TMI Tax Updates - e-Newsletter
September 27, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Levy of penalty for discrepancy in E-way Bill - E-way bills generated without completely filling Part B - The object of circular dated 14.09.2018 was that in case of circumstances as detailed in the circular, which were procedural in nature and there no intention of misleading the transfer of goods, the proceedings should not have been initiated u/s 129 of HGST/CGST Act. Apart from not mentioning number of the vehicle in Part B, all the other documents have been shown by the driver of the vehicle. - Order set aside, a penalty of Rs. 500/- imposed - HC
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Income Tax:
TP Adjustment - comparable selection - Clearly, since according to the Tribunal the segmental information was not available, the comparables were ordered to be excluded. We are of the opinion that there is no error in the approach adopted by the Tribunal, which is otherwise in line with the view taken by the coordinate bench. - HC
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Income Tax:
Addition u/s. 56(2)(vii)(c) - additional 82,200 shares allotted to assessee due to renouncement of rights by wife & father of the assessee - the aim and intention behind amending the provision of Sec. 56 is to prevent the practice of transferring unutilized shares at a price which are allotted for the first time by way of right shares. The amendment is therefore never meant to aim the “fresh issue” or “fresh allotment” of shares by a company. - ITAT rightly deleted the additions - HC
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Income Tax:
Rectification of mistake - adjustment made u/s 143(1)(a)(vi) to the returned income in respect of presumptive income declared u/s. 44AD - the Intimation, making adjustment by invoking clause (vi) of section 143(1)(a), is evidently debarred as violating the prescription of Instruction No.10/2017, which is binding on the Departmental Officers. - AT
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Income Tax:
Income taxable in India - cellular roaming charges - India-UK DTAA under Article 13(3) - Royalty - VIL already possessed the process used for providing roaming services and used the same to provide services to customers in India, however, since VIL could not provide services to its customers who travelled to UK and it does not have any facility or infrastructure in UK and for this, even the arrangement with the assessee was made to provide services to its customers whenever they travel to UK. - Not to be treated as Royalty - AT
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Income Tax:
Credit of TDS denied as barred by limitation - We do not understand why the AO raised a demand in intimation u/s 143(1) of the Act without giving credit of the amount of the TDS which was already appearing in form no. 26AS. A copy of said form has been filed by the assessee before the AO alongwith rectification application. Ignoring the TDS credit available to the assessee, and then raise the demand is abuse of the authority. - AT
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Income Tax:
Claim of expenditure u/s 37(1) even if there is no corresponding income / revenue - The tax authorities have also taken a view that the assessee has not shown any sales in the books of account. It is well settled proposition of law that, once the assessee has set up his business, all revenue expenses are allowable as deduction irrespective of the receipt of income. - AT
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Income Tax:
Validity of TP Adjustment against non existent entity - amalgamated company - all the revenue authorities i.e., the AO, TPO and DRP have passed the order in the name of old company. We are of the opinion that the order passed by the revenue authorities in the name of non-existent company which was in the knowledge of the revenue authority does not survive. - AT
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Income Tax:
Addition u/s 68 - Unexplained sundry creditors - CIT(A) deleted the additions - if we presume that the basis adopted by the CIT(A) is correct then also the nature and source of making an investment in the share capital of CMHPL by the assessee remains unexplained when no payments have been made to the stated 71 sundry creditors =- Tribunal restored the additions - AT
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Income Tax:
Penalty u/s 271FA - not filing the AIR for the relevant AY - Prior to 01.04.2015 - the assessee being a Souhardha Sahakari, there was ambiguity as to whether Co-operative Banks are required to comply with the provisions of Rule 114E of the Rules, meaning thereby, the bonafide belief of the assessee would constitute a reasonable cause as mandated as per section 273B of the Act for the failure to furnish AIR for the relevant years under consideration. - AT
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Customs:
Levy of clean energy Cess payable - Import of Low Ash Metallurgical Coke - there is no charge of Clean Energy Cess on goods falling under Customs Tariff Heading 2704. - AT
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PMLA:
Money Laundering - Seeking grant of bail - Practicing chartered accountant (CA) - allegation of assisting the co-accused to convert the tainted money into untainted money and connived in the laundering thereto - The allegation against the present petitioner is not that he has done something which was beyond his scope of profession i.e. indulging in some activities which are totally unconnected with the chartered accountancy. The plea of the petitioner that he has acted on the basis of information and record provided to him cannot be rejected outrightly at this stage. - Bail Granted - HC
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Service Tax:
Business Support Services - Point of Taxation Rules (POTR) - Place of supply - the Appellant were buying the space for transportation of containerized goods outside the territorial water of the country and selling the same to their clients in their own capacity and is not obligated to work on principal-to-agent relationship. Accordingly, the income received by the Appellant is not liable to service tax under the category of 'Business Support Service' - AT
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Central Excise:
Valuation - inclusion of drawing, designing and engineering charges - The excise duty can be demanded on the same amount charged for drawing and designing, even if service tax has already been discharged on the same value, if they are related to the goods manufactured. - AT
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Central Excise:
Reversal of CENVAT Credit - when there was no recovery mechanism before 01.03.2013, therefore, no recovery can be affected and accordingly the present proceedings initiated under Rule 14 of Cenvat Credit Rules read with Rule 3(5B) of the Cenvat Credit Rules is liable to be dropped. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (9) TMI 1171
Levy of penalty order and pre-deposit amount equal to penalty - Part B of the E way bill as required under Section 68(3) of the Act, 2017 and Rule 138 (1), (2), (3) of the Rules, 2017 not submitted - HELD THAT:- In the facts of the present case, at the time of search of the vehicle of the petitioner, Part B was not filled up but the time driver filled up Part B in the presence of the Officer and hence there was no malafide intention on the part of the petitioner. Accordingly, proceedings under Section 129 of HGST/CGST Act should not have been initiated, as per circular dated 14.09.2018 (P-6). The object of circular dated 14.09.2018 was that in case of circumstances as detailed in the circular, which were procedural in nature and there no intention of misleading the transfer of goods, the proceedings should not have been initiated under Section 129 of HGST/CGST Act. Apart from not mentioning number of the vehicle in Part B, all the other documents have been shown by the driver of the vehicle. The present petition is allowed.
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2023 (9) TMI 1170
Maintainability of petition - availability of alternative remedy of appeal - Inadmissible ITC - Passing on fraudulent ITC to the petitioner without payment of tax - HELD THAT:- The present writ petition deserves to be dismissed as the petitioner has alternative remedy of filing an appeal against the impugned order. The only ground taken for not filing appeal is that before the Appellate Authority, the petitioner will have to deposit 10 percent of the disputed amount as per Section 107 (5) of the Act. The grievance of the petitioner before this Court is that as per copy of ledger book (P-5 and P-6), the petitioner is not liable to pre-deposit 10 per cent of the disputed amount. However, the petitioner can take all the pleas before the Appellate Authority and the Appellate Authority can consider the question of pre-deposit of amount, after examining the ledger book. Petition dismissed.
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Income Tax
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2023 (9) TMI 1169
Bogus purchases - addition AO made has primarily relied upon some information received from the office of the Director General of Income Tax (Investigation), Mumbai - as decided by HC [ 2021 (12) TMI 21 - BOMBAY HIGH COURT] respondent has discharged its onus by producing the books of accounts, stock register, stock tally and also filed various documentary evidences such as statements of banks and once respondent has discharged this burden, the onus shifts to the Revenue and the AO has not conducted any independent inquiry or further verification of the records produced before him - HELD THAT:- No justifiable reason for condoning the delay. Hence, the Special Leave Petition is dismissed on the ground of delay.
