Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 17, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST council is now reaching towards consensus on most issues including Dual Control and power to levy GST on transaction made within the Territorial Water - Most likely date is 1.7.2017 on which the GST would come into effect
Income Tax
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Exemption u/s 54F - Merely, because the claim was made by a revised return which was not a valid return in the eyes of the law, the claim of exemption cannot be denied because a legal claim can be made before the First Appellate Authority - HC
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Revision u/s 263 - MAT computation u/s 115JB - there was no justification for the CIT to use his revisionary powers in the case under consideration. It is to be remembered that the accounts of the assessee were audited by the C&AG and by a special auditor. They had not found any defect in the accounts prepared by it - AT
Customs
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Period of limitation for filing refund claim of SAD - Notification No.102/2007 Cus - the original exemption notification neither stipulated a time period, it was included subsequently - The power to consider that refund claim and grant it, if permissible, is traceable to Section 27 of the Customs Act, 1962 - Period of limitation was always applicable - HC
Service Tax
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CENVAT credit - duty paying document - CSR is a summary of AWBs, i.e., invoices raised by the airlines - whether availment of credit on the document called Cargo Sales Report (CSR) is in order or otherwise? - CSR is a valid document - credit allowed - AT
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Maintainability of appeal - rejection on the ground that the amount involved is less than ₹ 10,00,000/- adverse judgment relating to issue of classification having legal and/or recurring nature has to be contested and decided on merits irrespective of the monetary amount involved - appeal restored. - AT
Central Excise
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CENVAT credit - capital goods - the assessee falls in the second clause of Rule 6(4), which provides an exception, and as such, the credit is available on capital goods, for output, which are normally taxable but exempt under notification. - AT
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Manufacture - there is no purchase order for such glazed panels by the clients in the present case - the indivisible works contract talks about installation of glazed panels/curtain wall and not supply of any glazed panels - no manufacture taking place - No Demand of excise duty - AT
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Reversal of CENVAT credit in case of Trade Discount - It is undisputed that the duty paid by the input manufacturers remained unaltered in the present case even after issue of credit notes - No demand - AT
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Refund of Cenvat credit was available on inputs used in manufacture of goods cleared by DTA unit to 100% EOU. Refund could not be denied on ground that it was a case of deemed export, under Rule 5 of CCR, 2004 - AT
VAT
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Classification of deoiled cake - goods specified in Entry-3 are 'Deoiled Cake including soya meal' and the expression 'Deoiled cake' is a generic expression which would include different types of DOC ie., defatted soya hypro products also. - HC
Case Laws:
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Income Tax
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2017 (1) TMI 820
Existence of substantial question of law - Addition on account of difference in trade creditors account - Whether the ITAT is justified in deleting the amount on account of difference in trade creditors account? - Whether the ITAT is justified in not upholding the addition made on account of ‘unaccounted purchases’, by ignoring the provisions of section 69B ? - Whether the ITAT is justified in deleting the addition made by the CIT(A) on account of ‘unaccounted sales/suppressed sales’, when the ITAT has not disbelieved the amount of closing stock arrived at by the CIT(A)? Held that:- It is significant that no additional material is placed before this Court to demonstrate that the findings of fact arrived at by the Tribunal are perverse. It is emphasized that the cardinal principle is that the Tribunal which is the final fact finding authority and if such findings of fact are to be assailed, it would require a substantial question, as to there being a perverse finding of fact by the Tribunal, to have been raised. In the absence of any such question having been raised, it cannot be said that any question of law arises for consideration, and much less a substantial question of law, as contemplated under Section 260A of the I.T. Act. The learned Counsel for the appellants has re-worded the substantial questions of law as framed in the memoranda of appeals and as framed by this Court at the stage of admission, as on 14.06.2016 at the final hearing as above. The principle that if a finding of fact is not challenged as being perverse, the High Court is bound to accept such finding. Therefore, as no such substantial question of law has been framed and the questions pertain to findings of fact, which cannot be said to be perverse as it is evident that the books of accounts of the respondent had been rejected by the assessing authority, in which case the same books of accounts could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. Thus there is no substantial question of law that arises for consideration and the findings of the Tribunal cannot be said to be perverse
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2017 (1) TMI 819
Appeal admitted on : iii) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the benefit of Section 80IB(10) of the Act can be made available to the assessee on a prorata basis? (iv) Whether on the facts and circumstances of the case and in law, the Tribunal was correct in holding that assessee shall be entitled to deduction under Section 80IB(10) even though assessee has not completed construction of two offices in wing B1?
