TMI Tax Updates - e-Newsletter
August 23, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
GST - Services provided in relation to admission or access to planetarium included within the category of Recreational, cultural and sporting services - See Sr. no. 34(i) of the amended notification.
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GST:
GST - Rates of IGST reduced from 18% to 12% in case of Supply of Services by way of printing of newspapers, books (including Braille books), journals and periodicals, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer - See sr. no. 27 of the amended notification.
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GST:
GST - Job Work - The benefit of reduced rates of IGST @5% extended to Job work of Textile articles, Articles of apparel and clothing accessories including Ready Made Garments, printing of newspapers, printing of books (including Braille books), journals and periodicals - See sr. no. 26 of the amended notification.
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GST:
GST - IGST rates reduced on specified Composite supply of works contract from 18% to 12% - See Sr. 3 of the amended notification.
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GST:
GST - option given to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge IGST @ 12% (6% CGST, 6% SGST) or not to avail ITC & discharge IGST @ 5% (2.5% CGST & 2.5 SGST) - With or without ITC - See Sr. no. 8, 9, 10 & 11 of the amended notification
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GST:
GST - electronic commerce operator (ECO) shall also be liable to pay gst for the services by way of house-keeping, such as plumbing, carpentering etc. where the turnover of the person supplying such service through electronic commerce operator is below threshold limit and not registered under GST - See notification as amended
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GST:
GST - Reverse Charge Mechanism (RCM) in the case of GTA - Now RCM will be applicable where the GTA has not paid the IGST @12% (or CGST / SGST @6%) only - See notification as amended
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GST:
GST - A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm for the purposes of goods and services tax. - See notification as amended
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GST:
GST - exemption modified relating to National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana) - now the exemption shall be available to Pradhan Mantri Fasal BimaYojana (PMFBY), instead. - See notification as amended
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GST:
GST - exemption modified relating to Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme - now it shall be available to Restructured Weather Based Crop Insurance Scheme (RWCIS), instead. - See notification as amended
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GST:
GST - Service provided by Fair Price Shops to State Governments or Union territories by way of sale of kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin, shall be exempted from goods and services tax. - See notification as amended
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GST:
GST - Service provided by Fair Price Shops to Central Government by way of sale of wheat, rice and coarse grains under Public Distribution System(PDS) against consideration in the form of commission or margin, shall be exempted from goods and services tax. - See notification as amended
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GST:
GST - services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 World Cup 2017 to be hosted in India, shall be exempted from goods and services tax. - See notification as amended
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GST:
Date and conditions for filing the return in FORM GSTR-3B for the month of July, 2017 - See the notification as amended
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Income Tax:
Rent and maintenance charges - treatment as income - whether the amount received in trust for a specific performance and, therefore, should not be treated as an income in the hands of the Assessee - Maintenance charges to be included as taxable income - HC
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Income Tax:
Disallowance of business expenditure - Interest income - The principal source of recurring income of the assessee is from the members - it was absolutely necessary for the assessee to maintain goodwill amongst its members and to lure them to continue to do their business with the society if it give presents to its members and to commemorate silver jubilee celebrations - expenditure allowed - HC
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Income Tax:
Direct Tax Dispute Resolution Scheme, 2016 - scope of the term "tax arrear" - The term “has a bearing” is much wider and must be understood in its plain grammatical meaning as to include assessment or reassessment of which a survey conducted under section 133A of the Act has a bearing. - HC
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Income Tax:
Bogus purchases - based on of list of hawala operators published by Maharashtra Sales-tax Department relied upon - addition u/s 69C - a reasonable net profit of 12.5% on total bogus purchases would be sufficient to meet the ends of justice
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Income Tax:
Assessment of Business loss in Share trading as capital gains - set off of Brought forward business losses - assessee is engaged in the business of share trading and resultant Profit or loss required to be assessed as a business income but not as capital gains - set off allowed.
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Income Tax:
TDS u/s 194I or 194J - payment made by the assessee to M/s. Sify Ltd. towards internet charges - the said amendment was made by Finance Act, 2012 w.r.e.f. 01.6.1976. Thus, as per existing provision, when the assessee made the payment there was no liability to deduct tax at source by treating it as royalty. The amendment made with retrospective effect cannot fasten liability on the assessee.
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Income Tax:
Addition u/s 40(a)(v) - ‘Tax’ on ‘Tax perquisite’ - Assessee has paid tax on tax and not claimed exemption u/s 10(10CC) - Therefore there can not be any disallowance u/s 40(a)(v).
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Income Tax:
Composite, continuous and inseparable project - computation of table income in India - turnkey project - P.E. in India - allegation of avoidance of tax by splitting the alleged composite contract into three different contracts - the intention of the parties to have three different contracts is proved - there is no wrong intention.
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Customs:
Valuation of imported goods - it is very clear that the imported goods were used monitors of different brands in assorted screen sizes and the department had to resort to Chartered Engineer assessment and also resorted to Customs Valuation Rules, 1988 to arrive at the enhanced value
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DGFT:
Import policy of Beans of the species Vigna mungo (L.) Hepper or Vigna radiata (L.) Wilczek - Import policy of Urad / Moong dal under EXIM Codes: 071331 00 is revised from 'free' to 'restricted'
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State GST:
Gujarat Government did not insert the New Rule 44A in the GGST Rules, 2017 in contrast with the inclusion of Rule 44A by the Central Govt. in CGST, Rules, 2017 and various other states, regarding reversal of credit of Additional duty of Customs in respect of Gold dore bar.
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PMLA:
Definitions. - PMLA - (MAINTENANCE OF RECORDS) RULES, 2005 - Meaning of "small account" amended to exclude certain deposited.
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PMLA:
Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2017 - the definition of "small account" shall not be considered while making deposits through government grants, welfare benefits and payment against procurements
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Service Tax:
Classification of services - non-profit organization mainly engaged in promotion of art and culture - Mandap Keeper Service or renting of immovable service - The usage is mostly official, social or business function. - the appellant’s activity is covered under tax entry of Mandap Keeper Service.
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Service Tax:
Valuation - includibility - transaction fee/turn-over charges - collection of transaction charges should form part of the gross value under Section 67 ibid for the purpose of payment of Service Tax.
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Central Excise:
Benefit of exemption - contract of construction of pipeline - whether the department's view that in the assessee's contract there is no element of 'water treatment plant' hence they are not eligible for exemption justified? - SC upholds the decision of tribunal allowing the exemption.
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Central Excise:
Unjust enrichment - refund claim - Section 4A of the Central Excise Act - whether the doctrine of unjust enrichment is attracted where the appellants have cleared the goods on MRP based assessment, as required under Section 4A of the Central Excise Act? - Held No - Refund allowed.
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Central Excise:
CENVAT credit - availing credit on the mixer-grinder assembly - the appellants have unpacked the same and fixed power cord and wiring harness in order to complete the product - credit allowed.
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VAT:
Determination of intra-sale or inter-state sale - When those material documents are evidently showing the Inter State sale, the first respondent, that too being a Check Post Official, is not justified in over stepping his role and coming to the conclusion as if the sale is local sale - HC
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VAT:
Jurisdiction - the orders of default assessment of tax, interest and penalty issued by the VATO (Audit) were validly issued and were within his powers and jurisdiction in terms of Section 58(1) r.w.s 58(4), and Section 66 r.w.s 68 of the DVAT Act - HC
TMI Short Notes
Articles
Notifications
GST-
24/2017 - dated
21-8-2017
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CGST
Seeks to further extend the date for filing of return in FORM GSTR-3B for the month of July, 2017
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23/2017 - dated
22-8-2017
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CGST Rate
Seeks to amend notification No. 17/2017-CT(R) to make ECO responsible for payment of GST on services provided by way of house-keeping such as plumbing, carpentering etc
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22/2017 - dated
22-8-2017
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CGST Rate
Seeks to amend notification No. 13/2017-CT(R) to amend RCM provisions for GTA and to insert explanation for LLP
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21/2017 - dated
22-8-2017
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CGST Rate
Seeks to amend notification No. 12/2017-CT(R) to exempt services provided by Fair Price Shops to Government and those provided by and to FIFA for FIFA U-17. Also to substitute RWCIS & PMFBY for MNAIS & NAIS, and insert explanation for LLP
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20/2017 - dated
22-8-2017
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CGST Rate
Amendments in the Notification No. 11/2017- Central Tax (Rate), dated the 28th June, 2017, - Composite supply of works contract.
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23/2017 - dated
22-8-2017
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IGST Rate
Seeks to amend notification No. 14/2017-IT(R) to make ECO responsible for payment of GST on services provided by way of house-keeping such as plumbing, carpentering etc
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22/2017 - dated
22-8-2017
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IGST Rate
Seeks to amend notification No. 10/2017-IT(R) to amend RCM provisions for GTA and to insert explanation for LLP
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21/2017 - dated
22-8-2017
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IGST Rate
Seeks to amend notification No. 09/2017-IT(R) to exempt services provided by Fair Price Shops to Government and those provided by and to FIFA for FIFA U-17. Also to substitute RWCIS & PMFBY for MNAIS & NAIS, and insert explanation for LLP.
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20/2017 - dated
22-8-2017
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IGST Rate
Seeks to amend notification No. 08/2017-IT(R) to reduce IGST rate on specified supplies of Works Contract Services, job work for textile & textile products, printing service of books, newspapers etc, admission to planetarium, and, also to provide option to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge IGST @ 12%
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21/2017 - dated
22-8-2017
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UTGST Rate
Seeks to amend notification No. 12/2017-CT(R) to exempt services provided by Fair Price Shops to Government and those provided by and to FIFA for FIFA U-17. Also to substitute RWCIS & PMFBY for MNAIS & NAIS, and insert explanation for LLP.
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20/2017 - dated
22-8-2017
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UTGST Rate
Seeks to amend notification No. 11/2017-UTT(R), to reduce UTGST rate on specified supplies of Works Contract Services, job work for textile & textile products, printing service of books, newspapers etc, admission to planetarium, and, also to provide option to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge UTGST @ 6%.
GST - States-
FA-3-40/2017-1-V-(89) - dated
17-8-2017
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Madhya Pradesh SGST
Last date for furnishing of return in FORM GSTR-3B.
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FA-3-40/2017-1-V-(88) - dated
17-8-2017
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017.
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FA 3-55/2017-1-V-(87) - dated
11-8-2017
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Madhya Pradesh SGST
Date for filing of GSTR-3B
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FA-3-54/2017-1-V-(86) - dated
5-8-2017
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax Fourth (Amendment) Rules, 2017.