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2023 (9) TMI 1168
Dismissal of appeal for non-prosecution - non filing of compulsory e-filing of appeal despite notice - assessee failed to appear before the Tribunal on the date of hearing - no request for further date - HELD THAT:- Having heard learned counsel for the parties and also considered the record, this Court is of the opinion that larger interest of justice require that the appeal against the assessment order for A.Y 2012-2013, completed by order issued by the AO i.e. Income Tax Officer, Ward- 7(2)(4), Bangalore should be restored. Accordingly, the Appeal is restored to the file of the Commissioner of Income Tax (Appeals)-7, Bengaluru. The said authority shall issue notice at least two weeks advance notice to the appellant to enable her to prosecute the appeal effectively.
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2023 (9) TMI 1167
Treatment of foreign exchange gain/loss by categorizing it as operating income/ operating loss - HELD THAT: As appellant cannot but accept that it stands covered against the appellant/revenue by a decision titled Pr. Commissioner of Income Tax-3 v. Fiserv India Pvt. Ltd. [ 2016 (1) TMI 1276 - DELHI HIGH COURT] TP Adjustment - comparable selection - Tribunal excluding two comparables i.e., Wipro Technologies Services Ltd. and Infosys Ltd - HELD THAT:- As it cannot be disputed the fact that assessee is in the business of providing software development services. The two comparables i.e., Wipro Technologies Services Ltd. and Infosys Ltd. are in the business of not only software development services but also in the sale of software products. Clearly, since according to the Tribunal the segmental information was not available, the comparables were ordered to be excluded. We are of the opinion that there is no error in the approach adopted by the Tribunal, which is otherwise in line with the view taken by the coordinate bench.
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2023 (9) TMI 1166
Assessment u/s 153A - Addition u/s 68 - ITAT deleted the addition - HELD THAT:- Tribunal has taken the correct view. Sans the incriminating material, no addition could have been made by the AO with regard to the AY in issue, as it was a case of completed assessment. This issue stands covered by the judgment rendered by the coordinate bench of this court in CIT vs. Kabul Chawla,[ 2015 (9) TMI 80 - DELHI HIGH COURT] This judgment has received the imprimatur of the Supreme Court in Principal Commissioner of Income Tax vs. Abhisar Buildwell, [ 2023 (4) TMI 1056 - SUPREME COURT] - No substantial question of law arises for consideration.
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2023 (9) TMI 1165
Reopening of assessment - information received by the AO from the investigation wing in the form of statement recorded in the case of Sh. Madan Lal Pahuja - as alleged assessee had made bogus purchases by inflating the expenses and thereby suppressed the profits - HELD THAT:- An FIR had been registered against Madan Lal Pahuja on 13.09.2009. On 13.02.2023, learned counsel for the appellant sought time to get instructions whether any steps were taken with respect to the business transaction with bogus bills of Madan Lal Pahuja, who had been acquitted in the criminal trial. Today, as appellant informed that no steps were taken with respect to business transaction with bogus bills against Madan Lal Pahuja. In the present case, initiation of reassessment proceedings on the basis of the statement given by Madan Lal Pahuja and without giving assessee any opportunity of cross-examination were good grounds to allow the appeal of the assessee and does not require any interference as no substantial question of law arises for consideration in the present appeal. Hence, the instant appeal is dismissed.
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2023 (9) TMI 1164
TP Adjustment - Direction issued by the Tribunal to exclude Avani, Wipro, E-Zest and Persistent - HELD THAT:- Assessee is in the business of software development services - HELD THAT:- We find that insofar as Avani, Wipro, and Persistent are concerned, the Tribunal has returned a finding of fact that no segmental data is available. These three comparables are in the business of software products and services and no segmental data is available. The finding of fact recorded by the Tribunal vis- -vis Avani is that it deals in software products and services, there is a categoric finding that no segmental data is available and, therefore, it is not a good comparable. Likewise, the same position was obtained vis- -vis Wipro. Wipro also, according to the Tribunal, deals in software products and services and no segmental data, according to it, is available vis- -vis this entity as well. Tribunal has, in fact, examined the matter and concluded that Persistent as a comparable had to be excluded, as no segmental data was available. This brings us to the last comparable which is E-Zest. In this case also, we find that the Tribunal also returned a finding that the said entity dealt in software product development services and high-end technical services which, according to it, fell under the umbrella of Knowledge Process Outsourcing (KPO) services. Based on this, the Tribunal concluded that E-Zest had to be excluded from the array of comparables as the respondent/assessee was not a KPO service. Thus concerning the four (4) comparables in issue, the Tribunal has returned findings of fact. Given this position, we are not inclined to interfere with the impugned order.
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2023 (9) TMI 1163
Maintainability of appeal against statutory claims - Corporate Insolvency Resolution Process commenced - HELD THAT:- As per improved corporate resolution plan, which was approved by the NCLT there was no provision made, inter alia, for statutory claims. Having regard to the fact that the claims which are the subject matter of the present appeal concern the period prior to the approval of the resolution plan by the NCLT, in which no provision has been made for statutory dues, the continuation of this appeal would serve no purpose. The court in these matters adopts a clean slate approach, and therefore, this appeal would have to be closed.
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2023 (9) TMI 1162
Addition u/s. 56(2)(vii)(c) - additional 82,200 shares allotted to assessee due to renouncement of rights by wife father of the assessee - HELD THAT:- As the provisions of Sec. 56(2) would not be applicable to the issue of new shares which is also submitted by the explanatory notice to the Finance Bill, 2010, wherein, it is clarified that Sec. 56(2)(vii)(c) of the Act ought to be applied only in the case of transfer of shares. It is trite law that allotment of new shares cannot be regarded as transfer of shares. Therefore, in order to apply the provisions of Sec. 56(2)(vii)(c), there must be an existence of property before receiving it. As per advanced Law Lexicon Dictionary, the term receive has been defined as To receive means to get by a transfer, as to receive a gift, to receive a letter or to receive money and involves an actual receipt. Issue of new shares by company as a right shares is creation of property and merely receiving such shares cannot be considered as a transfer under Sec. 56(2)(vii)(c) and accordingly, such provision would not be applicable on the issuance of shared by the Company in the hands of the allottee. The Apex Court in the case of Khoday Distilleries Ltd. [ 2008 (11) TMI 16 - SUPREME COURT] after referring to the decision in the case of Shri Gopal Jalan Co. vs. Calcutta Stock Exchange Association Ltd., [ 1963 (5) TMI 30 - SUPREME COURT] noted the question arose as to the amendment of the word allotment held that the word allotment means appropriation out of previously unappropriated capital of a company, of a certain number of shares to a person and till such allotment, the shares do not exist as such . Therefore, it is only on allotment that the shares come into existence. In every case, the words allotment of shares having used to indicate the creation of shares appropriation out of unappropriated share given to a particular person which is also referred to in the notice of clause to the Finance Bill 2010. Therefore, the aim and intention behind amending the provision of Sec. 56 is to prevent the practice of transferring unutilized shares at a price which are allotted for the first time by way of right shares. The amendment is therefore never meant to aim the fresh issue or fresh allotment of shares by a company. With regard to issue of 82,200 shares, the name of wife and father of the assessee would also not be hit by provision of Sec. 56(2)(viii)(c) as both of them would be covered by definition of relative covered in the exemption of relative, and therefore, the provision of section 56 would not be applicable at all. The findings recorded about valuation of shares to Rs. 205.55 is concerned, there are concurrent findings of fact which do not require any interference as the CIT(A) has rightly computed the FMV on the basis of the balance sheet which was available on record for the previous year and which was approved in AGM.
