Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 11, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
News
Notifications
GST - States
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CCT/26-2/2017-18/22 - dated
15-11-2017
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Goa SGST
Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1.
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CCT/26-2/2017-18/20 - dated
31-10-2017
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Goa SGST
Amendments in the Notification Number CCT/26-2/2017-18/11, dated the 12th September, 2017.
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CCT/26-2/2017-18/19 - dated
31-10-2017
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Goa SGST
Extends the time limit for making the declaration in FORM GST ITC-04.
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CCT/26-2/2017-18/18 - dated
31-10-2017
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Goa SGST
Amendments in the Notification Number CCT/26-2/2017-18/17 dated the 13th October, 2017.
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38/1/2017-Fin(R&C)(38/2017-Rate)/3589 - dated
24-10-2017
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Goa SGST
Amendment in the Government Notification No. 38/1/2017-Fin(R&C)(8/2017-Rate) dated the 30th June, 2017.
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38/1/2017-Fin(R&C)(37/2017-Rate)/3588 - dated
24-10-2017
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Goa SGST
Notifies the state tax on intra-State supplies of good 65% of state tax applicable.
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38/1/2017-Fin(R&C)(36/2017-Rate)/3587 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(4/2017-Rate) dated the 30th June, 2017,
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38/1/2017-Fin(R&C)(35/2017-Rate)/3590 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(2/2017-Rate) dated 30th June, 2017.
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38/1/2017-Fin(R&C)(34/2017-Rate)/3592 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(1/2017-Rate) dated 30th June, 2017,
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38/1/2017-Fin(R&C)(33/2017-Rate)/3597 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate) dated 30th June, 2017.
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38/1/2017-Fin(R&C)(32/2017-Rate)/3591 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(12/2017-Rate) dated 30th June, 2017
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38/1/2017-Fin(R&C)(31/2017-Rate)/3593 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(11/2017-Rate) dated 30th June, 2017
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38/1/2017-Fin(R&C)(24)/3598 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(5)/2550 dated the 28th June, 2017.
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38/1/2017-Fin(R&C)(23)/3595 - dated
24-10-2017
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Goa SGST
The Goa Goods and Services Tax (Ninth Amendment) Rules, 2017.
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38/1/2017-Fin(R&C)(22)/3599 - dated
24-10-2017
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Goa SGST
Recommendations of the Council, hereby notifies the registered person whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees.
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38/1/2017-Fin(R&C)(21)/3596 - dated
24-10-2017
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Goa SGST
Appointed the "Proper Officers"
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38/1/2017-Fin(R&C)(20)/3600 - dated
24-10-2017
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Goa SGST
Amendments in the Government Notification No. 38/1/2017-Fin(R&C)(17)/2408, dated the 21st September, 2017,
Indian Laws
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F.No.4(28)-W&M/2017 - dated
8-1-2018
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Indian Law
Amendment to 7.75% Savings (Taxable) Bonds 2018, Notification No S.O.44 (E)
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Time limit for issuance of notice u/s 143(2) for scrutiny assessment u/s 143(3) - furnishing of ITR-V forms in case of electronic filing of return - Period to be computed from expiry of 30 days from the date of filing of ITR or from the extended date - question of law framed in this case answered in favour of the assessee - HC
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Disallowance of depreciation u/s 32 - intangible assets - amount paid for non compete fees - non compete fee is not an eligible intangible asset as the words “similar business or commercial rights” have to necessary result in an intangible asset against the entire word which can be asserted as such to qualify for depreciation u/s 32(1)(ii) of the Act which non compete fees lacks. - AT
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Disallowance of carry forward of losses on the ground that return of income was not filed within the due date as required u/s 139(1) - Mere delay in submitting the ITR-V does not make the return invalid for denying the benefit of carry forward of losses in future years. - AT
Customs
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Fraudulent drawback - fake bank realization statements (BRCs) - While the appellant surely deserves a rap on the knuckles, revocation of the license for acts and commissions committed by their employee without their knowledge or intent is surely an overkill - AT
FEMA
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FDI Policy Clarification on After-Sale/Repair Services - any standalone sale of spare parts/accessories etc. shall be construed as retail trading for the purposes of FDI policy
Corporate Law
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Prohibition on insider trading of securities - Section 195 of the Companies Act, 2013 omitted.
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Prohibition on forward dealings in securities of company by director or key managerial personnel - Section 194 of the Companies Act, 2013 omitted.
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Related party transactions - non-ratification of transaction shall be voidable at the option of the Board or shareholders, as the case may be - Section 188(3) of the Companies Act, 2013
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Related party transactions - restriction on vote - second proviso to section 188 (1) shall not apply to a company in which ninety per cent. or more members in numbers are relatives of promoters or related parties. - Section 188(1) of the Companies Act, 2013
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Loan and investment by company - provide for aggregation of loan and investments so far made and guarantees so far provided, for the purpose of calculating the limits of loans and investments. - many other amendments - Section 186 of the Companies Act, 2013
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Loan and investment by company - the restrictions on layers of investment companies deleted - Section 186 of the Companies Act, 2013
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Loans to directors, etc - allows a company to give loan or guarantee or provide security to any person in whom any of the director is interested subject to passing of special resolution by the company and utilisation of loans by the borrowing company for its principal business activities - Section 185 of the Companies Act, 2013
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Loans to directors, etc - to limit the prohibition on loans, advances, etc., to directors of the company or its holding company or any partner of such director or any firm in which such director or relative is a partner. - Section 185 of the Companies Act, 2013
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Disclosure of interest by director - Relief from the rigor of this section - body corporates under the ambit of sub-section (5) in certain cases - Section 184(5) of the Companies Act, 2013
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Disclosure of interest by director - the cap of minimum penalty removed with respect to failure by directors to disclose interest. - Section 184(4) of the Companies Act, 2013
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Restrictions on powers of Board - securities premium is also included along with paid-up share capital and free reserves for calculation of upper limits on borrowing powers of the Board - Section 180(1) of the Companies Act, 2013
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Nomination and Remuneration Committee - company shall place the remuneration policy on its website and will disclose salient features of such policy with web address in the Board's report, etc. - Section 178(4) of the Companies Act, 2013
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Nomination and Remuneration Committee - committee will specify methodology for effective evaluation of performance of Board and committees and individual directors either by the Board, nomination and remuneration committee or an independent external agency and for its review - Section 178(2) of the Companies Act, 2013
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Audit Committee - to provide for ratification by audit committee of transactions involving amount not exceeding one crore rupees within 3 months of transaction, consequences of non-ratification, exemption from approval of audit committee to related party transactions between holding company and its wholly owned subsidiary, other than those covered under Section 188, etc. - Section 177(4) of the Companies Act, 2013
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Meetings of Board - participation of directors allowed on certain items at Board meetings through video conferencing or other audio visual means if there is quorum through physical presence of directors - Section 173 of the Companies Act, 2013
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Resignation of director - the requirement for forwarding of copy of resignation by director to the Registrar shall be optional - Section 168(1) of the Companies Act, 2013
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Vacation of office of director - where he incurs disqualification under sub-section (2) of section 164, the office of the director shall become vacant in all the companies, other than the company which is in default under that sub-section - Section 167(1) of the Companies Act, 2013
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Number of directorships - For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be included - Section 165 of the Companies Act, 2013
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Disqualifications for appointment of director - certain disqualifications to continue to apply even if appeal or petition is filed - Section 164(3) of the Companies Act, 2013
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Disqualifications for appointment of director - where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment - Section 164(2) of the Companies Act, 2013
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Appointment of additional director, alternate director and nominee director - the filling up of causal vacancy of the director may be done by the board in case of private company as well - Section 161(4) of the Companies Act, 2013
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Appointment of additional director, alternate director and nominee director - a person is restricted from being appointed as an alternate director if he is holding directorship in the same company - Section 161(2) of the Companies Act, 2013
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Right of persons other than retiring directors to stand for directorship - the requirement of deposit of rupees one lakh with respect to nomination of directors shall not be applicable in case of appointment of independent directors or directors nominated by nomination and remuneration committee - Section 160 of the Companies Act, 2013
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Appointment of directors - in addition to Director Identification Number, a director may hold any other identification number prescribed by Central Government under section 153 - Section 152 of the Companies Act, 2013
