitration agreement and the parties should resolve their disputes by the arbitration process. These proceedings cannot be said to be non-est and void ab initio as is sought to be argued.
All supplementary and incidental proceedings and the said orders cannot be said to be void ab initio merely because an application was filed by Mr.Vikram Bakshi under Section 8 of the Arbitration Act and was pending adjudication. CLB did not cease to have jurisdiction.
It is not clear as to how the appellant is in any manner concerned or connected with the controversy regarding the application filed under Section 8 of the Arbitration Act by Mr.Vikram Bakshi before the CLB. The petition before CLB was not filed by him. It is also the case of the appellant as stated in the present appeal that he is not a party to the agreement dated 31.03.2006 or to the ensuing arbitration proceedings. Hence, it is obvious that the appellant is not concerned with the arbitration proceedings/application. There is no merit in this present appeal and the same is dismissed.
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Service Tax
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2018 (7) TMI 864
Valuation - inclusion of supply of bought out goods - N/N. 12/2003- ST dated 20.06.2003 - Works Contract - The department is of the view that the appellant have artificially bifurcated the value of entire service into sale of goods and service which is not permissible, hence, the total value is gross value of provision of service.
Held that:- In the facts of the present case, the Revenue has not made any effort to verify that despite making different invoices in respect of services and sale of the goods whether the value of service was suppressed and transferred to the transaction of sale of the goods. Without carrying out any such verification, the department straightaway demanded the service tax on all the bills through which the goods were shown to have sold to the service recipient by the appellant. It is also fact that the appellant have paid the VAT in respect of those invoices where the goods were shown to have sold. In this fact, if the value shown in the sale invoices is correct towards the sale of the goods, the same will not be chargeable to service tax in terms of N/N. 12/2003-ST dated 20.06.2003.
The matter needs re-consideration - appeal allowed by way of remand.
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2018 (7) TMI 863
Valuation - Commercial coaching and training services - inclusion of value of study material - Burden to prove on Revenue - Held that:- Department has stated that there were no separate records to indicate the salary received by Prof. Thomas and the cost of the study material, it is found that the SCN itself has categorically stated these amounts differently.
It is for the Department to show that the cost of materials is not separately shown and that the professional charges were not towards the classes conducted by the respondent in M/s/ Chaithanya Classes; the Order-in-Original wants the respondents to prove the otherwise - having accepted that fact; the same cannot be included in the value of the taxable service in terms of the Notification No. 12/2003- Service Tax; therefore, we find that the demand on this count is not sustainable.
Salary or remuneration received by the respondent - Held that:- Neither the SCN nor the Order-in-Original give a categorical finding or evidence to show that the respondent’s contention on this count is wrong. In fact, it was for the Department to show proof to that extent rather than going by the premise that the respondents have not shown any proof to that effect. Since the Department has made the allegations, it was for the Department to prove the same - In the absence of any proof shown by the Department, salary/remuneration earned by the respondent cannot be taxed under Service Tax.
As the main demand does not survive in pursuance of the interest and penalty would also not survive as a corollary.
Appeal dismissed - decided against Revenue.
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2018 (7) TMI 862
Levy of service tax - Agency Commission - Brokerage Commission for booking of space in the airline - Sub-contract - whether the ‘Agency Commission’ received from M/s. UPS Jet Air Express Pvt. Ltd. is chargeable to service tax? - Held that:- The department has not disputed the fact that M/s. UPS Jet Air Express Pvt. Ltd. are paying them commission from the amount collected from their customers, which includes the bill raised by the appellants on M/s. UPS Jet Air Express Pvt. Ltd. after paying the service tax due on it, so the Commission received by the appellants has already suffered the service tax - Subcontractors are liable to pay service tax whether or not the services are provided by a person in his capacity as a subcontractor and whether or not such services are used as input services - the appellants are not required to pay service tax on the ‘Agency Commission’ received by them from M/s. UPS Jet Air Express Pvt. Ltd. - demand set aside.