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FA-3-35/2017-1-V-(84) - dated
5-8-2017
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Madhya Pradesh SGST
CORRIGENDUM - Notification No. F-A-3-35-2017-1-FIVE (63), dated 30th June 2017
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FA-3-33/2017-1-V-(85) - dated
5-8-2017
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Madhya Pradesh SGST
Corrigendum - Notification No. F-A-3-33-2017-1-V-(42), dated 29th June 2017
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FA 3-40/2017-1-V-(83) - dated
5-8-2017
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax Amendment Rules, 2017
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FA-3-33/2017-1-V-(80) - dated
27-7-2017
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Madhya Pradesh SGST
Corrigendum - In the notification No. F-A-3-33-2017-1-V(42) dated 29th June, 2017 and notification No. F-A3-35/2017/1/Five(63) dated 30.06.2017
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19/2017-State Tax (Rate) - dated
18-8-2017
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Maharashtra SGST
GST-Reduction in tax rate of Tractor Parts-Amendment to Notification No. MGST 1017/C.R.104/Taxation-1, [No. 1/2017-State Tax (Rate)], dated the 29th June, 2017
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23/2017-State Tax - dated
17-8-2017
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Maharashtra SGST
GST-Specifying Conditions for submission of GSTR-3B with TRAN-1-extension of date upto 28th August 2017.
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22/2017-State Tax - dated
17-8-2017
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Maharashtra SGST
The Maharashtra Goods and Services Tax (Fifth Amendment) Rules, 2017.
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JC(HQ)-1/GST/2017/Noti/18/ADM-8. - dated
8-8-2017
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Maharashtra SGST
Extension of time limit for submission of GSTR-3 for the month of July and August 2017
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JC(HQ)-1/GST/2017/Noti/18/ADM-8. - dated
8-8-2017
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Maharashtra SGST
Extension of time limit for submission of GSTR-3B for the month of July and August 2017
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JC(HQ)-1/GST/2017/Noti/18/ADM-8. - dated
8-8-2017
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Maharashtra SGST
Extension of time limit for submission of GSTR-2 for the month of July and August 2017
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JC(HQ)-1/GST/2017/Noti/18/ADM-8. - dated
8-8-2017
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Maharashtra SGST
Extension of time limit for submission of GSTR-1 for the month of July and August 2017
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FIN/REV-3/GST/1/08 (Pt-1) “U” - dated
6-7-2017
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Nagaland SGST
GST Implementation date
Money Laundering-
3/2017 - dated
21-8-2017
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PMLA
Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2017
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (8) TMI 752
Nature of receipt towards Rent and maintenance charges - treatment as income - whether the amount received in trust for a specific performance and, therefore, should not be treated as an income in the hands of the Assessee - Held that:- This Court having decided the issue of maintenance charges in favour of the Revenue and against the Assessee for AY 2007-08, there is no reason, particularly, without any change in the circumstances in the present AY i.e. 2008-09, for the Court to take a different view in the matter as far as the maintenance charges are concerned. Treatment of ground rent - Held that:- The Court finds that the decisions of the ITAT, and even the decision of this Court for AY 2007-08, did not specifically deal with the issue of ground rent. They appear to have treated both the maintenance charges and ground rent alike whereas the decisions of the ITAT in favour of the Assessee, even for the earlier AYs, were specific to the issue of maintenance charges and not ground rent. Consequently, the impugned orders of the ITAT, the CIT (A) as well as the AO on the issue of ground rent for this AY 2008-09 is hereby set aside and the said issue is remanded to the file of the AO for re-determination in accordance with law after examining the accounts of the Assessee and any further evidence that may be led on this issue by the parties.
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2017 (8) TMI 751
Disallowance of business expenditure - Interest income - The principal source of recurring income of the assessee is from the members - as ITAT has observed, it was absolutely necessary for the assessee to maintain goodwill amongst its members and to lure them to continue to do their business with the society if it give presents to its members and to commemorate silver jubilee celebrations - Held that:- Tribunal accepted the assessee’s version that the expenditure was incurred for the purpose of business to maintain goodwill and continuity of business being provided by important members. It was pointed out that these members had provided for nearly 98% of the bank’s business and the expenditure was marginal as compared to the interest realised on advances made to such members by the bank and the amount of deposits made by the members with the bank. The Tribunal held that merely because there was no legal obligation to incur such expenditure would not mean that the same was not allowable business expenditure if it could be pointed out that the expenditure incurred in preserving the business connections and goodwill of business. No question of law arises
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2017 (8) TMI 750
Direct Tax Dispute Resolution Scheme, 2016 - scope of the term "tax arrear" - CIT was of the opinion that since the additions made for the assessment year 2007-2008 were having bearing on the materials impounded during search in case of Baldevbhai Bhikhabhai Patel, the application for being covered under the Scheme was not maintainable - Penalty u/s 271(1)(c) - Held that:- The term “tax arrear” for the purpose of the said Scheme therefore, had a definite meaning as provided in the said definition. It would include the amount of tax, interest or penalty and would be treated as a tax arrear if against such determination, appeal is pending before the appellate Commissioner on the specified date. The expression used “if it relates to any tax arrear” in subclause( ii) of clause(a) of section 208 therefore, would include penalty also. In view of such clear definition, we are unable to accept the contention of Shri Soparkar that for the limited purpose of subclause( ii), the term “tax arrear” must exclude the penalty. Reference to any tax arrear is not limited to an order of assessment or reassessment but could also be in relation to an assessment or reassessment, clearly indicating the legislative intent not to confine the term “tax arrear” in the said clause to the simplicitor tax exclusive of interest or penalty, contrary to the plain language used in the definition section. The second contention that sub-clause( ii) would not include a situation as in case of the present assessee where he himself was not subjected to survey operation, also cannot be accepted. The language used is “has a bearing if it relates to any tax arrear” and not “if it relates to any tax arrear” or some similar expression. The term “has a bearing” is much wider and must be understood in its plain grammatical meaning as to include assessment or reassessment of which a survey conducted under section 133A of the Act has a bearing. As noted, the very genesis of the reassessment proceedings in case of the petitioner assessee was the documents found and seized during the survey operation. This condition is also therefore, satisfied in the present case. We do not therefore, find any error in view of the Commissioner in rejecting the petitioner's declaration.
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2017 (8) TMI 749
Recovery of tax dues from the wife of deceased - earlier auction proceedings of the defaulter's property was stayed - While the stay order was in force the defaulter transferred the property - Subsequently, the Purchaser expired - validity of sale - The writ petition was dismissed by the learned Single Judge, mainly concluding that the defaulter having transferred the property, did not have locus standi to maintain an appeal under Rule 86 - Held that:- Admittedly, the sale was on 12.5.1995. On 12.5.95 purchaser was declared to be successful and, therefore, she deposited 25% of the purchase money and thus complied with Rule 57(1). She ought to have deposited the balance amount within 15 days thereafter. Contention of the Department and the purchaser that the interim order passed by this court on 12.5.95 prevented the authorities from accepting the balance sale consideration within the 15 days period if accepted in favour of the Income Tax Department and the purchaser, that benefit can extend only till 18.2.2005 when the stay was vacated by this court. Then also, the Purchaser or it being the estate left behind by the Purchaser, who had expired in the meantime, his legal heirs, had the duty to comply with the requirements of Rule 57(2) within 15 days thereafter. The wife of the deceased Purchaser, who also held power of attorney of the other legal heirs of the deceased, did not deposit the balance amount within the 15 days period specified in Rule 57(2), even if the said period is reckoned from 18.2.2005, when the order of stay was vacated by this court. Evidently, therefore, there is non compliance of the mandatory provisions of Rule 57(2) attracting the consequences of such default. This means that the confirmation of sale, ordered on 29.3.2005 is of a void sale and the sale certificate issued on 30.9.2005 being a dependent order is also void and is of no consequence. Any private alienation after notice under Rule 2 has been served on the defaulter, except with the permission of the Tax Recovery Officer shall be void. Sale admittedly was without the permission of the Tax Recovery Officer. Therefore, and as rightly contended by the counsel for the Revenue, the sale is void at least as against the Revenue. If that be so, insofar as the proceedings between the appellant and the Revenue are concerned, the appellant is fully entitled to maintain legal proceedings impugning the sale and the further proceedings. Therefore, this contention is only to be refuted and we do so. For all these reasons, we are inclined to think that the learned Single judge erred in dismissing the writ petition filed by the appellant. Accordingly, the judgment under appeal is set aside and Ext.P22 order passed by the first respondent is also set aside. The writ appeal is allowed as above.
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2017 (8) TMI 748
Bogus purchases made from three parties - notices issued u/s 133(6) were returned by the postal authorities with the remark, “not known” - profit estimation - Held that:- Though assessee has proved the initial onus cast upon him, but failed to substantiate the purchase with further evidence in the form of producing the parties in person as required by the AO. Therefore, considering the overall facts and circumstances of the case, we are of the view that instead of taxing the total alleged bogus purchases, the profit element embedded in such purchases only needs to be taxed. In this case, assessee has declared a gross profit of 2% to 6% in the preceding financial years. We further observe that the assessee might have saved the tax portion embedded in such purchases. If we take into account the average gross profit declared by the assessee and the probable savings on account of tax portion on bogus purchases, the assessee might have saved a profit of 6-7% on those alleged bogus purchases. Therefore, considering the facts and circumstances of the case and also to meet the ends of justice, we deem it appropriate to direct the AO to estimate profit of 7% on alleged bogus purchases from those parties. Addition towards difference in credit balances in 3 parties’ accounts - Held that:- We observe that it is quite possible in business transactions that there may be variance in bill of customers and final payment made against such bills because of various reasons. As requested by the assessee, the AO ought to have provided an opportunity to the assessee to reconcile the difference before making additions. We further notice that the assessee has filed a paper book with necessary evidences explaining the difference noticed by the AO in those parties’ accounts. Therefore, considering the overall facts and circumstances, we are of the view that the issue needs to be verified by the AO in the light of the details filed by the assessee. Hence, we set aside the issue to the file of the AO and direct him to verify the reconciliation filed by the assessee before making any addition towards difference in sundry creditors’ accounts. Appeal filed by the assessee partly allowed for statistical purpose.
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2017 (8) TMI 747
Bogus purchases from two parties - based on list of hawala operators published by Maharashtra Sales-tax Department relied upon - addition u/s 69C - reasonable profit computation in case of these transactions - Held that:- Assessee has produced certain details to prove the purchases from the said parties, in view of the fact that the assessee could not prove the existence of the parties and also could not rebut the finding of Maharashtra State Sales-tax department that the parties were hawala operators, involved in providing accommodation entries, the purchases from the said parties cannot be accepted as genuine. But keeping in view the fact that the AO had not doubted sales declared by the assessee, a reasonable inference can be drawn that the assessee has purchased goods from the grey market and obtained bills from these parties to cover up the purchases. Therefore, under these facts and circumstances, what needs to be taxed is only the profit element embedded in such purchases, but not the entire purchases from these parties. In this case, the assessee is involved in specialized business of providing lifting solutions of heavy equipment from the ground level to the critical point of its final placement which requires specialized skills and knowledge. The assessee also declared a gross profit of 37% on its gross receipts. Keeping in view overall facts and circumstances of the case, we are of the considered view that a reasonable net profit of 12.5% on total bogus purchases would be sufficient to meet the ends of justice. Hence, we direct the AO to estimate net profit of 12.5% on total purchases made from the above two parties. - Decided partly in favour of assessee.