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Company to have Board of Directors - easier requirements with respect to appointment of resident director. It also seeks to specify limits with respect to pecuniary relationship of a director with respect to eligibility of a director to be appointed as an independent director. It also seeks to specify the scope of restriction on pecuniary relationship entered into by a relative - Section 149 of the Companies Act, 2013
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Punishment for contravention - quantum of fine revised - It also restricts the liability of auditor for damages to the shareholders or creditors of the company instead of any other person. It also seeks that in case of criminal liability of any audit firm the concerned partners only shall be liable - Section 147 of the Companies Act, 2013
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Powers and duties of auditors and auditing standards - required to report whether the company has adequate internal financial controls with reference to financial statements - Section 143(3) of the Companies Act, 2013
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Powers and duties of auditors and auditing standards - auditors shall have access to accounts and records associate companies along with subsidiary companies - Section 143(1) of the Companies Act, 2013
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Eligibility for appointment of auditor of a company - scope of the term relative amended. - Section 141(3) of the Companies Act, 2013
Indian Laws
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FDI policy further liberalized in key sectors - Cabinet approves amendments in FDI policy
IBC
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Corporate insolvency resolution process - whether the Company Court has any jurisdiction to stay the proceedings filed by a Corporate Debtor before NCLT even though a previously instituted company petition by a creditor may have been admitted (and therefore does not get transferred to NCLT) but where a provisional liquidator has not been appointed? - there is no bar on NCLT, Ahmedabad from proceeding with IBC application. - HC
Service Tax
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CENVAT credit - input services - Help desk assistant at estate has no relation to the activity of manufacture in the factory premises and thus credit of the same cannot be permitted, the same is denied. - AT
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CENVAT credit - input services - If the said medical centre is not located in the factory or if the said medical centre is primarily used by the families of the employees and not by the personal engaged in the factory then the credit would not be admissible - AT
Case Laws:
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Income Tax
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2018 (1) TMI 457
Time limit for issuance of notice u/s 143(2) for scrutiny assessment u/s 143(3) - furnishing of ITR-V forms in case of electronic filing of return - Period to be computed from expiry of 30 days from the date of filing of ITR or from the extended date - assessee contended that the assessee had in fact furnished the ITR-V forms within the period of 30 days through mail and the Circular No.3 of 2009 had not formulated any specific procedure - Held that:- In the present case, the assessee had filed its return electronically on 30.09.2009. It says that it availed of the filing of the ITR-V forms through post. The Revenue is not in a position to verify either way. It is precisely to cater to this circumstance that the circular of 01.09.2010 (especially para 2) extended the period. The extension of this period necessarily meant that ITR-V forms received during such extended period validated the returns originally filed. The interpretation sought to be placed by the Revenue now that fresh returns were necessary, in the opinion of the Court, flies against the opinion of the CBDT and the circumstances, under which, both the circulars were framed and published. In other words, these circulars were necessitated on account of the legislative gap – even conflict between the Rules on the one hand, which mandated electronic filing and other provisions of the Statute, which prohibited the attachment of annexures along with returns, which resulted in ITR-V form, as were in the present case. Thus the Court is of the opinion that the question of law framed in this case is to be answered in favour of the assessee
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2018 (1) TMI 456
Addition u/s 69 - addition based on book entries as unexplained investments - Tribunal sustaining the addition based on notional/ artificial book entries on the mis-construction of Section 69 - Held that:- Before the Tribunal, the assessee took the very same stand as was taken before the Assessing Officer as well as the Commissioner of Income Tax (Appeals) by stating that the recipients had no corresponding credits in their bank accounts. This issue was examined by the Tribunal and on facts, it was ultimately found that the balance sheet of the assessee reflected investments made by the assessee in two companies, which were group companies of the assessee, namely M/s.Sri Padmabalaji Steels Private Limited and M/s.Suryabalalji Steels Private Limited and that these two companies were again private limited companies. The assessee did not dispute that the said two companies were subjected to statutory audit under the Companies Act and that in the auditor's report of the assessee company, it was certified by the Chartered Accountant that the balance sheet and profit and loss account were prepared as per the books of accounts and reflected true and correct working of the assessee company. Thus, the Tribunal held that when both the balance sheets of the assessee company and the balance sheets of the companies, in which, the assessee had invested, reflected the amounts of investments and are correctly tallied, neither the accounts nor the auditor's report could be brushed aside. - Decided against assessee
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2018 (1) TMI 455
Rectification petition - petitioner seeks a direction to the respondents not to enforce the arrears of demand pending disposal of the rectification petition filed - Held that:- Since a petition has been filed by the petitioner and has been received by the office of the second respondent on 11.12.2017, it would be appropriate for the second respondent to pass an order on merits and in accordance with law. At this stage, this Court does not want to express any opinion as to the manner, in which, the second respondent should consider such a rectification petition and he is free to consider the same in accordance with law. Writ petition is disposed of with a direction to the second respondent to consider the petitioner's rectification petition dated 11.12.2017, purported to have been filed under Section 154 of the said Act, on merits and pass appropriate orders and in accordance with law, after affording an opportunity of personal hearing to the authorized representative of the petitioner as expeditiously as possible, preferably within a period of six months from the date of receipt of a copy of this order.
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2018 (1) TMI 454
Penalty u/s 271(1)(c) - books of accounts of the assessee were rejected - assessee made the surrender in survey operation - Held that:- In the present case, the assessing officer has not given any reason as to how he reached the conclusion that "the assessee has concealed it's income and furnished inaccurate particulars of it's income". Merely because, the books of account had been rejected it did not in itself establish or prove either of the two circumstance to levy penalty, leave alone both circumstances as the penalty order suggests. The assessing officer, was obliged to reason and state in the penalty order how according to him the assessee had either concealed the particulars of his income or had furnished inaccurate particulars of the same either with reference to the material discovered during the survey proceedings or otherwise. In view of the peculiar facts of this case where the assessing officer had not given any cogent reason in support of conclusion drawn by him to impose penalty, the Tribunal has correctly deleted the penalty relying on the earlier division bench judgement of this Court that rejection of books of account did not automatically lead to the conclusion of concealment or submission of inaccurate particulars of income. - Decided in favour of assessee
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2018 (1) TMI 453
TPA - comparable selection criteria - Held that:- TCG Lifesciences Ltd. and Transgene Bioteck Ltd. both are functionally dissimilar. They are having intangible assets which are owned by both the companies. There is high risk involved by both the comparables. These are functionally dissimilar because they are into Pharmaceutical Industry and not in Auto Mobile Industry. Thus, both these comparables needs to be excluded. Therefore, the TPO/A.O is directed to exclude these two comparables. The order of the ITAT in the assessee’s own case for Assessment Year 2005-06. In this particular year also, the working capital adjustment was not considered by TPO, therefore, ITAT directed the TPO to do the needful by taking into account of the relevant factors which was ignored on the earlier occasions. However, it would have to be decided fresh only after the fresh comparables are chosen by the TPO which are similar to the function segment and ownership of the assets.
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2018 (1) TMI 452
Estimation of Gross profit - rejection of books of accounts - Held that:- First of all coming to the estimation resorted by the A.O in this case. He did not refer any other cases of similar trade. Secondly, he did not clarify the basis on which he resorted to the adoption of his estimate, but mechanically adopted the average of previous years’ G.P rate. Thus while considering the nature of the assessee's business being that of a food grain dealer, he should have mentioned about better market conditions, worked out specific other direct expense comparables and then should have resorted to his best estimate of Profits in my opinion because the food grain business is highly volatile and prices are quite fluctuating year to year based on cropping success, monsoons and several other factors involved. Thus just increasing the Gross Profit based on some average of earlier year’s rates without any reasonable basis was uncalled for. We do not agree with the A.O‘s estimation and hold that the addition made needs to be restricted to ₹ 1,50,000/ - to cover up for the possibility of certain expenses being unvouched or fully for business purposes. The balance addition of ₹ 10,94,635/- is directed to be deleted. Since the addition is being made to the Net profit of the assessee, the disallowances in other expenses shall be deemed to be covered in this addition as the rejection of the books of accounts has been confirmed. - Decided against assessee.
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2018 (1) TMI 451
Nature of expenditure - replacement of steel rolls - revenue or capital - Held that:- We find from the explanation of the aforesaid manufacturing process, steel rolls are not independent machinery but instead they are only part of a rolling mill. It does not contribute for the increase in production capacity of the products manufactured by the assessee company. Hence there is no enduring benefit or advantage derived by the assessee company in this regard. The replacement of steel rolls are merely operational expenses incurred in the ordinary course of business by the assessee. Moreover, from the details of replacement of steel rolls as tabulated hereinabove, it could be safely concluded that the steel rolls were replaced by the assessee on a regular basis and hence we hold that merely because the same is found as a separate line item in the Appendix I of Depreciation Rates Schedule, it does not take the character of capital expenditure automatically. We hold that since it is not a capital expenditure at all vis a vis the facts of the instant case and the manufacturing process involved therein, the explanation to section 30 and 31 of the Act brought into the statute with effect from 1.4.2003 would not be applicable to the facts of the instant case. Expenses in the instant case would have to be treated only as revenue expenditure and we direct accordingly. Hence the Ground No.2 raised by the assessee is allowed.