Business Auxiliary Service - Whether the ‘Brokerage Commission’ received by them from the airlines for booking of space, is liable to service tax under the head BAS? - Held that:- Appellant are not engaged in providing any marketing or promoting services for the airlines or shipping lines - reliance placed in the case of DHL Logistics Pvt. Ltd. vs. CCE [2017 (8) TMI 600 - CESTAT MUMBAI], where it was held that Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS - demand set aside.
Penalties - Held that:- As the main demand itself is not sustainable, the penalties are also required to be set aside.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 861
Validity of SCN - Voluntary Compliance Entitlement Scheme - Section 73 of the Finance Act, 1994 - The ground for challenge is since they have made the declaration under VCES scheme and also a certificate under VCES scheme has been issued to them, the proceedings could have been initiated against them only in terms of Section 111 of the Finance Act, 2013 and not under Section 73 of the Finance Act, 1994.
Held that:- In terms of Section 111(3), it is a fact that any notice issued under the provisions of this section is deemed notice under Section 73 of the Finance Act, 1994. If that be so, this section does not bar initiation of the proceedings under Section 73 of the Finance Act vis-àvis the service tax short paid or not paid. The show cause notice issued under Section 73 cannot be faulted on this account - it may be seen that the investigations in the present case have been started on 8.1.2013 whereas the VCES scheme has come into operation only from 10.5.2013. Thus, when the proceedings have already been initiated before the VCES scheme, the show cause notice for short payment would have been issued only in terms of Section 73 of the Finance Act, 1994.
The recovery was to be initiated in terms of Chapter V of the Finance Act, 1994 and adjudged accordingly.
From the construct of Section 106 to Section 111 of Finance Act, 2013, it is clear that when a declaration is made under the provisions of VCES, 2013, and where the service tax liability declared under VCES cannot be disputed by the department, either with reference to value or with reference to applicable tax rate, entitlement for abatement etc., and the declaration passes the text laid down under Section 106 & Section 111 of Finance Act, 2013 by being not substantially false; the declaration made need to be accepted and immunity granted.
Appeal dismissed - decided against appellant.
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2018 (7) TMI 860
Goods Transport Agency service - freight charges paid by the appellant for transport of marble slabs from the mines to the appellant’s factory - Reverse Charge Mechanism - the individual truck owners do not issue any invoice/ document/ consignment note for transport of such marble blocks. The only document which is generated by the appellant by way of debits notes indicating the freight paid for such transport.
Whether the appellant is liable to pay service tax by considering such debit notes as consignment notes? - Held that:- The issue which stands settled in the various case laws cited by the appellant is that as long as no consignment note is issued in terms of Rule 4B of the Service Tax Rules, 1994 by the transporter, the service tax liability under the category of GTA service does not arise - There is no dispute in the facts of the present case that the individual truck owners do not issue any consignment notes. The debit notes issued by the appellant indicating the freight payable cannot be considered as a consignment note as per Rule 4B ibid.
The liability for payment of service tax under GTA cannot be sustained against the appellant in the absence of consignment notes - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 859
Rectification of mistake Application - Held that:- After deciding the main issue of applicability of the service tax to the sub-contractor, remanded the matter to the adjudicating authority to consider various other issues in quantifying the demand. On quantification of the demand in the de novo proceedings other issues would arise which would be addressed accordingly taking into consideration the submission of the appellant. Thus, there is no mistake apparent on the face of the order of this Tribunal - application seeking rectification of mistake is devoid of merit and is accordingly dismissed.
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2018 (7) TMI 858
Levy of service tax - recovering consideration from its employees for providing canteen services - scope of 'service' - Held that:- I am clearly not in a position to appreciate what has been stated therein. Commissioner (Appeals) states that appellant's act of recovering consideration from its employees for providing canteen services falls under the definition of the term - Service. Since it is the finding Commissioner (Appeals) that the activity undertaken by the appellant is a canteen service, then how can he deny the exemption that has been given in respect of the said taxable service.
