Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 31, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
GST
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06/2019 - dated
29-1-2019
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CGST
Seeks to amend notification No. 65/2017-Central Tax dated 15.11.2017 in view of bringing into effect the amendments (to align Special Category States with the explanation in section 22 of CGST Act, 2017) in the GST Acts
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05/2019 - dated
29-1-2019
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CGST
Seeks to amend notification No. 8/2017-Central Tax dated 27.06.2017 so as to align the rates for Composition Scheme with CGST Rules, 2017.
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04/2019 - dated
29-1-2019
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CGST
Seeks to amend notification No. 2/2017-Central Tax dated 19.06.2017 so as to define jurisdiction of Joint Commissioner (Appeals)
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03/2019 - dated
29-1-2019
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CGST
The Central Goods and Services Tax (Amendment) Rules, 2019.
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02/2019 - dated
29-1-2019
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CGST
Seeks to bring into force the CGST (Amendment) Act, 2018
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01/2019 - dated
29-1-2019
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CGST Rate
Seeks to rescind notification No. 8/2017-Central Tax (Rate) dated 28.06.2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts
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1/2019 – Goods and Services Tax Compensation - dated
29-1-2019
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GST CESS
Seeks to bring into force the GST (Compensation to States) Amendment Act, 2018
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03/2019 – Integrated Tax - dated
29-1-2019
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IGST
Seeks to amend notification No. 10/2017-Integrated Tax dated 13.10.2017 in view of bringing into effect the amendments (to align Special Category States with the explanation in section 22 of CGST Act, 2017) in the GST Acts
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02/2019 – Integrated Tax - dated
29-1-2019
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IGST
Seeks to amend notification No. 7/2017-Integrated Tax dated 14.09.2017 to align with the amended Annexure to Rule 138(14) of the CGST Rules, 2017.
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01/2019 – Integrated Tax - dated
29-1-2019
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IGST
Seeks to bring into force the IGST (Amendment) Act, 2018
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01/2019 – Integrated Tax (Rate) - dated
29-1-2019
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IGST Rate
Seeks to rescind notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts
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01/2019 - Union Territory Tax - dated
29-1-2019
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UTGST
Seeks to bring into force the UTGST (Amendment) Act, 2018
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01/2019 – Union Territory Tax (Rate) - dated
29-1-2019
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UTGST Rate
Seeks to rescind notification No. 8/2017-Union Territory Tax (Rate) dated 28.06.2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts
Indian Laws
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G.S.R. 51(E) - dated
28-1-2019
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Indian Law
Amendments in the notification of the Ministry of Corporate Affairs notification number G.S.R 787(E), dated the 15th October, 2015
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Credit and debit notes. - Section 34 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Cancellation or suspension of registration. - Section 29 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Procedure for registration - Section 25 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Compulsory registration in certain cases. - Section 24 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Persons liable for registration. - Section 22 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Manner of distribution of credit by Input Service Distributor. - Section 20 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Apportionment of credit and blocked credits. - Section 17 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Eligibility and conditions for taking input tax credit. - Section 16 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Time of supply of services. - Section 13 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Time of supply of goods. - Section 12 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Composition levy. - Section 10 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Levy and collection. - Section 9 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Scope of supply. - Section 7 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Definitions. - Section 2 of the CENTRAL GOODS AND SERVICES TAX ACT, 2017 as amended
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Notification exempting reverse charge under Section 9(4) rescinded in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts
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GST rates for Composition Scheme with CGST Rules, 2017 aligned between notification and rules.
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Jurisdiction of Joint Commissioner (Appeals) under GST defined.
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CGST (Amendment) Act, 2018 came into force w.e.f 1-2-2019
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Input Tax Credit - A person, registered in WB, cannot claim ITC for CGST & SGST of other states - He cannot adjust the ITC of one state’s CGST for payment of another state’s CGST.
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Exemption from GST - classification of services - Security Services and Scavenging Services to various hospitals under the State Government as well as the Central Government - The services the Applicant bundled under the description ‘Scavenging Services’ are, therefore, not exempt
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Sweeping Service that the Applicant supplies to the Housing Directorate of the Government of West Bengal, cannot be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.
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Classification of services - composite supply - the service of manufacturing tea bags from the physical inputs owned by the latter is the principal supply. It is classifiable under SAC 9988 and taxable at 5% rate
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Classification of goods - Springs of Iron and Steel for Railways are classifiable under HSN Code no. 7320 (taxable @ 18% of GST)
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Classification of goods - ‘Poly Propylene Leno Bags’ are to be classified as plastic bags under HSN 3923 and would attract 18% GST.
Income Tax
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Clarification regarding applicability of section 56(2)(viia) of the Income-tax Act, 1961 for issue of shares by a company in which public are not substantially interested
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Validity of notice u/s 143(2) - Invalid return - period of limitation - once the defects are removed within the time permitted by the department, the same would relate back to the original date of filing of the return. In the result, impugned notice is set aside
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Reopening of assessment - the information supplied to the AO by the Investigation Wing does not even suggest that this Trust namely Scientific Research of Rural Development was a dubious Trust and the Investigation Wing had material to believe that the donors of this Trust were beneficiaries of the bogus entries - notice set aside.
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Cancellation of registration u/s 12A(a) - Since the act of cancellation of registration has serious civil consequences and the ammended provision is held to have only a prospective effect the effect of cancellation, in the event the pending Tax Appeal is decided in favour of the Revenue,will operate only from the date of the cancellation order.
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TDS u/s 194J - Disallowance u/s 40(a)(ia) - As the person whom the amount was paid was not a qualified professional and he was an accountant writing the accounts and hence 194J of the Act, does not apply - Additions deleted.
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Exemption u/s 54F - LTCG - where assessee invested entire sale consideration in construction of a residential house within three years from date of transfer of land, deduction u/s.54F of the Act cannot be denied just because he did not deposit the said amount in capital gains account scheme.
Customs
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Non-fulfillment of export obligation - demanding the duty foregone and also imposing the penalties by the customs department in spite of the fact that for the same offence, the ADGFT has already passed the order, amounts to double jeopardy which is not permissible in law.
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Undervaluation of imported goods - The existence of the emails/ documents at the time of import is very much doubtful. It is pertinent to note that it is not the case of the department that such evidences were recovered in course of search. The records indicate that the same are produced by the appellants. - Department has not relied upon any other important documentary evidences or any contemporaneous import - Demand set aside.
Corporate Law
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When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not “blow hot and cold”, but they blow hot and hotter - SC
Service Tax
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Works Contract - tax paid by a sub contactor may not be denied to be set off against the ultimate service tax liability of the contracts if the contractor is made liable to service tax for the same transaction, though the exchequer cannot be enriched on account of double taxation
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The fact that service tax was being paid by MUL to the insurance company along with the insurance premium will not make any difference, when the assessee-appellants are independently providing the service of promotion or marketing, which is covered by ‘Business Auxiliary Service’
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Demand of service tax by way of statement in lieu of Show cause notice (SCN)- demand-cum-penalty - section 73 (1A) of Finance Act, 1994 is not invokable and the deficiency in invoking section 73(1) of Finance Act, 1994 is irreparable.
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Levy of service tax - deputation of employees the corporate group - amount paid by one company in the corporate group to another - appellant had not retained any amount from out of the payment received - In the absence of any consideration, no service tax liability.
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Refund of unutilized CENVAT Credit - export of services - value of SEZ exports should be included in computing the export turnover for the purpose of working out the quantum of refund in Rule 5 of the CCR 2004.
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CENVAT Credit - input services - duty paying documents - Merely that these letters are not in the form of invoice cannot be a reason to disallow the Cenvat credit as substantial compliance of the provision under Rule 9(1) of Cenvat Credit Rules have been made.
Central Excise
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Clandestine removal - retraction of statements - Admission was withdrawn very next day with the allegations of coercion being exercised upon him while making him sign on statement - the Commissioner is held to have definitely committed an error while still relying upon the statement.
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Imposition of penalty u/r 209A of CER on Directors - The authorized signatory and Director has stated that the material was purchased through broker was “on for” basis in their testimony. The Director also sought leave to confront the broker who has denied any transaction and even receiving of cheque. -No opportunity was given - No penalty.
Case Laws:
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GST
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2019 (1) TMI 1492
Input Tax Credit - inward supply - distinct persons - Place of Provision of Services - Can a person, registered in WB, claim ITC for CGST and SGST of other states? - adjustment of ITC of one state’s CGST for payment of another state’s CGST - adjustment of ITC of Tamil Nadu GST for payment of IGST, whereas he is not registered in Tamil Nadu - Held that:- In this case, the location of the supplier, providing hotel, banquet hall or restaurant in Tamil Nadu and the location of the recipient i.e. the Applicant, receiving the service, is also Tamil Nadu. So, the Applicant can avail ITC on the said invoices in Tamil Nadu only, if registered in Tamil Nadu. In no case, the Applicant can claim/adjust/avail ITC outside Tamil Nadu on the said invoices, even if the invoices are issued as B2B mentioning the Applicant’s GSTIN in West Bengal - As input tax and its credit are always linked with whether the person is registered or not, the two components of GST paid on inward intra-state supply in Tamil Nadu could have been taken credit of, if only registration is taken in Tamil Nadu under Section 25(1) of the GST Act and is regarded as “distinct person” within the meaning of Section 25(4) of the GST Act. As the Applicant is not registered under section 25(1) in Tamil Nadu, the SGST and CGST paid on intra-state inward supply in Tamil Nadu are not ‘input tax’ to the said person. The GST Act does not contain any concept of ‘input tax’ to an unregistered person. No credit of it is, therefore, admissible under the GST Act. Ruling:- The Applicant is not registered under Section 25(1) of the CGST Act in Tamil Nadu. The SGST and CGST paid on intra-state inward supply in Tamil Nadu are not, therefore, ‘input tax’ to the Applicant. The GST Act does not contain any concept of ‘input tax’ in relation to an unregistered person. No credit of it is, therefore, admissible under the GST Act. A person, registered in WB, cannot claim ITC for CGST & SGST of other states. He cannot adjust the ITC of one state’s CGST for payment of another state’s CGST. He cannot adjust the ITC of Tamil Nadu GST for payment of IGST, whereas he is not registered in Tamil Nadu.
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2019 (1) TMI 1491
Exemption from GST - classification of services - Security Services and Scavenging Services to various hospitals under the State Government as well as the Central Government - N/N. 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017, as amended - Bundling of services - Held that:- The services provided under the head “Scavenging Services”, according to the Applicant’s submission, includes manual cleaning, duties of attendant or operator of trolleys - Article 243G under Serial No 26 covers “Health and sanitation, including hospitals, primary health centres and dispensaries” - Article 243W under Serial No 7 covers “Public health sanitation, conservancy and solid waste management”. No other entries in the Eleventh or the Twelfth Schedules of the Constitution appear relevant while examining applicability of the Applicant’s services bundled as ‘Scavenging Services’. ‘Health Care Service’ is defined under clause 2(zg) of the Exemption Notification. It means inter alia any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine in India and includes services by way of transportation of patient to and from a clinical establishment. It is classified under SAC 99931. It does not include any of the services the Applicant bundled under the description ‘Scavenging Services’ - Again, ‘Sanitation and similar services’ are classified under SAC 99945. It includes sweeping and cleaning, but only with reference cleaning of a road or street. Cleaning of hospital premises is not, therefore, classified under ‘Sanitation or similar service’. The services the Applicant bundled under the description ‘Scavenging Services’ are, therefore, not exempt under Sl No. 3 of the Exemption Notification. Ruling:- Benefit of exemption from the payment of GST is not available to the Applicant under Notification No 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136FT dated 28.06.2017, as amended, for the supply of Security Services and the bundle of service that he describes as ‘Scavenging Services’.
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2019 (1) TMI 1490
Exemption from GST - deployment of personnel like a plumber, sweeper, security guard, electrician, carpenter etc. (Sweeping service) to the West Bengal Housing Board - bundled services - Benefit of N/N. 12/2017-CT (Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017 - Held that:- From the Tender Notice of the Housing Directorate issued under their office memo no. 342/2E – 28 dated 13/03/2018 it appears that the Housing Directorate invites quotation for deployment of personnel at the RHEs under the Directorate for several services, including ‘Sweeping Service’. The job description of a sweeper mentioned therein includes sweeping of the compound and common staircase and corridors of all floors of the buildings in the Housing Estate, cutting of jungles and bushes, cleaning and disposal of garbage, cleaning of the roof, surface drain cleaning, pit cleaning of sewerage system etc. - It is, therefore, a bundle of activities that are classifiable under SAC 99853 as ‘cleaning service’. It may be eligible for the above exemption if it also qualifies as a service for public health sanitation, being an activity under Sl No. 7 (public health sanitation, conservancy and solid waste management) of the Twelfth Schedule to the Constitution. 'Sanitation and similar services’ are classified under SAC 99945. It includes sweeping and cleaning, but only with reference cleaning of a road or street. Sweeping of premises – public or residential – is not classified under ‘Sanitation or similar service’, Sweeping service that the Applicant supplies to the Housing Directorate cannot, therefore, be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. Ruling:- Sweeping Service that the Applicant supplies to the Housing Directorate of the Government of West Bengal, cannot be classified as an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. The exemption under Sl No. 3 or 3A, as the case may be, of Notification No 12/2017-CT (Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017 is not, therefore, applicable to such supplies.
