TMI Tax Updates - e-Newsletter
August 5, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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Income Tax:
Reopening of assessment - The present case is where the issuance of notice itself is bad issued by the authority who was not competent - Reference to section 292BB of the Act by the counsel of the revenue would need summary rejection. - HC
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Income Tax:
Deduction u/s 801A - the Tribunal has rightly held that the assessee is entitled for deduction under Section 801A of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the asseessee. - HC
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Income Tax:
Roads and boundaries, railway sidings, jetty pire, bouys, mooring and navigation structure can be considered as plant and machinery for the purpose of granting of depreciation under Sec. 32 - HC
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Income Tax:
Allowance of process loss in Sun Flower Oil - only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. - HC
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Income Tax:
Addition under section 68 - whether the items sold were the same which were disclosed under VDIS? - Since the same quantity which was disclosed under VDIS was sold, we find no justification in making the addition on introduction of sale proceeds in the books of account - AT
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Customs:
Valuation - import of old and used printing machines of Heildelberg make from Finland - The payment of duty and clearance of goods on enhanced value in order to avoid delay and demurrage cannot be held against the importer - AT
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Customs:
Refund of interest paid - appellant avoided the payment of Customs duty till the clearance of the goods, therefore the interest chargeable to the warehouse goods after expiry of one year is inevitable. Therefore the interest paid by the appellant under any circumstances is not refundable - AT
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Corporate Law:
Restoration of name in the register of companies maintained by the Registrar of Companies - annual returns and balance sheets were not filed for almost fourteen years - the name of the petitioner company, its directors and members shall, stand restored to the Register of the respondent, as if the name of the company had not been struck off, in accordance with S.560(6) of the Companies Act, 1956. - HC
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Indian Laws:
Inter-corporate deposit is not in the nature of loan or advance within the meaning of section 2(7) and therefore, not chargeable to the interest-tax under section 5 - HC
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Service Tax:
Levy of penalty u/s 76 - waiver u/s 80 - reasonable cause - the financial difficulty is not a valid reason for waiving penalty when a statutory payment had not been made - AT
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Service Tax:
Technical Inspection and Certification Service of seeds produced by the seeds producer - the activity undertaken by the respondents are not a sovereign function and the respondents are liable to pay service tax - AT
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Service Tax:
Import of service or not - “courier” service and “air travel agency” service - “last mile” delivery of packages - the overseas correspondents ensure delivery of such packages to the consignees. It is therefore amply clear that the role of the overseas entity commences and ends beyond the border of India. - no service tax liability - AT
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Service Tax:
Refund - Rule 5 of the Cenvat Credit Rules, 2004 - eligible input services - It can be seen that most of the credit claimed by the appellant pertains to the period prior to 1/03/2006, during which period credit of service tax paid on services used for manufacture of goods exported was not permissible at all. - AT
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Central Excise:
Whether market purchase goods can be treated as duty paid goods - manufacture of knitted or crocheted fabrics of cotton - Held Yes - Benefit of exemption notification would be available to all these assessees - SC
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Central Excise:
Classification of goods - coated paperboard, coated on one side with China clay and the same - the goods cleared by the respondent are un-coated paperboard sheet/paperboard - manufacturer has correctly classified the goods under Central Excise Tariff sub heading 4802.10 - AT
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Central Excise:
Demand of duty - forced statement - On photocopies of the invoices, the witness was forced to write in his handwriting as per the wishes of the departmental officers. This issue has neither been denied by the Revenue - No demand - AT
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Central Excise:
Entitlement of writ petitioner to interest under section 11BB of the central excise act 1944 on delayed excise duty refund - language of Section 11B is very clear and unambiguous. The Section does not distinguish or differentiate between any kind of excise duty refund, whether duty paid in excess or duty paid which are exempted - HC
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Central Excise:
Excess of physical stock noticed as compared to that recorded in the RG-1 register - huge difference found can not be on account of processing loss. Also it is not logical that the appellants would weigh the raw material while charging the furnace but no weigh the finished goods which come out from the furnace - AT
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Central Excise:
Levy of penalty under Rule 25 of CER, 2002 – issuing invoices without accompanying the goods - appellant not dealt with the excisable goods at all. The penalties on the appellant under Rule 25 of the Central Excise rules, 2002 read with section 11AC of the Act are not warranted. - AT
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VAT:
Input tax credit - Whether the use of the furnace oil as processing materials or consumable stores - captive generation of power - Held Yes - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (8) TMI 114
Reopening of assessment - Assistant Commissioner jurisdiction to issue notice - Held that:- Assistant Commissioner, Circle 5(2) had no jurisdiction to assess the petitioner. She could not have issued notice for reassessment. This is not a mere irregularity or a defect which can be cured, but question of jurisdiction of the authority to reopen the assessment. In administrative or quasi judicial matters, where exercise of powers are well regulated and segregated through rules and regulations or administrative instructions, no authority or officer who is not vested with the jurisdiction of the particular nature can exercise such powers which would be purely a case of lack of authority failing which there would be a total anarchy and any officer positioned at any place may choose to exercise jurisdiction over any assessee. Reference to section 292BB of the Act by the counsel of the revenue would need summary rejection. The said provision guards against any objection to service of notice particularly when an assessee has despite any defective service of notice participated in the proceedings. Such is not the facts in the present case. The present case is where the issuance of notice itself is bad issued by the authority who was not competent. This is a case of defect in issuance of notice and not service of notice. - Decided in favour of assessee
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2016 (8) TMI 113
Interest on inter corporate deposit - whether was not chargeable to tax under the Interest Tax Act? - whether inter corporate deposit can neither be treated as loan nor an advance? - Held that:- Questions raised in these appeals are already settled by a judgment of the Delhi High Court rendered in the case of Commissioner of Income-tax v. Visisth Chay Vyapar Ltd., [2011] (Delhi) (2011 (8) TMI 783 - Delhi High Court ] wherein, it has been held that the expression advance occurring in section 2(7) along with the expression loan should take its colour from loan and cannot be given wider interpretation to include deposit as well, otherwise, money deposits given for investments, etc., would also qualify as advances and interest thereon would become exigible to the Interesttax Act. Such a situation was never contemplated by the legislature. Hence, inter-corporate deposit is not in the nature of loan or advance within the meaning of section 2(7) and therefore, not chargeable to the interest-tax under section 5 - Decided in favour of the assessee
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2016 (8) TMI 112
Deduction u/s 801A - non deduction of amount of subsidy given by the government to the farmers, for the purpose of allowing deduction u/s 801A - Held that:- The issue is squarely covered by the decision of the Hon’ble Supreme Court in case of Commissioner of Income Tax versus Meghalaya Steels Ltd. [2016 (3) TMI 375 - SUPREME COURT ] wherein the Hon’ble Supreme Court by placing reliance on the decision in case of CIT versus Sterling Foods [1999 (4) TMI 1 - SUPREME Court] lays down a very important test in order to determine whether profits and gains are derived from business of an industrial undertaking. There should be a direct nexus between such profits and gains and the industrial undertaking or business. Such nexus cannot be only incidental. Therefore the Tribunal has rightly held that the assessee is entitled for deduction under Section 801A of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the asseessee. We therefore answer the question in favour of the assessee and against the revenue.
