TMI Tax Updates - e-Newsletter
July 3, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
Articles
Notifications
Central Excise-
17/2017 - dated
30-6-2017
-
CE
Seeks to amend various Central Excise Exemption notifications relating to Export Promotion Schemes under central excise Tarif Notification
-
16/2017 - dated
30-6-2017
-
CE
Amendment to Notification No.23/2003-Central Excise dated 31.03.2003
-
15/2017 - dated
30-6-2017
-
CE
Seeks to amend notification 28/2002-central excise
-
14/2017 - dated
30-6-2017
-
CE
Seeks to amend notifications 52/2002 –CE, 8/2003-CE, 38/2004-CE, 3/2006-CE, 29/2008-CE, 62/2008-CE and 21/2009-CE
-
13/2017 - dated
30-6-2017
-
CE
Exemption to goods supplied for defence and other specified purposes and or on board a vessel of the Indian Navy or Coast Guard
-
12/2017 - dated
30-6-2017
-
CE
Seeks to exempt excise duty on goods manufactured on or before 30th june 2017 but not cleared from the factory of production before 1st july 2017
-
11/2017 - dated
30-6-2017
-
CE
Effective Rate of Duty of excise
-
10/2017 - dated
30-6-2017
-
CE
Exemption to Goods supplied to UN/International Organisations for their official use
-
09/2017 - dated
30-6-2017
-
CE
Seeks to rescind Central Excise notifications as mentioned in the notification
-
21/2017 - dated
30-6-2017
-
CE (NT)
Seeks to prescribe the credit transfer document under rule 15(2) of CCR, 2017
Customs-
69/2017 - dated
1-7-2017
-
Cus (NT)
Notification for further amendment in CBEC Tariff Value Notification No. 62/2017-Customs (N.T.) dated 30.06.2017
-
68/2017 - dated
30-6-2017
-
Cus (NT)
Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017
-
67/2017 - dated
30-6-2017
-
Cus (NT)
Courier Imports and Exports (Electronic Declaration and Processing) (Amendment) Regulations, 2017
-
66/2017 - dated
30-6-2017
-
Cus (NT)
Courier Imports and Exports (Clearance) (Amendment) Regulations, 2017
-
65/2017 - dated
30-6-2017
-
Cus (NT)
Bill of entry(Forms)(Amendment) Regulations, 2017
-
64/2017 - dated
30-6-2017
-
Cus (NT)
Amendment to notification No. 12/97-CUSTOMS (N.T.), dated the 2nd April, 1997
-
63/2017 - dated
30-6-2017
-
Cus (NT)
Amendment to notification No.93/2016-Customs(NT) dated 1st July, 2016
DGFT-
14/2015-2020 - dated
30-6-2017
-
FTP
Addition of M/s International Gemological Institute (India) Pvt Ltd, Bandra Kurla Complex, Mumbai in paragraph 4.42 of FTP 2015-20
GST-
18/2017 - dated
30-6-2017
-
CGST Rate
Seek to reduce the rate of Central Tax, Union Territory Tax, on fertilisers from 6% to 2.5% and Integrated Tax rate on fertilisers from 12% to 5%
-
16/2017 - dated
30-6-2017
-
IGST Rate
Seek to reduce the rate of Central Tax, Union Territory Tax, on fertilisers from 6% to 2.5% and Integrated Tax rate on fertilisers from 12% to 5%
-
15/2017 - dated
30-6-2017
-
IGST Rate
Notification for Exemption from Integrated Tax to SEZ
-
18/2017 - dated
30-6-2017
-
UTGST Rate
Seek to reduce the rate of Central Tax, Union Territory Tax, on fertilisers from 6% to 2.5% and Integrated Tax rate on fertilisers from 12% to 5%
Circulars / Instructions / Orders
News
Case Laws:
-
Income Tax
-
2017 (7) TMI 40
Disallowance of enhanced lease rent liability payable to Bombay Port Trust - whether Tribunal was right in not allowing the liability on account of enhanced rent which had been charged by the applicant to its sub-lessees and assessed to tax on accrual basis? - Held that:- It has been brought to our notice that before the Apex Court there was a settlement between the Bombay Port Trust and the lessees. The judgment of the Apex Court details the said fact, which is reported in a case of Jamshed Hormusji Wadia vs. Board of Trustees, Port of Mumbai and another (2004 (1) TMI 96 - SUPREME COURT OF INDIA). It has been held that the rates of rent for the period upto 31/03/1994 shall remain as suggested in the “Compromise Proposal”, which is reproduced in paragraph 6 (supra) by the Apex Court. AO as such will have to consider the rent as agreed in the said compromise proposal and assess it accordingly. It is submitted that for the period of 1989-90 to 1996-97, the Assessing Officer has assessed the returns as per the compromise formula. The same would be applicable for the assessment year 1988-89 also. It would be appropriate for the Assessing Officer to assess the return for the year 1988-89 as per the compromise formula and as has been assessed for the year 1989-90 to 1996-97.
