Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 12, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Compensation received from transfer of development rights - the land and building earlier in the possession of the Assessee continued to remain with it - any receipt from transfer of TDR in the present case cannot be taxed as a capital gain
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Fixed place permanent establishments - India-USA DTAA - GE carried on business in India through its fixed place of business (i.e the premises), through the premises - The intricate nature of activities it has carefully designed, where technical officials having varying degree of authority involve themselves - Existence of PE in India established.
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Condonation of delay - No doubt the explanation offered is not convincing but there is nothing on record brought by the Revenue to show that the appellant had purposely and willfully delayed in filing the appeal within the period of limitation - Delay condoned.
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Disallowance of motor car running expenses - the assessee being a juridical person, even if there is some element of personal use of car by the directors, it continues to be for business purposes of the assessee nevertheless - Claim of expenses allowed.
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Assessment u/s 153A - When the search u/s 132 was conducted and to be valid, the warrant and notice should be issued in the name of the successor only whereas these, in the present case, had been issued in the name of Nahar Enterprises, a non-existent entity which could not be said to be mere clerical mistake.
Customs
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Seeks to remove pre-import condition and include specified deemed export supplies for exemption from integrated tax and Compensation cess for materials imported against Advance Authorizations and Advance Authorizations for Annual Requirement
DGFT
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Amendment in Standard Input-Output Norms (SION) at S.No. H-97 - Flexible Intermediate Bulk Containers (Builder Bag)
IBC
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IBC - though the resolution applicant has no voting right in the CoC; and it is the CoC to approve or reject the resolution plan, an opportunity ought to have been provided to the resolution applicant to attend the meeting of the CoC in which the Resolution Plan is to be considered
PMLA
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The contention that assets acquired prior to enactment of the PMLA could never fall under the scope of the definition of the expression ‘proceeds of crime’ and consequently are immune from the provisions of the PMLA, is erroneous and is accordingly rejected.
Service Tax
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CENVAT Credit - unregistered premises taken on rent - appellant’s premises appears to be one and same having different room numbers as throughout the case record, room number and premises number are used interchangeably - availment of cenvat credit against renting of premises number 67 is admissible.
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Penalty u/s 78 - cash crisis/ fund shortage - cash crunch could not be substantiated by it as it could generate cash of huge amount for payment within two days of visit by the departmental officials to is premises - Levy of penalty confirmed.
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Rectification of Mistake - Having held that penalty is not imposable, it cannot be held that penalty under Section 78 would be restricted to the extent of confirmation of demand.
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Insurance service or not - The activity undertaken by the appellants is mandatory and in discharge of statutory obligation in the performance of sovereign functions of the State Govt. Therefore, the appellant’s case is squarely covered by the Circular as “Life Insurance”.
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Construction of residential complex services - after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to Service Tax
Central Excise
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Validity of SCN - Jurisdiction - The Central Government clearly understood the manufacturing process and taken into consideration that the return quantity of LPG has ultimately been cleared on payment of appropriate duty by oil Companies - SCN was rightly quashed.
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The original authority has travelled beyond the show-cause notice and proposed the recovery under one provision of the Central Excise Act whereas confirmed the demand under different provisions of law which is not permitted under law.
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Valuation - inclusion of profit earned on transportation charges - due to transportation in their own vehicle, manufacturer has earned the profit on account of transportation of the goods - In any case, transportation charges are not includable in the assessable value of the goods as freight charges are separately shown in the Invoice.
Case Laws:
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GST
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2019 (1) TMI 552
GST TRAN-1 - opening the GST portal - petitioner has placed before us a screen-shot of GST TRAN-1 application which the assessee wants to file, which is dated 09.01.2019 and which clearly mentions that the filing of declaration in TRAN-1 is not available now as the due date is over - Held that:- The respondents are directed to file their counter affidavit within one month - List after one month.
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2019 (1) TMI 551
Permission to withdraw the present petition - Held that:- The present petition is disposed of with liberty to the petitioner to file a detailed and comprehensive representation with respondent No.4 within a period of three days from today.
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2019 (1) TMI 550
Cancellation of petitioner's bail - the sole ground for cancellation of the petitioner’s bail is the impression given to the Sessions Court that the quantum of tax evasion involved is not ₹ 4.58 crores but ₹ 85 crores - Held that:- It is evident that the order cancelling the petitioner’s bail does not proceed on the basis of the quantum of tax evasion involved but on the basis that the petitioner has attempted to intimidate witnesses whom he had made dummy directors/proprietors in certain companies/firms - this Court is of the opinion that there is no infirmity in order dated 22.12.2018 made by the Sessions Court cancelling the petitioner’s bail; and that, the petitioner having misused and abused the liberty granted to him, is not entitled to the benefit of bail, at this stage - application dismissed.
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2019 (1) TMI 549
Imposition of penalty equal to 200% of the tax - the penalty order was an appealable order, however, since no Appellate Authority had been constituted so far, therefore, the petition was being filed - Held that:- Additional Commissioner (Appeals) has been appointed to perform the functions as an Appellate Authority under Section 107 of the Punjab Goods and Service Tax Act, 2017 and rule 109A of the Punjab Goods and Service Tax Rules, 2017 - the writ petitions disposed off by relegating the petitioners to take recourse to the remedy of appeal before the Appellate Authority, in accordance with law - petition disposed off.
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Income Tax
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2019 (1) TMI 548
Penalty u/s 271(1)(c) - addition of capital gain - Held that:- The firm actually paid such amount inclusive of tax payable on such receipt to the sisters. The assessee claimed the deduction of such payments while offering the receipts by way of capital gain in the return filed for the said assessment year 2009-10. AO did not accept the Assessee's contention and insisted that the entire capital gain should have been offered by the firm itself. The assessee in such circumstance argued that in such case the tax paid on the amounts paid offered to to the sisters may be given to the credit of. The Assessing Officer accepted such requests. AO initiated the penalty proceeded for their declaration of capital gain by the assessee. The Tribunal allowed the appeal and deleted the penalty on the ground that the assessee had put-forth a bonafide claim making full disclosures and no question of penalty would therefore be arise. We are in agreement with the view of the Tribunal. The Assessee had raised a claim giving full particulars thereof. Even if such claim was found to be not sustainable, the penalty in any case could not have been levied since the assessee had raised a bonafide claim. - decided against revenue.
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2019 (1) TMI 547
TDS u/s 194C - disallowance u/s 40(a)(ia) - requirement of statutory audit in case of the assessee - Held that:- The Tribunal noted that the statutory provisions contained sub-Section 1 and 2 of Section 194(c) prevailing at the relevant time excluded the individuals and Hindu Undivided Families from the requirement of deducting tax at source as long as their turnover did not exceed the limit for statutory audit. On facts, it has been held that assessee would have been qualified for exclusion clause and therefore the requirement of deducting tax at source could not be applied. No error in the view of the Tribunal. The finding of the Tribunal that the Assessee’s turn over for the previous year did not exceed the statutory threshold is a finding of fact, not shown to be erroneous. The statutory provisions contained in Section 194 (c) of the Act applicable at the relevant time specifically excluded the requirement of deducting tax at source by the individual or HUF payees if during the previous year their turnover did not exceed the limit requiring them to be subjected to compulsory audit - decided against revenue.
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2019 (1) TMI 546
Gain on sale of shares - capital gain or busniss income - Revenue argued that the income arising out of the sale of shares should be taxed as business income - Held that:- Whether the activity of the assessee in dealing with the shares is by way of investment or business is principally a question of facts to be adjudicated on the basis of the documents on record and well established legal principles through series of judgments. In the present case, the CIT(A) and the Tribunal have concurrently held that the assessee is not in the business of buying and selling shares. This conclusion was principally on the basis of above noted factors inter-alia establishing that the assessee was occupied in the activity of manufacturing of optical equipments, that the assessee had showed the acquisition of shares as investment, that all purchases were upon delivery of shares. Exemption u/s 54F denied - purchasing two flats of residential complex - Revenue contends that both the flats are independent units and the assessee, therefore, cannot get exemption with respect to investments made in purchase of both of the - Held that:- CIT(A) and the Tribunal concurrently held that the two flats were combined into one residential unit. There was a common electricity connection and common bill. There was only one telephone connection. The LPG connection was also single. There was common kitchen for the entire unit. We notice that a Division bench of this Court in largely similar set of circumstances in CIT Vs. Devdas Naik (2014 (7) TMI 173 - BOMBAY HIGH COURT) had dismissed the Revenue's appeal.
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2019 (1) TMI 545
Compensation received from transfer of development rights - taxabilty under the provisions of long term capital gains - Transfer of Development Rights (TDR) - computation of the sale of TDR Held that:- The entire issue is squarely covered by the Judgment of Division Bench of this Court in the case of Sambhaji Nagar Co-op. Hsg. Society Ltd. [2014 (12) TMI 1069 - BOMBAY HIGH COURT] the land and building earlier in the possession of the Assessee continued to remain with it. Even after the transfer of the right or the additional FSI, the position did not undergo any change. The Revenue could not point out any particular asset as specified in sub-section (2) of section 55. Taxing the value of 3 fats as a capital gain, the Revenue has proceeded on completely erroneous basis. The assessee had withheld portion of available FSI for 3 fats which was constructed by the builder at the cost of the assessee and the fats were thus acquired by the assessee. All this was part of argument between the assessee and the builder. In any case, once we hold that any receipt from transfer of TDR in the present case cannot be taxed as a capital gain and this question would itself become academic. Tax Appeal is dismissed.
