TMI Tax Updates - e-Newsletter
July 9, 2019
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Exemption u/s 11 - the cash (capitation fees) which has been collected by the assessee has not been recorded in the books of the assessee but has been kept outside the regular books - during search cash was not found either of the premises of the assessee or in the hands of the Managing Trustees - deemed to be used in violation of Sec. 13(1)(c)
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Income Tax:
Disallowance of ESIC and EPF u/s 37(1) - assessee was not under obligation to discharge the liability under EPF and ESIC in respect of employees of sub-contractors - the assessee as part of good corporate governance complied with the provisions of beneficial legislature qua the contract labourers who were working for the assessee - wholly and exclusively for the purpose of business - duly allowable
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Income Tax:
LTCG - period of holding - purchase of share directly between the parties and not through stock exchange - as per documents filed, since the actual delivery of shares took place along with transfer deeds/contract bills, so that date should be considered the date of transfer i.e 30.03.2012 - scrips was admittedly sold on 16.08.2013 after more than 12 months - LTCG
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Income Tax:
Validity of assessment u/s 153A - approval u/s 153D - approving authority has directed the DCIT to ensure the seized materials and the findings of the appraisal report to be incorporated in the final assessment order which clearly goes to proves that the approval given by the JCIT is not a final approval as required u/s 153D on final draft assessment order - order by the DCIT do not stand in the eyes of law
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Income Tax:
LTCG - period of holding - Registration of the property which was acquired by the assessee in the F.Y. 1994-95 though executed in the Year 2005 has no significance because u/s 53A of the TPA, when the possession of the said immovable property has been taken over by the assessee in part performance of a contract, the transfer is complete - thus holding the property for more than 36 months - LTCG
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Income Tax:
Applicability of surcharge and cess on DTAA rate of tax - as per DTAA between India and Netherlands, the income tax including surcharge shall not exceed 10% - A.O. cannot charge surcharge and education cess over and above 10% of the Income Tax levied on the assessee
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Income Tax:
Stay of demand - additions are not sustainable on the strength of earlier years’ order - ld.DR stated at the Bar that Revenue is not going to adopt any coercive measures in the shape of auctioning assets of the assessee for recovery of outstanding demand except adjusting the refund - no urgency of passing any order staying the outstanding demand at this stage - petition dismissed
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Income Tax:
Addition u/s 68 - Unexplained cash advances received from various customers - trade advances given by the creditors/customers were found to be adjusted against the sale of products made by the assessee subsequently to the concerned creditors/customers then the advances so received by the assessee could not be treated as unexplained cash credit - no addition
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Income Tax:
Taxability of compensation awarded for the acquisition of land, buildings etc - Section 96 of the 2013 Land Acquisition Act - the exemption granted by the Parliament, this Court is of the view, is denied through an impermissible interpretation adopted by the first respondent - not taxable
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Income Tax:
Disallowance u/s 40(a)(ia) - TDS u/s 194C - the explanatory memorandum makes it clear that the scope of sec.194C was extended to cover Association of Persons from 1st June 2008 - It may be pertinent to note that the Trusts file their return of income under the category of “Association of Persons” only - assessees liable to deduct TDS
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Income Tax:
Rectification u/s 254(2) - failure to take cognizance of certain judicial pronouncements - non-consideration of the judgments of the jurisdictional High Court and the Tribunal, which were specifically relied upon by the counsel during the course of the hearing of the appeal constitutes a mistake apparent from record - rectification allowable
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Income Tax:
Penalty u/s 271 (1)(c) - TP adjustment - TPO included Government Companies which are now cannot be treated as good comparable as per certain decisions - if these will be excluded, Arithmetic mean is approximate to the working of the assessee hence it is not a case of concealment of income or furnishing of the inaccurate particulars - assessee has acted in good faith and with due diligence so no penalty is leviable
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Customs:
Seeking continuation of anti dumping duty (ADD) on import of Paracetamol from China PR - withdrawal of Anti dumping duty after sunset review - Revenue directed to issue notification extending the anti dumping duty on the product in question, till the final findings are rendered by the designated authority.
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Customs:
Import of CRT monitors - the goods cannot be termed as hazardous waste in the absence of any specific legal provision. However, they are liable for confiscation u/s 111 of the Customs Act, 1962 for import in violation of para 2.17 of Foreign Trade Policy
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Customs:
Service of Notice - returned unserved from addresses given by appellant - despite intimation given to the appellant (the customs department) are not taking steps to effect the publication - appeals are hereby dismissed for default
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Customs:
Wavier Pre-deposit - alternate and efficacious remedy - no explanation as to why petitioners chose to remain absent before the Adjudicating Authority or to avail of opportunity for cross-examination - nothing demonstrated as to why the petitioners cannot avail the alternate remedy of appeal and neither pleaded nor elaborated that pre-deposit constitutes a hardship, not a fit case to ignore the mandate of Section 129E
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Customs:
Revocation of Customs Broker License - inordinate delay in completing the inquiry proceedings - timeline provided in Regulation 22 of the CHLR, 2004 were directory in nature and not mandatory - remanded to Tribunal for passing fresh order
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Customs:
Sunset review for existing anti-dumping duty - imports of rubber chemicals - Designated authority not only has failed in appreciating the material and accompanying documents for review but also failed to ascertaining the likelihood of continuation or recurrence of the dumping and injury to the domestic industries - the demand and supply gap is not not the only basis for allowing such import as continuous dumping - directed to initiation of sunset review
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IBC:
Corporate Insolvency Resolution Process (CIRP) - the amount in question is in dispute even prior to the issue of demand notice and, it is filed for with sole intension to recover it. Therefore, it is not fit case to admit to initiate CIRP
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Service Tax:
Maintainability of appeal - Non-compliance with the pre-deposit of 7.5% or 10%. - any payment made by the appellant during the course of the investigation has to be adjusted against the said percentage of mandatory deposit.
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Service Tax:
Imposition of penalty - having regard to the first proviso which was effective from 04.04.2011 till the effective date of implementation of Finance Bill of 2015, appellant is liable to pay 50% of the duty demand as penalty.
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Service Tax:
Refund of unutilized CENVAT Credit - input services - Club and Association Services - the services in question were directly used by the service provider and credit was, therefore admissible.
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Service Tax:
Input Credit - separate contracts for supply of transformer as well as erection and commissioning - When the value of both the activity is separately shown, both the activities cannot be clubbed to make it taxable under the Works contract composition scheme - the revenue has nowhere disputed the payment of central excise duty on transformer and therefore once excise duty payment is made, the Appellant is eligible for availing credit
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Central Excise:
SSI Exemption - manufacture of branded goods - So long the assignment deed in favour of the appellant remains valid, the appellant is entitled to SSI exemption.
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Central Excise:
Refund of excess duty paid - Valuation - sales made to their dealers (customers) who in turn sell the final product - orders of finalizing the provisional assessment were never challenged before the higher authorities and have attained finality - doctrine of unjust enrichment is not applicable in the case of provisional assessment - refund allowed.
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VAT:
Attachment of personal property of Director - Default/dues on the part of Company - whether personal property belonging to the Director of a company can be attached and sold for the realisation of the dues from the company under the Gujarat Value Added Tax Act, 2003? - Held No
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VAT:
Attachment of property of related company - some common director - Default/dues on the part of another Company (dealer) - The language of the statute is very clear u/s 45 which provides that AO by order in writing attach provisionally any property belonging to the dealer - property given on lease to dealers does not mean he is of the owner - order attaching the property is quashed
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VAT:
Admissibility of appeals - grant of ITC - merely because certain documents may have been brought on record may not itself be sufficient to grant ITC - once claim had been rejected by the AO, the appellate authority was obliged to record a positive finding after due appraisal of the evidence on record or calling remand report - failure leads to order erroneous and are premature - remanded
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VAT:
Addition towards non-existing profits - Tribunal has included the value of goods, loading and unloading charges, railway freight as also the service charges received in turnover - Once the modus operandi of the assessee's business has been accepted and held that Societies were running for the benefit for their members and service charges had been included in the taxable turnover - no addition on presumptive basis permissible
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VAT:
Review of recall of the judgement - non appearance of respondent counsel - clerk of company received the paper/order from court but skipped to inform the director or authorised person - The judgement and order passed by Court is hereby recalled
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VAT:
Legislative competence of State to levy tax/fee on the import of rectified spirit - levy is not on the input of the final product as such but is on the manufactured or produced product being potable alcohol palatable to human consumption - for computing the levy, the yardstick of ₹ 6 per LPL on the total quantity of imported rectified spirit is reckoned - State is empower to levy charges
Articles
News
Case Laws:
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Income Tax
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2019 (7) TMI 369
Rectification u/s 254 - penalty u/s 271(1)(c) - assessee offer explanation in penalty proceedings - HELD THAT:- CIT(A) upheld the assessment order passed by AO confirming additions wherein expenses claimed by assessee were not allowed against the said income. It is well settled now that penalty proceedings u/s 271(1)(c) are independent proceedings than the quantum assessment proceedings and merely because additions in quantum are sustained by appellate authorities, leviability of penalty u/s 271(1)(c) is not automatic.
The tribunal while setting aside back to the file of the AO for fresh adjudication has directed AO to re-adjudicate the leviability of penalty u/s. 271(1)(c) on merits of the penalty provisions as are contained u/s. 271(1)(c) .
Provisions of Section 271(1)(c) are to be read with Explanations . If the assessee comes with an explanation in penalty proceedings u/s 271(1)(c) , which explanations are genuine and bonafide as provided under Explanation1 to Section 271(1)(c) the assessee will be out of clutches of penalty provisions as are contained in Section 271(1)(c).
The explanations which are offered before the tribunal by assessee as detailed in order dated 09.04.2018 needed verification by the AO as it is a factual matter and thus, tribunal was pleased to set aside the matter to the file of AO for re-adjudication on merits in accordance with law. Thus, when tribunal directed AO to decide the matter on merits in accordance with law , it meant merits under the provisions of Section 271(1)(c) - No merit in MA filed by Revenue which stand dismissed.
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2019 (7) TMI 368
Deduction u/s 80IB(10) - certain plans were seized which revealed that the Quantum Park project has two flats with built–up area of 2,000 sq.ft. per flat, whereas, in the other plan each floor had four flats having built–up area of less than 1,000 sq.ft. per flat - as per revenue housing project does not fulfilled the conditions of section 80IB(10) - HELD THAT:- After considering all aspects of the issue the Tribunal has categorically come to a finding that the Quantum Park project fulfills all the conditions of section 80IB(10). While doing so, the Tribunal has relied upon its own decision rendered in the case of Jivesh Developers and Properties Pvt. Ltd., [2018 (4) TMI 698 - ITAT MUMBAI] .
