Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 8, 2020
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Best judgment assessment - Order of ITAT modified for determining the profit rate @ 8% instead of 12.5% on gross contract receipt subject to allowing depreciation, interest and remuneration to partners.
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Exemption u/s 10(23C)(vi) - existence solely for 'educational purpose' or not - activity of acquisition or lease of immovable properties as well as investment of funds in the equity - the monitoring of the activities of the petitioner is a matter of assessment by the AO - the Commissioner (CIT) has overstepped in assuming that the mere mention of the aforesaid two activities disentitles the petitioner to the approval and exemption sought.
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Reopening of assessment u/s 148 - the extended period of limitation cannot be availed by the Department when all primary particulars were, admittedly, available on file.
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Reopening of assessment u/s 147 - information received from the Investigation Wing - AO has acted mechanically and without any independent application of mind. The reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind - The order is nonest in law and without jurisdiction.
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Depreciation - Determination of value / cost of assets - reduction of the value received by it in the form of forfeiture of amount in an earlier agreement for sale of asset - quoting a wrong section would not be fatal in making a correct disallowance - there is no reason why assessee’s claim of depreciation to the extent of entire amount of receipt should not be reduced.
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Deduction/Exemption u/s 54 - nexus between sale consideration received on sale of old asset and source of investment in new house - amount contributed by the Appellant’s husband towards reinvestment in new house property - benefit u/s.54 of the Act cannot be denied on the ground that sale proceeds of the original asset sold was not utilized for the purpose of purchase of new asset.
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MAT - Addition to book profit of tax on non-monetary perquisites - without there being any corresponding amendment in the definition of Income Tax as provided in Explanation-2 to Section 115JB, Fringe Benefit Tax (FBT) was not required to be added back while arriving at Book Profits u/s. 115JB
Customs
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Recovery of such Social Welfare Surcharge (SWS) cannot be done by making debit from the value of the scrips produced by the petitioner - the respondents are directed to re-credit the value of Social Welfare Surcharge so far debited from the scrips held by the petitioner, subject to a condition that the petitioner pays such Social Welfare Surcharge either in cash
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Levy of safeguard duty - Granting such a stay or interim order would facilitate entry of the goods at vastly lower prices, precisely what Parliament intended to curb through the levy. Clearly, the balance of convenience is not in favour of the petitioner, for grant of such relief. The Court is therefore, of the opinion that no interim orders are called for.
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Non-speaking order - Refund of the differential duty - by not issuing the speaking orders or giving any reply to their requests for speaking order, the officer has denied the appellant their legitimate right to challenge the reassessments. - The assessing officer are directed to issue speaking orders.
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Imposition of penalties - default on the part of Customs Broker to declare the correct value of goods - the liability of customs duty rests only upon the importer - Accordingly Section 114A also applied to the importer in this case.
Indian Laws
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Dishonor of cheque - It was not open for the appellant to file its complaint before the learned M.M., Patiala House Courts, Delhi, who did not have territorial jurisdiction over the place where the respondent’s bank was located (that is, Defence Colony, New Delhi)
Service Tax
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Refund of service tax - erroneous payment of service tax - It is settled law that once the appellant has passed on the burden of Service Tax paid to their customers, the amount of tax paid even erroneously cannot be refunded to them.
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Refund of accumulated Cenvat credit - export of services - The order is confirmed, only denying the refund of Cenvat credit under Rule 5 of CCR, 2004 to the extent the refund claims were filed beyond the period of one year from the date of realisation of foreign exchange in terms of the notification.
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Refund of service tax - export of services - There is no provision in law that payment of service provided by the appellant has to be made by the service recipient for entertaining refund application. - the appellant provided the service and received FIRCs against those service. Therefore, refund claim is admissible to the appellant.
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Business Support services - Branch Network Fee - Firstly, the definition of ‘Business Support Service’ did not cover mere agreeing to grant right to access, which was introduced only with effect from 01.07.2012 and secondly, even on limitation, the Revenue has not been able to establish the suppression in any manner.