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2017 (1) TMI 818
Addition made u/s 68 - share transactions were not recorded in the name of assessee on the floor of stock exchange and transactions were proved bogus - Held that:- AO, though confirmed the sale of 30,000 Shares of Neptune Securities P. Ltd, however for part of 20,000 sale of shares held to be non-genuine and ₹ 13,17,873 were added u/s 68 on proportionate basis. It leads to a contradiction and despite the facts that BSE has confirmed transaction of 30,000 Shares. In the absence of any inquiry from Vimla Exim P. Ltd who is a undisputedly a member of Ahmedabad Stock Exchange no adverse inference can be drawn. 9.6 In view of these glaring facts, the assessment of Smt. Jaya Agrawal and the fact that the relevant purchases for AY 2004-05 have been held to be genuine, we see no infirmity in the order of ld. CIT(A) in deleting these additions. - Decided in favour of assessee
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2017 (1) TMI 817
Unexplained cash credit - addition u/s 68 - Held that:- In the statement of facts the revenue has repeated the observations of the A.O. There is no dispute that the purchase of gold ornaments was duly supported by purchase bills which was subsequently confirmed by M. Ruhi Exports. It is also not in dispute that subsequently the assessee had sold the gold so purchased. We fail to understand, when the A.O. has accepted the capital gains then he has also accepted the cost of purchase, then how can he treat the purchase amount as unexplained cash credit. Considering the facts in totality, we do not find any merit in this grievance of the revenue and the same is dismissed. Addition made u/s. 69 - Held that:- After carefully perusing the relevant documentary evidences field before us in the form of a paper book, we find that the amounts shown to have paid by Shri Ankit C. Shah and Shri C.S. Shah (HUF) are duly reflected in their respective pass book. It is also an undisputed fact that there was a typographical error in respect of the dates of payment. It is also true that Shri C.S. Shah (HUF) has paid the amount on three different dates although the A.O. tried to find out the payment of ₹ 9,00,050/- as a total figure. Thus we do not find any merit in this grievance of the revenue and the same is dismissed. Capital gain - possession of the impugned gold ornaments sold during the year under consideration - Held that:- There is no dispute that the assessee was showing 1238.67 gms of gold from 1993-94. It is also not in dispute that in the year 2006-07, the assessee had purchased gold weighing 3417.64 gms. Merely, because the sale bills had two different addresses of the assessee, the same cannot be brushed aside lightly. More over as find from the findings of the First Appellate Authority, both the addresses are in fact of the same residential flat. Since the capital gains have arisen from the gold sold during the year the acquisition of which have been successfully explained by the assessee, we do not find any merit in the impugned grievance of the revenue and the same is dismissed.
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2017 (1) TMI 816
Validity of reopening of assessment - mere change of opinion - Held that:- A query was raised during the regular assessment proceedings and it was responded to by the assessee. This non consideration of the same in the assessment order is no evidence of the Assessing Officer not being satisfied with the issue raised. This is not a case where the Assessing Officer has ignored / overlooked by oversight the claim made by the assessee in its return of income while allowing it as in the case of Export Credit Guarantee Corporation of India (2013 (1) TMI 517 - BOMBAY HIGH COURT ). This is a case where the Assessing Officer did apply his mind as evidenced by the query raised to the very issue which is now sought to be raised as the basis for reopening the notice and the Assessing Officer was satisfied with the response to the query during the regular assessment proceedings. In the above view, the view taken by the impugned order of Tribunal that the reopening notice is without jurisdiction as it is founded on a mere change of opinion is on facts covered by the decision of this Court in favour of the respondent assessee.