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2018 (1) TMI 450
Transfer Pricing Adjustment - Held that:- We find that the Tribunal had dealt with all the issues of TP adjustments in detail, that the TPO had benchmarked the IT's of the assessee at entity level, that the Tribunal found that the benchmarking was within the permissible limit( +/- 5%), that the IT's were held to be at arm’s length, that it was further held that all other adjustments like payment of royalty, receiving of royalty, advertisement and sales promotion and advertisement, adjustment out of R&D cess, payment of service tax, research and innovation development related services and under3 charging for central services were subsumed once assessee's margin at entity level for AE’s transactions was at arm's length, that the ITAT had deleted the entire transfer pricing adjustment made for that year, that the Hon’ble Bombay High Court dismissed the appeal filed by the departments on this issue of deletion of adjustment(2016 (7) TMI 1245 - BOMBAY HIGH COURT ). Nothing has been brought on record that the facts for the year under consideration are different in any manner, except for the amount involved, from the facts of the last AY. Therefore, following the order of the Tribunal for that year, and the aforesaid judgment of the Hon’ble Bombay High Court for the same year, we decide the effective ground of appeal in favour of the assessee. Disallowance under section 14A - Held that:- AO has not pointed out as to why the disallowance made by the assessee was not acceptable. In our opinion the provisions of section 14A read with rule 8D of the Rules cannot be applied mechanically. The AO is supposed to give a clear-cut finding as to how and why the provisions of the section14A are applicable and as to why the disallowance made by the assessee is not acceptable. In the cases of Aditya Birla Finance Ltd. (2017 (6) TMI 827 - ITAT MUMBAI), the Tribunal has held that the AO, without giving any finding about the suo motu disallowance made by the assessee, cannot make any addition u/s. 14A r. w. r. 8D of the Rules. Disallowance of expenses incurred on shifting of office, treating it as a capital expenditure - Held that:- We find that the AO and the DRP has held that the expenditure incurred by the assessee was transactional expense, that the assessee has claimed that expenditure was incurred for a temporary site and that before shifting to the new office premises the assessee had incurred the expenditure. From the order of the AO the factual position is not emerging clearly. Therefore, we are of the opinion that matter needs to be further verified by the AO. In the interest of Justice, we are restoring back the issue to the file of the AO for fresh adjudication. disallowance u/s 36(1)(va) - delayed payment of PF/ESIC dues - Held that:- As the payment towards PF/ESIC were made within the grace period, therefore, in our opinion, the AO should not have made any disallowance. Relying upon the cases referred to by the AR and the matter of Ghatge Patil (2014 (10) TMI 402 - BOMBAY HIGH COURT)of the Hon’ble Bombay we decide the ground in favour of the assessee Interest income - treated as income from other sources or busniss income - Held that:- If surplus available with an assessee earns interest from the deposits made by it, then it cannot be taxed under the head business income. In short, the DRP has rightly observed that the assessee is not in the business of money-lending/earning income from its business. Therefore, in our opinion there is no need to disturb the directions of the DRP. Last ground of appeal is decided against the assessee. TP adjustments on the ground that the variation was within 5% limit of ALP specified - Held that:- n assessee's own case for the AY. 2006-07 the TPO had applied entity level approach for benchmarking the IT. s, that the Tribunal had approved the bechmarking, that it had held that the assessee's margin fitted within +/-5% arm's length range, that the Tribunal deleted the entire TP adjustment made for that year, that the Hon’ble Bombay High Court had dismissed the appeal filed by the department in that regard. In our opinion, the issue of TP adjustment has attained finality. Until and unless the AO brings new facts for making TP adjustment there is no need to discuss the issue in length. - Decided against revenue Allocating interest expenses only to units claiming Section 10A & 10B exemption and not to units claiming section 80 IB & 80IC deductions - Held that:- We find that out of total interest expense of ₹ 2178 lakhs and expenditure of ₹ 2064 lakhs was incurred on export packing credit and export bills discounting, that the interest-expenditure pertained to exports, that the DRP directed to the AO to allocate the same to Section 10A and Section 10 B units. As the units claiming deduction u/s. 80 IB and 80IC were not engaged in exports and therefore no interest could be allocated to those units. While deciding the appeal, filed by the assessee, for the AY. 2006-07 the Tribunal [2012 (12) TMI 458 - ITAT MUMBAI] held interest could not be allocated to 80IB and 80 IC units also confirmed by HC. Adjusted value of closing stock - Held that:- We are of the opinion that the directions of the DRP do not suffer from any legal infirmity. Closing Balance of an year automatically becomes Opening Balance for the later year. Therefore, we are unable to comprehend the logic behind raising the ground. Secondly, the AO as per the judgment of Goetz India cannot entertain a new claim without filing a fresh return of income. But, the appeallate authorities can allow the new claim made for the first time before them, as held by the Bombay High Court in the case of Pruthvi Brokers & Shareholders (2012 (7) TMI 158 - BOMBAY HIGH COURT) Non allocating interest for working disallowance u/s. 14A - Held that:- As we have endorsed the views of the DRP that the interest expenses had to be allocated to Section 10A and Section 10B units having direct nexus with exports business. Therefore, in our opinion the DRP had rightly held that same could not be again considered for disallowance u/s. 14A of the Act.
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2018 (1) TMI 449
Additions u/s. 68 - loans from unsecured creditors - assessee had failed to furnish bank statements of the creditors - Held that:- We are in agreement with the findings of authorities below that mere furnishing of confirmations and PAN are not sufficient to prove the creditworthiness of the creditors. The assessee has to prove financial capacity of the creditors. The assessee was required to furnish evidence that would show financial worth of the creditors, such as bank statements, to remove the shadow of doubt from the mind of Assessing Officer. Taking into consideration totality of facts, we deem it appropriate to restore this issue back to the file of Assessing Officer in respect of 11 creditors mentioned in the grounds of appeal. The assessee is directed to furnish all necessary documents before the Assessing Officer to prove the genuineness and creditworthiness of the creditors. The Assessing Officer after affording opportunity of hearing to the assessee shall decide this issue, in accordance with law. It is made clear that the Assessing Officer shall not disturb the relief already granted by the First Appellate Authority in respect of addition u/s. 68 of the Act. Appeal of assessee is allowed for statistical purpose.
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2018 (1) TMI 448
Disallowance of depreciation u/s 32 - intangible assets - amount paid for non compete fees - AO denied the claim holding that the business is of specialize nature and there are no chances that other parties can enter into the business due to its complexity - Held that:- This issue squarely is covered against the assessee in view of the decision of the Hon'ble Delhi High Court in case of Sharp Business Systems Vs CIT [2012 (11) TMI 324 - DELHI HIGH COURT] has decided this issue against the assessee that non compete fee is not an eligible intangible asset as the words “similar business or commercial rights” have to necessary result in an intangible asset against the entire word which can be asserted as such to qualify for depreciation u/s 32(1)(ii) of the Act which non compete fees lacks. In the present case though goodwill of 57.30 million was paid but that is not the issue in dispute. In view of the decision of the Hon’ble Jurisdictional High Court we reverse the finding of the ld CIT(A) in granting deprecation to the assessee on non compete fees and restored the order of ld Assessing Officer. In the result, the solitary ground of the appeal of the revenue is allowed.