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2017 (8) TMI 746
Assessment of Business loss in Share trading as capital gains - not allowing the set off of Brought forward business losses - assessee is engaged in the business of transport and in share trading - Held that:- The assessee has declared the business results for the assessment year 2008-09 as business loss and filed the return of income, which was accepted by the department u/s 143(1) of the Act. There was a clear identification of shares held as investment and shares held as stock in trade. This fact was not disputed by the revenue. It is for the assessee to treat a particular transaction as investment or stock in trade and whether the intention of the assessee was to make the business or as investment should be established with the financial statements and the conduct of the assessee. In the balance sheet by declaring stock in trade and accounting the purchases and sales in P&L A/c the assessee declared the intention as a business transaction but not as investments. The assessee is free to make certain assets as business assets and certain assets as investments. This view is upheld in the case of NSS Investments Vs. CIT [2005 (4) TMI 45 - MADRAS High Court]. Therefore, we hold that the assessee is engaged in the business of share trading and resultant Profit or loss required to be assessed as a business income but not as capital gains. Accordingly, we set aside the order of the lower authorities and delete the addition made by the A.O. - Decided in favour of assessee.
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2017 (8) TMI 745
Levy of penalty under Sec. 271(1)(c) - addition of interest income - Revised Computation of Income - Held that:- When no penalty had been imposed in the hands of the assessee in respect of similar ‘interest income’ which was offered for tax by the assessee by way of a ‘Revised Computation of Income’ in the course of the assessment proceedings in his case for A.Y. 2010-11, therefore, an inconsistent and whimsical approach on the part of the A.O, therein leading to levy of penalty under Sec. 271(1)(c) in respect of similar ‘interest income’ which too was offered for tax by the assessee by way of ‘Revised Computation of Income’, cannot be sustained in the eyes of law. We further find that the bonafides of the assessee that the aforesaid ‘interest income’ had inadvertently remained omitted to be reflected in his ‘Return of income’ for the year under consideration, viz. A.Y. 2011-12, further stands fortified from the very fact that the assessee had duly reflected the ‘interest income’ relatable to the said advances/deposits in his ‘Return of income’ for A.Y. 2012-13, which was e-filed on 30.08.2012. That as the aforesaid ‘Return of income’ for A.Y. 2012-13 was filed by the assessee before the issue of notice u/s 143(2) for A.Y. 2011-12 on 08.09.2012, therefore, we are of the considered view that it can fairly be concluded that such reflection of ‘interest income’ in the return of income for A.Y. 2012-13 clearly reflects the bonafide mistake of the assessee in failing to have reflected the ‘interest income’ during the year under consideration, viz. A.Y. 2011-12, which on coming to the notice of the assessee, was thus voluntarily offered for tax by the assessee. Thus we quash the penalty imposed by the A.O under Sec. 271(1)(c). -Decided in favour of assessee.
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2017 (8) TMI 744
Penalty u/s 271(1)(c) - amount parked in the ‘Suspense account’ by the assessee - Held that:- As assessment proceedings are separate and distinct from penalty proceedings, therefore, now when the aforesaid amount of ₹ 2,76,180/- (supra) was to be held as the ‘Unexplained money’ of the assessee under Sec. 69, then the same as per the said clearly worded statutory provision could only be related to and held as the income of the assessee for the year in which the investment is found to have been made by the assessee. We thus circumscribing our observations solely for the purpose of adjudication of the present appeal, are thus of the considered view that on the basis of the aforesaid material fact itself, which we find had though categorically been raised by the assessee before the CIT(A), but had not been adverted to by the latter, no penalty under Sec. 271(1)(c) could be justified in respect of the amount of ₹ 2,76,180/-(supra) during the year under consideration, viz. A.Y. 2008-09. That as we have quashed the levy of penalty imposed by the A.O under Sec. 271(1)(c) on the basis of our aforesaid observations, we therefore refrain from adverting to the other contentions raised by the assessee before the lower authorities while assailing the validity of the penalty imposed. Appeal of the assessee is allowed.
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2017 (8) TMI 743
Penalty u/s. 271(1)(c) - estimated the profit element at 2% of the value of the purchase transactions - Held that:- When the addition of ₹ 46,831/-(supra) had been struck down by the CIT(A) while disposing of the appeal filed by the assessee against the order passed by the A.O u/s. 143(3) r.w.s. 147, and the same had been substituted by an addition of ₹ 936/- which in itself had been worked out on an estimate basis by applying a profit rate of 2% on the value of the aforesaid purchase transaction of ₹ 46,831/-, and is not found to be backed by any concrete basis, therefore, we find ourselves to be in agreement with the ld. A.R. that no penalty in respect of the addition at ₹ 936/-(supra) which had been sustained in the hands of the assessee on an estimate basis can be sustained in the eyes of law. We thus in light of our aforesaid observations set aside the order of the CIT(A) and quash the penalty imposed by the A.O u/s. 271(1)(c) of the Act in the hands of the assessee. Appeal of the assessee is allowed.
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2017 (8) TMI 742
Assessment of notional rental income - self occupied property - assessee purchased two flats / properties - assessee has claimed that two flats are single residential unit used by the assessee therefore, no notional rent was required to be assessed with regard to the second flat / property - Held that:- AO in assessment order admitted this fact that the entrance of the both the units was single one and the kitchen of both the units was also be single one. However, the assessee did the modification in accordance with her convenience. The assessee also produced some other evidences to prove this fact that both the units were being used as a single unit therefore, no notional rental value of the other unit was liable to be assessed. The assessee has sold both the units by virtue of agreement dated 24.06.2010 in which the Flat No. 1401/02 have been shown as single unit. The photograph of the entrance of the flat has already been placed on record which lies at Page No. 156 to 157 of the paper book. The photograph of the kitchen has also placed on record in which the single unit was being seen and the photographs are also lies at Page No. 159 of the paper book. The assessee also adduced the telephone bill in respect of Flat No. 1401 and 1402 which lies at Page No. 160 to 162. These telephone bills speaks that the telephone bills were being issued with the name of the assessee at the Flat No.1401/02. The builder also issued the receipt and payment of the legal cost, society share money and part payment of Flat No. 1401/02 with the name of the assessee which lies at Page No. 164 of the paper book. In view of the said document and observation recorded by the AO. It is quite clear that the assessee was using the Flat No. 1401/02 as a single unit. In the said circumstances, the notional income of the second flat 1402 is not liable to be assessed separately. The annual rental value of the Flat No. 1402 be treated as nil being no notional rental income is required to be assessed in respect of a single unit. - Decided in favour of assessee. Addition of expenses - disallowance in the process of calculating rental income on deemed let out property and disallowance was computed on the basis of annual rent of both the properties - Held that:- While deciding the issue no. 1, we have arrived at this conclusion that the Flat No. 1401/02 were being used as a single unit therefore, disallowance on the basis of notional income doesn’t seems justifiable. Moreover, the assessee did not claim any expenses against the said property. Therefore, in the said circumstances, we are of the view that the finding of the CIT(A) on this issue is not justifiable therefore, we set aside the finding of the CIT(A) on this issue and allowed the expenses. Accordingly, this issue decided in favour of the assessee
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2017 (8) TMI 741
Reopening of assessment - in-genuineness of purchases - reliance on the report given by the Sales Tax Department for reopening - proof of independent application of mind by AO - Held that:- We noticed that the assessee has furnished all the evidences such as bills, delivery challans, lager account copy of the supplier, payment details through bank, quantitative details, stock register, sales invoice etc. in order to prove the genuineness of the purchases. Further, we noticed that the supplier M/s. Trishul Enterprises through its agent Mr. Suresh A. Parekh has confirmed the factum of supply of materials to the assessee. Hence, in our view, that the assessee has sufficiently discharged its burden to prove the genuineness of the purchases. On the contrary, we noticed that the Assessing Officer has simply placed reliance on the report given by the Sales Tax Department and he did not bring any material on record to disprove the claim of the assessee. - Decided against revenue.
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2017 (8) TMI 740
TDS u/s. 194J - non deduction of tds on payments made to M/s. Avery Dennisson Hong Kong BV - payment made is for technical services or software, hence, royalty - payment made for Purchase of thermal transfer printers, Purchase of barcodes and Software charges for onsite installation and operator training - assessee in default u/s. 201(1) and 201(1A) - Held that:- The payments have been made towards purchase of thermal transfer printer which is nothing but capital goods. Therefore, such payment cannot be treated as fees for technical service/royalty so as to bring them within the sweep of section 194J. The barcode stickers are nothing but stationery items purchased by the assessee. Therefore, payment made for purchase of barcode cannot be treated as fees for technical services or royalty, so as to apply the provisions of section 194J. Payments made towards software charges, onsite installation and operator training - as far as software charges are concerned, it is required to be seen whether the software supplied are in the nature of copy right or copy righted article. The afore-said factual aspect has not been examined by any departmental authorities. To put it in proper perspective, the departmental authorities have failed to properly examine the nature of payments. While A.O. has treated the entire payment as internet charges paid to M/s. Sify Ltd. The ld. CIT(A), though, has called for breakup of payment made, however, he has wrongly assumed that entire payment made to M/s. Avery Dennison was for barcode. In our view, without properly examining the facts, A.O. and CIT(A) have wrongly concluded that payment made is for technical services or software, hence, royalty. Therefore, there was no liability on the assessee to deduct tax u/s. 194J. - Decided in favour of assessee TDS u/s 194I or 194J - payment made by the assessee to M/s. Sify Ltd. towards internet charges - effect of amendment - Held that:- As could be seen, in a number of judicial precedents, it has been held that payment made towards broadband/lease line charges is not in the nature of royalty so as to attract the provisions of section 194J. Since, the services rendered are not in the nature of technical service as envisaged u/s. 194J, the ld. CIT(A) has attempted to rope in the payment u/s. 194I by referring to the definition of process as provided under Explanation (6) to section 9(1)(vi). However, the said amendment was made by Finance Act, 2012 w.r.e.f. 01.6.1976. Thus, as per existing provision, when the assessee made the payment there was no liability to deduct tax at source by treating it as royalty. The amendment made with retrospective effect cannot fasten liability on the assessee. That being the case assessee cannot be treated as assessee in default. - Decided in favour of assessee Payment made to Tracom Network Ltd. for internet/lease line charges do not attract provision of section 194J. - Decided in favour of assessee Applicability of TDS provision to service tax component in the payment made to M/s. Sify Ltd. - Held that:- Having perused the CBDT Circular no. 1/2014 dated 13.1.2014 saying service tax cannot be subject to TDS provision, we find merit in the submissions of the assessee. In any case of the matter, while deciding ground nos. 5 to 7, we have held that the payment made to M/s. Sify Ltd. do not attract the provisions of section 194J. In that view of the matter, there is no liability on the assessee to deduct tax under the said provision. Therefore, the demand raised by the A.O. u/s. 201(1) and 201(1A) have to be deleted. - Decided in favour of assessee
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2017 (8) TMI 739
Revision u/s 263 - As per CIT-A AO allowed the claim of deduction of expenses u/s. 57 whereas these expenses were related to ‘Income from house property’ and deduction of 30% was already allowed u/s. 24(a) - non application of mind by AO - change of chage by CIT-A - Held that:- Considering the factual matrix which has been brought out and which was very much available before the Commissioner, it does not justify the assertion of the Commissioner that the expenditure related to the income assessed by the Assessing Officer under the head ‘Income from house property’. In our considered opinion, the Commissioner has been influenced by the heading of schedule 15 of the Annual Accounts viz. “Expenditure in respect of Property”. In any case, once the assessee had brought to his notice the wrong factual notion entertained by him at the time of issuing the show cause notice, it was imperative for the Commissioner to have considered the same in an appropriate manner. Though the Commissioner has specifically noted this submission of the assessee but there is no negation of the same. Therefore, the very foundation of the Commissioner to embark on the exercise of invoking section 263 becomes susceptible to error. Admittedly, the Commissioner has proceeded to show cause the assessee on the ground that the expenses relate to ‘Income of house property’ and, ostensibly, such ground is not compliant with the fact-situation. Also in the show cause notice issued to the assessee by the Commissioner the charge posed against the assessee was that the expenditure of ₹ 2,23,92,358/- related to income from house property and thus, should not have been allowed as a deduction u/s 57 of the Act and, thus, it was a case of excess deduction of expenses. Pertinently, after going through the submissions furnished by the assessee, the Commissioner has changed the course while concluding that the assessment order was erroneous. In his order, Commissioner concludes that the assessment order is erroneous and prejudicial for the reason that the Assessing Officer had not gone into the whole aspect of the case and not analysed the things properly and, moreover, not brought on record all the relevant facts and documents to arrive at a proper conclusion on the issue of allowability of the expenditure of ₹ 2,23,92,358/-. Referring to Commissioner's allegation that the assessment order was passed without making enquiries and verification, the learned representative assailed such conclusion of the Commissioner by referring to the content of the assessment proceedings. Our attention was invited to an annexure to notice u/s. 142(1) of the Act, which contains queries raised by the Assessing Officer, which, inter alia, include calling for details along with supporting evidences in respect of expenditure incurred on the property. Reference was also invited to the reply furnished by the assessee, copies of which have also been placed on record. A tabulation has also been filed showing that similar claim was allowed in assessment years 2009-10 and 2010-11 also, in assessments made u/s. 143(3) of the Act. In our considered opinion, whether or not an inquiry or verification of an aspect has been carried out is matter of factual appreciation and in the present case, it is quite evident that the Assessing Officer has called for the relevant material. In fact, the manner in which the Assessing Officer has drawn up the total income in para 6 of the assessment order also reflects that he has considered the matter appropriately. In our considered opinion, the queries raised by the Assessing Officer and the manner in which he has computed the income finally in para 6 of the order clearly points out that he was conscious of the fact that the expenditure in question was not related to the income being assessed under the head ‘Income from house property’, an aspect which is supported by the fact-situation. Therefore, the charge made by the Commissioner in the order that the assessment order has been made without making enquiries and verification is factually untenable. Allegation of Non-application of mind by AO is devoid of any factual support since we have already observed that during the assessment proceedings the relevant details were called for by the Assessing Officer and the appreciation of the same by him is duly reflected in the manner in which he computed the respective incomes under the head ‘Income from house property’ as well as under the head ‘Income from other sources’. - Decided in favour of assessee.