No cogent or even an iota of reason is coming for not allowing the benefit of exemption under notification No. 25/2012-ST dated 20.06.2012 as amended by the notification No. 14/2013-ST dated 22.10.2013 - service tax not levied, since the activity does not fall under the scope of term 'service'.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 857
Penalty u/s 78(1) of FA - case of Revenue is that the appellant had paid taxes only after being pointed out by the department and interest due have been paid only after the decision of the Commissioner (Appeals) - justification for invocation of section 80 of the Finance Act, 1994 - Held that:- There has been no challenge in the present case with regard to the finding in respect of mens rea evasion of tax etc. and both the authorities have concluded that there was enough mens rea in the present case for suppressing the value of the services received and not payment of tax. While doing so, both the authorities have also considered the plea of revenue neutrality.
Without proper challenge to such a finding with regard to the malafide intent, the appellant cannot challenge the imposition of penalty and claim waiver in terms of Section 80 just on the ground of revenue neutrality.
No cogent reason has been put forth to establish the bonafides by the appellant - invocation of Section 80 of the Finance Act, 1994 not justified - appeal dismissed - decided against appellant.
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2018 (7) TMI 856
Works contract service - transmission of electricity irrespective of classification - services rendered by the appellant for construction of various structures, superstructures etc. of hydro power projects for generation of electricity for TNEB - N/N. 11/2010-ST and 45/2010-ST - Held that:- The Tribunal in the case of PES Engineers (P) Ltd, [2017 (7) TMI 687 - CESTAT HYDERABAD], has held that irrespective of the classification of services of service relating to/for transmission of electricity are exempted from payment of service tax by this notification - demand cannot sustain.
Works contract service - dedicated water supply scheme to Coimbatore City Municipal Corporation under JNNURM Scheme - Held that:- This being public utility service and not being for commercial purpose, is not covered under taxable services - The Tribunal in the case of BMS Projects (P) Ltd. [2017 (9) TMI 1386 - GUJARAT HIGH COURT] has held the above services to be not liable to levy of service tax - demand cannot sustain.
Supply of tangible goods service - renting of construction of equipment by the appellant to L&T - Works contract service in respect of hydro power projects - Held that:- Evidently, the value of these services being less than ₹ 10 lakhs is exempted under N/N. 6/2005-ST as all other income of the appellant falls under exempted services - the demand cannot sustain as it falls below threshold limit and requires to be set aside.
Works contract service for construction of staff quarters for TNEB employees in the power project - N/N. 11/2010-ST and 45/2010-ST - Held that:- The Tribunal in Sima Engineering Constructions [2018 (5) TMI 405 - CESTAT CHENNAI] has considered the very same issue and held that such services of construction of staff quarters inside the power project is not levy to service tax as per the notifications - demand cannot sustain.
Management, maintenance or repair service - services rendered by the appellant at Periyar Lower Camp and Suriliyar Lower Camp which are both small hydroelectric power projects - Held that:- These activities being services related to for transmission of electricity will be covered by the exemption Notifications No. 11/2010 and 45/2010 - The decisions in the case of PES Engineers [2017 (7) TMI 687 - CESTAT HYDERABAD] would apply to the demand of service tax in respect of management, maintenance or repair services in regard to hydroelectric power projects also - demand set aside.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 855
Refund claim - unjust enrichment - refund allowed but transferred the same to Consumer Welfare Fund, in terms of Section 12C of the CEA, 1944 - burden of service tax has been passed on to the passengers/customers or not - Held that:- Similar issue has been considered by this Tribunal in identical set of circumstances/ arguments in M/s Rajdhani Travels & Ors case [2018 (4) TMI 168 - CESTAT AHMEDABAD], where it has been concluded that once the refund amount has been shown as an expenditure in the books of accounts, accordingly it enters into the cost of the service, then inevitably the burden of tax is passed on to customers/others, and consequently hit by the principles of unjust enrichment.
Regarding the refund amount of ₹ 12,86,403/-, the Ld. Commissioner(Appeals) has upheld the same observing that once the duty is refundable, there is no question of imposition of penalty and recovery of interest.
Appeal allowed in part.
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Central Excise
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2018 (7) TMI 854
Refund claim - suo motto adjustment of the excess payment against the short payment of Central Excise duty - unjust enrichment - Held that:- The refunds under Indirect taxes have to cross the bar of ‘Unjust Enrichment’. If the amount of Tax/Duty sought to be refunded has been recovered from the buyers, then the claimant is not entitled to refund. Even if the such amount of tax, though not directly recovered from the client, but has been charged to expenses in the books of accounts, then also it is consistently held that the claimant has indirectly recovered the tax and hence failed to cross the bar of Unjust Enrichment. The only possible way to pass the bar of Unjust Enrichment is that the disputed tax /duty is not expenses off in the accounts, but booked as ‘Receivables’.