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2019 (1) TMI 1489
Classification of services - Packing of tea bags - rate of GST - composite supply - principal supply - whether the Applicant’s services to HUL are classifiable as packaging service or manufacturing service or both? - Held that:- Consuming tea contained in a tea bag does not require the tea leaves to be taken out of the bag. The tea bag itself is dipped in water, as the bag is porous and is filled with tea leaves. Tea bags, therefore, are distinct from tea leaves, offering a user friendly way of making the beverage. Tea bag pouch is, therefore, not a packaging material, but an input required for manufacturing tea bag as a commercial item separate from blended tea leaves. It is a new product having a distinct name, character and use, and classified as such under Tariff item 0902 40 40 - It is evident, therefore, that the Applicant’s service to HUL for manufacturing tea bags is service for manufacturing a product classified under Tariff item 0902 40 40, where physical inputs are owned by the recipient - The supply is, therefore, to be classified under SAC 9988 and taxed under Sl No. 26(f) of the Rate Notification. The two services (service for manufacturing tea bags and the service for packaging of the manufactured tea bags) are supplied in terms of a single contract and at a single price (as may be ascertained from the invoices). The flow chart shows that the services are supplied as processes in a continuous assembly line, where packaging of tea bags in cartons and wrapping is ancillary to manufacturing tea bags. The tea bags, of course, cannot be delivered unless they are suitably packed. The Applicant is, therefore, making a composite supply to HUL where the service of manufacturing tea bags from the physical inputs owned by HUL is the principal supply. Ruling:- The Applicant makes a composite supply to Hindustan Unilever Ltd, where the service of manufacturing tea bags from the physical inputs owned by the latter is the principal supply. It is classifiable under SAC 9988 and taxable at 5% rate under Sl No. 26(f) of Notification No. 11/2017–CT (Rate) dated 28/06/2017, as amended from time to time. Applicability of this Ruling with respect to other recipients is subject to the specific nature of the contracts with them.
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2019 (1) TMI 1488
Classification of goods - Springs of Iron and Steel for supply to the Railways - whether classified under HSN Code no. 8607 of Chapter 86 of First Schedule to the Customs Tariff Act, 1975 or under HSN Code no.7320 of Chapter 73 of the Tariff Act? - Held that:- Chapter Heading 8607 does not anywhere clearly classify Springs of Iron and Steel. It only refers to parts of railway (such as bogies, bissel-bogies, axels and wheels and parts thereof) in a general way; whereas, Chapter Heading 7320 clearly classifies springs of Iron and Steel for Railways. “Leaf-springs for Railways” are classified under Tariff Item No. 73201012 and “Coil-springs for Railways” are classified under Tariff Item No. 73209010 - since Springs of Iron and Steel, are specifically classifiable under Chapter Heading 7320, the general description under Chapter Heading 8607 is not applicable. Springs of iron and steel for railways are classifiable under HSN Code no. 7320 and taxable @ 18% under Serial No. 234 of Schedule III of Notification No. 1/2017- CT (Rate) dated 28.06.2017. Ruling:- Springs of Iron and Steel for Railways are classifiable under HSN Code no. 7320 (taxable @ 18%) under Serial No. 234 of Schedule III of Notification No. 1/2017- CT (Rate) dated 28.06.2017.
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2019 (1) TMI 1487
Classification of goods - Polypropylene Leno Bags - rate of tax - whether classified under Tariff sub-Heading No. 6305 33 00 of the GST Tariff or under Tariff sub-Heading No. 3923? - Held that:- TRU clarification under Circular No. 80/54/2018-GST issued under F. No. 354/ 432/2018-TRU dated 31/12/2018 in Para 7, sub-Para 7.4 clarifies that Polypropylene woven and non-woven bags and PP woven and non-woven bags laminated with BOPP would be classified as plastic bags under HS Code 3923 and would attract 18% GST - HSN 3923 covers articles of the conveyance or packing of goods, of plastics; etc. Sub- Heading 39232990 is applicable for sacks and bags of plastics which are neither polymers of ethylene nor of poly-vinyl chloride and are subject to 18% GST. Ruling:- ‘Poly Propylene Leno Bags’ are to be classified as plastic bags under HSN 3923 and would attract 18% GST.
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2019 (1) TMI 1486
Detention of goods with vehicle - wrong declaration in the e-way bill - Held that:- Division Bench of this Court in Renji Lal Damodaran v. State Tax Officer [2018 (8) TMI 1145 - KERALA HIGH COURT] has dealt with an identical issue - the respondent authorities are directed to release the petitioner's goods and vehicles on its furnishing Bank Guarantee for the tax and penalty due, and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.
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Income Tax
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2019 (1) TMI 1485
Revision u/s 263 - capital gain - did assessee receive sale consideration out of such sale? - spectacular appreciation in land price - assessee answerable for capital gain for a sum which she never received - Held that:- SLP dismissed.
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2019 (1) TMI 1484
Validity of notice u/s 143(2) - Invalid return - Removal of the defects in the return initially filed defectively - notice barred by the limitation - Held that:- The petitioner filed the return of income on 16th October, 2016. This return was found to be defective. Department called upon petitioner to remove such defects which was done on 12th September, 2017. Though at one stage the department had some doubt about the curing of defects, on a representation of the petitioner it did not raise this issue further and thus impliedly accepted the petitioner's representation that there were no further defects after the petitioner removed the defects on 12th September, 2017. The issue arising in the present petition is no longer resintegra. A division bench of this Court in case of Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of Income-Tax [2009 (4) TMI 108 - BOMBAY HIGH COURT] had held that once the defects are removed within the time permitted by the department, the same would relate back to the original date of filing of the return. In the result, impugned notice is set aside - Decided in favour of assessee.
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2019 (1) TMI 1483
Reopening of assessment - accommodation entries dealing - record element of income chargeable to tax having escaped assessment - Held that:- The very premise of Assessing Officer to form a belief that income chargeable had escaped assessment is completely invalid. As per the information received by the Assessing Officer and to which the assessee raised its no dispute, the assessee had as an Asset Reconstruction Company dealt with Avance. Avance was a borrower of Allahabad Bank. The assessee purchased NPA from Allahabad Bank. By way of recovery, Avance paid a sum of ₹ 2.70 crores to the assessee. Whatever be the nature of existence of Avance, its dealings with other individual entities and dealings of said S.C.Shah, we simply fail to appreciate how the AO in the present case asserts that in case of the assessee income chargeable to tax has escaped assessment. Even going by the information at the command of the Assessing Officer, the assessee having purchased the NPA from Allahabad Bank, received the payment of ₹ 2.70 crores from Avance. This has nothing to do with the alleged dubious dealings of Avance at the instance of S.C.Shah. In clear terms, the very formation of the belief by the Assessing Officer that income chargeable to tax in the hands of the assessee had escaped assessment, lacks validity. The department as well as the counsel for the revenue have tried to improve upon the reasons stated by the Assessing Officer by suggesting that it would be necessary to verify whether such income was offered to tax by the assessee or whether the Trustee for whom assessee claims would have received the income had offered the same to tax. None of these elements find place in the reasons recorded by the Assessing Officer. - Decided in favour of assessee.
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2019 (1) TMI 1482
Reopening of assessment - dubious Trust - whether Investigation Wing had material to believe that the donors of this Trust were beneficiaries of the bogus entries - Held that:- We called for the original files of the department to guard against any possible typographical or clerical error in recording reasons. Such files also would not reveal anything that could save the impugned notice. The files contain the communication from the Investigation Wing providing information to the Assessing Officer of beneficiaries of bogus donations, which also contain the Trust to which such donations were made and the amount of donation so given. This information in case of the petitioner, refers to sum of ₹ 15 lakhs, allegedly donated by the petitioner to the said Trust. Thus, on the basis of such information supplied by the Investigation Wing is falsified upon perusal of the return filed by the assessee. We also notice that in the return the assessee had claimed to have paid the donation of ₹ 20 lakhs to one Scientific Research of Rural Development. However, the information supplied to the AO by the Investigation Wing does not even suggest that this Trust namely Scientific Research of Rural Development was a dubious Trust and the Investigation Wing had material to believe that the donors of this Trust were beneficiaries of the bogus entries. In the result, impugned notice is set aside - Decided in favour of assessee
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2019 (1) TMI 1481
Reopening of assessment - reopening of beyond the period of four years from the end of relevant assessment year - addition u/s 68 - Held that:- We notice that the impugned notice have been issued beyond the period of four years from the end of relevant assessment year. There is neither any allegation, nor any suggestion in the impugned notice that income chargeable to tax has escaped assessment due to the failure of the assessee to disclose truly and fully all material facts. Only on this ground therefore, the impugned notice would be rendered invalid. There is yet another ground why we cannot allow the AO to act on such notice. This is so because in the original scrutiny the assessment, the AO had examined the issue on which he now wants to reopen the assessment. In the reasons recorded he had referred to the authorized capital of the assessee-company of ₹ 4 crores representing 40 lakhs shares of ₹ 10/each, out of which 39 lakhs 90 thousand shares were issued at the premium of ₹ 145 per share. He has recorded that no details as to how the share premium was worked out at ₹ 145 per share was produced on record. It was on account of this that AO held the belief that the share premium sum of ₹ 57.85 crores (rounded off) had escaped assessment. AO now cannot have second innings and re-examine the same issue, in absence of any tangible material outside the record within his possession. Any attempt on his part would be based on mere change of opinion. - Decided in favour of assessee.
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2019 (1) TMI 1480
Deduction u/s 10B - “manufacture” for the purposes of Section 10B - conversion of gold into mountings, outsourced by the assessee - assessee is a partnership firm engaged in manufacturing of diamond studded gold jewellery - Held that:- The respondent-assessee was granted permission by the Government to make only handmade jewelery. Accordingly, nature of manufacturing activity carried out by the respondent did not require huge plant and machinery and the absence of plant and machinery could not lead to conclusive presumption that there was no manufacturing activity. The Tribunal further recorded the fact that the material produced by the respondent has not been contradicted or shown to be incorrect by the Revenue. Further, the small amount of labour charges and wages being the basis of the disallowance was also considered by the Tribunal and it was found that the Revenue had not carried out any examination / enquiry to ascertain what would be the fair market value of the labour charges and wages in this sort of activity. Thus, there is no reason to disbeleive the respondent. - Decided against revenue.
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2019 (1) TMI 1479
Belated claim for deduction u/s 80IB - deduction under Section 80IB in view of the bar provided by Section 80AC - alleged grievance that the assessee had not in fact received the intimation under 143(1) - Held that:- A consideration of the orders of the lower appellate authorities clearly discloses that even the AO, after considering the grounds urged by the assessee in the return filed by it pursuant to the search and seizure, accepted the deduction claim. In these circumstances, the acceptance of that deduction, however, in the appeal by the CIT(A) – even upon an erroneous presumption that an intimation was not generated to the assessee at the relevant time, is of no consequence. All the Revenue authorities – AO as well as the CIT examined the deduction claim on merits and what is more, we also notice that for the previous years as well similar benefits had been granted. Given these circumstances, the Court is of the opinion that no substantial question of law arises
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2019 (1) TMI 1478
Charitable activity - registration under Section 12A(a) cancelled - main object is to do 'medical relief' to the needy people - power of cancellation conferred to the commissioner vide amendment to Sec 12 AA (3) - Whether the commissioner had the power to cancel the certificate of registration before he was specifically empowered to do so by the amendment dated 01.06.2010 to sec 12 AA (3)? - reopening of assessment on account of cancellation of the certificate of registration at a distant date. Held that:- The questions raised in these Writ petitions have become a matter res judicata and no more res integra owing to the various Judicial decisions. Following the amendments to Section 12AA(3) and the subsequent actions of the Department on Section 12AA Companies, numerous cases came to be filed before various judicial forums. The vires of the amended section also came to be challenged and considered before the High Courts. The various questions raised in the litigations are settled by a series of pronouncements by various High Courts and later affirmed by the Hon'ble Supreme Court. The pronouncements that answers the questions raised in these writ petitions are summarised in the succeeding paragraphs. Commissioner's inherent powers to cancel the certificate of registration flowing from his power to issue registration, it was held that without any express powers conferred under the statue, review or revocation is not permissible. On the question, the courts had further observed that the order passed by the Commissioner under Section 12AA is neither legislative and nor executive and essentially quasi judicial in nature and therefore went on to hold that Section 21 of the General Clauses Act is not applicable to the order passed by the commissioner under Sec 12 AA. Whether the cancellation will operate from a retrospective date? - As held that the amendment to Section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when the parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation can not operate from a past date. Effective date of operation of the cancellation order - the cancellation will take effect only from the date of the order/notice of cancellation of registration. Since the act of cancellation of registration has serious civil consequences and the ammended provision is held to have only a prospective effect the effect of cancellation, in the event the pending Tax Appeal is decided in favour of the Revenue,will operate only from the date of the cancellation order, that is 30.12.2010. In other words, the exemption cannot be denied to the petitioner for and up to the Assessment Year 2010-11 on the sole ground of cancellation of the certificate of registration. Whether the completed assessment can be reopened on the ground of cancellation of certificate of registration at a later/future date - what follows as a sequel to the decisions in the other three questions is an emphatic 'No'. Courts have categorically held that unless the assessee obtained registration by fraud, collusion or concealment of any material fact, the registration granted can never be alleged to be a nullity. In the case on hand, it is evident that fact of the cancellation of the registration triggered the proceedings and evidently forms the preamble of each of the impugned orders. And clearly, there is no allegation of fraud or misdeclaration on the part of the petitioners and the respondents were candid in confessing that the certificate was granted erroneously. Therefore, reopening the assessment for the past years on account of the cancellation order dated 30.12.2010 in the case of the petitioner by the assessing officer is not permissible - Decided in favour of assessee.