On a perusal of the aforesaid decision by the Tribunal, it is noticed that after going through all the details, the Tribunal has recorded a factual finding that the Quantum Park project satisfies all the conditions of section 80IB(10) .
The reasons on the basis of which assessee’s claim of deduction u/s 80IB(10) was disallowed in the preceding assessment years have been adopted by the AO while disallowing assessee’s claim of deduction under section 80IB(10) in the impugned assessment year. That being the case, respectfully following the decisions of the Tribunal as referred to above, we uphold the decision of learned Commissioner (Appeals) on the issue. - Grounds raised are dismissed.
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2019 (7) TMI 367
Addition on the basis of statements given in survey operations u/s 133A - in statement assessee offer a sum of ₹ 83.33 lakhs and subsequent retracted, latter on by way of another letter offer a sum of ₹ 50.00 lakhs - HELD THAT:- We have noticed that the survey operations took place on 14th and 15th of February, 2018, meaning thereby, the assessee was having sufficient time between the dates of survey and the date of filing letter dated 26.04.2013, wherein the additional income of ₹ 50.00 lakhs was surrendered.
This is further fortified by the fact that the assessee himself has agreed to offer a sum of ₹ 50.00 lakhs in his letter filed subsequently, which would mean, the assessee itself has arrived at the figure of ₹ 50.00 lakhs by duly examining the surrounding facts. When there is basis for ascertaining the undisclosed income, then, we are of the view that the CIT(A) was justified in holding that the various decisions relied upon by the assessee are not applicable to the facts of present case.
Quantum of addition - enhancement by CIT(A) - HELD THAT:- Assessee was ignorant of the basis under which the additional income of ₹ 83.33 lakhs was arrived. Hence the assessee has asked for the basis of arriving at the figure of ₹ 83.33 lakhs in his letter dated 18.02.2013 (within three days of survey operations). It appears that the assessee was not given the basis. Even at the time of hearing before us, D.R could not furnish the basis for the amount of ₹ 83.33 lakhs. Thus, it can be noticed that the revenue is unable to furnish the basis for determining the additional income of ₹ 83.33 lakhs and hence the assessee is also not aware of it.
Assessee could arrive at the additional income at ₹ 50.00 lakhs and agreed to offer the same, even though the assessee also did not furnish the details thereof. In any case, the fact remains that the basis of determining additional income of ₹ 50.00 lakhs is within the personal knowledge of the assessee. We notice that the said offer has been accepted by the AO, even though the assessee did not offer the said amount also in the return of income.
CIT(A) was not justified in enhancing the addition to ₹ 83.33 lakhs without furnishing the break-up details and basis thereof. Since the basis of determining the additional income of ₹ 50.00 lakhs offered by the assessee in his letter dated 26.04.2013 is within the knowledge of the assessee, we are of the view that the same should be added as additional income of the assessee. AO has added the sum of ₹ 50.00 lakhs as per the letter dated 26.04.2013 and in our view, the AO was justified for the same. Appeal of the assessee is partly allowed.
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2019 (7) TMI 366
Grant of ad-interim stay of outstanding demand - assessee contended that demand deserves to be stayed as additions are not sustainable on the strength of earlier years’ order - coercive measures in the shape of auctioning assets of the assessee for recovery of outstanding demand - adjustment of refund with demand - HELD THAT:- Revenue intend to adjust the refund of earlier years or subsequent years. Considering the above situation, we do not see any urgency of passing any order staying the outstanding demand at this stage, because, the application of the assessee for grant of stay is pending before the Pr.CIT. It is for the ld.Pr.CIT to look into circular of the CBDT cited by the ld.counsel for the assessee, which is pending with the Revenue and other circumstances. At this stage, we do not deem it necessary to exercise our discretion in view of the above discussion and stay petition is dismissed. The assessee will be at liberty to file fresh application after disposal of its application by Pr.CIT.
No merit in the alternative contentions of the assessee for protecting it from the recovery of the demand till the disposal of the application by Pr.CIT by 10 days thereafter, because, the ld.CIT-DR was categorically stated that except adjusting the refund, Revenue is not going to take any other steps. The assessee has agreed in the past of such conditional order. Therefore, this stay petition is dismissed.
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2019 (7) TMI 355
Addition u/s 14A r.w.r. 8D - Addition of PPF Interest - According to the assessee, she has made investment in PPF account after receiving maturity amount earlier invested - HELD THAT:- To our mind the assessee has demonstrated the source of fund and no disallowance is required on account of administrative expenses for managing PPF account. Therefore, addition to the extent of ₹ 29,989/- deserves to be deleted. We delete accordingly.
Addition of Dividend income - Contentions of the assessee is that she has capital out of which it can be alleged that she made investment - HELD THAT:- Proprietor’s capital has been shown at ₹ 42,08,954/- as on 31.3.2012, but her investments are more than this. Her total investment was at ₹ 1,33,52,645/-. Against immovable properties she has shown investment of ₹ 9,98,150/-. Now what are these immovable properties, is not ascertainable, and what is the source of these, is also not identifiable. Her interest free fund is far less than the investment, and therefore, AO has rightly haboured a belief that interest expenses required to be calculated on the investment made by the assessee.
One of the arguments raised by the assessee before the ld.Revenue authorities was that since she was in the business of trading in shares and securities, therefore, no disallowance out of interest expenditure is to be made. This aspect has been settled in the decision of Hon’ble Bombay High Court in the case of Godrej & Boyce vs. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] as well as in the case of Maxopp Investment Ltd v/s CIT [2018 (3) TMI 805 - SUPREME COURT] that if the assessee has been trading in shares and earned incidental income on such trading in the shape of dividend then also expenses relatable to exempt income are required to be calculated and disallowed. For Asstt.Year 2012-13, we allow the appeal of the assessee partly and confirm the disallowance at ₹ 46,625/-.
As far as Asstt.Year 2014-15 - assessee failed to give any plausible explanation as to how the expenses are not required to be disallowed. CIT(A) has examined this issue in detail. She has made investment in the mutual fund to the extent of ₹ 94,54,500/- in the financial year 2013-14. She has failed to show that such investment was made out of interest free funds. AO has rightly worked out the disallowance under section 14A. The only amount which requires to be excluded is allowance of ₹ 9600/- which has been received by the assessee as transport allowance. Appeals of the assessee are partly allowed.
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2019 (7) TMI 351
Validity of reassessment proceedings - assessment time barred and the Revenue have no jurisdiction in the matter - Time limit for notice - assessee was a non-resident - HELD THAT:- SLP dismissed.
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2019 (7) TMI 365
Validity of assessment u/s 153A - invalid and incomplete and inchoate approval u/s 153D - no approval u/s 153D on final draft order - validity of assessments completed by the DCIT - HELD THAT:- When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid.
In the instant case, the approving authority has clearly mentioned that the approval given is a technical approval. Moreover, he has directed the DCIT to ensure the seized materials and the findings of the appraisal report to be incorporated in the final assessment order. This clearly goes to proves that the approval given by the JCIT is not a final approval as required u/s 153D but a conditional approval subjected to modifications by the DCIT after receiving of the approval which makes it an invalid, qualified, uncertain approval.
This is not the mandate of the Act. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. The approval has to be statutory nature after due application of mind, it should be neither technical nor proforma approval which is envisaged u/s 153D
As relying on SMT. SHREELEKHA DAMANI [2018 (11) TMI 1563 - BOMBAY HIGH COURT] and M/S. M3M INDIA HOLDINGS (FORMERLY M/S. KRISHNA FLEXI SOLUTION) VERSUS THE DCIT, CENTRAL CIRCLE-II, FARIDABAD. [2019 (3) TMI 895 - ITAT DELHI] assessments completed by the DCIT do not stand in the eyes of law. - Decided in favour of assessee.
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2019 (7) TMI 364
Bogus LTCG on sale of shares - sale of penny stocks - accommodation entries as alleged by the ld AO - undisclosed commission expenses u/s 69C - HELD THAT:- AO / CIT(A) has not made any negative/adverse remarks or finding against the aforesaid documents produced before the AO. However, they have brushed aside these documents and has relied heavily upon the general investigation report of the department, which has not found any wrong doing on the part of the assessee or her broker who sold the shares. We note that the suspension by SEBI of transaction of scrips of M/s. KAFL has been later lifted. Therefore, in the light of the above supporting documents the assessee’s claim for LTCG has to be allowed.
We allow the claim of LTCG of the assessee and delete the addition made u/s 69C of commission expenses. See MANISH KUMAR BAID AND MAHENDRA KUMAR BAID VERSUS ACIT, CIR-35, KOLKATA [2017 (10) TMI 522 - ITAT KOLKATA]
Valid claim of LTCG - period of holding - whether assessee held the scrip for a period of 12 months - CBDT Circular No. 704 dated 28.04.1995 - date of contract of sale as declared by the parties shall be treated as the date of transfer - purchase of share made directly between the parties and not through stock exchange - HELD THAT:- According to the documents filed before us since the actual delivery of shares took place along with transfer deeds/contract bills, so that date should be considered the date of transfer. Thus, we note that assessee held the shares of M/s. Panchshul on 30.03.2012 (page 8 & 9 of paper book) which was later merged with M/s. KAFL and scrips of M/s KAFL was sold on 16.08.2013 – 28.08.2013, so the assessee was holding the shares in question for more than 12 months. Therefore, the claim of assessee for LTCG is valid in the eyes of law. - Decided in favour of assessee.
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2019 (7) TMI 363
Applicability of surcharge and cess on DTAA rate of tax - rectification u/s 154 - assessee being foreign company received Royalty and Fees for Technical Services (FTS) after TDS @ 10% - filed return claiming DTAA benefit - AO applied tax as per Income tax Act - assessee filed rectification wherein tax rate was corrected but retain levy of surcharge and education cess - as per DTAA between India and Netherlands, the income tax including surcharge shall not exceed 10% - education cess is surcharge or not
HELD THAT:- The DTAA clearly provided that the taxes in India means the income tax including surcharge there as pointed out by the Learned Counsel for the Assessee. Further, clause 11 of the Finance Act 2018 clearly explains that the education cess is nothing but additional surcharge. In the case of J.P. Morgan Securities Asia (P.) Ltd, [2013 (10) TMI 1518 - ITAT MUMBAI] the coordinate Bench of this Tribunal was considering the provisions of DTAA between India and Singapore wherein similar adjustment was made by the A.O. and the Tribunal has held that tax payable under DTAA is inclusive of surcharge and education cess.
Respectfully following the same, we hold that the A.O. cannot charge surcharge and education cess over and above 10% of the Income Tax levied on the assessee. Appeals of the assessee are accordingly allowed and the A.O. is directed to delete the adjustments made on account of the education cess and surcharge levied on the assessee for all the four assessment years. - all the appeals of the assessee are allowed.