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2018 (1) TMI 447
Disallowance of the foreign expenses - Held that:- We have deliberated on the aforesaid claim of the assessee that in the backdrop of the observations of Tribunal in the assesses own case for A.Y(s). 2007-08 to 2009-10, the disallowance out of foreign travelling expenses for the year under consideration may also be restricted to 10% of “Other expenses”. We are of the considered view that in the backdrop of the very fact that the disallowance out of foreign travelling expenses in the preceding years, AY’s 2007-08 to 2009-10, as claimed by the assessee, was restricted by the CIT(A) to 10% of the “Other expenses”, which order of the CIT(A) had thereafter been affirmed by the Tribunal, therefore, going by the rule of consistency in all fairness restrict the disallowance of the foreign expenses for the year under consideration on the same footing to 10% of the “Other expenses” for the year under consideration. The Ground of Appeal No. 1 is allowed. Disallowance in respect of the motor car expenses - Held that:- We find from the records that the assessee had not maintained any log book in respect of the motor cars, as a result whereof the lower authorities had rightly concluded that the element of personal usage of the motor cars cannot be ruled out. We find that the CIT(A) after recording the aforesaid observations had relied on the order passed by his predecessor in the assesses own case for the earlier assessment years, wherein under similar facts a disallowance to the said extent was made in the hands of the assessee. We further find that as observed by the CIT(A), the orders of his predecessor for the earlier assessment years had been upheld in respect of the issue under consideration by the Tribunal. We are of the considered view that as neither any material had been brought to our notice which would persuade us to observe that the observations of the CIT(A) are perverse or incorrect, therefore, find no reason to dislodge the same. We thus in the terms of our aforesaid observations uphold the sustaining of the disallowance of expenses pertaining to motor car usage of ₹ 5,30,432/- by the CIT(A). The Ground of Appeal No. 2 raised by the assessee is dismissed.
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2018 (1) TMI 446
Addition u/s 68 - CIT(A) had concluded that the assessee by raising loans from others, which had not been properly explained by him, had thus created assets to the said extent - Held that:- We would not hesitate to observe that even if the unsubstantiated reasoning of the CIT(A) was to be accepted, even then, without pointing out as to which unexplained cash credit of ₹ 38,94,877/- backed/sourced the addition of ₹ 38,94,877/- in the account of M/s Avdhoot Finance & Investments P. Ltd., no addition u/s 68 could validly be made in the hands of the assessee. We are afraid that the reasoning adopted by the CIT(A) to conclude that the addition of ₹ 38,94,877/- made by the A.O by characterizing the same as an unexplained cash credit in the hands of the assessee is beyond comprehension and cannot be accepted. We are of the considered view that as the provisions of Sec. 68 presupposes an unexplained cash credit, failing which no addition can validly be made under the aforesaid statutory provision, therefore, now when it remains as a matter of fact that not only the assessee had duly explained that the addition of ₹ 38,94,877/- had occasioned on account of a wrong journal entry which thereafter had been reversed, but rather, no such cash credit had been brought to our notice which could persuade us to conclude that the addition of the aforesaid amount of ₹ 38,94,877/- made by the A.O was rightly upheld by the CIT(A). We thus in the backdrop of our aforesaid observations not being persuaded to subscribe to the observations of the lower authorities, therefore, set aside the order of the CIT(A) and delete the addition - Decided in favour of assessee
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2018 (1) TMI 445
Unexplained investment u/s 69 - Held that:- As before us, the assessee filed additional evidence which could not be filed before CIT (Appeal) within the specified time. The assessee has also filed an affidavit stating that the assessee could not attend the office of the Ld. Commissioner of Income Tax (Appeal) under the bona fide reasons/compelling circumstances as has been narrated in the said affidavit. Considering the aforesaid order of the Tribunal and the reasons explained before us/stated in the affidavit, we are of the view that even as per Article 265 of the Constitution of India, only due taxes has to be levied/collected. Even otherwise, no persons should be condemned unheard, thus, considering the principle of natural justice and the material facts available on record, in all fairness, we deem it appropriate to remand these files to the file of the First Appellate Authority to adjudicate the same afresh on merit. The assessee be given opportunity of being heard with further liberty to furnish evidence in support of his claim. The assessee is also directed to remain careful and to furnish the necessary evidence before the Ld. Commissioner of Income Tax (Appeal), thus, the appeals of the assessee are allowed for statistical purposes only.
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2018 (1) TMI 444
Disallowance of carry forward of losses on the ground that return of income was not filed within the due date as required under section 139(1) - Held that:- In the instant case, the ITR-V was filed though belated but on 31.03.2009. The return of income was filed well before the due date of filing of return under section 139(1) of the Act. Mere delay in submitting the ITR-V does not make the return invalid for denying the benefit of carry forward of losses in future years. We therefore hold that the assessee is entitled to carry forward of loss to future years. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the carry forward of losses to future years. - Decided in favour of assessee.
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Customs
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2018 (1) TMI 441
Penalty u/s 114 (iii) of the CA, 1962 on the CHA/Shipping Lines - alleged drawback fraud committed by concerned exporters - Jurisdiction to issue SCN - Held that: - The decision in the case of Monte International [2016 (4) TMI 406 - CESTAT NEW DELHI] has categorically held that the SCN issued by DRI officers under Rule 16 & 16A of Customs and Central Excise Drawback Rules, 1995 is without jurisdiction and such SCN is ab initio void. The issue whether SCNs issued by DRI for recovery of drawback under Rule 16 & 16A of the Drawback Rules is valid or not is decided by the Tribunal. On this score, we have no reason to deviate from the decision of the Tribunal in Mante International case cited by the appellant. We are only following the legal maxim 'sublato fundaments, cadit opus' which means in case a foundation is removed, the superstructure is bound to fall. Once the basis of a proceeding is gone, all consequential acts, action, orders would fall to the ground automatically. The demands of duty and / or imposition of penalties on the appellants herein which have been confirmed in the impugned orders cannot sustain - appeal allowed.
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2018 (1) TMI 440
Penalty on CHA - Regulation 18 of CBLR, 2013 - delay in issue of SCN - Held that: - the concerned Commissionerate has been put to knowledge with regard to the offence on 23.12.2016. However, the show cause notice has been issued on 6.4.2017 which is beyond the period of 90 days prescribed in Regulation 20 - In the case of Santon Shipping Services Vs. Commissioner of Customs, Tuticorin [2017 (10) TMI 621 - MADRAS HIGH COURT], the Hon’ble High Court of Madras observed that the SCN is not issued within 90 days and the proceedings initiated under CHALR for revocation of licence is vitiated. The SCN issued after 90 days is non est and vitiates the proceedings - Appeal allowed.
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2018 (1) TMI 439
Smuggling - red sander logs - prohibited goods - allegations raised against both these appellants are that they did not obtain the KYC details of the exporter - Held that: - Commissioner has observed that the appellant had requested for permission for outsourcing the services of transporting the goods. Pending such application, the offence had occurred. That since the appellant had sought permission for outsourcing the transportation with effect from8/2015 and as they had already taken necessary steps to comply with the provisions of the Regulations, there is no violation of the Regulations - main allegation being no complying with KYC norms and there being no allegation of direct involvement, in the alleged offence - the confiscation of the container in the present case is unjustified and requires to be set aside. The penalties imposed on M/s. Bhavani Shipping Services India Pvt. Ltd. as well as the confiscation of the container and the redemption fine imposed requires to be set aside - penalty imposed on M/s. Sea Port Lines (India) Pvt. Ltd. is also set aside. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 438
Whether the appellant is entitled to the benefit of N/N. 29/2004 CE dated 7.4.2004 as amended from time to time for payment of additional duty of custom equivalent to excise duty under Section 3(1) of CTA, 1975 on the imported filament yarn falling under heading 5402.10 of CETA, 1985 and CTA 1975? Held that: - Tribunal in the case of SRF Polymers Ltd. [2017 (10) TMI 159 - CESTAT CHENNAI] had analysed the very same issue, has held that Additional duty of customs, also known as countervailing duty (CVD) is imposed to provide a level playing field for the indigenous goods who have to bear the brunt of local taxes, in particular central excise duty levied on manufacture of identical goods in India. Also, goods imported into India in most cases benefit from export incentives like duty drawback in the concerned country of export. The important factum, however, is that the additional duty of customs has to be equal to the excise duty for the time being leviable. The appellants are not eligible for benefit of N/N. 29/2004 dated 9.7.2004 - Appeal dismissed - decided against appellant.
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2018 (1) TMI 437
Fraudulent drawback - fake bank realization statements (BRCs) - Held that: - the appellants were the CHA in respect of the exporters involved in 62 shipping bills wherein the BRCs were found to be fake and the exporters themselves have been found to have obtained IE Codes by giving non-existent addresses. In such circumstances, the needle of suspicion would also ordinarily fall on the CHA as one who had plausibly connived or at least abetted in the fraud. However, from the facts, what emerges is that there is no allegation that the appellants themselves were hand-in-glove with the fraudulent exporters. Appellants had only opened a branch office in Tirupur to cater to the ICD / CFS which were located there. Pre-signed shipping bills or bills of entry were kept in the Tirupur office for use by the staff working there. From the facts, it is also not disputed that one Mr. Ranganathan, an employee of their Tirupur branch had misused such pre-signed documents and was ostensibly in league with the exporters filed the export documents in their name and facilitated the fraudulent claims of drawback. While the appellant surely deserves a rap on the knuckles, revocation of the license for acts and commissions committed by their employee without their knowledge or intent is surely an overkill - appeal allowed.
