TMI Tax Updates - e-Newsletter
July 5, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Rate of tax - nature of use - marine propeller, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings, used in fishing / floating vessels - taxable @5% IGST i.e. [SGST-2.5%; CGST - 2.5%].
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Income Tax:
Claim of deduction on account of exchange fluctuation loss on account of amount received from Head Office in EURO and repaid in EURO on account of differential value in INR - such fluctuation loss is allowable as deduction
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Income Tax:
Determination of the income of the assessee JV - the profit or loss arising from execution of such work would flow individually to the members of the assessee JV.
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Income Tax:
Addition u/s 68 - If in the inquiry, by the ITI it was found that on the said addressee the company of the Director was not traceable, then AO should have confronted to the assessee and assessee should have been given the opportunity to produce the concerned person from the said company.
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Income Tax:
TDS u/s 195 - Scope of auditor's opinion - The opinion of the Auditor is not conclusive because the issue shall have to be considered and decided as per Law. Further, the assessee-company has filed the revised audit report to clarify the above position. - No additions.
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Income Tax:
Additions u/s 50C - valuation of property as per stamp value - in the absence of the DVO report, the assessee cannot put to travel up facing virtual trial to appear before the AO after three years to prove that the sale price declared by him was reasonable.
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Income Tax:
Assessment u/s 153A - denial of natural justice - no substantial question of law in this regard can be said to be arising on the basis of the office guidelines which are for internal purposes of the Department. They are not even statutory instructions issued u/s. 119 which if beneficial to Assessee.
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Income Tax:
Exemption u/s 10(20) - scope of the term "local authority" - NOIDA - the appellant is not covered by the definition of local authority as contained in Explanation to Section 10(20).
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Customs:
Revocation of CHA License - penalty - The suspension of licence of the Customs broker is no longer justified and cannot be used as a substitute for revocation of his licence or imposition of penalty on him under CBLR
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Customs:
Provisional release of goods - The negotiations for import were directly carried out by the appellants themselves with the foreign supplier but the import were routed through an intermediary in the SEZ Unit. - There was an apparent attempt to commit fraud and in these circumstances lenient view in imposing the condition of provisional release cannot be taken.
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Indian Laws:
Dishonor of cheque - There is no valid basis for the High Court to hold that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. The appellant has proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque.
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Service Tax:
Classification of services - doing carpentry in an old building - Commercial and Industrial Construction Services or not? - Held Yes
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Service Tax:
CENVAT Credit - input services or not - commission paid to sales/ commission agents - the explanation inserted in Rule 2 (l) of Rules 2004 is declaratory in nature and has to be complied retrospectively - credit allowed.
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Service Tax:
Classification of services - activity of depressurising an aquifer in Mata Sukh Liginte Mines - mining activity - activity is taxable only w.e.f 01.06.2007 - demand for the period prior the said date is absolutely not sustainable
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Service Tax:
Extended period of limitation - CENVAT Credit - input services - outward freight - Since the fact of availment of such irregular credit was not disclosed to the Department, it is a clear case of suppression of relevant facts warranting invocation of extending period.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (7) TMI 142
Rate of tax - nature of use - marine propeller, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings, used in fishing / floating vessels - applicant is of the opinion that the rate of tax applicable to the above products is 5% as per entry 247 and 252 of Schedule 1 of the Central Notification 1/17 - Held that:- The classification of the commodities under Entry 252 solely depends on the nature of use to which the commodities are put to - commodities such as marine propellers, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings used only for the purposes of fishing / floating vessels would be taxable @ 5%. If the said commodities are used for some other purpose, then the applicable tax rate would be 18%. Ruling:- Commodities such as marine propellers, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings used as a part of fishing / floating vessels would come under the Entry 252 of Schedule 1 of N/N. 01/2017 Central Tax (Rate) dated 28.06.2017 and State N/N. 360/2017 dated 30.06.2017 and hence taxable @ 5% [SGST-2.5%; CGST - 2.5%].
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Income Tax
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2018 (7) TMI 141
Income accrued in India - Existence of Permanent establishment (PE) so as to attract the provisions of Section 9 - income directly or indirectly attributable to the branches/offices is not taxable in India - DTAA between India and Japan - Held that:- Special leave petition is dismissed having regard to the the peculiar facts without going into the question of law raised. HC order confirmed [2018 (3) TMI 434 - DELHI HIGH COURT] saying evidence produced by the AO does not show that the LOs of the Assessee carried on any activity which was not incidental and auxiliary in nature. With the consistent position in this regard continuing since 1977-78, in the absence of any evidence to suggest a change in the circumstances, there was no warrant for the AO and the CIT (A) to take a different view of the matter. - Decided in favour of assessee.
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2018 (7) TMI 140
Addition u/s 40A - Cash purchase - Whether the assessee’s transactions are exempted under Rule 6DD - Paddy Purchase - Held that:- SLP dismissed. HC order confirmed [2017 (10) TMI 597 - KERALA HIGH COURT] saying Section 40A(3) is a deeming provision; Rule 6DD clearly exempts the agricultural produce -paddy-from the rigours of section 40A(3) of the IT Act. As to the genuineness of purchases, the paddy quantity, believed by the Revenue for determining the yield, speaks volumes. And on the pricing, the Revenue has no ground to suspect or disbelieve the assessee’ claim, for it has not ascertained the market rate prevailing then. So we affirm the Tribunal’s findings on the disallowance: there should be no disallowance.
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2018 (7) TMI 139
TDS u/s 194C - failure to deduct tds on payment to the transporters, which is mandatory in view of Section 40(a) (ia) for claiming the expenditure - Held that:- SLP dismissed. HC order confirmed [2017 (7) TMI 1153 - RAJASTHAN HIGH COURT] HC order confirmed saying Section 194(c) read with 204(iii) will come into operation only on the payment made by assessee and as rightly discussed since payment is not made by the assessee if at all there is default the default is of Mangalam. Since the payment was not received, the same is required to be considered in the books of account since TDS is deducted by the Mangalam on behalf of assessee completely. Therefore, if there is default in payment made, he is entitled to match the balance-sheet and he cannot claim for credit @ ₹ 20 per tonne as handling charges for arranging the truck for transportation.
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2018 (7) TMI 138
Annulling the block assessment order - validity of proceedings under Section 153C - seized document ‘pertained to’ - Held that:- We do not find any ground to interfere with the impugned order(s). The special leave petitions are, accordingly, dismissed. HC order confirmed [2017 (9) TMI 670 - DELHI HIGH COURT] a document seized ‘should belong to a person other than the person referred to in Section 153A of the Act’ - Rejection of contention of the Revenue that even prior to 1st June 2015 at the stage of initiation of proceedings under Section 153C of the Act, it is sufficient if the seized document ‘pertained to’ the other person and it is not necessary to show that the seized material ‘belonged to’ the other person. - Decided in favour of Assessee
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2018 (7) TMI 137
Exemption under Section 10(20) - scope of local authority u/s 10(20) - NOIDA - Notices issued by Income Tax Authority under Section 142 - Appellant challenging the said notices contended that appellant is a local authority, hence, is exempted from payment of income tax under Section 10(20) and Section 10(20A) - Held that:- Authority constituted under Act, 1976 with regard to which notification under proviso to Article 243Q(1) dated 24.12.2001 has also been issued is not akin to the Municipality constituted under Article 243Q(1). As per Explanation to Section 10(20), these are entities which mean the local authority. The submission of the appellant is that the appellant is covered by Clause (ii) of the Explanation i.e. Municipality as referred to in clause (e) of Article 243P of the Constitution . We, while discussing above provisions, have already held that the appellant is not covered by the word/expression of Municipality in clause (e) of Article 243P. Thus, the appellant is not clearly included in sub-clause (ii) of Explanation. It is not even the case of the appellant that the appellant is covered by Section 10(20) except clause (ii). Thus, we are of the considered opinion that the appellant is not covered by the definition of local authority as contained in Explanation to Section 10(20). - Decided against the assessee.