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2019 (1) TMI 1477
Applicability of Section 79 - Carry forward and set off of losses in the case of certain companies - Tribunal have held that the assessee-Company as on the last date of the previous year relevant to the assessment year being a Company in which the public are substantially interested and the 51% shareholding of that Company having existed prior to the amalgamation on 01.01.2000, Section 79 of the Act is inapplicable to the Company Held that:- Not less than 51% of the share holding of FC Berg on the last day of the year or years in which the loss occurred, should have been beneficially held by not less than 51% of the shareholders of FC OEN. FC OEN acquired 60% of the shareholding of FC Berg only in July, 1999. Irrespective of that, the new company will be entitled to claim the business loss of the amalgamated company in the assessment year relevant to that previous year in which there was change in shareholding. This is because the prohibition is only in claiming the losses of any year prior to the previous year. But 51% of the shareholding, in FC Berg, in none of the years prior to the previous year (1999-2000), was ever held by FC OEN or even FCI. Section 79 squarely applies in the case of the assessee, FC OEN Limited in so far as the claim of carry forward of losses, incurred by FC Berg, in any of the years prior to the previous year. On amalgamation, FC OEN Limited cannot claim business loss of FC Berg for the years prior to the previous year, i.e, as on and prior to 31.3.1999. Section 79 does not prohibit the claim of business loss of that previous year in which there was a change in shareholding, i.e., 1999-2000. We see from the assessment order that business loss upto 31.12.1999 has been declined obviously for reason of the new company in which the public are substantially interested having been formed on 01.01.2000. As we earlier noticed, the amalgamation and the change in status of the company to one in which public are substantially interested, does not at all affect the applicability of Section 79 insofar as the earlier company was not one in which the public are substantially interested. Hence, the business loss of the earlier company from 01.04.1999 to 31.12.1999 has to be allowed to be carried forward by FC OEN Limited. We, hence, answer the question of law partly in favour of the assessee and partly in favour of the Revenue. We direct the AO to carry out the modification insofar as grant of carry forward of business loss or set off of business loss of the previous year relatable to FC Berg, i.e., of the financial year 1999-2000, in the assessment year 2000-2001.
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2019 (1) TMI 1476
Maintainability of appeal - monetary limit - Held that:- On the litigation policy, we notice the judgment of another Division Bench of this Court in Commissioner of Income Tax v. Smt.Vasantha Anirudhan [2018 (1) TMI 902 - KERALA HIGH COURT]. When the monetary limit is computed, the overall demand made by the Revenue in a group of appeals, where the question raised is common, has to be considered. Merely because in each of the appeals the limit is below that specified in the litigation policy, the individual appeals cannot be rejected. What has to be looked at is the total demand in so far as the adjudication with respect to an issue.
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2019 (1) TMI 1475
Interest free loans given to sister concerns - proof of commercial expediency - Held that:- The business of the assessee is that of dealers of automobiles. Its sister concerns to whom monies are advanced, are engaged in manufacture of bus bodies and running of petrol pump. In these facts, both CIT (A) and the Tribunal found that the business run by respondent's sister concerns to whom money is advanced is complementary to its business. The Apex Court in S.A. builders Limited (2006 (12) TMI 82 - SUPREME COURT ) had held that whether a particular advance made to the sister concerns is on account of business exigency is a decision which the businessman has to take and it is not for the Income Tax Authrities to put themselves in the shoes of the assessee and decide the matter of commercial expediency from the point of view of the profitability. In fact, the Apex Court also observes that no businessman can be compelled to maximize its profits. The only exception in the above order was where the money has been advanced to the sister concerns and the money is not used by the sister concerns/subsidiaries for business purpose, then alone the interest paid on borrowed amounts will be disallowed. - Decided against revenue
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2019 (1) TMI 1474
Interest receivable on gold loan - “constructive receipts” of the interest amount - Held that:- Amount represents interest collected by the Company on take over of the business of the firm. Further, it is stated that the Company had taken over from the firm an amount of ₹ 66,09,167/- as interest receivable, which was later collected and handed over to the firm by the Company. Hence the duplication is not in the Assessing Officer having made the addition, but in the Company having received the payments in the course of the year in addition to the consideration. We have our own doubts about the interest credited to the P&L account and the interest receivable, collected and handed over to the firm by the Company; whether they are one and the same. This is essentially a question of fact and the assessing officer will examine whether there was a duplication in so far as the addition made. We hence refuse to answer the questions of law for reason of there existing a warrant for further examination of the figures as revealed from the P&L Account. We remand the matter for verification of this single aspect.
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2019 (1) TMI 1473
Addition of undisclosed receipt - Difference in total receipts as per books of accounts and receipts as per 26AS - Held that:- Tribunal on consideration of the aforesaid has held that the CIT(A) has considered specific fact of discrepancy in the amount shown in the 26AS in comparison to the books of account. The bills including service tax were raised and the TDS was deducted inclusive of service tax amount of ₹ 1,61,36,763/-. The revenue has not brought any fact or material to contradict the factual details recorded by the CIT(A). The appeal of the revenue was therefore dismissed by the Tribunal. Even though the learned counsel for the appellant-revenue has reiterated the same arguments which were raised before the Tribunal but on consideration of the material on record, we do not find any substantial question of law arising in the present appeal. The appeal is therefore dismissed.
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2019 (1) TMI 1472
Reopening of assessment - Held that:- The assessee in the present case twice made a request to the assessing authority, but despite the specific requests, the assessing authority did not comply with the said request and supplied the reasons to the assessee. That casts a doubt even on the fact of the recording of the reasons in the contemporary period by the assessing authority. The fact that such reasons are supplied before the learned Tribunal only for the first time was enough for the learned Tribunal to hold that the assessing authority lacked the jurisdiction in invoking the reassessment proceedings and therefore, the impugned reassessment order deserves to be quashed. - Decided in favour of assessee.
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2019 (1) TMI 1471
Deduction of section 80IB(10) - whether the restriction of maximum permissible unit area imposed for an assessee to claim deduction under Section 80IB(10)? - Held that:- In the present case, taken a view that such amended provision would not be applicable to the housing project where the development of possession was granted earlier. The assessee however pointed out that such an issue has been decided by this Court in case of Commissioner of Income Tax Vs. Happy Home Enterprises and anr. (2014 (9) TMI 707 - BOMBAY HIGH COURT) hold that such modified requirement for claiming deduction under Section 80IB(10) cannot be enforced against those assessee where the housing project granted development permission prior to such date. We notice that Gujarat High Court in case of Maran Corporation [2012 (9) TMI 700 - GUJARAT HIGH COURT] has also taken a similar view. In any case where issue has now been considered by the Supreme Court in case of Commissioner of Income-Tax Vs. Sarkar Builders (2015 (5) TMI 555 - SUPREME COURT). In that view of the matter it would be worthwhile to admit these appeals since no question of law can be stated to have arisen. Both the appeals are therefore dismissed.
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2019 (1) TMI 1470
Additional expenditure on repairs to qualify for the deduction u/s 54 - ITAT treating the expenditure incurred by the assessee over and above the actual cost of the new property to make it habitable as part of acquisition cost - additional expense is more than that the actual cost of the property - Held that:- Tribunal has recorded the facts. The assessee had pointed out that he had acquired the flat which was a bareshell which required further expenditure to make it habitual. The assessee had to undertake renovation, tiles, furnitures and fixtures had to be fitted as per the instructions of the assessee. The Tribunal thereupon concluded that the Revenue was not correct in questioning such expenditure. We notice that the Tribunal had relied on the decision of the Division Bench of Punjab and Haryana High Court in case of Ashok Syal Vs. Commissioner of Income-tax (2012 (10) TMI 203 - PUNJAB AND HARYANA HIGH COURT) in which somewhat similar view was taken. Eventually, the entire issue is based on facts. The Tribunal has assessed the facts on record and accepted the assessee's claim that the expenditure was shown to make the unit habitable - No question of law arises
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2019 (1) TMI 1469
Nature of land sold - agricultural land or capital asset - distance between the limits of Navi Mumbai Municipal Corporation and the land in question - Held that:- If land comprises within the jurisdiction of the Thane Municipal Corporation, it falls falls within sub-clause (a). In which case, reference to sub-clause (b) is not necessary. On the other hand, as we held, if it does not comprise within the jurisdiction of Thane Municipal Corporation, it would not fall under sub-clause (a). But if it is situated at a distance of less than 8 kms from Navi Mumbai Municipal Corporation, it would fall under sub-clause (b). In either case, it would be referred as a capital asset. In our opinion, therefore, the Tribunal has correctly appreciated the legal position in this regard. No question of law, therefore, arises. Alternative contention for the assessee as he drew our attention to a letter dated 14.10.15 written by the Assistant Director, Town Planning, Navi Mumbai Municipal Corporation. According to this letter, the distance by road or the land in question and the Navi Mumbai Municipal Corporation is approximately 9 kms. If it is so established, in any case, the assessee may be entitled to the benefit under the Act. However, this document was not part of the proceedings below. We would, therefore, not examine this question before us for the first time. Instead, we allow the assessee to produce this document before the Tribunal who thereafter enable the Revenue to respond to such document and take a fresh decision with respect to the distance between the limits of Navi Mumbai Municipal Corporation and the land in question. The statutory provision prevailing at the relevant time, did not clarify the manner in which the distance would be measured i.e. either by road or aerially. The legislature now specifically provides that such distance would be measured aerially. This was introduced by Finance Act, 2013 w.e.f. 01.04.2013. In this respect, our attention was drawn to the Circular dated 06.10.2015 issued by the Central Board of Direct Taxes clarifying that judgment of this Court dated 30.03.2015 in ITA No.151 of 2013 in the case of Smt. Maltibai R. Kadu [2015 (4) TMI 227 - BOMBAY HIGH COURT] holding that the amendment in question would apply prospectively, is accepted by the Revenue.
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2019 (1) TMI 1468
Reopening of assessment - Held that:- With regard to assumption of jurisdiction under Section-147 of Income-tax Act is concerned, hereto we are of the view that the Tribunal did not consider the plea of the assessee with regard to the jurisdiction under Section-147 of the Income-tax Act. Hence, this question also requires to be considered by the Tribunal. The failure of the Tribunal to consider the question of jurisdiction has therefore led to miscarriage of justice. Under these circumstances, both the questions of law are held in favour of the assessee and against the Revenue, by holding that the order of the Tribunal is unsustainable, since it did not consider the grounds urged before it and has committed an error in not considering the contention of the assessee with regard to the question of assumption of jurisdiction under Section-147
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2019 (1) TMI 1467
TPA - aggregation/segregation of two segments - purchase of software segment was not merged with the software development segment - Held that:- This is the first time that the TPO has taken a different view from the earlier Assessment Years as well as subsequent Assessment Years by aggregating Software Trading Segment with Software Development Segment, but while doing so, there was no finding as to why these two segments has been aggregated/merged/clubbed by the TPO. Therefore, it will be appropriate to remand back this issue to the file of TPO/A.O. to decide the same afresh by taking into account FAR analysis given by the assessee in TP Study as well as principle of consistency. Therefore, Ground is partly allowed for statistical purpose. Since this issue is remanded back, the subsequent grounds which were raised by the assessee in respect of Transfer Pricing Adjustment will also be decided by the TPO/A.O. according to the decision of aggregation/segregation of these two segments. Therefore, Ground Nos. 1 to 13 are partly allowed for statistical purpose. Adjustment on account of advance billing to be allowed in favour of the assessee by the decision of the Co-ordinate Bench in asessee’s own case for Assessment Years 2008-09 & 2007-08. Adjustment on account of business promotion and conference - Held that:- These business promotion expenses were incurred wholly and exclusively for the purpose of business and were necessitated in view of commercial exigency and are earned year on year. Hence, the Ld. AR prayed that the same may be allowed as business expenses u/s 37 - issue is covered in favour of the assessee in assessee’s own case for Assessment Year 2009-10.