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2017 (1) TMI 815
Agricultural income - nature of transfer - whether the said agricultural land was used for agricultural purposes before the date of transfer - nature of land - Held that:- We find that both the lower authorities have grossly erred in dismissing the claim of the assessee merely on the strength of the probable uses of the said agricultural land by the purchaser M/s. Attune Inc. We fail to understand the observations of the A.O. which has been confirmed by the ld. CIT(A), that the onus for converting the agricultural land for nonagricultural purpose is upon the firm M/s. Attune Inc. as per the MOU. As mentioned earlier, the assessee is not responsible for the acts of the purchaser of the land. All that we are concerned about is whether the said agricultural land was used for agricultural purposes before the date of transfer and after going through the documentary evidences, the answer is “YES”. In our considered opinion, if an agricultural operation does not result in generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. The said land was entered in the revenue records as an agricultural land. It is also not in dispute that no permission was ever obtained for non-agricultural use by the assessee. Since no evidence has been brought to show that it was used for nonagricultural purposes, nor there is any evidence to show that the assessee has ever taken permission for non-agricultural uses, the profit earned on sale of the impugned land was agricultural income of assessee liable to be exempt from tax. - Decided in favour of assessee Denial of the claim of deduction u/s. 54F - whether legal claim can be made before the First Appellate Authority also ? - Held that:- There is no dispute that the assessee has paid a sum of ₹ 42.25 lacs. It is also not in dispute that the assessee has entered into two Banakhata one pertaining to the land and the other pertaining to the construction. The assessee had purchased one constructed house for a total consideration of ₹ 42.25 lacs within the prescribed period mentioned in Section 54F of the Act. Merely, because the claim was made by a revised return which was not a valid return in the eyes of the law, the claim of exemption cannot be denied because a legal claim can be made before the First Appellate Authority also and the First Appellate Authority should have entertained the claim of the assessee. Thus we direct the A.O. to allow the claim of the assessee u/s. 54F of the Act. See Pruthvi Brokers and Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] - Decided in favour of assessee
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2017 (1) TMI 814
Deduction of sales commission - Held that:- It is not in dispute that the sales were made in earlier years though the commission has been paid during the year under consideration. A perusal of the commission statement marked as exhibit 85 in the paper book shows that the sale considerations have been realized during the year under consideration. Therefore, we find force in the contention of the assessee that as per the agreements with the agents which are also part of the paper book, the agents are entitled for sales commission only when the assessee has realized the sale considerations. We also do not find any merit in the observations of the lower authorities that since the Tribunal in the first round of litigation has restored this issue to the files for verification of the claim, the assessee is not entitled to adduce evidences in support of its renewed/fresh claim of the same disputed sales commission. The Tribunal has directed to verify the claim of the assessee afresh. Therefore, the claim of the assessee has to be considered in the light of the agreements with the sale commission agents. Thus the assessee is entitled for the deduction of sales commission during the year under consideration. We accordingly direct the A.O. to allow the claim in respect of commission expenses. Disallowance on account of deduction u/s. 80HHC on interest on bank fixed deposits - Held that:- The Hon’ble Supreme Court in the Case of ACG Associated Capsules Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA] we direct the A.O. to re-compute the deduction u/s. 80HHC of the act after netting off of the impugned interest. Deduction u/s. 80HHC on exchange rate difference allowed
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2017 (1) TMI 813
Validity of reopening of assessment - Held that:- The position of law is settled proposition that when the reassessment proceedings are pending based on a valid 148 notice, the subsequent proceedings under section 148 cannot be initiated unless earlier proceedings are brought to a logical end. In the present appeal, it is an undisputed fact that the first notice dated 27.07.1995 issued under the same section remains un-disposed of. It is also an undisputed fact that the second notice under section 148 was issued on the ground that income had escaped assessment because of the invalid/non-est return filed by the assessee. The Assessing Officer in the remand report has confirmed all the dates as mentioned of the order of CIT(A) and also confirmed that no assessment was made pursuance to first notice u/s.148 dated 27.07.1995. Thus we are inclined to quash the second notice under section 148 dated 10/03/1998 as invalid. The assessment order dated 27.03.2000 passed in pursuance such notice is thus annulled. - Decided in favour of assessee
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2017 (1) TMI 812
Revision u/s 263 - MAT computation - additions under heads of income namely interest on decommissioning fund, Levy for decommissioning,R&M Fund,R&D Fund not included while computing the book profit u/s. 115 JB - notice u/s. 154 issued for including the said items - CIT directed the AO to recompute the income under the MAT provisions and to include the above items Held that:- We find that while completing the original assessment the AO had called for details of 115 JB computation in the notice issued u/s. 142 (1) of the Act and the assessee had filed the requisite details. After considering the available material the AO had passed the original order. Not only this, later on he issued a notice u/s. 154 to include the same items for computing book profit, that the assessee had filed detailed reply in that regard. In the circumstances,we are of the opinion that the AO had applied his mind while passing the original order and dropping the rectification proceedings. We also find that the CIT had directed the AO to make the additions. Thus, he has left the AO with no option but to make additions.The provisions of section 263 of the Act permit the CIT to revise the orders which are erroneous and prejudicial to the interest of revenue but it does not give unbridled power to the CIT to take over the power of the AO and to decide the issue at his end. The provisions of section 115JB of the Act,were introduced in the Act with specific purposes. While computing the income under the said section certain items are to be added and certain items are to be deducted. AO or the assessee cannot travel beyond the Laxman Rekha drawn by the section itself. The disputed four items are not part of the list appearing in the section. Therefore,in our opinion,there was no justification for the CIT to use his revisionary powers in the case under consideration. It is to be remembered that the accounts of the assessee were audited by the C&AG and by a special auditor.They had not found any defect in the accounts prepared by it. Considering the above,we are not able to persuade ourselves to endorse the action taken by the AO u/s. 263 of the Act. - Decided in favour of the assessee.
