TMI Tax Updates - e-Newsletter
July 24, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Can an Importer of goods or services opt to pay tax under composition scheme under GST?
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GST:
Can an exporter of goods opt to pay tax under composition scheme under GST?
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GST:
Whether a person who is opting for Composition u/s 10 of the GST, is required to pay GST at composite rate on Exempted Goods also?
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GST:
Whether a person having turnover much below ₹ 75 Lakhs (Rs. 50 lakhs as the case may be) as on 30-6-2017, and having stock of goods purchased against C form, F form etc. or import goods or inter-state purchases, is eligible for availing the benefit of Composition Scheme under GST?
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GST:
GST - Who are not eligible to opt for composition scheme? Whether certain manufacturers (like Ice cream, Pan masala, Tobacco etc.) are excluded from opting composition scheme? if Yes, who are they?
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GST:
GST - if a person from outside the sate comes to the shop of the composite dealer and asks for Invoice, the composite dealer may gently refuse to mention the place of supply as outside his state.
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GST:
GST - a supplier of goods supplies through electronic commerce operator may be eligible to avail composition scheme before the date on which the provisions of Section 52 are made operative.
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Income Tax:
Validity of assessment - pending assessment on the date of the search - ITAT was in error in holding that the assessment for AY 2008-09 should be treated as ‘pending’ whereas in terms of the CBDT circular it should be treated as final in respect of which no scrutiny are to be started - HC
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Income Tax:
Benefit of Amnesty scheme in respect of penalty only - HC rejects the following contention of the department that, inasmuch as there is a reference to a payment of tax and interest payable on the total income finally determined, along with 25% of the minimum penalty leviable, the Scheme must be intended to cover only such penalties as have been imposed on an assessee along with the assessment order.
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Income Tax:
PE in India - assessee had deployed the rig in connection with the exploration activity from 26.04.2010. Hence, since service and the operation continued till the end of the financial year, the number of days of the deployment of rig was more than 183 days. Hence assessee had a PE in India.
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Income Tax:
Addition on account of excess stock - difference in stock statement submitted with bank and as per books of accounts - No additions
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Customs:
Arrears of cost recovery charges - the petitioner on their own volition stopped remitting the charges from the period of January, 2009. Such conduct of the petitioner is not appreciable, as unless and until exemption is granted the petitioner has to pay the said amount without prejudice their rights to seek for exemption from the CBEC. - HC
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Customs:
Enhancement of declared value - “mixed plain plastic film rolls” of cuts/odd sizes - The Custom Valuation Rules will operate only when there is a dispute or a doubt on such transaction value.
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Customs:
EOU - rejection of the assessee's request for issuance of NOC by the Customs - the delay on the part of the authorities cannot act prejudice to the assessee's interest, which cannot be denied the benefits, if otherwise available.
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State GST:
Karnataka GST - it is hereby informed to the exporters in the State that the Bond or the letter of undertaking in place of Bond in all the cases (irrespective of the fact that the provisional ID for the GST is issued by the Commercial Tax Department), will be accepted.
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Service Tax:
Penalty - Since the appellants have paid the entire amount of Cenvat Credit along with interest and 25% of penalty within one month of the issue of show-cause notice, all proceedings shall be deemed to be concluded in respect of that amount in terms of the proviso to sub section (2) of section 73
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Service Tax:
Penalty u/s 77(2) of the Finance Act, 1994 - there is no provision for imposition of personal penalty on the director under the Finance Act. - All the liabilities/ responsibilities are of the service provider.
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Service Tax:
CENVAT credit - to discharges service tax liability under the category of Advertising Agency Services - the appellant is not eligible to avail the CENVAT credit of Central Excise duty on structural steel used for fabrication and erection of unipoles.
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Service Tax:
CENVAT credit - input services - the fact that the appellant is obliged to provide such services under the Employees State Insurance Act, 1948 can also not to be held as ground to allow the credit, in as much as legislation is within its right to amend the definition of "Input Services" and to include or exclude any of the services from its ambit
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Service Tax:
The value of other goods and material, if sold separately would be excluded under exemption N/N. 12/2003 and the term 'sold' appearing thereunder has to be interpreted using the definition of 'sale' in the Central Excise Act, 1944 and not as per the meaning of deemed sale under Article 366(29A)(b) of the Constitution.
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Central Excise:
CENVAT credit - Since the waste batteries are not exempted from payment of duty, the embargo created in Rule 6 of the said rules will not be applicable for payment of amount/ reversal of cenvat credit in the generation of the waste batteries.
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Central Excise:
SSI exemption - At the most it can be said that Economos, Austria have not registered the name "Seal Jet" but that does not make any difference, because notification prescribed that in order to avail exemption goods should not bear the brand name of another person whether it is registered or otherwise
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VAT:
Principles of natural justice - method of selection for audit under Section 43 of the West Bengal Value Added Tax Act, 2003 Section 43AB is more akin to Section 142(2A) of the Income Tax Act, 1961 - No relief to the assessee - HC
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VAT:
Inter-State purchases of vehicles - C-Form - The action of the respondents in not allowing the petitioner to generate C form solely on the ground that the petitioner had not paid the self assessed tax for the relevant period under the VAT Act is illegal. - HC
TMI Short Notes
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GST:
Whether a person who is opting for Composition u/s 10 of the GST, is required to pay GST at composite rate on Exempted Goods also?
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GST:
A person who was making inter-state supplies during the previous year but not making inter-state supplies during the current year, can he avail the benefit of composition under GST?
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GST:
How to determine Turnover limit for availing the benefit of composition scheme? Is it required to be determined each year on the basis of turnover of the previous year?
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GST:
What is the validity of composition levy? Whether intimation is required to be submitted each year for availing the benefit of composition scheme under GST?
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GST:
Can the option to pay tax under composition levy be exercised at any time of the year?
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GST:
Can a person paying tax under composition levy, withdraw voluntarily from the scheme? If so, how?
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GST:
Can an Importer of goods or services opt to pay tax under composition scheme under GST?
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GST:
Can an exporter of goods opt to pay tax under composition scheme under GST?
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GST:
Can a person paying tax under composition scheme under GST make supplies of goods to SEZ?
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GST:
Whether a person having turnover much below ₹ 75 Lakhs (Rs. 50 lakhs as the case may be) as on 30-6-2017, and having stock of goods purchased against C form, F form etc. or import goods or inter-state purchases, is eligible for availing the benefit of Composition Scheme under GST?
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GST:
A person availing benefit of composition scheme under GST, want to be a casual dealer in another state. Can he avail the benefit of composition scheme in the capacity of casual dealer or non resident taxable person?
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GST:
Who are not eligible to opt for composition scheme? Whether certain manufacturers (like Ice cream, Pan masala, Tobacco etc.) are excluded from opting composition scheme? if Yes, who are they?
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GST:
A person availing composition scheme during a financial year crosses the turnover of ₹ 75 Lakhs (₹ 50 lakhs in hil areas) during the course of the year i.e. say he crosses the turnover of ₹ 75 Lakhs (₹ 50 lakhs in hil areas) in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?
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GST:
Whether a person supplying goods through Electronic Commerce Operator, is eligible to opt composition scheme? Since the provisions of TDS u/s 51 and TCS u/s 52 have been deferred, would it make any difference?
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GST:
A registered person opting for composition scheme is not allowed to make any inter-State outward supplies of goods. Therefore, what would happen if someone from outside the state wants to purchase goods? Will it make any difference, if the person from outside the state is not a registered person?
Articles
Notifications
GST - States-
FD 48 CSL 2017 - dated
12-7-2017
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Karnataka SGST
CORRIGENDUM - Notification No. FD 48 CSL 2017 (01/2017) dated 29th June, 2017.
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FD 47 CSL 2017. - dated
5-7-2017
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Karnataka SGST
Notification specifying the document to be carried for movement of Goods.