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2023 (9) TMI 1161
Disallowance of exemption u/s. 10(38) - Bogus LTCG - SEBI had passed an interim order in relation to this scrip by MFTL holding that preferential allottees and promoters related entities had, with the aid of exit providers, misused the exchange mechanism to exit at a higher price - Principal CIT (A) and the Tribunal found that the SEBI report based on which the AO had made additions was an interim report and in the final report there was no adverse finding. SEBI in the final report had not made any adverse findings - HELD THAT:- As verified that the payment for purchase of shares was made through banking channel, shares were in demat account of the appellant for more than 12 months before they were sold through BOLT of BSE and the proceeds have been received through banking channel, STT has been paid. The main stand of the AO which was picked up from SEBI interim report has also been decimated by the final report of the SEBI itself. Confirming this view of the CIT(A), the Tribunal observed that having gone through the assessment order it was evident that it was based on the interim report. The final report of SEBI had absolved the scrip of all charges. Moreover, there was no independent finding on any other aspect casting doubts to show that share prices were manipulated at an unreasonable price when sold. Decided against revenue.
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2023 (9) TMI 1160
Penalty proceedings u/s 271AAB - additional income admitted by the assessee - suo-moto admission by assessee - as assessee contended before the learned CIT(A) that no incriminating material was found during the search and the additional income was admitted to buy peace and to avoid litigation and the same is not a tangible income as the said income has not been credited in its books nor has come out of any incriminating evidence seized during the course of search - HELD THAT:- In this case, from the beginning the assessee has been claiming that only to purchase piece, he has been disclosing additional income. As rightly pointed out by the learned CIT(A), the income disclosed by the assessee is not represented by any of the categories mentioned in clause (c) of explanation to section 271AAB inasmuch as the assessee has never taken any entry of the un-disclosed income in its books nor the same is corroborated to any entry in the books or any incriminating material nor does the same pertaining to any false expenditure claimed by the assessee; and also that the learned Assessing Officer did not bring out anything on record to prove that the surrendered income pertains to any entry in the books of the assessee or to any false expenditure claimed by the assessee. It is also not the case of the Revenue that the assessee admitted the additional income on account of any incriminating material that was unearthed during the course of search. In the circumstances, respectfully following the view taken in the case of Padam Chand Pungliya [ 2019 (4) TMI 565 - ITAT JAIPUR] we hold that the disclosure of additional income in the statement recorded under section 132(4) of the Act itself is not sufficient to levy penalty u/s 271AAB of the Act until and unless income so disclosed by the assessee falls in the definition of undisclosed income defined in explanation to section 271AAB(1) - Decided in favour of assessee.
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2023 (9) TMI 1159
Rectification of mistake - adjustment made u/s 143(1)(a)(vi) to the returned income in respect of presumptive income declared u/s. 44AD - HELD THAT:- As the position is that the assessee filed return declaring total income u/s. 44AD; the gross receipts for the application of section 44AD exceeded the amount as per Form No.26AS; and the AO issued intimation by invoking clause (vi) of section 143(1)(a). In such circumstances, the Intimation, making adjustment by invoking clause (vi) of section 143(1)(a), is evidently debarred as violating the prescription of Instruction No.10/2017, which is binding on the Departmental Officers. We, therefore, hold that the ld. CIT(A) was not justified in confirming the disallowance contrary to the mandate and ambit of section 143(1)(a)(vi) - The impugned order is overturned to this extent. Once it is held that the adjustment could not have been made in terms of section 143(1)(a)(vi) to the returned income in respect of presumptive income declared u/s. 44AD, naturally, there was no reason to rectify the already and correctly rectified Intimation for reaching a fresh conclusion that the adjustment made in the original Intimation u/s. 143(1) was correct and the rectification order was not passed correctly. We, therefore, set-aside the impugned order. Assessee appeal allowed.
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2023 (9) TMI 1158
Income taxable in India - cellular roaming charges - India-UK DTAA under Article 13(3) - Royalty - Assessee is a non-resident telecommunication service provider, primarily engaged in the business of providing mobile and broadband services along with various other ancillary services such as text, media messaging, games, music, video and data connections in the United Kingdom - AO held that the amount received by Assessee is covered within the scope of process and taxable as royalty under the Act as well as India-UK DTAA - HELD THAT:- Nowhere it has been elaborated by the ld. AO how the right to use process has been allowed by the assessee to VIL. It is a call connectivity services which has a standard process employed by various telecom operators around the world. In fact, VIL already possessed the process used for providing roaming services and used the same to provide services to customers in India, however, since VIL could not provide services to its customers who travelled to UK and it does not have any facility or infrastructure in UK and for this, even the arrangement with the assessee was made to provide services to its customers whenever they travel to UK. Thus, it cannot be held that the amount paid by VIL to the assessee falls within the scope and meaning of royalty u/s. 9(1)(vi). ITAT, Bangalore Bench in the case of group concern [ 2023 (9) TMI 280 - ITAT BANGALORE] had also dealt with the Explanation 5 6 to Section 9(1)(vi) and held that this definition cannot be read in to the DTAA which were in the nature and scope and held that it does not fall within the definition of Royalty as contained in Article 13(3) of India-Spain DTAA which is also applicable to India-UK DTAA. The Tribunal has also relied heavily upon the judgment of Vodafone Idea Ltd. [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT] which has reversed the judgment of Vodafone South [ 2015 (1) TMI 1018 - ITAT BANGALORE] which has been relied upon by the ld. AO. Thus, following the same reasoning, we hold that the amount received by the assessee from VIL in the form of roaming charges is not taxable. Accordingly, the same is delayed. In the result, on this ground, appeal of the assessee is treated as allowed.
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2023 (9) TMI 1157
Reopening of assessment u/s 147 - addition was not made in respect of undisclosed in the assets of the assessee and AO made the addition in respect of loans - Assessee challenged the legality of the assessment framed on the ground that the additions as envisaged in the reasons recorded u/s 148 were not made in the assessment framed and therefore the AO has no jurisdiction to make other additions in respect of loans from two parties - HELD THAT:- AO has no jurisdiction to make any other addition when the issues which were subject matter of the reasons recorded of Section 148(2) of the Act were not added in the assessment order. The case of the assessee is supported by the decision of Coordinate Bench in the case of Shree Prakash Chhawchharia (HUF) [ 2021 (6) TMI 234 - ITAT KOLKATA] wherein the Hon'ble Coordinate Bench has held that the AO has no jurisdiction to make the addition in respect of any other item which were not the subject matter of the reasons recorded when the issues which were the subject matter of the reasons recorded u/s 148(2) of the Act were not added to the income of the assessee. We note that the Coordinate Bench has followed the decision of Hon'ble Calcutta High Court in the case of CIT Vs. M/S Infinity Infotech Parks Ltd [ 2014 (9) TMI 1142 - CALCUTTA HIGH COURT] on the same issue. The Coordinate Bench has also followed the decision of Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd.[ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT] Therefore, respectfully following the ratio laid down by the Hon'ble Courts we are hereby quash the assessment framed by the AO u/s 143(3) r.w.s. 147 of the Act and accordingly, the additional ground raised by the assessee is allowed.