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2019 (1) TMI 544
Reopening of assessment - benefit of Tonnage Tax Scheme - scope of business activities carried out by the assessee - Department found that the assessee was not handling the cargo shipping business or movement of cargo and that the activities carried out by the company were merely incidental activities and in absence of the core business activities, the assessee was not entitled to the benefits under chapter XII-G - Held that:- The assessee's nature of activities was fully disclosed during the assessment proceedings. There was no failure on the part of the assessee to disclose any of the material facts. Infact from the note on assessee's nature of business one could gather the precise nature of the activities carried on by the company. There was these clear disclosure on the part of the assessee and the reopening of assessment beyond the period of four years from the end of relevant assessment year could not have been done. Also we must strike down the notice of reopening as assessee's claim of benefits under the chapter XIIG of the Act as is clear from the material on record came up for pointed attention of the Assessing Officer during the original assessment proceedings. It was in this context that the Assessing Officer had raised certain queries including asking the assessee to give full details of its business activities. Thus, the question of the assessee being qualified for the benefits under Chapter XIIG of the Act was scrutinized issue. Without there being any additional material, any attempt on the part of the AO to reopen the assessment would be based on mere change of opinion. - Decided in favour of assessee.
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2019 (1) TMI 543
Penalty levied u/s 271(1)(c) - assessee filed the revised return of income only after the survey action u/s 133A taken place in the premises of the purchaser - treat the revised return as return filed in response to the notice under Section 148 - Held that:- Tribunal was of the view that it was not a case where penalty could be levied under Section 271(1)(c) of the Act because the entire addition resulted from the voluntary disclosure by the assessee, though omitted to be disclosed while filing the original return of income due to bona fide reasons. In our considered view, the CIT(A) as well as the Tribunal considered the factual position and were satisfied that the contentions advanced by the assessee were bona fide. Thus, we find that no substantial question of law arises for consideration in these appeals. - decided against revenue
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2019 (1) TMI 542
Fixed place permanent establishments - India-USA DTAA - assessee/appellants separately had an independent agent PE, located in India - GE’s activities in India were not of an auxiliary or preparatory nature - Held that:- The facts of the present case clearly point to the fact that the assessee’s employees were not merely liaisoning with clients and the headquarters office. E-mail communications and chain mails indicate that with respect to clients and possible contracts of GE with Reliance CS-1, GE Oil & Gas, Bongaigaon Refinery, Draft LOA for WHRU (E-mail from Andrea Alfani (GE Overseas) to Vivek Venkatachalam (GEIIPL) and Riccardo Procacci (GEII) on proposed email to send Reliance, including comments to RIL on the proposed letter of acceptance and relevant attachments. Also, asked them whether they wanted to send the e-mail themselves to RIL or for it to be sent directly. These appear to show important role for Vivek and Riccardo in the negotiating process. The e-mail chain on “CONFIDENTAL: Ad Syst” contains e-mail from Gioseppe La Moita (GE Overseas). These suggest that Gioseppe La Moita, Renato Mascii (GE Overseas) and Riccardo Procacci (GEII) were in India negotiating the BHEL contract. Rest of the correspondence is not particularly relevant. These suggest that substantive negotiation work on the BHEL contract was done in India by a mix of GE Overseas and GE India team. It is clear that in the kind of activity that GE carries out, i.e manufacture and supply of highly specialized and technically customized equipment, the “core activity” of developing the customer (identifying a client), approaching that customer, communicating the available options, discussing technical and financial terms of the agreement, even price negotiations, needed a collaborative process in which the potential client along with GE’s India employees and its experts, had to intensely negotiate the intricacies of the technical and commercial parameters of the articles. This also involved discussing the contractual terms and the associated consideration payable, the warranty and other commercial terms. No doubt, at later stages of contract negotiations, the India office could not take a final decision, but had to await the final word from headquarters. But that did not mean that the India office was just for mute data collection and information dissemination. The discharge of vital responsibilities relating to finalization of commercial terms, or at least a prominent involvement in the contract finalization process, discussed by the revenue authorities, in the present case, clearly revealed that the GE carried on business in India through its fixed place of business (i.e the premises), through the premises. Question No. 1 is answered in favour of the revenue Agency PE - assessee/appellants separately had an independent agent PE, located in India - Held that:- The assessee, GE has organized its affairs in such a manner – and one cannot quarrel with its intent, so as to minimize tax incidence in India. Yet, the court’s task is not as easy to neatly compartmentalize the analysis of whether the patterns of past decisions result in its establishments constituting fixed place PE or a dependent agent PE. The intricate nature of activities it has carefully designed, where technical officials having varying degree of authority involve themselves – along with local managerial and technical employees, in contract negotiation, often into core or “key” areas, modification of technical specifications and the negotiations for it, to fulfill local needs and even local regulatory requirements, the complexities of price negotiation, etc. clearly show that the assessee carries out through the PE business in India. These activities also intersect and overlap with the content of the principle of dependent agent, inasmuch it is evident that these agencies work solely for the overseas companies, in their core activities. Attribution of income to such PEs - Held that:- In this case and the findings of the lower Revenue authorities – including the AO and the CIT(A), both of whom have upheld the attributability of income to the extent of 10% and apportionment of 3.5% of the total values of supplies made to the customers in India as income, the Court finds no infirmity with the findings or the approach of the Tribunal in this regard. This question too is answered against the assessee and in favor of the Revenue. Decided against the assessee.
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2019 (1) TMI 541
Default u/s 201 - TDS not been deposited with the taxation authorities - Held that:- According to the learned State counsel, the amount payable to the petitioner is ₹ 92,560/- and not ₹ 1,00,750/-, as claimed by the petitioner due to calculation error. It was stated that the amount of ₹ 92,620/- (Rs. 60 in excess), has since been released to the petitioner. Further, the TDS on account of income tax has also been deposited with the concerned authorities and certificates in that regard have been issued to the petitioner. As urged that the present writ petition has been rendered infructuous and may be disposed of as such. Ordered accordingly.
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2019 (1) TMI 540
Condonation of delay - inordinate delay of 914 days in filing the appeal and the reason assigned by the assessee is flimsy - Held that:- Length of delay alone is not always the criteria to reject an appeal. The facts in the instant case is not in dispute and the appellant is guilty of belatedly filling the appeal after 914 days after the appeal time had lapsed. No doubt the explanation offered is not convincing but there is nothing on record brought by the Revenue to show that the appellant had purposely and willfully delayed in filing the appeal within the period of limitation. So far as the assessment for the years 2010-11 and 2011-2012 is concerned, CIT(Appeals) had passed an order on 09.09.2015 and appeal was filed before the Tribunal within time and that appeal has been dismissed and the appellant has filed Tax Case Appeal. Apart from that, substantial question of law raised by the appellant is now pending before this Court in other cases as well. Substantial question of law raised in this appeal is squarely covered by the decision in the case of Chettinad Logistics (2017 (4) TMI 298 - MADRAS HIGH COURT). Considering the fact that the substantial question of law is pending before this Court in other cases as well, we deem it appropriate that the appellant can be given an opportunity to contest the appeal on merits. However, such opportunity will be subject to certain conditions. The appeal is allowed subject to the condition that the appellant pays a sum of ₹ 5,000/- (Rupees Five thousand only) towards Chief Minister's Public Relief Fund within a period of four weeks from today and if the appellant complies with the condition, the order passed by the Tribunal, which is impugned in this appeal shall be set aside and the appeal shall be restored to the file of the Tribunal to be heard and decided on merits.
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2019 (1) TMI 539
Disallowance u/s 36(1)(va) - late payment of employee’s contribution to provident fund account - application for rectification under section 254(2) - Held that:- As consistency view in favour of the Revenue on the issue of claim of deduction under section 36(1)(va) of the Act, whereby the assessee has missed deadline for deposit of employees’ contribution in the relevant fund before the due date of filing of the return by following in the case of Gujarat State Road Transport Corporation Ltd. Vs. CIT (supra). As pointed out by the assessee, recently, Hon’ble jurisdictional High Court in the case of Salasar Laminates Ltd. Vs. Deputy Commissioner of Income Tax in Tax Appeal No.1186 of 2018 order dated 1.10.2018 has held that since appeal against the judgment of High Court in the case of Gujarat State Road Transport Corporation Ltd. (supra) is pending, and SLP has been granted, liberty was given to assessee to file an application for revival of appeal, in case Hon’ble Supreme Court reverse the decision of the High Court on the issue. Addition while computing book profit u/s 115JB - similar addition was made u/s 14A while computing normal income of the assessee-company - Held that:- Special Bench answered this question in favour of the assessee and held that computation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully we allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules. - Appeal of the assessee is partly allowed.
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2019 (1) TMI 538
Penalty u/s 271AAA - on-money was received for sale of land at Gatrad which was not accounted in the books - assessee has paid taxes along with interest on this undisclosed income admitted during the course of search - whether the assessee has disclosed manner and substantiate that manner? - Held that:- A perusal of the record would indicate that the ld.CIT(A) has recorded a finding that search party did not ask particular question from the assessee in whose reply he could demonstrate manner of earning the income; neither in the assessment proceedings AO has asked the manner of earning of income from the assessee. However, the assessee himself has disclosed during the course of search that this was on-money received on sale of Gatrad land. Thus, the assessee has disclosed manner and also fulfilled conditions no.2. CIT(A) has rightly appreciated this aspect and has rightly deleted the penalty. - Decided in favour of assessee.