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04-A/2017 - dated
5-7-2017
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Karnataka SGST
Karnataka Goods and Services Tax (Amendment) Rules, 2017.
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17/2017 - dated
29-6-2017
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Karnataka SGST
Intra-State supply of Services by Electronic Commerce Operators.
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16/2017 - dated
29-6-2017
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Karnataka SGST
Specified International organisation.
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15/2017 - dated
29-6-2017
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Karnataka SGST
Restriction of refund of un-utilised ITC u/s.54(3) of the KGST Act, 2017 in case of services of certain category.
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14/2017 - dated
29-6-2017
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Karnataka SGST
Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the constitution.
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13/2017 - dated
29-6-2017
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Karnataka SGST
Reverse charge related notification in respect of services.
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ERTS(T) 65/2017/024 - dated
29-6-2017
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Meghalaya SGST
Specifies the following documents to be carried by a person in charge of a conveyance carrying any consignment of goods taxable under the Act.
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ERTS(T) 65/2017/014 - dated
29-6-2017
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Meghalaya SGST
Neither as a supply of goods nor a supply of service.
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ERTS(T) 65/2017/012 - dated
29-6-2017
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Meghalaya SGST
Exempts the intra-State supply of services State tax leviable thereon under sub-section (1) of section 9.
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ERTS(T) 65/2017/011 - dated
29-6-2017
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Meghalaya SGST
Notifies the State tax.
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ERTS(T) 65/2017/005 - dated
29-6-2017
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Meghalaya SGST
Notifies the goods no refund of unutilised input tax credit on account of rate of tax on inputs
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ERTS(T) 65/2017/002 - dated
29-6-2017
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Meghalaya SGST
Council, exempts intra-State supplies of goods, Schedule appended to this notification,
Income Tax-
66/2017 - dated
20-7-2017
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IT
Section 10(46) of the Income-tax Act, 1961 Central Government notifies Haryana Electricity Regulatory Commission, a commission constituted under the Haryana Electricity Reform Act, 1997, in respect of the following specified income arising to that body
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (7) TMI 746
Validity of assessment - Assessments for Assessment Year 2008-09 pending on the date of the search - Held that:- The Assessee filed its return on 21st October, 2008. The return was processed under Section 143(1) of the Act on 27th March, 2010. It has held by this Court in Indu Lata Rangwala v. Deputy Commissioner of Income Tax (2016 (5) TMI 804 - DELHI HIGH COURT) that the mere processing of a return under Section 143(1) of the Act and the sending of an intimation to the Assessee will not make it an ‘assessment’. At the same time, the consequences of the Department not issuing a notice under Section 143(2) of the Act within the time stipulated as far as the filing of the return in normal course is concerned was not examined either in Commissioner of Income Tax v. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) or Indu Lata Rangwala v. Deputy Commissioner of Income Tax (supra). CBDT circular makes it abundantly clear that once an Assessee does not receive a notice under Section 143(2) of the Act within the period stipulated then such an Assessee “can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return. The inevitable conclusion, therefore, in the present case, is that the ITAT was in error in holding that the assessment for AY 2008-09 should be treated as ‘pending’ whereas in terms of the above CBDT circular it should be treated as final in respect of which no scrutiny are to be started. - Decided in favour of the Assessee Addition on account of the claim of depreciation on software - Held that:- ITAT has re-examined every shred of evidence to come to clear conclusion that the Assessee was not able to demonstrate the genuineness of the purchase software. Further the story put forth by the Assessee that the software having been handed over to Sobha was also not substantiated by any documentary evidence or even otherwise. On facts, therefore, the concurrent opinions of the AO, CIT(A) and the ITAT to the effect that the purchase of the software was, in fact, a bogus transaction not entitled to depreciation cannot be said to suffer from any legal infirmity warranting interference.- Decided in favour of the revenue
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2017 (7) TMI 745
Tax appeal admitted for consideration of following substantial question of law : Whether the Appellate Tribunal was right in treating business income of ₹ 2,31,17,992/- as Short Term Capital Gain and ₹ 11,27,984/- as Long Term Capital Gain and ₹ 11,12,073/- as Long Term Capital Loss? Disallowances of interest - Held that:- Tribunal noted that the advances were made by the assessee to one Kanak Castor Products Private Limited. Kanak Castor was declared as the highest bidder for purchase of assets of a company in liquidation by the Gujarat High Court. To facilitate the purchase, the assessee had also purchased 4.79 crores shares out of 5 crores shares of the company i.e. Kanak Castor. The Tribunal, therefore, found that such advances were made for the purpose of business. We do not find any error in the view of the Tribunal. This question is, therefore, not considered.
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2017 (7) TMI 744
Disallowance of interest expense - Held that:- As decided in assessee's own case [2017 (7) TMI 745 - GUJARAT HIGH COURT] noted that the advances were made by the assessee to one Kanak Castor Products Private Limited. Kanak Castor was declared as the highest bidder for purchase of assets of a company in liquidation by the Gujarat High Court. To facilitate the purchase, the assessee had also purchased 4.79 crores shares out of 500 crores shares of the company i.e. Kanak Castor. The Tribunal, therefore, found that such advances were made for the purpose of business. We do not find any error in the view of the Tribunal. This question is, therefore, not considered. Disallowing set off of speculation loss (F & O) - amount not claimed in the original return but claimed in revised return where the case attracts the provisions of Section 139(3) - Held that:- Sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub-section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the same would be impermissible. In terms, sub-section (5) of Section 139 allows the assessee to revise the return filed under subsection (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed. Accepting the contention of the revenue would amount to limiting the scope of revising the return already filed by the assessee flowing from sub-section (5). No such language or intention flows from such provision. Appellate Tribunal has not erred in in facts and circumstances in deleting the addition made by the Assessing Officer by disallowing set off of speculation loss (F & O) as the same was not claimed in the original return but claimed in revised return Revenue appeal dismissed.
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2017 (7) TMI 743
Eligibility to exemption u/s 80IA - generation of electricity - Held that:- Income from generation of power, may that be in the nature of captive generation, make the assessee entitled for deduction under Section 80-IA of the Income Tax Act, 1961 in respect of notional income from generation of electricity which was captively consumed by the assessee itself in another unit of the same company. This appeals preferred by the Revenue are dismissed with conclusion that Tribunal rightly declared the assessee entitled to claim deduction as prescribed under Section 80-IA of the Income Tax Act, 1961 and even for the purpose of computing the books of account as per Section 115-JA of the Income Tax Act, 1961. The question is therefore answered in favour of assessee
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2017 (7) TMI 742
Non grant approval u/s.80G(5) - fulfillment of required conditions - Held that:- Taking into account that the activities which are carried out by the respondent is covered under Section 80G(5)(vi) inasmuch as the education will be a part of charitable activities. However, in view of the provisions of Section 2(15) of the Income Tax Act and the factum of registration under Section 12A right from 1977, it will be suffice to answer all the issues in favour of the assessee.
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2017 (7) TMI 741
Order passed by the Income Tax Settlement Commission, Additional Bench, Chennai under Section 245F[I] challenged - held that:- The issue involved in these writ petitions are squarely covered by the decision of this Court in the case of R.Vijayalakshmi Vs Income Tax Settlement Commission and Others [2016 (8) TMI 657 - MADRAS HIGH COURT] wherein held when the statute does not provide power of review with the authority and if it is done, it has to be termed as wholly without jurisdiction. The phraseology used by the legislation is “rectification” and such rectification can be done on any mistake apparent from the record. Therefore, such power exercisable under sub Section 6D of Section 245D can be exercised only to rectify a mistake and such mistake should be apparent from the record. Thus, even as per the amendment made by Finance Act, 2011, power of review is not conferred on the Settlement Commission. Rudimentary legal principle is that subsequent development of law cannot be a ground to exercise review jurisdiction and that cannot be taken into consideration as an error apparent on the face of the record. Hence, on that ground also, the Department should be non suited. Hence for all the above, order of the Settlement Commission is held to be unsustainable and it is accordingly quashed. This Court has held that the order passed by the Commission under Section 245D(4) has become final and the Department will be entitled to interest only as ordered by the commission.