Tribunal has in case of Philips Electronics India Ltd Vs. Commissioner of Central Excise, Pune I [2010 (4) TMI 449 - CESTAT, MUMBAI] has held that CA’s certificate of non-recovery of duty loses its probative value, it certified that amount shown as expenses in profit & loss a/c whereas assessee collected cum-duty prices. Further if amount shown in P&L account, it must have been factored into price of goods manufactured. Refund hit by bar of unjust enrichment.
Appeal dismissed.
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2018 (7) TMI 853
Transfer of Credit - Rule 10 of CCR, 2004 - denial on the ground that the appellant have not obtained the prior permission for transfer of credit and stock of the goods - Held that:- Rule 10 does not prescribe any procedure to be followed for transfer of the credit lying unutilized from transferred unit to transferee unit. The only requirement is that if any stock of raw-material, capital goods and other goods on which Cenvat credit had been availed, the same should also be transferred to the transferee unit.
It is obvious that if any unit has to be transferred it can be transferred during the registration only and there is no mandatory requirement that shifting can be done only after surrender of the registration of the transferred unit. Therefore, this condition was also unnecessarily imposed by the Adjudicating Authority.
The Adjudicating Authority denied the credit transferred from Silvassa to Surat only on the ground which is not supported by any authority of law. At the same time, no verification of records of Silvassa and Surat was carried out by the Adjudicating Authority or the Jurisdictional Assistant Commissioner - In these circumstances, the Adjudicating Authority must get the records verified and thereafter pass a reasoned order.
Appeal allowed by way of remand.
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2018 (7) TMI 852
Extended period of limitation - Demand of duty with penalty - captive consumption of fly ash bricks - whether the demand raised for extended period by invoking the proviso to Section 11 A (i) of the Central Excise Act, 1944 is legal and correct or otherwise? - Held that:- The appellant failed to declare the production clearances of the goods consumed captively and also not claimed the exemption notification in the ER-1 Return despite there is column in the ER-1 Return for mentioning the exemption notification. Therefore, with this failure, the appellants have suppressed the fact from the department. Accordingly, the extended period for the demand is clearly invokable in the facts of the present case.
Penalty u/s 11AC - Held that:- The penalty under Section 11AC is also legal and correct in respect of the demand pertaining to the extended period - As regards the penalty imposed for the normal period it cannot be said that the appellants have suppressed any fact for the reason that once a show cause notice was issued in subsequent show cause notice of the same issue, the suppression of the fact cannot be alleged - penalty under Section 11AC cannot be imposed in respect of demand raised in the normal period.
Personal penalty imposed on Shri Rakesh Harish Kumar Shah - Held that:- He is only an employee of the company in the matter relates to the removal of the goods within the factory for captive consumption. In these facts, it cannot be said that the employee Shri Rakesh Harish Kumar Shah was involved in any malafide Act - penalty set aside.
Appeal allowed in part.
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2018 (7) TMI 851
Time limitation - Revenue held that the demand for the period 01.04.2004 to 31.03.2006 as time barred, but, demand from April 2006 onwards was maintained - case of appellant is that once the fact of the transaction has come to the notice of the Audit and the said period was held time barred, for the subsequent period it cannot be said that there is any suppression of fact - Held that:- The Ld. Commissioner has admitted that the issue was raised in the Audit Report dated 20.10.2008 in respect of the Audit conducted for the period April 2006 to August 2008. On the basis of this Audit Report, the Ld. Commissioner (Appeals) held the demand for period 01.04.2004 to 31.03.2006 as time barred - We failed to understand why the demand for remaining period should not be held time barred on the same analogy.