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2018 (7) TMI 133
Adoption of value of property at the circle rates of the State Government as against value of sale consideration disclosed by the assessee - invoking Section 50C - absence of the DVO report - non reference of matter to DVO - Applicability of provisions of Section 153C - peririod of limitation - Held that:- The courts time and again held that reference u/s 153C(2) is mandatory and the AO having failed to follow the provisions of the Act, he should not be given one more chance to refer the matter to the DVO. In the case of Manish Maheshwari vs. ACIT and Anr. (2007 (2) TMI 148 - SUPREME COURT OF INDIA), the provisions of Section 153C deserves that if the AO not recorded a satisfaction for the issue of notice 153C of the Act, the proceeding deserves to be quashed rather than giving the AO another chance to record proper reasons, when the AO not followed the procedure in law, the addition made deserves to be deleted. The lower authorities passed the order in summary manner without going into the merits of the case and analyzing the legal issue involved, the applicability of Section 50C(2) (a) of the Act, in a particular. AO has not found any adverse material evidence to indicate that assessee has received any excess money over and above the sale consideration, in the return of income. In the light of the peculiar facts of this case and in the absence of the DVO report, we are of the considered opinion that the assessee cannot put to travel up facing virtual trial to appear before the AO after three years to prove that the sale price declared by him was reasonable. Addition to be deleted - decided in favour of assessee
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2018 (7) TMI 132
TDS u/s 195 - Disallowance on account of non-deduction of TDS on airfreight - amount paid (reimbursed) to the nonresident agents was on behalf of non-resident shipping company or non-resident airline company - violation of the provisions of Section 44B r.w.s. 172 as well as 44BBA - Held that:- It is clear that assessee-company made payments on behalf of its clients as Clearing and Forwarding Agent which were reimbursed to the assessee-company. The assessee-company did not make claim of deduction in the P & L A/c. Similar claim of assessee-company has been allowed in earlier and subsequent year, therefore, rule of consistency do apply to the income tax proceedings. There were no justification for the authorities below to take a different view on same set of facts. Even no action have been taken while scrutinizing the issue of TDS against the assessee-company. The assessee-company has not violated the provisions of Section 44B r.w.s. 172 as well as 44BBA. Since, under the domestic Law as well as under DTAA, the income received by non-resident airline/shipping companies or their Agents, are not taxable in India, therefore, assessee is not liable to deduct TDS. In this view of the matter, we set aside the orders of the authorities below and delete the entire addition. Scope of auditor's opinion - The opinion of the Auditor is not conclusive because the issue shall have to be considered and decided as per Law. Further, the assessee-company has filed the revised audit report to clarify the above position. Disallowance u/s 40A(3) - Held that:- There is an amendment in Rule 6DD of I.T. Rules as is noted by the Ld. CIT(A), but in Section 40A(3) itself, an exception is provided on account of nature and extent of banking facilities available, consideration of business expediency and other relevant factors. It is not in dispute that assessee-company was engaged in the business of Clearing and Forwarding Agent and acted on behalf of other companies. The amounts in question have been tabulated in the assessment order. These payments are made to airline companies. The nature of business of assessee-company and the agency carried on by the assessee-company on behalf of others, clearly shows that for business expediency in the line of business of assesseecompany, some times cash payments are made to complete the work on behalf of Principal. The assessee-company, under such compelling reasons, shall have to make payments in cash on account of urgent need. The authorities below have not doubted the identity of the payee and the genuineness of the transaction in the matter. We, accordingly, set aside the orders of the authorities below and delete the addition. Assessee appeal allowed.
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2018 (7) TMI 131
Addition u/s 68 - identity of the person giving the credit has not been proved and also creditworthiness has also not been established - Held that:- Evidences which have been furnished by the assessee have not been discussed; and if the Director has not been found then it cannot be said that identity of the company is not established especially in wake of income tax records and share allotment form and other host of documents. If in the inquiry, by the ITI it was found that on the said addressee the company of the Director was not traceable, then AO should have confronted to the assessee and assessee should have been given the opportunity to produce the concerned person from the said company. CIT (A) in his order though sought for the remand report but has not given the mandate to the AO to confront the same to the assessee - Matter should be restored back to the file of the AO and assessee will ensure full corporation and produce the concerned person from the said company and or provide correct details of the said company for issuing of summon - Decided in favour of assessee for statistical purposes.
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2018 (7) TMI 130
Disallowance of 12.5 % of bogus purchase - Held that:- It will not be appropriate to consider and take away the relief already granted by the ld. CIT(A) to the assessee as held in CIT JAIPUR VERSUS M/S SHRUTI GEMS [2017 (5) TMI 1485 - RAJASTHAN HIGH COURT] when sales are not doubted 100% disallowance for bogus purchase is not disallowable. Hence, we confirm the order of ld. CIT(A) in arriving at a disallowance by adopting a Gross Profit ratio of 12.50% on alleged bogus purchases
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2018 (7) TMI 129
Validity of reopening of assessment - Addition u/s.68 - bogus share capital received from companies controlled and managed by Praveen Kumar Jain - whether Commissioner of Income Tax (Appeals) has erred in not dealing the issue pertaining to validity of reopening, however, he decided the issue upon merits in favour of the assessee? - Held that:- If a decision is challenged before the first appellate authority both on the issue of validity of jurisdiction as well as merits of the case, the adjudication on validity of reopening can by no stretch of imagination be liable for rejection on the ground that the assessment has been decided in favour of the assessee on merits. We also note that adjudication of issue raised on validity of reopening need reference to factual records which are not available before us. CIT(A) has decided one issue and has left undecided another issues duly raised before him. Hence, we are of the considered opinion that these issues relating to validity of reopening were duly raised, which have been left undecided by the ld. CIT(A) and need to be remitted to the file of the ld. CIT(A). Appeal allowed for statistical purposes.
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2018 (7) TMI 128
TDS u/s 194I - non-deduction of tax at source - lease rent payments to the Yamuna Expressway Industrial Development Authority - Held that:- if the assessee wishes to take benefit of the proviso to section 201 of the income tax act, then it is for the assessee to furnish necessary detail, so that assessee cannot be treated as assessee in default with respect to the amount of tax deductible. Since the issue in dispute of deducting tax at source on lease rent and consequent tax liability under Section 201(1) & 201(IA) involved in the present appeals of the assessee has already been decided by the Tribunal (2017 (9) TMI 241 - ITAT DELHI) and the Assessing Officer has been directed to carry out the verification as mentioned in para 17 of the order of the Tribunal, these appeals stand disposed of accordingly.