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2017 (7) TMI 740
Expenditure in excess of 6% of the liability of the Mutual Fund companies - whether this liability was that of the individual companies and not of the holding company ? - Held that:- Any excess over the 6% initial issue expense shall be borne by the Asset Management Company. In the Assessment Order, the Assessing Officer accepted that the Assessee is Asset Management Company. There is no dispute in this regard. The Respondent Assessee is statutorily liable to bear the expenses over and above 6%. The same has been rightly considered by the Tribunal. As far as allowing the expenses relating to IT infrastructure is concerned, it would appear that in the subsequent assessment year 2009-10, the Assessing Officer has accepted the expenditure on account of IT infrastructure as separate expenses and has allowed the same. There is no reason to take different view for the present assessment year.
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2017 (7) TMI 739
Income from the sale of flat - Business income or capital gain - Held that:- As far as the flat is concerned, the same is acquired in the year 1941 and was held as such since then. It appears that in the year 1984-85, construction permission was obtained by the Assessee. However, the same was abandoned. Even the amount received from the prospective buyers were returned and some who did not come forward to receive the amount, such amount is reflected in the account. The commercial activity which was sought to be undertaken in the year 1984-85 never took of and had to be abandoned because of the order of the Bombay High Court and the commencement certificate was also revoked. Totality of the facts as were discussed by the Commissioner (Appeals) and the Tribunal would show that no error has been committed in treating the income from the sale of flat as long term capital gain. Sale of hoarding, parking and cable video charges - Held that:- As observed that for last 40 years, the same is being shown as business income and the Assessee for all the previous years has accepted the same as business income. There was no reason to deviate for the present year. The evidence in this regard has also been discussed by the Tribunal. Even in respect of trade in bullion, the Assessing Officer for all the previous year has accepted that the Assessee is engaged in business of trading in bullion.
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2017 (7) TMI 738
Validity of proceedings under Section 153-C - satisfaction note - Held that:- In the present case, the AO of the searched person and the other person (the Assessee) was the same. In similar circumstances, the Court has recently in Ganpati Fincap Services Pvt Ltd. v. CIT [2017 (5) TMI 1425 - DELHI HIGH COURT] held that there do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. In such event, the AO need make only one satisfaction note. That satisfaction note is qua the other person. In that view of the matter, the impugned order of the ITAT which proceeds to invalidate the proceedings under Section 153C of the Act only for the reason that the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note cannot be sustained in law. - Decided in favour of revenue
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2017 (7) TMI 737
Addition u/s 68 - identity, genuineness and creditworthiness of the investors - Held that:- The exercise for determining the identity, genuineness and creditworthiness of the investors of the share capital of the Assessee as well as lenders was undertaken in an elaborate manner by the CIT(A). Comments from the AO were sought. Detailed reasons have been given by the CIT(A) to come to the conclusion that the Assessee had discharged its onus of establishing the identity, genuineness and creditworthiness of both the investors as well as the lenders. This has been concurred with by the ITAT in the impugned order which is again an extremely detailed one. The concurrent factual findings of both the CIT(A) and ITAT have not been shown to be perverse by the Appellant. This is virtually the fourth stage of the litigation. - Decided in favour of assessee
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2017 (7) TMI 736
Income from sale or purchase of share - capital gain, long terms capital gain or as a stock in trades - Held that:- Whether the sale or purchase of share has to be considered as short term capital gain, long terms capital gain or as a stock in trades, will have to be evaluated on the basis of facts in each case. In the case of assessee, for the previous assessment year, the Assessing Officer had accepted the income from the shares as short term and long term capital gain. The Tribunal relied on the judgment of the Apex Court in the case of P. M. Mohammed Meerakhan (P.M.) Vs. Commissioner of Income Tax [1969 (2) TMI 4 - SUPREME Court] as observed that it is not possible to evolve any single test or formula which would apply in determining the transaction as adventure in nature of trade or not. It is also observed by the Apex Court in case of The Commissioner of Income Tax Vs. Madan Gopal Radhey [1968 (9) TMI 14 - SUPREME Court] that there is no presumption that an acquisition of a commodity, even if it is an accretion to the stock in trade of the business, is an acquisition for the purpose of his business, in each case the question is one of intention to be gathered from the evidence of conduct and dealings by the acquirer with the commodity. It has been observed by the Tribunal that there is no evidence on record to show that the assessee has been churning same shares. The said finding is a finding of fact concurrently arrived at by the Commissioner and the Tribunal. From the evidence on record, it cannot be said that the said evidence is perverse. No substantial question of law arises.
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2017 (7) TMI 735
Benefit of deductions of Section 80-I and 80-IA - assessee was carrying on business of cold-storage and was also dealing in skimmed milk - Held that:- Tribunal in allowing the above deductions has held that the Assessing Officer and the Commissioner of Income Tax (Appeals) had erred in applying the decision of the Delhi High Court in refusing the above deductions inasmuch as after the said decision the provisions of Section 80-I and 80-IA of the Act have undergone amendment which aspect of the matter was not considered by the authorities below. The Tribunal in granting the deductions of Section 80-I and 80-IA of the Act held that all the necessary conditions for availing the benefit thereunder were fulfilled by the assessee and as such the Assessing Officer and the Commissioner of Income Tax (Appeals) were not correct in refusing deductions as claimed by the assessee. There is no error or illegality in the order of the Tribunal and the assessee is entitle to deductions under Section 80-I and 80-IA of the Act. - Decided in favour of assessee.
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2017 (7) TMI 734
Addition u/s 68 - revision u/s 263 - Held that:- The assessment of Mr. Suveer Arora for the same AY was completed under Section 143(3) of the Act. After considering all of the above documents, the ITAT came to the conclusion that there was no ground to dispute the genuineness of the investment. In response to the query from the Court, Mr. Bhatia confirmed that the assessment order passed in the case of Mr. Suveer Arora under Section 143(3) of the Act was not re-opened by the Revenue by invoking Section 263 of the Act. In the circumstances, the mere fact that Mr. Suveer Arora was not produced by the Assessee before the AO for examination will not detract from the identity, genuineness and creditworthiness of the Investor. The conclusion reached by the ITAT cannot be said to be suffering from any legal infirmity. The question framed is, accordingly, answered in the negative, i.e. in favour of the Assessee and against the Revenue.