The ld. Commissioner (Appeals) observed that the last Audits conducted on 28.08.2006 to 30.08.2006, and if the Audit officers have not raised this issue for the subsequent period, no suppression of fact cannot be alleged against the appellant. Therefore, we do not agree with the discriminative finding given by the Commissioner (Appeals) in as much as the demand for 01.04.2004 to 31.03.2006 was held time barred and for the subsequent period, the demand was held within time - Since, Audit has been conducted right from 28.08.2006 to 30.08.2006 and show cause notice was issued on 13.04.2009 the entire demand stand time barred.
The entire demand is time barred - appeal allowed on the ground of limitation.
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2018 (7) TMI 850
Transitional provisions - CENVAT Credit - requirement of reversal of credit while opting exemption - Department took the view that even this cenvat credit balance amount should lapse in view of the provisions of Rule 11 (3) (ii) of Cenvat Credit Rules, 2004
Held that:- Sub-rule (3) (i) ibid will apply when the assessee opts for an exemption from the whole of duty of excise leviable under a notification issued under Section 5A of the Central Excise Act, 1944. Sub-rule (3) (ii) ibid will be attracted only to those assessees who are confronted with absolute exemption in respect of final product/s manufactured by them, in which case the entire balance of cenvat credit lying in his account shall lapse and the same shall not be allowed to be utilized for payment of duty for home consumption or for export - in sub rule 3 (i) ibid, the assessee has to ‘opt‛ for the exemption whereas in sub-rule 3 (ii) ibid, there is no such option available to the assessee and the absolute exemption that may have been brought forth under Section 5A ibid would apply unilaterally to the related final product manufactured by the assessee.
It is important to note that the law makers have not incorporated the requirement of payment of cenvat credit equivalent to credit taken by the assessee in respect of inputs lying in stock or in process in sub rule 3 (ii) ibid. This is because once the entire cenvat credit account is reduced to naught, there will be no CENVAT credit that will be available whatsoever, under sub-rule 3 (ii) ibid, for the assessee to avail.
The impugned order then cannot sustain and will require to be set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 849
Extended period of limitation - inter-connected/inter linked units - Show Cause Notice has been issued after two years invoking extended period and alleging suppression of facts - Held that:- The appellant vide letter dated 06.01.2003 has informed the Department that they are shifting their capital goods from Unit No. 44 to Unit No. 34. The Department has not cared to respond to this letter and only after three years, on 27.04.2006, have issued a letter seeking clarification as to whether separate registration is required for Unit at Door No. 34. The appellant has responded to this letter by explaining that the manufacturing activity that is undertaken in both these units are interconnected - There is no positive act or any iota of evidence brought out to show suppression of facts on the part of the appellant with intention to evade payment of duty. The appellant has, vide letter dated 06.01.2003, informed of the shifting of capital goods - the demand invoking extended period cannot sustain.
CENVAT Credit - Housekeeping Services - Maintenance and Repair Services - these services availed in the unit at Door No. 34. Housekeeping Services are availed for keeping the premises in a lean and hygienic manner - Held that:- The Hon’ble jurisdictional High Court in the Case of Commissioner of Service Tax-III Chennai Vs. CESTAT Chennai [2017 (4) TMI 943 - MADRAS HIGH COURT] has held that even if the premises is not registered, the credit is available - credit allowed - the demand set aside on the ground of limitation.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 848
CENVAT Credit - duty paying documents - denial of credit on the ground that the documents against which they have taken the cenvat credit is not proper document in terms of Rule 9 of the CCR 2004 - Held that:- The dealer has charged transportation charges from the appellant on which service tax have been paid. In terms of Rule 3 of Cenvat Credit Rules, 2004, the assessee is entitled to avail cenvat credit of duty paid/service tax paid by them.
The appellant has not paid service tax directly to the transporters but the dealer has paid, i.e. charge of transportation of Goods purchased. As the dealer has paid transportation charges and service tax and issued invoices to appellant. On the strength of the invoices issued by the dealer, appellant is entitled to avail the cenvat credit. Therefore, the appellant has correctly availed the cenvat credit on transportation charges on the amount paid by the dealer shown in the invoice issued by the dealer.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 847
Extended period of limitation - availment of excess deemed credit - export of the processed man made fabrics - Held that:- Job workers doing processing of fabrics received from merchant manufacturers cannot be held responsible for mis-declaration of the value of the fabric by merchant manufacturer and there is no legal requirement showered on the processor to verify the correctness of the declarations furnished by owners - the extended period cannot be invoked.