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2019 (7) TMI 362
Rectification u/s 254(2) - failure to take cognizance of certain judicial pronouncements - HELD THAT:- We are of the considered view that the non-consideration of the judgment of the Hon’ble jurisdictional High Court and that of a co-ordinate bench of the Tribunal, which were specifically relied upon by the counsel for the assessee during the course of the hearing of the appeal, therein constitutes a mistake apparent from record, which renders the order passed while disposing off the appeal in context of the issue under consideration amenable for rectification under sub-section (2) of Sec. 254.
Accordingly, in terms of our aforesaid observations, the order passed by the Tribunal is recalled for the limited purpose of re-adjudicating the “Ground of appeal No. 3” after considering the aforesaid two judicial pronouncements viz. (i) The CIT Vs. M/s Bajaj India Ltd. [2009 (4) TMI 931 - BOMBAY HIGH COURT] ;and (ii) Gulf Oil Corporation Ltd Vs. ACIT [2006 (9) TMI 226 - ITAT HYDERABAD-B] .
The miscellaneous application filed by the assessee is allowed and, the registry is directed to re-fix the matter in terms of our aforesaid observations.
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2019 (7) TMI 361
Exemption u/s 10(23C) - assessee had obtained “works contract” from the Office of Commissioner of Social Welfare, Government of Karnataka to implement its scheme of conducting Vocational training courses - Educational institution or not - HELD THAT:- We have noticed that the assessee is only executing the works contract given by Government of Karnataka. In our view, the reliance placed by the assessee in the case of Mudra Foundation for Communication Research & Education [2016 (1) TMI 42 - GUJARAT HIGH COURT] is not appropriate, since paragraph 16 of the order of High Court would make it clear that the assessee therein was awarding diplomas, certificates etc after providing training in communication, advertising and related subjects to equip them thoroughly to practice the art and profession of Communication in which they have been trained. The facts of the present case is quite different. Hence the claim of the assessee that it is running an “educational institution” within the meaning of sec.10(23C) is liable to be rejected. Accordingly we are of the view that the tax authorities are justified in rejecting the claim of exemption u/s 10(23C)(iiiab) and (iiiad).
Disallowance u/s 40(a)(ia) - TDS u/s 194C - trust are covered for TDS or not - in earlier round ITAT has held that subcontract given to the franchisees would fall under the category of “work” defined in sec.194C - scope of provisions of sec.194C has been extended to include “Association of persons” only from 1st June, 2008 - HELD THAT:- The explanatory memorandum makes it clear that the scope of sec.194C was extended to cover Association of Persons from 1st June 2008, since a large number of works contracts are executed by a number of Special Purpose Vehicles (SPVs) structured as Joint Ventures/Consortiums in the nature of Association of Persons.
There is no dispute that the assessee is a trust and hence, in view of specific provisions of sec.194C, it shall be liable to deduct tax at source. It may be pertinent to note that the Trusts file their return of income under the category of “Association of Persons” only, meaning thereby, the category “Association of Persons” would encompass different forms of association, of which SPVs and Trusts are one of the forms of association. Since the provisions of sec.194C specifically include “Trusts” in the list of assessees liable to deduct tax at source, in our view, the assessee’s claim to consider it under the category of SPVs is liable to be rejected. Accordingly we do not find any merit in this contention of the assessee. - appeals are dismissed
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2019 (7) TMI 360
Disallowance of ESIC and EPF u/s 37(1) - allowable business expenses - assessee was not under obligation to discharge the liability under EPF and ESIC in respect of employees of sub-contractors - HELD THAT:- In the instant case though the assessee was not under contractual obligation but the assessee was severally liable for the compliances of the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952 and the scheme framed under the said Act. Further, the assessee as part of good corporate governance complied with the provisions of beneficial legislature qua the contract labourers who were working for the assessee. The rendering of service and payments have not been doubted by the Department. The payments were wholly and exclusively for the purpose of business of assessee - assessee’s claim of such payments u/s. 37(1) of the Act deserves to be allowed. - Decided in favour of assessee
Disallowance of expenditure u/s. 14A r.w. Rule 8D(iii) - CIT-A deleted disallowance in respect of interest expenditure, i.e. disallowance made under Rule 8D(ii) and sustained statutory disallowance of 0.5% of the average value of investments under Clause (iii) of Rule 8D - HELD THAT:- We observe that the findings of Commissioner of Income Tax (Appeals) on this issue are fair and reasonable, hence, we do not find any reason to interfere with the same. - Decided against assessee
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2019 (7) TMI 354
Disallowance u/s 14A r.w. Rule 8D(2)(ii) - sufficiency of own funds - whether own interest free funds are sufficient to cover the investments? - HELD THAT:- A perusal of Balance sheet shows that the assessee is having own interest free funds comprising of share capital, reserves and surplus aggregating to ₹ 7,54,94,323/-, as against the investments of ₹ 4,26,14,226/-. Since, the assessee’s own interest free funds are sufficient to cover the investments it is presumed that entire investments are made from non-interest bearing funds.
The Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] has held that where the assessee is having both interest free funds and interest bearing funds, the presumption is that the investments are made from interest free funds. Accordingly, the disallowance u/s. 14A r.w. Rule 8D(2)(ii) in respect of interest expenditure is deleted. - Decided in favour of assessee.
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2019 (7) TMI 375
Stay of demand - CIT-A insisting upon payment of 20% of the disputed tax amount, pending disposal of the appeals - single Judge while disposing the writ petitions, had reduced the condition by limiting the payment to an amount of 10%, till the disposal of the appeals - HELD THAT:- Taking note of the peculiar aspect involved touching the merits in the appeals based on decision above The Mavilayi Service Co-operative Bank Ltd. v. The CIT [2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the opinion that the insistence for payment of a portion, as a condition for granting stay, need not be made in the cases at hand. Therefore the impugned judgments need to be modified.
Hence, the writ appeals are hereby allowed. The impugned judgment of the single Judge are hereby set aside. The respective writ petitions are allowed to the extent of directing the CIT (Appeals) to consider and dispose of the statutory appeals filed by the appellants herein, at the earliest, taking note of the Full Bench decision cited above.
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2019 (7) TMI 374
Stay of demand - CIT-A insisting upon payment of 20% of the disputed tax amount, pending disposal of the appeals - single Judge while disposing the writ petitions, had reduced the condition by limiting the payment to an amount of 10%, till the disposal of the appeals - HELD THAT:- Taking note of the peculiar aspect involved touching the merits in the appeals based on decision above The Mavilayi Service Co-operative Bank Ltd. v. The CIT [2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the opinion that the insistence for payment of a portion, as a condition for granting stay, need not be made in the cases at hand. Therefore the impugned judgments need to be modified.
Hence, the writ appeals are hereby allowed. The impugned judgment of the single Judge are hereby set aside. The respective writ petitions are allowed to the extent of directing the CIT (Appeals) to consider and dispose of the statutory appeals filed by the appellants herein, at the earliest, taking note of the Full Bench decision cited above.
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2019 (7) TMI 359
LTCG - period of holding - possession of property taken earlier after payment of consideration - registration of property made subsequently - HELD THAT:- Registration of the property which was acquired by the assessee in the F.Y. 1994-95 though executed in the Year 2005 by way of a registered deed is of no significance. Under Section 53A of the Transfer of Property Act, when the possession of the said immovable property has been taken over by the assessee in part performance of a contract, the transfer is complete. The assessee ultimately sold out the property on 04.10.2008.
The assessee is thus holding the property for more than 36 months before selling out the same to third party in the Year 2008. Thus, working out of the capital gain as Short Term Capital Gain considering the acquisition of the property in the previous year of its registration rather than the same in the previous year i.e. 1994-95 when the agreement was executed and the appellant paid the consideration for such acquiring of all right title and interest over the property as done by the Learned AO rightly found not justified by the Learned CIT(A). - ground of revenue dismissed
Deduction u/s 54 - HELD THAT:- The case made out by the assessee towards Long Term Capital Gain on the ground of holding the property for more than 36 months before the sale of the same in the year 2008 and the plea taken by the assessee regarding wrong claim u/s 54D instead of 54 as well as the mistake towards description of the property and registering the deed of rectification with the office of the Sub-registrar from “land” to “residential house with land appurtenant thereto” and after careful consideration of the remand report and the reply filed by the assessee thereto particularly the deed of rectification which was taken into consideration by Learned CIT(A) u/s 46A we find no infirmity in allowing the prayer of the appellant by the Learned CIT(A) which, according to us clear and specific and without any ambiguity so as to warrant interference.Thus the same is hereby upheld. Consequently, the appeal fails and is accordingly dismissed.
Agriculture income - AO treated undisclosed business - assessee is in possession of 568.87 bighas of land - HELD THAT:- In the absence of the detail and/or evidences regarding the agricultural expenditure the reasonable expenditure of 40% of the value of crop has been estimated and determined by the Learned CIT(A) resulting to agricultural expenditure of ₹ 9,43,324/- being 40% of ₹ 23,58,310/- seems to be rational and thus acceptable. Therefore the difference of ₹ 3,08,014/- (17,23,000 – 14,14,986) i.e. around 3,00,000/- as has been treated as income of the appellant on undisclosed source and not from agricultural activities found to be acceptable and without any ambiguity. Hence we decline to interfere with the order impugned and the same is hereby upheld. In the result, Revenue’s appeal is dismissed.
Penalty u/s. 271(1)(c) -agriculture income of ₹ 17,23,000/- treated as unaccounted business income - subsequently reduced by CIT(A) at ₹ 3 lakhs - HELD THAT:- We find no merit in imposing penalty in the present facts and circumstances of the case when the quantum order has been passed restricting the disallowance to the tune of ₹ 3,00,000/- only on estimated basis. Further that in the absence of any conclusive evidence to establish concealment of particular of income penalty on estimated basis is not permissible in the eye of law. In that view of the matter, we are of the considered opinion that this is not a fit case for levy of concealment penalty. Penalty on such estimated disallowance is this, liable to be quashed. We, therefore, direct to delete the same. Assessee’s appeal is, thus, allowed.
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2019 (7) TMI 373
Restoration of appeal - dismissed earlier due to low tax effect - Monetary limit - appeals below the minimum threshold limit provided by CBDT - maintainability of appeal - HELD THAT:- Having gone through the averments made in this application, we are convinced with the grounds raised for the purpose of recall of the order in KALYANBHAI L VASA (HUF) [2018 (10) TMI 1689 - GUJARAT HIGH COURT]
This application is allowed. The order passed by this Court above is hereby recalled.
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2019 (7) TMI 353
Rectification u/s. 254(2) - computation of income filed with the return of income does not reflect the exact amount of suo motu disallowance made by the assessee in the return of income itself - HELD THAT:- The impugned amount has already suffered disallowance at the time of filing of return by way of suo motu action, is required to be corroborated on the basis of material on record. Since at this stage, in terms of the limited jurisdiction available with us in terms of section 254(2) of the Act, only apparent mistakes can be corrected, we deem it fit and proper to direct the Assessing Officer to verify this aspect of the matter.