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2017 (7) TMI 733
Calculating deduction under Section 80-HHC(4A)- whether the Assessee is entitled to reduce interest paid by it from the interest received by it, while calculating deduction under Section 80-HHC(4A) read with Explanation (baa)- Held that:- Subsequently, this Court has in its decision in Commissioner of Income Tax v. Shri Ram Honda Power Equip (2007 (1) TMI 86 - HIGH COURT, DELHI) inter alia held that the word "interest" in clause (baa) of Explanation to Section 80 HHC connotes "net interest" and not "gross interest". "Therefore in deducting such interest the Assessing Officer will take into account the net interest i.e. the gross interest as reduced by the expenditure incurred for earning such interest." - Decided in favour of the Assessee
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2017 (7) TMI 732
Benefit of Amnesty scheme in respect of penalty only - Penalty imposed on the petitioners u/s 271D, 271E and 272A(2)(C) - Revenue denied the benefit as there is a reference to a payment of tax and interest payable on the total income finally determined, along with 25% of the minimum penalty leviable, the Scheme must be intended to cover only such penalties as have been imposed on an assessee along with the assessment order. Held that:- Firstly, the definition of tax arrears does not exclude a situation where the dispute of an assessee is only in respect of a penalty that has been determined against him under the Income Tax Act. Secondly, while the procedure envisaged includes the filing of a declaration solely in respect of penalty, the Scheme suggests that when a declaration is only with regard to penalty, the obligation of the declarant is to pay 25% of the minimum penalty levied, and also to pay the tax and interest payable on the total income finally determined for the assessment year in question. The object of the Scheme appears to be to ensure that, while a person seeking an Amnesty Scheme only in respect of the penalty that is imposed on him, avails the benefit of the Scheme to that extent, it should also be ensured that the said declarant discharges the tax and interest liability under the Income Tax Act for the assessment year in question. A person, who defaults on the tax and interest liability under the Income Tax Act for the assessment year, cannot claim the benefit of amnesty in respect of the penalty alone. It is also significant to note that the exclusions from the Scheme, that are enumerated in Section 208 of the Finance Act, 2016, also do not expressly provide for the exclusion of a declaration, such as those filed in the instant writ petition, where the amnesty is sought only in respect of a penalty that is imposed under the Income tax Act. Thus, find that, the reasons stated in Exts.P8, P9 and P10 intimations served on the petitioners cannot be legally sustained to deny the petitioners the benefit of Ext.P4 Amnesty Scheme. Resultantly, quash Exts.P8, P9 and P10 intimations in both the writ petitions and direct the 2nd respondent to process Exts.P5, P6 and P7 declarations submitted by the petitioners in both the writ petitions expeditiously and in terms of Exts.P4 Scheme, as clarified in this judgment. - Decided in favor of assessee.
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2017 (7) TMI 731
PE in India - for how many days the assessee was engaged in the activity of exploration, exploitation or extraction of mineral oils in India? - stay in India - Held that:- An enterprise shall be deemed to have a permanent establishment in contracting state to carry on business through that permanent establishment if it provides services or facilities in that state for a period of more than 183 days in connection with the exploration, exploitation or extraction of minerals oils in that state. In the present case we note that the drilling rig of the assessee was brought into India on 26.04.2010. Thereafter as evident from the minutes of meeting held on 27.04.2010 between GSPC as mentioned in page 4 of the A.O’s order the Rig was undergoing necessary fabrication, upgradation & positioning to meet GSPC requirements and as proposed in their bid. For providing the service and facility in this case it was required to properly position the rig, fabricate and modify of the same as per the needs of the GSPC. By no stretch of imagination it can be said that the Rig was ready for use. It was only after the aforesaid fabrication, upgradation and enabling operations were carried out that further drilling operations were commenced from 3.11.2010 and continued till the end of the financial year. Thus, the assessee was having in PE in India to carry on business from the day when it commenced in India operation to fabricate, to upgrade to prepare, to position and to enable the Rig to perform the drilling activity. Hence assessee had deployed the rig in connection with the exploration activity from 26.04.2010. Hence, since service and the operation continued till the end of the financial year, the number of days of the deployment of rig was more than 183 days. Hence assessee had a PE in India. - Decided against assessee.
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2017 (7) TMI 730
Denying exemption under section 54 - whether owing more than one residential house was relevant to exemption/reduction u/s 54(F) and not u/s 54 - Held that:- In the present case, it appears that the assessee claimed the exemption u/s 54 of the Act and not u/s 54(F) of the Act. It is also noticed that the certificate from the architect mentioning the period of completion of construction was furnished by the assessee as an additional evidence before the learned CIT(A) who had not rejected the same and asked the remand report from the AO. However, the impugned order was passed without waiting for the remand report from the AO. Therefore, considering the totality of the facts deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh, in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of assessee allowed for statistical purposes.
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2017 (7) TMI 729
Validity of reopening of assessment - Held that:- Where the return initially filed is processed under section 143(1) of the Act, and an intimation is sent to an assessee, it is not an ‖assessment‖ in the strict sense of the term for the purposes of section 147 of the Act. In such event, there is no occasion for the Assessing Officer to form an opinion after examining the documents enclosed with the return whether in the form of balance-sheet, audited accounts, tax audit report, etc. The first proviso to section 147 of the Act applies only (a) where the initial assessment is under section 143(3) of the Act and (b) where such reopening is sought to be done after the expiry of four years from the end of the relevant assessment year. In other words, the requirement in the first proviso to section 147 of the Act being a failure on the part of the assessee ―to disclose fully and truly all material facts‖, it does not apply where the initial return has been processed under section 143(1) of the Act. In view of this we reverse the finding of the Ld. CIT appeal in holding that reopening of the proceeding is invalid. In the result ground No. 1 of the appeal of the revenue is allowed. Disallowing brought forward speculative loss - Held that:- If the transactions are carried out electronically at recognised stock exchange in shares and securities then the assessee is eligible to claim that the loss incurred by it in assessment year 2005 – 06 was not speculative in nature. Hence to determine this aspect we set aside ground No. 2 of the appeal of the revenue to the file of the learned assessing officer to determine whether loss incurred by the assessee is satisfying the conditions of eligible transactions or not such as whether transactions are carried out at recognised exchange for the respective trade or not. Needless to say that it is for the assessee to establish that the transactions carried out by him on which the losses are incurred are eligible transactions by production of trading notes of exchange, and therefore Ld. Assessing officer is also directed to grant adequate opportunity of hearing and adducing evidence in support of the claim to the assessee. Appeal of the revenue is allowed with above direction.
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2017 (7) TMI 728
Addition on account of excess stock - difference in stock statement submitted with bank and as per books of accounts - Held that:- CIT(A) has correctly stated that during the year there is only a difference of 3 bags of sugar which is practically negligible looking to the operation of the assessee. Further it is not the case of the revenue that assessee has pledged the stock to the banker it is merely a case of hypothecation of the stock where the possession of the stock remains with the assessee and not under the lock and key of the banker. As we do not see any infirmity in the order of the Ld. CIT appeal we confirm his finding in deleting the addition of ₹ 113905000/– made by the assessing officer on account of excess stock on basis of stock statement given to the banker. Further the various decisions cited by the revenue were with respect to the pledge of the goods which is not the case here as it is a case of hypothecation of the goods, valuation of the closing stock which is inflated the case cited by the revenue whereas in the present case there is no allegation of the inflation of quantity of stock material in view of this the reliance placed by the revenue on all those decision does not help its case. Ground No. 1 of the appeal of the revenue is dismissed
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Customs
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2017 (7) TMI 707
Arrears of cost recovery charges - case of petitioner is that when a direction has been issued to consider the representation seeking exemption, issuance of the impugned demand is not sustainable - Held that: - the petitioner cannot escape from the liability as raised in the demand dated 17.12.2008 for the period from April, 2007 to December, 2008, which has been quantified at ₹ 20,52,498/-. What is important to note is that thought the petitioner's application for exemption was not considered and no orders were passed, the petitioner on their own volition stopped remitting the charges from the period of January, 2009. Such conduct of the petitioner is not appreciable, as unless and until exemption is granted the petitioner has to pay the said amount without prejudice their rights to seek for exemption from the CBEC. Petition dismissed - decided against petitioner.
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2017 (7) TMI 706
Revision under Section 129DD of the Customs Act - Validity of order passed by Commissioner of Customs (Appeals) - Confiscation of gold - Held that: - reliance placed in the case of M/s NVR Forgings Versus Union of India and others [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT], where it was held that the order in appeal as well as revisionary order had been passed by the officers of the same rank which is not permissible as per law. Therefore, the impugned order is set aside - respondent is directed to release the gold to the petitioner within one week from the date on which the petitioner furnishes a bond - petition allowed - decided in favor of petitioner.