The demand is barred by limitation - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 846
Manufacture - appellant contended that what they are selling are stampings only and the process of cleatting or riveting does not result in coming into existence of a part of stator or rotor - Held that:- The first stage of the process of manufacture is a cleatting/riveting of the requisite number of stampings. Thus, the cleatting/riveting of the stake of stamping is a first stage necessary for the manufacture of stator. The show-cause notice alleges that the appellants have manufactured stators of different sizes. When the matter was remanded by the Tribunal, there was a specific issue referred to the adjudicating authority which required the adjudicating authority to determine if the process amounts to manufacture.
The impugned order deals with the classification of the product but it does not deal with the issue of manufacture. It needs to be appreciated that a different classification per se is not sufficient to prove the fact of manufacture. To establish that the activity of manufacture is happened, it needs to be established that a new product known in the market has come into existence due to activity conducted by the appellants. We find that the Commissioner has not dealt with this issue at all despite specific remand on this issue.
Since the impugned order fails to deal with the core issue regarding manufacture, the impugned order needs to be set aside and matter remanded once again to decide the issue afresh strictly in terms of the order of remand dated 22.1.2007.
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2018 (7) TMI 845
Rectification of Mistake - rectification of order of remand - Held that:- This Tribunal, after recording in detail various issues raised by the Revenue, remanded the matter to the adjudicating authority to examine the applicability of provisional assessment and consequent determination of the valuation - there is no mistake apparent on the record nor any basis in the apprehension of the respondent that ancillary issues could not be raised in the de novo proceeding - MA(ROM) is devoid of merit and is accordingly dismissed.
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2018 (7) TMI 844
Time Limitation - suppression of facts/intent to evade present or not? - Short payment of duty - Two methods of valuation of the converted goods have been stated in the purchase order and the appellant paid duty by following a method, however, collected the entire amount of conversion charges by issuing debit notes, resulting into short payment of duty.
Held that:- No doubt, issues of valuation relating to transfer of finished goods to their depots have been raised by the visiting audit team and settled, but recovery of the excess amount by way of debit notes towards conversion charges from M/s Pfizer Ltd. has not been an issue raised by the audit team - Also, it is not borne out from the records that the relevant credit notes were placed before the Audit party.
It is difficult to appreciate that such facts and evidences i.e. debit notes were placed before audit team who, after, analyzing the same raised no objection on the issue. In absence of such evidences, it is difficult to accept that the appellant had not suppressed the fact of recovery of the excess amount by way of issuance of debit note, after the job-worked goods were cleared to the raw material supplier i.e. M/s Pfizer Limited. - impugned order upheld - appeal dismissed - decided against appellant.
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2018 (7) TMI 843
Transfer of credit - denial of transfer of credit from the predecessor unit namely M/s Varun Enterprises to M/s. Varun Pressing Pvt. Ltd - Rule 10 of the Cenvat Credit Rules, 2004 - the department has sought to deny the credit stating that when the Range Officer visited he was not able to verify for the reason that goods were lying haphazardly on the shop floor - Held that:- If Range Officer would have made effort, he could have physically verified the stock which he failed to do so. For failure of the Range Officer to perform his duty, the credit due is not to be denied to the appellant.
In the present case, it is also not stated that the stocks were found short, if found short in what extent. Further, what was the documentary evidences made available at the time of stock verification was not produced.
One more opportunity may be granted to the department to cause verification of the documents - appeal allowed by way of remand.
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2018 (7) TMI 842
CENVAT Credit - input service - group insurance policy for employees - the said group insurance policy was taken for its employee for medical claim, personal and vehicle insurance from M/s National Insurance Company Limited - denial on the ground that group insurance services provided by the appellant to his employees and their family member will constitute personal consumption of employees and the same will fall under exclusion clause of definition - Extended period of Limitation - Penalty u/r 15(2) of the CCR 2004.