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2018 (1) TMI 436
100% EOU - Duty Drawback - Section 129A of the Customs Act - Maintainability of appeal - Difference of opinion - Held that: - In view of findings recorded by Member (Tech) and Member (Judicial), the following difference of opinion needs to be resolved: Whether the appeal is maintainable before the Tribunal is view of the bar of Section 129A of the Customs Act as held by the Member (Tech) or the appeal can be entertained by the Tribunal and on merit can be decided as held by the Member (Judicial)? - appeal file may be place before Hon’ble President for further action.
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2018 (1) TMI 435
Principles of natural justice - revocation of CHA License - jurisdiction - Held that: - while the Commissioner of Customs is vested with powers under Regulation 23 to take urgent action if the situation warrants. The minimum requirements of the principles of natural justice are to be complied with. The charge against the appellant on the preliminary stage is that they have transacted business on behalf of non-existing export firms. It is necessary to inform the appellant that which are of those firms now subjected to investigation for possible violation. This is a basic requirement without which the post decisional hearing will not carry any conviction - the impugned order passed did not comply with the basic requirements of principles of natural justice and apparently the required particulars are not available to the Original Authority for examination even for an order of prohibition - appeal allowed.
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2018 (1) TMI 434
Refund claim - time limitation - Section 11 B of CEA - CBEC Circular No.802/35/2004-CX dated 08.12.2004 - Held that: - the Revenue is duty bound to refund the amount paid as duty during course of investigation within three months from the date of order passed by the appellate Tribunal, unless and until there is a stay against the order of this Tribunal - Revenue was duty bound to refund the amount within three months from the date of the order of this Tribunal. As Revenue has failed to discharge the duty, therefore, the refund claim cannot be held as time barred. Appeal allowed.
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Corporate Laws
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2018 (1) TMI 432
Restoration of company name being struck off - Held that:- It is not in dispute that Registrar of the Companies is empowered to take the impugned action and only the point here is that he has to strictly comply with provisions as extracted above. A Court/Tribunal cannot interfere with normal activities of business of a Company being carried on in accordance with law unless any serious violation of law committed by a Company. As stated supra, the impugned violations are not so severe so as to take serious view of it. Moreover, the Company has come forward to file all required documents comply in accordance with law along prescribed/additional fee along with fine. It is also relevant to point out here that there is no bar for a Company, which is struck off, can register new company, in accordance with law. As stated, the Company is rendering services as commission agent for referring and enrolling members into any resorts, clubs, hotels, family parks and other related activities etc, and it is running without any interruption. In terms of section 248(6) of Act as extracted supra, the above consequences are required to be looked into while passing final order under section 248(5) of the Act. It is no doubt that the Company, on its part, is under statutory obligation to comply with all extant provisions Companies Act, 2013. The Company is now satisfactorily explained to Tribunal the reasons for the delay in non-filing statutory returns in question and expressed its willingness to file them along with payment of prescribed fee. Thus as satisfied that the applicant Company has filed the present application within prescribed time under law, and also shown sufficient reasons to order Restoration of its name in the Register of companies maintained by the Registrar of Companies. Therefore, the Company application deserves to be allowed, however, subject to filing all pending returns, Annual returns, Balance sheets, statements etc., along with prescribed and addl. fee under law. And also subject to giving undertaking that they would not resort to such type of violations in future.
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2018 (1) TMI 431
Petition pending before NCLT since 2006 - Held that:- Section 422 of the Companies Act 2014 expects the NCLT to dispose of the petition in three (3) months and here, more than a decade has passed. In such circumstances, we do not find any reason to interfere with the impugned orders which have been passed. The above impugned orders are speaking for themselves and it is apparent that the Appellants were not permitted amendments or impleadments for reasons recorded and no fault can be found with these orders. In such petition of 2006 which is being dragged even after a decade, such lack of promptness as referred above cannot be entertained. Appellants is trying to show that Responders were responsible for the delay in the matter and according to him, the Respondents attending the matter at times causing delay and when the matter reaches crucial stage, suddenly, the Respondents appear and seek time on various counts. It is stated by him that because of this, the Company Petition is being delayed. If the Respondents are resorting to any delaying tactics, it would be for the learned NCLT to take suitable steps so that the matter is not delayed because of delaying tactics adopted by any of the parties. We are not going into the general statements being made. We are concerned with the specific details of the present impugned orders. Going through them, we find that this appeal does not merit admission. On the face of the record, there is no reason to interfere in the impugned order which have been passed.
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Insolvency & Bankruptcy
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2018 (1) TMI 443
Application under Sections 433 and 434 of the Companies Act, 1956 for winding been treated as an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Held that:- In the present case, the respondent has failed to show that the amount of loan treated to have been given to the Corporate Debtor were disbursed against the consideration for the time value of money. In absence of any such evidence on record to suggest that the amount was disbursed against the consideration for the time value of money and was borrowed by the Corporate Debtor against the payment of interest, we hold that the respondent – M/s. Visa Drugs and Pharmaceuticals do not come within the meaning of ‘financial creditor’. The Adjudicating Authority having failed to notice the facts, we have no other option but to set aside the impugned orders dated 4th September and 18th September, 2017. In effect, order(s) passed by the Adjudicating Authority appointing ‘Resolution Professional’ declaring moratorium, freezing of account and all other order(s) passed by the Adjudicating Authority pursuant to impugned order and action taken by the ‘Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 433 and 434 stands abated. The Adjudicating Authority will now close the proceeding. The Corporate Debtor is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect.
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2018 (1) TMI 442
Corporate insolvency process - Held that:- In view of the fact that despite service of notice and thus an opportunity having been given to the Corporate Debtor to defend its cause by way of compliance with the principles of natural justice mandated to be adhered to by this Tribunal, the Corporate Debtor has not availed the opportunity given and from the facts averred and the documents placed before this Tribunal, this Tribunal is of the considered view that this is a fit case for admitting the application as filed by an Operational Creditor for initiation of Corporate Insolvency Resolution Process, as contemplated under the provisions of IBC, 2016. Since the Operational Creditor has failed to name an Interim Resolution Professional (IRP) in Part 3 of the Application as filed before this Tribunal, in terms of the provisions of Section 16 of IBC, 2016 this Tribunal makes a reference to the Insolvency and Bankruptcy Board of India (IBBI) for recommendation of the name of an IRP subject to the condition that no disciplinary proceedings are pending against such an IRP named who may act as an IRP in relation to the CIRP of the Corporate Debtor. Application/Petition stands admitted in terms of Section 9(5) of IBC, 2016 and the moratorium shall come in to effect as of this date. A copy of the order shall be communicated to the Operational Creditor as well as to the Corporate Debtor above named by the Registry
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2018 (1) TMI 433
Corporate insolvency resolution process - whether the Company Court has any jurisdiction to stay the proceedings filed by a Corporate Debtor before NCLT even though a previously instituted company petition by a creditor may have been admitted (and therefore does not get transferred to NCLT) but where a provisional liquidator has not been appointed? - Power to stay proceedings pending before NCLT - Held that:- Section 446 of the Companies Act, 1956 is not applicable to the present petition and therefore, no leave, as stipulated thereunder has to be obtained. This position has been settled by the Supreme Court in the case of Allahabad Bank v. Canara Bank and Ors. [2000 (4) TMI 757 - SUPREME COURT OF INDIA] wherein the issue of the impact of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDB Act”) on the provisions of the Companies Act, 1956 arose. The Supreme Court has held that leave of the Company Court is not required in order to commence proceedings under RDB Act, for the reason that RDB Act is a special law which would prevail over the Companies Act, 1956 being the general law and even assuming that both the statutes are special enactments, the latter one would prevail over the former, if the latter law contains a provision giving an overriding effect. In the case at hand, in view of Section 34 of RDB Act, it was held that the said Act overrides the Companies Act, to the extent of any inconsistency between the two enactments. Therefore, applying the ratio of this judgment to the present case, in view of Section 238 of IBC, provisions of IBC shall supersede and prevail over the Companies Act, to the extent of any inconsistency between the two. This judgment has been approved by a larger bench of the Supreme Court in the case of Rajasthan State Financial Corporation v. Official Liquidator (2005 (10) TMI 280 - SUPREME COURT OF INDIA) . Whether NCLT can entertain a petition after the order of admission or appointment of Provisional Liquidator by Company Court? - Held that:- The legislative intent behind the enactment of IBC is to consolidate provisions of SICA and Companies Act. Section 15 of SICA is parimateria to section 10 of IBC and section 22 of SICA is similar to Section 14 of IBC. IBC has been enacted to revive the Corporate Debtor by declaring a Moratorium of various proceedings and appointing an Interim Resolution Professional (IRP) to manage the affairs of the Corporate Debtor. Similarly, both SICA and IBC contains nonobstante provisions to the effect of overriding the provisions of any other law in force except as excluded expressly. There is in fact no inconsistency between the provisions of IBC and Companies Act. However, in the event of any inconsistency, the provisions of IBC will prevail in view of Section 238 of IBC. The provisions give overriding effect to any other law for time being in force, in case of any inconsistency or conflict with respect thereof. Since the IBC is admittedly a successor statute to SICA, and Section 64 (2) of IBC being parimateria to Section 22 of SICA, the argument that the Company Court has the power to injunct proceedings before under NCLT in cases of pending winding up petitions is entirely misplaced and contrary to legislative intent. As per rule 6 of the Companies (Court) Rules, 1959, the provisions of the Code of Civil Procedure, 1908, will apply to proceedings under the Companies Act, 1956, unless such application would be contrary to the express provisions of the said rules. Rule 9 of the Companies (Court) Rules, 1959, provides that the Company Court may exercise its inherent powers. Section 141 of the Code of Civil Procedure, 1908, makes it applicable to all proceedings in any court of civil jurisdiction. A combined reading will show that the Company Court has ample powers to recall any order previously passed by it. In the circumstances, there is no bar on NCLT, Ahmedabad from proceeding with IBC application. This application, therefore, has to succeed. The impugned order dated 19th July 2017 is recalled/vacated. Company application accordingly stands disposed.