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2019 (1) TMI 1466
Levy of penalty u/s 271(1)(c) - assessee claimed additional depreciation under section 32(1)(iia) on fixed assets under the head plant and machinery - Held that:- It is a case where penalty is levied, on a issue, in respect of which Hon’ble Delhi High Court in assessee’s own case for relevant assessment year under consideration, has framed substantial question of law. It thus becomes apparent that addition is debatable. We draw support in respect of aforestated view from order dated passed by Hon’ble Delhi High Court in case of CIT vs Liquid Investment and Trading Co., (2010 (10) TMI 1021 - DELHI HIGH COURT ). We are, therefore, inclined to delete the penalty. - Decided against revenue
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2019 (1) TMI 1465
Addition u/s 68 - non providing opportunity of cross examination of the person relying on whom addition is made - Held that:- We find considerable cogency in the contention raised by the assessee’s counsel that addition was made on the basis of statement of Sh. Vikrant Kayan, but the assessee was not granted the opportunity to cross examine Sh. Vikrant Kayan, which ground was also raised before the Ld. CIT(A). It is of the considered view that assessee has raised ground no. 3 (wrongly mentioned as ground no.5) before the Ld. CIT(A) in the appeal requesting for granting reasonable opportunity of being heard. CIT(A) in his impugned order has reproduced the plea of the Assessee that while making the addition of ₹ 11,78,216/- the AO has relied on statement of Sh. Vikrant Kayan without providing opportunity to the assessee for cross examination of such person. In view of above, there is no doubt that assessee has raised the ground of providing opportunity of cross examination of Sh. Vikrant Kayan before the CIT(A) and also by way of revised/additional ground before the Tribunal. See SMT. JYOTI GUPTA VERSUS THE I.T.O, DELHI [2018 (11) TMI 1353 - ITAT NEW DELHI] and ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT] - Decided in favour of assessee
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2019 (1) TMI 1464
Bogus LTCG - addition u/s 68 - exemption of Long Term Capital Gain u/s 10(38) denied - abnormal rise in the price - Held that:- No defect in the said documentary evidences could be brought on record by the revenue. The addition in question was made merely on the basis of suspicion and surmises. No material has been brought on record to show that the assessee was involved in the racket which was unearthed by the Investigation Wing of the department. The revenue could not point out that in anywhere in the statement of Sh. Sanjay Vora and/or Sh. Praveen Kumar Agarwal, the name of the assessee was stated by them. Therefore, simply because some persons were involved in generation of bogus Long Term Capital Gain cannot lead to conclusion that the assessee was also involved in it without cogent material. After making inquiries from the person, from whom, the assessee purchased the shares in question and/or from the share broker through whom the assessee sold the shares, no material could be brought on record by the AO to show that the transaction of the assessee was not genuine and the assessee actually paid any amount in cash to any person in consideration of cheque received by him from the authorized share broker. In absence of such a material being brought on record by the revenue, in my considered opinion, the transaction of the assessee which is supported by overwhelming documentary evidences cannot be impeached merely because share prices rose abnormally or other persons were involved in generation of bogus Long Term Capital Gain. - Decided in favour of assessee
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2019 (1) TMI 1463
Penalty u/s 271(1)(c) - allegation of concealment of particulars of income or furnishing inaccurate particulars of income during assessment proceedings - Held that:- AO before initiating the penalty proceedings has not recorded satisfaction if the assessee has concealed particulars of income or has furnished inaccurate particulars of income so as to attract the provisions of section 271(1)(c) of the Act rather proceeded to levy the penalty by specifically writing in para 2 on page 3 of the penalty order that the record filed by the assessee not found to be correct. We are of the considered view that penalty levied by the AO and confirmed by ld. CIT (A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed.
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2019 (1) TMI 1462
Penalty u/s 271(1)(c) - reopening of assessment u/s 147 - Held that:- Reasons recorded have not been mentioned in the assessment order nor in the order passed by the CIT (A). All these facts go to prove that the assessment has been framed in haste without providing adequate opportunity of being heard to the assessee. Even the CIT (A) has not provided adequate opportunity of being heard to the assessee rather relied upon unsubstantiated fact that when order u/s 271(1)(c) dated 02.06.2017 was received by the assessee, he cannot be believed that the notice u/s 148 of the Act and notices sent u/s 142 (1) have not been received by the assessee. To meet with the ends of justice, assessment order passed by the AO and impugned order passed by the ld. CIT (A) are required to be set aside. Hence case is remanded back to the AO to decide afresh after providing an opportunity of being heard to the assessee. Consequently, the aforesaid appeal filed by the assessee is allowed for statistical purposes. Penalty u/s 271(1)(c) - since the assessment order framed u/s 144/147 of the Act on the basis of which penalty proceedings were initiated has been set aside to the file of AO to decide afresh after providing an opportunity of being heard to the assessee, the penalty proceedings being consequential in nature are also liable to be set aside to the AO to decide accordingly after framing new assessment order.
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2019 (1) TMI 1461
Reopening of assessment - no notice u/s 148 was served upon the assessee and even date of service of notice u/s 142 (1) of the Act on the assessee has not been mentioned by the AO - Held that:- There is not an iota of material mentioned in the assessment order as to on which date notice u/s 148 of the Act was served upon the assessee and even date of service of notice u/s 142 (1) of the Act on the assessee has not been mentioned by the AO who has rather framed the assessment in haste. All these facts go to prove that adequate opportunity of being heard has not been provided to the assessee by the AO and the documents placed on file before the ld. CIT (A) have also not been examined by calling a remand report rather the ld. CIT (A) has dismissed the appeal on the basis of conjectures and surmises without going into the merits of the documents relied upon by the assessee. In these circumstances, we are of the considered view that to meet with the ends of justice, the assessee is required to be given adequate opportunity of being heard. - decided in favour of assessee for statistical purposes. Penalty proceedings u/s 271(1)(c) - failure of the assessee to appear and defend the penalty proceedings - Held that:- Since the assessment order framed u/s 144/147 of the Act on the basis of which penalty proceedings were initiated has been set aside to the file of AO to decide afresh after providing an opportunity of being heard to the assessee, the penalty proceedings being consequential in nature are also liable to be set aside to the AO to decide accordingly after framing new assessment order. Consequently, the aforesaid appeal filed by the assessee is hereby allowed.
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2019 (1) TMI 1460
Levy of penalty u/s.271(1)(c) - Addition towards working capital - Held that:- We find that assessee is not in appeal against estimation of 8% on its receipts of ₹ 1,42,54,512/-, as income from civil construction business. Once an addition on estimate basis is made, in our opinion a further estimate for investments in working capital will be superfluous. There is nothing on record to show that assessee had any working capital or work in progress. Estimation of ₹ 24,00,000/- , as net receivables of the assessee was purely an assumption. We have no hesitation in deleting this addition. Ground No.2 of the assessee is allowed. Initiating levy of penalty u/s.271(1) (c) of the Act, which is consequential in nature, needing no specific adjudication. Unexplained investment in business - Assessee seeks telescoping of such investment against the income estimated at 8% on contract receipts - Held that:- It is clear that assessee itself had admitted a sum of ₹ 4,00,000/- as peak investment in bank account which was not disclosed. Having done so, assessee cannot turn around and say that such addition ought not have been made by the ld. CIT(A). Assessee cannot plead for telescoping of admitted income with what is found by the Assessing authority to be undisclosed income. We thus do not find any reason to interfere with the order of the ld. CIT(A). Grounds 4 and 5 of the assessee stand dismissed. Penalty u/s 271(1)(c) - income arrived at estimated basis - assessee in its original return of income had shown only income from salary and income from house property and never revealed that it was doing any business, much less a civil contract business - Held that:- Question of concealment and furnishing of inaccurate particulars has to be answered with reference to the original return filed by the assessee, and not based subsequent computations or revised return filed when assessee became aware that Assessing Officer was having information on income not disclosed in the original returns. Thus, in our opinion there was clear furnishing of inaccurate particulars as well as concealment of income. Even in the revised computation filed, during the course of assessment proceedings, assessee had admitted income of only ₹ 1,24,400/- that too, on estimate basis. Lower authorities were justified in levying penalty under Section 271(1)(c). Nevertheless, since we have deleted the addition of ₹ 24,00,000/- considered as unexplained investment in working capital, the penalty levied also requires to be reduced proportionately. Appeal of the assessee are partly allowed.
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2019 (1) TMI 1459
Bogus LTCG on share transactions - addition u/s 68 - disallowance of exemption claimed u/s.10(38) - Held that:- Transactions done through recognized stock exchanges where payments were made through bank cannot be doubted or disbelieved based on an investigation report of the Department, which at the best can be strong reason to suspect the veracity of the claim but not good enough to disbelieve it. Therefore of the opinion that there is nothing concrete brought on record by the Department to show that transactions entered by the assessee in the shares of SMIL were bogus or sham. No reason to uphold the orders of the lower authorities. Such orders are set aide and the addition is deleted. - Decided in favour of assessee
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2019 (1) TMI 1458
Denial of exemption claimed u/s.54EC - investments in Electrification Corporation Bonds made on 28.02.2014 and 30.06.2014 were beyond the period allowed u/s.54EC - whether JDA was correctly taken as date of transfer by the lower authorities - Held that:- Handing over of the possession could happen only after the CMDA approval for the plan was received. Planning permit was given by the CMDA, only on 31.12.2013. Hence, possession could have been given by the assessee to the developer only after 31.12.2013. Even if, we presume the letter dated 03.02.2014 placed by the assessee at paper book page 42 and claimed as evidence for handing over of possession, as a document constructed by the assessee and the developer to help the assessee’s cause, still we are inclined to hold that the investments made by the assessee in the bonds were within six months outer limit mentioned in Section 54EC of the Act. Even if possession was given by the assessee on the very next day after getting the CMDA approval, viz, on 01.01.2014, the investments made on 28.02.2014 and 30.06.2014 were within six months period. By virtue of Section 2(47) (v) of the Act transfer is complete when the possession of immovable property is given in part performance falling within Section 53A of the Transfer of Property Act, 1882. Coming to the question whether assessee could claim such exemption over investment done over two successive financial year, this stands answered by Hon’ble Jurisdictional High Court in the case of Coromandel Industries Ltd [2014 (12) TMI 852 - MADRAS HIGH COURT] as upheld the view of this Tribunal that investments, even though they are made in two difference financial years, if they fall within six months period from the date of transfer, would be eligible for deduction under Section 54EC - Decided in favour of assessee Disallowance of additional cost of construction while computing the deduction claimed under Section 54 - Held that:- AO sought restriction of the additional claim of ₹ 12,21,086/- based on certain submissions given by M/s.Sumanth& Co. It appears that he did not verify whether the claim of the assessee was genuine. Ld. AO also did not verify whether there was any duplication of original claim of ₹ 3,18,75,000/- under Section 54 made in the return and the additional claim of ₹ 3,06,40,581/- made before ld. CIT(A). Once ld. CIT(A) admitted fresh evidence in our opinion ld. AO was duty bound to verify such evidence in accordance with law. Careful examination is required since the claim of additional construction, when aggregated with what was originally claimed by the assessee in the return appears prime facie to be disproportionate to the cost and the area. Even the original claim, it seems, was allowed without consider this aspect. We are therefore of the opinion that question whether assessee was eligible for claiming any relief for additional cost of construction and if so, to what extent requires a fresh look by the ld. AO - Decided in favour of assessee for statistical purposes.