The assessee is required to satisfy the Assessing Officer that the impugned sum of ₹ 1,05,47,651/- was disallowed suo motu in the return of income. In case the assessee is able to satisfy the Assessing Officer, no further disallowance would be warranted. So, however, if the Assessing Officer is of the contrary view, he shall be free to pass an order on this limited aspect afresh as per law. Miscellaneous Application has been disposed of as partly allowed.
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2019 (7) TMI 352
Levying penalty u/s 271B - not filing the tax audit report - non furnishing statutory audit report in proper form - as per AO assessee failed to carry out statutory Audit and failed to file the Audit report in prescribed forms - HELD THAT:- Assessee has filed form no. 3CD and 3CB and the same has not been disputed therefore the tax audit report was on record and hence the penalty should not be levied.
AO disputed that instead of form no.3CB audit report should be in form no. 3CA. We note that the difference in form no. 3CA and form no. 3CB is that in form no. 3CA, the auditors are not required to give separate audit report. But in form no. 3CB, since that deals with the case of an assessee whose accounts have not been audited, mandates of comprehensive audit report. Therefore, when an assessee had furnished the tax audit report in form no. 3CB then it cannot be said that it has not complied with the provisions of section 44AB merely because the report is not in form no. 3CA.
Thus, we are of the view that in the assessee’s case, form no. 3CB audit report with form no. 3CD is a sufficient compliance and hence penalty should not be levied. Therefore, we delete the penalty levied - Decided in favour of assessee.
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2019 (7) TMI 358
Penalty u/s 271 (1)(c) - addition based on the findings of the transfer pricing officer in its order u/s 92CA(3) - HELD THAT:- TPO assessed the Arithmetic Mean @ 16.85%. It is now well settled that the government companies are not good comparables to the private companies and In this regard we also find support of law settled in the case of CIT,3 v. ThyssenKrupp Industries India (P.) Ltd. [2016 (3) TMI 1354 - BOMBAY HIGH COURT] , Pr. CIT-4 v. International SOS Services India (P) Ltd [2017 (5) TMI 1588 - DELHI HIGH COURT] . In these ‘10’ comparables there are ‘4’ companies which has been compared by the TPO. Whose names are Apitco Ltd, Rites Ltd, Vapi Waste & Effluent Mgmt Co. Ltd, WAPCOS Ltd (Seg). If the ratio of these companies be not included for comparisons then the Arithmetic mean would be 8.32% and e-bay India Margin would be 9.82%, if the legal fee be adjusted by the TPO then the margin would be approximate 9% whereas the assessee has already given the Arithmetic Mean @ 8.69%.
After concluding all the facts mentioned above when the Arithmetic mean is approximate to the working of the assessee we are of the view that it is not a case of concealment of income or furnishing of the inaccurate particulars.
Moreover the assessee has acted in good faith and with due diligence so no penalty is leviable in view of the law settling in case tiled as Pr. CIT-04 v. Gap International Sourcing India Pvt. Ltd. [2017 (8) TMI 1556 - DELHI HIGH COURT] , Pr. CIT-6 v. Mitsui Prime Advanced Composites India (P.) Ltd. [2017 (4) TMI 186 - DELHI HIGH COURT] . Taking into account of all the facts and circumstances, we are of the view that the finding of the CIT(A) is not justifiable and is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the- CIT(A) in question and delete the penalty - Decided in favour of assessee.
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2019 (7) TMI 372
Deemed dividend u/s 2(22)(e) - assessee was the substantial stakeholder in both the companies namely M/s.AVPL and M/s.TPCL - allegation that loan received from M/s.AVPL to M/s.TPCL - allegation was made without evidence - balance sheet reveal that it was the assessee, who extended the loan to M/s.AVPL and not vice versa - perversity of order - HELD THAT:- Allegation against M/s.AVPL is quasi criminal in the sense that M/s.AVPL was used as a conduit to transfer funds to the assessee. If such is the allegation, then it is the duty of the AO to render a finding based on the material, which was placed on record by the assessee and explain the nexus in the transaction before holding that the assessee was benefited on account of the transaction and that M/s.AVPL was used as a conduit.
We find that this factual finding is missing in the assessment order, the correctness of which was not tested by the CIT(A) nor did the Tribunal undertake such an exercise though the assessee raised such a ground.
We will be well justified in terming the orders passed by both the CIT(A) as well as the Tribunal to be perverse and unsustainable. That apart, the assessee specifically raised a contention before the CIT(A) that he did not have adequate opportunity to explain his case before the AO.
This ground has not been dealt with by the CIT(A). Thus, considering these facts, we are of the opinion that the matter should be remanded to the CIT(A) for a fresh consideration
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2019 (7) TMI 371
Nature of expenditure - expenses incurred by the assessee for the purchase of software - Revenue or capital expenditure - HELD THAT:- Tribunal was fully justified in treating the expenditure as revenue expenditure, as there is no enduring benefit accruing to the assessee. Admittedly, every software has a shelf life and this has been clearly brought out in the order passed by the Tribunal. Therefore, we affirm the common order passed by the Tribunal and the substantial question of law with regard to the expenses incurred by the assessee for the purchase of software is answered against the Revenue.
Addition u/s 14A - whether the provisions of Rule 8D of the Income Tax Rules cannot be invoked for computing the expenditure towards earning exempt income for the purpose of disallowance under Section 14A of the Act and as to whether the Tribunal was right in holding that only 2% of the exempt income earned is to be treated as an expenditure for disallowance under Section 14A ? - HELD THAT:- The Revenue cannot dispute that this issue has been decided against the Revenue in several cases and admittedly, the assessments in question are prior to 2008-09. Therefore, these questions have to be necessarily decided against the Revenue and accordingly, they are answered against the Revenue.
Claim for additional depreciation - whether the Tribunal was right in holding that additional depreciation can be allowed in an assessment year other than the assessment year, in which, the new plant and machinery were acquired and installed - HELD THAT:- Revenue does not dispute the position that those issues were considered and decided against the Revenue in the decision in the case of CIT Vs. M/s.Hi Tech Arai Limited [2009 (9) TMI 60 - MADRAS HIGH COURT] . Applying the said decision, the other substantial questions of law involved for the assessment year 2008-09 are decided against the Revenue.
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2019 (7) TMI 357
Addition u/s 68 - Unexplained cash advances received from various customers - assessee is engaged in the business of retail trading of motor-parts and accessories - HELD THAT:- Advances received by the assessee being trade advances by very nature of activity of the assessee and the same having been adjusted against the sales made to the concerned parties, the said advances could not be treated as unexplained cash credit u/s 68. See M/S. SAHA ENTERPRISE [2015 (2) TMI 1312 - ITAT KOLKATA]
trade advances given by the creditors/customers were found to be adjusted against the sale of products made by the assessee subsequently to the concerned creditors/customers and it was held by CRYSTAL NETWORKS P. LTD. VERSUS COMMISSIONER OF INCOME-TAX [2010 (7) TMI 841 - KOLKATA HIGH COURT] on these facts and circumstances of the case that the advances so received by the assessee could not be treated as unexplained cash credit - addition to be deleted - Decided in favour of assessee.
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2019 (7) TMI 370
Taxability of compensation awarded for the acquisition of land, buildings etc - AO included compensation in the taxable income of petitioner - scope of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - HELD THAT:- As referring on C. NANDA KUMAR, VERSUS UNION OF INDIA [2017 (4) TMI 662 - ANDHRA PRADESH HIGH COURT] language of Section 96 is clear, plain and simple. The exemption is complete if the compensation is paid under an Award after the owner is denied ownership/possession of land, building etc pursuant to compulsory acquisition under Act 30 of 2013. The exemption granted by the Parliament, this Court is of the view, is denied through an impermissible interpretation adopted by the first respondent. The point is covered in favour of petitioner both by the precedent and circular No.30/2016. - The writ petition is accordingly allowed.
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2019 (7) TMI 315
Exemption u/s 11 - cancelling the registration granted to the assessee u/s.12AA - charitable activity or not? - Allegation that the Trust was being run for the purpose of profit and not solely for educational purpose - registration u/s.12AA can be be withdrawn retrospectively or not - amounts received from the students were capitation fee or not - HELD THAT:- Funds which have been collected by the assessee and recorded in the note books, which has been seized in the course of search is for the assessee to explain. It must be remembered here that but for the search this diary would not have seen the light of the day. A perusal of the said diary which has been extracted by the PCIT in his order dated 07.12.2016 cancelling the registration u/s.12AA shown amounts having been collected from various students towards various branches of engineering. A perusal of the dates shows that the same has been collected between November, 2009 and June, 2010, substantial portions having been collected between April, 2010 and June, 2010.
Admissions taken place during June-July. The assessee has claimed these advances received, as and when the admission is processed, the same have been recorded into the regular books. If the admission is not taken, the amount is returned. It is for the assessee to tally the accounts. There are 214 entries in the said diary. It is not an impossible task to identify the student with the admission and to identify to whom the money has been returned if the admission has not been taken. The Revenue would not be able to identify from the seized diary who is the student and who is not the student because the admission details are also not available in the said diary nor their addresses - if the assessee is able to identify and specify the students, they can be questioned for proving the amounts are not capitation fee paid by such students or parents of such students. In the absence of such identification, the factum of taking capitation fee would stand established against the assessee.
Cash Receipts - What stopped the assessee from recording these amounts in the regular books of the assessee. Why were the amounts taken in cash? The law does not bar the receipt of the admission fee from students. - Once it is recorded as the document of collection of capitation fee then it is to be considered that the assessee is doing the business of running an Educational Institution for the purpose of profit. This view also gets supported by the fact that the cash which has been collected by the assessee has not been recorded in the books of the assessee but has been kept outside the regular books as has been accepted by the assessee in cash with its Managing Trustees and others. Thus, there has been a total violation of the provisions of Sec.13(1)(c)
Here what is also to be recognized is that, in the course of the search cash was not found either of the premises of the assessee or in the hands of the Managing Trustees and consequently, the cash is deemed to have been used for the purpose other than the objects of the trust, which is also violation of Sec. 13(1)(c). This being so, as the assessee has violated the very basic requirement and provisions for registration u/s.12AA and it has come to the light as a consequence of search of the assessee on 02.07.2010, we are of the view that the cancellation of registration u/s.12AA by the PCIT is on right footing and does not call for any interference. - Decided against assessee.