-
2017 (7) TMI 39
Undisclosed business income - valuation of goods - Held that:- Invoice and delivery challans were in fact proforma invoices. In view of the plea raised by the assessee, the Assessing Officer ought to have examined the suppliers to find out the truth or otherwise of the claim. As such the Tribunal directed 5% of the value of goods, under the delivery challan bearing acknowledgement of receipt, to be added to the gross profit and the additions of the other three purchases, deleted. The Revenue could not dispute that there was no attempt to adduce corroborative evidence to support the AO’s rejection of the claim of the assessee. We find that the view taken by the Tribunal is a plausible view. Stock verification - Held that:- The stock statement given to the bank is dated 29th February, 2008. The survey was conducted soon thereafter on 10th March, 2008. It was undisputed before the Tribunal that at the time of survey physical verification of stock was made and it tallied as per books of account maintained by the assessee. On these facts, we are unable to accept the argument on behalf of the Revenue that the bank having had verified the stock, stated to be there with the assessee, such should be accepted for the purpose of the addition being sustained. The judgments relied upon by the assessee lend credence to our accepting the Tribunal’s finding on fact. When the Revenue itself could not detect a discrepancy in the stock, relying upon a verification made by a person not concerned with the assessment cannot be relevant evidence to lawfully presume undisclosed income. The correctness of the verification made by the bank was not determined. That is not a matter for consideration or adjudication in this appeal. No substantial question of law
-
2017 (7) TMI 38
Unexplained investment in share capital - addition u/s 68 - invoking the provisions of Section 153C - Held that:- As no satisfaction was recorded. Hence, notice u/s 153A is bad-in-law and consequential order passed by AO is not sustainable. - Decided in favour of assessee.
-
2017 (7) TMI 37
Assessment u/s 153A - Held that:- In the event of non-filing the return of income within the time provided in notice issued u/s. 153A, the assessee is liable for interest, penalty and prosecution accordingly. In view of this, it is quite clear that the assessee was allowed to file return of income, even beyond the time provided in the notice and such return is valid return of income for all the purposes under the Income Tax Act, including completion of the assessment, but with consequences of payment of interest, penalty and facing prosecution proceedings. In view of this, the assessee's contention that the returns of income filed by him beyond the time limit provided u/s. 153A is invalid, is not correct as per law. For AY. 2008-09, which is not forming the part of block period, is the regular return filed u/s. 139 and therefore a revised return can be filed within one year from the end of the assessment year which ended on 31-07-2009. Since the return filed by assessee is a valid return, the revised computation filed after that date cannot be accepted. Since AO has not based the assessment directly on the seized material but on Receipts and Payments Statements and assessee also has furnished different statements at different points of time, in the interest of justice, we are of the opinion that the assessments pertaining to these three impugned assessment years are to be set aside, with a direction to AO to compute the incomes on basis of the incriminating material found and the returns if any filed earlier in any assessment year. AO is also directed to quantify the incomes either on the basis of the seized material or if entire seized material is considered in the Receipts and Payments Statement furnished by assessee, on the basis of such statements. Assessee is also directed to furnish the correct computation of incomes for the impugned assessment years before the AO. Needless to say that assessee should be given due opportunity. AO is also directed to examine the issues afresh and need not base his computation either on the returns of income filed in August, 2009 or on the basis of the revised computations filed subsequently. With the observations made above, we hereby set aside the orders of the AO and CIT(A) for the impugned three assessment years and restore the same to the file of the AO to examine the facts and determine afresh considering the law on the issues.
-
2017 (7) TMI 36
Rejection of boos of accounts - n.p. determination - Held that:- As assessee had given reasonable justification for the decline in GP and NP rate and, therefore, books of account should not be rejected u/s 145(3) of the I.T. Act
-
2017 (7) TMI 35
Adjustment of derivatives loss - non-speculative transaction - Held that:- Direct the AO not to consider the derivatives loss suffered by the assessee as speculative in nature. See IVF Advisors Private Limited Versus The Asstt. Commissioner of Income Tax [2015 (5) TMI 706 - ITAT MUMBAI ]
-
2017 (7) TMI 34
Transfer pricing adjustments - ALP of the International transaction of provision of services and renting of equipments is determined at Nil - international transaction - Held that:- The first international transaction with respect to services provided by SIS Outside Broadcast Ltd. which falls into the nature of transaction of “provision of services” u/s 92B(1) of the Act and as the condition of bearing on profit income and loss of the assessee applies to any other transaction only. Therefore, according to us this transaction is covered in the definition of "international transaction". Availing of equipment on hire from M/s. Fatpipe Satcom Ltd transaction is with respect to rent of certain equipment to render broadcasting services. The assessee has admittedly not claimed the deduction of this sum. However, the availment of equipment on hire falls into the category the nature of the transaction as purchase, sale or lease of tangible or intangible property. Therefore, according to us irrespective of the fact whether the transaction impact profit, income, losses or asset of the assessee, these are international transaction. Transaction with respect to inter-company receivable from SIS Holding no interest has been charged by the assessee. Therefore, it was the contention of the assessee that in view of the cash basis of accounting no income has arisen to the assessee. We are of the view that as it is transaction of lending of borrowing money it falls into the definition of international transaction u/s 92B(1) of the Act. We dismiss ground of the appeal of the assessee holding that the transactions benchmarked by the ld TPO are "international transaction" u/s 92B of the Income Tax Act despite the method of accounting followed by the assessee and not claiming such expenditure as deduction. TPO empowered to question the commercial expediency of any alleged transaction - Held that:- Transfer Pricing Officer as well as ld DRP did not appreciate the evidence produced by the assessee for receipt of services in proper perspective. Therefore, it is imperative for the ld Transfer Pricing Officer/ Assessing Officer to verify these evidences. In view of this we set aside the grounds of the appeal of the assessee on transfer pricing issues to the file of ld Transfer Pricing Officer/ ld Assessing Officer to examine the evidences produced and then determine ALP of the transactions.