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2019 (1) TMI 1457
Revision u/s 263 - sum paid towards pension fund but there is corresponding payment of employer and employee contribution to P.F. - Held that:- No dispute about the settled legal proposition as per hon'ble apex court’s landmark decision in Malabar Industrial Co. Pvt. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] that the legislative expression “prejudicial to the interest of the Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their lordships made it clear that every loss of revenue as a consequence of the Assessing Officer’s order cannot be treated as prejudicial to the interest of revenue. The CIT’s former remand direction as related to an expenditure head of ₹23,32/- and ledger copy of various loans to be re-verified whereas the PCIT second show cause notice in issue raised two more issues of various other heads of expenditure i.e. car maintenance, car insurance, the business promotion, site expenses employee’s contribution to PF and pension etc., His case is that the same had not been examined during original assessment framed which stood revised as per former CIT’s order. The PCIT clearly sought to exercises his revision jurisdiction on different issues which had nowhere been raised in first round revision order. Case file suggests that the first round regular assessment had been framed on 16.04.2012 in financial year ending on 31.03.2013 Sec. 263(2) of the Act prescribes limitation in such a case to be “after expiry of two years from the end of the financial year in which the order sought to be revised was passed.” The Revenue failed to dispute that the said clause states with a negative covenant. The limitation period of two years as per this statutory provision comes to be 31.03.2015 as outer limit i.e. much earlier than earlier to the PCIT’s second show cause notices on 10.08.2017. The same is held to be hit by statutory period of limitation therefore. - PCIT’s order under challenge directing afresh assessment in his order dated 31.10.2017 is not sustainable. - Decided in favour of assessee
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2019 (1) TMI 1456
Addition on account of alleged discount received - CIT(A) confirmed this addition on the ground that the assessee should have reduced this amount from his purchases but had malafidely shown cash payments of equal amount to M/s. Dyechem International Pvt. Ltd. and has failed to prove the same with documentary evidence - Held that:- During the course of hearing, the assessee had changed its stand and hence the ld. CIT(A) confirmed the addition in question. We find no infirmity in the same, and hence dismiss Ground No. 1 of the assessee. Addition of an unreconciled closing stock balance as on 31/03/2010 of a cash credit account with United Bank of India (UBI) - Held that:- As assessee’s contentions is that ₹ 8,00,000/-, was withdrawn in cash during the period and the money was not entered in the cash book resulting in the figures remaining unreconciled. It was submitted that such unreconciled amount would not result in any income. We find that no such contention has been raised before the lower authorities. In any event, we set aside the matter to the file of the Assessing Officer for fresh adjudication, in accordance with law. Disallowance u/s 40(a)(ia) - scope of amendment - retrospective effect - Held that:- We set aside this matter to the file of the Assessing Officer for applying the judgment of the Hon’ble Delhi High Court in the case of Commissioner of Income-tax-1 v. Ansal Land Mark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] where the Hon’ble Court upheld the order of the Agra Bench of ITAT in Rajiv Kumar Agarwal v. ACIT (2014 (6) TMI 79 - ITAT AGRA) and held that the insertion of second proviso to Section 40(a)(ia) of the Act is declaratory and curative and hence retrospective in nature. Grounds of the assessee allowed for statistical purposes Disallowance under the head staff welfare expenses - amount was paid to one Mr. Md. Latif by way of two cheques - Held that:- Mr. Latif is a local politician and subscription is given for local puja purposes and also the amount has been disallowed on the ground that no evidence has been produced by the assessee. We find no infirmity in the same and uphold the order of the ld. CIT(A) and dismiss this ground of the assessee. Addition of bogus purchase of diesel - assessee has moved an application for filing of additional evidence - Held that:- CIT(A) has not confronted the assessee with the information, we admit the additional evidence filed by the assessee as the assessee had no opportunity before the ld. CIT(A) on this issue. As the Assessing Officer did not have an opportunity to verify all the bills as well as the additional evidence, we set aside the matter to the file of the Assessing Officer for fresh adjudication Disallowance on account of payments made to one Shri Moti Mondal, for purchase of diesel - Held that:- The disallowance was made as the assessee could not produce any evidence in support of his claim. On these facts, we see no infirmity in the finding of the ld. First Appellate Authority. TDS u/s 194J - Disallowance u/s 40(a)(ia) - non deduction of tds on accounting charges - Held that:- As the person whom the amount was paid was not a qualified professional and he was an accountant writing the accounts and hence 194J of the Act, does not apply. We agree with the submissions and deleted the disallowance made u/s 40(a)(ia) of the Act. Gross profits determination - Held that:- After hearing rival submissions we direct the Assessing Officer to adopt gross profit @ 3.5% in place of 5% adopted by the ld. CIT(A), as in our view this would meet the ends of justice. In the result, this ground of the assessee is allowed in part.
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2019 (1) TMI 1455
Bogus purchases - assessee failed to establish the genuineness of the purchase and accordingly, he made addition of unproved purchase at 12.5% - Held that:- As relying on Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] we find that the CIT(A) has rightly applied the profit rate at the rate of 6.5% of the bogus purchases and we confirm the same. This issue of assessee’s appeal is dismissed.
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2019 (1) TMI 1454
Allowability of deduction u/s.54F - residential house has been constructed consisting of 6 RCC rooms on the ground floor - assessee did not deposit the said amount in capital gains account scheme - Held that:- We find that there is no dispute to the fact that one capital asset was sold and thereafter, new house was constructed. That both the Revenue Authorities in their respective orders have agreed that the Inspector had visited the site and has reported that residential house has been constructed consisting of 6 RCC rooms on the ground floor. That without negating this report, Revenue Authorities have simply rejected the claim of deduction u/s.54F of the Act so far as the assessee is concerned. Neither AO nor CIT(Appeals) has conducted any specific enquiry to demonstrate that the construction of the new house was from any other source other than the net consideration received from sale of land. CIT(Appeals) denied the deduction u/s.54F simply because bills and vouchers were not produced. But the factual parameters of existence of new residential house was not denied by the CIT(Appeals). Nor he has shown the fund utilized for such construction was from other sources. In absence of these specific enquiry and not granting deduction u/s.54F to the assessee, is not permitted within the ambit of welfare legislation which is embedded in the taxing statutes. We take guidance from the judicial pronouncements in Pr. Commissioner of Income Tax Vs. C. Gopalaswamy [2016 (6) TMI 643 - KARNATAKA HIGH COURT] where opined that “where assessee invested money in construction of a residential house, deduction u/s.54F cannot be denied merely because construction was not complete in all respect within stipulated time”. Similarly in the case of Commissioner of Income Tax Vs. K. Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] held “where assessee invested entire sale consideration in construction of a residential house within three years from date of transfer of land, deduction u/s.54F of the Act cannot be denied just because he did not deposit the said amount in capital gains account scheme.
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2019 (1) TMI 1453
TDS u/s 195 - commission paid to the Foreign Agents u/s 40(a)(ia) - fees for technical services - non-resident rendering services outside India - PE in India - Held that:- Since the non-resident agents do not have any permanent establishment in India no part of the commission income of those agents can be said to have been accrued or arise in India. Further that the commission payments to non-resident agents also cannot be as regarded fees for technical services as defined in explanation 2 of Section 9(vii) as the commission payment is not for rendering any managerial, technical or consultancy services. It is well settled principle of law flowing from the judgment passed in the case of CIT vs. Toshoku Ltd., [1980 (8) TMI 2 - SUPREME COURT] that the non-resident since rendering services outside India, the commission earned by such non-resident for acting as an agent for Indian exporter would not accrue in India. In the case in hand the foreign agents are not residents of India and thus squarely covered by the said judgment passed by the Hon’ble Apex Court. Further that similar commission paid in earlier years by the assessee to the foreign agents in the similar set of facts and circumstances no disallowance made by the authorities below and therefore disallowance made by the Learned AO is not justified. In fact the order impugned clarified each and every aspect of the matter as discussed above does not call for any interference and therefore in the absence of any infirmity we confirm the same. Thus, revenue’s ground of appeal is dismissed. Disallowance made u/s 14A - Held that:- no direct or indirect expenditure has been incurred by the firm in respect of investment in capital with partnership firm. In the absence of any expenditure incurred and debited to profit and loss account of the company in relation to investment in capital in partnership firm application of Rule 8D(iii) is not permissible and therefore no disallowance of expenditure is required to be made. The investment in partnership was made out of the own funds as it is clearly evident from the record before us; no interest bearing borrowed fund were used for making these investment. The judgment relied upon by the Learned AR in this respect passed by the Jurisdictional High Court in the case of Corrtech Energy Pvt. Ltd.[2014 (3) TMI 856 - GUJARAT HIGH COURT] which has held that in a case where there is no income which is not chargeable to tax, provision of Section 14A of the Act will not be applied is rightly applied to the instant case. - decided in favour of assessee
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2019 (1) TMI 1452
Reopening of assessment - disallowing STT debited to P&L Account, income-tax debited, disallowance u/s 14A and preliminary expenses - addition u/s 68 - assessment proceedings u/s 153A/143(3) - Held that:- In the case of CIT vs. Raj Kumar Arora [2014 (10) TMI 255 - ALLAHABAD HIGH COURT] wherein it has been held that the AO has power to reassess returns of the assessee not only for undisclosed income found during the search operation, but also with regard to material available at the time of original assessment. Similar view has been taken in the case of CIT vs. Kesarwani Zarda Bhandar Sahson, Allahabad [2017 (4) TMI 57 - ALLAHABAD HIGH COURT] wherein it has been held that the Assessing Officer has power to reassess returns of the assessee not only for undisclosed income found during search operation, but also with regard to material available at the time of original assessment. Thus we are unable to accept the contention of the ld. counsel for the assessee that in the absence of any incriminating material found during the course of search, the initiation of proceeding u/s 153A are not valid. Therefore, the legal ground raised by the assessee stands dismissed. Coming to the merit of the case, it is an admitted fact that in the order passed u/s 147/143(3) on 31st December, 2009, the Assessing Officer had examined the issue of share premium and share application money. On the basis of various details filed by the assessee as required by the Assessing Officer, no addition was made and the issue of share premium was accepted without making any addition. When the assessee during the course of reassessment proceedings had filed the requisite details such as the copies of share applications, bank statements including details of allotment, premium charge, etc., and nothing adverse was found during the course of search proceedings and considering the fact that nothing adverse during post search inquiries was found to negate the documents already filed at the time of the reassessment proceedings, the present Assessing Officer, on the same set of material cannot take a different view than the view already taken by his predecessor at the time of original assessment merely because a search has taken place. Addition made by the Assessing Officer and sustained by the CIT(A) is not justified. Accordingly, AO is directed to delete the addition made by him u/s 68 - Appeal filed by the assessee is partly allowed.
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2019 (1) TMI 1451
Depreciation to assessee trust - double deduction - revenue contented as had rightly disallowed assessee’s depreciation since it had already claimed corresponding cost of acquisition for the purpose of section 11 exemption provided in the Act - Held that:- We find no merit in Revenue’s as Hon’ble Apex Court in the case of CIT vs Rajasthan and Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] has settled the very same issue in assessee’s favour. Their Lordships have already made it clear that section 11(6) brought in Act vide Finance Act, 2014 which applies w.e.f AY 2015-16 only than having any retrospective operation. We make it clear that we are in AY 2008-09. We thus confirm the CIT(A) findings accepting assessee’s depreciation claim.
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Customs
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2019 (1) TMI 1450
Smuggling - Unpaid seller of goods - non-existent individual consignment found - brown colour tapes containing 21510 pieces of 4GB memory cards (unbranded of Taiwan make) and other items inside the computer UPSs - return of goods for resale - Held that:- Whilst there was no dispute that M/s Sui company’s name is found in the Import General Manifest and further that the petitioner’s mobile number too was apparent, the inter se relationship between the two is unknown - When this Court directed the adjudicating authority to consider amending the show cause notice, in the opinion of this court at the stage, when the request was taken into account, the onus was upon the petitioner to produce the relevant documents to establish its relationship with the consignor (Sui Co., Hong Kong) - That the petitioner’s name could be discerned in the Import General Manifest or any other relative document per se does not establish that he was the unpaid seller. Other documents prima facie indicating that he had a pre-existing relationship with M/s Sui Co. or that he had title to the goods or that he was authorized by the company in some capacity would have strengthened its case. The petitioner’s remedy is by way of an appeal to the Commissioner of Customs (Appeals) - Petition disposed off.