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Service Tax
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2018 (1) TMI 429
CENVAT credit - input services - denial on the premise that during the warranty period, the appellant has provided exempted service of Repair and Maintenance - Revenue is of the view that free warranty service of Repair and Maintenance is an exempted service - Held that: - Repairs and Maintenance service is taxable service with effect from 01.07.2003 in terms of provisions of Section 65 (105) (zzg) of Finance Act, 1994 and the said activity thereafter has never been exempted by the Government by way of any notification thereof - merely because the appellant are not charging any amount towards providing this service, does not mean that the service is an exempted service - appellant is providing taxable service of Repairs and Maintenance to the customers free of cost during the period of warranty. Whether the appellant is engaged in the activity of trading or not? - Held that: - the appellant is a branch office of their head office and they are getting the goods on stock transfer basis from head office for sale. Therefore, the appellant are selling their own goods, manufactured by them. If the person selling the goods manufactured them, in that circumstance, the appellant cannot be said that he is a trader - the appellant is not engaged in the activity of trading. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 428
Short payment of service tax - CHA service - Business Auxiliary services - Held that: - the SCN itself gives the break-up of the charges collected, such as wharfage charge, CHA, transportation and other expenses. This being so, the contention of the ld. AR that respondent has to pay service tax on 15% of the lump sum amount is not acceptable - the Commissioner has dealt in detail the break-up of the charges as well as the amount paid to RSPL by respondents out of the amount received from M/s.NPCIL. Thus, he has found that the differential taxable value would be only ₹ 0.2 per MT - demand upheld. Services rendered to FHB under BAS - Held that: - on verification, it was revealed that respondents had entered into agreement with FHB to act as agent of FHB for handling and distribution of a portion or all the contents of a consolidated shipment for delivery or re-consignment. Respondents have agreed to provide all such services on behalf of FHB in respect of cargo as are normally rendered by break bulk agents. Therefore the charges received by respondent for such activities from NPCIL are actually on behalf of FHB. In such circumstances, the observation of the Commissioner that the respondents have not rendered services for and on behalf of FHB does not appear to be in consonance with law - for the limited purpose of verifying and reconsidering the demand of service tax in respect of Annexure III (BAS), the matter requires to be remanded to the adjudicating authority - matter on remand. Partly decided against Revenue and part matter on remand.
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2018 (1) TMI 427
Jurisdiction - power of Superintendent to finalize provisional assessment - provisional assessment finalized in November, 2006 itself - Held that: - Finalization of provisional assessments is within the powers of Assistant/Deputy Commissioner in terms of Rule 6 (6) of Service Tax Rules, 1994. The endorsements of the Superintendent, though refers to an approval by the Deputy Commissioner, cannot be considered as finalization of provisional assessment - The assessment has to be done by the Assistant Commissioner in his name and signature. The same cannot be delegated to the Superintendent. Belated order of finalization - Held that: - the Central Excise provisions for finalization of provisional assessment do have limit of six months for such finalization form date of furnishing the particulars by the assessee - the present order has been issued much belatedly - In any case, the duty payments as already deposited by the appellants have found to be correct. There is no grievance regarding any demand for extra payment or liability that was put on appellant on such finalization. Appeal dismissed.
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2018 (1) TMI 426
Validity of SCN - Section 73(4A) of the Finance Act, 1994 - Held that: - if during the course of investigation it has been found that the assessee has first paid service tax, in that circumstance, if the amount is short paid has been paid by the assessee along with interest and penalty equal to 1% of such tax for each month for the period default continues, in that circumstance, no SCN is required to be issued to the assessee. Admittedly, in this case the respondent has paid amount of service tax during the period of default. Therefore, the provisions of Section 73(4A) of the Act is squarely applicable to the facts of this case. Appeal dismissed.
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2018 (1) TMI 425
Penalty u/s 70 of FA 1994 - non-filing of ST-3 returns - Held that: - in case the assessee on detection has paid the amount of service Tax to the department, in that circumstances, SCN is not required to be issued. Admittedly, the ld. Commissioner (Appeals) has accepted the provisions of Section 73(3) of the Act is applicable to the appellant - the ld. Commissioner (Appeals) has fell in error for imposing late fees on the appellant by invoking Section 70 of the Finance Act, 1994 - penalties set aside - appeal allowed.
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2018 (1) TMI 424
Entitlement of interest - interest on the amount of refund of pre-deposit debited through cenvat account - interpretation of statute - Held that: - statute itself provides for an interest on refund of an amount deposited in furtherance of Sec. 36F consequent on the order of the Appellate Authority from the date of payment of the amount till the date of refund of such amount. The said Section does not differentiate between the deposits made in cash or by debit in cenvat account - denial of interest to appellant under Section 35FF for only for the reason that there is no loss that has occurred to appellants which needs compensation is unsustainable findings - It is settled law that Section of the statute needs to be interpreted as they are. Interest has to be paid to the appellant as per Sec. 35FF of the CEA, 1944 - appeal allowed.
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2018 (1) TMI 423
Refund claim - rejection mainly on the ground of time bar - Held that: - The appellants’ claim that within six months from the date of payment of service tax to the service provider consequent to the raising of the invoices by the service provider, the refund claims were filed; the facts need to be verified - the claim of payment of service tax to the service provider on which refund was claimed also needs to be verified. Refund claim relating to telephone services installed in the premises - Held that: - The telephone services are used in receiving calls from outside and also used in calling outside number as a part of the communication in performance of its business - rejection of refund set aside. Appeal allowed by way of remand.
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Central Excise
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2018 (1) TMI 422
SSI Exemption - N/N. 08/2003-CE dated 01.03.2003 - denial on the premise that appellants are using the brand name of another person - Extended period of limitation - Held that: - M/s. RMT, was the owner of brand name RIAT and Shri Navrattan Singh and Shri Davinder Pal Singh were the partners of M/s. RMT. These two partners of M/s. RMT are the Directors of appellant firm - reliance placed in the case of Commissioner of Central Excise & ST, Ludhiana Versus M/s. Basant Presses (India) [2017 (6) TMI 805 - CESTAT CHANDIGARH], where it was held that if the person who is using the brand name of another firm where he is a Director, Partner or Proprietor then it cannot be said that the assessee is using the brand name of other person - the appellants are entitled to avail benefit of exemption N/N. 08/2003-CE dated 01.03.2003 as they are using their own brand name. Extended period of limitation - Held that: - on 31.05.1995 the registration certificate was amended with effect from 01.04.1995 wherein it was in the knowledge of the Revenue that appellants are using the brand name RIAT which is owned by M/s. RMT. Therefore, it cannot be held that appellant has suppressed any material fact from the Revenue to invoke extended period of limitation - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 421
Refund of amount under protest - time limitation - CBEC Circular dated 22.9.1998 - Held that: - The period of dispute in the impugned appeal is 2003-04 and as such, the department officers were fully aware of the above Board circular which are also binding on them. Nonetheless, no show cause notice has been issued in the present case proposing recovery of the alleged erroneously refunded amount - The second proviso to section 35A of the Act requires, inter alia, that where Commissioner (Appeals) is of the opinion that any amount has been erroneously refunded, appellant should be given notice within the time limit specified in Section 11A of the Central Excise Act. The order passed by the Commissioner (Appeals) cannot sustain and will therefore have to be set aside - appeal allowed.