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2019 (1) TMI 537
Disallowance on account of provision of LTA (Leave Travel Allowance) - assessee is following the mercantile system of accounting - Held that:- It is preceding year as well as the succeeding year the claim of the appellant has been accepted. Considering the principle of consistency demands that the claim of the appellant should be accepted in this year also. Considering VINITEC CORPORATION PVT. LTD. and BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX [2000 (8) TMI 4 - SUPREME COURT] as the principle of consistency the claim of the assessee is accepted and addition on account of LTA. Disallowance on account of non-deduction of TDS on the payment made to M/s Graziano Transmission North America, USA holding the same as commission - the payment is actually in the nature of fee for technical services and the assessee only named the same as commission to enjoy the tax benefit - Held that:- We find that the agent is not providing any technical services to the assessee. The agent is acting only commission agent and procuring the orders for the assessee and to inform the assessee for any infringement of rights. Even if the same is considered as business income of the commission agent same is not taxable in India as the foreign entity does not have any PE or BC in India. The commission is being entertained in the foreign company in the foreign country. No part of its income accrue or arise in India. Nor it is making available any technical knowledge, experience, skill, knowhow etc. to the assessee. Hence, Ld. CIT(A) has rightly held that the case of the assessee is identical to the decision in the case of DIT vs. Guy Carpenter and Company Ltd.[2012 (5) TMI 31 - DELHI HIGH COURT]. - Decided against revenue.
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2019 (1) TMI 536
Nature of land sold - Treating the sale of agricultural land as sale of capital asset - Held that:- There is no dispute with regard to the fact that Ld. CIT(A) has considered the certificate of the revenue official who has categorically stated that the land in question do not fall within 4 kms. of the limit of Mhau Cantonment Board. Further, it is noticed that Ld. CIT(A) has duly considered the objections of the AO and rejected the same on the basis of notification. The revenue has not controverted this finding by placing any contrary material. The finding of the CIT(A) is based upon the notifications issued by the competent authority. No infirmity into the finding of the CIT(A) and the same is hereby affirmed. Ground of the revenue s appeal is dismissed. Allowability of deduction u/s 54B - Held that:- We find that the assessee had raised issue of recording of satisfaction by the assessing officer of the searched person as well as allowability of deduction u/s 54B of the Act. Both these grounds have not been adjudicated by the Ld. CIT(A). We are of the view that the CIT(A) ought to have adjudicated this ground. Therefore, respectfully following the judgement in the case of CIT Vs. Tolaram Hassomal (2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT) we restore both the grounds to the file of the A.O. to decide the case afresh.
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2019 (1) TMI 535
Late payment of contribution to PF and ESI - Held that:- We fairly agree that the issue is now covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of CIT Vs Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT]. We, therefore, decline to interfere in the findings of the CIT(A), which are in consonance with the law so laid down by Their Lordships, on this aspect of the matter. TDS u/s 195 - Disallowance on account of testing expenses - non deduction of tds u/s 40(a)(i) - whether the testing fees is clearly covered by the scope of Section 9(1)(vii) of the Act, and hence the income embedded in the testing fees is taxable in India - income accrued in India - India- Swiss DTAA - Held that:- The taxability under the tax treaty provisions clearly fail to bring the testing fees paid to a Swiss entity within the ambit of its income chargeable to tax in India. As for the connotations of 'make available' clause in the treaty, this issue is no longer res integra as relying on case of DIT v. Guy Carpenter & Co Ltd. [2012 (5) TMI 31 - DELHI HIGH COURT] and CIT v. De Beers India (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT]] in favour of the assessee. The assessee did not have any tax withholding obligations from payments made to the Swiss entity in respect of the testing fees. Accordingly, the very foundation of impugned disallowance under section 40(a)(i) is devoid of any legally sustainable basis. - Decided in favour of assessee Disallowance of motor car running expenses - allowable busniss expenditure - Held that:- We are of the considered view that this disallowance deserves to be deleted not only for the reason that it is based purely on surmises and conjectures, but also because the assessee being a juridical person, even if there is some element of personal use of car by the directors, it continues to be for business purposes of the assessee nevertheless. We delete the impugned disallowance - Decided in favour of assessee
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2019 (1) TMI 534
Enhancement of income - assessee has paid only ₹ 1 Crore and it received property to the extent of ₹ 12.5 Crores, therefore, the balance of ₹ 11.5 Crores added as income of the assessee - dispute between the parties in regard to sale of property - compromise order / decree by HC - Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan have to pay ₹ 14.5 Crores to the assessee-company. Out of which, ₹ 12 Crores has to be paid on or before 31st March, 2013 and the balance ₹ 2.5 crores shall be paid in equal monthly instalments Held that:- This Tribunal is of the considered opinion that when the High Court passed an order directing Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan to pay ₹ 14.5 Crores, the CIT(Appeals) or any other officer of the Department cannot go beyond the judgment of Madras High Court. In lieu of payment of ₹ 14.5 Crores, Shri Kamalesh Kumar Sheth executed a sale deed for ₹ 12.5 Crores and the balance has to be paid by Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan. The judgment of Madras High Court clearly says that Shri Kamalesh Kumar Sheth and Shri S. Venkataramanan are jointly or severally liable to pay the money. In compliance with the direction of the High Court, Shri Kamalesh Kumar Sheth executed the documents for discharge of his liability. Therefore, the CIT(Appeals) is not justified in enhancing the assessment by holding that the assessee has paid only ₹ 1 Crore and it received property to the extent of ₹ 12.5 Crores, therefore, the balance of ₹ 11.5 Crores as income of the assessee. - Decided in favour of assessee.
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2019 (1) TMI 533
Penalty u/s 271(1)(c) - income from other sources - assessee earned interest income from certain loans & savings bank account - Held that:- onus to prove the nexus between income earned and expenditure made there-against, in terms of Section 57, squarely lied on the assessee, which has not been conclusively established. The assessee has paid interest to loans obtained from banks / financial institutions. It is categorical finding of the lower authorities that the loans have been obtained against shares and the same have been invested in Shares & Bonds and this fact could not be rebutted by any cogent material on record. Similarly, the nexus between loan obtained from LIC and loans which earned interest income could not be demonstrated. This being the case, we have no hesitation in confirming the stand of lower authorities. The cross-objection of assessee stands dismissed. For penalty we find that the assessee made a claim which has not been accepted by lower authorities for want of conclusive evidence of proving the nexus between funds borrowed by the assessee and funds advanced by the assessee. However, the same, in our opinion, did not lead to concealment of income or furnishing of inaccurate particulars of income so as to warrant imposition of penalty u/s 271(1)(c). Therefore, by deleting the same, we allow the assessee’s appeal.
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2019 (1) TMI 532
Eligibility to claim deduction u/s 80IB against Unit-III at Silvassa & Falandi Unit - Held that:- The first appellate authority has noted that Unit- III was eligible to claim the deduction u/s 80IB from AY 2003-04 onwards which was already been upheld by the Tribunal and the revenue’s appeal against the Tribunal order was also dismissed by Hon’ble Bombay High Court. The Ld. CIT(A) observed that both the aspects viz. whether the unit was engaged in carrying out manufacturing activity as well as whether the unit was formed by splitting up or reconstruction of a business were already considered in the aforesaid decisions. Regarding Falandi Unit, it was noted that the unit was located at different location and independently engaged in carrying out manufacturing activities and therefore it was eligible to claim the said deduction as already upheld by the Tribunal up-to AY 2008-09. Addition of deemed dividend u/s 2(22)(e) - assessee took loan of ₹ 11.46 Crores from a sister concern in which one of the partners of assessee’s firm namely Sangeeta Gilada had substantial shareholding of 18% - Held that:- We find that it is undisputed fact that the assessee is not holding any beneficial shareholding in aforesaid lender and the recipient of loan is the assessee and not the beneficial shareholder. The identical issue for AY 2009-10 was contested by revenue before this Tribunal [2014 (1) TMI 1782 - ITAT MUMBAI] wherein the stand of first appellate authority was confirmed by placing reliance on the decision in Universal Medicare [2010 (3) TMI 323 - BOMBAY HIGH COURT]. During impugned AY, the CIT(A) has also followed the same judicial precedent. This being the position, we find no infirmity in the impugned order on this issue. By confirming the same, we dismiss this ground of appeal.
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2019 (1) TMI 531
Deduction claimed u/s 80IC - restriction to 30% of the eligible profits as against 100% claimed by the assessee on account of substantial expansion carried out by it - assessee firm is engaged in the manufacturing of axels, gears and shafts having units at Baddi and Rudrapur - in the seventh year of production since the first time the assessee carried out substantial expansion - Held that:- The issue was now settled and covered against the assessee by the decision of the Hon'ble Apex Court in the case of CIT Vs M/s Classic Binding Industries & Ors. [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] wherein held once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It may be asserted again that the assessee's accept the legal position that they cannot claim deduction of more than 10 years in all under Section 80-IC. - Decided in favour of revenue Quantification of deduction u/s 80IC - the loss of one priority unit is to be set off against the profit of the other priority unit - Held that:- Since the issue involved in the present case is identical to that in the case of Milestone Gears [2019 (1) TMI 421 - ITAT CHANDIGARH] the decision rendered by the ITAT in the said case would squarely apply to the present case also following which we hold that the assessee is eligible to claim deduction on the profits of each individual undertaking without resorting to netting of the profit and loss of the eligible undertakings. - Decided in favour of assessee
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2019 (1) TMI 530
Assessment u/s 153A - Deduction u/s 80IB (10) denied - order passed on the non-existing entity - firm on which the order was passed was M/s Nahar Enterprises which stands closed with effect from 20.11.2011 and the business was taken over by “M/s Nahar Builders Limited” and therefore the assessment order passed on non-existing entity - Held that:- Search action was a strict action taken against the privacy of any person and therefore the aforesaid powers bestowed upon the authorities were to be exercised with utmost precaution and only after conducting detailed enquiries & investigation. Therefore, non-mentioning of correct name of the entities could not be termed as mere clerical or procedural mistake particularly when the assessee had already intimated the fact of dissolution of the firm to the department much before the date of the search. Therefore, the issue of Panchnama in the name of dissolved firm could not be said to be valid. When the search u/s 132 was conducted and to be valid, the warrant and notice should be issued in the name of the successor only whereas these, in the present case, had been issued in the name of Nahar Enterprises, a non-existent entity which could not be said to be mere clerical mistake. Similar facts exist in the given year. No contrary judgment has been placed on record by the revenue. Therefore, material facts and circumstance being the same, respectfully following the view of the coordinate bench of the Tribunal, we hold that the assessment proceedings were bad in law and therefore, could not be sustained in the eyes of law. We order so. The issue on merits has also been decided in assessee’s favor by holding that service area, window area, window projections and cupboard projections were not to be included while computing the builtup area. - Decided in favour of assessee.