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2018 (7) TMI 127
Addition u/s. 56(2)(vii)(b)- Held that:- Since the conveyance deed has been executed on 26.03.2013, the sale transaction has happened in the AY 2013-14, sec. 56(2)(vii)(b)(ii) of the Act was not applicable because for inadequate consideration the amended provision is applicable with effect from 01.04.2014 that means the said provision is applicable from AY 2014-15. Since the consideration for purchase of property was agreed upon by the vendor and the assessee at ₹ 30 lakhs, no addition was possible under sec. 56(2)(vii)(b) of the Act as the law stood at that time and we note that later the entire sale consideration has been paid by account payee cheque by the assessee to the vendor, therefore, the addition was not sustainable. Hence, the Ld. CIT(A) has rightly allowed the appeal of the assessee - dismiss the revenue’s appeal.
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2018 (7) TMI 126
Receipts to tax in India u/s (9)(1)(i) - income accrued to India - taxability of receipts u/s 44BB - Indo UAE DTAA - Held that:- Merely because the assessee had taken same alternative plea without prejudice to the main contention, the same cannot be held against the assessee as there is no estoppel in law. For this proposition, we draw support from the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Bharat General Re-insurance Co. ltd [1970 (12) TMI 5 - DELHI HIGH COURT] and HCL Technologies Vs. ACIT [2015 (4) TMI 841 - DELHI HIGH COURT]. Hon'ble Uttarakhand High Court in the case of CIT Vs.Enron Espat Services Inv. [2009 (9) TMI 565 - UTTARKHAND HIGH COURT] has categorically held that if the receipt by a non-resident is exempt from tax under the relevant DTAA, the said amount cannot be brought to tax u/s 44BB - thus hold that receipts of the non residents are not taxable in India u/s 9(1)(i) of the Act under the treaty - Decided in favour of assessee.
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2018 (7) TMI 125
Determination of the income of the assessee JV - assessment being made in the hands of assessee JV in the status of AOP - additional ground - Held that:- We find that BBF and GIL (members of JV) had formed a consortium to obtain subject mentioned project of construction of bridge in the location stated hereinabove. We find that the consortium was found only for the inter se co-ordination between the members for administrative convenience in the form of fulfilling the eligibility conditions for participation in their tender, based on collective strengths of each of the members of the consortium. We find that each member of the consortium is independently responsible for executing its respective part of the work with its own men, materials, resources, infrastructure, at its own risk. Accordingly, the profit or loss arising from execution of such work would flow individually to the members of the assessee JV. We find that this aspect is being clarified by the Central Board of Direct Taxes vide Circular No. 7/2016 dated 07.03.2016. Thus set aside all these appeals to the file of the ld. AO for determination of income of the assessee JV in the light of the aforesaid circular dated 07.03.2016. We make it clear that all the connected factual and legal issues are left open and the assessee is at liberty to adduce fresh evidences, if any, before the ld. AO in support of its contentions. Accordingly, grounds raised by the assessee and revenue are allowed for statistical purposes.
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2018 (7) TMI 136
Stay of demand - directing the petitioner to pay 20% of the tax demanded as per the CBDT Office Memorandum, dated 31.07.2017 - Held that:- CBDT Office Memorandum, dated 31.07.2017, though appears to fix a percentage of tax to be paid for being entitled to an order of stay, exception has been carved out in a very same instruction and this is clear from the Office Memorandum dated 29.02.2016, in paragraph 4 [B(b)]. CBDT did not completely oust the jurisdiction of the officer, while examining a prayer for stay of the demand of tax pending appeal. Respondent could not have passed the impugned order without taking note of the petitioner's case and without considering as to whether the petitioner has made out a prima facie case for grant of interim relief. The petitioner has specifically pointed out their financial position and the prejudice that is being caused to them on account of the high pitched assessment. They specifically pleaded that their income of the said year was 1/4th of tax assessed. This aspect was not dealt with by the respondent, while passing the impugned order. Larger question which will be decided by the CIT (A) is whether merely because a payment was reflected in form 26AS and shown to have been made to the assessee, can it be brought to tax, in the absence of proof to show that the assessee was the actual beneficiary of the said payment - information furnished to the learned Standing counsel for the Revenue would clearly demonstrate that at the time of passing the impugned order, no such reasons weighed in the minds of the respondent and therefore, the respondent cannot justify his order by substituting fresh reasons, after the order is put to challenge - Writ Petition is allowed, the impugned order is set aside and the matter is remanded to the respondent for fresh consideration and to pass an order on merits
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2018 (7) TMI 124
Expenditure incurred towards licence fee recovered by the BPCL - TDS liability u/s 194H - direct expenditure allowable u/s 28(1) or an expenditure coming under provisions of section 30 to 38 of the Act - Held that:- A perusal of the invoice filed before us shows that licence fee is recovered from the assessee on each and every purchase of diesel and petrol and it necessarily forms part of the invoice which is issued by BPCL. Thus, it necessarily forms part of the purchases of the assessee which falls within the ambit of section 28 itself - CIT (A) has wrongly upheld the disallowance on the ground that licence fee was covered by section 194H of the Act but she has failed to demonstrate how this conclusion has been arrived at - It is settled law that section 194H is attracted when there is a principle and agent relationship between two parties whereas in the instant case no such relationship can be said to exist and, therefore, the provisions of section194H do not get attracted -licence fee recovered by BPCL forms part and parcel of the purchase cost of the assessee and the same does not attract deduction of tax at source - decided in favour of assessee Disallowance of traveling expenditure - assessee did not furnish copies of bills/ evidences for expenses incurred on foreign/domestic travel - Held that:- assessee did not produce any bills or vouchers in support of the traveling expenses even when specifically required by the AO. However, the assessee did furnish details of traveling before the AO. We also note that the books of accounts of the assessee are audited and apart from the inference drawn by the lower authorities that the entire traveling expenses would not pertain wholly for business purposes, no other adverse inference has been drawn. Accordingly, Interest of justice would be served if this disallowance is restricted to 25% of the entire traveling expenses. Accordingly, the ground no. 2 of the assessee stands partly allowed.