Held that:- In view of the amendments made in the definition of input services in the year 2011, the phrase “activities relating to business” appearing in inclusive part of the definition has been deleted, and an exclusion clause specifying the services that are to be excluded from the definition of the input services has been added - Undisputedly the period under consideration is from July 2014 to October 2015. Hence it is to be examined whether the group insurance services provided by the appellant to his employees and their family member will be covered by the definition of “input services” as amended from 2011.
Adjudicating authority has analyzed the various provisions of the policy to determine whether the policy is primarily for personal consumption of employees or otherwise and has concluded that the said policy is for the personal consumption of employee - when both Adjudicating Authority and Commissioner (Appeal) have arrived at common finding of the fact that the insurance policies under consideration are primarily meant for personal consumption of the employees, there is no reason to differ with the said finding of fact.
Further in terms of the language of Rule 2(l) once a finding of fact is arrived that the insurance policy is primarily for the personal consumption of the employee than the said policy shall go out in totality from the definition of the input service and there can be no justification for artificial bifurcation of the policy and allow the credit in respect of that part of the policy which is not for the personal consumption of the employee.
Since the insurance services in the present case are primarily meant for the personal consumption of the employees hence they do not qualify to be input services under the definition of input services as amended in 2011. Hence credit in respect of the said insurance services is not admissible.
Extended period of Limitation - Held that:- The true nature of insurance policies was never in knowledge of the departmental officers and came to light only when the unit was audited. The insurance services against which this credit has been taken definitely are within the exclusion clause and credit in respect of the same would have not been admissible - Further the fact that these insurance policies provided insurance cover to family members of the employees was also never disclosed to the department - By taking such credit they have willfully suppressed the relevant facts knowingly to claim the CENVAT Credit not due to them - extended period of limitation rightly invoked.
Penalty u/r 15(2) of the CCR 2004 - Held that:- Since the party has willfully suppressed the facts with intent to evade payment of duty, penalty has been rightly imposed by the adjudicating authority on them under the provisions of Rule 15(2) of the CENVAT Credit Rules, 2004 - penalty rightly upheld.
Appeal dismissed - decided against appellant.
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2018 (7) TMI 841
Clandestine removal - search conducted at the premises of M/s Monu Steels & M/s Gopal Traders - no investigation at the appellant's end except recording of the statement of the Director - Held that:- In the present case, the entire endeavour of the Revenue is based upon the documents recovered from the premises of M/s Moun Steels & M/s Gopal Traders read with the statement of their Director and by ignoring the statement of the Director of the present appellant.
Tribunal in the case of CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. [2015 (11) TMI 455 - CESTAT NEW DELHI] held that the allegations based on inquiries e made in the third party's documents of Commission Agent and transporters cannot lead to the fact of clandestine activities.
Demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 840
Clandestine removal - shortages of scrap - closure of factory - evidences to prove clandestine activity - Penalty u/r 26 - Held that:- The demand is solely based upon the shortages detected by the officers during the course of their visits Admittedly, there is no other evidence indicating procurement of raw materials, clandestine manufacture of the goods, their transportation or identification of the buyers etc., so as to lead to the inevitable conclusion of clandestine removal - It is well settled law that the allegations of clandestine removal, cannot be upheld merely on the basis of shortages in stock - demand set aside.
Penalty on the individuals - Held that:- Inasmuch as, there is no dispute about the fact of settlement of dispute by the main noticee M/s. Ashok Magnetics Pvt. Ltd., before the Settlement Commission, penalty proceedings against the other co-noticees i.e., Director and the employees, are not sustainable - penalty set aside.
Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 839
CENVAT Credit - failure to pay duty from PLA account - Rule 8 (3A) of the Central Excise Rules, 2002 - demand of duty with Interest and Penalties u/r 25 of the Central Excise Rules - Held that:- The issue of demand raised by invoking of provisions of Rule 8 (3A) ibid came up before this Tribunal in the case of M/s R. K. Machine Tools [2018 (1) TMI 39 - CESTAT CHANDIGARH], where it was held that the demand is under Rule 8(3A) of Central Excise Rules, 2002 is not sustainable against the appellant - demand of duty with interest set aside.