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2017 (1) TMI 811
Disallowance u/s 40 (a)(ia) - Held that:- Since no amount was outstanding to be paid, the provisions of section 40 (a)(ia) are not attracted in this case. Hence a disallowance is not justified - Decided in favour of assessee
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2017 (1) TMI 810
Treatment to salary earned for services rendered in Indonesia as income taxable in India - salary income which is deemed to accrue or arise in India - NRI status is not available - appellant worked at Indonesia (Out of India) for more than 182 days in a given financial year - India Indonesia DTAA - bifurcation of income received in India and outside India - Held that:- The assessee has submitted a letter before Assessing Officer offering to withdraw the claim of exemption but the Assessing Officer has not at all considered the said letter offering withdrawal of the claim. He has decided the issue purely on merit by considering the provisions of the direct tax avoidance agreement between India and Indonesia and the rulings from authority of advance ruling. Upon assessee's appeal Learned CIT(Appeals) has erroneously noted that the Assessing Officer has levied the tax only on assessee's concession by withdrawing the claim of exemption. This is an erroneous appreciation of the fact. There is no whisper in the Assessing Officer’s order that he is levying the tax on the basis of assessee's concession. In such circumstances Learned CIT(Appeals)’ reliance upon the decision of Honourable High Court of Karnataka in the case of T. P. Indrakumar (2009 (7) TMI 651 - KARNATAKA HIGH COURT ) is also not applicable, as in the said case it was noted that by offering income for taxation there was nothing else for the Assessing Officer to probe. Here the case is not so. The order of learned CIT(Appeals) is not liable to be sustained. Both the counsel fairly agreed that the issue may be remitted to the file of Learned CIT(Appeals) to consider the issue on merits - Decided in favour of assessee for statistical purposes.
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2017 (1) TMI 809
Revision u/s 263 - addition on account of defective vouchers - Held that:- We find that the assessing officer had framed the assessment specifically on the issue pointed out by the ADI regarding verification of the discrepancies pointed out in the vouchers.Looking to the kind of discrepancies in the vouchers of various expenditure as mentioned above the assessing officer had arrived at the conclusion to make addition on account of defective vouchers. These facts indicate that the assessing officer had taken into consideration, verification and examination the report of the ADI during the course of assessment proceedings. We are not in agreement with the CIT that no inquiries were conducted by the assessing officer. Therefore, considering the above stated facts, findings and material on record we find that the assessment order cannot be said to be erroneous and prejudicial to the interest of revenue. - Decided in favour of assessee.
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2017 (1) TMI 808
Disallowance u/s 14A - application of rule 8D - Held that:- It is observed that assessee had earned exempt income during the year under consideration and assessing officer has added 0.5% of such investment as expenses relating to administration as provided by rule 8D (2) (iii) of the rules 1962. Considering the assessment year involved, we agree with the plea advanced by the Ld. DR that the assessing officer was duty bound to calculate the disallowance by applying rule 8D. We do not agree with the arguments advanced by the assessee that no expenditure can be attributed to the earning of the tax free income. - Decided against assessee
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2017 (1) TMI 807
Validity of Block assessment u/s 158BC - whether was barred by limitation - authorization for requisition u/s 132A - Held that:- The assessment order was to be completed within one year from the end of the month i.e. on or before 31.8.2001. The Tribunal records that in the present case, block assessment order was passed on 29.8.2002, which was well beyond the period of one year, as the stipulated period of limitation in the present case would be one year as is provided under Section 158BE (1) (a) of the Act. The Tribunal, therefore, rightly came to conclusion that the assessment order passed on 29.8.2002, was not a valid assessment as it was beyond the period of one year and barred by limitation. Consequently, it was quashed. The contention of the department that last requisition was sent on 15.6.1999 and served upon CBI on 21.6.1999, so, case will fall within the ambit of Section 158BE (1) (a) of the Act and limitation will be of two years since the date of execution of the requisition is not acceptable because when first requisition dated 11.9.1995 was pending and no further material came to the notice of the department, so, there was no occasion for issuing second requisition on 15.6.1999. - Decided in favour of assessee
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Customs
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2017 (1) TMI 789
Validity of order of tribunal where the members who have heard the matter got retired - Section 129C(5) of the Act - diversion of exempted goods meant for supply and consumption by an Export Oriented Unit - Held that: - Reliance placed in the case of COLOURTEX Versus UNION OF INDIA [2010 (6) TMI 191 - Gujarat HIGH COURT], where similar issue is decided and was held that as both the Members of the Tribunal have retired, the matter is required to be heard by the Division Bench as per the present position prevalent today. The Members who first heard the case are no longer available and hence, an impossible situation has arisen whereby it would not be possible to give effect to the provisions of sub-Page section (5) of section 129C of the Act. The impugned order of the Tribunal to the extent the same relates to the question of imposition of penalty on M/s. Modern as recorded in the difference of opinion between the members is hereby quashed and set aside. The Tribunal is directed to hear the appeal afresh to the aforesaid limited extent without in any manner being influenced by any observations made by the Members in the impugned order. Petition allowed - matter on remand.