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Cash Refund of amount remaining unutilized in Education Cess (EC), Secondary & Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC) - restriction on Carry forward of credit pertains to EC, SHEC and KKC - transition to GST regime - there is no legal provision under which the assessee’s appeal could be entertained
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Club and association service - principles of mutuality - The Hon'ble Supreme Court has considered the provisions of the Finance Act, 1994, as it stood prior to and after passing of the Finance Act, 2005 and after 2012 after the advent of negative list with the introduction of the definition of “service” in section 65B (44) of the Finance Act, 1994 vide Finance Act, 2012 w.e.f. 01.07.2012 - In view of that demand set aside.
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Validity of adjudication proceeding initiated by the impugned SCN - Time limitation - Keeping in view the mandate of law as well as sub-section (4B) of Section 73 of the Finance Act, 1994, this Court is of the view that a statutory authority has to decide the show-cause notice within the time prescribed wherever it is possible to do so. - Demand set aside - Refund of deposit ordered.
Central Excise
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Vires of Rule 8(3A) of the Central Excise Rules, 2002 - At least four different High Courts have struck down the constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 and appeals against such judgments have been admitted by the Hon’ble Supreme Court and have yet to be decided. - Demand set aside.
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Extended period of limitation - as the appellant have categorically declared to the department regarding packing material being supplied Free of Cost by their customer and the cost thereof was not being include, there are no instance of suppression of facts.
VAT
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Process amounting to manufacture or not - TN VAT - purchase of minced tobacco in bulk quantity and repacking the same with added flavour in small packs - adding scent or flavour did not result in a new and distinct product having a different character and use
Case Laws:
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Income Tax
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2020 (1) TMI 225
Entitled to deduction under Section 80HHC of the Act on the total income after excluding the deduction available under Section 80IB - Appellant entitled to deduction under Section 80HHC on the gross total income without reducing it by the deduction allowed under Section 80IB - HELD THAT:- SLP dismissed.
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2020 (1) TMI 224
Best judgment assessment - net profit rate in making assessment of the income - adjustment of the profits arrived at by applying net profit rate by way of allowance of depreciation of the assets used in business is permissible - HELD THAT:- The present issue that has been raised by the appellant in the present appeal is that once the Appellate Tribunal had determined profit on the basis of net profit basis @ 8% of the contract value, it was no longer open for the Income Tax Appellate Tribunal to re-do computation on the 12.5% of net profit. On perusal of impugned order, it appears that, though, the Tribunal has taken note of the directions of this Court, however, it had failed to apply the judgment rendered by this Court in the case of M/s. Shri Ram Jhanwar Lal [2008 (7) TMI 505 - RAJASTHAN HIGH COURT] nor the judgment rendered in the case of Jain Construction [1999 (9) TMI 26 - RAJASTHAN HIGH COURT] The present appeal is allowed to the extent of modifying the order of the Tribunal for determining the profit rate @ 8% instead of 12.5% on gross contract receipt as earlier determined by the Tribunal subject to allowing depreciation, interest and remuneration to partners. Accordingly, the appeal is allowed and the matter stands remitted back to the Income Tax Authorities concerned for recomputing the amount of tax.