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2016 (8) TMI 111
Depreciation computation - whether the depreciation should be allowed on the original value of assets even though certain assets were old and obsolete and the respondent had claimed depreciation in its books of accounts for the same? - Held that:- The depreciation provided in the books in the years when the income was exempt cannot be treated as the depreciation “actually allowed”. Accordingly, it was held that as the assessee was not required to compute profits and gains of business or profession under the Income-tax Act, mere passing of accounting entry made for depreciation in the books of accounts was not the depreciation “actually allowed” as there was no liability to tax and hence, no income-tax assessment for this period. It has further held that the written down value (WDV) for the purpose of assessment would be the original cost less nil, i.e., the original cost. This interpretation is not in conformity with the intent and purpose of the provisions of depreciation. Accordingly, Explanation 6 has been inserted in sub-section (6) of section 43 to clarify that in such a case - (a) the actual cost of the asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account of the assessee; (b) the total amount of depreciation on such provided in the books of account of the assessee in respect of such previous year or years preceding the previous year relevant to the assessment year under consideration shall be deemed to be the depreciation actually allowed under the Income-tax Act for the purposes of sub-section (6) of section 43; (c) the depreciation actually allowed as above shall be adjusted by the amount of depreciation attributable to such revaluation.- Decided against assessee Roads and boundaries, railway sidings, jetty pire, bouys, mooring and navigation structure can be considered as plant and machinery for the purpose of granting of depreciation under Sec. 32. See Commissioner of Income-Tax v. SLM Maneklal Industries Limited [1993 (6) TMI 51 - GUJARAT High Court] - Decided in favour of assessee.
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2016 (8) TMI 110
Allowance of process loss in Sun Flower Oil - ITAT allowed the claim - Held that:- Tribunal has considered the facts on record. Several relevant factors have been examined. These facts included uncertainty of the nature of business and fluctuating nature of process loss. By the very nature of things, the business of assessee depended on quality of cotton seed oil procured from the market. Such cotton seed oil depending on quality of cotton produced being an agricultural commodity, naturally quality would depend on the seeds used, the technique employed by farmers for production, soil, rainfall, irrigation and so on. In absence of any additional material, only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. Tribunal had also relied on certificate given by the supplier of machine who stated that typically the process loss ranges between 2.65% to 4.20%. - Decided in favour of assessee. Depreciation on trucks given on hire - Held that:- As the trucks were not used in the business of running them on hire, the Tribunal was not right in allowing depreciation at the rate of 40% by reversing the order of the Commissioner (Appeals). The depreciation on trucks ought to have been restricted to 25% as has been rightly granted by the Assessing Officer which has been confirmed by the Commissioner (Appeals). - Decided in favour of revenue.
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2016 (8) TMI 109
Addition unexplained credit under Section 68 - copy of the report not furnished to the Assessee - CIT-A deleted the addition confirmd by ITAT - Held that:- As noted the settled legal position that "it is mandatory for the AO to confront the assessee with any material collected by the AO at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered on unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal." The CIT (A) concluded that the Assessee had discharged the onus of proving the identity, genuineness and creditworthiness of the four parties and that it was the AO who failed to bring material on record to doubt those materials. Having perused the impugned of the ITAT, which has discussed the materials on record extensively and concurred with the CIT (A), this Court does not find any substantial question of law arising for determination. - Decided against revenue
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2016 (8) TMI 108
Addition on account of unverifiable and bogus liability - ITAT deleted the addition stating that the same can't be added u/s. 41(1) or Sec. 68- Held that:- As the entire issue is based on appreciation of evidence on record. CIT (Appeals) as well as the Tribunal both concurrently found that the assessee had produced sufficient material to establish the claim. The Assessing Officer had raised demands which were not possible to meet with. - Decided against revenue
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2016 (8) TMI 107
TDS u/s 194C or 194J - TDS on Port Charges - as per the AO the services provided by the C & F agents were in the nature of ‘professional services’ - Held that:- It is clear that C & F agents are nowhere remotely indicated in the explanation to Section 194J of the Act. In the decision rendered by the Delhi High Court in the case of Hindustan Lever Ltd. (2012 (12) TMI 846 - DELHI HIGH COURT), the Court has held that tax is deductible under Section 194C in relation to warehousing charges paid to clearing and forwarding agents. We find that the CIT(A) as well as Tribunal has not committed any error in deleting the deduction of tax at source by applying provisions of Section 194C instead of 194J of the Act. - Decided in favour of the assessee
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2016 (8) TMI 106
Disallowed capital loss - Held that:- Tribunal was right in allowing the short term capital loss on sale of mutual funds within one day after earning tax free dividend income thereon.
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2016 (8) TMI 105
Revision u/s 263 - whether AO failed to make detailed inquiry with respect to issue of capital gain - Held that:- From the record we can see that the Assessing Officer had examined entire transaction including from the point of view of the confirming party receiving considerable portion of the sale proceeds. This is not a case where the Assessing Officer failed to enquire into the transaction at all. Further, the Revenue has not brought anything on record to suggest how the sale proceeds of ₹ 3.69 crores in the hands of Genus Commu Trade Pvt Ltd. was treated. Surely on the receipt of sale proceeds of ₹ 3.69 against the price of ₹ 1.60 crores paid by the Genus Commu Trade Pvt Ltd. on 23.11.2004, the said company also would be answerable to and subjected to capital gain. Without any murmur about how the Revenue treated such proceeds in the hands of the Genus Commu Trade Pvt Ltd., it would not be proper to question the very transaction and seek to tax the difference in the hands of the assessee.
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2016 (8) TMI 104
Disallowance of deduction claimed u/s.80IA - Held that:- From the records it is borne out that the unit is registered with the Central Excise Department and Sales Tax Authority which charges excise duty on the goods dispatched from the undertaking at Daman. The Excise Register maintained by the assessee is being verified by the Central Excise and Customs Department. Learned advocate for the revenue could not rebut this finding. Moreover, from the report of the Assessing Officer himself, there were more than 10 persons working in Daman. We have also gone through the report dated 23.06.2003 addressed by the ITO Ward-2, Mehsana that the assessee had purchased the diesel for the power requirement for the industrial undertaking. We have gone through the orders passed by the CIT(A) as well as the Tribunal who have given detailed reasons for deleting the disallowance. The assessee was allowed such deduction in the earlier years and no action u/s 263 or 147 was taken against the assessee. Therefore we do not see any reason for interference so far as the first question is concerned. With regard to the question regarding disallowance of salary, we are of the view that the Tribunal has rightly proceeded on the footing that since at the time of inspection it was found that the employees were actually engaged in the factory at Daman and merely that the assessee has not employed employees regularly it cannot be the basis of disallowing salary. In view of the evidence in the form of salary register and the statements of employees and the partner etc., the CIT(A) and the Tribunal has rightly deleted the disallowance. We do not find any infirmity in the impugned orders passed by the Tribunal.- Decided in favour of the assessee
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2016 (8) TMI 103
Penalty levied under Section 271 (1)(c) - Held that:- It is self evident that the issue in question was highly debatable one to various judicial forums giving different interpretations. Assessee having supplied all the primary facts cannot be held to have concealed income or furnished inaccurate particulars of income - Decided in favour of the assessee.