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2017 (1) TMI 788
Application for discharge under Section 245(2) of the Code of Criminal Procedure sought for - quashing of proceedings of CRIME No.F.No.DRI/AZU/INV-16/2009/Part- 1 - release of amount deposited on bail - stay of other proccedings - Fraudulent import of the high end Cars/SUVs - Held that: - in the absence of any complaint lodged before the competent court under Section 135 of the Customs Act, no relief as such can be granted - I take notice of the fact that almost nine years have passed and the applicant is facing lot of hardships because he has to appear before the officials of the DRI twice in a month. His passport has also been taken away, and at the time of furnishing of the bail, he had to deposit ₹ 10 lac in cash - I expect the authorities concerned to look into the matter at the earliest and act in accordance with the guidelines issued by Circular No.27/2015-Customs, F.No.394/68/2013-Cus (AS) of the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs (Anti-Smuggling Unit), New Delhi, dated 23rd October 2015 - application disposed off.
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2017 (1) TMI 787
EPCG scheme - failure to fulfill Export Obligation within 8 years as required - a change in the policy with regard to fulfillment of Export Obligation. Held that: - the petitioner has filed a representation dated 26.08.2016, which, as indicated above, is pending consideration with the EPCG Committee - I am inclined to direct the EPCG Committee to consider and dispose of the representation of the petitioner dated 26.08.2016, by way of a speaking order - petition disposed off.
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2017 (1) TMI 786
Period of limitation for filing refund claim of SAD - Notification No.102/2007 Cus - it was contended that sale of the exempted goods is thus a precondition and until that is complied, refund cannot be obtained. - the subsequent sale is the triggering point for refund and that is not within the control of the petitioners. There cannot be, therefore, a unreasonable condition to obtain refund. If such conditions as are unreasonable, unfair and unjust are allowed to control the benefit of the exemption Notification, particularly refund, to the extent such stipulation disentitles the petitioners to avail of the exemption Notification, that must be struck down. - the original exemption notification neither stipulated a time period within which the refund was to be claimed, nor it makes Section 27 of the Customs Act applicable to such claims. Held that: - The power to refund is to be found in section 27 of the Customs Act, 1962, and that was always there. The amendment to the notification introducing a limitation for seeking refund apart, section 27 with its condition of a limitation period was throughout on the statute book. That is the only provision enabling granting refund of any duty is undisputed. The notification granting exemption and under consideration in the case, enables claiming a refund of duty (SAD) but the power to grant it is in the substantive law. With greatest respect, if the exemption can only be claimed within the statutory provisions and not beyond the same, such conditional exemption including the stipulation as above has not been challenged. Only one condition therein cannot be declared ultra vires because the petitioners desire to brush it aside. The petitioners have accepted the position that if this exemption Notification had not been issued in exercise of the statutory power, no exemption could have been claimed at all. In these circumstances, merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation, that cannot be held to be onerous, excessive and therefore ultra vires Article 14 of the Constitution. If the exemption Notification grants an exemption in the manner noted by us, then, it could have been granted only in that mode and not another. In the present case, the exemption Notification states that the importer shall file a claim for refund on the additional duty of customs paid on the imported goods before the expiry of one year from the date of payment of additional duty of customs. The exemption is granted from the payment of this additional duty. That can be availed of provided the goods are imported into India for subsequent sale. However, all the conditions envisage first payment, second a stipulation that when such goods are sold, invoice must indicate that no credit for this additional duty of customs shall be admissible. Thirdly, if at all a refund claim is to be laid, it must be filed within one year from the date of payment. Only in these circumstances and if the goods are sold, the payment of tax as required has to be evidenced as also to its proof produced would not mean that we can override other conditions. Pertinently, it is not regarding all the conditions but only with regard to the limitation that this argument of Mr. Patil is canvassed. Even when the Notification was first issued on 14-9-2007 there may not have been a stipulation with regard to the period for refund, but the clause was that the refund claim shall be filed within the Jurisdictional Customs Officer. The power to consider that refund claim and grant it, if permissible, is traceable to Section 27 of the Customs Act, 1962. Therefore, it was impossible to ignore the statutory bar and contained in sub-section (1) of Section 27 at any time. Petition dismissed - decided against petitioner.