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2018 (7) TMI 123
Penalty u/s 271(1)(c) - invalid notice - non mentioning of reasons for imposing penalty - Held that:- A perusal of the notice issued u/s 274 read with section 271(1)(c) as appearing on page 6 of the paper book shows that notice has been issued in mechanical manner by merely filling up the format of the notice and it is not clear as to whether the penalty is proposed to be imposed for concealment or for furnishing inaccurate particulars as the relevant portions in the notice have been crossed out. The assessment order dated 30.12.2010 passed u/s 143(3) / 153A of the Act mentions initiation of penalty proceedings u/s 271(l)(c) of the Act for concealment of income and furnishing of inaccurate particulars. The penalty order dated 20.03.2014 passed u/s 271(l)(c) of the Act mentions that the assessee is liable to be penalized u/s 271(1)(c) of the Act but does not specify whether the penalty is being imposed for concealment or for furnishing inaccurate particulars. Concealment and furnishing inaccurate particulars are different. The AO, while issuing notice, has to come to the conclusion as to whether it is a case of concealment of income or whether it is a case of furnishing of inaccurate particulars. Levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Mere filling up of the standard proforma without striking of the relevant clauses will lead to inference as to non application of mind. - Decided in favour of assessee
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2018 (7) TMI 122
Addition on account of exchange fluctuation loss - foreign exchange fluctuation loss on account of amount received from Head Office in EURO and repaid in EURO on account of differential value in INR - Held that:- Hon’ble Supreme Court in the case of CIT vs. Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] held that the “loss” suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance-sheet is an item of expenditure under section 37(1) of the I.T. Act, which, clearly support our findings that assessee- company is entitled for deduction on account of foreign exchange fluctuation loss. It is an undisputed fact that assessee-company received the amount from Head Office in EURO and repaid to Head Office in EURO, therefore, even if the amount may be called by any name i.e., loan, borrowing or otherwise, but the assessee-company has suffered foreign exchange fluctuation loss on account of amount received from Head Office in EURO and repaid in EURO on account of differential value in INR, therefore, such fluctuation loss is allowable as deduction in favour of the assessee-company. Assessee-company is entitled for deduction on account of foreign exchange fluctuation loss. We, accordingly, set aside the orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
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2018 (7) TMI 121
Unexplained credits u/s 68 - unexplained credits - share premium account - Held that:- Assessee filed a copy of valuation of shares done by the same CA dated 16.02.2007 in which the same auditor has valued the shares as per discounted cash flow method and arrived at the fair value per share at ₹ 154 in support of its stand. Thus, we now have three different valuations being ₹ 23 per share by Net Asset Method, ₹ 48 per share on the basis of Earnings Capitalisation Method and ₹ 154 per share as per discounted cash flow method. The assessee transferred the shares at ₹ 176 per share including the premium. Thus, the assessee has adopted a figure unsupported by any of the valuations also. It is also not known as to which valuation have been produced before the AO. However, it is noticed that neither the AO nor the assessee has applied the prescribed methods for determination of the fair value of the unquoted shares of the assessee company. We deem it fit to remit this issue back to the AO for a fresh examination. Since, the assessee’s shares are not quoted, the AO would examine whether, the valuation of shares done by the assessee is in accordance with the law/rule and proceed to determine the correct value of share and income after affording adequate opportunity to the assessee. The assessee shall place all the materials in its support before the AO and comply to the AO’s requirements as per law. - Decided in favour of assessee for statistical purposes.
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2018 (7) TMI 120
Unexplained investments in jewellery - Held that:- Jewellery found by the assessee stands fully explained and no addition can be made in the hands of the assessee for undisclosed investment in jewellery. We accordingly hold that there cannot be any addition in respect of the jewellery u/s 69A of the Act. - Decided in favour of assessee
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2018 (7) TMI 119
Levy of penalty u/s. 271(1)(c) - Addition on account of sundry outstanding creditors - Held that:- The assessee has duly disclosed the sundry creditors in its books of accounts, which were not verified during the assessment proceedings for want of present address. But that does not mean that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. The impugned sundry creditors are arising from the purchases which have not been disturbed by the lower authorities. Lower authorities have accepted the purchases but corresponding creditors have been added to the total income of the assessee for want of the address. In our considered view the addition on account of sundry creditors arising out of purchases cannot be added without disturbing the corresponding purchases. Sundry creditors arising out of the purchases which were debited in the profit & loss account as revenue expenses - None of lower authorities have been brought on record that there was a deliberate act on the parts of the assessee suggesting that the assessee has claimed bogus purchases either by concealing the income or furnishing inaccurate particulars of income. In view of above we reverse the order of the authorities below. The ground of appeal of the assessee is allowed.
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2018 (7) TMI 118
Addition being on-money received by the company from the sale of flats - Addition considering the statement u/s.133A of the director - Held that:- The statement made is categorical based on a personal knowledge of the assessee. A departure therefrom for the purpose of quantification cannot be deciphered cursorily. Therefore, addition of ₹ 28 Lakhs (towards understatement of on-money of 4 flats) out of ₹ 70 Lakhs on this score requires to be confirmed and the order of the CIT(A) requires to be set aside to this extent. Action of the CIT(A) however appears justified with respect to deletion of addition to the extent of ₹ 42 Lakhs for the reasons given by the CIT(A). Flat sold earlier at a lower price was cancelled which was re-booked in the subsequent financial year at a price which is close to the price of the other flats. Thus, the preponderance of probabilities weigh in favour of the assessee and thus, action of the CIT(A) in this regard does not call for interference. In conclusion, the addition of ₹ 28 Lakhs out of ₹ 70 Lakhs by the AO concerning project ‘Earth 12’ deserves to be sustained and for remaining amount the deletion made by the CIT(A) is confirmed. Addition towards on-money of project‘Earth Errita’ - Held that:- Assessee not explained as to what prompted him to make alleged wrong assertions before the survey team and repeated again before the DDIT (Inv.) after a gap of nearly three months on the factual aspect that six bungalows have already been booked at the time of survey as referred to in reply dated 25.07.2011 before the DDIT (Inv.) reproduced at page no.4 of the assessment order. The facts regarding disclosure of on-money, if any, concerning remaining 6 bungalows has not been examined by the CIT(A) to enable it to exclude the addition of ₹ 1.30 crores in respect of 2 bungalows. Issue regarding addition of ₹ 1.30 crores towards 2 bungalows requires to be remitted back to the file of the CIT(A) for de novo examination and for passing fresh order in accordance with law after giving reasonable opportunity to the assessee. We do not find any good reason to interfere with the order of the CIT(A) for accepting lower declaration by ₹ 4 Lakhs on sale of 4 bungalows for the reasons borne out from the order of the CIT(A) - Appeal of the Revenue is partly allowed.
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2018 (7) TMI 117
Levying penalty u/s 272A(2)(k) - Held that:- Appellant has deposited TDS along with interest. Thus, it has compensated Govt. for late payment of TDS ensuring no loss to the revenue. In case there is no loss to the revenue, then penalty u/s 272A(2) cannot be levied Sec.273B of the Act lays down that the penalty shall not be imposed in respect of a default relating to the provisions mentioned therein if the person or the assessee concerned can show that there was a reasonable cause for default in question. Section 272A(2)(k) falls within the ambit of sec.273B of the Act. It is observed that the AO has levied the penalty in a routine manner without bringing the facts on record to establish that the appellant committed the default without a reasonable cause. - Decided in favour of assessee.
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2018 (7) TMI 116
TDS u/s 195 - tax payer’s failure in deducting TDS on export commission paid to various UAE based payees, involving proceedings u/s 201(1)/201(1A) - Held that:- The assessee’s commission expenditure in question is not taxable in the hands of its payees so as to attract TDS liability in its case as held in hon’ble apex court’s decision in GE India Technology Centre’s case [2010 (9) TMI 7 - SUPREME COURT OF INDIA]. The Revenue’s sole substantive ground fails accordingly. Sole issue herein pertains to the very kind of payments made to Dubai based entities as involved in preceding assessment year 2012-13. We appreciate this fair stand of the parties towards the bench to affirm the CIT(A)’s findings in the impugned latter assessment year as well.
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2018 (7) TMI 135
Disallowance u/s 40(a)(iib) - disallowance was made to deductions claimed as gallonage fee, licence fee, shop rental (kist) and surcharge on sales tax - scope of the new provision introduced w.e.f. AY 2015-16 - exemption towards payment of licenece fee and surcharge on liquor (vendors) to the State government - Held that:- Provision was one introduced in the subject year and the deductions were allowed in all the earlier years. The income so generated by the Corporation also goes to the exchequer of the State, which definitely is used for welfare purposes. Yet again we are of the view that there is a debatable issue, which has to be considered, especially on the new provision introduced in the Income Tax Act. We hence direct the Commissioner (Appeals) to consider the appeal itself and in the meanwhile keep recovery in abeyance. We make it clear that the observations by this Court or the learned Single Judge need not regulate the consideration by the Appellate Authority. The observations, if at all made are only in the nature of prima facie ones to invoke the extra-ordinary jurisdiction under Article 226 of the Constitution. Writ Appeal would stand allowed.