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2019 (1) TMI 529
Addition u/s. 68 - Unexplained Share Premium - Held that:- There is no discussion, whatsoever, regarding these submissions and evidences in the quantum assessment order. The Ld. AR has also submitted that notices u/s 133(6) were returned undelivered since the same were sent at the wrong address. As submitted that both the entities, upon being informed by the assessee about notices u/s 133(6), confirmed the transactions with supporting documentary evidences. The attention has also been drawn to the fact that valuation of shares was justified by following discounted cash flow method which was placed on record. Similar other submissions / pleas have been raised before us which lead us to reach a conclusion that the issue require re-appreciation by lower authorities. Similar is the position of impugned order where we find that there is no discussion as to how the three ingredients of Section 68 were satisfied by the assessee which led the Ld. CIT(A) to delete the impugned addition. On above facts and circumstances, without delving much deeper, we set aside the impugned issue and remit the matter back to the file of AO for re-adjudication after appreciating the documentary evidences filed by the assessee & pleas raised by Ld. AR. Revenue’s appeal stands allowed for statistical purposes.
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2019 (1) TMI 528
Addition u/s 68 - onus on the assessee to prove the genuineness of the investment made by the parties concerned and their creditworthiness - Held that:- AO has doubted the transactions primarily by questioning the high share premium. However, to reiterate, the revenue, by questioning the wisdom of the investor, could not make addition in the hands of the assessee as unexplained cash credit u/s 68 unless it was established that the assessee’s unaccounted money was routed in the books through the mechanism of fictitious share allotment. Nothing on record establishes this fact. We find that the assessee has demonstrated the same by filing bank statements, Income Tax Returns, financial statements & various other documents as noted by lower authorities and which are not under dispute. So far as the provisions of Section 56(2)(viib) are concerned, we find that the same do not apply to the assessee in view of the fact that these provisions are inserted by Finance Act, 2012 and applicable with effect from 01/04/2013 only. Secondly, these provisions do not apply to the assessee since the assessee is a public listed company. The consideration of the totality of above facts and circumstances lead us to inevitable conclusion that Ld. CIT(A) was justified in providing relief to the assessee in terms of catena of judicial pronouncements as discussed in the impugned order. Finding no infirmity in the same we dismiss the appeal. - Decided against revenue
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2019 (1) TMI 527
Adjustment of interest expenditure against interest income - Held that:- It is noticed that this issue is pertained to the assessing of income u/s. 50C of the act on the additional stamp duty of ₹ 13,995/- paid for two plots by the assessee on 20/07/2009. During the course of appellate proceedings, the ld. counsel could not controvert the impugned addition with any relevant material therefore this ground of appeal of the assessee is dismissed. Disallowance of interest expenditure - AO observed that assessee has shown investment in agricultural land and investment in shares and stated that against interest income of ₹ 5,88,073/- expenses of ₹ 90,389/- was to be allowed - Held that:- As examined the contention of the assessee claiming that her own capital as on 31-03-2010 was to the amount of ₹ 22870663/- and investment in the fixed assets and shares and LIC were to the amount of ₹ 3,95,54,837/-. As demonstrated that 58% of the investment was made from her own fund and remaining 42% investment was made from the borrowed funds. As contended that 42% of the interest expenses out of the total interest expenses of ₹ 11,06,847/- can be disallowed. It is noticed that the above facts was not disproved at the time of the appellate proceedings by the CIT(A), therefore, we find merit in the contention of the assessee and restrict the disallowance of interest expenses to the amount of ₹ 4,64,876/- and the remaining interest payment of ₹ 6,41,971/- is to be set off against the interest income. Accordingly, the appeal of the assessee is partly allowed.
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2019 (1) TMI 526
Disallowance of claim for deduction under section 80IA - Held that:- From the above specific sub-clause (a) to clause (iv) of section 80IA, it is clear that the intention of Legislation for substituting clause (iv) to section 80IA(4) to the Undertaking is only to extent the benefit of the provisions of section 80IA to such undertaking, which is neither a company nor a consortium of companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act as required under clause (i) to section 80IA(4) only to encourage electric power generation and its distribution. Since the authorities below have not disputed any other parameters of eligibility criteria, we are of the considered opinion that the assessee is eligible to claim deduction under section 80IA(4)(iv) of the Act. The orders of authorities below and direct the Assessing Officer to allow the deduction claimed by the assessee. Thus, the ground raised by the assessee is allowed. Disallowance of infrastructure development charges and erection & commission charges as well as transmission and wheeling charges under section 40(a)(ia) - Held that:- As per the remand report dated 08.09.2016, the AO has clarified that the impugned payments were prior to commissioning of the windmill and the amounts have been capitalized. Further, in the remand report, AO has stated that a perusal of the Profit and Loss statement shows that the impugned payment has not been claimed as revenue expenditure by assessee, but capitalized as evident from the depreciation schedule. The provisions of section 40(a)(ia) is applicable only when the assessee has claimed an expenditure and no disallowance can be made under section 40(a)(ia) if the payments were not claimed as an expenditure. Both the disallowances made by the AO u/s 40(a)(ia) and confirmed by the ld. CIT(A) stand deleted. - decided in favour of assessee.
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2019 (1) TMI 525
Penalty u/s 271(1)(c) - sufficient losses to absorb the assessment of cessation of liabilities u/s 41(1) - Held that:- Cessation of liabilities u/s 41(1) will come into picture only when the assessee claimed certain amounts as expenses in the earlier years and the same was also allowed by the revenue. The claims of the assessee were considered as genuine in the earlier years and in such a case no concealment or furnishing of inaccurate particulars can be presumed. In the instant case, it was the inability to reconcile the liabilities and prove the same. Also, as the assessee has closed down its business and there were sufficient losses to absorb the assessment of cessation of liabilities under section 41(1) the assessee has not taken pains to reconcile the differences in the credit balances with M/s. India Cements Ltd and accepted the addition proposed/made by the AO. Such admissions or surrender of claims etc. will not automatically lead to concealment of income or furnishing of inaccurate particulars for the purpose of levying penalty under section 271(1)(c). As observed that if the claims made by the assessee are not genuine or suppressed/inflated or fabricated or malafide etc., the additions/ disallowances or withdrawal of claims etc. will amount to concealment of income or furnishing of inaccurate particulars for the purpose of section 271(1)(c). Similarly, if the transactions shown by the assessee in its return of income is genuine and all the particulars of it are available in the return, mere withdrawal of the claim or not appealing against the assessment by the assessee, will not amount to concealment of income or furnishing of inaccurate particulars. CIT(A) has rightly deleted the penalty levied under section 271(1)(c) - decided against revenue.
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2019 (1) TMI 524
Gain on sale of shares - ‘capital gain’ or ‘business gain’ - Held that:- The assessee never purchased shares from open market. When the shares were allotted, the assessee waited for the right opportunity and sold the shares thereby making profits which were returned as short term capital gain. It is not the case of the AO that the assessee has been consistently buying and selling shares of the same company or companies. The only grievance of the Assessing Officer is that the assessee sold the shares in a very short span of time. This objection of AO is not acceptable when law itself provides that profits on shares held for less than 12 months shall be treated as short term capital gain. Therefore, in the light of the said provisions of the Act, the Assessing Officer cannot say that why the shares were held for less than 12 months. Moreover, shares applied through IPOs are directly allotted in the DEMAT account and if subsequent sale has to be made through DEMAT account. There is no dispute that the Security Transaction Tax paid by the assessee was never claimed as expenditure. - decided against revenue.
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Customs
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2019 (1) TMI 519
Overvaluation - fraudulent intention to avail excess duty drawback - omission or commission on the part of the Appellants in relation to the export of the said goods - Held that:- There was no delay or inefficiency on the part of the employees of the CHA with reference to the three Shipping Bills in question In view of the above the Inquiry Officer stated that he was constrained to hold that the charges as contained in Article of Charge-I was not proved. Article of Charge-II related to failure on the part of the Appellants to ensure the conduct of their own employees which rendered them liable to action under Regulation 19(8) of CHALR, 2004 - During the course of proceedings, the witnesses examined by the department had stated plainly that they are not permitted to open the package, which normally comes in the sealed condition because there would be complaints and allegations of thefts or substitution; even though this was what was clearly stated by the department’s witness, yet, no evidence was brought on record to say that this contention was not true in view of any specific provisions of law; since the charge basically was that of misdeclaration of the export cargo, in terms of value and no allegations of aiding or abetting were made against the Appellants, the charge of misconduct on the part of the employees cannot sustain; Consequently the charge that there was a failure on the part of the Appellants to ensure proper conduct of the employees cannot be upheld. Accordingly, the Inquiry Officer held that this charge too was not proved.
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2019 (1) TMI 518
Classification of imported goods - aluminium profiles - whether merit classification under CTH 76042990 or under CTH 83021090 of CTA, 1975? - Held that:- The learned adjudicating authority by referring to the signed catalogue of “Aluminium Profiles” furnished by the appellant, has recorded specific findings in para 12 at pages 9, 10 and 11 in the impugned order to support the stand of classification of subject goods under CTH 830219090. The appellants have not adduced any material evidence to counter such claim by Revenue - Further, the voluntary statement recorded under summon was never retracted by the appellant at any point of time before adjudication of the matter. Thus, it cannot be said that the product in question should be classifiable under CTH 76042990, instead of CTH 83021090 of CTA, 1975 - demand not sustainable. Penalty u/s 112(a) of CA - Held that:- Initially, classification of the disputed goods was highly contentious and there were different views within the department, whether to classify the same under Chapter Heading 7604 or 8302 of the CTA, 1975. Thus, under such circumstances, the provisions of Section 112(a) of the Act cannot be invoked for imposition of penalty on the appellant No.2, who is the Managing Director of the appellant company - penalty set aside. Appeal disposed off.