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Service Tax
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2017 (1) TMI 806
Outdoor catering services - demand of tax, interest and penalty - Held that: - the said SCN is issued only on the basis of statement dated 01.05.2007, recorded as stated above and the contents of the SCN have not been corroborated with any other evidence, including the evidence emerging out books of accounts of the appellant or the invoices said to have been issued by the appellant. The appellant has admitted Service Tax liability of which was already paid - the SCN is not sustainable in so far as, demand of ₹ 2,62,174/- of Service Tax is concerned - demand of tax, interest and penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 805
Natural justice - Refund claim - rejection on the ground that no documentary evidences were submitted establishing excess payment of service tax - Held that: - As per the statutory provisions, Ld. Commissioner(Appeals) suppose to grant three opportunity of personal hearing which he failed to do so. Therefore Commissioner(Appeals) has violated the principles of natural justice - this is a fit case for remand the matter to Commissioner(Appeals) for re-consideration of the overall case - appeal allowed by way of remand.
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2017 (1) TMI 804
Advertising agency service - work of fabrication, erection, installation, transportation, site civil work, supplying and fixing, repairing, fixing with pipes, painting and installing with iron structure, signages, sign boards, glow sign boards, flex board, flex sheets, sticker etc. - whether the activity of appellant covered in the definition of advertising agency service? - it is the appellant's claim that there was no involvement of designing, visualizing and conceptualizing their activity did not get covered by the definition of advertising agency service. Held that: - the appellant is not engaged in the activity of designing, visualizing or conceptualising the material which is present in the work provided by them - Since the activity undertaken by the present appellant does not involved designing, visualising and conceptualising, the services provided by appellant in the present appeals do not get covered by advertising agency service - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 803
CENVAT credit - duty paying document - CSR is a summary of AWBs, i.e., invoices raised by the airlines - whether availment of credit on the document called Cargo Sales Report (CSR) is in order or otherwise? - the order for appeal is mainly on the ground that the appellant is not eligible to take Cenvat credit on service tax paid by airlines at all and that the recipient of the service is the shippers of the goods/documents and not the appellant. Held that: - when the relevant Air Way Bills (AWBs) have also been made available to the Department, the appellants taking credit on their consolidation and summarization in a fortnightly Cargo Sales Report is therefore, to be considered as their having taken credit on the AWBs themselves. It has to be also kept in mind that the appellants conduct their business in a unique niche of the airline industry, that of booking cargo space on behalf of airlines, and as such the universal practices in such areas should be properly understood and appreciated before issuing demands of this nature. So long as the primary and essential requirements of the procedural Rule have been satisfied, benefit should not be denied on insubstantial grounds. In fact, even the said Rule 9, lays down that minor inadequacies in the document on which credit is availed should be overlooked, in the Proviso to sub-rule (2) thereof. The availment of Cenvat credit based on the Cargo Sales Report prepared from the AWBs, cannot be denied to the appellant. By implication, utilization of such availed credit to discharge their service tax liability cannot also be held as irregular - Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 802
Maintainability of appeal - rejection on the ground that the amount involved is less than ₹ 10,00,000/- - Held that: - the matter involved in this appeal is concerning classification of the activities of the respondent and which are of recurring nature - This exception viz., ‘classification issues of legal and/or recurring nature’ is under sub-clause ‘c’ of Para 3 of the instructions F. No. 390/Misc./163/2010-JC, dated 17-8-2011 issued by C.B.E. & C., Department of Revenue, Ministry of Finance, Government of India says that adverse judgment relating to issue of classification having legal and/or recurring nature has to be contested and decided on merits irrespective of the monetary amount involved - appeal restored.
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Central Excise
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2017 (1) TMI 801
CENVAT credit - capital goods - whether Cenvat Credit on capital goods is allowable or eligible - (a) only after the production from those capital goods commences or (b) on the day the said goods are installed in the factory premises or, (c) on the day the goods are received in the factory premises for intended production of dutiable final products? - Held that: - Cenvat credit has to be determined on capital goods on the date of receipt that is as and when, the said goods are received in the factory of production along with evidence of duty paying documents. Whether the Cenvat Credit taken lawfully under Cenvat Credit laws on the receipt of capital goods in the factory can be denied later on at a subsequent stage, when the final product becomes exempted? - Rule 6(4) of CCR, 2004 - the said ruling have two clauses. The first clause provides that “no Cenvat Credit shall be allowed on capital goods, which are used exclusively in the manufacture of exempted goods or in providing exempted services" thereafter in 2nd Clause, it is provided that - "other than the final products, which are exempt from the whole of the duty of Excise leviable thereon under any notification when exemption is granted based upon the value or quantity of clearance, made a financial year". Held that: - Rule 6(4) does not debar taking of Cenvat Credit on capital goods, which are used in the manufacture of final products, although taxable, but exempt from the whole of duty of Excise under any notification when exemption is granted based upon the value or quantity of clearances - In the instant case, biscuits are normally taxable under the tariff but have been exempt vide N/N. 22/2007-CE dated 03.05.2007 with respect to the value of the product and/or MRP. Thus, the assessee falls in the second clause of Rule 6(4), which provides an exception, and as such, the credit is available on capital goods, for output, which are normally taxable but exempt under notification. CENVAT credit rightly taken and utilised - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 800
Penalty - Rule 26 of CER, 2002 - Clandestine manufacture - Held that: - no case of suppression of facts, or contravention of provisions of Central Excise Rules have been framed, nor any finding recorded, to that effect - Appeal allowed - decided in favor of the assessee.