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2016 (8) TMI 102
Bogus expenditure - allowance of depreciation - whether regular assessment require fresh investigation and finding although the fact remain that the purchase of plant and machinery was already established as bogus in the Block Assessment ? - Held that:- Regular assessment of the assessment year 2000-01 was completed under section 143(3), in which the aforesaid purchases of ₹ 3,14,47,344/- were not held to be bogus and depreciation of such purchase was allowed. In the assessment year 2001-02 depreciation has been claimed on the written down value and the learned Tribunal has allowed that. Mr.Nizamuddin was unable to point out any mistake on the part of the learned Tribunal in allowing the claim for depreciation. In that view of the matter, we are of the opinion that this appeal is wholly un-meritorious and the same is dismissed. The question formulated is based on incorrect assumption of facts.
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2016 (8) TMI 101
Unpaid sales tax liability - deduction in view of Section 43B - Held that:- The issue raised herein viz. the sales tax collected by the assessee in the last quarter of the year was paid in the subsequent quarter before filing of the return, is to be allowed as a deduction in view of Section 43B of the Act, stands concluded against the Revenue by the decision of the Apex Court in Allied Motors (P.) Ltd. v/s. Commissioner of Income Tax [1997 (3) TMI 9 - SUPREME Court ] . - Decided in favour of the assessee Excise duty portion included in the closing stock - deduction in view of Section 43B - double deduction - Held that:- There is no question of double deduction, as deduction under Section 43B of the Act is allowable only on actual payment. The actual payment of ₹ 877.38 lakhs has admittedly been done during the previous year relevant to the subject assessment year for which the deduction is claimed. There could be no occasion of making the same payment of ₹ 877.38 lakhs on duties/taxes in future. This is so as the payment has been made in the previous year relevant to the subject assessment year. Accordingly question covered by the decision of the Apex Court in Berger Paints India Ltd. (2004 (2) TMI 4 - SUPREME Court ). Accordingly, both the questions are answered in the negative i.e. in favour of the assessee
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2016 (8) TMI 100
Disallowance of employer's and employee's contributions of PF and ESI - amount paid within the due date of filing return of income under Section 43B and Section 2(24)(x) read with Section 36 (1) (va) of the Act? - Held that- Where the assessee was entitled to make payment under the Provident Fund Act within grace period and that if within that grace period, the contribution has been deposited by the assessee, it cannot be said that assessee has not deposited the amount within due dates, as prescribed under the Provident Fund Act and consequently, the assessee was entitled to get deduction of the amount contributed. See The Commissioner of Income Tax Versus Amoli Organics (P) Ltd. [2013 (11) TMI 971 - GUJARAT HIGH COURT ] . Hence, the order passed by the Tribunal dated 02.01.2007 and by the Assessing Officer dated 24.02.2006 are quashed and set aside. The matter is remitted to the Assessing Officer for consideration of the first question afresh in light of the aforementioned judgment of this Court. Whether, the omission of second proviso to Section 43B by Finance Act, 2003 being curative in nature has retrospective effect or not? - Held that:- The issue s also settled by the judgment of this Court rendered in CIT v. Cadila Pharmaceuticals Ltd., [2013 (12) TMI 1591 - GUJARAT HIGH COURT] wherein, it has been held that in view of retrospective amendment in first proviso to section 43B, the Tribunal was justified in deleting disallowance in respect of unpaid PF / ESI amount, which remained unpaid even during grace period available. Thus, the second issue is answered in favour of the assessee
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2016 (8) TMI 99
Applicability of provision of Section 40(a)(ia) - whether, a sum paid by the assessee to a contractor, during the previous year ended on 31st March, 2005 is deductible ? - Held that:- Admittedly, the Finance Act, 2004 got presidential assent on 10th September, 2004. The assessee could not have foreseen prior to 10th September, 2004 that any amount paid to a contractor without deducting tax at source was likely to become not deductible under Section 40. It is difficult to assume that the legislature was not aware or did not foresee the aforesaid predicament. The legislature therefore provided that the act shall become operative on 1st April, 2005. Any other interpretation shall amount to “punishing the assessee for no fault of his” following the judgment in the case of Hindusthan Elector Graphites Ltd. [2000 (3) TMI 2 - SUPREME Court ]. On the top of that, Section 4 relied upon by Mr.Agarwal merely provides for an enactment as regards rate of tax to be charged in any particular assessment year which has no application to the case before us. Section 11 of the Finance Act by which Clause (ia) was added to Section 40 of the Income Tax Act does not provide that the same was to become effective from the assessment year 2005-06. It merely says it shall become effective on 1st April, 2005 which for reasons already discussed should mean to refer to the financial year. There is, as such, no scope for any ambiguity nor is there any scope for confusion. Tribunal erred in applying provision of section 40(a)(ia) in disallowing payment to a contractor without deducting TDS during the financial year 2004-05, corresponding to assessment year 2005-06. - Decided in favour of the assessee.
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2016 (8) TMI 98
Addition being the difference between the annual lease rent receivable and received - assessee paid the full amount of lease rent of ₹ 1,18,42,200/- and the three companies, the lessor, the assessee and the sub-lessee were sister concerns - Held that:- There is no denial of the fact that the bona fide of the transaction was never in dispute. There is evidence to show that the assessee resolved to remit the sum of ₹ 1.5 crore. There is also evidence to show that the assessee received only a sum of ₹ 75 lakhs. In that view of the matter, the addition of the sum of ₹ 1.5 crore, made by the Assessing Officer and upheld by the CIT(A) was rightly deleted by the learned Tribunal. In that view of the matter, the question formulated is answered in the affirmative and against the revenue.
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2016 (8) TMI 97
Method of computation of deductions under Section 80HHC(3) - ITAT directing AO not to deduct the amount in respect of disclaimer certificate issued by the assessee under the proviso to sub-section (1) of Section 80HHC of the Act and directing the Assessing Officer to allow the assessee’s claim for deduction - Held that:- Cconsidering the decision of the Honble the Supreme Court in the case of Jeyar Consultant and Investment Pvt. Ltd (2015 (4) TMI 195 - SUPREME COURT ), the question, which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving any elaborate reasons for the same as in the case of Jeyar Consultant and Investment Pvt. Ltd (Supra) it is held by Hon’ble the Supreme Court that if there is net profit from the export business, after adjusting the losses from one type of export business against profits from another type of export business, the benefit of the provision would be granted. The Tribunal is justified in deducting the loss from the gross profit and the benefit is rightly granted on the basis of net profit. Since the supporting manufacturer has made loss, there is no question of claim being made by assessee. Accordingly, the question is answered against the appellant – revenue and in favour of the assessee.