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2019 (1) TMI 1449
Non-fulfillment of export obligation - import of capital goods at concessional rate of duty with a condition to export under EXIM policy with certain conditions - EPCG Scheme - Held that:- It is a fact that the appellant has failed to fulfill the export obligation and therefore, ADGFT proceeded against the appellant and passed the order dated 7.11.2016 demanding the duty foregone and also imposed penalty. For the same offence of not fulfilling the export obligation, the customs department has also initiated proceedings and confirmed the demand and imposed the penalties - Further, the ADGFT has taken care of the interest of the revenue and initiating of proceedings by the customs department is not warranted in this case. Further, demanding the duty foregone and also imposing the penalties by the customs department in spite of the fact that for the same offence, the ADGFT has already passed the order dated 7.11.2016 amounts to double jeopardy which is not permissible in law. The impugned order demanding duty and also imposing penalty for non-fulfillment of export obligation amounts to double jeopardy and not legally sustainable - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1448
Revocation of CHA License - forfeiture of security deposit - time limit - contravention of provisions of Regulation 11(a), 11(d), 11(e) and 11(n) of the Custom Broker licensing Regulations, 2013 - Held that:- The findings recorded by the Ld. Commissioner General are more or less the reiteration of the allegations, without any specific bills of entry handled by the appellants-CHA. Further, the appellant have obtained and maintained sufficient documents as regards the importers who approached them for clearance of their goods. The allegations of the Revenue are based on investigation and the statements of Mr. B.K. Goyal. Although Director of the appellant have also stated that the said importer were introduced to him through Shri B.K. Goyal, but it is not established that appellant handled the work of clearance with any malafide motive, or any motive to abnormal gain - there is no allegation of the appellant having made any abnormal profits in connivance with the said Mr. B.K. Goyal. The impugned order is bad in the absence of any offence report - the charges levelled against the appellant CHA are not maintainable - the license of the appellant CHA is restored - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1447
Reliability on statements - Undervaluation of imported goods - Booster Pumps and water purifier parts like RO Membrane - rejection of declared value - demand of differential duty - whether the statement of the partner of the Company recorded can be taken as reliable evidence with allegation of coercion etc. is made and when the evidence is not corroborated by independent evidence/documents? Held that:- The evidence that the Department claims to possess is nothing but some documents which were obtained through the appellants themselves and is contained in emails. On a perusal of the said e-mails from M/s Micro Filter Co. Ltd & others would clearly indicate that they were tailor made as per request of the importer well after the imports have taken place. The existence of the emails/ documents at the time of import is very much doubtful. It is pertinent to note that it is not the case of the department that such evidences were recovered in course of search. The records indicate that the same are produced by the appellants. The appellants submitted that they have obtained the value declared by other importers during the relevant time. Perusal of the same reveals that prices at which other importers imported identical items, from the same companies at about the same time, are either comparable or less than value declared by the appellants. It is found that the Department has ignored this fact and has not produced any import data of the contemporaneous import to indicate that the appellants have misdeclared the value of the import. This being the case the Department's contention that the appellant misdeclared the imported items cannot be accepted. Therefore the declared prices cannot be rejected in terms of Customs Valuation Rules. Thus, because of the very fact that the Department has not relied upon any other important documentary evidences or any contemporaneous import which were made at higher price than the appellants, we are not inclined to accept the contention of the Department - demand not sustainable - penalty also set aside - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1446
Exemption of additional duty of customs (CVD) - Classification of imported goods - whether the imported goods were Manganese Ore or Manganese Concentrate? - N/N. 4/2006-CE as substituted by Notification No. 12/2002 - Held that:- In the case of ANDHRA FERRO ALLOYS LTD [2017 (8) TMI 89 - CESTAT HYDERABAD], the Bench went into the details of the entire issue and held that in the absence of any evidence to show that the goods imported were concentrates, demands cannot be sustained. In the cases in hand, identical issue falls for our consideration and it is found that there is no evidence in the form of any test report of the Dy. Chief Chemist or any person to even remotely indicate that the goods imported by the respondent herein are not Ores but Concentrates - The ratio of the decision of the Tribunal in ANDHRA FERRO ALLOYS would squarely apply in the cases in hand. Appeal dismissed - decided against appellant.
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2019 (1) TMI 1445
Condonation of delay of 206 days in filing appeal - applicant submits that delay has occurred due to the fact that father-in-law of the Director of appellant Shri Parag Garg was terminally ill since December 2017 and unfortunately passed away on 12.04.2018 - Held that:- The Order which is the subject matter of the Appeal for which the impugned application has been filed was passed on 22.12.2017 and was received by the appellant within less than 15 days i.e. on 31.12.2017. The maximum time available to the applicant to file the Appeal was till 31.03.2018. The documents supporting the terminal illness as impressed upon by the applicant reflects that the person got admitted on 10.04.2018 and expired on 12.04.2018 i.e. the pleaded event occurred post expiry of the period of three months during which the Appeal could have been filed. Admittedly, the person passed away was the father-in-law of the Director of the applicant but there is nothing on record to show his personal involvement that too to the extent of making it impossible for him to pursue his consultant (CA/ Advocate) for collecting the relevant documents and filing the Appeal within the time frame fixed for the same. This particular observation is sufficient to hold that the reason mentioned for condonation of delay is not a sufficient cause for the delay to be condoned - the delay is of more than 200 days which has not been appropriately explained, Application is held to have no merits - COD Application dismissed.
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2019 (1) TMI 1444
Export of Rice - Basmati Rice or Non-Basmati Rice? - Held that:- The size of grains were more than the size prescribed by DGFT (6.61mm length & L/B more than 3.5 mm) which is in consonance with law. Policy Circular No. 11 (RE-2012)/2009-14 dated 3/1/2013 issued by the DGFT, categorically states as follows-“2.Since export of non-basmati rice has been made free from 9.09.2011, it has been decided to withdraw with immediate effect both policy circular mentioned in para 1 above, namely, Policy Circular No. 33 (RE-2008) 2004-09 dated 30/09/2008 and Policy Circular No. 28/2009-14 dated 31/03/2010.” - Taking judicial notice of the development of law i.e. the goods (rice) were made freely exportable, it is deemed fit to set aside the impugned order - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (1) TMI 1443
Right of a secured creditor to file a winding up petition after such secured creditor has obtained a decree from the Debts Recovery Tribunal [“DRT”] and a recovery certificate based thereon - Held that:- One of three instances in which a company shall be deemed to be unable to pay its debts. If the fact situation fits sub-clause (b) of Section 434(1), then a company may be said to be deemed to be unable to pay its debts. However, this does not mean that each one of the sub-clauses of Section 434(1) are mutually exclusive in the sense that once Section 434(1)(b) applies, Section 434(1)(a) ceases to be applicable. Also, on the facts of this case, we may state that the company petition was filed only on 03.07.2015, pursuant to a notice under Section 433 of the Companies Act, 1956 dated 15.04.2015. This petition was filed under Section 433(e) read with Section 434(1)(a) of the Companies Act, 1956. At the stage at which the petition was filed, it could not possibly have been filed under Section 434(1)(b) of the Companies Act, 1956, as execution or other process in the form of a recovery certificate had not been issued by the Recovery Officer till 12.08.2015, i.e., till after the company petition was filed. For this reason also, it is clear that this contention of the learned counsel appearing for the appellant must be rejected. We may only end by saying that cases like the present one have to be decided by balancing the interest of creditors to whom money is owing, with a debtor company which will now go in the red since a winding up petition is admitted against it. It is not open for persons like the appellant to resist a winding up petition which is otherwise maintainable without there being any bona fide defence to the same. We may also hasten to add that the respondent cannot be said to be blowing hot and cold in pursuing a remedy under the Recovery of Debts Act and a winding up proceeding under the Companies Act, 1956 simultaneously. When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not “blow hot and cold”, but they blow hot and hotter.
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2019 (1) TMI 1442
Winding up petition - financial creditor's application which has been admitted by the Tribunal - Held that:- Section 11 of the Code specifies which persons are not eligible to initiate proceedings under it. This Section is of limited application and only bars a corporate debtor from initiating a petition under Section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this Section, it does not follow that until a liquidation order has been made against the corporate debtor, an Insolvency Petition may be filed under Section 7 or Section 9 as the case may be, as has been held by the Appellate Tribunal. Hence, any reference to Section 11 in the context of the problem before us is wholly irrelevant. We decline to interfere with the ultimate order passed by the Appellate Tribunal because it is clear that the financial creditor's application which has been admitted by the Tribunal is clearly an independent proceeding which must be decided in accordance with the provisions of the Code. Though, we are not interfering with the Appellate Tribunal's order dismissing the appeal, we grant liberty to the appellant before us to apply under the proviso to Section 434 of the Companies Act (added in 2018), to transfer the winding up proceeding pending before the High Court of Delhi to the NCLT, which can then be treated as a proceeding under Section 9 of the Code.
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Service Tax
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2019 (1) TMI 1441
Works Contract - Construction services - works of conservation, repair, renovation and restoration work for Archaeology and Museums Department, Government of Rajasthan and various other Government Agencies/ Departments - Conservation and restoration work done for Ghat ki Guni, Jaipur - Construction of Roads, culvert and drain in the stone park - Construction of individual houses constructed for Rajasthan Housing Board - Construction of quarters at DCCPP, Dholpur - Construction of quarters for officers of RRVUNL - Construction Milk Chilling unit for dairy under scheme of Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture - Sub- contractor work for GEA Energy and others - cum-tax benefit - imposition of penalties. Commercial and Industrial Construction Services - Conservation and restoration work done for Ghat ki Guni, Jaipur - Construction of Roads, culvert and drain in the stone park - Held that:- The later work (Ghat ki Guni) is held taxable for the reason that it does not fall within the definition of building but the perusal of definition under Section 65(25B) makes it clear that the construction meant not only for building but for any other civil structure or a part thereof. There is no denial on the part of the Department for Ghat ki Guni to be at least a civil structure which otherwise is apparent from the photographs also as are placed on record by the appellant. Resultantly, confirmation of the tax liability as far as the conservation and restoration of Ghat ki Guni is not sustainable. With respect to the several work orders/ contracts executed with respect to construction, widening, renovation or maintenance of the road it is observed from the above definition of Section 65(25B) itself that the same are excluded from the taxability thereof. Though w.e.f. 01.07.2012 the word road for use by general public has been incorporated in the aforesaid provision but to our opinion the said insertion is not affecting the execution of the work contracts/ orders executed by the appellant qua various roads - Perusal clarifies that roads/ drains/ pipelines as executed by the appellant are the roads for use by general public which fall under exclusion part of the definition of Commercial and Industrial Construction - The findings of the Commissioner confirming tax liability for conservation and restoration work done for construction of roads, culverts and drain in the Stone Park are therefore hereby set aside. Construction of individual houses constructed for Rajasthan Housing Board - Construction of quarters at DCCPP, Dholpur - Construction of quarters for officers of RRVUNL - Held that:- The complex which is constructed with an intention for personal use as residence by a person who is directly engaging any other person for designing / planning of layout and the construction of such complex out of the ambit of such construction and thus from taxability - reliance placed in the case of C.C.E., Aurangabad Vs. Mall Enterprises [2015 (11) TMI 333 - CESTAT MUMBAI] wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personal use of such person i.e. the owner of the complex - In the present case, the quarters/ residential complexes were got constructed by the appellant for three different Departments of Government of Rajasthan for being used as accommodation for their own employees, the same amounts to personal use . The confirmation of demand qua these services by the Commissioner is therefore not sustainable, accordingly is set aside. Construction Milk Chilling unit for dairy under scheme of Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture - Held that:- Though the milk chilling plant was run by Rajasthan State Government but the fact remains is that the plant was selling milk on commercial basis against the profit. In view of said apparent fact, it cannot be held that the State Government was discharging some sovereign function and as such exemption from taxability is not available because irrespective of authority been owned by Government if the work/ activity of this authority is intended for business or commerce, it becomes taxable - demand rightly confirmed. Sub- contractor work for GEA Energy and others - Held that:- From the record i.e. scrutiny of contract it is perused that cement and steel had been supplied by M/s GEA Energy Systems only under all the work Orders. In such circumstances, it cannot be held that the liability of appellant as sub contractor is same as the liability of the main contractor which is mentioned to have been discharged for the entire contract for the purpose. In the given circumstances, for the impugned contract, the appellant as sub contractor cannot be held to have stepped into the shoes of the main contractor. Resultantly, any discharge of tax liability by the main contractor cannot be held as the discharge of the liability of sub contractor. The fact that services provided by such sub contractor are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by a sub contractor. Services provided by sub contractor are in the nature of input services. Service tax is therefore leviable on any taxable service provided whether or not the services are provided by a person in his capacity as a sub contractor or whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provider. Such proposition finds support from the basic rule of cenvat credit and service of a sub contractor may be input service provided for a contractor if there is integrity between the services. Thus tax paid by a sub contactor may not be denied to be set off against the ultimate service tax liability of the contracts if the contractor is made liable to service tax for the same transaction, though the exchequer cannot be enriched on account of double taxation - demand upheld. Cum-tax benefit - Held that:- The appellant herein is engaged in constructing residential complexes and commercial or industrial complexes and has been held eligible for the benefit of abetment vide Notification No. 01/2006 - in view of provision of Section 67(2) of Finance Act, 1994 cum-tax benefit should be made available to the appellant. Imposition of penalties - Held that:- Where most of the findings of the adjudicating authority against the appellant have been set aside, it stands clarified that there was no deliberate defiance of legal provision nor any non compliance thereof as has been noticed qua the appellant and as is otherwise alleged in the SCN - The appellant is rather observed to be under bonafide belief of being entitled under the abetment Notification and of not been liable being a sub contractor and also about the work to have been excluded being not for commerce and thus is not liable to pay the tax. In the given circumstances, when there is no malafide intent proved or is not even apparent to evade tax, the penalties under Section 76 and 78 are not at all sustainable - Commissioner has been wrong while confirming the proposed demands alongwith interest and the penalties except for the demand confirmed qua construction services for milk chilling plant and for the demand qua work contracts of construction as sub contractor where the construction material has been provided by the main contractor - The interest and penalties stand proportionately reduced. Appeal allowed in part.