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2017 (1) TMI 799
Refund claim - discount - unjust enrichment - agreement for discount entered later after transaction took place, on 19/01/2004, and refund sought for the discount on transactions covered during period from 01/12/2003 to 28/02/2004 - rejection on the ground that the discount was not admissible to the appellant - Held that: - Hon'ble Supreme Court has held in the case of Purolator India Ltd. Versus Commissioner of Central Excise, Delhi-III [2015 (8) TMI 1014 - SUPREME COURT], that the transaction value should be known at the time of removal - in the instant case the duty incidents has been passed on to the customers, before 19/01/2004 and the discounted value shall be admissible only with effect from 19/01/2004 - the appellant will be entitled for refund & interest on the refund with effect from 19/01/2004 - appeal allowed by way of remand.
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2017 (1) TMI 798
Refund claim - discount - unjust enrichment - denial on the ground that the appellant has claimed discount retrospectively and therefore they were not eligible for said refund - Held that: - Hon'ble Supreme Court has held in the case of Purolator India Ltd. Versus Commissioner of Central Excise, Delhi-III [2015 (8) TMI 1014 - SUPREME COURT] that the transaction value should be known at the time of removal - in the instant case the duty incidence has been passed on to the customers, before 19/01/2004 and the discounted value shall be admissible only with effect from 19/01/2004 - we remand this case back to Original authority for the period subsequent to 19/01/2004. We also hold that the appellant will be entitled for refund & interest on the refund with effect from 19/01/2004 as admissible in the law - appeal allowed by way of remand.
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2017 (1) TMI 797
Benefit of N/N. 5/99-CE dated 28.02.1999 and 6/2000-CE dated 01.03.2000 - denial on the ground that intermediate goods used in the manufacture of exempted finished goods were not eligible for exemption - Held that: - it appears that the Ld. Commissioner (Appeals) by order has accepted, certificate issued by the Chartered Accountant and directed to Assessing Officer to compute the duty pursuant to the costing data. In the peculiar facts and circumstances of the case, the same appears reasonable. Hence, we find no reason to interfere with the impugned order passed by the Ld. Commissioner (Appeals), and the same is hereby sustainable along with the reasons mentioned herein - appeal dismissed - decided against Revenue.
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2017 (1) TMI 796
100% EOU - Refund claim - denial on the ground that the credit was held to be availed in contravention of Rule 6(1) read with 6(4) of CCR, 2004 - Held that: - due to non appearance by the appellant before the Court below, the issue has not been examined with respect to the availability of Cenvat credit in terms of rule 6(6) of the Cenvat Credit Rules, 2004. Accordingly, in interest of Justice we remand the matter to the adjudicating authority, who shall examine the issue as regards both availability and impediment to avail Cenvat credit with respect to the provisions of Cenvat Credit Rules, particularly Rule 6(6) of the Cenvat Credit Rules - appeal allowed by way of remand.
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2017 (1) TMI 795
Manufacture - Section 2 (f) of Central Excise Act, 1944 - glazed panels - whether affixing duty paid processed and pre-cut glasses supplied by the client to the duty paid aluminium frames and panels with the help of sealant results in emergence of new product having new identity, character and use distinct from the inputs, namely, glass cut to size and aluminium frames of required dimensions? Held that: - the duty demand is on glazed panels alleged to have been manufactured by the appellant at site. The Department sought to charge Central Excise duty on glazed panels - We note that such panels emerge stage by stage upon fabrication with bolts, nuts and brackets on the building. The said glazed panels are fabricated and fixed simultaneously as part of civil structure. There is no new marketable product as glazed panel emerging in between in the whole process. It is also clearly recorded in the impugned order that there is no purchase order for such glazed panels by the clients in the present case. In other words, the indivisible works contract talks about installation of glazed panels/curtain wall and not supply of any glazed panels - no manufacture taking place - appeal dismissed - decided against Revenue.