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2020 (1) TMI 223
Rejection of the applications filed seeking approval in terms of section 10(23C)(vi) - petitioner has set up and manages several Universities, Schools and Educational campuses in different parts of the Country and sought an approval for exemption - HELD THAT:- The scope of enquiry when granting approval in terms of Section 10(23C)(vi) of the Act has been considered by the Supreme Court in two Judgments, viz., Queen's Education Society V. Commissioner of Income Tax [2015 (3) TMI 619 - SUPREME COURT] and American Hotel and Lodging Association, Educational Institute V. CBDT (2008 (5) TMI 17 - SUPREME COURT ) . The Bench has specifically noted the distinction between satisfaction in regard to prima facie conditions required for the grant of approval and the monitoring conditions relating to application/accumulation/deployment of income as well as other compliances. The Bench has stated that the grant of approval would only require a satisfaction of the Officer in regard to the existence of the University and the avowed objects. The question of whether the Society has, in fact, complied with the statutory provisions strictly is a matter of assessment and would be dealt with by the Assessing Officer in the course of assessment itself. Respondent has, in the impugned orders adopted a view that is premature and Writ Petitions are allowed. Delay in filling application for Section 10(23C) - HELD THAT:- The 14th proviso to Section 10(23) was amended by Finance (No.2) Act, 2009 with effect from 01.04.2009. The notes and clauses to the Finance Bill (see 314 ITR 130 (ST.)) state that the insertion of the proviso was to permit applications to be filed upto 30th September of the relevant assessment year, instead of restricting the date to 31st of March of the financial year. The purpose was thus to expand the time for filing till 30.9.2012 and not restrict it to only the six months between 1.4.2012 and 30.9.2012. In the present case, the application has been filed in November, 2011 itself and in the light of the object of the amendment noticed above, the application is well within time. Society did not exist solely for 'educational purpose' as required under Section 10(23C) - HELD THAT:- The purpose of the aforesaid clauses is, in my view, only to enable the acquisition of assets by the petitioner. This does not, in my view, lead to the inference that the Society is engaging in other commercial ventures apart from dissemination of education. As stated elsewhere, the monitoring of the activities of the petitioner is a matter of assessment by the Assessing Officer and the Commissioner has, in my view, overstepped in assuming that the mere mention of the aforesaid two activities disentitles the petitioner to the approval and exemption sought.
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2020 (1) TMI 222
Reopening of assessment u/s 148 - whether the impugned proceedings are barred by limitation - primary and material particulars as far as deduction u/s 80IA - HELD THAT:- In the present case, the petitioner has, admittedly, not defaulted in the filing of a return of income. Thus, the only condition to be satisfied by the revenue would be the establishment of the fact that there has been a failure by the assessee to make a full and true disclosure of material particulars. Adverting to paragraph 8 of this order setting out the reasons for re-assessment, I note that items (i) and (ii), have, admittedly, been considered by the Commissioner of Income Tax in his order under Section 263 dated 26.03.2010 and thus, it does not lie in the mouth of the Department to state that material particulars in regard to those two issues were not available on record. As far as deduction under Section 80IA, is concerned, a perusal of the proceedings commencing from the filing of return of income by the petitioner would reveal that all material particulars in respect of the claim under Section 80IA were available on file. If at all the Officer was of the view that the materials had been incomplete or did not support the claim adequately, it was for the Authority to have taken action in that regard even at the first instance and not by way of re-assessment. It is also relevant to state that the reasons for re-assessment commence with the phrase 'upon an examination of the return of income and other enclosures' . Thus, the proceedings for re-assessment are initiated based wholly on the materials available on record only and this is an admitted position. Proceedings for re-assessment are barred by limitation. I draw support in this regard on a judgment of the Supreme Court in the case of Assistant Commissioner of Income Tax, Mumbai and Others Vs. ICICI Securities Primary Dealership Ltd [2012 (8) TMI 754 - SC ORDER] wherein, the Bench holds that the extended period of limitation cannot be availed by the Department when all primary particulars were, admittedly, available on file. Grant of depreciation on imported car, I find that this issue has not been challenged and the re-assessment on this score is thus confirmed. The writ petition is allowed to the extent indicated above.
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2020 (1) TMI 221
Reopening of assessment u/s 147 - cash deposits represent income from undisclosed sources - HELD THAT:- Both the persons appeared before the AO as witness, shown documentary evidence of holding the agricultural land and their income from the agricultural land held by them hence shown their capacity to make payment for the purpose of buying agricultural land. Also in support of the said transaction the assessee has submitted the following documents - Copy of affidavit, Copy of Jamabandi towards proof of capacity and Copy of statement accepted the fact that amount was given to the appellant for purchase of his agriculture land. Perusal of the above documents suggest that assessee has discharged his onus to prove the identity and creditworthiness of the lender. No merit in the addition so made by the A.O. Income from other sources - sale of agricultural land - HELD THAT:- The claim of assessee that assessee owned 10 bigha of agriculture land is genuine and it cannot be said that the land hold by the assessee is not sufficient to generate quantum of income disclosed. Also found that Shri Banwari accepted the fact that he cultivated the agriculture land (approx. 10 bigha) belonging to Shri Laxman Singh Khokar. He annually paid against the agriculture land amounting to ₹ 1,24,000/- and ₹ 6,800/- against falling tree. No merit in the action of the A.O. in making addition by considering the same as income from other sources. Accordingly, direct to delete the same.