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2023 (9) TMI 1156
Rectification application us 154 - Credit of TDS denied as barred by limitation - AO raised a demand in intimation u/s 143(1) of the Act without giving credit of the amount of the TDS - HELD THAT:- As assessee in the return of income mistakenly reported the amount of TDS as advance tax. But in the total, no excess claim of the tax has been made by the assessee. We do not understand why the AO raised a demand in intimation u/s 143(1) of the Act without giving credit of the amount of the TDS which was already appearing in form no. 26AS. A copy of said form has been filed by the assessee before the AO alongwith rectification application. Ignoring the TDS credit available to the assessee, and then raise the demand is abuse of the authority. The order of the AO passed u/s 143(1) of the Act is in gross negligence of his duty. In the case, neither in the order of the AO nor in the order of ld CIT(A) date of passing order u/s 143(1) has been provided nor such order has been placed on record by the Revenue. It was the onus of the AO to provide at least a copy of the order passed u/s 143(1) to the assessee before rejecting his application u/s 154 of the Act. The assessee has stated that said order was not received by him, therefore, it was not possible for him to file rectification within the stipulated period. Secondly, we note that as per section 254 ( 2) of the Act, an assessee or revenue can make an application for rectification before the Tribunal at any time within six months from the end of the month in which the order was passed . As respectfully, following the decision of Daryapur Shetkari Sahakari Ginning and Pressing Factory [ 2020 (12) TMI 84 - BOMBAY HIGH COURT] the period of four years for rectification of the order as stipulated in section 154(7) of the Act should be reckoned from the date from which the said order came to the knowledge of the assessee. In that case the application of the assessee would be within the limitation period. Further, in Liberty Pesticides Fertilizer Ltd [ 2014 (1) TMI 248 - ITAT AHMEDABAD] held that the Revenue cannot reject the rectification application on the ground that it was time barred, as A.O. failed to send intimation to the assessee specifying the sum so payable which was not the fault of assessee, hence application entertained . In the instant case also, As here is no evidence on record that intimation u/s 143(1) was sent to the assessee, therefore, Assessing officer is not justified in rejecting the rectification application of the assessee invoking section 154(7) of the Act. It is not in dispute that tax deducted by the employer on the pension of the assessee has already gone to the exchequer of the Government of India and now denying the credit of the same to the assessee is gross injustice to the assessee. we set aside the order of Ld.CIT(A) on the issue in dispute and direct the AO to carry out necessary rectification order and give credit of the TDS against the tax liability of assessee. The Grounds raised by the assessee are accordingly, allowed.
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2023 (9) TMI 1155
Income recognition - Addition towards profits/gains earned on transfer of land pertaining to villas as sold - Year of assessment - Assessee argued that entire amount of sale consideration was not disclosed in the turnover, but it reported turnover of only Rs. 2.91 crores - HELD THAT:- As we are of the considered opinion that factual verification as to how much of sale consideration that was received during the financial year 2012-13 is necessary. Apart from this, from the sale deeds, the copies of which are found in the paper book filed before us clearly reveal that the construction activity on relevant plots had not reached even the lintels level. Observations of AO that the entire construction work was over and vacant possession of the villas was handed over to the respective buyers is, therefore, factually incorrect. When the sale deeds were available to the AO it is evident from the photos appended to the sale deeds that the construction work is at preliminary level, AO could have verified this fact from the field. It is, therefore, incorrect to conclude that the project work was complete or that the assessee should recognize the entire revenue. Thus we deem it just and necessary to quash the orders of the authorities below and restore the issue to the file of AO to cause enquiry as to the sale consideration that was received during the relevant assessment year and also whether the percentage on recognition of revenue was in-consonance with the percentage of completion of the project as on 31/03/2013. AO will decide the issue as per facts and law, after giving due opportunity of being heard to the assessee.
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2023 (9) TMI 1154
Nature of expenses - revenue v/s capital/deferred revenue expenditure - expenses incurred by the assessee consisted of exhibition expenses, foreign local travelling, telephone calls etc. - as per AO these expenses have resulted in building up a benefit of intangible nature that may accrue in future and the above said expenditure is capital in nature - CIT(A) observed that these expenses can at best be treated as pre-commencement expenses made by the company in order to explore the market abroad - HELD THAT:- The fact that the assessee has started manufacturing of packaging machines would show that the business of the assessee has been set up and even commenced. It is well settled proposition of law that the revenue expenses incurred after the setting up of the business is allowable as deduction, even if the business has not commenced. Hence, the view taken by the learned CIT(A) that pre-commencement expenses are not allowable as revenue expenditure cannot be sustained. A Perusal of the said expenditure would show that all the expenses have been incurred in the normal course of carrying on business in order to capture the market. Hence, in our view, these expenditures cannot be considered as capital in nature. Further, we are of the view that the Assessing Officer was not justified in holding that these expenditure would create an asset of intangible nature in future and further, the AO has taken this view only on surmises and conjectures without any basis Whether the assessee is entitled to claim expenses fully for income tax purposes, when it has treated the same as deferred revenue expenditure in the books of accounts? - It is well settled proposition of law that the entries made in the books of account are not relevant for the purpose of computing total income. The action of the assessee in treating this expenditure as deferred revenue expenditure in the books of account will not bar the assessee from claiming it as revenue expenditure for the income tax purposes. If the claim of the assessee is allowable in terms of sec. 30 to 37 of the Income tax Act, the same should be allowed. In this case, it is not the case of the AO that the above said expenses are not allowable under any of the provisions of the Act. The tax authorities have also taken a view that the assessee has not shown any sales in the books of account. It is well settled proposition of law that, once the assessee has set up his business, all revenue expenses are allowable as deduction irrespective of the receipt of income. In support of this proposition, the Ld A.R brought to our attention the decision of Hon'ble Supreme Court rendered in the case of CIT Vs. Rajendra Prasad Mody [ 1978 (10) TMI 133 - SUPREME COURT ] Accordingly, we reject the view taken by the tax authorities on this proposition. Thus we are of the view that the learned CIT(A) was not justified in confirming the disallowance made by the Assessing Officer. Decided in favour of assessee.
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2023 (9) TMI 1153
Validity of reassessment - Notice beyond period of four years - reason to believe - share transactions - HELD THAT: - A.O has recorded the reasons without any tangible material/ fresh material except charges based on the information. The assessee has purchased shares in the financial year 2007-08 The Ld.AR submitted that the information of sale and purchase of shares was already filed on record vide letter in the original assessment proceedings U/sec 143(3) of the Act and the A.O after verifying the facts and information has passed order on 23-03-2015. Therefore the reopening of assessment is based on the same set of facts and is only a change of opinion and no inquiry or independent investigation by the A.O. As the notice issued by the A.O falls beyond the period of time limit specified and the assessing officer has to show/highlight the failure on part of the assessee to disclose fully and truly all material facts at the time of assessment. Accordingly, the notice issued for reassessment is bad in law and quash the assessment order passed u/s 143(3) r.w.s 147 of the Act. Grounds of appeal are allowed in favour of the assessee.
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2023 (9) TMI 1152
TP Adjustment - Comparable selection - exclusion of Tata Elxsi and Mind Tree Ltd., from the final set of comparable companies on the basis of turnover filter exceeding more than Rs. 200 crores - HELD THAT:- We do not find Tata Elxsi and Mind Tree Ltd., and as such, there is no question of adjudicating these 2 comparables on the basis of turnover filter exceeding more than Rs. 200 crores. Issue regarding to inclusion of iSN Global Solution Pvt. Ltd., as comparable while determining the ALP of international transaction after considering the export turnover filters. Accordingly, this issue is remitted to the file of AO/TPO for fresh consideration.