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2017 (1) TMI 794
Denial of CENVAT credit - Time Bar - the amount of SAD was deposited by way of cash, whether the assessee were eligible to utilize the credit balance in the DFCE Scrip for the subsequent imports? - Held that: - the payment of the duties of customs was paid by way of debit in DFCE account and the B/E were duly assessed and no objection was ever raised by the customs authorities. The same is allowable as per Circular dated 05/04/2006 and Clarification 19/12/2006 - the impugned order denying the Cenvat credit to appellant is incorrect and is liable to be set aside, specially when the duty was paid by debit in DFCE account of the Bill of Entry. The department has raised no objection so there is no case of suppression of the facts on the part of the appellant. When it is so then we find no merit in the impugned order and the same is hereby set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 793
Reversal of CENVAT credit in case of Trade Discount - discount allowed post clearance - the assessable value of the inputs received was altered, at the end of the manufactures of the inputs - Held that: - It is very clear from the circular dated 17/11/2008 that when subsequently the supplier allows some trade discount or reduces the price, without reducing the duty paid by him, the duty paid is admissible as Cenvat Credit - It is undisputed that the duty paid by the input manufacturers remained unaltered in the present case even after issue of credit notes - appeal dismissed - decided against Respondent-assessee.
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2017 (1) TMI 792
Refund claim - clearance of goods to 100% EOU - rejection on the ground that goods have been cleared to 100% EOU under CT-3 certificate, without payment of duty - Held that: - similar issue decided in the case of Commissioner of Central Excise & Customs v/s NBM Industries, [2011 (9) TMI 360 - GUJARAT HIGH COURT] where it have been held that Refund of Cenvat credit was available on inputs used in manufacture of goods cleared by DTA unit to 100% EOU. Refund could not be denied on ground that it was a case of deemed export, under Rule 5 of CCR, 2004 - refund allowed - appeal dismissed - decided against Revenue.
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2017 (1) TMI 791
CENVAT credit - availing of credit at the time of acquisition - Rule 57S(2)(C) Central Excise Rules, 1944 - Rule 3(4) of CCR 2001 - whether the appellant is liable to pay duty on removal of used Brass Tubes (capital goods) during the period 2002-03 on which Cenvat Credit was not taken? - Time limitation - Held that: - there is no categorical allegation that the appellant had taken Cenvat Credit on the Brass Tubes removed during a particular financial year. Further, the whole transaction was duly recorded in the books of accounts ordinarily maintained by the appellant - the demand is hit by limitation and also bad on merits, as the condition precedent in Rule 57S(2)(C) Central Excise Rules, 1944 and/or Rule 3(4) of CCR 2001, Being taking of credit at the time of acquisition, being absent, the demand is not sustainable on merits The Ld. Commissioner (Appeals) have erred in refusing to go into the grounds, on merits, as in Revenue matters first appellate proceedings are an extension of the adjudication/assessment proceedings. Appeal allowed - decided in favor of assessee.
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2017 (1) TMI 790
Clandestine Removal - suppression of facts - validity of SCN - is the achieving of production more than double of the installed capacity possible? Held that: - on perusal of SCN, it was found that against installed capacity of 600 MT per annum or 1400 MT for 28 months, achieving production of 2015.788 MT is an impossibility. Thus, I am satisfied that the Show Cause Notice is based on imaginary and illusive data and/or based on misreading of the documents of the appellant and have got no legs to stand. Accordingly, I hold the Show Cause Notice is untenable and impugned order set aside - the appeal is allowed in part and remanded Adjudicating Authority for the limited purpose of recalculation of duty, during that time, or period in dispute, on clearances, as per returns - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (1) TMI 785
Condonation of delay of 258 days - entitlement of interest on refund - Section 54 of the Gujarat Sales Tax Act, 1969 - Held that: - considering the provisions of the Gujarat Sales Tax Act prevailing at the relevant time i.e. section 54(1) (aa) and also considering the subsequent provisions contained in the Gujarat Value Added Tax Act, 2003, more particularly section 38, the dealer is entitled to interest on the refund arising out of and/or pursuant to the order passed by the learned appellate authority and/or on passing order of assessment - it cannot be said that the learned tribunal has committed any error in holding that the dealer is entitled to interest on the refund which arises as a consequence of the order passed by the learned appellate authority - apart from the fact that the delay has not been properly and sufficiently explained, even the Appeal deserves to be dismissed even on merits also, as the appeal lacks merits - appeal dismissed - decided against appellant.
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2017 (1) TMI 784
Classification of deoiled cake - tax free commodity specified in Entry No.3, Schedule I of the MP VAT Act, 2002 or not? - is it correct to hold that the product is superior quality of deoiled cake is sold in the name and style of defatted soya products or hypro soya products - Held that: - goods specified in Entry-3 are 'Deoiled Cake including soya meal' and the expression 'Deoiled cake' is a generic expression which would include different types of DOC ie., defatted soya hypro products also. Even otherwise according to the principles of specific Vs. General entry when the product falls under specific entry, its end use cannot determine its classification. The product in question would fall in category of deoiled cake including soyabean meal, as specified in Entry No.3 of Schedule I of the M.P. VAT Act, 2002 - petition allowed - decided in favor of petitioner.
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