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2019 (1) TMI 517
Rectification of mistake - ex-parte order - Held that:- Considering the fact that the applicant has filed the appeal in Delhi, there is no intimation given to the applicant for transfer of their appeal to Chandigarh. Under this belief, the appellant could not appear before the Tribunal. In that circumstance, we recall our order dated 12.7.2018 and direct the Registry to list the appeal for final disposal.
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2019 (1) TMI 516
Maintainability of appeal - no assessment order is available in difference to the declaration filed entry under agitation - Speaking order in terms of Section 75 of the Customs Act, 1962 - Held that:- There are no infirmity with the impugned orders - impugned order upheld - appeal dismissed.
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Corporate Laws
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2019 (1) TMI 520
Appointment of Provisional Liquidator - time limitation - Appellant argued that the learned Company Judge has erred in admitting the petition and appointing a provisional liquidator, without taking note of the fact that the claim of the Respondent was barred by limitation - Held that:- In the present case, it is significant to note that the Appellant has not denied the receipt of the legal notice issued by the Respondent prior to filing of the winding up petition. The legal notice annexed along with the Company petition is duly supported with the copies of the postal receipts, courier receipts and tracking report of the courier company evidencing the service of the said notice on the Appellant. Concededly, the Appellant did not give any reply to the said legal notice. In case the Appellant indeed had a justifiable defence, the same ought to be taken immediately on the receipt of the legal notice. The Appellant did not do so and therefore adverse influence has to be drawn against the Appellant. However, failure on the part of the Appellant to reply to the legal notice is not the only reason for this Court to decline to admit the instant appeal - There being no cogent defence of the Appellant to deny the claim, the only question that merits consideration is as to whether the letter dated 4th March, 2013 enclosing the outstanding balance confirmation is a forged communication that would render the claim to be time barred. The communication dated 4th March, 2013 is on the Appellant’s Company letter head and also bears the rubber stamp along with the signatures of Ms. Shruti Gaur affixed on it. Learned Single Judge has also noted that in the reply there is only a bare denial of the aforesaid documents. There is no attempt on the part of the Appellant to justify the denial by producing the original ledger accounts or the copies thereof that would contradict the entries reflected in the said ledger account - The Appellant Company had the opportunity to contest the claim by producing the ledger accounts maintained by them to traverse and disclaim the entries reflected with the letter dated 4th March, 2013. Since this was not done, the learned Single Judge was justified in drawing an adverse inference against the Appellant Company on the doctrine of onus of proof. It is well settled in law that party who is having the possession of the original documents ought to take steps to produce the same. Appeal dismissed - decided against appellant.
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Insolvency & Bankruptcy
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2019 (1) TMI 523
Rejection of resolution plan of Acme Chem Ltd. Approved by the committee of creditors - Resolution Applicant has submitted that it is evident from the minutes of the meeting held on 12.09.2018 that the said request of applicant was not placed before CoC for consideration and the Resolution Professional was keen to proceed in the absence of the applicant for obvious reasons - principles of natural justice - Held that:- At is worth to be noted that the Resolution Applicant had expressed his inability to attend the CoC's meeting scheduled on 12.09.2018 due to religious constrains and requested the RP to fix any other date after 14.09.2018 for meeting of the CoC. However, the Resolution Professional refused to re-schedule the meeting. Therefore, a reasonable opportunity of being heard is not given to the applicant and the same is in violation of the principle of natural justice. As per Section 30 (5) of the I&B Code, 2016, the resolution applicant is entitled to attend the meeting of the CoC in which the resolution plan of the applicant is to be considered. It is clear that though the resolution applicant has no voting right in the CoC; and it is the CoC to approve or reject the resolution plan, an opportunity ought to have been provided to the resolution applicant to attend the meeting of the CoC in which the Resolution Plan is to be considered, to make his representation and to express his view point on the Resolution Plan submitted to the CoC. The application of the Resolution Applicant is allowed - the CoC is directed to consider the plan afresh submitted by the Applicant by providing it reasonable opportunity of being heard within two weeks from the date of passing this order and RP is directed to file status report within two working days thereafter.
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2019 (1) TMI 522
Initiation of Corporate Insolvency Resolution Process under section 10 of Insolvency & Bankruptcy Code 2016 - sub rule (1) of Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 - scope of Corporate debtor - Held that:- Under Clause (b) of Section 10(3) the corporate applicant is bound to propose the name of Registered Resolution Professional proposed to be appointed as Interim Resolution Professional. We have perused the written communication in Form No.2 Annexure-III furnished by Mr. Arvind Kumar a registered Resolution Professional with IBBI. This Form contains all the particulars provided in the Form. He has furnished his written consent and stated that presently he is not serving as such in any proceedings under the Code so far - It is now to be seen whether the petitioner has also complied with Section 10(3)(c) of the Code. There was complete loss of net worth of the corporate debtor. It is clear from the above that the corporate debtor has failed to pay its debt and has thus committed default. In fact the learned counsel for the financial creditor has not raised any objection to the admission of the petition in view of the default committed by the petitioner-corporate debtor, nor any reply to the petition was filed. It clearly seems that the corporate debtor has fallen into debt trap and thus competent to set in motion the insolvency resolution process under the Code to ensure maximum value of assets which is in the interest of all the stakeholders. The petition is admitted.
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2019 (1) TMI 521
Initiation of the ‘Corporate Insolvency Resolution Process’ - no demand notice under Section 8(1) of the ‘I&B Code’ was served on the ‘Corporate Debtor’ - Held that:- Appellant though enclosed invoices dated 6th June, 2016, 21st October, 2016 and 4th April, 2017 and different e-mails and highlighted certain facts by the Appellant has failed to bring on record any document to suggest that the Appellant has rendered services to the ‘Corporate Debtor’ - Thus there being a disputed question of fact, the Adjudicating Authority had rightly refused to entertain application under Section 9 preferred by the Appellant - appeal dismissed.
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PMLA
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2019 (1) TMI 515
Validity of communications issued by officers of the Enforcement Directorate to the BSE - attachment of equity shares of KRBL Ltd. held by the petitioners in their Demat Accounts with SMC - Withholding of the proceeds of equity shares sold by the petitioners on the platform of respondent no.2 - prohibition of any debit transaction in the Demat Accounts. Held that:- In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets or the means with which he has acquired the property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA - In either case, the Adjudicating Authority is required to pass an order within a period of one hundred and eighty days from the date of the order of provisional attachment under Section 5(1) or from the date of order of seizure/freezing passed under Section 17 of the PMLA. This is explicitly clear by the plain language of Section 5(1) of the PMLA. In terms of Section 20 of the PMLA, any property seized under Section 17 or frozen under Section 17(1A) of PMLA can be retained or if frozen, continue to remain frozen for a period not exceeding one hundred and eighty days. Any property can be provisionally attached under Section 5 or be seized under Section 17 or be frozen under Section 17(1A) of the PMLA. However, any such order can be passed only if the necessary checks and balances are complied with; namely, that the seizure or attachment is preceded by the concerned authority having reason to believe that such properties are proceeds of crime or are otherwise related to crime - It is axiomatic that no order of freezing can be passed except in accordance with the provisions of Section 17(1A) of the PMLA. The reliance placed on provisions of Section 65 of the PMLA is misplaced. By virtue of Section 65, the provisions of Cr.P.C. apply only insofar as they are not inconsistent with the provisions of the PMLA. There can be little doubt that scheme of seizure under Section 102, Cr.P.C. is inconsistent with the provisions relating to attachment and seizure of property under the PMLA. The contention that officers of the Enforcement Directorate could issue orders of freezing under Section 102 of Cr.P.C. is rejected and the communications issued by the Enforcement Directorate to BSE are, plainly, without authority of law - it is not necessary to examine whether the series of communications sent by the officers of Enforcement Directorate for interdicting the transaction relating to sale of 64,94,891 equity shares of KRBL Ltd. are otherwise sustainable in law. However, for the sake of completeness, this Court considers it apposite to also examine the question whether such communications could be issued under the provisions of Section 102 Cr.P.C. Plainly, provisions of Section 102 Cr.P.C. do not empower any police officer to nullify a transaction. The sale of shares of KRBL Ltd. were complete and SMC had tendered the shares and M/s Pabrai Investment Fund had tendered the consideration and was entitled to the said securities. The petitioners were entitled to the consideration paid by M/s Pabrai Investment Fund. By directing BSE to release funds to M/s Pabrai Investment Fund, the Deputy Director of the Enforcement Directorate had proceeded further; he had interdicted the BSE from effecting the clearing and, by the letter dated 23.03.2018, the Assistant Director of the Enforcement Directorate had nullified the sale transaction that was complete. No authority for such actions can be found in section 102 Cr. PC. A police officer cannot set aside a transaction of sale and purchase of shares under the provisions of Section 102 Cr.PC. This Court pointedly asked Mr Singh, the learned counsel for the respondents as to under which authority did the Assistant Director, PMLA issue the communication dated 23.03.2018. Apart from contending that such action was bonafide, there was no explanation forthcoming as to under which provision of law, this direction had been issued. Accordingly, 5109 shares of KRBL Ltd., which were sold by the petitioners, were released to the counter parties (purchasers) - However, on instructions of the Enforcement Directorate, BSE continued to withhold 64,94,891 shares of KRBL Ltd. and ₹30,35,006.90 which were received as consideration for the sale of 5109 shares. It is seen that orders under Section 17 of the PMLA freezing the said shares and the amount released in the bank account of the petitioners has since been passed and, the petitioners have preferred an appeal before the Appellate Tribunal. Keeping this in view, no further orders are being passed and it would be open for the petitioners to seek appropriate remedy including compensation for any loss suffered by them on account of the illegal actions on the part of the respondents. Whether the provisions of the PMLA are applicable in respect of freezing orders passed under Section 17(1A) of the PMLA in respect of the shares of KRBL Ltd.? - Held that:- As is apparent from the above that whilst it is clear that RAKGT is alleged to have received the alleged proceeds of crime, it is unclear on what basis it is alleged that the petitioners are recipients of proceeds of crime. Clearly, a ledger entry is not a property and cannot be the proceeds of crime. It appears from the reading of the counter affidavit that it is the Enforcement Directorate’s allegation that certain funds were received by RAKGT which were essentially kickbacks paid by AgustaWestland. The receipt of the said amounts are reflected as credit entries against M/s Omar Ali Balsharaf-GK. In other words, books of RAKGT reflect that the said sums have been received from petitioner No.2 - this court in order to seek clarity, by order dated 27.09.2018 directed Enforcement Directorate to file the statement indicating money trail which the Enforcement Director alleges to be proceeds of crime. If it is established that the petitioners hold any property overseas, which is derived or obtained by a scheduled offence, then the Enforcement Directorate would be well within its right to initiate proceedings against any property held by the petitioners in India to the extent of the value of the proceeds of crime held overseas. In such a case, it would be irrelevant whether the assets acquired in India were acquired prior to or after the PMLA came into force - the contention that assets acquired prior to enactment of the PMLA could never fall under the scope of the definition of the expression ‘proceeds of crime’ and consequently are immune from the provisions of the PMLA, is erroneous and is accordingly rejected. Petition disposed off.