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2017 (8) TMI 738
Addition u/s 40(a)(v) - ‘Tax’ on ‘Tax perquisite’ - admissible expenses in the hands of the employer - Held that:- The exemption under section 10(10CC) of the Act is not applicable as the tax borne by employer has already been grossed up. Moreover, exemption under section 10(10CC) of the Act has also not been claimed by the assessee. The assessee has paid tax on tax and not claimed exemption under section 10(10CC) of the Act. Therefore, in our view, there can not be any disallowance under section 40(a) (v) of the Act, and hence we confirm the order of ld CIT(A). Addition on account of interest on fixed deposit - Held that:- As limited request of assessee is for a direction to direct the AO that if the same income is taxed in the succeeding year on receipt basis then the same should be deleted in previous year, in which it had been taxed based on accrual, to avoid double taxation, we agree with the submission of ld AR and we direct the Assessing Officer to delete the interest income if the same income is offered to tax by the assessee in the succeeding assessment year. Therefore, we allow CO.No.1 for statistical purposes.
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2017 (8) TMI 737
Composite, continuous and inseparable project - computation of table income in India - turnkey project - P.E. in India - avoidance of tax by splitting the alleged composite contract into three different contracts - DTAA - whether all the three contracts are independent and separate from each other? - Held that:- A turnkey project itself indicates that it is composite contract which involves activities from the initial stage to the final stage. All the activities are either interlinked and interdependent or consequent to one another. The Hon’ble Supreme court in the case of Ishikawajima Harima (2007 (1) TMI 91 - SUPREME COURT) was dealing with the case of a turnkey project by a consortium in which the scope of work of each of the constituent of consortium was specified. The Hon’ble Supreme Court has held that A contract must be construed keeping in view the intention of the parties. Even in the case before us, though SCCL had issued a single tender document for whole of the project, the intention of the assessee to segregate the contract into three contracts was clear from the beginning. It negotiated with SCCL who ultimately agreed to execute three separate contracts with specific scope of work for each of the contracts and different time frames. Thus, the intention of the parties to have three different contracts is proved. In such circumstances, the findings of the authorities below, that all the three contracts are part of a single and composite contract are not sustainable. The question No.1 is accordingly answered in favour of the assessee. The consequential finding that in a composite contract, if there is a PE for one of the contracts, then the PE is there for all the contracts is also not sustainable. According to the revenue, the project office set up on 21.04.2008 is the PE even for the contracts I and II. This is not acceptable. Article 5(2) of the DTAA between India and Germany defines Permanent Establishment and clause (i) thereof includes a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities continue for a period exceeding six months. In the case before us, the activities under contract No.I did exceed six months. The contract was signed on 21.11.2006 while, DGMS approval was received on 18.10.2007 during which period the employees carried on the work of scientific site investigation and has also designed the mining method to be adopted for obtaining the optimum output as required under the contract. Thus, it can be said that there is a PE for contract I. The contracts II & III are to come into force only after approval of the DGMS is obtained. The results of the contract I are the basis for the design, manufacture and supply of the plant and equipment under contract II. The AO has not doubted the manufacture and delivery of the equipment outside India. His basis for bringing to tax a part of the income under contract II is that the findings of contract I are the basis for the design of the equipment and therefore part of the income is attributable to activities in India. Even if there is a PE in India for the contracts I and II, only such income which is attributable to activities of the assessee in India is taxable. There is no dispute that the entire activity of designing, (albeit with the information gathered during evaluation of the site and finalization of the project report during contract I), manufacture and delivery of the equipment including the payment was made outside India. Therefore, even if there was a PE for contract II, it cannot be said that the PE of the assessee had any role to play in any of the above activities. - Decided in favour of assessee.
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2017 (8) TMI 736
TDS u/s 195 - TDS liability on reimbursement of employee training expenses - whether payments made by the Assessee to Hunan and Hunan Law through ECGCL would constitute FTS within the meaning of the India China DTAA - condition precedent for taxing such receipts - Held that:- The training of engineers in China was done by Hunan for and behalf of the Assessee and for the specific purpose of execution of the onshore services and construction of steel plant in India. The Assessee was bound to make payment for such services to Hunan. The fact that ECGCL made payment one behalf of the Assessee which was subsequently repaid by the Assessee to ECGCL will not make the payment in question as pure reimbursement which did not involve any element of income in the hands of the recipient. Tribunal in the case of C. U. Inspections (I) Pvt. Ltd. Vs. DCIT [2013 (12) TMI 1044 - ITAT MUMBAI] held that if the Indian subsidiary company incurs expenses or makes purchases or avails any service from some third party abroad and the payment to such third party is routed through its holding or related company abroad, the provision for deduction of tax at source apply as if the assessee has made the payment to such independent party de hors the routing of payment through the holding company. The remission of amount to the holding or related company for finally making payment to the third person will be considered as payment to third party. It cannot be termed as reimbursement of expenses to the holding company. The Mumbai Tribunal further held that if the contention of the Assessee is accepted and the payment to third party, routed through its related concern, is considered as reimbursement of expenses to the related party then probably all the relevant provisions in this regard will become redundant. We therefore hold that the payments in question cannot be regarded as mere reimbursement of expenses by the Assessee to ECGCL which do not attract the provisions of Sec.40(a)(i) of the Act. Whether the payment by the Assessee to Hunan Law through ECGCL would constitute FTS within the meaning of the India China DTAA? - Held that:- The main purpose for which Hunan was employed was to train Chinese Engineers who were to visit India for carrying out the onshore services and construction of integrated steel plant in India, in English language, acquaint them with the Safety Standards which is to be followed by steel plants in India as per Indian law and to enable them to answe questions that may be asked before issue of Visa by Indian authorities. As in the case of Lloyds Register Industrial Services (India) Pvt. Ltd. (2009 (11) TMI 670 - ITAT MUMBAI) held that going by common sense training expenses cannot be called as "fee for technical services". The Mumbai Bench went on to hold that even highly qualified personnel might require training to carry out the job for which they are recruited and the person imparting training cannot be said to be rendering technical, managerial or consultancy service. It was held that such training was a continuous process because technology is changing very fast and one needs to keep touch with such technology and therefore, expenses incurred towards training cannot be termed as "fee for technical services". Article governing FTS identical to 12(4) of India-China DTAA or Article 14 of India-China DTAA will govern taxation of income derived from independent professional services in the context of rendering of legal services by non-resident - Held that:- In the case of Maharashtra State Electricity Board, (2003 (8) TMI 165 - ITAT BOMBAY-H), wherein it was held that the relevant Article of India-UK DTAA dealing with FTS was a general provision while the relevant Article of the India-UK DTAA dealing with fees for independent personal services was a specific Article and that the specific article in the DTAA would override the general article. Similar ruling in the context of India-USA DTAA was rendered by the Mumbai ITAT in the case of DCIT Vs. Chandbourne & Parke LLP (2005 (1) TMI 596 - ITAT MUMBAI). Thus no hesitation in holding that Article 14 would apply in so far as payments made to Hunan Law is concerned and since the condition precedent for taxing such receipts in the hands of Hunan Law in India are not satisfied, the said payment is not chargeable to tax in India in the hands of Hunan Law and therefore there was no obligation on the part of the Assessee to deduct tax at source u/s.195 of the Act. - Decided in favour of assessee.