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2017 (7) TMI 705
Recovery of erroneous refund - Benefit of N/N. 133/ 85 dated 19.04.1985 - Captive consumption - benefit of exemption was denied to the assessee company, since the assessee company proposed to set up captive power plant, to provide power to their own factory and so 30% basic customs duty was charged - the present appeal has been filed by the appellant department mainly on the ground that the Hon'ble Apex Court in Union of India vs. Indian Charge Chrome [1999 (8) TMI 69 - SUPREME COURT OF INDIA] has upheld the notification issued in Notification No.133/85 and observed that it is only an amendment notification for clarification - Held that: - the original authority has held that the respondent company was entitled to the refund of ₹ 1,50,99,363/- together with interest of ₹ 2,32,84,458/- (totally amounting to ₹ 3,83,83,821/-). So, it is clear that the appellant department had accepted and complied with the order passed by this Court in the above Writ Petitions and had refunded the above said amount to the respondent company. However, pursuant to the refund of the above said amount to the respondent company, the appellant department has issued a show cause cum demand notice dated 04.08.2011 to the respondent company under Section 28 of the Customs Act, calling upon the respondent company to show cause as to why, the erroneously refunded amount of ₹ 3,83,83,821/- should not be recovered from the respondent with interest. The appellant department cannot take two parallel proceedings for the same issue i.e. Challenging the erroneously refunded duty amount by the appellant department to the respondent company - the Tribunal has rightly allowed the appeal filed by the respondent company and had dismissed the appeal filed by the appellant department and the same does not warrant any interference by this Court - appeal dismissed - decided against Revenue.
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2017 (7) TMI 704
Jurisdiction - power of DRI to issue SCN - Held that: - the powers of officers working in this organization to issue notice under Customs Act, 1962 as proper officers has been subject matter of decision by various High Courts - the matter is being remanded to the original authority to decided the issue of jurisdiction - appeal allowed by way of remand.
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2017 (7) TMI 703
Classification of imported item - enhancement of declared value - “mixed plain plastic film rolls” of cuts/odd sizes - The claim of the importers in these appeals is that the imported goods are from stock lot, hence the lower transaction values - Held that: - no evidence has been brought forth by the department to disprove such an averment or establish that these are not stock lots. In fact, there is no corroborative evidence of any sort, in the form of documents or any other evidence unearthed from the supplier’s end to hold up the allegations of the department. The Custom Valuation Rules will operate only when there is a dispute or a doubt on such transaction value. These rules provide for the manner and method of determining the assessable value in different circumstances. Evidently, such proceduralities are enjoined to eliminate any adhocism or arbitrariness while determining one an enable value. Value of identical imported goods can very well have different transaction values depending on whether the imports are a one time transaction or are one in a series of continuous imports, whether the goods are from a prime lot or stock lot and so on. Appeal dismissed - decided against Revenue.
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2017 (7) TMI 702
DEPB benefits - cancellation of DEPB scrips on the ground that it was obtained by producing incorrect documents - Held that: - Since the entire amount of duty amount stands discharged by M/s. Alpha Exports and some additional amount is seems to have been deposited by them, no liability arises on the respondent herein - when the perpetrator of the fraud, as in this case, has admitted of his role in that fraud and has admitted in writing that excess benefit of DEPB has actually accrued to him and not to the importer and finally has made good the loss of customs duty to the exchequer by paying the amount to the DRI, it would be extremely unjust and unfair to foist further penal action on the respondent - appeal dismissed - decided against Revenue.
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2017 (7) TMI 701
Penalty u/s 112 (a) of the Customs Act, 1962 - clearance of the goods without a proper NOC from the drug control authorities - Held that: - The role of a CHA, and his job is only to file the bill of entries. It is inconceivable that a CHA, whose job is only to file bill of entries, making the proper declarations as per the information given by the importer and to assist an importer for clearances of the goods, would be aware of the technical laws of production of various licences for an import of a particular item, so as to invoke penal action against him. There is no evidence on record to show that the present appellants were aware of the fact that the importer does not have the NOC's or the requisite licences are required to be produced before Customs authorities and as such, has abetted the illegal imports - penalty not justified - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 700
EOU - rejection of the assessee's request for issuance of NOC by the Customs - non-filing of intent declacation in the shipping bill - Held that: - the Revenue was approached by the appellants for issuance of NOC as required by the DGFT authorities. Such a request has been rejected on the ground that while filing the free shipping bills during the intermittent period, i.e., from period of intimation of appellants decision to exit EOU to the final order for exit having been given by the authorities, Shipping bills were filed without any intent declaration. As such, its stand that NOC cannot be granted to the appellants. Such a declaration is a procedural requirement and it cannot be adopted as a ground to deny substantive benefits which are otherwise available to an assessee. If the factum of availability of substantive benefits can be arrived at otherwise also, the non-adherence to a particular declaration cannot be adopted as a ground for denial of such substantive benefits. It is again a well settled issue that the delay on the part of the authorities cannot act prejudice to the assessee's interest, which cannot be denied the benefits, if otherwise available. As such, the technical objection raised by the Revenue is now warranted or justified. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2017 (7) TMI 697
Corporate Insolvency Resolution Process - solvency and Bankruptcy Code, 2016 - Held that:- Financial Creditor has placed on record all the documents concerning the default and the name of resolution professional proposed to act as an interim resolution professional. We are satisfied that the default has occurred and the application in all other respects is complete. Moreover, there is no opposition despite the fact that the service has been effected. Therefore, we are inclined to admit this petition. This petition is admitted. The necessary consequence of admission is that a declaration is made in terms of Section 13(a) for the purpose of section 14 of the Code. A direction is issued to the interim resolution professional Shri Sanjay Kumar Agarwal to make public announcement in accordance with the provisions of Section 13(1)(b) of the Code. The corollary of the declaration is that moratorium under Section 14 of the Code shall come in operation from the date of this order.
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Service Tax
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2017 (7) TMI 727
"Sale" of used cars - motor vehicle dealer is dealing in used cars - Is its transaction a sale in the conventional sense attracting the sales tax, or a service--as an intermediary, agent, or broker--to the true owner attracting service tax? - Held that: - the sale and the registration of the sale are two distinct acts. The sale of a motor vehicle, movable property, takes place under Section 19 of the Sale of Goods of Act. But if the transferee intends to get statutory protection as the owner of the transferred vehicle, he alone must invoke Section 31 of the Act to have the vehicle transferred on to this name. Movable property--chattel--stands on a different footing. Possessing it amounts to owning it: there is an element of exclusivity. But owning it does not amount to using it. Of a motor vehicle, the sale signifies its possession; the registration, its use. The Legislation has advisedly avoided registration to be a precondition for the sale of movable property. A person can buy and possess a motor vehicle without registration so long as he does not intend to use. If he intends to use it, the registration assumes significance. As we can see, the Motor Vehicles Act regulates the use of a motor vehicle, and the sale, predates the use. Not everyone who owns a motor vehicle uses it, possessing vintage or antique cars--wealth in itself--being a case in point - the sale of a motor vehicle is governed by the Sale of Good Act, and its use by the Motor Vehicles Act. It is now well settled that strong suspicion, strange coincidences and grave doubts cannot take the place of legal proof - the Commissioner observes that the dealer takes from the used-vehicle owner a "sale letter/sale deed." Incorrect. What the dealer obtains are Forms Nos.29 & 39, signed in blank, though. And neither of them is a sale letter or sale deed, nor does the statute compel the dealer, to be the owner, to obtain one. Appeal dismissed - decided against Revenue.