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2018 (7) TMI 134
Assessment u/s 153A - denial of natural justice - Addl./Joint Commissioner while granting an approval u/s.153D of the Act, to an order to be passed u/s.153A of the Act, no opportunity need to be provided to the Appellant - Held that:- It is not a case where the Assessee did not have any opportunity of hearing before any of the Authorities to defend his case and some assessment of tax has been made against him fastening the liability of tax against the Assessee. Assessing Authority as well as the two Appellate Authorities who have concurrent powers of assessment as are available with the Assessing Authority, have admittedly heard the Assessee on the merits of the case - no substantial question of law in this regard can be said to be arising on the basis of the office guidelines which are for internal purposes of the Department. They are not even statutory instructions issued u/s. 119 which if beneficial to Assessee have been held to be binding on the Authorities of the Department. The Assessee has also not been able to point out any prejudice caused to him on account of approving Authority not giving him an opportunity of hearing. Claim of deduction u/s. 54B with regard to sale of agricultural land by him - Held that:- Authorities below have found against the Assessee that since the land in question situated at Adyar Village, Mangalore, sold by the Assessee in the relevant period was never used as agricultural land, for a period exceeding two years, therefore the Assessee was not entitled to the benefit of deduction u/s. 54B of the Act. For this reason also, the said finding of fact which is upheld by the two Appellate Authorities as well, we are of the opinion that no substantial question of law arises.
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2018 (7) TMI 115
Denying the deduction u/s 80IB(10) - Held that:- Disallowance of deduction u/s 80IB(10) of the Act is to be made only on the units which fail to comply with the conditions laid out u/s 80IB(10) of the Act which, in the instant case, relates to few flats and row houses, which were not able to satisfy the provisions of section 80IB(10)(c) of the Act having built up area of more than 1500 sq. ft. We, therefore, find no infirmity in the order of the Commissioner of Income Tax (Appeals) partly allowing the assessee’s claim of deduction u/s 80IB(10) of the Act. Appeal of the revenue is dismissed.
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Customs
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2018 (7) TMI 109
Provisional release of goods - Seizure of goods on the charges of under valuation - Circular No. 35/2017-CUS dated 16.08.2017 - Held that:- From the above Circular it is apparent that it prescribes a discrimination between the cases involving miss declaration and other. In the instant case the modus operandi as alleged by the Revenue is that the appellant were routing their import through the SEZ unit in order to achieve the object of under valuation. The negotiations for import were directly carried out by the appellants themselves with the foreign supplier but the import were routed through an intermediary in the SEZ Unit. There was an apparent attempt to commit fraud and in these circumstances lenient view in imposing the condition of provisional release cannot be taken. The provisional release was ordered after adjusting entire differential duty and additional amount equivalent to 15% of the said differential duty - appeal allowed in part.
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2018 (7) TMI 108
Provisional release of imported goods on furnishing of bank guarantee and bond - Held that:- In spite of application made for provisional release dated 18.01.2018, the provisional release has been allowed belatedly by the impugned order dated 27.04.2018 and that also, on the intervention of the Hon’ble High Court - till date the show cause notice has not been issued to the appellant, in the matter. The terms of provisional release are modified - Upon complying of the modified conditions, the Customs Authorities shall release the goods forthwith within a period of 3 days of such intimation of compliance, made to it - appeal allowed.
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2018 (7) TMI 107
Revocation of CHA License - penalty - time limitation - Held that:- Regulation 18 of CBLR provides for revocation of licence of the Custom House Broker and forfeiture of part or whole of security or imposition of a penalty not exceeding ₹ 50,000/- on the Customs Broker for misconducts mentioned therein. The procedure to be followed either in revoking the licence or imposing penalty is given in Regulation 20. Thus, it is evident that revocation of licence is not the only penalty which can be imposed for acts of omission or commission by the Custom Broker; even a penalty can be imposed on him. Detailed procedure has been laid down in the Regulation 20 for either revocation of licence or for imposing penalty. The process starts with a notice to be issued by the Commissioner of Customs to the Custom House Broker within a period of 90 days from the date of receipt of offence report stating the grounds on which it is proposed to revoke the licence or impose penalty. The suspension of the licence cannot be a substitute for either revocation or imposition of penalty on the appellant, although Regulation 19 does not indicate for how long the licence can be suspended. It does indicate that licence may be suspended where immediate action is necessary where an enquiry against the Customs Broker is pending or contemplated. Now, neither the enquiry can be completed nor action taken under Regulation 18 against appellant unless the offence report is received from the New Customs House, Delhi, which is not forthcoming despite reminders by the Principal Commissioner of Customs, Hyderabad. The suspension of licence of the Customs broker is no longer justified and cannot be used as a substitute for revocation of his licence or imposition of penalty on him under CBLR - the continuation of the suspension of the appellant’s licence vide the aforesaid Order-in-Original needs to be set aside - appeal allowed.
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2018 (7) TMI 113
Bail Application - accused appellant has been in custody for a period of over 26 months as on date on a charge of commission of offence under Section 135 of the Customs Act, 1962 - Held that:- The period of custody suffered by the accused appellant; the fact that co-accused has also been granted bail, we are inclined to release the appellant on bail - the appellant is ordered to be released on bail to the satisfaction of the Learned Special Chief Judicial Magistrate, Meerut - application allowed.
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2018 (7) TMI 112
Release of consignment - The sum and substance of the counter affidavit being that the petitioner had imported ’Adult Toys’, which are banned items, and other items, which are being imported, attracts IPR violation and they are all counterfeit items and the total value of the offending goods exceeds ₹ 1 crore and therefore, the petitioner is liable for arrest and further investigation is in process - Held that:- It is seen that the request for re-export have not been given in writing to take action, therefore, the prayer for re-export cannot be considered on a oral request - Petition dismissed.
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2018 (7) TMI 111
Service of notice - Petitioner's case is that the impugned Order-in-Original was not communicated to the correct address - Refund of SAD - Held that:- Though the statute does not mandate an opportunity of personal hearing, as the impugned order rejecting the petitioner’s claim results in civil consequences, principles of natural justice have to be read into the provisions and the petitioner should have been afforded an opportunity, as the impugned order is an order of adjudication - on the said ground, the impugned order calls for interference. Apart from that, it has to be seen as to whether mere non-compliance of a condition affixing rubber-stamp seal on the invoice would defeat the very refund claim. This Court is of the considered view that the application filed by the petitioner for refund should be reconsidered on merits and in accordance with law - the matter is remanded to the first respondent for fresh consideration, who shall afford an opportunity of personal hearing to the authorised representative of the petitioner - appeal allowed by way of remand.
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2018 (7) TMI 106
Jurisdiction - Maintainability of the proceedings initiated by ADG, DGCEI - Duty Drawback - Rule 16 of the Drawback Rules, 1995 - Held that:- At present, consequent to the Mangli Impex judgment [2016 (5) TMI 225 - DELHI HIGH COURT] having been stayed by the Hon'ble Apex Court, the Monte International decision [2016 (4) TMI 406 - CESTAT NEW DELHI] cannot be taken as the settled law at this point of time - the interests of justice would be best served by remanding the matter to the original authority, for denovo consideration, after the Hon'ble Supreme Court pronounces judgment in Mangli Impex - appeal allowed by way of remand.