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2017 (8) TMI 735
Entitlement to deduction u/s 80 HHC - Export Trading House (‘ETH’) in question was not holding a valid THC - case of the Revenue that REIL did not have a valid THC on the date it issued the certificate to the Assessee in Form 10 CCAB, the Assessee cannot get the benefit under Section 80 HHC (1) read with (1A) - Held that:- There is a discernible distinction in the legislative scheme of Section 80 HHC between, the deduction that can be claimed by an exporter and the deduction that can be claimed by a supporting manufacturer. It appears to this Court that while the supporting manufacturer certainly has to fulfil the condition of a certificate having been issued by the exporter/export trading house to avail the benefit of a deduction from the turnover that has been made available to the supporting manufacturer, expressly in terms of Section 80 HHC (1A) of the Act, the said deduction does not hinge upon the eligibility of the exporter for the deduction under sub-section (1) of Section 80 HHC of the Act. A perusal of Form 10 CCAB clearly shows that there is a separate certificate to be issued in favour of the supporting manufacturer where the exporter makes a declaration that it has not claimed a deduction under Section 80 HHC (1). There is a counter verification by the Chartered Accountant of such a certificate. It is, therefore, clear that there is no double deduction claimed in respect of the export and this is consistent with the legislative intent of extending the benefit under Section 80HHC either to the exporter or to the supporting manufacturer and not to both. Even after the period for which the renewal of the THC was sought, REIL continued to be treated as an export house and that is plain from the facts that have emerged before the CIT(A) as well as the ITAT. For the aforementioned reasons, the Court is unable to accept the contention of the Revenue in the present case that if the exporter, i.e., REIL, is not entitled to a deduction under Section 80 HHC for the AY in question then, automatically, even the supporting manufacturer, i.e., the Assessee herein, would not be entitled to a deduction under Section 80 HHC as well.- Decided in favour of assessee. - Entitlement of Supporting Manufacturer to deduction - Held that:- On the question of REIL not having a valid THC and, therefore, not being in a position, at the relevant time, to issue any certificate to the Assessee in terms of the proviso to Section 80 HHC(1) of the Act, the Court concurs with the ITAT that REIL did file an application for renewal of its THC, which was pending before the relevant authorities for four long years and was pending even on the date of the assessment order. Therefore, the extant Exim Policy for the relevant period, which expressly states that during the interim period the trading house would be eligible to claim all the facilities and benefits, would come to rescue of the Exporter/REIL and, therefore, to the further benefit of the supporting manufacturer/Assessee as well. The benefit under Section 80 HHC was, therefore, available to REIL for the exports made during this period. However, REIL having issued the disclaimer, did not, in fact, claim the deduction. The mere non-grant of the renewal of the THC by the DGFT cannot deprive the Assessee as a supporting manufacturer for the deduction it is entitled to in terms of Section 80 HHC (1A) of the Act. - Decided in favour of assessee.
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Customs
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2017 (8) TMI 771
Imposition of ADD - rubber chemicals - imported from China PR and Korea RP - N/N. 4/2016 - CUS (ADD) dated 29/1/2016 of Ministry of Finance - principles of natural justice - the decision in the case of M/s Rishiroop Polymers Pvt. Ltd. and M/s Kumho Petrochemicals Co. Ltd. Versus Union of India/DA [2016 (11) TMI 88 - CESTAT NEW DELHI] contested - Held that: - the decision in the above case upheld - present SLP dismissed - decided against petitioner.
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2017 (8) TMI 770
Imposition of ADD - rubber chemicals - imported from China PR and Korea RP - N/N. 4/2016 - CUS (ADD) dated 29/1/2016 of Ministry of Finance - principles of natural justice - the decision in the case of M/s Rishiroop Polymers Pvt. Ltd. and M/s Kumho Petrochemicals Co. Ltd. Versus Union of India/DA [2016 (11) TMI 88 - CESTAT NEW DELHI] contested - Held that: - the decision in the above case upheld - present SLP dismissed - decided against petitioner.
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2017 (8) TMI 769
Restoration of appeal - the Show Cause Notice dated 12th August, 2016 was not received by the Petitioner - Held that: - There were three notices of hearing sent to the Petitioner while the adjudication process was on. These notices dated 2nd February, 20th March and 20th April, 2017 appeared to have been sent by the Department by speed post to the above address. While the Department, in its file, has the postal receipts for dispatch of these notices by speed post, there is no tracking report showing whether, in fact, they were delivered to the Petitioner. Section 153 (a) of the Customs Act, 1962 (‘Act’) mandates the service of a notice, including an SCN, “by registered post or by such courier as may be approved by the Commissioner of Customs”. In the present case, the SCN was dispatched by ordinary post and not by the registered post. Consequently, the Department is unable to satisfy the Court that in compliance with Section 153(a) of the Act, it has, in fact, served the SCN in question on the Petitioner. Consequently, the benefit of doubt in this regard must go to the Petitioner. The matter is restored to the file of the Principal Commissioner of Customs (Preventive), New Customs House, New Delhi, for a fresh hearing of the Petitioner and passage of a fresh adjudication order on merits without reference to the orders that has been set aside by this Court - decided in favor of petitioner.
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2017 (8) TMI 768
Rate of customs duty - prawn feed - release of seized consignment - Held that: - The chemical composition of the consignment imported was allowed to be checked by the authorities by the order dated January 10, 2017. The report filed in Court by the authorities does not demonstrate that the prawn feed imported by the petitioners has the chemical composition attracting 30% Customs duty. The form of prawn feed has also not been substantiated by the Department. The claim of the Department is not sustained by the report filed in Court - petitioners are therefore liable to pay Customs duty at 5% - the Customs Authorities will release the consignment imported by the Bill of Entry Nos. 6834094, dated September 23, 2016 and 6856923, dated September 26, 2016, in the event the petitioners have paid Customs duty at 5% - petition allowed - decided in favor of petitioner.
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2017 (8) TMI 767
Revocation of CHA licence - forfeiture of security deposit - principles of natural justice - Held that: - it cannot be disputed that the principles of natural justice are applicable to the proceedings under the Customs Act as well and if such principles are not complied with, that will vitiate the proceedings. Law is settled that in an enquiry when documents are relied on against a person either copies of the documents should be furnished to the person against whom it is sought to be relied on or at least the contents thereof should be disclosed to him - None of the documents, including the offence report, were furnished to the appellant. Even the contents of these documents were also not disclosed to them. In other words, these documents were relied on against the appellant behind their back and thus in violation of principles of natural justice. Statements recorded under Section 108 of the Customs Act - Held that: - In terms of Section 138 B (2) of the Customs Act such statements could not have been used in any proceedings under the Act without the person who made the statement being examined as a witness, so long as the maker of the statement is available. Insofar as this case is concerned even the department has no case that the makers of the statements, who are very much available, were examined. If that be so, these statements could not have been relied on. The appeal is disposed remitting the matter to the respondent Commissioner who shall appoint an Enquiry Officer who shall conduct a fresh enquiry - appeal allowed by way of remand.
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2017 (8) TMI 766
Valuation of imported goods - used monitors of different brands in assorted screen sizes - enhancement of assessable value - Held that: - it is very clear that the imported goods were used monitors of different brands in assorted screen sizes and the department had to resort to Chartered Engineer assessment and also resorted to Customs Valuation Rules, 1988 to arrive at the enhanced value of US$ 8861.50. This being so, they cannot now allege arbitrariness. We therefore do not find any reason to interfere with the enhancement of the assessable value. Redemption fine - penalty - Held that: - it is very reasonable and proportionate to the enhanced value and also to the nature of the offence. This being so, the prayer of the appellants on this score also fails to impress. Appeal dismissed - decided against appellant.
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2017 (8) TMI 765
Classification of imported goods - The coal so imported were claimed to be steam coal which never attracted any duty during the material period. But other coal i.e. Bituminous coal falling under sub-heading 2701 12 00 attracted 5% duty as per N/N. 12/2012-Cus., dated 17-3-2012 - Held that: - Regarding the classification of the coal, different Benches of CESTAT have taken different views at the instance of the parties. The Chennai and Ahmedabad Benches prima facie considered these are the ‘steam coal’ attracting no duty. This was followed by Mumbai Bench. On the other hand, Bangalore Bench of the CESTAT considered it as ‘Bituminous coal’ attracting duty to 5% - the matter is subjudice before the Hon’ble Supreme Court - liberty is granted to the applicants/assessees to come again before this Tribunal after having the final verdict from the Apex Court, within the prescribed time, if advised so.
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2017 (8) TMI 763
Valuation - sanitary ware and bathroom fittings - it was alleged that all the imports made by the appellant during the last one year by way of 30 BE were undervalued - Held that: - apart from the market inquiries there is no other evidence on record disapproving the transaction value. It is well settled law that such market inquiries cannot be made the basis for enhancing the assessable value. As such, we are of the view that impugned order of Commissioner (Appeals) calls for no interference - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (8) TMI 759
Report of the Statutory Auditor contains material which tantamounts to personal vilification and character assassination and has little relevance to the financial statements of the company as prepared by him - Held that:- No doubt, every member is entitled to a true and correct picture of the affairs relating to the business of the company, but not extraneous to the same. There are allegations and counter allegations made by both the parties which are subjudice before various courts. While it may be worthwhile to mention the pendency of lis at the instance of both the parties in the Auditor's/Director's report, it would not be prudent to suggest conclusive findings on facts while the matters are sub-judice. We are also unable to appreciate the Respondent's arguments that if the incorporated remarks be defamatory in nature, the recourse to seek remedial measures by way of damages or criminal action would be open to the petitioner/applicant. It does not stand to reason as to why any petitioner should not be protected by courts if they have been vigilant to take pre- emptive steps rather than first being made to suffer despite seeking protection, only to be told to suffer first and then move the court for adjudication for any cause of action that may arise after the damage has been done. That would indeed be a travesty of justice. We arc therefore of the opinion that while the respondents shall go ahead with convening of the AGM called for on the 16th July, 2017 at the appointed time, all derogatory remarks of a personal nature, having no relevance on the financial statements shall stand deleted/expunged from the Auditor's/Director's report.
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2017 (8) TMI 758
Reduction of Share Capital - whether the interests of those members of the public who may be induced to take shares in the company are secured - whether the reduction is fair and equitable as between different classes of shareholders? - Held that:- The question of reduction of capital is a matter of domestic concern, one for the decision of the majority of the shareholders of the Company. Since the decision for reduction is based on commercial considerations undertaken by businessmen who are in the best position to know of the necessities and interests of the company concerned, in the absence of serious allegations as regards the bona fides of the proposed scheme, the Courts are hesitant. In interfering with the view of the majority. The Court has to consider whether the interests of those members of the public who may be induced to take shares in the company are secured and whether the reduction is fair and equitable as between different classes of shareholders. See Reckitt Benckiser (2005 (5) TMI 665 - DELHI HIGH COURT) The present Company Application for reduction of share capital is deserved to be allowed. Hence it is allowed and made absolute in the terms of its prayer clause. In the result the petitioner company is dispensed with the use of word “and reduced” in the name of the petitioner company or even in the memorandum of association, as no special reason is shown by the Central Government to be existing which may call for giving such direction by this Tribunal to the Company.