-
2017 (7) TMI 33
Disallowance of financial charges by 50% - contentions of assessee that these financial charges have arisen only because of discounting of the bills and funds are utilised for payment to the creditors - Held that:- Contention of assessee was neither examined by the AO nor by the CIT(A), even though assessee is insisting on this. As seen from the orders in earlier years and also in AY. 2008-09 and 2009-10, the financial charges are allowed as such in scrutiny proceedings, that too in post search proceedings in AYs. 2004-05 and 2005-06. This means that the financial charges are utilised for the purpose of business only. We are prima-facie satisfied that the financial charges cannot be disallowed. However, AO has not given any finding whether the funds are really diverted to sister concerns, out of the funds availed due to discounting of bills. Therefore, for the limited purpose of verification, the issue is restored to the file of the AO. Appeals of assessee allowed for statistical purposes.
-
2017 (7) TMI 32
Capital gains pursuant to the settlement of the contract of purchase - denial of natural justice - Held that:- The order of the CIT(A) does not mention that assessee has been given an opportunity after the remand report. As seen from the copy of the account headed ‘Aushapur land payment’, assessee was stated to have received ₹ 90 Lakhs- by way of DD of ₹ 20 Lakhs and balance by way of cash- between 04-09-2006 to 04-12- 2006. One payment on 09-11-2006 was through Shri Krishna Reddy. Balance of the amount of about ₹ 72,75,000/- was also transfer entries from Shri Krishna Reddy account. The role of Shri Krishna Reddy was not brought on record and we are not sure whether any statement has been recorded from Shri Krishna Since the account copies and statements have not been confronted to assessee, considering the request made by the Ld. Counsel in the course of arguments, we are of the opinion that the matter is to be set aside to the file of the AO to give proper opportunity to assessee to explain his stand and also to offer cross-examination of the parties, if required. The role of Shri Krishna Reddy also requires examination.
-
2017 (7) TMI 31
Addition u/s 68 - addition under Section 153C - Held that:- For the purpose of making addition under Section 153C especially when the assessee filed the return of income before the date of search operation, the Assessing Officer has to place his reliance on the material found during the course of search operation. In case, no material was found during the search operation, in respect of credit found in the Books of Accounts which is produced during the course of proceedings, this Tribunal is of the considered opinion that there cannot be any addition under Section 153C of the Act. In this case, admittedly no material was found during the course of search operation in respect of the addition made by the Assessing Officer to the extent under Section 68 of the Act. Therefore the addition made by the Assessing Officer cannot be sustained. Accordingly, the same is deleted. Comparison of average profit - Estimation of net income - Held that:- CIT (Appeals) compared the profit ratio of the assessee right from the assessment years 2001-02 to 2006-07 and found that there was a marginal difference between the profit ratio disclosed in the earlier assessment year and for the assessment year 2006-07. Accordingly, the Assessing Officer estimated the profit at 1.19% being the average for the assessment year 2005-06. AO has taken the profit at 1.18% which was confirmed by the CIT (Appeals). This Tribunal has also confirmed the order of the CIT (Appeals). Therefore for the sake of consistency the order of the lower authorities is modified and the Assessing Officer is directed to estimate the profit at 1.18% instead of 1.19%. Suppression of net profit - Held that:- The last three years average comes to 1.11%. This is also not in dispute. The assessee has disclosed only 0.71%. The Assessing Officer has computed the suppression of income by taking the difference of average income of earlier years and the income disclosed during the year under consideration. This Tribunal is of the considered opinion that the Assessing Officer computed the average income of the assessee by comparing the profit ratio disclosed by the assessee himself. Therefore there cannot be any reason to interfere with the order of the lower authorities, especially when the assessee has not maintained the books of income. Therefore this Tribunal sustains the order of the lower authorities. Addition of cash balance as on 31.09.1999 - Held that:- Assessee was not carrying any unaccounted business. There is a prima facie evidence to indicate that the assessee is carrying on some activity for the period 02.12.1997 to 21.07.1998. What actually was done by the assessee was to be examined by the Assessing Officer after giving opportunity to the assessee. Accordingly the orders of the lower authorities are set aside and the issue is remitted back to the file of the Assessing Officer for re-examination in the light of the material available on record and thereafter decide in accordance with law after giving reasonable opportunity to the assessee. Addition u/s 68 - Held that:- As seen from the assessment order, it appears that the credit was made by cash. Even though, the assessee claims that it was a transfer from M/s. Sri Durga Textiles, there was no debit entry in the Books of Accounts of M/s.Sri Durga Textiles. The assessee appears to have proposed an arithmetical tally inside the account by relying on journal entries. When the capital account disclosed the investment by cash, this Tribunal is of the considerable opinion that the claim made by the assessee that it was transferred from M/s. Sri Durga Textiles is an afterthought. Therefore the CIT (Appeals) has rightly confirmed the addition made by the Assessing Officer. Addition towards excess stock - Held that:- During the course of search operation, the physical stock of the assessee was quantified and it was found that there was excess stock. It is not in dispute that the excess stock was computed after considering the opening balance, purchases and overhead expenditure furnished by the assessee. Therefore the claim of the assessee that the aggregate closing stock of all the 4 concerns were put together, there may not be any difference is misconstrued. Since, the Assessing Officer has taken the opening stock, purchases, overhead expenditure for all the 4 concerns, this Tribunal is of the considered opinion that the excess stock of ₹ 31,91,834 was rightly taken as business income of the assessee.