Retrospective cancellation of registration - HELD THAT:- Admittedly, this registration has been cancelled on account of the fact that the search on the assessee on 02.07.2010 brought out the evidences in the form of the incriminating documents which showed that the assessee Trust was being run for the purpose of profit and not solely for educational purpose as also on account of the fact that the cash which had been collected in the form of capitation fee had been misappropriated by the Trustees for purposes other than the objects of the Trust and the trustees are unable to show how the funds were used only for attaining the objects of the Trust. - Order of CIT sustained.
Arguments of the AR that when the assessments were completed u/s.143(3) on 28.03.2013, the assessee had the approval u/s.10(23C)(vi) and consequently, the denial to grant the benefit of deduction u/s.10(23C)(vi) was wrong - order of the DGIT(Inv.) passed on 18.11.2014 withdrawing the approval u/s.10(23C)(vi) right from the AY 2010-11 is in operation and the same has not been challenged, whether the Assessment Order is passed u/s.143(3) or whether it is passed u/s.144 at the present point of time have no consequences as the assessee has been held to be not eligible for the benefit of deduction u/s.10(23C)(vi). Here, we must make it clear that had the assessee challenged the said order of the DGIT(Inv.) passed on 18.11.2014 withdrawing the approval and if the same had gone in favour of the assessee, then admittedly there would have been room to maneuver in respect of the claim of deduction u/s.10(23C)(vi) for the AYs 2010-11 & 2011-12. In the absence of such, appeals or challenge to the said order withdrawing the approval u/s.10(23C)(vi) it cannot be held that the assessee is entitled to claim of deduction u/s.10(23C)(vi) for the AYs 2010-11 & 2011-12.
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Customs
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2019 (7) TMI 349
Application for early hearing - Duty chargeable on quantity of goods received or invoice value - Appellant claimed that Customs duty under Section 12 of Customs Act, 1962 is chargeable on basis of quantity of goods received in shore tank in cases of import of bulk liquid cargo and not on invoice value - HELD THAT:- List the appeal in the month of November, 2019 before the appropriate Bench.
The application is accordingly disposed of.
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2019 (7) TMI 356
Seeking continuation of anti dumping duty (ADD) on import of Paracetamol from China PR - withdrawal of Anti dumping duty after sunset review - Section 9A(1) of the Customs Tariff Act, 1975 - Inadequate disclosure of essential facts thereby violating the principles of natural justice and denying the domestic industry an opportunity to defend its interests. - alternative remedy in terms of Section 9C of the Act - HELD THAT:- There is no inflexible proposition of law that in no case, the final findings of the Designated Authority can be subject to challenge under Article 226 of the Constitution of India. It is well settled principles of law that in a given case even if there is alternative remedy available, the High Court under Article 226 of the Constitution of India has power to issue necessary order.
The petitioners have shown how there is diametrical conclusion reached in the Final Finding from the particulars and objections in the earlier part of Final Finding as well as Disclosure Statement, in his conclusion reached in the Final Finding in its submissions, which have been reproduced hereinabove. On analysis of the same, it appears that while considering the import as insignificant which constituted 98% of the total import and 6% of consumption in India which more than insignificant as defined in Rule 14(d) of the Rules has not been properly considered by respondent No.2 - according to Rule 14(d), the percentage has been given in the import of the like product. Now, admittedly, in view of para-62 at page No.265, the imports are 5.84% which is above the insignificant import as per Rule 14(d). Thus, the observations made by the DA is misreading of the facts and the DA has not properly appreciated this very observation while reaching in the conclusion in Final Finding and this fact is corroborated from the Final Finding itself.
Thus, according to Rule 14(d), the percentage has been given in the import of the like product. Now, admittedly, the imports are 5.84% which is above the insignificant import as per Rule 14(d). Thus, the observations made by the DA is misreading of the facts and the DA has not properly appreciated this very observation while reaching in the conclusion in Final Finding and this fact is corroborated from the Final Finding itself.
It appears from the Disclosure Statement as well as Final Finding that all the above facts are narrated therein, but without considering those facts and in diametrically opposed to the same, the DA has made conclusion. Thus, the submission of the petitioners that the DA has not properly appreciated the fact and has went beyond the evidence and information examined, is acceptable. It appears from the record that the conclusion arrived at by DA in Final Finding is not based on the observations made by him in Disclosure Statement as well as in Final Finding itself. Thus, there is lack of non-application of mind on the part of the authority concerned.
The impugned Final Finding recorded in the Notification No.7/16/2018-DGAD dated 29.01.2019, cannot be said to be strictly in accordance with the provision of Rule 23 of the Rules, as there is nonadvertance to the material placed on record and there is noncompliance with the principle of natural justice as no requisite information was made available and the conclusions are diametrically opposed to the material on record.
The respondent no.2 is hereby directed to undertake the exercise of recording its final finding afresh in accordance with the provisions of Rule-23 of the Rules and after affording full opportunity to the parties and complying with the principles of natural justice and respondent no.1 shall appropriately issue notification extending the anti dumping duty on the product in question, till the final findings are rendered.
Petition allowed.
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2019 (7) TMI 348
ADD - Rejection of initiation sunset review for continuation of existing anti-dumping duty - extension for a further period of 5 years - imports of certain rubber chemicals viz.MBT, CBS, TDQ, PVI and TMT and PX-13 (6PPD) from China PR and Korea RP - rejection of application for sunset review based on absence of current injury - HELD THAT:- The competent authority has rejected the application for sunset review based on absence of current injury. This assumption is not proper. Impact of likelihood of injury is required to be looked into by the Designated Authority. Further one of the grounds is regarding the gap of demand and supply in the country. This is also not proper. Where gap of demand and supply exists, the imports are inevitable but that is not a justification for imports coming into India at unfair and dumped prices.
In view of the information made available by the petitioner to the authority, it is clearly found that there is continuous dumping, in the present case and, therefore, the demand and supply gap is not the basis for allowing such import.
It also appears from record that respondent no.2- authority has failed in appreciating the material and accompanying documents to the substantive application, on likelihood test and its parameters and has not considered essential facts such as (a) surplus capacities in exporting countries (b) inventories diverted to India at dumped prices, (c) volumes of export by exporting countries to other countries and (d) price attractiveness of the Indian market.
The Court needs to be mindful of the fact that in any manner the exercise that is required to be undertaken is in light of the final statutory limit to complete the sunset review, as in any case, anti-dumping duty cannot exceed and continued after the statutory period of limitation is over, as provided under Section 9A (5) - Therefore, the Court is of the view that when the Court has elaborately discussed herein above, mere remand of the matter may consume avoidable time and that may affect the very process of sunset review as in that process the authority also will have to give sufficient time to all the concerned for putting forward their viewpoints and material to substantiate them.
If sunset review is ordered, no harm is likely to cause to either side and it can be brought to its logical conclusion after complying with the provisions of law.
While rejecting the application for sunset review, without appreciating the material placed in substantive application, the authority has rejected the petition at the threshold. It clearly transpires from the record that the authority has not considered various Rules regarding necessity of ascertaining the likelihood of continuation or recurrence of the dumping and injury to the domestic industries as would be seen from Rule 23 - the only requirement is substantive application or request on behalf of the domestic industries and only prima facie view is sufficient to initiate sunset review.
In the present case, though the petitioner has provided sufficient prima facie information justifying initiation of investigation, the authority has not considered it in proper perspective. It is also pertinent to note that information relating to foreign producers and other interested parties could be made available only after investigation is initiated. In absence of initiation of any investigation, this information may not be available with the authority and with the petitioner.
As there is sufficient and substantive material available for initiation of sunset review, the impugned order dated 24.12.2018 is set aside - respondent-authority is hereby directed to initiate sunset review and also suitably extend anti-dumping duty in accordance with the provisions of law - Petition allowed.
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2019 (7) TMI 342
Import of CRT monitors - prohibited goods or not - it was alleged that the goods which were imported were hazardous waste and were covered by Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 - imposition of penalty u/s 112 of FA - HELD THAT:- The goods which are imported in violation of any provision of the Act or Rules can be confiscated under section 111 of the Customs Act, 1962. In this case, undisputedly, there is a violation of para 2.17 of Foreign Trade Policy framed under the Foreign Trade (Development and Regulation) Act, 1992, inasmuch as the goods which were imported were old and used and could not have been imported without a licence from the Director General of Foreign Trade. The appellant has imported these goods in violation of Foreign Trade Policy and therefore the goods were liable for confiscation under section 111 and they were liable to penalty under section 112 of the Customs Act, 1962.
Whether the goods in question can also be considered as hazardous waste? - HELD THAT:- This determination can be made if there is a specific notification by the Ministry of Environment to the effect. Once the goods are notified as hazardous waste, Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 apply and as per Rule 17(2), the importer is legally duty bound to re-export that hazardous waste. The responsibility for ensuring that the goods are re-exported rests on the State Pollution Control Board.
No case has been made out by the Revenue that the imported goods are hazardous waste. Therefore, the goods cannot be termed as hazardous waste in the absence of any specific legal provision. However, they are liable for confiscation under section 111 of the Customs Act, 1962 for import in violation of para 2.17 of Foreign Trade Policy and the importer is liable for penalty under section 112 of the Customs Act, 1962.
Appeal disposed off.
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2019 (7) TMI 341
Smuggling - Gold - likely to smuggle gold by way of concealment on person without declaring the same to the Customs authorities and without payment of duty - retraction of statements - HELD THAT:- As per the Mahazar and the Statements of the appellants, they have confessed their guilty. As far as their retraction by executing sworn affidavits dt. 27/10/2015, this affidavit has not been filed before the lower authorities including the Commissioner(Appeals). Further, the alleged affidavit and statements record on 07/01/2016 wherein also the appellants did not state that they retract their statements recorded on 15/10/2015.
The appellants have confessed their guilty by specifically confessing the same in their statement and the Mahazar proceedings both dt. 15/102015. Further, the allegation of the appellant that there is a violation of Section 110(2) as the notice of seizure has not been given to the appellants within the period of six months as stipulated in the said provisions.
There is no infirmity in the impugned order as far as absolute confiscation of the goods are concerned and there is no violation of the provisions of Section 110(2) read with Section 153 of the Customs Act.
Imposition of penalty of ₹ 8 lakhs under Section 112 - HELD THAT:- The imposition of penalty of ₹ 8 lakhs is on the higher side and therefore, the penalty reduced to ₹ 1 lakh on each of the appellant.
Imposition of penalty under Section 114AA of the Customs Act, 1962 - HELD THAT:- The penalty under Section 114AA can only be imposed if the person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular - in the present case, the appellants have not made intentionally any false sign or declaration, incorrect statements or declarations to attract penalty under Section 114AA of the Act.
Appeal allowed in part.