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2018 (1) TMI 420
CENVAT credit - input service - Advertisement and Publicity used on their traded goods - suppression of facts - Held that: - it is clearly evident that the department was aware about the availment of input service credit towards advertisement and publicity for brand promotion taken on account of trading goods. So, the allegation made in the SCN dated 04.04.2012 that there is a suppression of fact from the department with intent to evade payment of duty cannot be sustained - Hon’ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] observed that when all the relevant facts are in the knowledge of the authorities when the first SCN was issued, the allegation of suppression of facts on the part of the assessee cannot be accepted. N/N. 3/2011 (NT) dated 01.03.2011 - exempted services - trading goods - Held that: - the demand of Input Service Credit for the normal period of limitation would be applicable. The SCN dated 05.07.2011 was issued for the period from June 2010 to March 2011 - in the present case, there is no suppression of facts with intent to evade payment of duty or collusion etc. and therefore the demand of duty for the normal period of limitation is to be invoked. Penalty - Held that: - There is no suppression of facts with intent to evade payment of duty and therefore imposition of penalty is not justified. Appeal allowed in part.
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2018 (1) TMI 419
Manufacture - classification of bulk talc powder - dutiability - Held that: - labeling or relabeling and repacking from bulk pack to retail packs to render the product marketable to the consumer shall amount to manufacture - there is no doubt that if the bulk talc powder purchased by the assesee fall chapter 25, the activities carried out by the assesee does not amount to manufacture. However, if the bulk talc powder is a cement water proofing compound which classifiable under Chapter 38, the same activities would amount to manufacture. Right from the adjudication stage upto the Commissioner (Appeals) stage the core issue of correct classification of bulk talc powder and its technical characteristics were not considered. Therefore, it is premature to come to a conclusion on the issue of manufacture and dutiability in respect of retail printed pack of talc powder which is marketed as cement water proofing compound. Matter remanded to the adjudicating authority for passing a fresh order - appeal allowed by way of remand.
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2018 (1) TMI 418
CENVAT credit - input services - Services rendered at Medical Centre - Held that: - There are no findings from the lower authorities regarding the location of the medical centre and primary use of the health centre. If the said medical centre is not located in the factory or if the said medical centre is primarily used by the families of the employees and not by the personal engaged in the factory then the credit would not be admissible - matter is remanded to the original adjudicating authority to determine these facts and decide the issue afresh. Works contract construction services - fireproofing work undertaken in respect of Fluidized Catalytic Cracking unit, DHDS (De-hydro De-blending unit, inside the refinery and the water proofing work undertaken in certain building in the factory premises - whether the said service comes within the ambit of input service or not? - Held that: - the services of fireproofing and waterproofing of existing structures does not quality as construction or execution of works contract of the building or civil structure or part thereof. The demand in respect of fireproofing work and waterproofing work is therefore, set aside - dismantling of Sulphur Pelletizer Shed is also does not amount to construction or execution of works contract of the building or civil structure or part thereof and thus would not be hit by the exclusion clause (A) of Rule 2 (l) of Cenvat Credit Rules, 2004 - demand set aside. CENVAT credit - Help Desk Assistant used for repairs carried out at the colony adjacent to refinery - Held that: - The definition post 01/03/2011 specifically excludes services used primarily for personal purposes. Therefore, Help desk assistant at estate has no relation to the activity of manufacture in the factory premises and thus credit of the same cannot be permitted, the same is denied. CENVAT credit - training given to employees about investment of salaries and pension plans - Held that: - the training given to employees in respect of investment of salaries and pension plans is nothing to do with the manufacturing process and is mainly for personal use of consumption of employees. It is thus not admissible as input service. Appeal allowed in part.
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2018 (1) TMI 417
CENVAT credit - capital goods - goods sent to sister unit not received back, as destroyed by fire - Held that: - After availing the credit in 2009 the appellant would have required to pay the said amount after expiry of 180 days to the Revenue and although the same amount would have been available as credit to the sister unit still Government would have received money in cash. Moreover, the amendment and the pattern of utilization of Cenvat Credit in both the units also has not been declared - appeal allowed - decided in favor of Revenue.
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2018 (1) TMI 416
CENVAT Credit taken without receipt of goods - Held that: - the Commissioner (Appeals) has upheld the demand in respect of many invoices where the credit was taken without receipt of goods. This establishes that the respondents were engaged in malpractices - Revenue has been able to establish the evidence of non-existence of transport lines, RTO, banking transactions and missing weighment slips that there was a reason to doubt receipt of goods - the above evidence is sufficient to discharge the burdens of Revenue, especially in the circumstances then the respondent has been caught doing the mischief on some consignments - appeal allowed.
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2018 (1) TMI 415
Clandestine removal - shortage of inputs - demand based on eye estimation - principles of Natural Justice - Held that: - the explanation put forward by the assessee would be sufficient to hold that the shortage, if any, is due to the impurities in the scrap. Moreover, the department has not conducted any physical stock taking. Even though the director and staff have given statements that there may be shortage, the same is not relevant for the reason that in the very statements they have explained the reasons for the shortage. Cross-examination of witnesses - Held that: - it would be denial of natural justice if the assessee is not allowed to cross-examine the witnesses whose statements are being relied by the department. The department has failed to establish that there is shortage of raw materials - demand set aside - appeal allowed.
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2018 (1) TMI 414
Refund of pre-deposit with interest - Section 35F of CEA - Section 35FF of CEA - grievance of the appellants is that their refund was adjusted without giving any opportunity of hearing - computation of interest - Held that: - the adjudicating authority have erred in not calculating the interest payable to the appellants - assessee under the provisions of Section 35FF - adjustment of demand in exercise of powers under Section 11 of the Act from the refund payable to the appellant is bad to the extent the adjustment have been made without issue of any show cause notice for the intended adjustment. Adjudicating authority is directed to calculate interest - appeal allowed by way of remand.
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2018 (1) TMI 413
CENVAT credit - service tax paid on sales commission - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matter, with the liberty to approach the Tribunal after disposal of the cases pending before the higher forum - appeal disposed off.
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2018 (1) TMI 412
CENVAT credit - goods purchased from Hindustan Unilever Limited in auction, as capital goods - Held that: - it is fact on record and is recorded in the SCN that the scrap purchased by the appellant in E-Auction has been refurbished as capital goods and the same has been cleared on payment of duty. When this fact was in the knowledge of department, then the show cause notice was not required to be issued to the appellant. Admittedly, in this case, the appellant has not claimed refund of duty paid by them as refurbished goods. The goods in question do not amount to manufacture but the same has been cleared on payment of duty. Therefore, the duty payment made by the appellant on the said goods shall amount to reversal of amount as Cenvat credit. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 411
CENVAT credit - capital goods, namely, Welding Rods, Stretchable Basket, Loctite, Parts of Fluorescent Lamp, Vajra Adhesives, Nilkamal Plastic Crates, Pallete Containers, GP Sheets etc. - Held that: - issue covered by the decision in the case of AMBUJA CEMENTS EASTERN LTD. Versus COMMISSIONER OF C. EX., RAIPUR [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT], where it was held that welding electrodes used in repair and maintenance of plant and machinery are inputs as defined under Rule 2(g) defined in the rule, and thus entitled for cenvat credit - credit allowed. CENVAT credit - compensation received from insurance company on the damaged inputs/ capital goods - Held that: - merely because compensation has been received from insurance company on the damaged inputs/ capital goods without any evidence on record that the same were not put to use, credit cannot be denied - credit allowed. Also, the credit on the old and used ball bearings cleared as scrap by the appellant, is eligible. Appeal allowed.
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2018 (1) TMI 410
Duty on capital goods - Rule 3 (5A) of CCR, 2004 - case of appellant is that it has not been classified under which rule they were required to pay duty, therefore, demand of duty not sustainable - Held that: - Without classifying the waste and scrap, duty cannot be demanded from the appellants - Appeal allowed.