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2020 (1) TMI 220
Reopening of assessment u/s 147 - information received from the Investigation Wing - non application of mind - accommodation entries - addition u/s 68 - HELD THAT:- In the case of CIT vs SFIL Stock Broking Ltd. [ 2010 (4) TMI 102 - DELHI HIGH COURT] wherein it was observed that reassessment proceedings were initiated on the basis of information received from investigation wing regarding alleged accommodation entries and it has been held by jurisdictional Delhi High Court that mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that A.O. had independently applied his mind to arrive at a belief that the income had escaped assessment. AO has acted mechanically and without any independent application of mind. The reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind. It is also noted that there is no live link or direct nexus between alleged material and, inference. It is further noted that initiation of proceedings is also based on non application of mind much less independent application of mind but is a case of borrowed satisfaction. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. There is nothing to show that the cash is paid from coffers of the assessee. Reasons do no indicate as to who AO reached to the conclusion that the assessee received accommodation entry and escaped assessment - Proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the assessment is quashed and ground no. 1 is allowed.
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2020 (1) TMI 219
Capital gain computation of estate of the deceased - year of assessment - proportionate amount of sale consideration received during the year - assessment in the hands of the estate of Late Shri Jagir Singh whereas the segment of estate of Shri Jagir Singh which is subject matter of the impugned assessment order had already devolved on his three sons after his death on 12-04-2003 - HELD THAT:- Capital gain has to be restricted to the proportionate amount of sale consideration received during the year and the rest of the capital gain will be taxable in the year in which rest of the consideration is received. Therefore, the Assessing Officer is directed to compute capital gains tax on the basis of actual receipts during the year, as mentioned in the covered case (supra).As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in the case of Shri Prem Singh Lalpura (deceased) through only local L/Hr. Mr. Daljit Singh-son [ 2017 (9) TMI 1861 - ITAT AMRITSAR] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Coordinate Bench (supra), the appeal filed by assessee is partly allowed. Penalty u/s 271(1) (c) - HELD THAT:- When quantum is deleted or dispute in respect of quantum has been decided in favour of assessee then penalty u/s 271(1) (c) does not survive. When the assessee furnishes accurate particulars of income and does not conceal particulars of income in that situation also the penalty should not be levied. The ld CIT(A) deleted the penalty u/s 271(1) (c ) of the Act taking into account all the material available before him, as noted above, therefore we do not find any infirmity in the order passed by the ld CIT(A).That being so, we decline to interfere with the order of Id. CIT(A) in deleting the penalty, his order on this issue is therefore upheld and the grounds of appeal of the Revenue are dismissed.
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2020 (1) TMI 218
Income accrued in India - Addition of interest income earned on foreign currency loan given to Indian Corporates and on debt securities - HELD THAT:- As decided in own case we hold that the interest income earned by the assessee is not taxable in India as the assessee is a beneficial owner as per Article 11(3)(c) of the India Mauritius Tax Treaty. Accordingly, grounds no.1 and 2 are allowed. Levy of interest u/s 234B - HELD THAT:- While deciding grounds no.1 and 2 we have deleted the addition made on account of interest income earned by the assessee. Consequently, there may not be any occasion for levy of interest under section 234B of the Act. Suffice to say, while deciding identical issue relating to levy of interest under section 234B of the Act, the Tribunal in assessee s own case for the assessment year 2013 14 has held that no such interest can be levied as the payer of such interest is obliged under the Act to deduct tax at source.