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2016 (8) TMI 96
Computation of deduction under Section 80HHC - whether export incentive will become part of the income from business - Held that:- The issue raised is covered by the Department’s Circular No.564 dated 05.07.1990 wherein, it has been provided in Clause (5) under the head of “Clarifications regarding calculation of deductions” that cash compensatory support (CCS), duty drawback (DDK) and profit on sale of import entitlement licences (I/L) shall be taxable under the head “Profits and gains of business or profession” in view of the amendment of Section 28 by The Finance Act, 1990. All the three export incentives shall have to be included in the profits of business for computing the deduction u/s.80HHC. - Decided in favour of the assessee and against the Revenue. Deduction under Section 80IB - duty free import benefit inclusion - Held that:- The issue is settled by the judgment of Apex Court in the case of Liberty India v. Commissioner of Income-tax, [2009 (8) TMI 63 - SUPREME COURT ] wherein, it has been held that duty drawback receipts / Duty Entitlement Pass Book benefits are on account of statutory provisions in Customs Act / Schemes framed by the Government and therefore, profits so derived do not form part of net profits of eligible industrial undertaking for purposes of Sections 80IB, 80I and 80IA. Learned counsel Mr. Dave could not point out any distinguishing feature, which may warrant a different view. Exclusion of sales-tax and excise duty from the total turnover for the purpose of computation of deduction under Section 80HHC - Held that:- Commissioner of Income-tax, Coimbatore v. Lakshmi Machine Works, [2007 (4) TMI 202 - SUPREME Court] wherein, it has been held that excise duty and sales tax cannot form part of the “total turnover” under Section 80HHC(3) as they do not have any element of “turnover”, which is the position even in the case of rent, commission, interest, etc. Further, the excise duty and sales tax are indirect taxes. They are recovered by the assessee on behalf of the Government and therefore, if they are made relatable to exports, the formula under Section 80HHC would become unworkable. Learned Standing Counsel Mrs. Bhatt could not point out any distinguishing feature, which may warrant a different view. - Decided in favour of the assessee and against the Revenue. Deduction under Section 80HHC - income from the sale of scrap - Held that:- As settled by the judgment of Apex Court in the case of Commissioner of Income-taxVII, New Delhi v. Punjab Stainless Steel Industries, [2014 (5) TMI 238 - SUPREME COURT ]. In that case, the issue was whether “turnover” would mean only the amount of sale proceeds received in respect of goods in which an assessee is dealing in for computing deduction u/s.80HHC of the Act. The assessee therein was a manufacturer and exporter of stainless steel utensils and was using stainless steel sheet as raw material. The scrap of raw material, which was not capable of being used, was sold as scrap because it could not be recycled in the same form of sheets of stainless steel, as the assessee was not having a rerolling plant. On these facts, the Apex Court held that proceeds generated from sale of scrap could not be included in “total turnover” for the purpose of computation for deduction u/s.80HHC. - Decided in favour of the assessee and against the Revenue. Deduction under Section 80HHC - net interest received from customer - Held that:- As in the case of ACG Associated Capsules (P) Ltd. v. Commissioner of Income-tax, Central-IV, Mumbai, [2012 (2) TMI 101 - SUPREME COURT OF INDIA ] wherein, it has been held that Explanation (baa) to section 80HHC states that “profits of the business” means the profits of the business as computed under the head “Profits and Gains of Business or Profession” as reduced by the receipts of the nature mentioned in clauses (1) and (2) of the Explanation (baa). Thus, profits of the business of an assessee will have to be first computed under the head “Profits and Gains of Business or Profession” in accordance with provisions of Sections 28 to 44D. In the computation of such profits of business, all receipts of income, which are chargeable as profits and gains of business under section 28, will have to be included. Similarly, in computation of such profits of business, different expenses which are allowable under sections 30 to 44D, have to be allowed as expenses. After including such receipts of income and after deducting such expenses, the total of the net receipts are profits of the business of the assessee computed under the head “Profits and gains of business or Profession”, from which deductions are to be made under clauses (1) and (2) of Explanation (baa)- Decided in favour of the assessee and against the Revenue. Deduction under Sections 80HHC and 80IB - discount / kasar and subsidy on energy audit - Held that:- Revenue, states that she does not press both the issues in view of the Circular No.21/2015 dated 10.12.2015 issued by Central Board of Direct Taxes, New Delhi wherein, it has been decided that no appeals shall be preferred before High Courts in cases where the tax effect does not exceed the monetary limit of ₹ 20.00 Lacs. It is also decided that the said Circular shall apply retrospectively in pending appeals as well. Hence, both the issues are answered in favour of the assessee and against the Revenue.
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2016 (8) TMI 95
Addition under section 68 - whether the items sold were the same which were disclosed under VDIS? - Held that:- We find that the same quantity of gold, silver and diamonds which were declared under VDIS was sold. Though the assessee has declared the gold, silver and diamond jewellery in different form under VDIS, but in sale bill the assessee has sold gold & silver bullion and diamonds separately. The assessee has filed evidence with respect to conversion of gold and silver jewellery into gold bullion & silver bullion and diamonds. Since the same quantity which was disclosed under VDIS was sold, we find no justification in making the addition on introduction of sale proceeds in the books of account - Decided in favour of assessee.
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Customs
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2016 (8) TMI 143
Failure to fulfill export obligation - EPCG scheme - The petitioner seeks a review of the aforesaid judgment on the ground that the exports obligation was met in terms of Deutsche Mark (DM) and its rupee equivalent ought to have been adjusted against the export obligation mentioned in rupee terms. - Held that:- If only the Rupee specified amount is met, it would result in reduction in quantum of foreign currency (US$) and would provide an unintended relief to the petitioner. Such interpretation of the EPCG Scheme would defeat its very objective, which was to earn more foreign exchange/convertible currency for the Indian economy. Hence, the petitioner cannot seek to circumvent the export obligation by bringing in lesser foreign exchange. It is also not known whether at the relevant time Deutsche Mark was kept in the basket of freely convertible currency, by Government of India. No apparent error in the order is shown. - Decided against the petitioner.
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2016 (8) TMI 142
Levy of penalty - imposing physical penalty on the petitioner to the tune of ₹ 15 lakhs on the ground that the petitioner has failed to fulfill the conditions of license granted by virtue of advance authorization No.0410078753 dated 21.02.2006 - Held that:- the bonafides of the petitioner may be reconsidered by the first respondent, after inviting appropriate report from the third respondent in this regard. - matter remanded back.