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2019 (7) TMI 347
Revocation of Customs Broker License - forfeiture of the entire amount of security deposit - inordinate delay in completing the inquiry proceedings - HELD THAT:- This Court in THE PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI VERSUS UNISON CLEARING PVT. LTD., AND OTHERS. [2018 (4) TMI 1053 - BOMBAY HIGH COURT] held that the timeline provided in Regulation 22 of the CHLR, 2004 were directory in nature and not mandatory. Consequently, it would be open to the Revenue to explain the delay in passing the orders of suspension/revocation under Regulation 22 of CHLR 2004.
The appeal is restored to the Tribunal for passing fresh order after taking note of the fact that timeline provided in Regulation 22 of CHLR, 2004 is merely directory - Appeal allowed.
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2019 (7) TMI 346
Smuggling - Gold - retention of passport - HELD THAT:- The petitioner cannot be compelled to give the name and details of other persons. However, the petitioner is required to appear before the customs authority for interrogation, as and when directed. This Court is of the view that the passport shall be released to the petitioner forthwith.
Petition disposed off.
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2019 (7) TMI 345
Availability of alternate and efficacious remedy of appeal - requirement with the pre-deposit - effective opportunity of cross-examination denied - HELD THAT:- Since we do not propose to entertain these petitions on ground of availability of alternate and efficacious remedy to the petitioners, we refrain from making any observations on merits of rival contentions on the aspect of alleged breach of provisions of Section 138B of the said Act or alleged flaw in the decision making process.
This is not fit case to exercise our discretion and entertain the present petitions, when, the petitioners have an alternate and efficacious remedy of appeal available to them under the said Act.
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2019 (7) TMI 344
Import of ‘Multi Function Devices’ / Machines - issuance of SCN - HELD THAT:- It is now submitted without any disputation or disagreement that the revenue has issued show cause notices (SCN) to each of the writ petitioners in these ten writ petitions.
The writ petitioners shall submit their reply to the SCNs, the same shall be adjudicated upon on merits, after affording an opportunity of personal hearing and the matter will be carried to its logical end.
Petition disposed off.
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2019 (7) TMI 343
Service of Notice - returned unserved from addresses given by appellant - HELD THAT:- After several postings of the case, steps were taken in the correct address. Notice sent again in the correct address was also returned unserved with postal endorsement as, “left”. On the request of the appellant, paper publication was allowed through an order passed by this court on 19.2.2019.
Even though the draft paper publication produced by the appellant was approved with hearing date noted as 26.03.2019, the appellant had failed to take out the publication and to produce proof regarding such publication made, despite several adjournments granted from April 2019 onwards.
Appeal dismissed for default.
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Corporate Laws
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2019 (7) TMI 340
Difficulty in obtaining no objection certificate - Ex-parte hearing - HELD THAT:- A law point has been urged on behalf of the company, prevented by on technicalities on seeking adjudication of it. One last opportunity is granted by adjournment on reiteration of notice in order dated 17th June, 2019.
List on 15th July, 2019 as prayed for by Mr.Chakraborty.
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Insolvency & Bankruptcy
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2019 (7) TMI 339
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor committed a default of repayment - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code.
The Hon’ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017 (9) TMI 1270 - SUPREME COURT] has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum.
The Instant Company Petition is filed that intention to recover the alleged dues, on the alleged e-mail dated 20.05.2016, and sent by the Respondent. However, the alleged amount itself is in dispute even prior to the issue of Demand Notice dated 25th September, 2017 under the Code - the amount in question is in dispute even prior to the issue of demand notice and, it is filed for with sole intension to recover it. Therefore, it is not fit case to admit to initiate CIRP etc. and thus it is liable to be dismissed.
Appeal dismissed.
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Service Tax
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2019 (7) TMI 337
Refund of unutilized CENVAT Credit - input services - Club and Association Services - period October 2006 to September 2009 - Rule 5 of the Cenvat Credit Rule 2004 - HELD THAT:- Commissioner had not disputed that the membership was not taken for business activities of the Appellant but he accepted the contention of the Appellant in Para 3(ii) of his order that respondent was required to get proper statistical data for proposed investment opportunities and the same can be gathered through participation in associating itself in any organisation/ business forum /trade association.
The services in question were directly used by the service provider and credit was, therefore admissible.
Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 336
Imposition of penalty - requirement of mens rea to impose penalty - Commissioner (Appeals) had confirmed the penalty through a different logic by borrowing Hon'ble Supreme Court observations made in UNION OF INDIA AND OTHERS VERSUS DHARMENDRA TEXTILE PROCESSORS AND OTHERS [2008 (9) TMI 52 - SUPREME COURT] - HELD THAT:- Considering the fact that appellant had placed his reliance on the statement of its own manager recorded by the respondent-department where the only plea taken by the appellant was financial difficulty in not registering the firm despite the fact that show-cause notice revealed huge turnover of ₹ 2,46,97,756/- for providing temporary accommodation service to the customers, paucity of funds cannot be a ground for non-registration of the firm. Further, as per Section 58 of the Indian Evidence Act, admission needs no further proof and when appellant admits through the statement of its manager that Service Tax was not paid and Service Tax registration was not obtained with its full knowledge, the same would establish a clear case of suppression against the appellant.
The duty on room service charges at a reduce calculated rate along with interest under Section 75 of the Finance Act, 1994 and penalty imposed under Section 78 of the Finance Act, 1994 was rightly involved - having regard to the first proviso which was effective from 04.04.2011 till the effective date of implementation of Finance Bill of 2015 which is admittedly effective after April 2015, appellant is liable to pay 50% of the duty demand as penalty since the duty assessment was done only on the basis of records maintained by it.
Appeal allowed in part.
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2019 (7) TMI 338
Condonation of delay in filing appeal - power of Appellate authority to condone delay - HELD THAT:- There is no reason to entertain this petition - SLP dismissed.
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2019 (7) TMI 335
Imposition of penalty u/s 78 of FA - service tax alongwith interest paid before issuance of SCN - Section 73 (1) and 73 (3) of the Finance Act, 1994 - HELD THAT:- While discussing the applicability of extended period, the Adjudicating Authority has inter alia apparently picked up the gross receipts as per the P&L Account and gross receipts as per ST-3 from the appellant’s books and thereafter, has quoted Section 73 (1) ibid., but however, has not discussed anywhere as to the misconduct in the nature of fraud, collusion, wilful mis-statement, etc. It is a settled position of law that mere quoting of a Section or Sub-Section leads to nowhere unless the Revenue discharges the initial burden. Further, there is no doubt that the leviability of penalty under Section 78 is not mandatory and the same is controlled by Section 80 ibid.
Even the Ld. Commissioner (Appeals) though recorded that Section 73 (4) prevails over Section 73 (1) and (3), but still, there is no recording of any finding as to the conduct of the appellant that could be termed as fraud, etc.
The penalty under Section 78 ibid could not have been levied - appeal allowed.
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2019 (7) TMI 334
Maintainability of appeal - Non-compliance with the pre-deposit - Section 35 F of the Central Excise Act, 1944 - Section 129E of the Customs Act, 1962- HELD THAT:- Perusal of Section 35 F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962 makes is abundantly clear that the 10% of the amount of demand confirmed as is mandatorily to be deposited by the appellant at the time of filing the Appeal before this Tribunal is a mandatory deposit in terms of Section 35F of the Central Excise Act. However, any payment made by the appellant during the course of the investigation has to be adjusted against the said percentage of mandatory deposit.
Thus, 7.5% on the amount of duty confirmed was to be paid at the time of filing of the Appeal before the Commissioner(Appeals). The amount of duty confirmed in this case was ₹ 1,57,050/-. The amount already stands deposited, as discussed above is ₹ 37,860/- and 7.5% thereof will be ₹ 11,778.75. The amount admittedly already stands deposited is ₹ 37,860/-.
The Commissioner (Appeals) has committed an error while dismissing the Appeal in limini to be barred by Section 35F - Appeal allowed by way of remand.
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2019 (7) TMI 333
Rent-a-cab service - Abatement of value - validity of demand - HELD THAT:- There is no challenge in respect of the demand under the head ‘Tour Operator’ service. Since the appeal does not contain any ground with respect of ‘Tour Operator’ service, no benefit in respect of such services can be granted.
Time Limitation - no suppression of facts - HELD THAT:- There are no suppression or mis-statement of facts - the demand for extended period of limitation is set aside.
Penalty - HELD THAT:- It is settled law that penalties under both section 76 & 78 cannot be imposed. Penalties under both section 76 & 78 have been imposed in the impugned order. The penalty under section 76 is set aside.
Appeal allowed in part.
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2019 (7) TMI 332
CENVAT Credit - input services - Works Contract Service - Membership of Clubs - Event Management - Construction of Residential Complex Service - Commercial Construction Service - Credit Card Services - International Air Travel Agent & Event Management Services - HELD THAT:- The Appellant must produce the documents in support of the aforesaid submissions, which the Appellant was ready to produce before me, but the said documents needs to be verified. The adjudicating authority is the appropriate authority to verify these documents.
Matter remanded to the adjudicating authority for de novo adjudication with a direction to pass the order after giving a reasonable opportunity of hearing to the Appellants to present their case - appeal allowed by way of remand.
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2019 (7) TMI 331
Refund of CENVAT Credit - export of services - Rule 5 of CENVAT Credit Rules 2004 - denial on the ground that invoices not bearing service tax registration no. - Rule 9(2) of CENVAT Credit Rules 2004 - HELD THAT:- In terms of Rule 9(2) of CENVAT Credit Rules 2004 certain details must be mentioned in the invoices before CENVAT credit can be availed that includes the details of duty or service tax payable, description of the goods or taxable services, assessable value, central excise or service tax registration number of the person issuing the invoice, name and address of the factory or warehouse etc. Service Tax registration number being an essential requirement under the CENVAT Credit Rules 2004 cannot be waived. This Tribunal has no powers of delegated legislation to make or modify the Rules. It’s role is confined to interpreting and applying the Rules as they exist - thus, in respect of two invoices the service tax registration No. was actually mentioned and I find it so. Therefore, they are entitled to CENVAT credit of refund under Rule 5 with respect to these two invoices.
Invoices not bearing the name of the assessee or appellant - HELD THAT:- The representative of the appellant has satisfactorily explained that it was on account of a takeover of the firm from another unit. Accordingly, once the business has been taken over, all assets and liabilities of the previous unit will be taken over by the present appellant including any invoices which may have been wrongly issued in the name of the previous concern - appellant is entitled to refund of invoices not bearing the name of the assessee as service recipient but bearing the name of the previous unit.
Invoices issued on unregistered addresses of the assessee - HELD THAT:- The appellant is exporting services only from their main office, and not from various offices. It is similar to Beedi factories where tobacco and leaves are issued to various individuals who roll the beedis in their homes and bring them back to the factory where the final product gets manufactured in the factory after baking them. The beedi factory is registered with the central excise department but all the individual homes where beedis are rolled cannot be registered - the appellant is entitled to CENVAT credit as well as refund under Rule 5 in respect of these invoices.