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2023 (9) TMI 1151
Validity of TP Adjustment against non existent entity - scheme of amalgamation approved - DRP passed order in the name of non-existent company - HELD THAT:- It is clear from the draft assessment order that the AO was known the fact of change of name of company after amalgamation, but still he has passed the order in the name of old company. The assessee informed the TPO regarding the change of name of assessee and there were series of events in which the assessee made the correspondence with the department in the name of new company. However, all the revenue authorities i.e., the AO, TPO and DRP have passed the order in the name of old company. We are of the opinion that the order passed by the revenue authorities in the name of non-existent company which was in the knowledge of the revenue authority does not survive. Decided against revenue.
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2023 (9) TMI 1150
Addition u/s 68 - Unexplained sundry creditors - CIT(A) deleted the additions - HELD THAT:- It is a case of issue of shares for consideration other than cash for which nothing is brought on record in respect of relevant compliance and documentary evidence under the Companies Act. CIT(A) has not enquired on this aspect which is vital before concluding to give relief to the assessee. Further, identity and creditworthiness of the creditors and the genuineness of the transactions have not been satisfactorily explained as required u/s. 68 of the Act, more importantly, when this information is stated to be the source of investment in the share capital of CMHPL. We set aside the finding given by Ld. CIT(A) and restore the order of AO wherein addition has been made. We also note that even if we presume that the basis adopted by the CIT(A) is correct then also the nature and source of making an investment in the share capital of CMHPL by the assessee remains unexplained when no payments have been made to the stated 71 sundry creditors and, therefore the relief granted by Ld. CIT(A) on the basis of considering sundry creditors as of earlier years would not hold field to bring the assessee out of the burden casted on him to explain the source and nature of investment made by him in the share capital of CMHPL. Accordingly, we allow the grounds taken by the Revenue.
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2023 (9) TMI 1149
Validity of re-assessment proceedings - AO received certain information from ITO (Investigation), Pune - As per the said reasons, there was a Sathekhat between assessee and Mr. Phaltane for sale of some land at a total consideration - HELD THAT:- We have perused the copy of the Sathekhat filed by the ld.AR - It is observed that nowhere in the Sathekhat amount of Rs. 1.50 crore is mentioned. Thus, it is clear that the reopening is based on a Sathekhat alleging sale consideration of Rs. 1.50 crore, but said Sathekhat does not mention anywhere the amount of Rs. 1.50 crore. There is no dispute that assessee purchased land from Mr. Phaltane vide registered sale deed dated 18.07.2009 for Rs. 55,00,000/-. The allegation of the AO that land was purchased for Rs. 1.50 crore is without any evidence. Thus, the AO has failed to establish, based on the impugned document, that there was escapement of any income in the reasons recorded; therefore, the reopening is quashed. We find support from the observations of Hon ble Jurisdictional High Court. In the reopening reason the AO has also mentioned that assessee has claimed excess depreciation. However, there is no addition made by the AO on this basis. Addition as based on the impugned Sathekhat and allegation that the impugned Sathekhat mentions that the land was sold for Rs. 1.5 Crores . As observed by us in earlier paragraphs that there is no mention of Rs. 1.5 crores in the Sathe Khat. Rather there is no figure of Rs. 1.5 crores or words Rs. 1.5 crores. Therefore, in this situation the value mentioned in the registered Sale Deed is taken to be true. Hence, the AO is directed to delete the addition. Appeal of the assessee is allowed.
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2023 (9) TMI 1148
Penalty u/s 271FA - not filing the Annual Information Report (AIR) for the relevant AY - main contention of AR before the Tribunal was that there is reasonable cause as mandated u/s 273B for not filing the AIR for the relevant AY - ambiguity as to whether the cooperative banks are required to comply with the provisions of Rule 114E - HELD THAT:- It is clear that in terms of Sl.Nos.1 and 2 of the Table under Rule 114E(2) of the Rules, before 01.04.2015 only banking companies or banking institutions (which includes the provisions of section 51 of the Banking Regulation Act, 1949) but not the provisions of section 56 or Part V of the Banking Regulation Act, 1949, that deals with Co-operative Societies were required to file the AIR. The co-operative banks have been brought within the ambit of Sl. Nos.1 to 4 of Table under Rules 114E(2) after 01.04.2015 and prior to that, the assessee being a Souhardha Sahakari, there was ambiguity as to whether Co-operative Banks are required to comply with the provisions of Rule 114E of the Rules, meaning thereby, the bonafide belief of the assessee would constitute a reasonable cause as mandated as per section 273B of the Act for the failure to furnish AIR for the relevant years under consideration. As decided in the case of Mandya District Co-operative Bank Ltd [ 2020 (3) TMI 1455 - ITAT BANGALORE] there is merit in the submission of the ld A.R that there existed an ambiguity as to whether the cooperative banks are required to comply with the provisions of Rule 114E of the Act, meaning thereby, the bonafide belief of the assessee shall constitute reasonable cause in terms of sec.273B of the Act for the failure in furnishing the AIR for the year under consideration. In this view of the matter, the impugned penalty is liable to be deleted. The assessee has demonstrated reasonable cause under section 273B of the Act and considering the same, we delete the levy of penalty under section 271FA - Appeals of the assessee are allowed.
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Customs
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2023 (9) TMI 1147
Refund of IGST - exemption from certain capital goods from the whole of the duty of customs leviable under the Customs Tariff Act - HELD THAT:- It is borne on reading the decision in the case of Prince Spintex [ 2020 (2) TMI 1168 - GUJARAT HIGH COURT ], that an identical issue as the one raised in these petitions was decided by this Court considering the policy and the relevant notifications, where it was held that It is held that the amendment of Notification No. 16/2015-Cus vide Serial No.1 of Notification No. 79/2017 dated 13th October, 2017, would also apply to imports made during the period 1.7.2017 to 13.10.2017. Trade Notice 11/2018 dated 30.6.2017 to the extent it is stated therein that under Chapter 5 importers would need to pay IGST is hereby quashed and set aside. All the petition allowed.
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2023 (9) TMI 1146
Provisional assessment - clean energy Cess payable - non-inclusion of the ship demurrage charges in the value - HELD THAT:- It is true that the provisional assessment was sought only for the purpose of ship demurrage charges. However, it is now an well-established legal principle that a assessment which is provisional is provisional for all purposes and at the time of finalization of the assessment, all factors which are necessary for finalization of the assessment must be reckoned. For instance, if the assessment is left open for questions of valuation, and subsequently it is found that the classification also requires a change or some other licencing requirement has to be examined, all these factors must be examined while finalizing the provisional assessment. There cannot be a provisional assessment which is provisional for one purpose and not provisional for other purposes. Imposition of Clean Energy Cess - Assessment challenging to own self-assessment before the first appellate authority - HELD THAT:- It is now settled by the Larger Bench of the Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] that all assessments can be challenged before the first appellate authority including self-assessments. The first appellate authority has correctly allowed the appeals of the importer and has ordered reassessment of the six Bills of Entry after excluding Clean Energy Cess on the ground that there is no charge of Clean Energy Cess on goods falling under Customs Tariff Heading 2704. The clean energy cess is not leviable on goods falling under Customs Tariff Heading 2704. There are no merits in the appeal of the Revenue - appeal dismissed.