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Service Tax
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2019 (1) TMI 513
Valuation - Business Auxiliary services - inclusion of amounts paid to the appellant by the other party to the contract in assessable value - Held that:- Hon’ble Supreme Court in re Intercontinental Consultants & Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT OF INDIA] after examining the provisions of Service Tax (Determination of Value of Taxable Services) Rules, 2006 and section 67 of Finance Act, 1994 as amended from time to time, it has been held that, till the incorporation of the explanation in section 67 of Finance Act, 1994 with effect from 14th May 2015, sub-rule (1), of rule 5 of Rules supra, inserted with effect from 1st June 2007, is ultra vires of the Act. Consequently, the legislative intent to tax was held to be limited to the consideration for the service and the test of leviability for the taxable service would have to be overcome for bearing fruit. The obvious conclusion, therefore, is that the consideration agreed upon as recompense for a particular service is taxable. Any other receipt has to be evidenced as additional consideration for the said service to be subject to tax - the demand of tax under the head of 'business auxiliary service' should be restricted to such amount as was being discharged by the appellant on the contracted amount. Manpower recruitment or supply service - pure agent services - section 67 Finance Act, 1994 - Held that:- Absence of consideration is not the same as unascertainable consideration and the Rules cannot be invoked in the present instance. Hence, except in circumstances of allegation, supported by evidence, of non-monetary consideration having been received for inclusion of money value such consideration, addition of any amount to the contracted price does not have the authority of law. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 512
Valuation - eligibility for deduction - expenditure incurred on salary and wages, provident fund etc. for providing the taxable service from October 2010 - pure agent - rule 5(2) of Service Tax (Determination of Value) Rules, 2006 - Held that:- It is clear from the ‘job order’ that appellant is responsible for discharge of all statutory requirements devolving on an employer. In this situation, the requirements enumerated in rule 5(2) of Service Tax (Determination of Value) Rules, 2006 have not been complied with as found in the order of first appellate authority. The proposition that rule 5(2) has no existence except in conjunction with rule 5(1) of Service Tax (Determination of Value) Rules, 2006 is not convincing as the condition precedent, i.e. ‘subject to’ does not reduce one to that of dependent of the other. In the absence of rule 5(1), the expression ‘subject to’ in rule 5(2) is rendered superfluous and the rest standing on their own - The claim of the assessee does not find merit in the absence of any justification to be compliant with the description of ‘pure agent’ as defined in the Rules. The appeal of M/s Swarupananda Enterprises is allowed on the substitution of penalty under section 78 with that under section 76 - deduction of expenses not allowed - demand of tax and imposition of penalties, as upheld by first appellate authority, is sustained except that penalty under section 76 for the period from October 2010 to March 2011 is set aside - appeal allowed in part.
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2019 (1) TMI 511
Valuation - Authorized Service Station Services - inclusion of reimbursement received by the dealer/ authorized service station from the assessee for carrying out service of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by the appellant in assessable value - identification of the taxable person, whether it is Appellant or the Authorized Dealer who are providing the Taxable Service under the category of Authorized Service Station Services to the recipient of the services, i.e. the customers who have purchased the car - Held that:- The matter needs to be relooked for determination of tax liability and all the documents that appellants would like to produce in their support. The order of Commissioner proceeds on no availability of certain documents for his consideration. Further appellants have also claimed that certain expenses such as those relating to commercial vehicles and in relation to the material/ parts supplied during the provisioning of the services needs to be deducted while calculating the value of services in respect of which demands can be made - Further the basic document in respect of the registration and payment of the service tax by the authorized dealers in respect of free warranty services provided needs to be examined and then only a final view and quantification of service tax to be paid can be done - Since it is an admitted fact that certain information as required by the department was not made available to the department by the Appellants, the extended period of Limitation as per proviso to sub section (1) to Section 73 of Finance Act, 1994 shall be available to the department. Business Auxiliary services - reverse charge mechanism - Appellants have challenged the demand stating that these services have been provided by the foreign buyers outside India, they cannot be taxable in India - Held that:- Section 66A clearly and unambiguously provides that, the services provided by the person (person A) having any fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India to any person (person B) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, shall be treated to be provided by the person B to himself and shall be taxable in India - demand upheld. Banking and Financial Services - whether the agreements/ contracts entered into by the appellants are loan contracts/ agreement or they are something else which fall under the category Banking and Financial Services? - Held that:- In this case the agreement is not of a loan as understood in general terms but incorporates various other factors which are taxable under the category of Banking and Financial Services. Appellants have by way of these agreements extended credit facility to the buyers, for a consideration. The part of considerations which cannot be classified as interest on loan would be subjected to service tax, by way of determination of value of value of taxable service by application of Section 67 or Service Tax (Determination of Value of Taxable Services) Rules, 2006 - appellants are required to make a justifiable claim, claiming the benefit of exemption if applicable in their case, and then adjudicating authority needs to examine or reject the said claim after considering all the relevant aspects in a judicial manner. Dealer subvention income - Held that:- The interest does not arise on account of any loan simplicitor. They recover from the vehicle purchaser, finance charges on the principal amount. Where a prospective purchaser is unwilling to pay at the said rate, the dealers in order to increase their sales, agree to bear part of these finance charges. It is clear that the real cost/ value of the services provided by the assessee is worth 9% of the principal amount. Therefore, the entire amount shall in toto form' the gross amount charged' for, the purpose of determining taxable value under Section 67, even if the dealer undertakes to pay part of the financial charges on behalf of the vehicle purchaser. Late payment charges - Held that:- In the instant case, they extend certain credit facilities by way of permitting deferred payment for the vehicles sold and in the process levies several financial charges spread over a period of time. As such, late payment charges which are integrally related to the financial services provided are also part of the consideration received from the service recipient for the taxable services provided classifiable under Banking and Other Financial Services . Considerations received and accounted for as 'credit card receipts' - Held that:- The assessee claims that these pertain to some past period not covered by the show cause notice. Appellants have not substantiated the said claim. Further in terms of the law service tax is payable on the realization basis and not on the accrual basis. Since the matter are being remanded the quantum of penalties too need to be determined after determination of duty demand - Interest is payable as statutory liability in case of short payment of service tax by the due date. Thus Demand for interest under Section 75 of Finance Act, 1994 is also upheld. Appeal disposed off by way of remand.
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2019 (1) TMI 510
CENVAT Credit - unregistered premises taken on rent - trading of goods - reversal of proportionate cenvat credit attributable to trading of goods in view of Rule 6(3) of the Cenvat Credit Rules 2004 - Held that:- The assessee had not submitted any documentary evidence to support the claim that premises no. 67 is not used for providing exempted services or manufacturing activities and ultimately he confirmed the reversal of proportionate credit as demanded in the show-cause. If this is the finding of the adjudicating authority, it is not understood as to how, he being the same person in position passed another order just two days before on 23.08.2016 stating that renting of premises at unit no. 67 has no nexus with the output service which is provided by the assessee from unit no. 65. Admittedly, appellant has reversed the credit basing on Rule 6(3) of Cenvat Credit Rules in proportion to its dutiable and exempted services. This being the factual position and the documents on record, it cannot be said that appellant is to be penalised twice by invoking alternate provisions of the statute - In the instant case, appellant’s premises appears to be one and same having different room numbers as throughout the case record, room number and premises number are used interchangeably - availment of cenvat credit against renting of premises number 67 is admissible. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 509
Penalty u/s 78 - non-payment of service tax collected for providing telecom services and work contract services - short payment for other period - cash crisis/ fund shortage was cited as the ground for such non-discharge of duty liability but on 18.08.2011 and 19.08.2011, the appellant was able to discharge the entire amount, which is just within two days from the date of raid conducted by the respondent department - intent to evade or not - Held that:- Appellant was not fling ST-3 returns and would have continued to evade service tax by suppressing material facts, had there been no intervention by the department. This being the factual aspect, it cannot be said that appellant had a bonafide intention to discharge duty liability and it could not do so due to incapacity - also, no material is forthcoming that appellant was ignorant of its duty liability and had in fact furnished its statement by way of ST3 returns to the department indicating its duty liability. Section 78 requires that such fact of wilful suppression, misstatement etc. had to be established by the department on whom the burden of proof lies and department has successfully discharged the same by getting the same admitted by the partner of appellant firm which remained unchallenged by the appellant all throughout the proceedings - Therefore the onus has shifted to the appellant which is supposed to disprove the allegation of the department but both stand taken by the appellant regarding delayed payment and cash crunch could not be substantiated by it as it could generate cash of huge amount for payment within two days of visit by the departmental officials to is premises and in not producing any documentary proof regarding non-payment or delayed payment by the service recipient namely Tata Telecommunications. Appeal dismissed - decided against appellant.