-
2017 (7) TMI 30
Reopening of assessment - loss on valuation of stock - Held that:- The assessee was constrained to change the method of valuation of stock after the revised Accounting Standard-2 became mandatory. The semi finished goods were hither to valued at cost and the said fact was reported in the Annual report relating to AY 2002-03. The change in the valuation was also duly disclosed in the Annual report relating to AY 2003-04. The details of change were also communicated to the AO through a letter dated 02-01- 2006 filed in the original assessment proceedings before the AO. Copy of the letter filed before the AO is placed on record at page 46-47 of the paper book. The AO has completed the original assessment accepting the explanations of the assessee without making any addition. Assessee has disclosed all the facts material to computation of income fully and truly. AO did not state in the reasons for reopening that there was failure on the part of the assessee. Hence the AO has reopened the assessment on mere change of opinion and hence the reopening has to be held as bad in law. - Decided in favour of assessee.
-
2017 (7) TMI 29
Penalty u/s. 271(1)(c) - undisclosed assets - unexplained cash found - non-explanation by the assessee - Held that:- The cash found is in fact from the business premises of the four firms, only two of which belong to the assessee. Two, it is the source of the assets found or admitted (refer s. 292C), for which explanation, supported by material, is to be furnished, and do not themselves explain the assets. In fact, once the amount of undisclosed assets has been arrived at (Rs.141.96 lacs), its configuration loses significance, and it is this amount which had to be explained, which could be either in terms of assets already disclosed (and accepted) and/or the income disclosed since. The assessee had no case either in the quantum proceedings (in the second round) nor has any in the penalty proceedings, proceeded with on the conclusion of the former. We, accordingly, find no merit in the assessee’s case in the instant proceedings. CIT(A) has clearly misled himself in stating that the assessee has explained the residual assets of ₹ 57.52 lacs, with we rather finding the assessee to have been allowed unmerited relief in assessment. The very fact that the tribunal restored the matter back qua the said amount implies that it did not consider the same as explained. The quantum proceedings stand since finalized. The penalty can therefore only be levied with reference to the income assessed. The income returned pursuant to the search is the same as originally disclosed. There is no question of the assessee having agreed to an amount, disclosing income to that extent, which he continues to contest even in the second round. The AO, however, has levied penalty on the entire income assessed (Rs. 34.86 lacs), which includes ₹ 2.73 lacs returned by the assessee. The same can only be levied with reference to the tax sought to be evaded as defined in Explanation 4 to s. 271(1)(c). The AO shall recompute the penalty amount, and the assessee gets part relief.
-
Customs
-
2017 (7) TMI 11
Unjust enrichment - refund claim - Whether the Honourable Tribunal is right in holding that chartered accountant certificate is not conclusive evidence ignoring the fact that the appellant company produced not only the chartered accountant's certificate but also the profit and loss account and balance sheet to establish that there was no unjust enrichment if the refunded amount is paid to the appellant company? - rebuttal of presumption - section 28 - Held that: - It is well-settled that the transaction adverted to in a ledger or in a Balance Sheet can only, at best, be a secondary evidence. The primary evidence would be the underlying documents, such as Bills, Sales Invoices, etc. In so far as the entries in the books of accounts and ledgers are concerned, they do not get proved by themselves even those entries require proof - in the opening paragraph of the Chartered Accountant's certificate, seems to indicate that the books of accounts and the relevant supporting documents have been verified. If, that was the position, then, we see no reason why the Assessee could not produce the relevant invoices, i.e., supporting documents before the Tribunal, despite opportunity having been given, in that behalf - appeal dismissed - decided in favor of Revenue.
-
2017 (7) TMI 10
levy of import fee on import of Denatured Ethanol - Rule 52 of the Gujarat Bombay Denatured Spirit Rules, 1959 - Held that: - considering the pith and substance of the levy of fees on import of Denatured Spirit / Ethanol on import of the same from other States and considering the fact that there is a Prohibition Act in the State of Gujarat and therefore, considering Article 47 of the Constitution of India and Entry 33 of List II of Schedule 7 of the Constitution of India read with Entry Nos. 6, 8, 24, 51 and 68 of List II and Entry 33 of List III of Schedule 7 of the Constitution of India and the purpose and object for which the import fee is levied, it cannot be said that such a levy is beyond the legislative competence of the State as contended on behalf of the petitioners. While the impugned levy of fees on import of Denatured Spirit / Ethanol though is held to be within the legislative competence of the State, does it pass the test of quid pro quo or not - Held that : - the State Government has not undertaken any supervisory activity which will constitute quid pro quo for the imposition of the import fees. As observed by the Hon’ble Supreme Court in catena of decisions more particularly decisions referred to hereinabove, there is a distinction between a “fee” and a “tax”. A tax is levied as part of a common exaction, whereas a fee is payment towards services rendered. The purpose for which the fee is being collected (so stated in the affidavits in reply) viz. to protect the interest of the Distelleries in the State of Gujarat, has no nexus with the import fees to be collected on import of Ethanol from outside Gujarat. Thus, there is no element of quid pro quo - Impugned levy of import fee under Rule 52 of the Gujarat Bombay Denatured Spirit Rules, 1959 is held to be invalid under the law and is hereby quashed and set aside - Decided in favor of the assessee.