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PMLA
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2023 (9) TMI 1145
Money Laundering - applicability of provision of Section 436-A of the Code of Criminal Procedure, 1973 - HELD THAT:- The impugned judgment/order set aside, which had restricted the grant of bail to the appellant for a period of six months, with a direction that the appellant will appear before the trial court and would be released on bail, which is pending adjudication before the Court of Sessions Judge, Khurda, Bhubaneswar, Odisha on terms and conditions to be fixed by the trial court. Application disposed off.
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2023 (9) TMI 1144
Money Laundering - Seeking grant of bail - Practicing chartered accountant (CA) - assisting the co-accused to convert the tainted money into untainted money and connived in the laundering thereto - petition dismissed primarily on the ground that the petitioner has failed to meet the threshold of Section 45 of PMLA - HELD THAT:- As per the law laid down that in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], it has inter alia been held that at the stage of considering the bail application, the court is expected to consider the question from the perspective of whether the accused possessed the requisite mens rea. It was further held that no definite finding is required whether the accused has not committed an offence under the Act. It is a well settled proposition of law that the jurisprudence of bail lays down that the liberty of a person should not be interfered with except in exceptional cases. At this stage, the court has to examine the case on the scale of broad probabilities. The apparent role of the petitioner is filing of the income tax return. It is a settled a proposition that at the stage of consideration of the bail even under PMLA the court has only to see the preponderance of probability. The court at this stage is not required to record the positive finding of acquittal. Such finding can be recorded only after recording and appreciation of the evidence by the learned trial court. The case of the petitioner that Anubrata Mondal is shifting his blame on the petitioner only to save himself has to be tested during the course of the trial. Generally speaking, the professional would act on the instructions of his client. However, whether he has gone beyond his professional duty is something which is required to be seen and examined during the trial. The allegation against the present petitioner is not that he has done something which was beyond his scope of profession i.e. indulging in some activities which are totally unconnected with the chartered accountancy. The plea of the petitioner that he has acted on the basis of information and record provided to him cannot be rejected outrightly at this stage. This is required to be tested during the course of the trial. It has repeatedly been held that stage of bail cannot convert into a mini trial. It is also pertinent to mention here that that the court has only to take a prima facie view on the basis of the material on record. The petitioner is admitted to bail on furnishing personal bond in the sum of Rs. 5 lakhs with a surety of the like amount to the satisfaction of the trial court on the terms and conditions imposed - application admitted.
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2023 (9) TMI 1143
Legal arrest or not - grounds of arrest need to be orally informed or given in writing - requirement to comply with mandate of Section 19(1) of PMLA or not - violation of fundamental rights - denial of right to consult - HELD THAT:- The reading of Para 458 and 459 which has been relied upon by both the parties makes it clear that the Apex Court in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] inter alia held that so long as the person has been informed about the grounds of his arrest, it is sufficient compliance of the mandate of Article 22(1) of the Constitution. It has also been inter alia held that it is enough if ED at the time of arrest contemporaneously discloses the grounds of such arrest to such person. Thus it cannot be said that the law laid down in V. Senthil Balaji is any way per incurium or irreconcilable with the judgment of Hon ble Supreme Court in Vijay Madanlal Choudhary. However, as has been held and relied upon by the Hon ble Supreme Court in V. Senthil Balaji [ 2023 (8) TMI 410 - SUPREME COURT] that the decision of a court cannot be read like a statute out of context and in ignorance of the requisite provisions. The question is that whether this meaning as given in Black Laws Dictionary has to be taken literally in the present case. The service of the pleadings in a civil case are entirely different in nature and the law has to be interpreted as a whole and it cannot be taken out of context. In the present case, we are dealing with a situation where the arrestee is accused of a serious offence under PMLA. Any sensitive information disclosed prematurely in such cases may hamper the case of the prosecution/investigating agency. The orders passed by learned Special Judge on 28.06.2023 whereby he found sufficient material on the record and recorded a finding that the investigating agency has complied with the provisions of law while arresting the applicant accused this judgement rather favours the ED. There is no violation of Fundamental Rights of the petitioner. There is nothing or the record to suggest that petitioner has been denied right to consult and defended by legal practitioner - there is nothing on record to suggest that reason to believe as required under Section 19(1) of the PMLA was not recorded in writing and, therefore, it cannot be held that petitioner was arrested illegally - petitioner here failed to show that the arrest of the petitioner is in violation of Section 19 of the PMLA. Petition dismissed.
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Service Tax
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2023 (9) TMI 1142
Non-payment of service tax - Business Auxiliary Service - Construction Service - Erection and Painting Service and Goods - Transport Agency Service - non-imposition of penalty under Section 76 of Finance Act - HELD THAT:- The assessee is not disputing the liability towards Business Auxiliary Service, Construction Service GTA Service from 01.06.2007 onwards and the total demand of service tax for those services works out Rs.22,70,491/-. The said demand is confirmed against the assessee along with interest. If any amount is payable by the assesse, the same shall be adjusted as the assessee has already paid an amount of Rs.42,50,000/- during investigation and Rs.14,13,327/ after issuance of show-cause notice. The said amount is to be adjusted against the confirmed demand along with interest. Prior to the period 01.06.2007 as there is a composite contract wherein supply of materials is also involved, therefore, merits classification is works contract service, which was not in service tax net prior to 01.06.2007. Therefore, no service tax is payable by the assessee for the period prior to 01.06.2007 under the category of construction services, therefore, the said demand is set aside. The demand on account of business auxiliary service, GTA service and construction service w.e.f. 01.06.2007 onwards are confirmed along with interest and the amount already paid by the assessee are to be appropriated if any excess amount is paid, the same is to be refunded to the assessee within a period of 30 days from the date of receipt of this order - no penalty is imposable on the assessee. Appeal of Revenue dismissed.