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2017 (8) TMI 757
Validity of allotment of shares initiated in meeting with no valid quorum - siphoning of funds - Held that:- In the case on hand, the second respondent company is closely held company. Wife of the petitioner was director of the company and she has got knowledge of allotment of 15000 shares to the first respondent in the month of December, 2007 itself. As can be seen from the winding up petition No. 58 of 2010 there appears to be civil and criminal litigations between the shareholders and the outsiders. As stated by respondent No. 1, the petitioner also suppressed the criminal prosecution filed against the 1st respondent in respect of allotment of 15000 shares. No reasons are given by the petitioner for non-filing of this petition for two years, even withdrawal of company petition No. 20 of 2010. Therefore, conduct of the petitioner goes to show that he has not only suppressed the material facts and has caused delay at every stage in questioning validity of allotment of 15000 shares to the first respondent. As no material was supplied to MGVCL, the amount of ₹ 19.97 lakhs shall be recovered from the first respondent along with interest as the contended by learned counsel of the petitioner. The said transaction took place in 2008 and the petitioner filed company petition 20 of 2010 in July, 2010 which is annexure P-6 to the petition. Reading of annexure P-6 to the company petition 20 of 2010 shows that there is no mention about siphoning of funds of ₹ 19.97 lakhs from the company to the proprietary concern of husband of first respondent. Therefore, for the first time, such an allegation was made in this petition after lapse of six years. No doubt siphoning of funds of the company, if established is an act of mis-management but the same shall be questioned by the shareholders within a reasonable time. Unless and until a thorough audit is made it is not possible to come to a conclusion that there was no supply of material by the proprietary concern of husband of the first respondent to MGVCL and the amount was not paid towards the supply of 63 Amp kit-kat fuses. It would not be appropriate or possible to have a complete audit of transactions that took place eight years back. The fact remains that wife of the petitioner was a director of the second respondent company and therefore siphoning of funds if any should have been questioned without unreasonable delay. However, the petitioner is at liberty to claim refund of the amount from husband of the first respondent by filing civil suit and by establishing that the amount was not paid for the supply of 63 Amp kit-kat fuses to MGVCL. In view of the findings there is inordinate and unexplained delay and inaction on the part of the petitioner and in view of the conduct of the petitioner in filing the petition and withdrawing the same and again filing the petition for the same reliefs and in view of several litigations pending between the shareholders and company as disclosed in company petition 58 of 2010 it is not a case where this Tribunal can exercise equitable discretionary powers in favour of the petitioner.
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FEMA
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2017 (8) TMI 756
Forfeiting the properties as order passed under section 7 of the SAFEMA, 1976 - purview of the term “associate” / "relative" - connection with alleged illegal activities of the detenu - Held that:- The only activities that have been stated in this regard are that the appellant assisted AP-1 to assume the name of Sanjay Srinath Rana and to obtain documents like Ration Card and Passport in the assumed name and that the detenu resided in the residence of the appellant through November, 2004 to April, 2005. We are of the view that the said activities by themselves would not bring the appellant within the purview of the term “associate” on the basis that she was managing the affairs of or keeping the accounts of AP-1 The explanation of the appellant in this regard is that certain documents had been given by her to AP-1/detenu to help her in obtaining the passport for her blind son Nishant Rana, which was misused by him to obtain a passport for himself in an assumed name using the same set of documents. There is also no evidence whatsoever that may indicate that the appellant was involved in the alleged illegal activities of the detenu/AP-1 in any manner whatsoever. The period of stay of the detenu at the appellant”s premises is also from November, 2004 to April, 2005 whereas the alleged illegal activity of AP-1 was of a later period viz. October, 2005. It is also observed that the impugned order is totally silent as to under which clause of the definition of associate, the appellants case is covered. We therefore find that the finding of the lower authority that the appellant would be covered within the term “associate” as defined in the Act is unsustainable. We find that the appellant cannot be considered as the wife of the detenu/AP-1 and hence not covered under the term “relative” as defined in the Act. She is also not covered within the definition of the term “associate” of detenu/AP-1 as defined under the Act. Consequently, she does not qualify as a person covered by the provisions of SAFEMA and accordingly the provisions of SAFEMA are not applicable to her. In conclusion, we find that the impugned order is unsustainable in law.
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PMLA
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2017 (8) TMI 755
Prevention of money laundering - Provisional Attachment Order - sale of property before the attachment orders - Held that:- In the present case it is not denied by the respondent that the sale deed was registered prior to the date of provisional attachment order. The mandatory notice under section 8 has not been issued to the appellant. Thus, the impugned order is not sustainable and impugned order dated 20th January, 2017 is set aside only in relation to the property no. 1 which has been purchased by the appellant prior to the date of passing the provisional order. The appellant is granted four weeks time to file reply to the notice. The Adjudicating Authority, thereafter, shall decide the matter after considering all the pleas raised by the appellant including the plea of the appellant claiming itself as a bonafide purchaser and no tainted money was paid to the vendor. The appellant would also be entitled to raise its plea under section 5(3) of the Act, which shall be also considered by the Adjudicating Authority and decide the same as per law.
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2017 (8) TMI 754
Innocent party whose immovable properties are attached by the ED - PMLA proceedings against banks - bonafide conduct of banks - Held that:- In the present case, it is undisputed facts that the attached property were purchased much prior to the period when the facility of loan sanctioned to the borrowers. The banks while rendering the facilities were boanfide parties. It is not the case of the respondent that the attached properties were purchased after the loan was obtained. The mortgaged of the properties were done as bonafide purposes. None of the bank is involved in the schedule offence. No PMLA proceedings are pending except the complainant bank was arrayed as Column;-11 at the time of framing charges. Union Bank of India has not granted sanction against its employee to proceed against him in criminal complaint. There is no criminal complaint under the schedule offence and PMLA is pending against the two banks. In case of failure on the part of borrowers to comply with the terms of settlement, the contempt proceedings are maintainable in the Court where the settlement was recorded. In view of the entire gamut of the dispute, we are of the considered opinion that the conduct of the banks are always bonafide. Both banks are innocent parties. They were legally entitled to inform the Adjudicating Authority about their innocence and they rightly did so but their contention was rejected as appeared from the impugned order. There is no nexus whatsoever between the alleged crime and the two bank who are mortgagee of all the properties which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority to the secured creditors to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The Ld. Adjudicating Authority has not appreciated the facts and law involved in these matters and the primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. All the contentions raised by Mr. Matta has no substance. The provisional attachment in the present matter is bad and against the law. In the circumstances available in the present case, the allegation of money laundering prima facie found to be unsustainable for the purpose of attachment under the PMLA, 2002.
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2017 (8) TMI 753
Provisional attachment - PMLA - Adjudicating Authority has not given any reasons as to why he arrived at the conclusion that ₹ 70 lakhs has not come from clean and legitimate source and has come from the alleged proceed of ₹ 85,28,63,700 crores and has failed to appreciate the fact that Sh. B.L. Venkataiah @ Venkaiah in his statement dated 09.06.2014 has stated that ₹ 70 lakhs went to the appellant from ₹ 104,18,55,950 crores in the account of M/s Indu Builders Held that:- We have gone through the findings and conclusion of the Adjudicating Authority available at internal page 14 to 17 of the impugned order. It is not discussed as to which of the documents supports the finding of the Adjudicating Authority that ₹ 70 lakhs was out of ₹ 85,28,68,700/- crores and not out of the 19 crores which is claimed as the legitimate money in the account of M/s Indu Builders. Since the defendant /appellant has been consistently raising the aforesaid issue that ₹ 70 crores is not from the proceeds of crime i.e. 85,28,68,700 crores but from other 19 crores, out of the total 104,18,55,950 crores in the account of M/s Indu Builders, it was necessary on the part of Adjudicating Authority to pass a speaking order on merit on this issue. Since the aforesaid issue was a contentious issue of fact before the Adjudicating Authority, it should have been decided primarily alongwith all other pleas raised by the appellant in her pleadings by the Adjudicating Authority for the better appreciation of the case in its entirety. Therefore, it is felt by this Tribunal that this case is a fit case to be remanded back to the Adjudicating Authority with direction to specifically give a clear finding as to “whether ₹ 70 lakhs is the money out of the 19 crores, claimed to be the legitimate money in the account of M/s Indu Builders or from ₹ 85,28,68,700 crore alleged to be proceeds of crime in the account of M/s Indu Builders out of the total amount of ₹ 104,18,55,950 crore. The Adjudicating Authority shall also decide all other pleas raised by the appellant in her pleadings. In the light of the above, the impugned order is set aside and the matter is remanded back to the Adjudicating Authority for deciding the matter afresh by way of a speaking order which shall disclose findings on all the issues raised by the appellant including the one mentioned in para above.
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Service Tax
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2017 (8) TMI 797
Refund of service tax - case of Revenue is that the appellant has not been able to produce any convincing evidence or additional ground in their support so as to deserve any fresh re-look of the circumstances relating to the case - Held that: - The Court finds that all the grounds concerning the rejection of the Petitioner’s claim for refund by the ACST and Commissioner (Appeals) can well be urged before the CESTAT. At the same time, the apprehension expressed by learned counsel for the Petitioner as noted hereinbefore cannot be stated to be wholly unfounded - this Court, while declining the present writ petition challenging the order dated 28th November 2016, passed by ACST, and the order dated 9th June 2017, passed by the Commissioner (Appeals-I), directs that the appeal filed against the said orders by the Petitioner before the CESTAT should be considered by the CESTAT both on the aspect of limitation and on merits - petition on remand to be decided by CESTAT only.
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2017 (8) TMI 795
Penalty u/s 78 - delayed payment of tax due to the financial hardships caused due to loss of the business - Held that: - the appellant is making payment of service tax intermittently and it is also pleaded that they were undergoing much financial difficulties due to loss of business. That there was much restriction for putting up hoardings and there were litigations pending even before the Hon’ble Supreme Court on the said issue and that this caused much financial constraints by which they could not deposit the service tax - there is no evidence to establish that there was any suppression of facts and therefore the penalties imposed under sections 76 and 78 are unwarranted and requires to be set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 794
Classification of services - non-profit organization mainly engaged in promotion of art and culture - Mandap Keeper Service or renting of immovable service - Held that: - Admittedly, the appellants rented out their premises, halls and galleries for various functions like music programs, art exhibitions, class rooms in relation with art etc. The premises are admittedly rented out for temporary occupation. The usage is mostly official, social or business function. On perusal of the materials on record, we have no hesitation to hold that the appellant’s activity is covered under tax entry of Mandap Keeper Service. Extended period of limitation - Held that: - though the appellant took registration in March, 2008, they have not discharged service tax on all rental income received by them. They have chosen to pay service tax in respect of certain premises, excluding some other premises, on their own interpretation. We do not find any bonafide belief in such act - By applying the Provisions of Section 73(1) proviso, the demand can be issued for five years from the relevant date. As such, we find no infirmity in the present proceedings on limitation. Re-quantification of tax liability by applying Section 67(2) to consider the gross value inclusive of service tax - Held that: - the same can be done on verification of invoices etc. issued by the appellant. The appeal is dismissed except for re-quantification - part matter on remand.