-
2017 (7) TMI 9
Liability of interest - The assessee's one and only contention before us is that, at the relevant time, there was no statutory provision in place for levy of interest and, therefore, the provisions in the bond executed by it, which provided for payment of interest, upon failure to fulfill export obligation could not to be enforced under the provisions of Customs Act, 1962 - whether, the customs authorities could enforce the bond and recover the interest? - Held that: - This is a case, where Section 28AB, if at all, would have given the right to the Revenue to demand interest, provided the imports had been made after the Section was brought on to the Statute book. Because of the failure to fulfill the export obligation by the Assessee, the Assessee's case would have, if at all, fallen within the ambit of Section 28AB, which, inter alia, imposes a liability on an Assessee to pay interest, where any duty has not been levied or paid, or has been short-levied or short-paid or erroneously refunded. Therefore, Section28AA, to our minds, would not be applicable in the instant case. Interest, as is well known, is payable, broadly, in three circumstances. First, where the statute provides for the same. Second, where there is a contract or agreement in place for payment of interest. Third, where it is payable by usage of trade having the force of law - the assessee could not have been called upon to pay interest by the customs authorities, by taking recourse to the provisions of the 1962 Act, as it obtained at the relevant time i.e., in and about, February, 1995. Whether the Supreme Court in REXNORD ELECTRONICS AND CONTROLS LTD [2008 (3) TMI 8 - SUPREME COURT] has stated anything to the contrary? - Held that: - The Supreme Court held that under the provisions of 28AA, the customs authority, for non payment of duty, would seek payment of interest, by initiating proceedings under Section 28 of the 1962, Act. Insofar as the interest on bond was concerned, the Court went on to observe that, since, the bond had been executed in favour of a different authority i.e. DGFT, and, it was payable in terms thereof and not in terms of the statutory scheme, the customs authorities would not be able to proceed, in terms of Section 28 of the Act. Appeal allowed - decided in favor of assessee.
-
2017 (7) TMI 8
Maintainability of appeal - pre-deposit - production of original invoices - Held that: - the petitioner pointed out that the factory was under lock out from July, 2013. Now the petitioner claims that they have been able to retrieve some of the original documents and they are prepared to produce the same. The petitioner is already a sick industry. Therefore, we are of the view that though the respondents were not guilty of denying the principles of natural justice, the petitioner could well be granted one more opportunity to produce original invoices - the matter is remitted back to the Original Authority for examination of the question without reference to the period of limitation - petition allowed by way of remand.
-
2017 (7) TMI 7
Amendment in shipping bills - benefit of DFIA licence - Held that: - due to oversight and mistake on the part of Custom House Agent, who has mentioned the code as 00 instead of 03 will not disentitle the appellant to claim the benefit of export incentives provided under the scheme - it is well settled law that the procedures are meant for furthering the justice and not to hamper them. It can be seen that the amendment of shipping bill is permitted in case such amendment is on the basis of documentary evidence which is in existence at the time of export of the goods whereas in the present case, the shipping bills as well as the invoices clearly mentions regarding the filing number of DFIA licence and VKGUY scheme - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 6
Penalty u/s 114(i) and 114(AA) of the Customs Act - export of prohibited item - non Basmati Rice - Held that: - the impugned order imposing the penalty on the appellants in view of the fact that they have exported non-basmati rice and wheat atta in violation of the notification banning the export of the same, is upheld - the Apex Court in the case of M/s. Kunal Travel (Cargo) Vs. CC & CE, Noida [2017 (4) TMI 880 - SUPREME COURT] has also justified the imposition of penalty in the similar fact situation - appeal dismissed - decided against appellant.
-
2017 (7) TMI 5
Warehousing of goods - extension for warehousing period not sought for - contravention of provisions of Sections 61 & 72 of the Customs Act, 1962 read with provisions of N/N. 140/91-Cus dated 22.10.91, as amended - Held that: - the EOU/EHTP/STP units are required to obtain private bonded warehousing licence u/s 58 of the Customs Act. The said licence is valid for a period of 5 years and the units are required to apply for renewal after every 5 years. The Board in order to obviate the difficulties of the EOU/EHTP/STP units has decided to allow extension of warehousing of all the capital goods installed or put into use, simultaneously at the time of renewal of warehousing licences irrespective of the fact that the capital goods are due for extension or not. The period of extension would be allowed for such a period so that the capital goods need further extension only on the date of renewal of warehousing license. The period of extension, therefore may be adjusted accordingly for every piece of capital goods. However the maximum period of extension at a time would not be allowed for a period for more than five years - appeal dismissed - decided against Revenue.
-
2017 (7) TMI 4
Jurisdiction of Directorate of Revenue Intelligence (DRI) - power to issue SCN - Held that: - sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.09.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had come up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28(11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.
-
Corporate Laws
-
2017 (7) TMI 2
Licence revoked under Section 25(1) of the Companies Act, 1956 - breach of natural justice - Held that:- The impugned action of revocation of licence against the petitioner is in exercise of the aforesaid clause (b) of Section 25(8). The contention that in respect of exercise of powers under Section 25(8)(b), notice is not contemplated, plainly overlooks the position emerging from the two sub-sections where they both deal with revocation of licence. These provisions have conjoint and interactive reading. Though sub-section (7) and sub-section (8) are engrafted as separate and different sub-sections, projection of the both is for same purpose-which is for revocation of licence. Revocation of licence is contemplated under subsection (8)(b) if the licencee body contravenes provision of sub-section (8)(a) namely that it alters the provisions of its Memorandum with respect to its objects without prior permission of the Central Government. This being so, when sub-section (8)(b) also empowers the Central Government to revoke the licence, the requirement of notice and opportunity of being heard as per the Proviso to sub-section (7) has to also apply for an action under Section 25(8)(b) of the Act. Viewed from any standpoint in the context of requirement of complying with the natural justice and principles of audi alteram partem, the impugned order is unsustainable in law. Thus in applying and action upon the provision of Section 25(8)(b) of the Companies Act, 1956, principles of natural justice shall have to be read into the exercise of said powers. The impugned action of revocation of licence deserves to be set aside on the aforesaid ground alone without going into any other aspect.