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2020 (1) TMI 217
Depreciation - Determination of value / cost of assets - reduction of the value received by it in the form of forfeiture of amount in an earlier agreement for sale of asset - HELD THAT:- A plain reading of Sections 51 and 43(6) of the Act in a harmonious manner, and keeping in mind learned CIT(A) s finding that assessee has indulged in dubious transaction of claiming forfeiture, it would show that the amount involved has been correctly reduced from the value of assets of the assessee. It is settled law that revenue authorities are not supposed to put on blinkers. It is also settled that quoting a wrong section would not be fatal in making a correct disallowance. The assessee has retained a large amount of receipt under the original agreement partly by way of forfeiture and also received partly by way of subsequent sale of part assets. Hence, there is no reason why assessee s claim of depreciation to the extent of entire amount of receipt should not be reduced. In the case of Kapurchand Shrimal vs CIT, [ 1981 (8) TMI 2 - SUPREME COURT] the Hon'ble Apex Court held that it is the duty of the appellate authority to correct the errors in the order of the authorities below, and remit the matter to them with or without direction unless prohibited by law. Considered from the above perspective, the learned DR s plea for taxing the whole amount of forfeiture does merit consideration. However, we also find that if the impugned amount was to be reduced from the cost of assessee s assets, there would be corresponding reduction in assessee s depreciation claim over a few years. Hence, the overall impact would be tax neutral. Hence, we do not find any infirmity in the order of the learned CIT(A) sustaining the disallowance of depreciation by the Assessing Officer. Addition u/s 14A - disallowance on account of interest - HELD THAT:- Hon'ble Jurisdictional High Court in the case of CIT vs HDFC Bank Ltd., 366 ITR 505 [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and CIT vs Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] had expounded that if interest free funds are sufficient to cover the impugned investment, no disallowance on account of diversion of interest needs to be done and the assessee is not required to show any one-to-one nexus. In this view of the matter, in our considered opinion, there is no infirmity in the order of learned CIT(A) wherein he has directed that disallowance under Rule 8D(ii) of the Rules be deleted. Disallowance under Rule 8D(iii) - It is the claim of the assessee that it will accept 0.5% disallowance sustained by the learned CIT(A) if it s claim for the strategic investment and some of the investment not yielded any exempt income is considered and proportionate reduction is done - HELD THAT:- We note that the assessee s plea of relief on account of strategic investment is no longer sustainable in view of the Hon'ble Court s decision in the case of Maxopp Investment Ltd. vs CIT [ 2018 (3) TMI 805 - SUPREME COURT] . As regards the claim to consider only those investments which yield exempt income, the same is acceptable on the touchstone of the Special Bench decision in the case of ACIT vs Vireet Investments (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] Since the assessee has not accepted the learned CIT(A) s order and the learned CIT(A) has not adjudicated the issue of lack of satisfaction, we remit this aspect of the issue to the file of the learned CIT(A). The learned CIT(A) is directed to pass a speaking order on this issue raised by the assessee. Disallowance under Section 80IB - AO excluded sale proceeds of packing materials from the profits of the Silvassa Unit - HELD THAT:- Items of receipts which go to reduce the cost should not be dealt with separately. But, it should be credited to the respective head of cost, and profits of the industrial undertaking should be computed accordingly. Under these circumstances, it would not be legally permissible to deny the benefit of deduction u/s 80IB on such receipts. Thus, respectfully following the aforesaid judgment of MEGHALAYA STEELS LTD [ 2016 (3) TMI 375 - SUPREME COURT] , we direct the AO to grant the benefit of deduction u/s 80IB on the sale proceeds of packing material - Decided in favour of assessee Disallowance of expenses incurred in relation to reduction of share capital base of the company - assessee had incurred share buyback expenses on lead management fees and other charges and advertisement for the purpose of buying back the shares of the company from the public - HELD THAT:- As decided in SELAN EXPLORATION TECHNOLOGY LTD. [ 2009 (9) TMI 989 - DELHI HIGH COURT] held that assessee had not acquired benefit or addition of an enduring nature, because after buyback benefit of addition of an enduring nature would not arise and capital employed had, in fact, gone down and, therefore, expenses were of revenue nature - Decided in favour of assessee.