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2019 (1) TMI 1440
SEZ Unit - Refund of Service Tax - denial of refund on the ground that the conditions of the N/N. 12/2013 dt. 01/07/2013 not fulfilled and also appellant had failed to produce proper and valid documents justifying the refund claim - rejection also on the ground of time limitation - time limit for issuance of ISD Invoices - Non-speaking order - Held that:- The impugned order is not a speaking order and has not considered all the documents along with relevant letters of approval submitted by the appellant. The said approval letters have also been placed on record which clearly covers all the services which have been used in or in relation to the authorized operations. Time limit for issuance of ISD Invoices - Held that:- The ISD invoice issued towards distribution of credit is dt. 31/10/2015 and in the present case, the appellant has not made the payment to the registered service provider and there is no time limit prescribed for ISD invoices. Therefore the date of ISD invoice is the date for which time limit one year is to be accounted. But the same has not been done by both the authorities below - keeping in view the intention of the Government in enacting the SEZ and giving special fiscal concession to SEZ unit, it is concluded that this is only a procedural requirement and not a mandatory as held by the Commissioner (Appeals). The impugned order is set aside and case remanded back to the original authority to pass a de novo order after complying with the principles of natural justice and after affording an opportunity of hearing - appeal allowed by way of remand.
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2019 (1) TMI 1439
Classification of services - Business Auxiliary Service or not - service in respect of sale of insurance products for and on behalf of M/s. Maruthi finance to the buyers of vehicles from M/s. Maruthi Udyog Ltd. - Held that:- The issue is decided in the case of M/S. AVG MOTORS LIMITED, M/S. INDUS MOTOR COMPANY PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX [2017 (10) TMI 502 - CESTAT BANGALORE], where it was held that The appellants are doing the service of promotion or marketing of service viz., issuance of insurance policies on behalf of MIBL. The fact that service tax was being paid by MUL to the insurance company along with the insurance premium will not make any difference, when the assessee-appellants are independently providing the service of promotion or marketing, which is covered by ‘Business Auxiliary Service’ as defined in Section 65(19) of Finance Act, 1994 read with Section 65(105)(zzb) of Finance Act, 1994. Penalty - Held that:- Further, the Tribunal has dropped the penalty on the ground that the subject matter involved relates to interpretation issue - following the same, the penalty is dropped. Appeal allowed in part.
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2019 (1) TMI 1438
Commercial training and coaching' service - business of 'teaching' - Held that:- The service proffered by 'commercial training and coaching centres' were subject to tax with effect from 1st July 2003 but, at the same time, exempting 'vocational/computer/recreational training institutes' from the purview of tax - The scope of taxability of the service was examined by the Larger Bench of the Tribunal in Great Lakes Institute of Management Ltd v. Commissioner of Service Tax, Chennai [2013 (10) TMI 433 - CESTAT NEW DELHI - LB] wherein it was held that, with the insertion of Explanation in 2010 with retrospective effect, section 65 (105) (zzc) of Finance Act, 1944 has undergone a sea change in its impact and admitting of no exceptions save that explicitly excluded by Parliament or deliberately exempted under the relevant powers devolving on the executive. Consequently, in relation to the present dispute, it is the extent of applicability of exemption notifications that would allow for a proper resolution. From inception, recreational training centres have been illustrated by reference to dance, singing, martial arts and hobbies. Not only is this claim for alternative benefit accorded to mutually exclusive categories repugnant to propriety expected of a training centre handling students but appears to have all the hallmarks of a shot in the dark without much effort at diligent aim. It is seen from the records that detailed submissions for such coverage was not made before the lower authority. The scope for inclusion among recreational training centre is question of fact and determined on establishing that study of English is a hobby as claimed in the present appeal. The submissions made on the plea for exclusion from the extended period of limitation and consequent penalty also requires careful consideration. Matter remanded back to the original authority to take a fresh decision to consider the pleas made to invoke the limitation provision in section 73 of Finance Act, 1994 - appeal allowed by way of remand.
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2019 (1) TMI 1437
Demand of service tax by way of statement in lieu of Show cause notice (SCN)- demand-cum-penalty - mobile telephone services rendered by the appellant to their employees - period after 2012 - post negative list regime - invocation of section 73 (1A) of Finance Act, 1994 - non-invocation of section 73(1) of Finance Act, 1994 - Held that:- It is trite that a taxing statute, before proceeding to recover any tax that were short-paid, mandates notice supported by evidence, opportunity to respond in writing and in person before an adjudication. The present proceedings appears bereft of such and is, thus, tantamount to a notice for payment of the said taxes relying entirely on preceding adjudication for an earlier period. Obviously, the provision is to be invoked in restrictive circumstances and cannot, by any stretch, be a substitute for resorting to section 73(1) in each and every subsequent period. The jurisdictional Commissioner has traversed beyond referring to the demand for the preceding period to record the changes effected in consequence of taxation in the negative list and has drawn upon the authority of Article 265 of the Constitution. This is clearly in excess of the circumstances contemplated in the newly incorporated artifice and sufficing to vitiate the impugned order. The tax regime had altered since period covered by the order relied upon in the present 'demand-cum-penalty notice' and the impugned order goes beyond mere reference to the earlier order to adjudicate, without notice and opportunity, the applicability in the transformed tax regime. The facts and circumstances of the transactions themselves are found to be vastly dissimilar - section 73 (1A) of Finance Act, 1994 is not invokable and the deficiency in invoking section 73(1) of Finance Act, 1994 is irreparable. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1436
Levy of service tax - deputation of employees the corporate group - amount paid by one company in the corporate group to another - whether coming within the scope of 'service' or not - no consideration - Held that:- The definition of taxable service was amended during the period in dispute to substitute 'commercial concern' with 'any person' - The rendering of service, to be taxable, is no longer restricted to such concerns as are professionally engaged in manpower recruitment and supply. The finding of the Hon'ble Supreme Court in Intercontinental Consultants and Technocrats Pvt Ltd [2018 (3) TMI 357 - SUPREME COURT OF INDIA] that the inclusion of value in section 66 imposing the tax on service restricted the scope of value to the service itself till the subsequent incorporation of Explanation in section 67 of Finance Act, 1994 would also lead to the further conclusion that levy of tax is permitted by law contingent upon there being a value inherent as consideration for the service and not a provision of service gratis to which a value could be assigned under the relevant Rules. There is no allegation in the SCN, or in the impugned order, that the appellant had retained any amount from out of the payment received from the group company, thus, discrediting the receipt of any consideration by the appellant. There is no provision in the relevant rules for computing the value in the absence of consideration even though provisions exist for monetising consideration other than in money. Absence of consideration is not the same as uncountable consideration requiring rules for conversion. In the absence of any consideration, there is no taxable service and, in the absence of taxable service, leviability of duty would not arise - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1435
Condonation of delay in filing appeal - time limit of filing of appeal before the Commissioner (Appeals) - Section 85 of FA - Held that:- The adjudication order was received by the appellant on 28.03.2015 and thereafter, the appeal was preferred before the office of the Learned Commissioner (Appeals) on 22.07.2015. The Commissioner (Appeals) is not empowered to condone the delay in late filling of appeal beyond the statutory limit of three months - In this case, since admittedly the appeal was filed beyond three months from the date of receipt of the adjudication order - the Learned Commissioner (Appeals) being a creature under the statute, has rightly dismissed the appeal filed by the appellant. Appeal dismissed - decided against appellant.
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2019 (1) TMI 1434
Scope of SCN - Works contract services or Construction services - appellants were issued show cause notices proposing to demand service tax under Works Contract Services. After due process of law, the original authority confirmed the demand under Construction of Residential Complex Services - Held that:- The appellant was discharging the service tax under Construction of Residential Complex. However, the SCN has been issued proposing to demand under Works Contract Services. After adjudication, the Commissioner held that the services are rightly classifiable under Construction of Residential Complex Services and confirmed the demand raised in the SCN under Works Contract Service - The Commissioner has traveled beyond the scope of the SCN and such confirmation of demand on a different category of service is not sustainable. The issue whether composite contracts involving both element of services as well as supply of goods would fall under Commercial or Industrial Construction Services / Residential Complex Services was analysed by the Tribunal in the case of Real Value Promoters Pvt Ltd. And others [2018 (9) TMI 1149 - CESTAT CHENNAI] and the Tribunal held that such composite contracts would not fall under the category of Commercial or Industrial Construction Services / Residential Complex Services and can be classified only under Works Contract Services - thus, the confirmation of demand under Construction of Residential Complex Services is un-sustainable and requires to be set aside. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1433
Evasion of service tax - Non-production of supporting documents - no proper registration certificate obtained - conditions for export of services not fulfilled - suppression of taxable value - service tax on import of service not paid - CENVAT Credit wrongly availed - the impugned demand is raised on the ground that the appellant had not furnished any supporting evidence in the form of documents - Held that:- The appellant submits that they had furnished all such necessary documents as well as the reconciliation statements in this regard - the matter has to be adjudicated afresh by the adjudicating authority since he has not given any finding on the documentary evidences furnished nor has he denied the production of such evidences. Penalty - Held that:- The issue involved is undoubtedly an interpretational one and the appellant had also submitted sufficient documentary evidences in its support - there is no scope for levying any penalty, for which reason the penalty is deleted. Appeal allowed in part and part matter on remand.
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2019 (1) TMI 1432
Construction of Industrial complexes services - Finishing and completion services - Short payment of service tax - wrong availment of abatement provided under Notification No. 1/2006-ST dated 01.03.2006 - non-payment of service tax on recipient portion - period from November, 2006 to 10/2007 and from 01/2007 to 12/2007 - Held that:- Issue decided by the Bench in the case of M/s/ Real Value Promoters Pvt. Ltd. & Ors. Vs. Commissioner of G.S.T. & Central Excise, Chennai & Ors. [2018 (9) TMI 1149 - CESTAT CHENNAI], where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service - For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter - the issue being identical, the above ruling squarely applies to the case on hand - demand set aside. Works Contract Services - Demand of ₹ 29,58,712/- (06/2007 to 02/2008) under WCS with interest thereon - Held that:- It is a fact borne out of the records that the assessee had charged service tax in their bills raised on customers, the service tax liability against which is ₹ 29,58,712/-, payable for the work undertaken between June 2007 and November 2008. Out of the above service tax liability, assessee has discharged a sum of ₹ 25,00,000/- on 11.02.2009. It is clear from the appeal memo that the assessee-appellant has not disputed the findings of the Ld. Commissioner that there was no dispute as to classification - there are no reason to interfere with the above findings of the Ld. Commissioner and hence, the same is held to be in order. Imposition of penalty - Held that:- The Delhi Bench of the Tribunal in the case of Siddha Projects Pvt. Ltd. [2017 (4) TMI 36 - CESTAT NEW DELHI] has set aside the penalty imposed under Sections 76 and 78 of the Finance Act, 1994 invoking the provisions of Section 80 of the Act - following the same, the penalty is set aside. Appeal allowed in part.
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2019 (1) TMI 1431
Penalties u/s 77 and 78 of FA - belated payment of Service - ST-3 returns from April, 2005 to September, 2009 not filed - service tax with interest were paid on being pointed out - Held that:- It is not the case of the Revenue that the appellant had not paid/short paid the tax liability - The appellant has given plausible explanations and the same have not been found to be wrong by the Revenue, nor is there any whisper suspecting the bona fides in the pleadings of the appellant by the Revenue. The penalty imposed under Section 78 is liable to be set aside which we hereby do. The penalty imposed under Section 77, however, is upheld - appeal allowed in part.
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2019 (1) TMI 1430
Valuation - inclusion of “visiting charges” in assessable value - Architect Service - Consulting Engineer Service - Held that:- For the period involved, reimbursable expenditure is not liable to be included in that value of the taxable services, the amendment for which makes it includible only with effect from 14.05.2015. Therefore, there is no liability to pay the balance of the demand. Penalties - Held that:- The issue involved interpretation - no suppression, fraud, etc., could be attributed to the assessee - the penalties imposed cannot be sustained. Appeal allowed in part.