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2016 (8) TMI 141
Valuation - import of old and used printing machines of Heildelberg make from Finland - Held that:- We find neither the alert nor the circular can substitute the legal provisions of Section 3 read with the Valuation Rules of 2007. Further, the lower authority invoked Rule 9 which talks about residual method of valuation. Here it has to be noted that the imported goods were very old and used. Atleast two machines are admittedly manufactured in 1982 i.e. before 28 years of import. The importer cannot be faulted for not producing the original price of the imported item at the time of their manufacture. It is not clear as to why the lower authority rejected the report given by the Chartered Engineer appointed by the department. The foreignsic test done also categorically stated that there is no tempering with any label of the machines. Inspite of all these facts the lower authority went ahead and did some search in internet and fixed the value for imported goods. The importer did not accept the enhanced value of imported printing machines. It is an admitted fact that they have been contesting the valuation. The payment of duty and clearance of goods on enhanced value in order to avoid delay and demurrage cannot be held against the importer. - Decided in favor of assessee.
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2016 (8) TMI 140
Revocation of license - forfeiture of ₹ 20,000/- from the security deposit furnished by M/s.Geo Cargo Express - Held that:- it is clear that time limits prescribed under Regulation 22 of CHALR, 2004 have been violated. Regulation 22 (1) stipulates that, the Commissioner of Customs shall issue a notice in writing to the Customs House Agent within 90 days from the date of receipt of offence report - Decided in favor of CHA and against the revenue.
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2016 (8) TMI 139
Refund of interest paid - Additional Customs Duty (CVD) and interest paid under protest for ex-bonding of their imported capital goods, warehoused in their Customs Private Bonded Warehouse. - he subject refund claim were filed on the ground that when the goods were imported and in-bonded, they were not having EPCG Scheme licence and by the time the EPCG licence allowing full duty exemption to the said in-bonded goods was issued, the initial warehousing period under Section 61 of Customs Act, 1962, was expired and they could not avail the full exemption under EPCG license as the ex-bond clearance was held up for want of extension of warehousing period by the proper authority. Held that:- In the peculiar facts of this case, even though the licensing period was expired nothing prevented the appellant to pay the duty and clear the goods, if they are really very serious to avoid the payment of interest. It is also the fact that the appellant avoided the payment of Customs duty till the clearance of the goods, therefore the interest chargeable to the warehouse goods after expiry of one year is inevitable. Therefore the interest paid by the appellant under any circumstances is not refundable. - Decided against the assessee.
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2016 (8) TMI 138
Valuation - principle of res judicata - related persons - goods imported was enhanced by royalty equal to 3% of the importer's selling price of the licensed products - Held that:- It is clear that in such cases the principle of res judicata does not apply. In both the cases relied by the Revenue the decision was accepted by Revenue and principle of res judicata was applied against Revenue. In this case it is other way round. Since the decision of Tribunal in the case of Hewlett Packard is in identical circumstances. Thus, we hold principle of res judicata does not apply in the instant case. From the clause 5 of the agreement, it is crystal clear that the net sale price on which 3% royalty is paid by the appellant is without deduction for components imported from HUSCO, in other words the value of imported goods is included in the net sale price of appellant s manufactured goods. In view of this undisputed fact, it is apparent that the decision of the Hon’ble Apex Court in the case of Matushita Television & Audio Ltd. (2007 (4) TMI 5 - SUPREME COURT OF INDIA) is squarely applicable to the present case. - Decided against the assessee.
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2016 (8) TMI 137
Confiscation of import of vehicle - import of mobile concrete pump placer boom pump of 120 Cu. MT capacity mounted on Volvo Chasis. - The appellant claimed the classification of the product under CTH 8705 and claimed the benefit of notification No. 21/2002 Sr. No. 230, List No. 18(Item No. 17). - Held that:- in view of facts and circumstances of the case there is no malafide intention on the part of the appellant. They only made their claim for change of classification even though in the bill of entry they initially classified the goods under CTH 8705. We are of the view that merely because the appellant claimed such classification it cannot be tantamount to mis-declaration. The only implication in case of CTH 8705, Homologation certificate has to be produced and in other classification the same is not required. The whole issue gets boiled down to the point that even if it is presumed that the goods is classified under CTH 8705 the only lapse on the part of the appellant is that they have not produced Homologation certificate. It is also observed that the claim of the appellant of classification under CTH 8413 does not benefit them in respect of custom duty, for the reason that the goods falling under CTH 8705 or 8413, both are eligible for exemption notification No. 21/2002-Cus. Redemption fine and penalty imposed by the Adjudicating authority require reduction. Since we are deciding only quantum of redemption fine and penalty, we are not addressing legal issue of classification of the goods therefore the same is kept open. - Decided partly in favor of assessee.
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Corporate Laws
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2016 (8) TMI 129
Restoration of name in the register of companies maintained by the Registrar of Companies - Held that:- Under the circumstances, it is entirely possible that the respondent had sent notices under S.560 to the petitioner on the old address of its registered office and the same may not have been received by the petitioner. Consequently, the condition precedent for the initiation of proceedings to strike off the name of petitioner from the Register maintained by the respondent was not satisfied. Looking to the fact that the petitioner is stated to be a running company; and that it has filed this petition within the stipulated limitation period t is only proper that the impugned order of the respondent dated 23.06.2007, which struck off the name of the petitioner from the Register of Companies, be set aside. At the same time, however, there is no gainsaying the fact that a greater degree of care was certainly required from the petitioner company in ensuring statutory compliances. Looking to the fact that annual returns and balance sheets were not filed for almost fourteen years, the primary responsibility for ensuring that proper returns and other statutory documents are filed, in terms of the statute and the rules, remains that of the management. Accordingly, the petition is allowed. The restoration of the company’s name to the Register maintained by the Registrar of Companies will be subject to payment of costs of ₹ 22,000/- to be paid to the common pool fund of the Official Liquidator, and the completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late deposit of statutory documents within 8 weeks; the name of the petitioner company, its directors and members shall, stand restored to the Register of the respondent, as if the name of the company had not been struck off, in accordance with S.560(6) of the Companies Act, 1956.
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Service Tax
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2016 (8) TMI 150
Import of services or not - ntellectual Property Right service - taxability u/s 66A - Held that:- to be categorized for service tax purpose under IPR, such right should have been registered with trade mark/patent authority. In the present case, admittedly, there is no right recognized as IPR under any law for the time being in force in India. As such, there can be no provision of IPR service for tax liability on reverse charge basis. - Demand set aside - Decided in favor of assessee.
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2016 (8) TMI 149
Levy of penalty u/s 76 - waiver u/s 80 - reasonable cause - assessee had paid the entire demand along with interest before the adjudication process - Held that:- assessee's business was closed down and they were not in a position to pay the service tax. It is my view that the financial difficulty is not a valid reason for waiving penalty when a statutory payment had not been made - The parameters of section 80 of the Act would not apply as no reasonable cause has been shown. - penalty not waived - Decided against the assessee.