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2020 (1) TMI 216
Disallowance for rent expenditure and society maintenance charges paid to Mrs. Chitra Agarwal by invoking provisions of Section 37 as well as Section 40A(2)(b) - HELD THAT:- AR placed on record the copy of the assessment orders in assessee s own case for A.Yrs 2006-07 to 2010-11 passed u/s.143(3) of the Act on various dates wherein similar payments of rent and society maintenance charges were made by the assessee to the persons specified u/s. 40A(2)(b) of the Act. We find that no disallowance was made by the ld. AO in any of the above mentioned assessment orders in respect of the subject mentioned payments either u/s.37 or u/s. 40A(2)(b). Both the parties agreed that there is no change in the facts and circumstances of the case with regard to the subject mentioned issue during the year under consideration. Hence, there is no need for the revenue to take a divergent stand during this year alone. Following the principle of consistency as approved by the decision in the case of Radhasaomi Satsang vs CIT [ 1991 (11) TMI 2 - SUPREME COURT] we direct the ld. AO to delete the disallowance made on account of rent payment and society maintenance charges. Accordingly, the ground Nos.1 2 raised by the assessee are allowed. Determination of net profit of Bhilai Unit by adopting 5% of turnover thereon - HELD THAT:- We find that the ld. AR fairly stated that he is agreeable for adoption of 5% net profit in respect of its Bhilai Unit and hence, this ground raised by the assessee is dismissed. Disallowance u/s.14A - HELD THAT:- We find that the law is now very well settled that the disallowance u/s.14A of the Act should be restricted only to the extent of exempt income. Reliance in this regard is placed on the decision of Hon ble Delhi High Court in the case of Joint Investment Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] . We direct the ld. AO to restrict the disallowance only to the extent of ₹ 1,575/- being the exempt income. Disallowance of foreign expenses - HELD THAT:- CIT(A) after verifying the Board resolution and appreciating the fact that turnover has substantially increased during the year under consideration pursuant to the said foreign visits observed that assessee had duly established the business nexus thereon and accordingly, deleted the disallowance made by the ld. AO. It is not in dispute that Soya DOC Hypro was a new variety of DE oiled cake developed specially for the European market by the assessee and the same has been launched for the first time during the F.Y.2009-10. Hence, this product required to be promoted in the European market for which the Directors of the assessee company had visited the relevant foreign country. It is also not in dispute that the turnover has substantially increased from ₹ 44.50 Crores to ₹ 126.15 Crores during the year as compared to the earlier year. This goes to prove that the benefits derived by the assessee pursuant to such foreign receipts by its Directors stands established by the business nexus. Hence, we do not find any infirmity in the action of the ld. CIT(A) granting relief to the assessee Special Audit report u/s.142(2A) - Disallowance of rate difference through debit note received from Mauria Merchandise division of Mauria Udyog Limited (MUL) - profit and loss account of trading in DE Oiled Cake (DOC) with MUL and others - Justification of expenses - HELD THAT:- We find that the entire modus operandi on DOC trading has been elaborated in para 5.2.2. of the order of the ld. CIT(A) as submitted by the assessee thereon. The rates for DOC trading have been determined by SOPA (Soyabean Processors Association of India) a non-profit organization, which is dedicated to the progress and welfare of the soya sector. We also find that the ld. CIT(A) in para 5.3 of his order had explained the manufacturing process of crushing of soya seeds and way in which the resultant by- product i.e. DOC is traded within the available time gap of three weeks which is also capable of raising finance to the assessee. The ld. CIT(A) had given a categorical finding that crushing of soya seeds and trading of DOC are independent twin businesses. With regard to comments made by the Special Auditor, the ld. AR stated that the rates were indeed available in SOPA for the DOC trading but the Special Auditor was not willing to verify the same and accordingly, he was non-committal in his Special Audit Report regarding the same. In the instant case, we find that the ld. CIT(A) should have asked for a remand report from the ld. AO so that the ld. AO could have understood the business model and the Modus Operandi of DOC trading business of the assessee and the said goods being available as security for earning finance for the assessee within a time gap of three weeks. Since the ld. CIT(A) had not asked for a remand report or not given proper opportunity for the ld. AO to understand the entire facts of the case, we find that the principles of natural justice have been grossly violated in the instant case. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO for denovo adjudication in accordance with law. The assessee is at liberty to furnish further evidences, if any, in support of its contentions. Accordingly, the ground No.1 raised by the revenue is allowed for statistical purposes.