-
Insolvency & Bankruptcy
-
2017 (7) TMI 1
Corporate Insolvency Resolution Process - dispute and existence of dispute - Held that:- In the present case the Respondent - Corporate Debtor much prior to issuance of notice under Section 8 of 'I B code', raised a dispute relating to quality of service/ maintenance pursuant to notice under Section 433(e) and 434 (1)(a) of the Companies Act 1956 to the notice of the 'Operational Creditor'. In that view of the matter, it can be safely being stated that there is 'existence of dispute' about the claim of debt. Objection raised by Respondent - 'Corporate Debtor', not raised for the first time while replying to the notice issued by 'Operational Creditor' under Section 8 of the 'I B code'. The objection cannot be called to be mere objection raising a dispute for the sake of 'dispute' and/or unrelated to Clause (a) or (b) or (c) of sub-section (6) of Section 5 of 'I B code'. For the said reason if the Adjudicating Authority has refused to entertain the application under Section 9 of 'I B code, no ground is made out to interfere with such orders.
-
Service Tax
-
2017 (7) TMI 28
Rectification of mistake - refund claim - Held that: - the issue is covered by the decision in the case of Commissioner of Service Tax-III, Chennai Versus Customs, Excise & Service Tax Appellate Tribunal, Chennai & M/s. SCIOinspire Consulting Services (India) Pvt Ltd, Chennai [2017 (4) TMI 943 - MADRAS HIGH COURT], where it was held that Mere perusal of Rule 5 of the 2004 Rules, would, inter alia, show that where a service provider, provides an output service, which is exported, without payment of service tax, he would be entitled to refund of cenvat credit, as determined by the formula provided in the Rule - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 27
Penalty - Consulting engineering services - short payment of tax - Held that: - he appellant paid tax with interest on being pointed out - in the show-cause notice, there is no allegation of suppression or fraud or collusion or wilful misstatement and the delay in payment occurred on account of the fact that the appellant had sought legal opinion as the appellant had a doubt about the taxability of the impugned services - reliance was placed in the case of Tidewater Shipping Pvt. Ltd. vs. CST [2008 (3) TMI 47 - CESTAT, BANGALORE], where it was held that if the assessee cleared the service tax along with interest on his own, then no penal proceedings can be initiated against them and all the proceedings against the appellant are deemed to have been concluded. Once the appellant has paid the service tax along with interest due, then the penalty cannot be imposed as there was no mens rea on the part of the appellant to evade payment of service tax - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 26
Maintainability of appeal - pre-deposit - Section 35F of the CEA 1944 - Held that: - the present appeals are not maintainable without the mandatory pre-deposit as provided under Section 35F of the Central Excise Act 1944 - appeal dismissed - decided against appellant.
-
Central Excise
-
2017 (7) TMI 25
CENVAT credit - input services - whether the Assessee can avail of Cenvat Credit of duty, paid on input services, in view of the fact that it manufactures goods, which, though exempt from duty are otherwise exported? - Held that: - It is no one's case that the goods manufactured by the Assessee were not excisable. Though the goods were excisable, the only reason, that Central Excise duty was not paid or was not payable, was, on account of the provisions of the 2006 notification. Therefore, upon executing the bond, the Assessee removed what were otherwise excisable goods without payment of duty. India is a party to the WTO regime and, therefore, it is permissible for it to neutralise duties on inputs, whether in the form of goods or services - we see no difficulty in the Assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. The purpose, apparently, behind carving out of such exceptions appears to be, to neutralise the impact of the duties paid by the exporters, with regard to input tax, whether paid on goods or services. The objective, obviously, is not to export duties, so as to provide much needed competitive edge to Indian exporter in foreign markets. Appeal dismissed - decided against Revenue.
-
2017 (7) TMI 24
The duty is said to have been paid under incorrect assessee code, which resulted into issuance of communications and orders - demand - Held that: - when authorities' stand became very clear from the communication at page-102 and reply that there exists no demand of duty or any sum payable from the petitioners so far as assessee code No. 001 is concerned and when the authority has also knowledge that there was a mistaken payment made under challan, which contained incorrect code i.e. Code no. 001, though it belonged to present assessee, who also has Code No. 002 also and who unequivocally intended to make payment demand, which was payable to him and which was paid, though mistakenly under wrong code i.e. Code no. 001, could not have been subjected to technical defect on the part of authority, so as to saddle with liability - this is a case of issuing appropriate mandamus for calling upon the authorities to treat the payment of ₹ 5,10,573/- against Code No. 002 from the date on which, it was paid resulting into exempting the petitioners from any coercive liability of so called non-payment against Code No. 002 - demand set aside - petition allowed - decided in favor of petitioner.