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2016 (8) TMI 148
Waiver of pre-deposit - Demand of service tax - providing various services to IRCTC - "Business Support Services" (supply of bed rolls for the rail passengers), "Outdoor Catering Services" (supply of newspaper, Catering Charges, renting of immovable property (hall rent/restaurant lease rent), intellectual property tax (royalty income), etc. - Held that:- At this prima facie stage, we find that the applicant did provide taxable services to IRCTC. The nature of such taxable services along with its correct classification is subject matter of detailed examination at the time of final disposal of the appeal. At this prima facie stage, we find that the applicant has failed to make a case for full waiver of all the adjudicated dues for admission of their appeal. - stay granted partly.
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2016 (8) TMI 147
Technical Inspection and Certification Service of seeds produced by the seeds producer - issuing the certificates - Extended period of limitation - revenue submitted that the activity undertaken by the respondents is not a sovereign function as per the section 9 of the seeds act, 1966 - Held that:- the activity undertaken by the respondents are not a sovereign function and the respondents are liable to pay service tax on their activity under category of "Technical Inspection Clarification Services". The show cause notice have been issued by the invoking extended period of limitation, the demand' of extended period of limitation is not sustainable as there was no mala-fide intention of the respondents not to pay service tax in the light of the clarification issue by the Commissioner of Servicer Tax Ahmadabad on 27-09-2006 - demand of extended period of limitation is not sustainable. Demand confirmed for the normal period only. - assessee is entitle for cum tax benefit - Decided partly in favor of Revenue.
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2016 (8) TMI 146
Waive of pre-deposit - Club and Association services - applicant has provided services to Haryana Tourism Corporation and receiving the supervision charges from 2% to 3% on the contract value - Further, it was revealed that the applicant is an Apex Co-operative Society registered under the Society Act, they have been formed for the welfare, safeguard and to promote the interest of individual labour in the state of Haryana and 19 societies are members of the applicant, its members had contributed some fixed amount at the rate fixed by the Registrar Co-operative Societies, Haryana. Held that:- Prima-facie we view that the activity undertaken by the applicant are having certain objects and for attain those objects, the applicant is receiving certain contribution charges or supervisions charges. Although they are fixed by Haryana Tourism Corporation but prima-facie the activity is in nature of the allegation alleged. We also take note of that prior to 01.05.2011, the taxable service means any service provided by the Club and association in relation to provision of service facility or subscription or any other amount. The said definition have been changed w.e.f. 01.05.2011 therefore, prime facie, we are also of the view that for the period prior to 01.05.2011 for the demand of service tax, the applicant is having a strong case. - stay granted partly.
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2016 (8) TMI 145
Import of service or not - “courier” service and “air travel agency” service - “last mile” delivery of packages booked by their customers in India - taxability u/s 66A of the Finance Act, 1994 - Held that:- The manner in which each of the taxable services are deemed to be received in India is laid down in the Taxation of Service (Provided from Outside India and Received in India) Rules 2006. Therefore, the leviability of a tax in the hands of recipient of a service will necessarily have to be in accordance to the provisions of the said Rules. Mere reliance on section 66A of Finance Act, 1994 without reference to the relevant provisions of the Rules is not sufficient to sustain a demand for service tax. The services rendered by the overseas entities to the appellant is a performance-based service and, to become taxable, requires that at least some portion of that be rendered in India. The role of the overseas entities commences upon the landing of the packages at the airport of destination. From there, the overseas correspondents ensure delivery of such packages to the consignees. It is therefore amply clear that the role of the overseas entity commences and ends beyond the border of India. It therefore, cannot be said to be in conformity with Rule 3 of the Taxation of Service (Provided from Outside India and Received in India) Rules 2006. - Demand set aside.
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2016 (8) TMI 144
Nature of activity / services provided by the assessee - security services or civil construction services - The appellate authority examined the provisions of section 44 AD(1) of Income Tax Act and observed that the said section not only relates to the business of civil construction but also to supply of labour for civil construction. As such, it cannot be said that the appellant was engaged in the business of civil construction merely on the ground that the assessment has been done under section 44AD(1) of the Income Tax Act. As regards bills, he observed that same were not produced before the original adjudicating authority, as such amount to introduction of new evidence. Held that:- It is not clear as to under which category the services being provided by the appellant are being classified. Even if they relate to the providing labour for construction. As per the appellant, during the relevant period, there was no service tax heading under the Finance Act, 1994, which read as security and placement service. Matter needs re-examination and revaluation of entire evidence on record. - matter remanded back.
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2016 (8) TMI 130
Refund - Rule 5 of the Cenvat Credit Rules, 2004 - eligible input services - proof / evidence that the services were used in respect of exports - Held that:- It can be seen that Notification No.5/2006 provided for refund of Cenvat credit availed in respect of inputs or input services used in or in relation to manufacture of final products which is cleared for export under bond or letter of undertaking. However, prior to 14/03/2006 Notification No.11/2002-CE (NT) dated 01/03/2002 provided for such refunds under Rule 5 of the Cenvat Credit Rules, 2002. The said notification provided for refund of Cenvat credit of specified duty allowed in respect of inputs used in or in relation to manufacture of final products which are cleared for export under bond. It can be seen that prior to 14/03/2006 the refund of credit of Cenvat in respect of 'input services' was not permitted under Rule 5 of the Cenvat Credit Rules or the notification issued thereunder. It can be seen that most of the credit claimed by the appellant pertains to the period prior to 1/03/2006, during which period credit of service tax paid on services used for manufacture of goods exported was not permissible at all. Refund denied - Decided against the assessee.
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Central Excise
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2016 (8) TMI 128
Whether market purchase goods can be treated as duty paid goods - manufacture of knitted or crocheted fabrics of cotton - benefit of concessional rate or nil rate of duty to the knitted garment manufacturers allowed on certain conditions - Notification No. 14/02-CE and 15/02-CE both dated 01.03.2002 - divergent view is taken by the different Benches of the Tribunal. - One of the conditions is for full exemption is that knitted garments are exempt if manufactured out of knitted fabrics on which appropriate duty of excise has been paid and no cenvat credit of duty paid on inputs or capital goods has been taken. If Cenvat credit is taken, the duty is at concessional rate. - Held that:- A reading of the Budget Explanatory Note makes it clear that those who did not want to avail MODVAT facility were allowed to clear the goods without payment of any excise duty. It is in this context that the authorities were asked not to insist upon any documentary proof for payment of duty and this was transported into the notification, in the form of Explanation II. It, therefore, becomes clear that when Explanation II states that the duty shall be deemed to have been paid even without production of documents evidencing payment of duty thereon, it was clearly meant that no duty was required to be paid by the manufacturers of knitted garments. Such an intention is clearly reflected in the Government's own Budgetary Notes extracted above. We, thus, hold that Explanation II to the said exemption Notification Nos. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion. It would be pertinent to mention here that Condition No. 3 which uses the words “read with any notification for the time being in force” was put in place to overcome the interpretation that was given by this Court in Dhiren Chemical Industries case. Benefit of exemption notification would be available to all these assessees. - Decided against the revenue.