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2020 (1) TMI 215
Addition u/s.68 - Unexplained cash credit - HELD THAT:- M/s. Rama Krishna Electro Component Pvt. Ltd. is a debtor in the books of the assessee which is also evident from list of debtors on 31.03.2013 given in Schedule 8 of the balance sheet. It has been further claimed that the said amount has not been adjusted against the debt as it still appears as unsecured loan in the name of M/s. High Ground Enterprises Ltd., because during that period the final verdict of the Hon ble High Court had not come. Now that the judgment of Hon ble High Court has come therefore, it is no longer in the nature of loan. Under these facts and circumstances, it cannot be held that the source of credit of ₹ 75 lacs remained unexplained, because admittedly the said amount has come from M/s. High Ground Enterprises Ltd. in pursuance of suit filed by the sister concern of the assessee which is an amount due by the said party to the sister concern, i.e., M/s. Rama Krishna Electro Component Pvt. Ltd.. Accordingly, the addition made by the Assessing Officer is directed to be deleted. TDS u/s 194C - Addition u/s.40(a)(ia) - freight charges paid - HELD THAT:- Now it is a well settled law in view of the Hon ble Jurisdictional High Court judgment in the case of Ansal Land Mark Township (P) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] that said proviso is clarificatory in nature and will apply respectively. Before us, ld. counsel had placed copies of income tax return of the parties to prove that these parties are regularly assessed to tax and has also shown these payments in the return of income and have paid taxes thereon. However, merely from the return the same is not very discernable. Accordingly, we are of the opinion that this matter should be restored back to the file of the Assessing Officer to verify, whether the payees have offered this amount in their return of income and have taken into account such sum for computing the income and have paid taxes thereon. Addition u/s.14A on account of interest and bank charges - HELD THAT:- From the assessment order, it is seen that the ld. Assessing Officer has observed that funds over drawn by the payee were never utilized for the purpose of business and has tried to make the disallowance u/s.14A without any giving any reasoning or basis. There is no whisper as to why the provision of Section 14A is attracted on addition of ₹ 25,49,658/- for disallowance of interest in bank charges, when there is no exempt income earned by the assessee during the year. The fact of the matter is that the assessee had made investment amounting to ₹ 10,50,000/- in shares of unlisted company on which Assessing Officer has made separate addition of ₹ 1,05,000/- u/s.14A which stands deleted by the ld. CIT(A). Even otherwise also, it is seen that assessee had huge interest free funds and capital of ₹ 68,64,871/- and there is no material or finding by the Assessing Officer that any interes-tbearing fund have been diverted for the non-business purpose. We are unable to appreciate the reasoning given by the Assessing Officer for making such kind of addition without application of mind and thus same is directed to be deleted. Adhoc disallowance of expenses - HELD THAT:- A short reasoning given by the Assessing Officer is that the element of personal use cannot be ruled. Nothing has been stated by him as to whether there is any discrepancy in the bill and vouchers and whether there is any defect in the books of account. If at all, there could be some element of personal use that could be only on account of car running and telephone expenses. The observation of the Assessing Officer is not only general but also vague and purely based on adhoc without finding any defect in the evidence submitted by the assessee. Accordingly, such an adhoc addition is directed to be deleted.
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2020 (1) TMI 214
Disallowance of the deduction u/s 54 - amount contributed by the Appellant s husband towards reinvestment in new house property - whether exemption u/s.54 of the Act are to be denied in the absences of nexus between sale consideration received on sale of old asset and source of investment in new house? - HELD THAT:- On mere reading of provisions of Section 54 of the Act, it would be clear that statute has not laid down condition for the assessee in order to get the benefit of Section 54 of the Act, the actual sale consideration received on sale of original asset should be utilized for acquisition of new house property. The only condition required to be fulfilled is that assessee should purchase a new house property within a period of one year before or after the date on which the transfer of his property took place or he should have constructed a house property within a period of two years after the sale of original asset. There is no provisions under Section 54 of the Act stipulating that assessee should utilize the amount which he obtained by way of sale for meeting the cost of new house. It is settled principle of interpretation of statute that Court do not have power to go beyond the terms of statute where the benefits are granted subject to fulfillment of certain conditions. The Courts cannot impose some other conditions in order to give benefit conferred by the statute. SEE K.C. GOPALAN [ 1999 (9) TMI 955 - KERALA HIGH COURT] We hold that benefit u/s.54 of the Act cannot be denied on the ground that sale proceeds of the original asset sold was not utilized for the purpose of purchase of new asset. Accordingly, we reverse the findings of the lower authorities and direct Assessing Officer to allow the benefit u/s.54 to the extent of investment made in new house. - Decided in favour of assessee.