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2017 (7) TMI 726
Penalty - CENVAT credit - fictitious invoices - doctrine of severability - Section 73 (1A) of the Act - Held that: - A perusal of sub-section (1A) of Section 73 shows that it is an option to a person to admit liability in full or in part and proviso to sub-section (2) relates to the liability admitted under Section (1A). Therefore, if the entire amount demanded under the notice is accepted under (1A), it becomes the liability under Section (1A) - the appellants are entitled to the benefit of sub-section (1A) of Section 73 of the Finance Act, in respect of Cenvat Credit wrongly availed on fictitious invoices. Since the appellants have paid the entire amount of Cenvat Credit along with interest and 25% of penalty within one month of the issue of show-cause notice, all proceedings shall be deemed to be concluded in respect of that amount in terms of the proviso to sub section (2) of section 73. On the above ground, the benefit of section 73(1A) read with subsection 73(2) is allowed in so far as it relates to the first issue - appeal allowed. CENVAT credit - duty paying invoices - credit denied as the documents contained alterations - Held that: - it transpires that C.P. Systems Pvt. Ltd. had provided services to the appellants and said invoices were indeed issued by C.P. Systems Pvt. Ltd. Difference in format was because of different places where the copies were generated. In these circumstances the fact of genuineness of the transaction cannot be questioned. The fact that the appellant received services and service tax was paid by the service provider for those service is not in dispute. It is seen that during this exercises duplicate copies of the documents have been obtained and transaction has been verified. Provision of service payment of service tax have already been confirmed and duplicate copies of invoices obtained from the service provider, the credit of such invoices in respect of services undisputedly received by the appellant cannot be denied - appeal allowed. Classification of services - works contract service or erection, commissioning and installation services? - Held that: - It is apparent that the responsibility of providing of materials except raw materials is that of the appellants. In these circumstances, the character of the contract being a work contract cannot be denied. Consequently, the appellants should be entitled to the benefit of Notification No.25/2007 - it is apparent that the appellants are engaged in the activity in the provision of works contract service and would be entitled to benefit of notification No.25/2007. In these circumstances, the demand and penalties on this count cannot be sustained - appeal allowed. CENVAT credit - denial on the ground that the goods have been received and consumed in their Jaigad site where the benefit of composition under works contract scheme has not been filed - Held that: - It is apparent that in principal the impugned order agrees that if the goods were indeed supplied to the appellants plant at JSW Jaigad site, the credit would be available. It appears that the documents presented before us were not presented before the original adjudicating authority. Since it is an issue regarding verification of facts, the demand is set aside and the matter remanded to the original adjudicating authority for verifying the facts with reference to all the documents and records that may be submitted by the appellants in this regard. If it is established from records that the goods were received at JSW Jaigad site the credit should not be denied - matter on remand. Amount received as advance - demand - The appellant have however claimed the benefit of section 73(1A) read with subsection 73(2) as they had paid the amount of service tax demanded along with interest and 25% of the penalty within the prescribed period - Held that: - the benefit of section 73(1A) read with subsection 73(2) cannot be denied to them as they have deposited the amount of duty demanded along with the interest and 25% penalty within the prescribed time - appeal allowed. Penalty u/s 77 (2) of the Finance Act, 1994 - Held that: - there is no provision for imposition of personal penalty on the director under the Finance Act. The said decision has been distinguished on the ground that in the said case the penalty under subsection 77(c) was examined and not under subsection 77(2). For any person to contravene any provision of the Finance Act or the Rules made thereunder it has to be first established that there was any liability of the person under the act - It is seen that there is no separate liability/responsibility of the Director of the service provider under the act or the rules. All the liabilities/ responsibilities are of the service provider. In these circumstances, penalty under Section 77 (2) cannot be imposed on the Director, the second appellant - appeal allowed. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 725
GTA service - reverse charge mechanism - Held that: - any person who avails GTA service including from individual truck operators when liable to pay service tax is eligible for the benefit of abatement as per N/N. 32/2004 - The appellant has also submitted a declaration that they have not availed the benefit of N/N. 12/2003. All these aspects have to be verified by the authorities below and for these reasons, the matter requires to be remanded Penalty u/s 76 and 78 - Held that: - penalty u/s 76 as well as u/s 78 cannot be imposed simultaneously - In the present case, we do accept the contentions put forward by the counsel that during the relevant period, whether they were liable to pay on GTA service when services are rendered by individual truck owners was in confusion and there were decisions both in favour of the assessee and the department. Taking these facts into consideration, we find that the penalties imposed both under sections 76 and 78 is unwarranted - penalty set aside. Appeal allowed in part and part matter on remand.
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2017 (7) TMI 724
Renting of immovable property service - case of the department is that the appellant is liable to pay service tax on the rent of leased out premises of the factory under renting of immovable property service and the appellant is not entitled for the exemption N/N. 06/2005-ST dt. 1.3.2005 - Held that: - In the present case, the premises which was rented out the appellant is provider of service only to that premises. In that premises no capital goods was received and used on which the credit was taken. Therefore the condition (iii) of para 2 of the notification does not get violated. The availment of cenvat credit in respect of input, input service or capital goods by the appellant only in relation to the manufacturing activity will not debar them from availing the exemption notification No. 06/2005-ST for their service of renting of immoveable property. The excisable activity in the manufacturing unit and the service related to renting of immoveable property are two distinct activities and therefore the availment of cenvat credit in relation to manufacturing activity cannot be applied to their service of renting of immoveable property. The appellant is not liable to pay any service tax - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 723
CENVAT credit - to discharges service tax liability under the category of Advertising Agency Services - structural steel used for fabrication of unipoles - case of the Revenue that the unipole which is fabricated is not goods and is an immovable property, so CENVAT credit cannot be allowed - whether the appellant is eligible to avail CENVAT credit of Central Excise duty paid on structural steel used for fabrication of unipoles? - Held that: - reliance placed in the case of Uni Ads Ltd Vs CCE, Cus & ST Hyderabad [2015 (11) TMI 1349 - CESTAT BANGALORE], where it was held that assessee is not eligible to avail CENVAT credit on the structural steel used for fabrication and erection of unipoles for display of hoardings and advertisements - the appellant is not eligible to avail the CENVAT credit of Central Excise duty on structural steel used for fabrication and erection of unipoles. Extended period not invocable - demand upheld for the limitation period of one year from the date of issue of show-cause notice along with interest, the demand beyond the period of limitation is liable to be set aside. Penalty - Held that: - Since the issue involved in this case was in litigation, the question of visiting the appellant with penalty does not arise. Accordingly, the penalty is set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 722
SEZ unit - Refund claim - case of appellant is that being SEZ Unit, they are not required to pay any service tax to the service providers - scope of SCN - Held that: - the lower authorities have gone beyond the allegations made in the show-cause notice and decided the matter on a different ground which was not put across to the appellant. It is settled law that adjudication proceedings cannot go beyond the allegations made in the show-cause notice and in this case despite there was second round of litigation both the lower authorities traversed beyond the allegations made in the show-cause notice - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 721
Short payment of tax - Man Power Recruitment or Supply Agency Services - tax with interest paid by appellant on being pointed out - Held that: - the SCN is bad to the extent of demand of ₹ 8,25,046/-, which was admittedly paid before the issue of SCN. Accordingly, the SCN, to this extent is not sustainable and accordingly, no penalty is also imposable on this amount, under any of the sections. So far, the balance demand of ₹ 1,25,055/-is set aside and the matter is remanded to the Adjudicating Authority, for redetermination, in accordance with law, after providing opportunity to the appellant of being heard and leading evidence. Appeal allowed in part and part matter on remand.
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2017 (7) TMI 720
CENVAT credit - input services - Insurance Services for workers at site - Held that: - The exclusion clearly mentions various services including the Life Insurance and Health Insurance Services as not covered by Input Services. Similarly, the travel benefits extended to the employees at the time of Leave or Home Travel Concession also stands excluded. There is no warrant to read excluded Health Insurance Services with the travel benefits for leave etc - the fact that the appellant is obliged to provide such services under the Employees State Insurance Act, 1948 can also not to be held as ground to allow the credit, in as much as legislation is within its right to amend the definition of "Input Services" and to include or exclude any of the services from its ambit. In any case, the Tribunal is not within its jurisdiction to decide on the vires of the said amendments - demand upheld. Penalty - Held that: - the appellants have availed the credit while reflecting the same in their account books as also in the various returns filed with the Revenue. Further, the issue involved is also a bonafide legal issue of interpretation of the provisions of law and cannot be held to be a malafide. In such a scenario, the imposition of penalty upon assessee is not warranted. Appeal dismissed - decided against assessee only except with regard to penalty, which is set aside.