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2017 (8) TMI 793
Classification of services - Mining service - appellants have provided composite service with main focus on mining of China Clay, from the mines of the client - whether the service is to be classified under 'Mining service' or ‘site formation’ or ‘cargo handling’ for purpose of service tax? - Held that: - it is clear that these contracts involve raising of China Clay from the mines along with various connected activities - Tribunal in similar issues, in the case of M/s Kanak Khaniz Udyog Versus CCE, Jaipur-II [2017 (3) TMI 1365 - CESTAT NEW DELHI], has held that Having examined the scope of work undertaken by the appellant as mentioned in the SCN, we find that the same is covered under the tax entry under Section 65(105)(zzzy) of the Finance Act, 1994. The clarification dated 28.02.2007 issued by CBEC states that mining service covers cite formation and clearance, excavation and earth moving and various outsourced activities provided for mining - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 792
100% EOU - refund of unutilised CENVAT credit - various input services - furniture are hired by the appellant for the employees to use at the office premises - Held that: - The furniture are hired by the appellant for the employees to use at the office premises while working on the computers and the definition of ‘input service' under Rule 2(l) of CCR, 2004 clearly includes furniture hire as activity relating to business - refund allowed. Refund - input services - rent - repair and maintenance services - Held that: - this Tribunal in the appellant's own case, has allowed the refund of CENVAT credit on rent, repair and maintenance and furniture hiring in the final orders - refund allowed. Appeals of the appellant except the refund on rates and taxes in respect of two appeals viz., ST/20215 & 21219/2015 are allowed - appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 791
Refund claim - services received by the respondent-assessee in the course of export of their products - Natural Justice - Held that: - In a catena of decisions by the this Tribunal, it has been held that such charges like Terminal Handling Charges, Empty Container of loading Charges, Rail to yard Movement Charges and Documentation Charges etc. are all eligible services for refund under the provisions of N/N. 41/2007 - ST as amended, read with successive N/N. 17 of 2009 as amended - refund allowed - decided in favor of assessee.
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2017 (8) TMI 790
Purpose of Early Hearing of appeal - Revenue's contention is that there are huge appeals pending in Tribunal with the demand involving more than the amount stated above. If early hearing application is allowed, Tribunal will be burdened with hearing of appeals of 2017 and past appeals cannot be decided - Circular NO. CESTAT F. No.974/PR (CEGAT)/86, dated 21.02.1986 - Held that: - Early justice is the right of the litigant and expeditious delivery of justice is the olive branch of the constitution. Unless justice is delivered expeditiously, litigant's confidence on law is shacked. This principle guides for expeditious disposal of litigation. It appears that Revenue's argument calls for evolvement of a policy by Hon'ble President for discerning the cases for grant of early hearing - Registry is directed to place the record before the Hon’ble President to hear the issue and evolve poly if any, as he pleases, relating the entertainment of early hearing applications at the interest of justice.
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2017 (8) TMI 789
Valuation - includibility - transaction fee/turn-over charges - Held that: - the appellant has not produced any plausible evidence to show that the transaction charges cannot be included in the gross value. Further, it has also not produced Circular or Instructions issued by the NCEDX with regard to the application of the stock broker to collect a specified percentage as transaction charges on their credit value from the clients and pass the same to the respective stock exchanges - collection of transaction charges should form part of the gross value under Section 67 ibid for the purpose of payment of Service Tax. Extended period of limitation - Held that: - the SCN should have been issued within one year from the relevant date, seeking confirmation of the adjudged demand - In the present case, since the SCN was issued on 28.01.2009 for recovery of Service Tax demand from 01.04.2005 to 31.08.2006, the same is clearly barred by limitation of time inasmuch as, there is no element of suppression, mis-statement etc. in the case of the appellant for defrauding the Government revenue. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (8) TMI 788
Condonation of delay - Valuation - deduction of discount - the decision in the case of M/s Mercedes-Benz India Pvt. Ltd. Versus CCE, Pune-II [2016 (10) TMI 79 - CESTAT MUMBAI], contested - Held that: - Delay in filing these appeals is condoned - appeals admitted.
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2017 (8) TMI 787
Benefit of exemption under N/N. 6/2002 CE dated 01.03.2002 as amended by Notfn No. 47/2002-CE dated 06.09.2002 - contract of construction of pipeline - whether the department's view that in the assessee's contract there is no element of 'water treatment plant' hence they are not eligible for exemption justified? - Decision of tribunal [2016 (10) TMI 907 - CESTAT HYDERABAD] contested. Held that:- The judgment of the learned CESTAT in the case of CCE, C & ST, Hyderabad Vs. IVRCL [2008 (12) TMI 198 - CESTAT, BANGALORE] relied upon to pass the impugned order was challenged by the Revenue before this Court in Civil Appeal D. No.24379 of 2009 [Commissioner of Central Excise, Customs & Service Tax (Appeal-III) Vs. M/s IVRCL Inrastructures and Projects Ltd. & Anr.] - The said appeal of the Revenue has been dismissed by this Court and the judgment of the relied upon judgment of the learned Tribunal has been affirmed. There is no live issue for adjudication in this appeal - appeal dismissed - decided against the revenue.
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2017 (8) TMI 786
CENVAT credit - packing material - The main allegation in the show cause notice is that the credit is not eligible as it was availed by the assessee under the erstwhile Rule 6 of Service Tax Credit Rules, 2002 and also for the reason that the advertisement and insurance services have no nexus with the output service of clearing and forwarding agent service - Held that: - In a catena of decisions, it has been held that when input services, are related to the business activities of the assessee, are eligible input services - The second allegation that the assessee is not eligible for availing credit is that since the same was availed under the erstwhile Rule 6 of Service Tax Credit Rules, 2002. This is without any basis. Rule 11 of CENVAT Credit Rules, 2004 provides for the transitory provision to avail and utilize the credit which was accumulated prior to coming into existence of the new legislation of CENVAT Credit Rules, 2004. On such score, we find that disallowance of ₹ 39,09,292/- for this reason also is unjustified - The impugned order dropping the demand of ₹ 39,09,292/- is upheld and the order passed by the Commissioner disallowing the credit of ₹ 49,00,192/- is modified to the extent of allowing the credit of ₹ 39,09,242/- and disallowing the balance. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 785
Unjust enrichment - refund claim - Section 4A of the Central Excise Act - whether the doctrine of unjust enrichment is attracted where the appellants have cleared the goods on MRP based assessment, as required under Section 4A of the Central Excise Act? - Held that: - this Tribunal in the case of Amadalavalasa Cooperative Sugars Ltd [2007 (1) TMI 432 - CESTAT, BANGALORE] and in the case of Girish Foods & Beverages [2007 (2) TMI 28 - CESTAT, MUMBAI] have held that where clearances were based on MRP or fixed-price it have been held that the duty differential burden was not passed on and accordingly, unjust enrichment is not attracted. It is an admitted fact that the appellant have received the same price/MRP for clearances of goods on 06 December, 07 December, 08 December, and so on. Accordingly there can be no presumption that the appellant have passed on the excess duty deposited erroneously on 07 December, to the buyer of the goods - the doctrine of unjust enrichment has been satisfied by the appellant assessee and appellant are entitled to refund of the amount in question. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 784
CENVAT credit - department was of the view that appellants are not eligible for availing credit on the mixer-grinder assembly received by them - whether the appellants are eligible to avail credit on the mixer-grinder assembly received by them from M/s. Videocon Appliances Ltd.? - Held that: - It is not disputed that at the time of clearance of the combi pack containing both refrigerator and mixer-grinder, the appellant have paid excise duty on the composite price. So also after receiving the mixer-grinder assembly, the appellants have unpacked the same and fixed power cord and wiring harness in order to complete the product. In such a case, the credit availed on the mixer-grinder assembly / parts by the appellant, in our view, appears to be legal and proper - reliance placed in the case of COMMR. OF C. EX., CUS. & ST., DAMAN Versus PRIME HEALTH CARE PRODUCTS [2010 (10) TMI 881 - GUJARAT HIGH COURT], where it was held that Provisions contained in Section 2(f) of the Central Excise Act, 1944 which defines the word “manufacture”. It includes any process in relation to the goods specified in the Third Schedule, which includes packing or re-packing of such goods in a unit container - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 783
Classification of goods - plastic ropes - Whether the report of the chemical examiner is admissible or not if the same is admissible whether the goods are correctly classifiable as plastic ropes to demand duty or not? - Held that: - the report of the chemical examiner is doubtful. Accordingly, the same cannot be the basis to determine the quality/classification of the goods in question manufactured form LDPE. Whether any evidence has brought on record by the Revenue to allege that the goods in question are manufactured from LDPE or not? - Held that: - During the investigation, there was statement of the appellant that they never purchased LDPE and purchased HDPE and PP and no evidence has been brought on record by the Revenue that the appellant has purchased LDPE. In the absence of evidence on record without bringing on record how the goods manufactured from LDPE, the demands are not sustainable. Whether the show cause notice is sustainable or not? - Held that: - It is seen that as per test report, deniers of the goods in question is 305.55 which is equal to 339.5 decitex. As per Section XI of Textile and Textile Articles, clause 12 (A) (b) states that man-made fibres (including yarn of two or more mono-filaments of Chapter 54), measuring more than 9000 deniers which is equal to 10000 decitex as per HSN. The adjudicating authority without any reasoning classified the goods in question, one plastic ropes which less than 10000 deniers to demand duty. Therefore, without classifying the impugned goods, the adjudicating authority cannot demand duty from the appellant. On this account also, the demand is set aside - the SCN is also barred by limitation. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 782
CENVAT credit - Channels, Plates, TMT bars etc. - inputs - capital goods - Rule 2 (k) and Rule 2 (a) (A) of Cenvat Credit of Rules, 2004 - Held that: - the matter is covered by Tribunal’s decisions in cases of CC & CCE., Vishakhapatnam-II V/s APP Mills Ltd. [2013 (7) TMI 494 - CESTAT BANGALORE] and Simbhaoli Sugars Ltd. Vs CCE, Meerut-II [2016 (3) TMI 615 - CESTAT ALLAHABAD], whereunder Cenvat credit for subject items has been allowed to the assessee - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 781
Manufacture - process of kitting various sub assemblies were grouped into a kit and the kit also including certain components which were procured indigenously - It appeared to Revenue that such activity of kitting was assembly of machines by putting together various components to bring into a new machine and amounts to manufacture by invoking provision under Section Note 6 of Section XVI of Tariff Act - Held that: - the requirement of facts for invocation of said Note are that at the beginning the goods should have essential character and they should be incomplete or unfinished and if any process is undertaken to make them complete and finished than such process amounts to manufacture - In the present SCN, which components are having essential characters and in which aspect they are incomplete or unfinished and which activities were undertaken to make them complete and finished are totally absent. Therefore, we do not find that the facts of the case justify invocation of provision of said Section Note 6 to Section XVI of Tariff Act, 1985 - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 780
Reversal of cenvat credit after finished goods become exempted goods - N/N. 10/2003 - Held that: - Hon’ble Madras High Court in the case of Tractor and Farm Equipment Ltd. Vs CCE Madurai-II - [2014 (12) TMI 905 - MADRAS HIGH COURT] has held that If credit can be taken against excise duty on a final product manufactured on the very day, it makes it abundantly clear that there need not be co-relation between the input and the goods cleared and as a result, validly taken credit need not be reversed - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 779
Whether the imported resins used in the manufacture of polished granite is a raw material or consumable - 100% EOU - Notification No.8/97-CE dated 1.3.1997 - Interest - Penalty - Held that: - In the case of Gem Granites Vs. Commissioner of customs, Seaport (Import), Chennai - [2007 (5) TMI 101 - CESTAT, CHENNAI] wherein it was held that the Bench considered Notification No.23/03-C.E. as well. It also took into account the Development Commissioner1s clarification which was to the effect that the resins used by EOUs in the polishing of granite blocks were only consumables. We are in full agreement with the view taken by the co-ordinate Bench. Accordingly, it is held that the appellants did not use any imported ‘raw material’ in the manufacture of ‘polished granite slabs’ during the material period and hence were eligible for the benefit of concessional rate of duty under Notification No.23/03-C.E. ibid - Appeal allowed.