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2018 (7) TMI 105
Benefit of N/N. 94/96-Cus. dated 16.12.1996 - denial on the ground that the goods were re-exported to supplier for want of proper labeling as required by PFA Act, 1954 - Ice Creamer Gelato Mix Concentrate - Held that:- The Port Health Officer (PHO) have given no objection for re-import of the goods - In the situation when there is no dispute that the goods re-imported are not the same, which have gone back and returned after re-labelling, it would be unfair to deny the benefit of the Notification to the appellant. The item was back to the supplier merely for rectification of label or otherwise - denial of the benefit of notification to the importer is not just and proper - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 104
Refund of SAD - N/N. 102/2007-Cus. dated 14.09.2007 - rejection on the grounds that the invoices do not bear the endorsement that the Cenvat credit is not admissible and also for the reason that the invoices do not show that the goods have been sold - Held that:- On the invoices the description of the goods is shown as STB, wherein the Ld. Counsel has explained that this is an abbreviation of Set Top Box. Invoices clearly show that the appellant has specifically stated that they have not passed on the Cenvat credit. It is clearly stated in the invoices that no Cenvat credit is admissible - Appellant is eligible for refund - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 103
Refund of excess duty paid - refund rejected on the ground that claimant has not challenged the order of assessment against the said Bills of Entry - Held that:- In the case of Micromax Informatics Ltd. [2016 (3) TMI 431 - DELHI HIGH COURT], the Hon'ble High Court of Delhi, relying upon its earlier judgment in the case of Aman Medical Products Ltd. [2009 (9) TMI 41 - DELHI HIGH COURT], reiterated that there is no necessity to challenge an assessment order and that the adjudicating authority is in error to reject the refund claim on the ground that self-assessment was not challenged - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 110
Jurisdiction of the DRI to issue the SCN - The Tribunal was pleased to remand the matter to the original authorities after setting aside the respective orders passed by them and status quo was directed to be maintained in the interim period - Held that:- There was no occasion to set aside the decision of the adjudicating authority as the Tribunal did not touch upon any of the appeals on merits except the Revenue’s appeal. This being the position, the Tribunal ought to re-hear the appeal of the Revenue - the matter is remanded to the Tribunal - appeal allowed by way of remand.
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2018 (7) TMI 102
Refund claim of excess customs duty paid - refund claims were rejected on the ground that at the time of filing of Bills of Entry, the appellant did not opt for exemption N/N. 21/2002 - Held that:- Admittedly, the appellant did not opt for exemption notification at the time of filing of Bills of Entry but it is the duty of the Assessing Officer to assess the duty properly. If exemption notification grants exemption unconditionally, in that circumstances benefit of notification cannot be denied. It is an admitted fact that appellant has borne the excess duty paid by them, which was not required to be paid by them. In that circumstance, as appellant has paid excess duty at the time of assessment of Bills of Entry, the appellant is entitled to refund claims - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (7) TMI 114
Additional shares entitling voting rights - additional shares acquired in violation of regulation 11(2) - Second proviso to regulation 11(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 permitting to acquirer to acquire additional shares without making public announcement of an open offer, entitling additional voting rights only up to 5% of the total voting rights of the target company - Held that:- Fact that the shares acquired after 06.08.2009 were directed to be sold in the peculiar facts of that case, would not come in the way of SEBI in reconsidering the question as to why benefit of doubt should not be extended to the appellants in relation to the acquisitions made prior to 06.08.2009. In the present case, acquisitions made by the appellants in violation of regulation 11(2) relate to the period prior to 06.08.2009. Therefore, if by order dated 05.09.2014 benefit of doubt could be given to Madhusudan Jhunjhunwala & Ors. in respect of additional shares acquired in violation of regulation 11(2) prior to 06.08.2009, there is no reason as to why the same benefit of doubt ought not be extended to the appellants in Appeal We answer the first question by holding that under the second proviso to regulation 11(2), additional shares entitling voting rights up to a maximum of 5% alone could be acquired without making open offer. Since the appellants had acquired additional shares entitling more than 5% voting rights in the target company in violation of regulation 11(2), appellants were liable to make open offer. However, in view of the decision of WTM dated 04.09.2014 in case of Madhusudan Jhunjhunwala & Ors., we restore the issue for the limited purpose of considering the question as to whether the benefit of doubt extended to Madhusudan Jhunjhunwala & Ors. (2014 (9) TMI 1154 - SECURITIES AND EXCHANGE BOARD OF INDIA) in relation to acquisitions in violation of regulation 11(2) on or before 06.08.2009 could be extended to the appellants in Appeal. Whether the expression ‘bulk deal’ in the second proviso to regulation 11(2) of the 1997 Regulations disentitles the acquirer covered under regulation 11(2) from acquiring additional shares entitling up to 5% of voting rights without making open offer, if additional shares are acquired in excess of 0.5% shares of the target company by a single transaction executed during the day in the normal market segment? - Held that:- The appellants in their letters/ reply had erroneously admitted that by acquiring additional shares in excess of 0.5% they have committed technical breach cannot be a ground to disregard the clarification issued by SEBI vide interpretative Circular dated 06.08.2009. Similarly, fact that BSE and NSE have shown the transactions of the appellants in the category of ‘bulk deal’ cannot be a ground to deny the benefit of the second proviso to regulation 11(2) especially in view of the interpretative Circular of SEBI dated 06.08.2009. Accordingly, we answer the 2nd question by holding that as per the second proviso to regulation 11(2) of the 1997 Regulations read with the interpretative Circular issued by SEBI on 06.09.2009, an acquirer covered under regulation 11(2) could acquire additional shares entitling more than 0.5% voting rights in a single transaction up to a maximum of 5% voting rights without making an open offer.
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Service Tax
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2018 (7) TMI 100
Penalty u/s 76 of FA - penalty u/s 76 was not imposed by adjudicating authority on the ground that penalty u/s 78 has already been imposed - Held that:- The demand stands raised for the period 01.10.2004 to 31.03.2010. The amendment in Section 78 was carried out w.e.f. 10.05.2008. Tribunal in the case of Ramawat Construction Co. vs. CCE, Jaipur-II [2017 (5) TMI 705 - CESTAT NEW DELHI] has ordered that penalties under both Sections 76 and 78 can be imposed for the period prior to the amendment in Section 78 carried out w.e.f. 10.05.2008. Penalty u/s 76 is imposable for the period 01.10.2004 to 09.05.2008 - The lower authority is directed to quantify and impose the penalty u/s 76 for the above period - appeal allowed by way of remand.
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2018 (7) TMI 99
CENVAT Credit - input services - outward freight paid beyond the place of removal - Rule 2(l) of Cenvat Credit Rules, 2004 - time limitation - Held that:- The Cenvat Credit on goods transport agencies availed for transport of goods from place of removal to buyer’s premises was not admissible to the Appellant - demand upheld. Extended period of limitation - Held that:- Vide the impugned Show Cause Notice the demand for refunding the Cenvat Credit already availed by the Appellant for the period with effect from 2011 till 2015 has been claimed. The Show Cause Notice is of January 2016. Apparently, it is beyond the period of one year for the demand till the year 2014 - Since the fact of availment of such irregular credit was not disclosed to the Department, the Commissioner has rightly held it to be a clear case of suppression of relevant facts warranting invocation of extending period and imposition of mandatory penalty under Section 78 - SCN is not time barred. Appeal dismissed - decided against appellant.