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2016 (8) TMI 127
Valuation - petroleum products - difference in quantity of petroleum products at normal temperature room temperature converted to the notional temperature of 15 degree temperature - Held that:- Considering the aforesaid facts, in our view, the issue being of valuation of the excisable goods, the appeal before this Court is not maintainable. Accordingly, the appeal is dismissed as not maintainable. However, the appellant, if so, advised, may avail of appropriate remedy before Hon'ble the Supreme Court. - Decided against the revenue.
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2016 (8) TMI 126
Cenvat Credit - demand raised on the allegation that in Unit I of the appellant has cleared credit availed raw materials, without proper invoices and attributed shortage of the stock - validity of retracted statement - Held that:- Though show cause notices have been issued by the original authority, for the shortage of raw materials noticed, which includes, allegation of clandestine removal of raw materials, the finding of the original authority against the revenue, on the latter, is clear. When the department has not chosen to challenge the finding of the original authority, on the allegation of clandestine removal of raw materials nor filed any cross-objection to the appeal filed by the assessee, we are of the view that the finding rendered, by the original authority, in favour of the assessee, has reached finality. As rightly contended by the learned counsel for the appellant, instead of addressing the issue, as to whether, the appellate authority had acted beyond the scope of the appeal, and exceeded in his jurisdiction, the Tribunal passed an order, impugned before us, elaborating, as to how, adjudication has to be done, with reference to the aspect of clandestine removal of raw materials, which in our considered opinion, is jurisdictionally erroneous. On the facts and circumstances of the case, we hold that the directions issued by the appellate authority and that of the Tribunal, run contrary to the principle of "no reformatio in peius". Decided partly in favor of appellant with direction of re-adjudicate the issue to the limited extent.
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2016 (8) TMI 125
Waiver of pre-deposit - Constitutional validity of amendment made in Section 35F of the Central Excise Act, 1944 - retrospective or prospective - Held that:- so far as question pertaining to Constitutional validity of the amendment and its retrospective effect or prospective effect are concerned, since such questions are not examined by us, liberty can be reserved to raise such issues at a later stage, in the event the appellants are unsatisfied with the decision of the Tribunal. We find that we need not address on the said aspects, except giving liberty to the appellants to agitate such questions as and when such controversies arise. The appeal filed by the appellants No. 1 and 2 shall be examined on merits by the Tribunal, after the deposit of the amount of ₹ 45 lakhs by the appellant – Company and such amount shall be deposited by the appellant No.1 – Company, within three weeks from today. The Tribunal shall decide the said appeal as early as possible, preferably within three months from the date of receipt of copy of this order.
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2016 (8) TMI 124
Entitlement of writ petitioner to interest under section 11BB of the central excise act 1944 on delayed excise duty refund – Held that:- language of Section 11B is very clear and unambiguous. The Section does not distinguish or differentiate between any kind of excise duty refund, whether duty paid in excess or duty paid which are exempted. Review sought for on the ground that two Central Government circulars dated 19-12-2002 and 08-12-2006 says section 11B not applicable to in case of exemption notification. Review petition dismissed.
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2016 (8) TMI 123
CENVAT Credit availed on various input services - eligibility - Rule 2(l) of Cenvat Credit Rules, 2004 - nexus with manufacturing activity - input services related business activities undertaken by the appellants. - the appellants have been taking a consistent stand that in their case Outdoor Catering services, Club or Association service, Health and Fitness Services are three services on which CENVAT Credit from 1.4.2011 is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, which is incorrect as these services are utilized for the business meetings held at various places including AGM. Held that:- It is not the case of the Revenue that these services used for personal consumption of employees. In the absence of any such dispelling, it is to be held that these services on which CENVAT Credit have been availed are not for personal consumption of the employee but it was billed for service provided for business meetings. In our considered view, the judgment of the Tribunal in the case of J.P. Morgan Services (I) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai (2015 (11) TMI 101 - CESTAT MUMBAI), will cover the issue in favour of the appellant in respect of these three services for the period after 1.4.2011. Credit allowed - Decided in favor of assessee.
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2016 (8) TMI 122
Cenvat Credit - eligible inputs - defective duty paying documents - credit taken on assembly Canvass Canopy, Castable Refractory, Doors, Windows and Frames of the vehicles. - Held that:- So far as Cenvat Credit with respect to CS Spoon, Assembly, Canvass Canopy, it is observed that this Bench in appellant s own case of Tata Motors Ltd. vs. CCE, JSR (2010 (10) TMI 458 - CESTAT, KOLKATA) held that credit on these items along with refractories used for lining of furnace is admissible. Similarly in para 16 of these case laws, it is held that when goods under job-work are received after 180(one hundred and eighty) days then credit can be taken again as per the provisions of Rule 57F of the Central Excise Rules, 1944. - further on technical lapses Cenvat credit cannot be disallowed - credit allowed. - decided in favor of assessee.
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2016 (8) TMI 121
Excess of physical stock noticed as compared to that recorded in the RG-1 register. - Appellant claimed that physical weighment not done and weight recorded on estimation basis, deducted certain percentage for normal losses and then recorded production. Respondent contended huge difference found in actual stock and records which can be seen by a simple eye estimation. Held that:- huge difference found can not be on account of processing loss. Also it is not logical that the appellants would weigh the raw material while charging the furnace but no weigh the finished goods which come out from the furnace. It is apparent that the contention of the appellants has no merit. - Appeal dismissed. - Decided against the assessee.
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2016 (8) TMI 120
Levy of interest and penalty on differential duty - revenue neutral exercise - appellant to avoid litigation, paid the differential duty of ₹ 2.18 crores approx. and intimated the Revenue - it was contended that, the entire exercise is revenue neutral inasmuch as whatever duty was required to be paid by the appellant, was available as credit to their other unit located at Jabalpur unit. - Held that:- the issue i.e. liability of the present assessee to pay the duty, has not been adjudicated by the lower authorities. The fact that the Jabalpur unit discharged the full duty liability is also required to be kept in mind while adjudging the assessee’s duty liability, even though they have paid the same. - However once differential duty is found payable, interest has to be paid - Matter remanded back.
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2016 (8) TMI 119
Valuation - inclusion of advertisement cost incurred by the dealers and promotional materials sold to the dealers - Held that:- advertisement cost incurred by the dealers and promotional materials sold to the dealers are not includible in the assessable value. - Decided in favor of assessee.
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2016 (8) TMI 118
Classification of goods - coated paperboard, coated on one side with China clay and the same - classifiable under tariff sub heading no. 4810.10 or tariff subheading no. 4802.10 - Held that:- the goods cleared by the respondent are un-coated paperboard sheet/paperboard. In that circumstances, we hold that the respondent has correctly classified the goods under Central Excise Tariff sub heading 4802.10 - Decided in favor of assessee.