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2023 (9) TMI 1141
Service tax not paid properly - Business Support Services - non-disclosure of actual value of service in ST-3 returns - service of information and tracking of delivery schedule - Commission/Brokerage income - Miscellaneous income like Amendment Charges, Container Detention charges etc. not shown in ST-3 return - demand of service tax along with equal amount of tax as penalty under Section 78 of the Finance Act, 1994. Service Tax on income arising from providing service of information and tracking of delivery schedule - HELD THAT:- The space for transportation of containerized goods outside the territorial water of the country has been bought by the Appellant company in a bulk and thereafter sold to other companies on principal to principal basis. In this sale they earn a margin of profit over the cost incurred by them on such bulk purchase. Since this transaction is entirely conducted on principal-to-principal basis and not on Principal - to - Agent basis, the income derived would not fall within the ambit of Business Support Service. As per the definition of Business Support Service, any activity which is rendered on behalf of another person ie, when the relationship is in the nature of principal-toagent, then only such activity is liable to service tax under the category of Business Support Service. In the instant case, the Appellant were buying the space for transportation of containerized goods outside the territorial water of the country and selling the same to their clients in their own capacity and is not obligated to work on principal-to-agent relationship. Accordingly, the income received by the Appellant is not liable to service tax under the category of 'Business Support Service' as confirmed in the impugned order - the demands confirmed in the impugned order on this count is not sustainable. Service tax on Commission/Brokerage income - HELD THAT:- The Appellant buy space for transportation of containerized goods outside the territorial waters of the country from Shipping Lines and selling the same to their clients in their own capacity. Hence, the relationship with the Shipping Lines as well as the customers is on principal-to-principal relationship. They obtained discounts from the Shipping Lines on account of bulk purchase of space in the ships. Such discount provided on account of purchase is outside the ambit of service tax - the Appellant was instrumental in providing business in bulk quantities to the shipping lines. This discount amount is, thus, connected with the act of bulk purchase of space in the ships and is received for selling of space outside the country in course of shipment of cargo. It is observed that the discount was billed as well as received in foreign currency. Therefore, it satisfies the main part of Rule 10 of the POP Rules which provides that the place of provision of services shall be the place of destination of the goods, which is outside India. In the instant case the facts on record conclusively establish that each of the applicable clauses of Rule 6A(1) stands duly satisfied. Since export of services is outside the purview of service tax under the Act, the demand of service tax of Rs.17,54,528/-in the impugned order is not sustainable. Service Tax on Miscellaneous income like Amendment Charges, Container Detention charges etc. not shown in ST- 3 return - HELD THAT:- As per Rule 10 of the Place of Provision of Services Rules 2012, the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory. In this case also, the requirement of Rule 6A of the Service Tax, 1994, as amended, stands duly satisfied. Accordingly, these charges are within the purview of the Export of Service Rules and hence outside the service tax net - the Appellant have been paying service tax for the considerations received as Amendment Charges, Container Detention Charges, Customer Administrative Charges, DTHC Charges, Handling Fees, Seal Charges and other charges when charged on Indian customers in Indian Currency. In view of the above findings, the demand confirmed in the impugned order on this count is not sustainable. Time Limitation - Penalty - suppression of facts or not - HELD THAT:- In this case there was no evidence brought on record to establish suppression of facts with an intention to evade payment of tax. It is a settled principle that in order to invoke the extended period of limitation, it is necessary to establish that there has been intent to evade payment of the tax by means of fraud, collusion etc. These ingredients postulate a positive act of fraud or collusion or willful misstatement or suppression of facts, which are absent in this case. Accordingly, the demands confirmed in the impugned order are not sustainable on the ground of limitation also. For the same reason, the penalty imposed under Section 77 and 78 of the Finance Act, 1994, is also liable to be set aside. Impugned order set aside - appeal of Revenue dismissed.
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2023 (9) TMI 1140
Levy of Service tax - part amount/earnest amount - Point of taxation rules - HELD THAT:- As per Rule 4(b)(iii), the point of taxation would be the date of issuing of invoice, which in the instant case is October, 2012. It is also noted that as per section 67A of the Finance Act, 1994, the rate of service tax, the value of a taxable service shall be the rate or value in force or as applicable at the time when the taxable service has been provided or agreed to be provided. It is noted that the appellant and the service recipient had merely entered into a Memorandum of Understanding in March, 2012 for leasing of land, and advance amount was paid to the appellant. The service of provision of leased land was provided in October, 2012. It is also apparent that the invoices for the said provision of service were raised on 23.10.2012. The above two dates are crucial to determine the date of provision of service in the instant case, that too in terms of Rule 4 POTR. From said two dates, it is clear that the service was provided after change in effective rate of tax and the invoice also has been raised after the change in effective rate of tax, though the part payment of Rs 10,62,33,750/- was received before the change in effective rate of tax. Thus, the case of appellant gets squarely covered under Rule 4(b)(iii) POTR. In the given set of facts and applicability of Rule 4(b)(iii) POTR there remains no service tax liability on advance received by the assessee. Hence, the demands and penalties confirmed against the appellant are not sustainable. The impugned order cannot be upheld and is therefore set-aside - Appeal allowed.
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2023 (9) TMI 1139
Classification of services - commercial and industrial construction service or works contract service? - services provided to Bharat Heavy Electricals Limited (BHEL) for construction of Thermal Power Plant - HELD THAT:- The appellant is providing the said service along with material, in that circumstances, the appropriate classification of the activity undertaken by the appellant is works contract service , as held by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ], wherein the Hon ble Apex Court has observed that A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Thus, the appellant is not liable to pay service tax under commercial or industrial construction service. Therefore, demand of service tax of Rs.30,11,274/- is set aside. Levy of penalty - HELD THAT:- Penalty on the appellant is not imposable as they have paid the entire amount of service tax along with interest before issuance of show cause notice. Appeal allowed.
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2023 (9) TMI 1138
Classification of service - Business Auxiliary Service or not - carrying out certain jobs by utilizing the Steam Generating Unit - HELD THAT:- As per the agreement the appellant has to provide various services by utilizing Steam Generating Unit but held by this Tribunal, the said activities does not fall under business auxiliary service prior to 26.05.2008, therefore, demand of service tax under the category of business auxiliary service is not sustainable against the appellant. The appellant is not liable to pay service tax on their activity - impugned order set aside - appeal allowed.
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Central Excise
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2023 (9) TMI 1137
Seeking permission for withdrawal of SLP - HELD THAT:- The special leave petitions are dismissed as withdrawn, with liberty to file a review before the High Court. Liberty is also granted to the petitioner(s) to challenge the impugned order, in case the decision in the review petition is adverse to the petitioner(s).
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2023 (9) TMI 1136
Reversal of CENVAT Credit - formula applied by the appellant for reversing the proportionate credit availed on common input services used in production of the exempted product (electricity) is correct or not - Department is of the view that the amount to be reversed has to be calculated by taking the entire credit (total credit) availed by the appellant - HELD THAT:- The very same issue was analysed by the Tribunal in the case of M/S. TOSHIBA JSW POWER SYSTEMS PRIVATE LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2023 (6) TMI 543 - CESTAT CHENNAI] where it was held that Total Cenvat Credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and will not include the Cenvat credit on input/input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. Similar view was taken by the Tribunal in the case of AAVANTIKA GAS LTD VERSUS COMMISSIONER, CGST- INDORE [ 2023 (1) TMI 505 - CESTAT NEW DELHI] . After appreciating the facts and following the decisions as above, we are of the considered view that the proportionate credit reversed by the appellant originally is correct and therefore the amount reversed as per direction of the audit team on 20.7.2013 is excess reversal made by the appellant. The appellant is therefore eligible for recredit of the amount of Rs.65,24, 669/-. There is no request to pay interest from the date of reversal in the reply to Show Cause Notice. The adjudication has also considered the issue of reversal of credit as per direction of audit team - it is not necessary to consider the eligibility of interest in this appeal. The appellant is eligible to avail re-credit / refund. The impugned order is set aside - appeal allowed.
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2023 (9) TMI 1135
Restoration of appeal - appeal dismissed for non-prosecution - appellant is not responding to the notices for hearing - HELD THAT:- From the facts, it is observed that the matter is pending only for the reason that appellant/counsel on record is not responding to the notices for hearing issued making it evident that they are not interested in prosecuting this matter any further. In the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown. In fact it can be said that the petitioner defendant misused the liberty and the grace shown by the court. It is reported that as such now even the main suit has been disposed of. Appeal is accordingly dismissed for non prosecution.