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2018 (1) TMI 409
Validity of SCN - appellants admitted their mistake and immediately paid the entire amount of duty along with interest and 25% of duty amount as penalty, in terms of Section 11A (6) of the CEA 1944 - Held that: - the proceedings are not required to be initiated against the assessee if the duty, interest and 25% of the duty has been paid before issuance of SCN and the same is intimated to the Central Excise officers - Admittedly, in this case, the appellant has complied with the provisions of Section 11A (5) (6) (7) of the Act. Therefore, no SCN is required to be issued to the appellants - appeal allowed.
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2018 (1) TMI 408
Refund of terminal excise duty - time limitation - whether the refund claim filed by the appellant before the Central Exciseofficer is barred by limitation or not, in terms of Section 11B of the Act? - Held that: - it is a fact on record that on the invoices it is mentioned by the appellant that terminal excise duty is refundable to them and the dispute arose only after issuance of circular by DGFT on 15.03.2013 that which authority is required to entertain the refund claim of terminal excise duty - bar of limitation is not applicable to the facts of this case. The matter is required to be remanded back to the adjudicating authority to keep the issue pending, till the Hon’ble Apex Court decide the issue whether the jurisdictional Central Excise is having the jurisdiction to entertain the refund claim filed by the appellant or not - appeal allowed by way of remand.
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2018 (1) TMI 407
Rectification of mistake - Rule 15 (1) of CCR, 2004 - Held that: - appeal was rejected observing that the demand was issued for the normal period of limitation and wherever extended period of limitation was invoked, the recovery of interest was set-aside - the penalty was imposed under Rule 15 (1) of Cenvat credit Rules,2004 therefore, the ingredients of suppression, mis-declaration etc., is not relevant for imposition of penalty. Re-consideration of the quantum of penalty, at this stage, would result in review of the order of this Tribunal dated 31.03.2017 a jurisdiction not conferred on this Tribunal - ROM application dismissed.
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2018 (1) TMI 406
CENVAT credit - service tax paid on sales commission - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matter, with the liberty to approach the Tribunal after disposal of the cases pending before the higher forum - appeal disposed off.
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2018 (1) TMI 405
100% EOU - Whether duty could be recovered both on the finished goods as well as on raw materials used in the manufacture of finished goods from the Respondent an 100% EOU? - Held that: - once the duty on the finished goods manufactured by the 100% EOU is directed to be recovered and the duty involved in the raw materials used in the manufacture of goods on which duty confirmed cannot also be recovered in view of the judgment of this Tribunal in the case of Sarala Polyester Ltd. Vs. C.C.E., Surat II - 2008 (222) ELT 376 (Tri-Ahd.) and C.C.E., Surat-I Vs. Cupro Recyline Pvt. Ltd. [2009 (1) TMI 893 - CESTAT AHMEDABAD]. Penalty on Director - Held that: - the ld. Commissioner (Appeals) has not taken cognizance of the result of analysis of the evidence recorded by the adjudicating authority while imposing penalty on the Director - penalty on Director upheld - quantum of penalty reduced. Appeal allowed in part.
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CST, VAT & Sales Tax
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2018 (1) TMI 404
Validity of assessment order - whether the respondent can be justified in holding that the petitioner has not opted to pay tax under Section 7-C of the TNGST Act? - Held that: - under the TNGST Act or the Rules framed thereunder, there is no separate form provided or any separate method provided for exercising the option to pay tax under Section 7-C of the TNGST Act. Therefore, it can be safely concluded that the assessee by filing a return and paying tax under Section 7-C of the TNGST Act amounts to exercising option under the said provision. Thus, the respondent committed an error in holding that the petitioner did not exercise his option. Therefore, the first question is answered in favor of the petitioner and against the revenue. Whether the respondent can re-open the assessment without there being a prior order from the Commissioner in accordance with Rule 15(5-B) of the TNGST Rules? - Held that: - on perusal of the original assessment order dated 29.05.2003, the respondent has clearly stated that such order is subject to random selection for detailed scrutiny under Section 12(1-A) of the TNGST Act. Thus, the respondent was fully aware that the assessment can be revised only subject to random selection under Section 12(1-A) of the TNGST Act. In order to effect such revision, the procedure under Rule 15(5-B) of the TNGST Rules have to be followed - decided against Revenue. Petition allowed.
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2018 (1) TMI 403
Reassessment - Section 9(2) of the Central Sales Tax Act, 1956 - Rate of tax - inter-state sale - the appellant/writ petitioner produced ‘C’ Forms from its buyers, and it is on the said basis that the assessment was completed - Section 29 (4) of Uttarakhand VAT Act, 2005 - time limitation - Held that: - there is no power with the authorities to reassess, in the facts and circumstances of this case, for the reason that there is no order passed under Sections 25 and 26 of the Act - The fact that in the U.P. Act, there is no reference to Sections 25 and 26 in Section 29 may not, in our view, take away the power of the authorities to carry out the reassessment in the circumstances involved in this case. The provision relating to Section 29(1)(c), which has, in fact, been adverted to in the order of the Commissioner, which is the basis for permitting reassessment would, in our view, endow the authorities to deal with the case at hand. Undoubtedly, the appellant/writ petitioner has been assessed at the rate of 1 per cent. If the appellant/writ petitioner was not entitled to the concessional rate available to the assessees fulfilling the requirements under Section 8 of the Central Sales Tax Act, 1956, the assessees would have been assessed at the rate of 4 per cent, which is the rate, which is higher than the rate at which the appellant/writ petitioner has been assessed. Therefore, we cannot say that there was no power even prior to the amendment to deal with a case like the present case. Therefore, we do not agree with the argument of the learned counsel for the appellant/writ petitioner that the impugned order is bad for the reason that it was beyond his powers. This is not a case where the order passed under Section 29(4) of the Act is bad for the reason that it was passed without giving any opportunity or there being no reason. In the notice, the Commissioner would state that a request has been sent by the Deputy Commissioner to authorize him under Section 29(4) of the Act and the reasons are as have been stated. In fact, there is no reference in this notice, to the notice, which he has already issued acting under Section 29(1) of the Act, namely, Annexure No. 3, dated 20.11.2015. Thereafter, we may notice the actual order, which has been passed under Section 29(4) of the Act - the aspect relating to the ‘C’ Forms and, finally, the order to do a reassessment under Section 29 of the Act being found justified and appropriate. The Court, therefore, inter alia, took the view that it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration can be used by him for any of the purposes mentioned in Form 'C', or that the goods purchased have, in fact, not been used - it is the Sales Tax Authority, who is competent to scrutinize the certificate to find out whether the certificate is genuine. The Assessing Officer will necessarily apply his mind to the various contentions raised by the appellant/writ petitioner in regard to the ‘C’ Forms and will also decide the matter - petition disposed off.
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2018 (1) TMI 402
Principles of Natural Justice - there was no communication from the second respondent, in respect of his request for adjournment made vide letter dated 10.08.2017 and resultantly, the petitioner was not in a position to have a reasonable opportunity to make his submissions in the matter in terms of Section 27(2) of TNVAT Act - Held that: - When it was pointed out that the petitioner having not availed the opportunity provided by the second respondent, could not claim such equity without establishing how prejudice has been caused to him by the impugned orders - the impugned order is set aside in terms of aforesaid order dated 30.10.2014 in W.P(MD).Nos.28374 to 28377 of 2014 passed by this Court and proceedings are re-opened for fresh adjudication - petition disposed off.
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Indian Laws
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2018 (1) TMI 430
Appointment of arbitrator - Section 11 (6) of the Arbitration and Conciliation Act, 1996 - rejection of application on the ground that the arbitration clause in the main contract was not incorporated by reference in the contract between the Appellant and Respondent therein - scope of Section 7 (5) of the Act - Held that: - though general reference to an earlier contract is not sufficient for incorporation of an arbitration clause in the later contract, a general reference to a standard form would be enough for incorporation of the arbitration clause - In the present case, the purchase order was issued by the Appellant in which it was categorically mentioned that the supply would be as per the terms mentioned therein and in the attached standard terms and conditions. The Respondent by his letter dated 15.12.2012 confirmed its acceptance of the terms and conditions mentioned in the purchase order except delivery period. The dispute arose after the delivery of the goods. No doubt, there is nothing forthcoming from the pleadings or the submissions made by the parties that the standard form attached to the purchase order is of a trade association or a professional body. However, the Respondent was aware of the standard terms and conditions which were attached to the purchase order. The purchase order is a single contract and general reference to the standard form even if it is not by a trade association or a professional body is sufficient for incorporation of the arbitration clause. Justice Sushil Harkauli is appointed as the Arbitrator to adjudicate the dispute between the parties - appeal allowed.
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