The appeal is allowed except in respect of invoices not bearing the service tax registration number of the service providers - appeal is partly allowed and remanded to the original authority for the limited purpose of computation.
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2019 (7) TMI 330
Input Credit - Works Contract services - Composition scheme - Appellant submits that they were given separate contracts for supply of transformer as well as erection and commissioning of same. In purchase order also both the values are appearing separately - HELD THAT:- Appellant has supplied the transformer under separate contract on payment of central excise duty and the erection, commissioning of transformer was under separate contract. When the value of both the activity is separately shown, both the activities cannot be clubbed to make it taxable under the Works contract composition scheme. The revenue has nowhere disputed the payment of central excise duty on transformer and therefore once excise duty payment is made on the transformer, the Appellant is eligible for availing credit of cenvat charged on the inputs used in manufacture of Transformers.
The inputs used for manufacture of transformer are not inputs for execution of works contract. There is no allegation that the Appellant has taken cenvat credit of duty paid on Transformer which was erected/ commissioned by them - Hence the demand of cenvat against the Appellant is absolutely illegal.
Valuation - inclusion of value of transformer which is not used/ consumed in providing service - HELD THAT:- Transformer was not used in execution of works contract but it itself was installed/ commissioned and hence there is no meaning of including the value of transformer in value of works contract service. The value of any material which is being used in providing the services can be included. The transformer is not used/ consumed in providing service so as to include its value in assessable value of Works contract. Further even assuming so prior to 06.07.2009, for the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, there was no requirement of including the value of free issue of material used for carrying out the works contract.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (7) TMI 327
Refund of excess duty paid - Valuation - sales made to their dealers (customers) who in turn sell the final product - finalisation of provisional assessment under Rule 7 of CER, 2002 - doctrine of unjust enrichment - HELD THAT:- In the present case, the appellants were clearing the goods to their dealers from the factory gate and were paying the duty on the prevalent prices and later on the appellant issued the credit notes to the dealers which resulted into payment of excess duty by the appellant while clearing the goods from the factory gate. Further, the appellants were permitted to clear the goods on provisional assessment under Rule 7 of the Central Excise Rules for the disputed period. Subsequently, the Assistant Commissioner finalized the provisional assessment by passing two separate Order-in-Originals and in the said order of finalization, the original authority has categorically held that the appellants are entitled to the refund for the excess duty paid by them.
After such sales to the ultimate consumer by the dealer at lesser value due to market fluctuations of prices, additional discount was given to the dealers to bridge the gap between the factory sale price and final sale price in the market, that the appellant had provided additional discount by issuing of credit notes to them and submitted them for the purpose of finalization of provisional assessment, which was verified by the jurisdictional Range Officer and it was found to be in order. These orders finalizing the provisional assessment were never challenged before the higher authorities and have attained finality.
The appellants have also produced Chartered Accountant certificate which was also considered by the original authority while finalizing the provisional assessment but during the refund proceedings, both the authorities did not consider the Chartered Accountant certificate certifying that incidence of duty has not been passed on to the ultimate consumer.
Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 326
SSI Exemption - manufacture of branded goods - owner of brand name FIBA - brand name HARDWYN assigned - benefit of N/N. 8/2003-CE, dt.01.03.2003, as amended - time limitation - imposition of penalty - HELD THAT:- The appellant assessee is manufacturing excisable goods with brand names HARDWYN and FIBA. There is no dispute that the brand name FIBA is owned by the appellant assessee. As regards HARDWYN brand, it was stated by Shri. S.S. Sayal and Shri R.S. Sayal in their statements that HARDWYN brand is owned by Shri S.S. Sayal and is assigned to appellant assessee vide assignment deed dt.17.02.2006.
So long the assignment deed in favour of the appellant remains valid, the appellant is entitled to exemption under Notification No.8/2003 CE dt.01.03.2003 as amended, in respect of goods bearing HARDWYN brand, manufactured by them.
It is also alleged that the department has not investigated use of the brand name by the owner Mrs. Santu Devi - HELD THAT:- The description and nature of goods manufactured by the owner of the HARDWYN brand Mrs. Santu Devi is not on record. It is also not known whether the said owner is still using the said brand name on the products manufactured by her. In a catena of decisions, it has been held that bar of S.S.I. exemption in respect of branded goods is inapplicable if the brand name is used by the owner on different goods or the owner has abandoned use of the brand name - In the present case, since no attempt has been made by the department to find out the factual position as regards use or non-use of the HARDWYN brand by Mrs. Santu Devi, the denial of exemption merely on the basis of information regarding registration of HARDWYN brand in the name of Mrs. Santu Devi, without ascertaining the actual use of such brand name by the registered owner, is unsustainable.
Alleged clearance of HARDWYN brand goods by the appellant assessee - HELD THAT:- There is absolutely no evidence to even suggest that the entire clearance made by the appellant assessee was only of HARDWYN brand goods - It is admitted fact that the appellant is also manufacturing goods with “FIBA‟ brand. This proves that the department has presumed the description and value of excisable goods cleared during the relevant period, for recovery of duty. It is settled law that duty cannot be demanded on assumptions and presumptions. In the present matters, since the description and value of the excisable goods has been presumed by the department, the demand of duty on basis of such presumed facts is unsustainable in law and hence has to be set aside - the demand of duty is set aside.
Time Limitation - HELD THAT:- Appellant were under bonafide belief that they were using their own brand names and hence eligible to S.S.I exemption - It is well settled law that extended period of limitation is not available to the department in cases where the assessee entertains a bonafide belief about non-levy of central excise duty - Under the circumstances, the extended period was not available to the department in the present matter and the demand of duty is, therefore, hit by bar of limitation also.
The interest is not payable and penal provisions of law are not attracted in these matters.
Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 329
Undervaluation - short payment of duty - cost of lignite extraction - contravention of provisions of Section 4 of Central Excise Act, 1944 read with Rules 4, 6 & 8 of Central Excise Rules, 2002 - HELD THAT:- The appeal, being devoid of any merit, is liable to be dismissed - appeal dismissed.
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2019 (7) TMI 325
CENVAT credit - input services - Outward Transportation of Goods up to the buyer’s premises - sale on FOR basis - place of removal - Department was of the view that the place of removal can only be the factory gate - HELD THAT:- It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer. Therefore, when the purchase orders itself show that the condition for sale is FOR basis, the observations made by the authorities below that the appellant has failed to produce any evidence/contract establishing that they have borne the freight charges, insurance, etc., is without any factual basis and unacceptable.
Further, in the present case, letters/certificates have been obtained by the appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that the appellants have borne the freight charges and have included it in the assessable value on which Excise Duty has been discharged by them.
The decision of the Hon’ble Apex Court in the case of M/s. Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT] will apply and the place of removal is the buyer’s premises. In such circumstances, the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. [2019 (2) TMI 1487 - CESTAT AHMEDABAD] squarely applies.
The disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 324
Clandestine manufacture and removal - Zarda - Revenue’s entire case is based upon the shortages of the perfumery compound found in the assessee’s factory and the statements of various persons and the records maintained by the third parties - HELD THAT:- Mere shortages in one of the raw materials without there being any corresponding shortages in respect of the other raw materials cannot lead to the fact of the allegations of clandestine manufacture and clearance of the final product inasmuch as only one raw material cannot be held responsible for manufacture of the final product. Admittedly the main raw material for Zarda is raw tobacco in respect of which no discrepancies stand found by the Revenue. Further the appellants have explained that the perfumery compounds in question were Light Liquid Paraffin i.e. LLP and the stock of the same was not checked by the visiting officers - the fact of shortages of perfumery compounds would not lead to any corroborative evidence for the purpose of confirmation of balance amount of duty.
Reliability on third party transactions - HELD THAT:- It is well settled law that the third party documents cannot be relied upon for concluding against the assessee unless the same are fully corroborated by sufficient positive and legal evidence. The entries made in the third party records are not conclusive and are primarily based upon the understanding of the person who has made those records. The same stands relatable to M/s.Sugandhi based upon the statements of owners of those records without even identifying and examining the scribe of those entries - Having held that statements are not admissible, the entries are also required to be ignored - in the absence of any evidence of actual manufacture of the goods or clearance of the same, the confirmation of demand based upon third parties documents cannot be upheld.
In the absence of any direct corroborative evidence of clearance of ‘Jagat’ brand chewing tobacco to M/s.Om Prakash Zardawale it cannot be said that the same was cleared clandestinely.
The requisite evidence to uphold the findings of clandestine removal has also been the subject matter of various decisions of the courts and it stands held that the findings of clandestine removal cannot be based upon the flimsy grounds leading to only doubts and the same require clear and clinching evidence establishing the doubts that such clandestine activities were being undertaken by the assessee.
Revenue’s entire case is based upon statements which in turn are as regards explanation of various entries in the records maintained by such deponent. In case of clandestine removal, the goods are first required to be manufactured for which purpose a manufacturer needs lot of raw materials. Except for the shortage in one of the perfumery compounds, which the appellant has also explained, there is no evidence of procurement of excess other raw materials, which are required to be used in the manufacture - HELD THAT:- Admittedly the main raw material for the manufacture of guthka or Zarda is raw tobacco for which neither any investigation stands conducted by the Revenue, nor is there any evidence to show procurement of such excess raw tobacco. We really fail to understand as to how the appellant could have manufactured such huge quantity of Zarda without procurement of the main raw material as also the other raw materials. Further, no investigations stand made from the persons associated with the actual manufacture or the labourers appointed by the appellant so as to establish that such excess Zarda was manufactured by them. Further no incriminating documents stand recovered from the appellants’ factory or possession.
Not only that the Revenue has not made any efforts during the course of investigations to identify the buyers to whom the said goods have been sold. To raise such a huge demand of duty, based solely on the statements, explaining the records maintained by such third parties, without identifying the buyers to whom the goods have been sold and without producing any evidence as regards the mode of realization of the consideration of such clandestinely removed goods, the allegations and findings of clandestine removal cannot be upheld against the assessee.
Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 328
Valuation - Job Work - the value of raw material as adopted for determination of assessable value is not correct - What would be principles of valuation of the goods under consideration? - Circular No 619/10/2002-CX dated 19th February 2002 - HELD THAT:- There is no legal infirmity in the impugned judgment and order warranting our interference under Section 35L of the Central Excise Act, 1944.
Appeal dismissed.
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CST, VAT & Sales Tax
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2019 (7) TMI 323
Review of recall of the judgement - non appearance of respondent counsel - clerk of company received the paper/order from court but skipped to inform the director or authorised person - order passed by Court dated 30.08.2018 - HELD THAT:- Having gone through the averments on record, we are inclined to give one opportunity to the respondent to appear and make good his submissions. The judgement and order passed by this Court dated 30.08.2018 in the Special Civil Application No.1889 of 2017 is hereby recalled - petition is ordered to be restored to its original file.