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2019 (1) TMI 1429
Refund of unutilized CENVAT Credit - export of services - Rule 5 of Cenvat Credit rules, 2004 - rejection of refund on the ground that certain input services such as Event Management service, Clearing & Forwarding Agency service, Insurance service, Real Estate services were not related with the output service - Refund claims were also restricted by excluding the value of exports made by SEZ units while arriving at the proportionate credit - Held that:- The issues in dispute are no longer res integra. The services like Event Management , Clearing & Forwarding Agency service, Insurance service etc. have been held, by various appellate forums, to be very much eligible input services for the purpose of 2(l) of the CCR 2004. So also, it has been consistently held that value of SEZ exports should be included in computing the export turnover for the purpose of working out the quantum of refund in Rule 5 of the CCR 2004. Respondent-assessee has correctly relied upon the decision of the Tribunal in Cognizant Technology Solutions [2016 (2) TMI 580 - CESTAT CHENNAI] which inter alia, held that the exclusion of SEZ exporter turnover in computing the export turnover for the purpose of Rule 5 ibid was not sustainable. Refund allowed - appeal dismissed - decided against appellant-Revenue.
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2019 (1) TMI 1425
CENVAT Credit - input services - duty paying documents - Rule 9 of the Cenvat credit Rules, 2004 - Held that:- The substantial particulars i.e. name and address of the service provider, service tax registration number of the service provider, amount of service tax, assessable value, name and address of the service receiver has been mentioned in the letters dated 01/03/2010 and 15/12/2010 having service tax incidence of ₹ 23,48,404/- each and are in the nature of payment advice. These can be considered an invoice and can be accepted in terms of the proviso to Rule 9 of the Cenvat credit Rules, 2004 as there is no allegation that the services covered by these bills have not been accounted for by the appellant. The appellant has also produced the invoice dated 19/08/2010 in support of letter dated 15/12/2010. Merely that these letters are not in the form of invoice cannot be a reason to disallow the Cenvat credit as substantial compliance of the provision under Rule 9(1) of Cenvat Credit Rules have been made. We are not inclined to accept Letter of acceptance dated 22/02/2010 for a service tax amount of ₹ 38,048/- as a proper document as the same does not bear the registration no. of the service provider and cannot be considered as bill/invoice/ challan in terms of Rule 9(1) of the Cenvat Credit Rules, 2004. The appellant has failed to produce a corresponding invoice, payment advice etc. for this amount. Accordingly, demand of ₹ 46,96,808/- on the first two documents is set aside and we uphold a demand of ₹ 38,048/- as sustainable under Rule 14 Of Cenvat Credit Rules, 2004 read with proviso to Section 73(1) of the Finance Act, 1994 as the appellant has failed to justify taking of lawful credit of ₹ 38,048/- on the basis of any acceptable document. Extended period of limitation - penalty - Held that:- The extended period of limitation as well as the equivalent penalty of ₹ 38,048/- under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 and interest as applicable under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 on this amount of ₹ 38,048/- is also upheld. Appeal allowed in part.
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Central Excise
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2019 (1) TMI 1428
100% EOU - Refund claims of unutilized / accumulated CENVAT - deemed exports or not - Rules 5 of CCR, 2004 read with Notification No.27/2012 dated 18.6.2012 - input services - Gardening/Landscaping services - Design Services - Retainership Fee (Auditor Services) - Outdoor catering service - Tea/Coffee Machine Maintenance - denial on account of nexus. Gardening/Landscaping services - Design Services - Retainership Fee (Auditor Services) - Held that:- The services have been held to be input service by the decisions relied upon by the appellant - reliance placed in the case of Orient Bell Ltd. vs. CCE [2017 (1) TMI 840 - CESTAT ALLAHABAD] - Therefore, the rejection of refund on these services on account of lack of nexus is not sustainable - refund allowed. Outdoor Catering Services - Held that:- After the amendment, the input service specially excludes it from the definition of input service - refund cannot be allowed. Tea/Coffee Machine Maintenance - Held that:- The appellant did not press for this - refund rejected. The appeals are remanded back to the original authority for quantification and sanctioning of refund - appeal allowed by way of remand.
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2019 (1) TMI 1427
Clandestine removal - MS Ingots - retraction of statements - opportunity to cross-examine the witnesses whose statements have been relied upon is denied - non consideration of written submissions - Held that:- Commissioner has acknowledged about appellant relying upon some case law along with various relied upon documents by the Department in the adjudication against M/s Kamdhenu based whereupon was initiated the impugned adjudication. However, the Commissioner (Appeals) without giving specific reason has simply mentioned that none of those documents and even the case laws are relevant in the instant case. Order under challenge has denied opportunity to appellants of cross examination by quoting a simple reason that no reason has been mentioned as to why the witnesses need to be cross examined by the appellant and that no evidence has been submitted for the same. But the adjudicating authority has failed to acknowledge that the entire relevant documentary evidence as could be produced by the appellant for any purpose was already taken in Department’s possession at the time of the search of premises on 13.02.2009 - Apparently and admittedly these documents were never returned to the appellant after the issuance of the SCN as was otherwise mandatory under Rule 24A of Central Excise Rules. Admittedly none of those documents were found incriminatory - the adjudication based on thirdy party evidence is not sustainable especially when in the adjudication against said third party there documents have already been observed as untrustworthy. Admission in the statement of Mr. Pawan Bansal - Held that:- No doubt admission is the best evidence unless and until the same is withdrawn. Admission of Mr. Pawan Bansal was withdrawn very next day with the allegations of coercion being exercised upon him while making him sign on statement of 13.03.2009 - the Commissioner is held to have definitely committed an error while still relying upon the statement of Mr. Pawan Bansal on 17.03.2009. The documents based whereupon the impugned adjudication has initiated are still under adjudication in view of the direction of this Tribunal vide Order dated 02.04.2018 - the present appeals be also remanded for denovo adjudication so that adjudication of present Appeals be taken alongwith the matter of M/s Kamdhenu Ispat Ltd. as has already been remanded so as to avoid any conflict of opinion - appeal allowed by way of remand.
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2019 (1) TMI 1426
CENVAT Credit - invoices were more than one year old - time limit for issuance of invoice - Held that:- The SCN has alleged that the cenvat credit has wrongly been taken by the appellant on the ground that invoices were more than one year old. Limitation of one year for availing credit from the date of invoice came into statute only in the year 2015. It was vide Notification No. 21/14 dated 01.09.2014 that the limitation period of six months was introduced into statute for the impugned periods. This observation is a definite ground to hold that SCN has been issued based on wrong facts. Since SCN is the foundation of the Revenue case, the adjudication cannot sustain where SCN is issued on wrong facts. Confirmation of demand only for want of the requisite documents - Held that:- The only relevant document for the purpose is the invoice. Apparently and admittedly, four of the impugned invoices are very much recorded in Annexure A of the SCN itself. Perusal of the individual invoice reflects the clear mention of material also being received on the date of invoice itself. All the four invoices are issued prior 01.09.2014 i.e. prior date when for the first time the concept of limitation for availing credit was introduced - order set aside. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 1424
Imposition of penalty u/r 209A of CER on Directors - reason to believe - whether there is evidence of connivance of respondent with the nonexistence dealers as would make the Director liable for the penalty under Rule 209A of the Rules 1944 or not? - Held that:- As there was contradictory statement of the authorized signatory and the scrap broker, statement of Director of respondent No.1 was recorded on 12.06.1998 under Section 14 of 1944 Act. The Director deposed that the denial of Shri Praveen Maheshwari, the scrap broker, is not correct. He deposed that he is ready to cross-examine Shri Praveen Maheshwari - However, it appears from the record that no opportunity to cross-examine Shri Praveen Maheshwari was afforded. And as evident from the order dated 16.06.1999 passed by the Adjudicatory Authority, the statement of Shri Praveen Maheshwari was relied upon to arrive at a conclusion that the Director was knowing or had reason to believe that the entire transaction was fake. In the case at hand, the penalty under Rule 209A of 1944 Rules is attracted only when it is established that it was within the knowledge and has reason to believe that the excisable goods is not confiscable - The authorized signatory and Director has stated that the material was purchased through broker was “on for” basis in their testimony. The Director also sought leave to confront the broker who has denied any transaction and even receiving of cheque. No cogent material is commended at, as would establish the fact that the Director was afforded effective opportunity of hearing under Section 14 of the Act of 1944 to cross-examine the broker. Thus, the conclusion arrived at by the Tribunal on the given facts of the case cannot be said to be perverse, as would give rise to a substantial question of law as proposed. Appeal dismissed.
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2019 (1) TMI 1423
CENVAT Credit - non-submission of documents - penalties - Held that:- In the statement of facts, against the total amount of CENVAT Credit denied of ₹ 1,75,010/-, this Bench had allowed the Credit to an extent of ₹ 64,051/- and as per the appellant’s own pleading, the remand Order was specifically for verification of the invoices which amounted to ₹ 68,879/-. There being no further appeal against the Order of this Bench, the same is final and hence, the scope of the de novo proceedings as also the present Order can only be ₹ 68,879/- pertaining to the 122 invoices. The assessee through its Authorized Representative has made a submission before the adjudicating authority in the de novo proceedings that they were not able to furnish/submit the 122 invoices as directed by the Tribunal based on which the adjudicating authority has confirmed the recovery of input service tax Credit to the above extent - there are no valid reason to interfere with the findings arrived at by the first appellate authority who has concurred with the findings of the adjudicating authority in the de novo adjudication. Penalties - Held that:- The list of invoices included the service tax Credit availed against payments made to various service providers which came to be denied because of the reason that the appellant could not produce the original documents during the de novo proceedings, which, as pleaded by the Ld. Consultant, were misplaced/could not be traced, for which reason no motive as to suppression of facts, fraud, etc. could be attributed - penalty set aside. Appeal allowed in part.
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2019 (1) TMI 1422
Valuation - inclusion of value of BFC in the assessable value of the Electrodes - no suppression of facts - extended period of limitation - scope of SCN - Held that:- The first appellate authority has not recorded proper reasons: on the one hand, the first appellate authority holds that the adjudicating authority having not decided the classification, the Show Cause Notice as well as the Order-in-Original are not sustainable; on the other hand, allows the appropriation of the duty paid by the assessee voluntarily; which appear to be contradicting each other. Only when there is a liability towards duty can the authorities order for appropriation. The matter requires re-adjudication by the adjudicating authority who shall pass a fresh Order after affording reasonable opportunities to the assessee, for which reason the impugned Order is set aside - appeal allowed by way of remand.
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2019 (1) TMI 1421
Maintainability of appeal - non-compliance with the pre-deposit - Section 35F of the Central Excise Act, 1944 - Held that:- There is no evidence provided by the appellant in support of the stand that the requirement of Section 35F of the Act has duly been complied with. Thus, it seems that the appellant is very casual in its approach for seeking appellate remedy for resolving its dispute. It is expected that the person seeking justice from the appellate forum, should come forward with clean and clear evidences on facts, inasmuch as, appreciation of evidence is the domain of the original authority, who alleges the wrong doings of the assessee. The appellate body can only decide the issue based on the findings recorded by the lower authority(s) and on the basis of documents available before it. The appellant has not pursued its statutory remedy of appeal diligently. To discourage the uncaring attitude in filing appeal in just and casual manner before the appellate body, some cost should be imposed on the present appellant, for meeting the ends of justice - the appellant is directed to deposit a cost of ₹ 5,000/- (Rupees five thousand only) in Prime Minister’s Relief Fund within a period of four weeks from the date of receipt of this order - appeal disposed off.
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CST, VAT & Sales Tax
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2019 (1) TMI 1420
Payments made to sub-contractors - Sub-contract - exemption under Section 3- B(2)(d) of the TNGST Act - registered dealers or not - requirement of Form XXXVII B to prove that the sub contractors are registered dealers and have paid the taxes - principal-agent relationship - explanation 1 to Section 2(1)(aa) of the Additional Sales Tax Act - Held that:- It was never the case of the revenue that Form XXXVII-B was required to be filed for exempting the turnover for the purpose of levy of AST. In other words, this issue was never raised by the revenue before the Tribunal. Furthermore, it is not the case of the revenue that sub-contractors are not registered dealers and neither it is their case that they have not paid taxes or AST. In fact, the finding rendered by the Tribunal on this aspect is clearly in favour of the petitioner and against the revenue. The finding rendered by the Tribunal that the petitioner should file Form XXXVII-B is wholly without jurisdiction and beyond the scope of the appeal filed by the revenue - tax case revisions are allowed - decided in favor of petitioner.
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