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2017 (8) TMI 778
Clandestine removal - On physical verification of stock of finished goods shortage of finished products to the extent of 88.209 MT was noticed - demand confirmed on the basis of the kachha slips and inculpatory statements given by Sh. J. D. Pant, General Manager as well as Sh. Prem Chand Jain, Director - Held that: - since the adjudicating authority has given detailed findings that all the goods covered by 25 kachha parchis have been cleared on payment of duty, we find no reason to take a different view. The allegation of clandestine removal has been upheld in respect of goods mentioned in the seven parchis only on the basis of inculpatory statements given by Sh. J.D. Pant, General Manager and Sh. P.C. Jain, Director. We find from the record that Revenue has not undertaken any verification either with the buyers or even with the transporters. No investigation appeared to have been carried out to prove that such goods were manufactured in the factory but not accounted for. Clandestine clearance is a serious allegation and needs to be established on the basis of tangible evidence. It is well established fact that only on the basis of the inculpatory statement, the charges of clandestine clearance cannot be upheld - The inculpatory statements given by the General Manager and Director also do not specifically cover the seven parchis. In the absence of any corroborative evidence to indicate that the goods covered by seven parchis were cleared by the appellant, we are of the view that the charge of clandestine clearance and demand of duty cannot be sustained. Appeal allowed - decided in favor of assessee.
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2017 (8) TMI 777
Penalty - interest - compounded levy scheme - Appellant defaulted in discharging their duty liability for the period from November 1997 to March 1998, which was paid later - Held that: - Hon'ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills Vs CCE [2015 (11) TMI 1172 - SUPREME COURT], where it was held that demand of interest as well as the imposition of penalty under the said provisions of Central Excise Rules is ultra vires - interest and penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 776
Manufacture - job-work - printing of information - whether the process amounts to manufacture? - Held that: - There is no manufacture in mere printing of information and this is settled law and there is no change in the product after the printing is carried out and the process cannot be said to be 'manufacture' - The appellants were engaged in the activity of printing on paper certain instructions for use of goods which would be wrapped therein for the surgical gloves made by a 100% EOU i.e., M/s. Kemwell International Ltd. and the paper so printed was folded by the buyer of the same and the buyers (i.e., EOU) puts their goods therein. The raw materials M. G. Paper and ink were supplied by the 100% EOU. So their activity is considered as job work up to March 2000 and not 'manufacture' - demand withheld - appeal dismissed - decided against Revenue.
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2017 (8) TMI 775
Utilisation of raw materials procured under CT-2 form - Revenue alleged that the raw materials received under CT-2 forms were not used in the manufacture of power driven pumps primarily designed for pumping water - Held that: - raw materials procured under CT-2 form prescribes that the goods procured through these forms shall be subject to the conditions of N/N. 5/1998-CE dated 02/06/2000, No. 6/2000-CE 01/03/2000 and 3/2001-CE dated 01/03/2001 - When the Notification requires that duty-free raw materials should be used for duty-free output, such object should not be defeated. Present cases are clear violation of law and that should not get any protection. Due to paucity of time the order could not be recorded and the order is reserved to come up on 30/06/2017. Proceedings having been recorded both sides are entitled to get copy thereof on proper application.
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2017 (8) TMI 774
SSI exemption - Clearance for export through merchant exporter - N/N. 9/2003-C.E., dated 28-2-2003 - Revenue alleged that the goods not cleared for home consumption cannot be cleared under concessional rate of duty under Notification No. 9/2003, hence demanded the differential duty - Held that: - Unless it is shown that the clearance challenged by the Revenue is not within the total permissible clearance, exemption cannot be denied - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 773
Valuation - discount/commission - includibility - It is the case of the Revenue that this amount deducted as trade discount is nothing but commission while it is the case of the assessee-appellant that the amounts disputed are discount - whether discount/commission given to the sales agent is to be included in the assessable value? - Held that: - One transaction of the sales is regarding direct sale to the customers which is executed and overriding commission is paid to the sales agent in the area and such commission is included in the assessable value for discharge of Central Excise duty. There is no demand of duty on these transactions. The second set of transactions is that the appellant sells their product directly to the sales agents. Appellant insists trade discount of 10%/20% on these transactions to the traders who purchases the goods from the appellant and market the same on their own in their area. This transaction is in dispute. There cannot be any dispute as to the fact that the sales agent can definitely function in dual role one as a commission agent and seller of the appellant’s product. The lower authority seems to have confused with the entire issue by mixing up both the sales transaction - even if these discounts offered by the appellant to the sales agent in a transaction on sale of principal-to-principal basis is towards rendering of certain services which at the most can be called as after sale services. In the case in hand there is no dispute as to the fact that the appellant raises invoice on the sales agent indicating trade discount 10% to 20% and discharges the duty liability. There is nothing on record to show that the sales agents in respect of 2nd set of transactions has paid any further amount in respect of these transactions to appellant. In the absence of any evidence, each and every sales invoices raised by the appellant could be a separate transaction and Central Excise duty is payable on the amounts received for such invoices. Demand set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 772
Time limitation - for the purpose of demand within the normal period in terms of Section 11A(3)(ii)(a) which period will be covered? - penalty - Held that: - according to Section 11A(3)(ii)(a) the period would be the six months prior to the date of issue of show cause notice i.e. the date on which the duty is to be paid under this act or the rules made thereunder. In view of this provision, it can be seen that for the purpose of show cause notice the relevant date is due on filing of monthly return - In the present case for the period Nov., 1997 the date of filing of return is 15-12-1997 therefore period November, 1997 also covered in the show cause notice dated 5-6-1998 - respondent is liable to pay duty right from 1st November, 1997 onwards till the date, demand was raised. Penalty - Held that: - Shri MK Gandhi had no knowledge that goods is liable for confiscation, for the reason that goods was not in possession of Shri MK Gandhi - penalty set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 764
100% EOU - proceedings against appellant as well as on his partner - C.B.E. & C. Circular No. 11/2016-Cus., dated 15-3-2016 - co-noticee in the context of Section 28 of the Customs Act, 1962 - Held that: - The circular clarified that when the noticee pays up the entire duty, interest and penalty, under such circumstances the proceedings shall be considered as closed not only against the noticee but also against the other persons to whom any demand of duty is envisaged but on whom penalty might have been imposed. Since Section 11A under which the present notice has been issued is pari materia to Section 28 of the Customs Act, similar benefit would be extendable to the appellant and partner - the proceedings are to be deemed concluded not only against the appellant but also against the partner of the appellant - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (8) TMI 762
Jurisdiction - input tax credit - whether the VATO (Audit) can pass an assessment order in terms of the Delhi Value Added Tax Act, 2004? - Held that: - Chapter X of the DVAT Act deals with the audit, investigation and enforcement. Under Section 58 (1) of the DVAT Act, the Commissioner may serve on any person a notice informing that an audit shall be performed and an assessment already abated with the reopening. In terms of Section 58 (3), the person on whom the notice is served is expected to provide all cooperation and reasonable assistance as may be required to conduct the audit proceedings. Section 58 (4) states that the Commissioner shall, after considering the return, the evidence furnished with the returns, if any, the evidence acquired in the course of audit, if any, or any information otherwise available to him, either confirm the assessment under review or serve a notice of the assessment or re-assessment of the amount of tax, interest and penalty pursuant to Sections 32 and 33 of the DVAT Act. Therefore, Section 58 (4) itself contemplates the auditor carrying out an assessment or re-assessment as the case may be, in terms of Sections 32 and 33 of the DVAT Act. At the time when the impugned orders of default assessment of tax, interest, and penalty were passed by the VATO (Audit) in the present case, the above order was in force. It is a validly issued order and is not a subject matter of challenge in the present proceedings. The above order delegates to the VATO all the powers of an auditor under Section 58 of the DVAT Act for (a) confirming the assessment under review or (b) serving a notice of assessment or re-assessment - in the present case, the impugned orders of default assessment of tax, interest and penalty issued by the VATO (Audit) were validly issued and were within his powers and jurisdiction in terms of Section 58 (1) read with Section 58 (4), and Section 66 read with Section 68 of the DVAT Act. Under the OVAT Act the officer undertaking the audit has to forward the report to the assessing officer who then, in terms of Section 42 of the OVAT Act, makes an 'audit assessment'. The position under Section 58 of the DVAT Act is very different - appeal dismissed - decided against assessee.
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2017 (8) TMI 761
Rejection of Compounding application - the petitioner has not remitted tax along with the compounding application - for invoking the benefit under second proviso to Section 16(2), whether the petitioner will have to pay tax or not? - Held that: - proviso to Section 16(2) is a measure to entertain a belated application under Section 8. It is in that context, to enable a dealer to avail the benefit of Section 16(2), a condition was imposed that the dealer shall pay tax under Section 8 along with interest due thereon. In that view of the matter, since the petitioner had not paid tax along with interest at the time of filing the application, the petitioner is not entitled for the benefit - petition dismissed - decided against petitioner.
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2017 (8) TMI 760
Determination of intra-sale or inter-state sale - Compounding - case of respondent is that the subject matter transaction is a sale, taken place within the State of Tamil Nadu attracting the tax under the Value Added Tax at the rate of 5% and not the Inter State Sale as claimed by the petitioner - Held that: - It is not the case of the first respondent that the necessary documents are not available in the vehicle which transported the goods. On the other hand it is admitted by the first respondent that the consignor is the Steel Authority of India Limited, Salem - it is evident that the goods were moving from Salem to Pondicherry and such movement is supported by the material documents viz., Invoice, Consignment Note and Transit Pass. When those material documents are evidently showing the Inter State sale, the first respondent, that too being a Check Post Official, is not justified in over stepping his role and coming to the conclusion as if the sale is local sale, which in my considered view, is not the role of the Check Post Official and on the other hand it is for the Assessing Officer of the concerned assessment circle to consider and decide - the first respondent is directed to release the goods forthwith - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (8) TMI 796
The petitioner has been debarred from participating in the tender process or entering into any contract/sub contract for a period of three years by the Ministry of Finance - Held that: - Since it is an admitted case that the petitioner had not deposited the complete dues of EPF till that date (and had deposited it on 05.11.2013), the respondent proceeded to pass the impugned order - A bare perusal of the letter dated 30.04.2013 indicates that there is no mention of blacklisting in the said letter. Thus, clearly the petitioner was not informed of any action such as blacklisting being contemplated against it. It is now trite law that an order of blacklisting has serious consequences on the party being blacklisted. In the present case, the letter dated 30.04.2013 did not indicate that any punitive measure was contemplated; the petitioner was called upon to provide certain details and was cautioned that "any lapse on submission of details will be viewed as gross violation of Labour Laws/Service tax rules". Thus it is apparent in the facts of the present case that no show cause notice as required was issued by the respondent and, consequently, the impugned order is not sustainable - petition allowed - decided in favor of petitioner.
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