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2019 (7) TMI 322
Addition towards non-existing profits - increase of turnover on ad-hoc basis - assessee was a Society that had made purchase of coal for supply made to its members on service charge basis only - HELD THAT:- The assessee are not a regular dealer in coal who may have purchased and sold coal solely for the purposes of deriving profits - Undisputedly, the assessee are the Societies constituted by various brick kilns and they exist for the purpose of ensuring smooth supply of coal to their members at reasonable price. In place of regular profits, the assessee had only charged service charges from its members, that have given rise to their profits.
The case of the assessee, in this regard, has been definitely accepted by the Tribunal, inasmuch as in the computation of the taxable turnover, the Tribunal has included the value of goods, loading and unloading charges, railway freight as also the service charges received by the assessee.
Once the modus operandi of the assessee's business has been accepted and held to be that Societies were running for the benefit for their members and once service charges had been included in the taxable turnover of the assessee, in that circumstance, there survived no room for making any further addition on presumptive basis.
The question of law is answered in the negative i.e. in favor of the assessee and against the revenue - Revision allowed.
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2019 (7) TMI 321
Rejection of commission purchase claimed by the assessee for or on behalf of ex U.P. principals - whether there were pre-existing contract (either written or oral), between the present assessee to make purchases of food grains for or on behalf of its ex U.P. principals? - HELD THAT:- The payments that have been received by the assessee against the single draft covering the value of goods, expenses and the commission charges could itself never form the basis for rejection of the claim as it is in no manner prescribed by law that commission charges should be paid separately and there is no prohibition operating on the ex U.P. principals from making such payment in a composite manner. What was of relevance was for the authorities to examine whether there was commission agency in existence viz-a-viz the transactions.
The absence of the octroi receipts is again of little consequence. If the finding of facts were to be reached by the authority that there existed a commission agency that was operated by the present assessee whereunder it had purchased and dispatched goods to ex U.P. principals and if the goods had actually been dispatched in the manner claimed by the assessee, the absence of octroi receipts would not mitigate against the claim made by the assessee.
The question framed above is answered in affirmative i.e. in favour of the assessee and against the revenue
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2019 (7) TMI 320
Admissibility of appeals - the matter was remanded by the Ist Appellate Authority to make enquiries with regard to evidences submitted for the first time before Ist Appellate Authority - HELD THAT:- The first appellate authority has, however, only noted the documents and evidence being brought on record. However, he has also not recorded any positive finding with respect to the same. In fact, he chose to remit the matter to the assessing officer to make a fresh assessment after considering the material brought on record by the assessee - The Tribunal had, on its part, also neither called for any remand report from the assessing officer nor recorded any independent finding as to the evidentiary value of the documents placed on record by the assessee.
Merely because certain documents may have been brought on record by the assessee, may not itself be sufficient to grant ITC. Once that claim had been rejected by the assessing officer, the appellate authority was obliged to record a positive finding after due appraisal of the evidence on record. For such appraisal of evidence to arise, it would have been necessary for the Tribunal to have called for a remand report and to have thereafter recorded cogent findings of fact, based on appraisal of such evidence - That having not been done, the findings recorded by the Tribunal are clearly erroneous and are premature.
The question of law is answered in the negative, i.e. in favour of the revenue and against the assessee.
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2019 (7) TMI 319
Attachment of property of related company - some common director - Default/dues on the part of another Company (dealer) - whether the immovable property of the ownership of the writ applicant could have been attached for the purpose of recovering the dues payable by the respondent No.3 under the Act, 2003 (Company)? - petiioner given property on lease to another Company (dealer)
HELD THAT:- Section 48 clarifies that any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer or as the case may be, such person - It appears from the materials on record that the impugned order passed by the respondent No.1 dated 23.1.2018 is one of provisional attachment as provided under Section 45 of the Act, 2003. Section 45 makes it very abundantly clear that during the pendency of any proceedings of assessment or reassessment and turnover, escaping assessment, the Commissioner, with a view to protect the interest of the Government Revenue, may by order in writing, attach provisionally any property belonging to the dealer.
The property of the ownership of the defaulting dealer can only be provisionally attached. The language of the statute is very clear. Section 45 provides that “he may by order in writing attach provisionally any property belonging to the dealer”. In such circumstances, in the first instance, the property which is of the ownership of the writ applicant could not have been attached for the purpose of recovery of the amount of tax, penalty or interest due and payable by the respondent No.3. It is not the case of the department that the writ applicant has defaulted, in any manner, with regard to payment of the tax under the Act, 2003.
The writ applicant is the lawful owner of the attached land. The property, which has been attached, might have been given on lease to the respondent No.3, but by virtue of the same, it cannot be said that the property is of the ownership of the respondent No.3. The relationship is just of a lessor and lessee. The land, as on date, belongs to the writ applicant-Company.
The impugned orders dated 23.01.2018 passed by the Commercial Tax Officer, Annexure-A as well as the order dated 14.05.2018 passed by the respondent No.2-Mamlatdar, mutating the entry in the revenue records, is hereby quashed and set aside - application allowed.
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2019 (7) TMI 350
Attachment of personal property of Director - Default/dues on the part of Company - whether personal property belonging to the Director of a company can be attached and sold for the realisation of the dues from the company under the Gujarat Value Added Tax Act, 2003?
HELD THAT:- The issue is no longer res-integra in view of the decision in the case of CHOKSI VERSUS STATE OF GUJARAT [2012 (3) TMI 392 - GUJARAT HIGH COURT] where it was held that Unlike section 179 of the Income-tax Act, 1961, there is no provision in the Sales Tax Act fastening the liability of the company to pay its sales tax dues on its directors.
The respondent authorities are directed to forthwith comply with the order passed by the first Appellate authority, Annexure 'D' to this petition and delete the attached entry on revenue records located in Survey No.968 (old survey No. 1310/1) Manij, Ta. Mahemadabad, District Kheda - petition allowed.
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2019 (7) TMI 318
Permission to file appeals under Section 51 of TNVAT Act to the Appellate Authority concerned - HELD THAT:- As per Section 51(1) of TNVAT Act and the proviso there to an appeal has to be filed within 30 days from the date on which the order was served on writ petitioner and there can be condonation of delay upto a further period of 30 days. In other words, there is a cap of 30 days with regard to condonation of delay - learned counsel for writ petitioner is not in a position to readily give the exact date on which the impugned orders were served on writ petitioner. Therefore, the question of condonation of delay, if any, subject to Section 51(1) and proviso thereto should also be decided only by the Appellate Authority.
The writ petitions are disposed of recording the submission that writ petitioner would be preferring statutory appeals under Section 51 of TNVAT Act.
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2019 (7) TMI 317
Concessional rate of tax - Permission for downloading 'C' Form - inter-state purchase of High Speed Diesel - HELD THAT:- The issue is squarely covered by the decision in the case of M/S. SHIR VARALAKSHMI COMPANY VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER & COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) , THE JOINT COMMISSIONER COMPUTER CELL [2019 (6) TMI 495 - MADRAS HIGH COURT] where it was held that this Court allowed the writ petitions filed by the assessees and directed the Revenue to permit the petitioners assessees to download 'C' forms.
Petition allowed - decided in favor of appellant.
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Indian Laws
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2019 (7) TMI 316
Legislative competence of State to levy tax/fee on the import of rectified spirit, as it is a non-potable liquor i.e. alcohol not fit for human consumption - powers u/s 90 of the Jharkhand Excise Act, 1915 - effect of Notification dated 6th November, 2010 as published on 10th November, 2012 - doctrine of quid pro quo - whether notification is in the nature of legislation by the State on the subject of industrial alcohol?
HELD THAT:- Alcohol can generally be classified into the following categories: Isopropyl alcohol (or IPA or isopropanol), Methyl Alcohol (or Methanol) and Ethyl alcohol, (also known as Ethanol) - the first two categories are poisonous, toxic and fatal for human consumption, rendering its use only for industrial purposes. It is stated that Isopropanol and methanol, because of their inherent chemical properties, cannot be purified and used for the production of ‘intoxicating liquor’ or ‘potable liquor’ by adopting ‘physical means’ like decantation, filtration, redistillation, fractional distillation etc. The third category namely, Ethyl Alcohol or Ethanol (in India is usually produced from molasses derived from sugarcane) in its concentrated form and it is also known as “Rectified Spirit” and its strength measured in LPL signifies the strength of alcohol by volume, 13 parts of which weigh exactly equal to 12 parts of water at 51 degrees Fahrenheit.
The substance of the provision is to levy charges on the product IMFL produced or manufactured by use of imported rectified spirit. In that sense, the levy is not on the input (imported rectified spirit) of the final product as such but is on the manufactured or produced product being potable alcohol palatable to human consumption. For the purposes of computing the levy, the yardstick of ₹ 6 per LPL on the total quantity of imported rectified spirit utilized for production of IMFL is reckoned. Thus, the impost is not on the imported rectified spirit as such but only on the produced foreign liquor before it is bottled for sale in the wholesale or retail market, as the case may be. If so understood, the whole edifice of the argument of respondents regarding the interpretation of the impugned rule must collapse.
If it is a case of legislation in respect of potable alcohol, as has been noted by us hitherto, the State would be competent to legislate in that regard and levy charges – be it for regulating the same or impost for parting with its rights regarding manufacture, storage, export, sale and possession thereof.
Whether the levy is in the nature of tax or excise duty? - HELD THAT:- The impost is neither in the nature of a tax nor excise duty but it is towards the charges by whatever name, for regulating the production of potable liquor to preserve public health and morality including for parting with its rights or privileges regarding manufacture, supply or sale of potable liquor or intoxicating liquor and to regulate the use of imported rectified spirit for production and sale of potable liquor. In such a case, the State need bear no quid pro quo to the services rendered to the licencee for production of foreign liquor (IMFA) - he fact that the manufacturer-respondent has already obtained requisite licences for import of rectified spirit and production of foreign liquor (IMFA) on payment of fixed rates does not mean that the State has surrendered all facets of its rights in respect of every form of activity in relation to potable liquor – its manufacture, storage, export, import, sale and possession. The amended provision is an enabling provision authorising the State to levy charges or impost for ceding its one or more of the activity in respect of foreign liquor (IMFL) produced by use of imported rectified spirit. Such impost can be in addition to the general power of the State to issue licence on payment of fees for production and sale of potable liquor.
However, having opined that the purport of the impugned Rule 106(Tha), is to permit impost on the final processed product being foreign liquor “IMFL”, before bottling as fit for human consumption, the State has jurisdiction to legislate on that subject and need bear no quid pro quo to the services rendered to the licencee of manufacturer of foreign liquor (IMFL).
Appeal allowed.
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