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2017 (7) TMI 719
Valuation - Benefit of N/N. 12/2003 dated 20.06.2003 - The appellant had availed the benefit of the notification on bonafide belief that the cost of papers and chemicals consumed can be deducted from the taxable value of services - whether the appellant is eligible to deduct the cost of papers and chemicals consumed while providing the output service of 'Photographic Service'? - Held that: - the issue is settled by the Larger Bench judgment in the case of Aggarwal Colour Advance Photo System [2011 (8) TMI 291 - CESTAT, NEW DELHI (LB)], where it was held that The cost of unexposed film etc., would stand excluded in terms of Explanation to section 67 if sold to the client. Also, the value of other goods and material, if sold separately would be excluded under exemption N/N. 12/2003 and the term 'sold' appearing thereunder has to be interpreted using the definition of 'sale' in the Central Excise Act, 1944 and not as per the meaning of deemed sale under Article 366(29A)(b) of the Constitution. Time limitation - Held that: - except for a vague statement that the appellant has willfully evaded payment of service tax by availing the benefit of notification, there is no evidence to establish that the appellant has intentionally evaded payment of service tax - the show-cause notice issued is time-barred and, therefore, not sustainable. Appeal allowed on the ground of limitation.
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Central Excise
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2017 (7) TMI 718
Classification of goods - AED - Embroidered Grey Fabrics - the central excise department alleged that the appellant had incorrectly classified the product under chapter heading No. 5804.11 as “Lace/Motif of Cotton” instead of chapter heading No. 5804.19 as “Embroidery”. The department was of the view that the appellant is liable to pay AED (TTA) @ 15% instead of 8% w.e.f. 20/08/1998 onwards - demand of interest - Held that: - Sections 11AC and 11AB of Excise Act have not been incorporated in the ADE (T&TA) Act. The counsel appearing for the Department/Respondent though endeavoured unable to pinpoint the incorporation of these Sections. In absence of any statutory provisions, it is settled that any demand of penalty (11AC) and/or interest (11AB) would be without jurisdiction and authority of law. It is settled that a clear statutory mandate requires for authority to collect and/or raise demand of any tax and penalty and/or interest. In the absence of such provision, any demand in the present case, of penalty/interest is unauthorised, impermissible and unsustainable. The Department itself, therefore, accepted the position of law and even set aside such imposition under Section 11AC by Additional Commissioner by order dated 29.03.2010. In view of above, the order passed by the Assistant Commissioner dated 26.12.2012 whereby order to refund the amount in view of above, but directed to appropriate the interest to be paid by the assessee (Appellant) under Section 11 of the Excise Act, is unsustainable - The order of recovery of interest at appropriate rate for delayed payment by invoking the provision of Section 11AB of Excise Act, therefore, is unjust, unclaimable as it is illegal. In view of above reasons, the confirmation of the same by the impugned order dated 27.09.2013 is also unsustainable and is required to be set aside. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 717
Maintainability of Summon order of petitioner - Section 108 of the Customs Act, 1962 - whether a Writ Court can injunct or quash a summon? - Held that: - similar issue decided by the Hon'ble Supreme Court in the case of Commissioner of Customs, Calcutta, vs. MM Exports, [2007 (3) TMI 265 - SUPREME COURT OF INDIA], wherein, it was held that High Court should not interfere at the stage when the department issues summons except in exceptional cases and it is always open to the personal summon to raise all contentions appearing before the department in person or through authorised representative. Therefore, by applying the challenge to the summon has to necessarily fail. The language of the sub-section is very clear that if the Officer directs the petitioner to appear in person, then he is bound to appear in person, or if he is given an option to appear through authorised agent, he can appear through authorised agent. That alone would be a proper interpretation of sub-section (3) of Section 108. Appeal dismissed being not maintainable.
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2017 (7) TMI 716
CENVAT credit - input services - whether the appellants are eligible to Cenvat credit of the service tax paid of input services claimed to have been used in or in relation to the manufacture of finished goods at their carton division? - Held that: - the flexible division where their head office also situated was undisputedly destroyed in fire in the year 2005. Therefore, all their manufacturing activities had been shifted to their carton division and accordingly the appellant had availed credit of the services received in the carton division between the periods October 2007 to December 2008 - The appellant had produced all the relevant record/ documents relating to the use of input services with the chartered accountant and got it verified. Thus, in absence of any contrary evidence, I do not find any reason not to accept that input services has been used and utilized in their carton division after destruction of the flexible division in 2005, when there has been no other manufacturing unit of the appellant - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 715
Manufacture - dilution and addition of preservatives, with branding of the product - Held that: - there must be a transformation, a new and different article must emerge having a distinctive name, character or use - Applying the principle to the facts of the present case, we note that different tests conducted by the Revenue clearly indicated that the raw material as well as the impugned goods are having same chemical characters. This is not disputed - we are not able to discern any substantial point or evidence so as to interfere with the said finding of the original authority - appeal dismissed - decided against Revenue.
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2017 (7) TMI 714
Valuation - clearance of HR Side Slits to two of their other units - captive consumption or not - Rule 8 of Central Excise Valuation Rules, 2000 - Held that: - Rule 8 of the Valuation Rules stipulates when excisable goods are not sold by the assessee but are used for consumption by him or for manufacture of other articles - In the present case it is not a case of the Revenue that all the goods are captively consumed by the appellants. No such findings have been recorded. Clearance on sales basis to the other units of the appellants cannot be considered as captive consumption. There is no factual support for such assumption - availability independent sales to buyers and sale transaction on similar value to their own units. Rule 8 has no application in this case - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 713
CENVAT credit - inputs used in the manufacture of Dry Battery Cells - waste batteries - Rule 6 of CCR - Held that: - Sub-rule (2) of Rule 6 mandates that where a manufacturer manufactures both dutiable and exempted goods and used common input for manufacture of such two types of goods, then he has to maintain separate records and cenvat credit in respect of inputs used in the manufacture of exempted goods should not be availed as cenvat credit. In the present case, Since some quantities of batteries (less than 1%) are not capable of being sold, being declared as waste, as a result of quality control test, the same were dumped inside the factory. It cannot be said that the waste batteries are exempted goods inasmuch as the same are neither chargeable to nil rate of duty nor are exempted in terms of the notification issued by the Central Government under Section 5 of the Central Excise Act, 1944. Since the waste batteries are not exempted from payment of duty, the embargo created in Rule 6 of the said rules will not be applicable for payment of amount/ reversal of cenvat credit in the generation of the waste batteries. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 712
Waste and paring used for packing - Taxability - Held that: - The only ground mentioned is that the said scrap and paring is used as a cushioning material in the truck for safety of the final product. As such the said cushioning material are to be considered as part of cost of transportation and to be treated as revenue expenditure. The value of final product does not include such waste of paper used for packing. When waste and scrap of paper is used, in whichever manner, for safe transport and delivery of the final product and the final product suffers duty on FOR destination basis, we find no reason to treat the value of waste and scrap separately for duty purpose by denying the exemption under N/N. 67/1995-CE. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 711