-
2017 (7) TMI 23
Refund of unutilized CENVAT credit - Held that: - The Assessee is entitled to claim refund of unutilised credit in terms of Rule 5 of 2002 Rules read with 2002 notification against the amount standing to its credit in the CENVAT credit account. There is nothing either in the Rule i.e., Rule 5 of the 2002 Rules or the 2002 notification, which provides for safe guards, conditions and the limitations which would have us conclude that the Revenue could have made the aforementioned adjustments against the closing balance reflected in the Assessee's CENVAT credit account - refund allowed - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 22
Refund claim - Whether the Hon'ble CESTAT is correct in directing the consequential refund under Section 11B of the amount paid by the appellant, to be credited to the CENVAT Credit account, in the absence of any provision in the said Section for such re-credit? - Held that: - the provisions of Section 11 B(2)(c) of CE ACT 1944 would come to the aid of the Assessee. Also, there is no dispute that the refund claimed by the assessee is within the period of limitation as prescribed under sub section (1) of Section 11 B - A perusal of the aforementioned Rules would show that if on receipt of any applications, the concerned officer, who is referred to in sub section (2) of Section 11 B is satisfied that the whole or part of any duty of excise and interest if any paid on such duty is refundable, he is required to make an order of refund and the amount so determined is to be credited to a Fund, i.e., the Consumer Welfare Fund. There is no impediment in the said amount being refunded to the Assessee by way of cash, contrary to what the Tribunal has indicated. This is the only viable and practical approach which can be adopted in the instant case as the Revenue does not dispute the fact that the final product manufactured by the assessee which is fabric, is no longer amenable to excise duty. In these circumstances, quite obviously, the re-credit of duty as ordered by the Tribunal via impugned Judgment or Order will not serve any purpose insofar as the Assessee is concerned. Refund allowed - Appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 21
Interpretation of statute - N/N. 32/2005-CE, dated 17.08.2005, read with amendment N/N. 35/2005-C.E., dated 29.11.2005; amendment N/N. 30/2006-C.E., dated 09.05.2006 and amendment N/N. 60/2008-C.E., dated 24.12.2008 - restriction of refund to the extent of duty paid on cement and steel, utilised in the construction of houses, which were affected by tsunami - Held that: - A perusal of the Notification would show that the purpose of issuing the Notification, which is an exemption Notification was to reimburse the specified goods from whole of the duty of excise leviable under the Central Excise Act, 1944 (in short the CE Act ). This aspect is evident upon the reading of the first part of Notification, wherein, it has been indicated that in excise of the powers conferred under Section 5A(1) of the CE Act, read with Sections 91 and 93 of the Finance (No.2) Act, 2004, the Central Government is satisfied that it is in public interest to exempt the cement and steel used in construction of houses, which were affected by tsunami in any concerned districts located in the State of Tamil Nadu, Andhra Pradesh, Kerala and the Union Territories of Pondicherry and Andaman and Nicobar Islands from the whole of the duty of excise leviable thereon under the said Acts . Under clause 2 of the said Notification, it is made clear that the exemption would apply only, if, the said goods, which would be steel and cement, are used in the construction of houses, which would include temporary shelters. These houses, or, temporary shelters could be built by Non-Governmental Organization or Voluntary Agency or via Private-Public Enterprise or Rehabilitation Organization or Trust or any agency approved by the concerned State or Union Territory Government. Upon the notification being read in the manner, as indicated above, the only conclusion one can reach, is that, it envisages reimbursement of duty paid on cement and steel used in the construction of tsunami affected houses and/or temporary shelters. Appeal dismissed - decided against appellant.
-
2017 (7) TMI 20
Pre-deposit - case of appellant is that even in so far as the balance demand in the sum of ₹ 56,79,644/- (Rs.83,64,207/- minus ₹ 26,86,563/-) is concerned, since it related to clearance by job workers, they were entitled to benefit of another Notification i.e., Notification No.83/94-CE dated 11.04.1994 - Held that: - it would suffice, if, for the moment, the main appellant deposits total amount equivalent to ₹ 50 Lakhs as against ₹ 85 Lakhs which has been ordered to be deposited by the Tribunal. Since, ₹ 47 Lakhs is said to have been already deposited, the appellant will deposit a further sum of ₹ 3 Lakhs, within two weeks from the date of receipt of a copy of the order - appeal allowed - decided partly in favor of appellant.
-
2017 (7) TMI 19
CENVAT credit - inputs received from 100% EOU - whether additional duty paid under Section 3(5) i.e. SAD is includible in CVD in terms of Rule 3(7) of the Credit Rules and credit of same can be availed on inputs received from a 100% EOU unit? - Held that: - Reliance was placed on the decision of the Hon’ble Tribunal in the case of Sri Venkateshwara Precision Components v. CCE, Chennai [2010 (8) TMI 243 - CESTAT, CHENNAI], where it was held that from 1-3-05, the additional duty levied under Section 3(5) has also been made eligible for credit, it would be proper to hold that the term CVD referred to in the formula would refer to both varieties of additional duties leviable under Section 3(1) and 3(5) of the Customs Tariff Act, 1975 - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 18
Rectification of mistake - Held that: - the adjudicating authority has imposed fine on the appellant no. 1 under Section 34 of the Central Excise Act, 1944 in lieu of the confiscation of goods cleared in contravention of the provisions of the Central Excise law. From the operative part of the adjudication order, it is evident that goods were liable for confiscation. Thus, the provisions of Rule 26 of the Central Excise Rules, 2002 can be invoked for imposition of personal penalty - imposition of personal penalty on the appellant no. 2 under Rule 26 ibid is proper and justified - the quantum of penalty is reduced from ₹ 2, 00,000/- to ₹ 50,000/- - appeal allowed - decided partly in favor of appellant.