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2019 (1) TMI 508
Rectification of Mistake - reopening of settled case or not - Held that:- In the impugned order, Tribunal has held that extended period and penalty is not sustainable. However, in Para 6.4 a finding was given to the extent that the Appellant shall be liable to penalty under Section 78 to the extent of service tax amount stands confirm. We find that to this extent there is a mistake apparent on record - Having held that penalty is not imposable, it cannot be held that penalty under Section 78 would be restricted to the extent of confirmation of demand. Para 6.4 of the impugned order 91424/17 of CESTAT, is modified - ROM application allowed.
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2019 (1) TMI 507
Condonation of delay in filing of appeal - non-payment of pre deposit - section 35F of the Central Excise Act - Held that:- Date of receipt being admitted by the Commissioner himself to be 15.06.2017 and appeal being filed on 08.09.2017, delay is only about 3 weeks over the normal appeal period and not even a month which was within the condonable period available with the Commissioner - Further having, been acknowledged that possession of appellant office was taken over by the Punjab National Bank authorized officer during the corresponding period, the Commissioner (Appeals) should not have refused to condone the delay on such narrow technical ground that flat number is different since there might be possibility that both the flats were being possessed by the appellant - delay condoned. Non-payment of statutory pre deposit amount for filing of appeal - Held that:- The appellant contention that 80 per cent of duty liability has been discharged by them has not been supported by any documentary evidence. Going by the statutory provision appeal should not have been entertained or admitted for hearing bereft of statutory pre deposit but the moment it is admitted for hearing, such failure on the part of appellant would have been pointed out to it enabling it to make pre deposit so as to ensure natural justice and not to dismiss the appeal at the end of hearing, after completing the entire exercise of appeal proceedings. Since this Appellate Tribunal cannot go beyond the order of the Commissioner (Appeals) to scrutinize the merit of the decision of the adjudicating authority, it is a fit case which necessitates re-adjudication of both the appeals by the Commissioner (Appeals) as under Section 35A (3). He is also empowered to make such further enquiry as may be necessary in order to pass such order as he may think proper and not to confine his views on the merits of the order of the adjudicating authority. The delay of 3 weeks in filing appeal before the Commissioner (Appeals-III) is condoned at this end - Pre-deposit having been made at this end, matter is remanded back to him for re-adjudication - appeal allowed.
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2019 (1) TMI 506
Classification of services - Video Tape Production Services or not? - appellant rendering services like creation of special effects, improving the quality of picture or image and convert the digital image file to film etc. - Held that:- The very same issue was analysed by the Tribunal in the appellant’s own case PRASAD CORPORATION LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2017 (11) TMI 435 - CESTAT CHENNAI] for the earlier period where the Tribunal held that the activity does not fall under Video Tape Production Services - demand of service tax under Video Tape Production Services cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 505
Waiver of penalty u/s 78 of The Finance Act, 1994 - short payment of service tax - malafide intent - Held that:- Unless and until, the investigation could have been started, the short payment of service tax could not be detected. The appellant having malafide intentions did not pay service tax in time, which has been collected by them from the service recipient - Moreover, the provisions of Section 78 w.e.f. 14.02.2005 are not applicable to the facts of this case as the appellant did not pay the service tax along with interest and 50% penalty within 30 days of communication of the adjudication order; therefore, the appellant did not require any immunity from this Tribunal for reduction of penalty under Section 78 of the Act. Immunity from penalty cannot be granted - appeal dismissed - decided against appellant.
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2019 (1) TMI 504
Business Auxiliary Services - appellants availed services of overseas agents for destuffing the cargo from the containers sent by them from India at Hub port and reshipped the cargo to the intended destinations - Taxability - Revenue observed that, the main activity of appellant is promoting services of various shipping lines and also managing distribution and logistics and that the services performed by appellants would be liable to classify under “Business Auxiliary Service” (BAS) - Held that:- The issue concerning taxability of services performed by Multimodal Transport Operator has been laid to rest by the Tribunal in Greenwich Meridian Logistics [2016 (4) TMI 547 - CESTAT MUMBAI], where it was held that The notional surplus earned thereby arises from purchases and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) ibid will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed. Extended period of limitation - Held that:- By no account, can the department make an allegation that the activities of the appellants had been suppressed by them. This being so, the delayed issue of the SCN only on 23.10.2008 for the period 01.07.2003 onwards, extending the period of limitation is certainly not sustainable since there are no ingredients present to justify such invocation and will require to be set aside. Appeal allowed on merits as well as on limitation.
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2019 (1) TMI 503
Composite works contract - Commercial and Industrial Construction Services - site formation and clearance, excavation, earth moving and demolition service - period 10.09.2004 to 31.03.2007 and 16.06.2005 to 31.03.2007 - demand of service tax with interest and penalty - Held that:- In respect of the work categorized as “site formation and clearance, excavation, earth moving and demolition services”. The appellants have produced a certification from VAT Authority in Annexure-D and VAT was charged accordingly on the taxable turn over, taxable sales and taxable sales of capital goods. The work undertaken by the appellants is a composite contract - as the works undertaken are composite contracts the ratio of the decision in the case of L&T [2015 (8) TMI 749 - SUPREME COURT] is squarely applicable and the demands for the period before 01.06.2007 are not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 502
Insurance service or not - scheme of Life Insurance for the employees was started with a view to render financial assistance to the family members of the employee in case of death of the employee in service - whether service are sovereign in nature or not? - CBEC vide Circular No. 89/7/2006-ST dated 18.12.2006 - Held that:- The activity undertaken by the appellants is mandatory and in discharge of statutory obligation in the performance of sovereign functions of the State Govt. Therefore, the appellant’s case is squarely covered by the Circular as “Life Insurance”. Though, it was mentioned in the SCN that the appellants are providing “General Insurance Service” no case has been made out and no demand has been confirmed in this regard - Demand not sustainable - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 501
Banking and Other Financial Services - amount collected by way of chit - person liable to pay service tax - Held that:- This issue is no more res integra and has been settled by the apex court in the case of UOI vs. Margadarshi Chit Funds (P) Ltd. [2017 (7) TMI 224 - SUPREME COURT OF INDIA], where it was held that chit fund business was not covered by sub clause (v) of subsection (12) of Section 65 even after its amendment by Finance Act, 2007 - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 500
Construction of complex services - demand of service tax on construction and sale of the apartments - case of appellant is that they are mere “builder/developer" of the property and construction services are in fact, under taken by the contractor - CBEC vide Circular No. 108/2/2009-ST dated 29.01.2009 - Held that:- Any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract Service Tax. Further, if the ultimate owner enters into a contract for construction of a residential complex with a promoter/builder/developer, who himself provides service of design, planning and construction; and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to Service Tax, because this case would fall under the exclusion provided in the definition of ‘residential complex’. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (1) TMI 499
Validity of SCN - Jurisdiction - petitioner challenged the show cause notice on the ground that it is without jurisdiction, clear abuse of process of law and therefore, the revenue should be prohibited from proceeding further with the show cause notice - Article 226 of the Constitution of India - what is received by the petitioner and what is sent back by the petitioner are both petroleum gases. - Scope of exemption notifications Held that:- what is to be borne in mind is that the product is petroleum gases and other gaseous hydrocarbons. If we turn to the show cause notice issued, the attempt of the revenue is that the composition of the goods received by CPCL and the goods returned to CPCL are different in its chemical composition and the product is distinguishable. - The revenue nowhere denies the fact that the product returned is a petroleum gas which should have been the only factor that is relevant. It is not a case of inherent lack of jurisdiction but an imposed restriction which has been elucidated in several decisions which were cited by Mr.Rajnish Pathiyil, learned SCGSC appearing for the revenue - we do not agree with his submission that there is an absolute and total bar for entertaining a writ petition which has been clarified by the Hon'ble Supreme Court in several decisions and when a show cause notice is challenged as being without jurisdiction or when it is a case of abuse of process of law, this Court is well justified in exercising its jurisdiction under Article 226 of the Constitution of India. Therefore, the preliminary objection raised by the revenue before us is held to be not sustainable and the finding recorded by the learned Single Bench in that regard is affirmed. The Central Government clearly understood the manufacturing process and taken into consideration that the return quantity of LPG has ultimately been cleared on payment of appropriate duty by oil Companies, the Central Government is satisfied that the burden of excise duty on the returned quantity of LPG, which was originally supplied by MRL to the writ petitioner at the price for industrial use, has fallen on the writ petitioner which is much more than the excise duty applicable on the quantity of LPG actually consumed by them. The adhoc exemption order is a clear answer to the case of the appellant. The learned Single Bench was perfectly right in entertaining the writ petition and quashing the impugned show cause notice that it has been wholly without jurisdiction. Furthermore, the learned Single Bench rightly held that they cannot upset the apple-cart and try to come to a new conclusion, that too, after a period of nearly 24 years - appeal dismissed - decided against the revenue.