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2018 (7) TMI 98
Classification of services - appellant were providing services to M/s Rajasthan State Mines and Minerals Ltd. which is the activity of depressurising an aquifer in Mata Sukh Liginte Mines - whether the service classifiable as site preparation and clearance service or mining activity? Held that:- It is apparent that appellant was already awarded work of mining activity i.e. of mining lignite from the mines vide an agreement of 27.01.2003. It is during this activity that the appellant noticed a big water aquifer. Though water aquifers are often found in the mines and need simultaneous cleaning while mining but as per appellant, which is not been denied or disputed by the Department, the impugned water aquifer was much bigger water body found within the mine having much large volume of water requiring much more amount of investment to depressurise the same - the sole intention of the subsequent agreement is not the site clearance as per the strict meanings in Section 65(97a) but is the part of the mining activity itself and that the same was entered into with the sole objective of justifying the financial burden upon the appellant. The activity carried out by the appellant was the mining activity which has been identified as taxable activity only beyond 01.06.2007. Hence, the demand for the period prior the said date is absolutely not sustainable - Reliance is also placed on the Circular No. 232/2/2006 E 1-4 dated 12.11.2007 which says that activities as that of excavation, drilling, removal of overburdens, etc. are the essential integral processes and are the part of mining operations and since the mining activity is taxable w.e.f. 01.06.2007, prior to this date such activities being part of mining operations itself are not subject to service tax and as such no service tax is leviable on such activities prior to the said date. The activities for the period beyond 01.06.2007 till 31.03.2008 - Held that:- It is observed that though the activities of appellant are no doubt the mining activities but it is observed from the impugned Show Cause Notice that the same has not been so alleged - In Show Cause Notice, the Department has alleged the said activity as that of site clearance. In such circumstances, the principle is well settled that the classification of taxable service which is not alleged in the Show Cause Notice cannot be concluded to support levy of tax. Penalties - Held that:- There is no positive act is alleged by the Department which may amount to committing suppression of facts or which may reflect any malafide on part of the appellant with an intention of evading tax. The question of imposition of penalty does not at all arise - penalty not warranted. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 97
CENVAT Credit - input services or not - commission paid to sales/ commission agents - whether the commission paid to the sales/commission agents is related to promotion of any activity specified in the inclusive part of the definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004? - Held that:- Whether the explanation added in Rule 2 (l) of Cenvat Credit Rules, 2004 vide notification dated 03/02/2016 has retrospective effect or not, has come before this Tribunal in the matter of Essar Steel India Ltd. vs. CCE & ST, Surat – I [2016 (4) TMI 232 - CESTAT AHMEDABAD] in which this Tribunal has held that the explanation inserted in Rule 2 (l) of Rules 2004 by Notification No. 2/2016-CX (NT) should be declaratory in nature and effective retrospectively. Explanation to Rule 2 (l) of Rules 2004 says it in clear terms that there is no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - the explanation inserted in Rule 2 (l) of Rules 2004 by notification dated 03/02/2016 is declaratory in nature and has to be complied retrospectively - appeal dismissed - decided against Revenue.
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2018 (7) TMI 96
Classification of services - doing carpentry in an old building - Commercial and Industrial Construction Services or not? - Held that:- We have gone through the definition of Commercial or Industrial Construction Services and find that the same includes the carpentry work also. Further said Clause (d) of the definition refers to repair, alteration, renovation or restoration, or similar services, in relation to Clauses (b) and (c). This clearly leads us to conclude that the carpentry work done for repair, renovation of the buildings is also included in the said definition - the appellant subsequently had taken the service tax registration and started paying service tax on the same activities for the subsequent period - decided against assessee. Extended period of limitation - Held that:- The fact that the appellant started paying duty for the subsequent period, even though the same was under a wrong belief, the same belief should have made him to pay duty for the previous year also instead of suppressing the value of the work done during that period - the appellant acted with a mala fide and suppressed the work done by him during the period 2005-06 in which case, the longer period stands rightly invoked by the Revenue. As regards the assessee s contention that part of the demand is even beyond the period of 5 years, we note that as per the letter of the Superintendent addressed to the assessee, the show cause notice was pasted at his residential premises on 23.04.2010 itself. It is only subsequently, when they asked another copy of the show cause notice the same was provided to them vide letter dated 15.11.2010, by stating that the same already stands served upon the assessee. As such we do not find merits on the said plea also. Demand of duty with penalty u/s 78 upheld - as regards imposition of penalty in terms of Section 77 of the Act, we find that as already full penalty stands imposed under Section 78, there may not be justification for imposition of separate penalty under Section 77 of the Act - appeal allowed in part.
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2018 (7) TMI 95
Liability of Service Tax - advertisement agency service - whether the activities undertaken by the appellants such as conceptualization, visualization and creating an advertisement or they are simply complying with the directions of their clients? - Held that:- The claim of the appellant to evaluate the evidence in the form of purchase bills, sale invoices and purchase orders with the records of the case is acceptable. Therefore, the matter requires to go back to the original adjudicating authority for proper analysis of the same and to re-determine the service tax liability of the appellants - appeal allowed by way of remand.
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2018 (7) TMI 94
Interest liability of ₹ 41,866/- allegedly on account of security deposit being treated as value of taxable service on which service tax is required to be discharged immediately - Belated payment of service tax - Mandap Keeper Service - Department took the view that the service tax liability should have been discharged by the 5th of the succeeding month following the calendar month in which payments are received, which were done belatedly by the appellants - applicability of Rule 6 of the Service Tax Rules, 1994 - Held that:- The service tax was required to be paid only on the value of service attributable to the relevant month of quarter - In the instant case, appellants have paid the service tax liability in the next month immediately after the preceding month. There cannot be any interest liability in respect of security deposit to the extent of ₹ 41,866/- - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 93
CENVAT Credit - duty paying documents - case of Revenue is that such credit was availed by the appellant on the input documents issued prior to 14.03.2003 which is violative of Service Tax Credit (Second Amendment) Rules, 2003 framed under N/N. 5/2003 dated 14.05.2003 vide sub-rule (1) of Rule 3 - Held that:- The payment in respect of all bills were made after 14.05.2003 and the cenvat credit was availed by the appellant between July 2013 and September 2013, as found from the appeal memo, which covers the case under proviso annexed to Rule 3 - appellant had not availed any cenvat credit in violation of Rule 3(1)(b) of Cenvat Credit Rules 2002 (second amendment) - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 92
Liability of Service tax - Book adjustment was made on the technical know-how fees paid by appellant to the associate company - The department was of the view that after the amendment cit. 10/5/2008 brought forth in Section 67 of the Finance Act, 1994, the appellants are liable to pay the service tax on book adjustments made with regard to associate enterprises. Held that:- The period is from 1/1/2007 to 31/12/2007, the explanation (c) to Section 67 of the Finance Act, 1994 provided that in respect of associate enterprises, service tax is required to be paid by the person liable to pay service tax on book adjustments also. However, the said amendment is applicable only from 10/5/2008 prospectively - the demand of service tax in respect of royalty / technical know-how fees cannot sustain and requires to be set aside. Penalty - entire service tax paid before issuance of SCN - Consulting Engineering Service - Held that:- the entire liability was discharged much before the issuance of SCN - the penalty imposed is unwarranted in terms of sub-section (3) of Section 73 of the Finance Act, 1994 - Penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 91
100% EOU - refund of unutilized CENVAT Credit which was availed prior to 14.3.2006 - Held that:- The said issue stands decided in the case of WNS Global Services (P) Ltd. [2008 (1) TMI 94 - CESTAT, MUMBAI] where it was held that N/N. 5/2006 does not state that the exports have to be made after 14.3,2006 to be eligible for refund of unutilized credit - it does not debar the refund of unutilized credit pending in the CENVAT account of the assessee on the date when the notification has come into existence - refund allowed - appeal allowed.