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2016 (8) TMI 117
Whether market purchase goods can be treated as duty paid goods - manufacture of knitted or crocheted fabrics of cotton - procurement of textile fabrics i.e. raw material/inputs - Notification No. 14/2002-CE dated 1.3.2002 - Held that:- . This will be an anomalous or absurd situation or else textile processors will be forced to avail Cenvat credit route alone to avoid cascading effect of taxation. In this context Explanatory Note of Budget Bulletin 2002 become relevant when it conveys that benefit of Notification No. 14/2002-C.E., should be available if no credit is taken by the manufacture. For such interpretation Explanation-II to Notification No. 14/2002-C.E., creating fiction of ‘Deemed duty paid’, becomes relevant and has to be harmoniously read with the conditions prescribed under Notification No. 14/2002-C.E. It is also a well accepted judicial discipline that if two interpretations of a statute are possible then the one more favourable to the tax payer should be taken Benefit of exemption allowed to the assessee.
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2016 (8) TMI 116
Claim of exemption - manufacture of fabrics - cotton dominated fabrics or polyester dominated fabrics - Notifications Nos.07/2000-CE dated 1.3.2000, 03/2001-CE and 14/2002-CE dated 1.3.2002 during the period from 1.4.2000 to 31.3-2003. - retraction of statement - Held that:- While adjudicating the case, the adjudicating authority has not given any credence to the cross examination done by the learned for the respondents wherein the witness itself has categorically stated that he was pressurized by the department to make inculpatory statement against the respondents on the pretext that the witness shall not be dragged, if the witness writes the statement as per wishes of the department. It was also revealed that in the cross examination, there is evidence on records that the invoices of the descriptions/contents of blended yarn are not written but the witness was compelled by the officers to write in his handwriting the contents of yarn on photocopies of the invoices. Even at the time of cross examination, in the original copies of the invoices, there was no mention the contents of yarn. In this case the original invoice is the main evidence to reveal the truth but the statement made by the witness during the cross examination that the original invoices does not have mention of the description of the goods which has not been considered by the adjudicating authority, therefore, the evidence in form of photocopy of invoice is not acceptable. Moreover on photocopies of the invoices, the witness was forced to write in his handwriting as per the wishes of the departmental officers. This issue has neither been denied by the Revenue nor raised in the appeal before us which is a crucial evidence to decide the case. No demand - Decided against the revenue.
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2016 (8) TMI 115
Levy of penalty under Rule 25 of CER, 2002 – issuing invoices without accompanying the goods – whether penalties under Rule 25 of Central Excise Rules, 2002 read with section 11AC of the Central Excise Act, 1944 can be impose on the person who has not dealt with the excisable goods or not? – Held that:- appellant not dealt with the excisable goods at all. The penalties on the appellant under Rule 25 of the Central Excise rules, 2002 read with section 11AC of the Act are not warranted. - Appeal allowed. - Decided in favor of appellant.
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CST, VAT & Sales Tax
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2016 (8) TMI 136
Waiver of pre-deposit - Input tax credit - AO arrived at a conclusion that though the petitioner had not entered into the sales and purchases transactions, the tax was collected illegally. - The case of the petitioner is that though the outstanding tax liability as per the reassessment order had already been paid, still however the first appellate authority directed the petitioner to deposit an amount of ₹ 1 crore which, according to the authority, amount to equal to undisputed liability of the petitioner. - Held that:- it appears to this Court that ultimately the orders impugned reflect the payment of total demand of tax and interest which comes to ₹ 39,38,927/- and ₹ 35,45,034/- totaling around approximately ₹ 75 lacs. Therefore, keeping all the rights open of the petitioner, if the petitioner has already paid an amount of ₹ 49,66,903/-, we deem it proper to direct the petitioner to pay the balance amount. Meaning thereby an amount (-) ₹ 49,66,903/-, so that ultimately total amount of ₹ 75 lacs be paid by the petitioner by way of pre-deposit. - stay granted partly.
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2016 (8) TMI 135
Form - 38's did not accompany the goods in question. - Whether the authority was justified in effecting seizure even though the Form 38's were subsequently submitted along with the reply to the show cause notice. - Held that:- The Form - 38 neither accompanied the goods nor were its details mentioned in the invoices or bills of transportation which were found with the consignment. This fact has been duly recorded in the order of the Assistant Commissioner. This, therefore, is perhaps an indication that these Forms were prepared subsequent to the seizure. At least this possibility cannot be ruled out. On this state of the record the Assistant Commissioner, in the opinion of this Court, was fully justified in recording his satisfaction that an attempt had been made to evade payment of tax. - Appeal dismissed - Decided against the appellant.
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2016 (8) TMI 134
Input tax credit - Whether the use of the furnace oil as processing materials or consumable stores - captive generation of power - Held that:- Tribunal has committed an error in holding that the use of the furnace oil is not processing materials or consumable stores. Accordingly, this appeal is allowed. The question posed for our consideration is answered in favour of the assessee and against the department.
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2016 (8) TMI 133
Classification of KADIPROL - entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969 - Held that:- it appears that the Tribunal has committed an error. The product 'KADIPROL' manufactured by the Veterinary Division of the appellant is covered by the entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969. Accordingly, the issue raised in this reference is answered in favour of the appellant and against the Department.
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2016 (8) TMI 132
Input tax credit - revision of the assessment orders - other end dealers not reported their sales turnover - Held that:- So far as the issue relating to reversal of input tax credit under Section 19(15) of the Act is concerned on the ground that the registration certificates of the dealers, from whom the petitioner purchased goods, have been cancelled, they are held to be not a ground to reversal of input tax credit of the purchasing dealer - Therefore, the proposal made by the respondent to reverse the input tax credit under Section 19(15) of the Act is not tenable. The other issue is with regard to reversal of input tax credit under Section 27(2) of the said Act stating that the other end dealers have not reported sales turnover. Even in this regard, there is no discussion as to how such an issue was taken up by the respondent for consideration and there is no material borne out even in the show cause notices. Therefore, the proposal to reverse the input tax credit under Section 27(2) of the said Act is also erroneous and not sustainable. With regard to levy of penalty, admittedly there is no allegation that there is any escapement of taxable turnover and when the books were accepted by the Authority, the question of levy of penalty does not arise. Decided in favor of asessee.
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Wealth tax
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2016 (8) TMI 131
Asset within the meaning of Section 2-E(a) of the Wealth Tax Act - interpreting the phrase “Commercial Establishment” or “Complexes” - Held that:- considering the decision of this Court in the case of Vasumatiben Chhaganlal Virani (2013 (9) TMI 957 - GUJARAT HIGH COURT ), the question, which is raised in the present appeals is required to be the assessee. We are not giving any elaborate reasons for the same as in the case of Vasumatiben Chhaganlal Virani (Supra) it is held by this Court exception sub-clause(3) of clause(i) of section 2(ea) pertains to any house which the assessee may occupy for the purposes of any business or profession carried on by him. Thus whenever legislature desired that exclusion may apply only if property is self occupied, it was so provided. Significantly, in sub-clause(5), there is no such insistence and that it nowhere provides that only if such commercial complex is occupied by the owner then alone the exclusion shall take effect.. Question raised for consideration in the present appeals are answered in favour of the assessee
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