-
2017 (7) TMI 17
CENVAT credit - input services - servicing of Air-Conditioners - Civil Works and Road Works at Bellary Road office - rental charges for space for coolers at malls - cooler maintenance and repair services - Held that: - the disputed services on which cenvat credit has been denied fall in the definition of input service as provided in Rule 2(l) of Cenvat Credit Rules, 2004 - the issue is squarely covered in favour of the appellant by the decision in the case of M/s. Carrier Airconditioning & Refrigeration Ltd. Versus CCE, Gurgaon [2016 (3) TMI 124 - CESTAT NEW DELHI] and Commissioner of S.T., Mumbai-II Versus MMS Maritime (India) Pvt. Ltd. [2016 (5) TMI 682 - CESTAT MUMBAI] - credit allowed - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 16
Penalty u/s 11AC - Quantum of reversal of credit - Rule 6(3)(b) of CCR - The department's contention is that value for the purpose of 6(3)(b) should be the total contract price minus works contract sales, no other element are deductible from the total value for the purpose of calculating 8% - Held that: - the issue indeed involved interpretation of the valuation provision in a case where a value is towards the works contract and arrived at the value of 6(3)(b). Therefore, looking to the nature of the issue no malafide can be attributed to the appellants. Accordingly, penalty under Section 11AC is not imposable. Job-work - demand of differential amount of 8% between the value of amount charged to the customer and the value on which the job worker reversed 8% - Held that: - the goods were manufactured by the job worker being a manufacturer they have reversed 8% under Rule 6(3)(b). Therefore, no differential duty if any can be raised against the appellants. Therefore, this demand and its corresponding penalty does not sustain, hence the same are set aside. Appeal allowed - decided partly in favor of appellant.
-
2017 (7) TMI 15
CENVAT credit - duty paying invoices - duplicate copy if invoices - Sub-rule (6) of Rule 57G of the Central Excise Rules, 1944, provides that a manufacturer may take credit on inputs received in his factory on the basis of original invoice, if duplicate copy of the invoice has been lost in transit, subject to the satisfaction of the Assistant Commissioner that the inputs have been received in his factory and the duty was paid on such inputs - appellant placed reliance in the case of SWADESHI KOREATEX Versus COMMISSIONER OF CENTRAL EXCISE, JALANDHAR [2007 (4) TMI 426 - CESTAT, NEW DELHI]. Held that: - The supplier of the input had not given the details of payment of duty and debit particulars and therefore there is no basis for availing credit. Similarly, (Sl.No.ix), where the appellant is not the consignee, Modvat credit is not available. It is noted that after introduction of invoice system, the endorsed invoices cannot be accepted. In any event, further, Sl.No.x, credit taken on endorsed Bill of Entry after 01.04.94, I find that the law was amended to take credit on the basis of the invoice of the registered dealer or other procedures, which was not followed by the appellant and therefore, they were not eligible to take Modvat credit. The other item (xii), Modvat credit is not available on the basis of the documents, not covered under Rule 57G. The ld.Counsel submitted that it is a case of transitional period and therefore, credit should not be denied. I find that the Board had issued various circulars for availment of the credit during the transitional period and the appellant had not followed it. Therefore, they are not entitled to avail the credit. Penalties set aside. Appeal allowed - decided partly in favor of appellant.
-
2017 (7) TMI 14
Penalty - unutilised CENVAT credit - the appellant availed the input credit wrongly twice and when it was pointed, the same was reversed with interest of ₹ 82,256/- which was paid on 19.2.2008 - Held that: - in the SCN, the Revenue has not alleged any suppression or fraud or willful misstatement with intention to avail irregular credit, and; as and when it was pointed out, the same was reversed. Since there was no allegation of suppression, therefore the extended period of limitation is wrongly invoked to impose penalty on the appellant as the necessary ingredient of Section 11AC of the Central Excise Act is missing in the present case - penalty set aside - appeal allowed - decided in favor of appellant.
-
2017 (7) TMI 13
CENVAT credit - denial on the ground that the finished products cleared by them and received back by them under Rule 16 of Central Excise Rules, 2002 were scrapped and hence they should have reversed the CENVAT credit availed on such goods - Held that: - the assessee have not furnished any documents to correlate that the 3845 Nos. of rocker arm are the same as one which was exported and re-imported vide Bill of Entry No.801664 as the B/E is dated 9.5.2005 and the date of accountal of the said goods in Annexure III is 4.10.2005 and also the quantity received as per Bill of Entry and quantity in Annexure III does not match - Further, the assessee have also not adduced any documentary evidence to show that the said goods were still in stock - credit rightly denied - appeal dismissed - decided against appellant.
-
2017 (7) TMI 12
CENVAT credit - cement and TMT bars used for construction of water tank /storage tank - denial on the ground that storage tank made out of cement and steel, is immovable in nature - Held that: - the Hon’ble Karnataka High Court in the case of SLR Steels Ltd. [2012 (9) TMI 169 - KARNATAKA HIGH COURT] have held that storage tank is specified as capital goods in the definition provided in Rule 2 (a) (A) (vii) of the Cenvat Credit Rules, 2004, and thus, steel and cement, used in the manufacture of the eligible capital goods i.e. storage tank, should merit consideration as input for the purpose of availment of cenvat credit, on the duties paid thereon - appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2017 (7) TMI 3
Maintainability of appeal - penalty - Form-C - Held that: - the Assessee, at least, in respect of these aspects should not have been relegated to an alternative remedy. This is apart from the larger issue,which the Assessee had raised in the writ petition, which is,as to whether a proposal could have been made by the CTO, to levy tax/or seek reversal of ITC solely based on the discrepancies pointed out by the Enforcement Wing, while conducting an audit - since, the Assessee has indicated to us that it would be filing an appeal with respect to the aspects referred to against Serial Nos.2 and 7 - appeal allowed - decided partly in favor of appellant.
|