SSI exemption - use of Brand Name of others - The case of the department is that the appellant is using brand name "Seal Jet" which belongs to foreign company M/s. Economos therefore the appellant is not entitle for the SSI exemption - Held that: - the goods manufactured by the appellant i.e. 'O' ring and Seals are sold duly packed in polythene pack which bear the logo "Seal Jet" in a particular form, therefore it is very clear that goods manufactured and sold by the appellant bears the brand name of "Seal Jet" Merely because the product itself does not bear the name of "Seal Jet" does not mean the product is not branded. In case of packaged goods the brand is always affixed on the packages and not on the product. We are of the clear view that goods cleared by the appellant is branded goods under the brand name of "Seal Jet". The fact remains that "Seal Jet" brand was affixed on the machine supplied by Economos, Austria. This is sufficient to establish that the "Seal Jet" brand belong to Economos, Austria therefore various correspondence through which Economos, Austria denies the ownership of the brand will not make any difference to the fact that brand name "Seal Jet" belongs to the Economos, Austria. At the most it can be said that Economos, Austria have not registered the name "Seal Jet" but that does not make any difference, because notification prescribed that in order to avail exemption goods should not bear the brand name of another person whether it is registered or otherwise therefore in the present case appellant have used "Seal Jet" brand which belongs to Economos, Austria. Time limitation - Held that: - matter was contentious and issue was decided by the larger bench - there is no suppression of fact on the part of the appellants - therefore extended period of limitation will not apply. Penalties - Held that: - penalties imposed for the normal period shall also not be imposable for the reason that the appellant have entertained bonafide belief that in the fact of the case they are eligible for SSI exemption and accordingly there is no malafide intention - penalties for the demand commensurate to duty for normal period of the limitation set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 710
CENVAT credit - Motor Vehicle Insurance - Vehicle Maintenance Charges - Clearing and Forwarding Services - Port Services - Revenue was of the view that such services cannot be considered to be cenvatable - Held that: - insurance of vehicles and their maintenance has to be treated as input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004, in as much as, they are related to the manufacturing activities of the assessee - the credit availed by the assessee prior to 01.04.2011, which is the period involved in two of the appeals, is admissible to the appellant. The appellants are not disputing their liability to reverse back the credit availed post-04.04.2011, I uphold the denial of the same. As regards, interest, though the appellant have taken a stand that the said credit was not utilized by them but the said fact is required to be verified by the lower authorities. If the credit has not been utilized and remained only as a paper entry in their Cenvat Credit Account, the appellant would not be saddled with any interest liability. Penalty - Held that: - there is no malafide on the part of the assessee so as to invite any penal action against them - penalty set aside. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 709
Time limitation - CENVAT credit - denial of the proportionate Cenvat credit availed in respect of Furnace Oil used for generation of electricity, a part of which was transmitted to Tamil Nadu Electricity Board (TNEB) - whether notice issued in 2005 covering the period from April, 2000 to June, 2001 is barred by limitation or not? - Held that: - The criteria for invocation of the longer period of limitation is suppression, misstatement etc., with an intent to evade payment of duty - no malafide intention can be attributed to the assessee, so as to invoke the longer period of limitation. Accordingly, the demand is barred by limitation and the denial of credit in respect of Furnace Oil along with setting aside of interest and penalty set aside. Penalty - Damaged inputs - Waste and Scrap and Jumbo Baggase - demand - Held that: - as the entire credit was availed by reflecting the same in statutory records in terms of the Central Excise provisions. As such, it stands contended that there was no suppression with any malafide on their part so as to invite any penal action. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 708
Clandestine removal - Goods found in excess - 818 nos, of Ingots were not entered in the RG-1 register - Held that: - the appellants have not advanced any justifiable arguments in respect of the excess 818 nos. of Ingots and have not advanced any plausible explanation for non-entry of the same in RG-1 register. They have not been able to establish as to whether the raw material used in the manufacture of such huge quantity of Ingots was entered in the Raw Material account, thus making it impracticable for them to clear the said goods without payment of duty - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2017 (7) TMI 699
Principles of natural justice - method of selection for audit under Section 43 of the West Bengal Value Added Tax Act, 2003 - Is the Commissioner acting under the provisions of Section 43(1) of the West Bengal Value Added Tax Act, 2003 obliged to give notice, an opportunity of hearing to an assessee and pass a reasoned order prior to making a selection thereunder? - Held that: - Sub-section (1) of Section 43 enjoins a duty upon the Commissioner to select assessees for audit. The proviso thereto allows assessees specified therein, if selected under Sub-section (1) to be deemed not to be selected. At the time of selection, the sub-section does not in express words provide for a right of hearing. Sub-section (2) and (3) allows the assessee selected a right of hearing leading to the preparation of report enjoined under Sub-section (3). Sub-section (4) deals with the time frame to complete the audit. Sub-section (5) allows the Commissioner to assess the net tax payable by the assessee. Section 43AB relates to audit by a special team. It is different than Section 43. It operates at a different space. An assessee may have to undergo audit by a special team under Section 43AB, upon the satisfaction of the conditions required thereunder, notwithstanding such assessee not being selected under Section 43. It may have to undergo audit by a special team, even if, it is selected under Section 43. Section 43AB comes into play when the Commissioner has justifiable reasons to believe that the assessee is engaged in an activity detrimental to the State revenue. Section 142(2A) of the Act of 1961 and Section 43 of the Act of 2003 are not pari materia. Section 43 of the Act of 2003 allows a Commissioner to select on a random basis or upon information or otherwise, such percentage or such class or classes of assessees, as may be prescribed, for audit of accounts, registers of documents. The Commissioner, therefore, has to make a selection for the purpose of audit of accounts of an assessee in respect of a financial year. The vires of Section 43(1) of the Act of 2003 is not under challenge in the writ petition. Such sub-section enjoins and casts a duty upon the Commissioner to select a certain prescribed percentage of the assessees. Such percentage may be prescribed. Therefore, in a given financial year there will be a certain percentage of assessees who will be required to undergo an audit in terms of Section 43 of the Act of 2003. The petitioner is one of such assessees undergoing an audit under Section 43 for the financial year 2013-2014. Section 43 mandates a selection of the prescribed percentage. Acting under Section 43 of the Act of 2003 a Commissioner is obliged to select the prescribed percentage in the manner mandated. The petitioner has not substantiated that, the petitioner has been selected beyond the parameters of Section 43. Therefore, the question of giving him a hearing does not arise prior to his selection. Subsequent to the selection the assessee falls within the procedure prescribed in Section 43. It is not that the Commissioner has not understood the accounts and is requiring the assessee to undergo a special audit akin to Section 142(2A) of the Income Tax Act, 1961. There is a distinction between Section 43 and 43AB of the Act of 2003. Section 43AB of the Act of 2003 allows a Commissioner to call for audit of such accounts, records and documents of such assessee by a special team, or tax professional, to be nominated by him if the requirements prescribed under such section are fulfilled. Section 43AB is more akin to Section 142(2A) of the Income Tax Act, 1961. The petitioner is not entitled to any relief in the present writ petition. Petition dismissed - decided against petitioner.
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2017 (7) TMI 698
Inter-State purchases of vehicles - C-Form - The petitioner having made local sales of the vehicles purchased from outside State, has not deposited the self assessed tax with the government authorities. On such ground, the department does not permit the petitioner to generate the C form. Since this is one of the requirements contained in the circular dated 16.11.2009, the short question is, Is it legally permissible? - Held that: - the State Government requires that a dealer must have discharged all his self assessed tax liabilities before C forms can be obtained in connection with any of his dealings. Essentially, this amounts to a mode of tax recovery. Even if it is self assessed tax, the prescription of the circular does not lose its essential character of one being in the nature of tax collection. Unless and until such a condition is backed by any statutory provision, it would not be possible for the State Government to provide such a mode of tax recovery making it a pre-condition for generation of C forms. As noted, had such a condition been introduced by framing statutory rules in exercise of powers under sub-sections (3) and (4) of Section 13 of the CST Act, we would have examined the question further. However, the circular in the form of executive instructions cannot take shape of a statute. What is envisaged in sub-sections (3) and (4) of Section 13 is the power of delegated legislation vested in the State Government for carrying out the purposes of the CST Act. Such rule making power cannot be substituted by executive instructions. The circular in question is certainly not in exercise of the rule making powers exercised by the State Government. The action of the respondents in not allowing the petitioner to generate C form solely on the ground that the petitioner had not paid the self assessed tax for the relevant period under the VAT Act is illegal. The respondents shall allow the petitioner to generate C form subject to other conditions being fulfilled - petition allowed - decided in favor of petitioner.
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