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2019 (1) TMI 498
Clandestine removal - Ready Mix Concrete - Department entertained a view that the appellant is engaged in the manufacture of Ready Mix Concrete and the same is cleared by them from their plant situated at Kumbalgodu to the project site without taking any Central Excise Registration and without paying any excise duty - case of appellant is that the concrete mix prepared by them is classifiable as concrete mix under Chapter Heading 38245010 of Central Excise Tariff Act, 1985 as the same was being prepared at site of construction and the same is exempted from excise duty vide Sl. No. 144 of Notification No. 12/2012 CE dated 17.03.2012 - non-speaking order - scope of SCN - time limitation. Held that:- As per the mahazar dated 05.03.2014 prepared on the spot in the presence of witnesses, it is clearly mentioned that the production of concrete mixing activity was in progress at the site of the project. Further we find that the original authority after considering the material on record and the statement of T.R. Umaprasad wherein he has fairly stated that the concrete was produced at their batching plant at the Kengeri site and used for construction of the said project. Further we find that the show-cause notice which has proposed to classify the impugned goods as RMC is without any evidence and basis. Further, in the show-cause notice there is no allegation that process adopted by the appellant to manufacture the impugned goods is similar to the process required for manufacturing RMC and the Department has never disputed or challenged or considered the manufacturing process adopted by the appellant. Time limitation - Held that:- The investigation took place in March 2014 and all the records were taken by the Department during the investigation and statements were also recorded but the show-cause notice was issued in June 2016 which is beyond the normal period of limitation of one year. Though the Department has invoked the extended period alleging suppression whereas according to us there was no suppression on the part of the appellant to evade payment of duty and the appellant had a bona fide belief that the impugned goods are exempted from payment of duty - invoking the extended period of limitation to demand duty is not sustainable in law. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 497
Transfer of credit - shifting of factory - Rule 10 of Cenvat Credit Rules, 2004 - Board’s Circular No. 502/68/99-CX dated 16.12.1999 - principles of natural justice - Held that:- Admittedly, there is no dispute regarding the shifting of the factory and the fact of transferring the cenvat credit which has been accepted in the impugned order also. But the only ground on which the cenvat credit has been denied is that the appellant has not followed the procedure as prescribed in Rule 10 of the Cenvat Credit Rules, 2004 - the original authority has also travelled beyond the show-cause notice and proposed the recovery under one provision of the Central Excise Act whereas confirmed the demand under different provisions of law which is not permitted under law. The original authority has observed that appellant has not appeared before them and satisfied the authority regarding the procedure followed by them - matter remanded to the original authority who will pass a De novo order after affording an opportunity of hearing and after considering the findings - appeal allowed by way of remand.
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2019 (1) TMI 496
CENVAT Credit - supporting structures/staging of equipments - classification of such equipment - extended period of limitation - Held that:- Such classification cannot be questioned at the receivers end, besides the fact that it is beyond the scope of this single bench to scrutinise the same and beyond the scope of the Commissioner (Appeals) to divert from the bounds of the show-cause notice. Staging of equipment/erection of supporting structure - Held that:- CENVAT credit availed by the appellant in respect of supporting structure for its equipments was admissible. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 495
CENVAT Credit - capital goods - denial on the ground that the appellant has opted for exemption under Notification No. 50/2003-CE dt. 10.06.2003 w.e.f. 3rd May, 2005 - extended period of limitation - Held that:- For the period prior to 03.05.2005, the appellant was not availing exemption under Notification No. 50/2003 ibid, but paying duty on their final goods. In these circumstances, for the period prior to 03.05.2005, the appellant has rightly availed the Cenvat credit on capital goods - further, when the capital goods have been procured by the appellant, they were manufacturing only and only exempted final goods. In these circumstances, the appellant is not entitled to avail the Cenvat credit on capital goods; therefore, the Cenvat credit availed from 03.05.2005 on capital goods is denied. Extended period of limitation - Held that:- During the period of availment of exemption under Notification No. 50/2003 ibid, the appellant has not intimated to the Department for availment of the Cenvat credit. Unless and until, an investigation was conducted at the end of the appellant, the said availment of the Cenvat credit on capital goods could not be unearth. In these circumstances, we hold that extended period of limitation is rightly invoked. Appeal allowed in part.
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2019 (1) TMI 494
Valuation - inclusion of profit earned on transportation charges in assessable value - Held that:- The respondent has shown transportation charges separately in the invoices - Moreover, the said PCC Poles have been transported by the respondent in their own vehicle and due to transportation in their own vehicle, the respondent has earned the profit on account of transportation of the goods. The said profit eared by the respondent is not includable in the assessable value of the goods as held by this Tribunal in the case of M/s Associated Strips Limited [2017 (11) TMI 1244 - CESTAT CHANDIGARH]. The transportation charges are not includable in the assessable value of the goods as freight charges are separately shown by the respondent - Appeal dismissed - decided against Revenue.
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2019 (1) TMI 493
Clandestine removal - variation with respect to stocks under WIP at the 9 manufacturing plants of the appellants - no such investigation has been carried by the investigating agency - shortages of goods - Held that:- It is evident from the records of the case that the stock taking was conducted by visiting officers of the DGCEI with respect to a stock, WIP and finished goods. The samples were also drawn at the time of initial search and more discrepancies were reported at the first instance. When the officers visited next time for collection of ‘adequate sample’, another stock taking was also conducted and the shortage was alleged with respect to aforementioned products. It is evident from the adjudication order as well as the appeal papers that no efforts were made by the department to find out as which product has been manufactured out of alleged shortage of the three aforesaid products and subsequent clearance thereof without payment of duty - It is also not forthcoming from the adjudication order as to how this product was cleared and to whom it was cleared. The department has also not investigated the mode of transport of the alleged clandestine removal of the goods from the transporters. It has been held by the various Courts as well as this Tribunal that clandestine removal is a very serious allegation and required to be proved beyond reasonable doubt, which has not been done in this case. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (1) TMI 492
Stay application - condonation of delay in filing appeal - Held that:- There is no error much less apparent in the order impugned. The review petition is, accordingly, dismissed.
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2019 (1) TMI 491
Assessment u/s 3-D(2) of the TNGST Act - whether the demand for the relevant assessment year should be assessed under Section 3-D(2) of the TNGST Act? - Held that:- Section 3-D deals with Payment of tax by hotels, restaurants and sweet stalls. It is not disputed by the Revenue that the assessee was assessed under Section 3-D(2) for the assessment years 1996-97, 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03, 2004-05, 2005-06, 2006- 07 and only for the subject assessment year, the assessee was not assessed under the said section - The Revenue did not file any appeal against the said order. Therefore, judicial discipline demands that the Assessing Officer should implicitly obey the order passed by the Appellate Authority or the Tribunal. But unfortunately, the Commercial Tax Officer, Egmore - I Assessment Circle, failed to follow the same and passed an order rejecting the appellant's case by order dated 06.11.2007. The Hon'ble Supreme Court in the case of Union of India v. Kamlakshi Finance Corporation Limited [1991 (9) TMI 72 - SUPREME COURT OF INDIA] has held that the subordinate authorities are bound by the directions issued by the Appellate Authorities, if such hierarchy is not followed, then it will result in judicial anarchy. Therefore, the Assessing Officer is bound to follow the direction issued by the Appellate Authority in its order dated 19.01.2007 in A.P.No.50 of 2006, especially when the Revenue has not filed any appeal against the said order. Tax Case Revision is allowed.
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2019 (1) TMI 490
Imposition of tax - stock transfers made in the course of inter-state trade and commerce - scope of State Legislature - violation of Entry 98A of List-I read with Article 269(3) and Section 3(a) of Central Sales Tax Act, 1956 - Held that:- AO directed to pass fresh assessment order and to issue fresh demand notice - Assessment order non-est - The Registrar (Judicial) of this Court shall refund the amount which had been kept in the shape of Fixed Deposit Receipt along with interest, accrued thereon to the petitioner forthwith. Needless to say, as observed earlier, in case any fresh demand is raised, the same shall be dealt with by the State in accordance with law.
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2019 (1) TMI 489
Incorrect filing of Form-C - Central Sales Tax Act - Section 73A of the Bihar Value Added Tax Act, 2005 - Held that:- It is directed that on the petitioner filing a certified copy of this order along with copies of Annexure-5 series, the Commissioner of Commercial Taxes, Bihar, Patna, shall either himself take up the issue and decide the question of correction in the Form-C as prayed for or shall assign the matter to any statutory authority, as is permissible under Section 73A of the Bihar Valued Added Tax Act, 2005 and direct the statutory authority to look into the grievance of the petitioner and take such remedial steps as are permissible in law for correction of Form- C issued to the petitioner - matter disposed off.
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Indian Laws
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2019 (1) TMI 514
Dishonor of Cheque - insufficient funds - Presumptions as to negotiable instruments - Section 138 of Negotiable Instruments Act - Held that:- Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. These provisions were intended to discourage people from not honouring the commitments by way of payment through cheques. It is for this reason that the Courts should lean in favour of an interpretation which serves the object of the statue - In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words “proved” and “disproved” have been defined in Section 3 of the Evidence Act. In Rangappa versus Sri Mohan, [2010 (5) TMI 391 - SUPREME COURT OF INDIA], Hon’ble three Judge Bench of the Hon’ble Supreme Court had occasion to examine the presumption under Section 139 of the Act and it was held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man. The standard of proof so far as the prosecution is concerned, is proof of guilt beyond all reasonable doubt, however, the one on the accused is only mere preponderance of probability. Therefore, once the accused/respondent No.1 has probabilized his defence by showing the consideration to be improbable or doubtful, then obviously, in the given facts and circumstances, the appellant was obliged to prove the existence of consideration as a matter of fact and upon his failure to prove the same, disentitled him to the grant of relief on the basis of negotiable instrument. Appeal dismissed - decided against appellant.
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