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2018 (7) TMI 90
Classification of services - Construction services for constructing the buildings for educational institutions, hospitals etc. - Commercial or Industrial Construction Services or not - whether the demand of service tax under 'Commercial or Industrial Construction Service' rendered by the appellant for construction of building such as hospitals, educational institutions etc. is correct or not? - Held that:- Only when the building is used for commercial purpose, the demand of service tax is sustainable. Tribunal’s decision in Banna Ram Choudhary Vs CCE Jaipur [2017 (9) TMI 86 - CESTAT NEW DELHI] has analyzed the very same issue holding in favour of assessee that when the construction of buildings are not used for any commercial purpose, the levy of service tax cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 89
Short payment of service tax - national roaming charges - appellants have provided such service to other mobile telecom operators and also received such services from other operators - revenue neutral situation - Held that:- There is nothing brought out from the records that the appellant has falsified any records or availed wrongful credit by any act of fraud. There is nothing brought forth by the department to show that appellants are not eligible for credit of service tax paid on services received by them from other mobile phone operators. When they are eligible for credit, the entire situation is revenue neutral one. It is clear that it was an error in the accounting pattern. The short payment of service tax was only due to an error in the accounting pattern for the impugned period. Even if the appellants had paid service tax, they would be eligible for credit and the whole situation would be of no revenue loss. Demand do not sustain - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (7) TMI 88
CENVAT Credit - the stock taking of the raw materials revealed that C.R Sheets/Coils to the extent of 162.63 MT, on which the appellants had availed the credit was not available in their stock - The entire case of the Revenue is based on the alleged shortages of raw material detected at the time of visit of the officers - Held that:- Admittedly the appellants have maintained their records and availed the credit on raw materials - Apart from the fact that Revenue has not referred to any of the buyers of the said goods, they have also not produced any evidence to reflect upon any alternate mode of procurement of raw materials by the appellants. As such merely on the basis of the shortages detected at the time of stock taking, which are also being assailed by the appellant and are doubtful, there is no justifiable reason to deny the credit to the appellant and to confirm the demand against them or to impose penalty upon them. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 87
CENVAT Credit - common inputs / input services for manufacture of dutiable products (sugar and molasses) as well as exempted goods (extra neutral alcohol / rectified spirit) - non-maintenance of separate records u/r 6(2) of CCR 2004 - whether the assessee is liable to pay an amount equal to 10% or 5% of the value of excise clearance as applicable in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 for not having filed declaration exercising option under Rule 6 (3A) ibid? - Held that:- The said issue has been considered by the Tribunal in the case of Cranes & Structural Engineers Vs Commr. Of C.Ex., Bangalore [2016 (8) TMI 387 - CESTAT BANGALORE], wherein the Tribunal held that the condition in Rule 6(3A) to intimate the Department is only a procedural one and that such procedural lapse is condonable and denial of substantive right on such procedural failure is unjustified - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 86
Valuation - job-work - Rule 4(5)(a) of CENVAT Credit Rules, 2004 - The department was of the view that the appellant did not discharge duty liability on the 110% of the cost of production - Held that:- It is seen that the job worked components were cleared to their own sister unit on stock transfer basis. Even if the appellant had paid the said duty, the same would be eligible as credit to their sister unit. Taking note of the fact that the entire exercise is revenue neutral situation, neither the assessee stands to lose anything by paying higher duty nor the Revenue stand to gain anything by appellant’s adoption of lower assessable value, the demand is unwarranted and is unsustainable. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 85
100% EOU - benefit of N/N. 22/2003 dated 01.03.2003 - whether repacking of imported goods supplied to 100% EOU would amount to manufacture by appellant so as to be eligible for the exemption under N/N. 22/2003 dated 01.03.2003 for the clearance of their inputs to 100% EOU without payment of duty on the basis of CT3 and AR-3 certificates or otherwise? - Held that:- The Ld. Counsel argues that the appellant would be able to produce evidence to establish this fact if an opportunity is granted to them. It is his submission that the said contention was not considered by the authorities below - it is fit to remand the matter to the adjudicating authority for denovo consideration leaving all issues open - appeal allowed by way of remand.
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2018 (7) TMI 84
Rectification of mistake - it was alleged that the Tribunal's Final Order has not specifically mentioned the respective values as mentioned in paras 5,6,7 & 8 of the adjudication order. In the said final order the value pertaining to para-8 (DXN Puducherry) has been mentioned and only the respective para numbers in regard to other three values have been mentioned without mentioning the value. Held that:- Though the Tribunal had mentioned the value of ₹ 15,44,70,060/- but omitted to mention para-8 in the said paragraph. Similarly, though, the para nos. 5,6,7 were mentioned, the corresponding values were omitted to be mentioned. This is an error apparent on the face of record and requires rectification - ROM application allowed.
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2018 (7) TMI 83
CENVAT credit - duty paying documents - Rule 9(b) of CCR 2004 - credit was availed on the basis of supplementary invoices issued by DIPL wherein they have paid the differential duty pursuant to an offence case initiated against them - Held that:- When the issue with regard to penalty imposed on DIPL has been set aside, the disallowance of credit alleging violation of Rule 9(b) of CENVAT Credit Rules, 2004 is without legal basis and requires to be set aside - appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (7) TMI 101
Validity of Conviction order set aside by High Court - dishonor of cheque due to insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - rebutting of presumption - High Court held that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability - Held that:- The trial court after considering the evidence on record has returned the finding that the cheque was issued by the accused which contained his signatures. Although, the complainant led oral as well as documentary evidence to prove his case, no evidence was led by the accused to rebut the presumption regarding existence of debt or liability of the accused. The High Court has not returned any finding that order of conviction based on evidence on record suffers from any perversity or based on no material or there is other valid ground for exercise of revisional jurisdiction. There is no valid basis for the High Court to hold that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. The appellant has proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque, the cheque was returned with endorsement insufficient funds . Bank official was produced as one of the witnesses who proved that the cheque was not returned on the ground that it did not contain signatures of the accused rather it was returned due to insufficient funds - the judgment of High Court is liable to be set aside on this ground alone. Whether there was any doubt with regard to the existence of the debt or liability of the accused? - Section 139 of the Act, 1881 - Held that:- In the present case, the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The High Court committed error in setting aside the order of conviction in exercise of revisional jurisdiction. No sufficient ground has been mentioned by the High Court in its judgment to enable it to exercise its revisional jurisdiction for setting aside the conviction. The judgment of the High Court is set aside and judgment of trial court as affirmed by the Appellate Court is restored - appeal allowed.
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