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2023 (9) TMI 1134
Benefit of N/N. 1/2011 dated 1.3.2011 - credit availed on inputs and input services used in the manufacture of the final products on which the concessional rate of duty is being availed - levy of penalty - HELD THAT:- The appellant manufactures foam and foam products and rubberised coir products. On foam products, standard rate of duty 12% is being discharged and accordingly, credit is availed on all inputs and input services. Foam is also captively used in the manufacture of Rubberised coir mattresses for which concessional rate of duty is availed and therefore, credit cannot be availed as per the exemption Notification No. 1/2011 dated 1.3.2011. The appellant admits the fact that they are aware of the fact that on rubberised coir mattresses, they are not supposed to avail CENVAT credit on inputs and inputs services in as much as they were claiming concessional rate of duty - when all other units were strictly following the conditions of the exemption Notification, how could this contravention by this unit go unnoticed by their own audit officers during the submission of the financial statement of the company. Whether there was any violation of the conditions of the exemption Notification as the mistake once noticed was made good by reversing the entire credit along with interest? - HELD THAT:- The irregular availment of credit came to the notice of the department only after the officers of internal audit party visited their unit and verified their records. The Commissioner at para 29 of the impugned order also notes that on one hand, the noticee claim that they have taken a policy decision to clear the goods on payment of 1% duty and on the other, they claim that there was confusion in their minds regarding CENVAT credit to be availed. It cannot be accepted that the contravention has not come to the notice of the noticee either at the time of their internal audit, statutory audit or during the preparation of the financial statement of the company - it is very clear that the appellant had consciously taken CENVAT credit which was irregular. Hence, having suppressed the facts, the Commissioner was right in invoking the Proviso to Section 11A. Penalties on Shri Kushroo, Engineer, Head of Finance; Shri M. S. Kamath, Vice President and Shri T. Sudhakar Pai, Chairman and Managing Director, the only allegation in the show-cause notice is that they are decision makers on the statutory matters of the company - HELD THAT:- But there are no specific allegations specified to allege their involvement in taking irregular credit by the company in spite of a policy decision was taken by the Senior Officers of the company not to avail credit. The error committed by the ground level officers cannot be alleged to be done with the knowledge of the above senior officers. Therefore, the Chairman and Managing Director of the company, the Vice President and Head of Finance cannot be penalized. It is also a fact that as and when it came to their knowledge, they ordered immediate reversal of credit of Rs.1,57,29,304/- hence, the penalty imposed on them is set aside. Appeal is disposed of by way of remand only for redetermination of penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944.
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2023 (9) TMI 1133
Refund claim - manufacture and clearance of goods in excess of the production capacity as determined by the Assistant/Deputy Commissioner of Central Excise in terms of Rule 5 of N/N. 16/2010-CE - CBEC Circular No.980/4/2014-CX dated 24.01.2014 - HELD THAT:- The said Circular clearly clarifies that duty is to be paid by the assessee in terms of the Chewing Tobacco Unmanufactued Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010, which has been determined by the adjudicating authority and on that basis the appellant has paid the duty, therefore, if during physical verification production is found more, no duty is payable by the appellant and the said issue also examined by this Tribunal in the case of KAIPAN PAN MASALA PVT. LTD. VERSUS C.C.E. S.T., BHOPAL [ 2016 (7) TMI 1104 - CESTAT NEW DELHI] . As in the matters in hand, the appellants were paying duty in terms of Notification No.16/2010-CE(NT) dated 27.02.2010 read with Rule 10 of Chewing Tobacco Unmanufactued Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010, therefore, the appellant paid correctly and no further duty is payable by the appellant on the basis of actual production, which was found higher than the deemed annual capacity of production. The said machine shall be considered as duplex single track line machine and no further duty is to be demanded from the appellant. There are no merits in the impugned orders and the same are set aside - appeal allowed.
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2023 (9) TMI 1132
Valuation - inclusion of drawing, designing and engineering charges collected by the Appellant in the assessable value for the purpose of calculating the Central Excise duty or not - time limitation. Appellant paid service tax on designing and engineering services and not included the same in the assessable value for the purpose of payment of central excise duty. HELD THAT:- When a tax under any statute is assessed and paid as per the requirement of the statute, it must be complied with. Even though the assessee might have paid the tax wrongly under a different tax statute, it does not satisfy the compliance of the statute under which the assessee is rightly required to pay their tax liability. This view has been held by this tribunal in the case of PHOENIX YULE LIMITED VERSUS COMMR. OF CENTRAL EXCISE, KOL-III [ 2018 (7) TMI 683 - CESTAT KOLKATA] where it was held that The charges paid by the subscribers for procuring a SIM Card are generally processing charges for activating the cellular phone and consequently the same would necessarily be included in the value of the SIM Card. Thus, assessee appellant should have included the charges of engineering drawing and design in the assessable value of conveyor belts as per the provisions of Section 4 of Central Excise Act, 1944 - also, the payment of service tax on the charges recovered from the buyer of engineering drawing design is not a proper compliance of provisions of Central Excise Act, 1944 and thus short payment of Central Excise duty stands recoverable. The excise duty can be demanded on the same amount charged for drawing and designing, even if service tax has already been discharged on the same value, if they are related to the goods manufactured. As the department has not examined each contract separately to ascertain the liability, we deem it proper to remand the matter back to the adjudicating authority to examine the issue afresh and pass an appropriate order. Time limitation - HELD THAT:- As there is no suppression of fact with an intention to evade payment of tax has been established in this case, the extended period cannot be invoked in this case. Accordingly, the demand confirmed by invoking the extended period of limitation set aside. Since the exact quantum of duty, if any, liable to be confirmed within the normal period of limitation is not available in the records, the matter needs to be remanded back to the adjudicating authority on this count also to determine the duty liability, if any, on the basis of the above said observations. Appeal allowed by way of remand.
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2023 (9) TMI 1131
Reversal of CENVAT Credit - input written off as per Rule 3(5B) of the Cenvat Credit Rules - recovery mechanism - HELD THAT:- During the relevant period, there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules and the explanation which was introduced vide Notification No. 3/2013 dated 01.03.2013 was from 01.03.2013 vide which it was provided that if the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), and (5B), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken. This recovery mechanism introduced from 01.03.2013 cannot be made applicable from the retrospective date and it can be only prospective and this issue was considered in various decisions by the Tribunal wherein it was held that when there was no recovery mechanism before 01.03.2013, therefore, no recovery can be affected and accordingly the present proceedings initiated under Rule 14 of Cenvat Credit Rules read with Rule 3(5B) of the Cenvat Credit Rules is liable to be dropped. It is pertinent to note that the identical issue was considered by the Division Bench of the Tribunal in the case of M/S. ERICSSON INDIA PVT. LTD. VERSUS CCE, JAIPUR [ 2019 (3) TMI 776 - CESTAT NEW DELHI] wherein the Tribunal has held for reversal of cenvat credit on partial writing down of value of inputs , the provision was introduced only first time by amendment of Rule 3(5B) of Cenvat Credit Rules, with effect from 01.03.2011. Further, there was no provision prior to 01 March 2013 for recovery of cenvat credit and interest thereon under Rule 3(5B) etc. which was made applicable with effect from 01.3.2013 only, by virtue of Notification No. 3 of 2013-CE(NT) dated 01.03.2013. Though the Revenue has filed appeal against the decision before the Hon ble High Court of Rajasthan, but no stay has been granted by the Hon ble High Court. In terms of proviso to Rule 3(5B) itself if the said goods are used subsequently the appellant was entitled to take credit of the amount equivalent to the cenvat credit paid earlier. Further, the entire demand is based on the entries reflected in the financial books of accounts and the balance sheet of the appellant, and there has not been any suppression and malafide on the part of the appellant, and therefore, the demand pertaining to extended period of limitation is not sustainable and the demand pertaining to normal period of limitation comes to only Rs. 2,17,251/-. Thus, when during the relevant period, there was no recovery mechanism provided in the Cenvat Credit Rules, therefore, the entire demand is liable to set-aside Appeal allowed.
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