Demand of Penalties u/r 25 of the Central Excise Rules - Held that:- Identical issue decided in the case of COMMISSIONER OF C. EX. & CUSTOMS VERSUS SAURASHTRA CEMENT LTD. [2010 (9) TMI 422 - GUJARAT HIGH COURT], where it was held that no intention on the part of the respondent assessee to evade any payment of duty, penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to ₹ 5,000/- in each matter under Rule 27 of the Rules - decided partly in favor of assessee.
Appeal allowed in part.
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2018 (7) TMI 838
Cash Refund of CENVAT Credit - Commissioner (Appeals) has held that the refund amount is though admissible to the appellant, but it is not by way of cash, but crediting their CENVAT account, since the amount was initially deposited in their CENVAT account - Held that:- The issue is no more res-integra, and covered by the judgement of the Larger Bench of this Tribunal in Steel Strips case [2011 (5) TMI 111 - CESTAT, NEW DELHI], where it was held that When right to refund does not accrue under law, claim thereof is inconceivable.
Cash refund of the Cenvat credit is admissible only in accordance with the procedure prescribed under Rule 5 of the CCR, 2004. Since, such a situation is not present in the appellant’s case, the cash refund of CENVAT credit is not admissible.
Appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2018 (7) TMI 837
Classification of goods - dyes and chemicals, Ammonia Victoria blue, rhodamine, methyl violet, oil blue, oil green and croum scarlet - whether the goods purchased and sold by the assessee, viz., Ammonia Victoria blue, rohodamine, methyl violet, oil blue, oil green and croum scarlet, which according to them, are basic dyes and acid dyes, taxable at 8%, as per Entry 16 of Part C of the First Schedule or colours and pigments, liable to tax at 16% under Entry 18(II) and (III) of Part E of the 1st Schedule?
Held that:- During the assessment year 2000-01, most of the purchases are made from Ahmadabad, Mumbai, Sinnar and other places and a cursory look at the interstate purchase details, reveals that the sellers are mostly dealing with chemicals and to name a few., Aspit Enterprises, Ahmadabad, Shree Dye Chemicals, Ahamadabad, Tirupati Dye Stuff, Ahmadabad, etc. - Similarly, perusal of the local sale purchases, also reflect purchase from sellers, dealing with chemicals. Details found in the assessment file, do not suggest strong evidence that the sellers are engaged in sale or paints or enamels. Goods grouped in Entry 18(II) and (III) of Part E of the 1st Schedule, relate to paints and enamels not otherwise specified in this schedule including powder paints, stiff paste paints and liquid paints; colours; and pigments, including water pigments and leather finishes.
In Tejraj Paramel v. State of Orissa [1994 (11) TMI 406 - ORISSA HIGH COURT], it is held that the meaning of the word has to be judged by the company it keeps. When the group of words in Entry 16 of Part C of the 1st Schedule speaks of dyes, which is soluble, the goods mentioned in Entry 18(II) and (III) of Part A of the 1st Schedule, relate to paints and enamels, colours, pigments, etc. As rightly observed by the Tribunal, Legislature has grouped the goods, dyes in a different entry than paints, enamels, powder paints, colours and pigments, etc.
Approach of the Tribunal in ascertaining the legislative intent with reference to the disputed word and scrutiny of the purchase invoices of the assessee, to ascertain the goods purchase and sold, to arrive at a conclusion that the goods sold are 'dyes', taxable at 8% as per Entry 16 of the Part C of the 1st Schedule, cannot be said to be perverse.
Tax Case Revision is dismissed.
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Wealth tax
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2018 (7) TMI 836
Agricultural land used for agricultural purposes as held as a capital asset for the purpose of Wealth tax Act - Held that:- On the similar facts, the coordinate bench of this tribunal in the case laws in the case of Devineni Lakshmi Vs. WTO Ward-2(3) [2018 (4) TMI 279 - ITAT VISAKHAPATNAM] dismissed the appeal of the revenue holding that on agricultural land, no construction is permissible as per existing laws unless the agricultural land is converted into non-agricultural land.
Since facts of the assessee’s case are identical, respectfully following the view taken by this Tribunal (supra), we hold that agricultural land used for agricultural purposes cannot be held as a capital asset for the purpose of Wealth tax Act. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue.
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