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2020 (1) TMI 213
MAT - Applicability of provisions of section 115JB - Addition to the books profit loss on revaluation of securities and provision made for bad debt and doubtful debts which is reduced from the respective asset - HELD THAT:- The Hon ble Bombay High Court in CIT Vs Union Bank of India [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] held that provisions of section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company governed by provisions of Banking Regulation Act, 1949. Further, this bench of Tribunal in assessee s own case for AY 2004-05 [ 2016 (6) TMI 1381 - ITAT MUMBAI] took the same view. Therefore, following the principle of consistency this ground of appeal is allowed in favour of assessee. Book profits loss on revaluation of securities and provision made for bad and doubtful debts which are reduced from the respective assets - HELD THAT:- This ground of appeal is also covered by the decision of Hon ble Gujarat High Court in CIT Vs Vodafone Essar (Gujarat) Ltd [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] wherein it is held that prior to the introduction of clause (i) to the Explanation to section 115JB, as held by the Supreme Court in case of HCL Comnet Systems Services Ltd. [ 2008 (9) TMI 18 - SUPREME COURT] , the then existing clause (c) did not cover a case where the assessee made a provision for bad or doubtful debt. With insertion of clause (i) to the Explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the Explanation to section 115JB. Considering the decision of Gujarat High Court in Vodafone Essar [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] which is based on the decision of the Hon ble Supreme Court in HCL Comet system and services limited [ 2008 (9) TMI 18 - SUPREME COURT] this ground of appeal is also allowed in fewer of assessee. Disallowance under section 14A - HELD THAT:- No disallowance under 14A is permissible in terms of Rule 8D in case of assessee is engaged in banking business. Therefore, respectfully following the judgment of the Supreme Court in case of Maxopp investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] we direct the Ld. AO to delete the disallowance of Rule 8D(2)(iii). Similarly, no disallowance under rule 8D((2)(ii) is permissible as the reserve and surplus of assessee which is a banking company, is more than the investment made for earning exempt income. Therefore, the assessing officer is also directed to delete the disallowance of Rule 8D(ii). Expenses incurred for increase in capital allowable under section 35D - HELD THAT:- We have noted that the lower authorities have not disputed the addition of new ATMs, new branches and Retail Asset Centre. The lower authorities denied the expenditure on the ground that no documentary evidences furnished. Considering the fact that all details of new assets which consist of ATMs, no branches and retail asset Centre are part of Annual Report. The annual report is prepared by statutory auditors. Hence, we are of the view that the assessee has added new unit, however for limited purpose, we deem it appropriate to restore this issue to the file of assessing officer to verify the facts and allow necessary relief to the assessee in accordance with law. Needless to say that before passing the order the assessing officer shall grant opportunity to the assessee to further substantiate its claim and to allow filing further details along with documentary evidence to prove its claim. Addition to book profit of tax on non-monetary perquisites - HELD THAT:- Assessee vehemently relied upon the decision of coordinate bench of tribunal in Rashtriya Chemical and Fertilizers Ltd. [ 2018 (3) TMI 1564 - ITAT MUMBAI] wherein on similar ground of appeal the coordinate bench held the taxes borne by the assessee on non-monetary perquisites provided to employees forms part of Employee Benefit cost and akin to Fringe Benefit Tax since they are certainly not 'below the line' items since the same are expressively disallowed under section 40(a)(v), the same do not constitute Income Tax for the assessee in terms of Explanation-2. Therefore, without there being any corresponding amendment in the definition of Income Tax as provided in Explanation-2 to Section 115JB, Fringe Benefit Tax was not required to be added back while arriving at Book Profits u/s. 115JB. In our view the ratio of the decision is squarely applicable on the facts of the present case. Disallowance under section 40(a)(i) - assessee has made provision for expenses on which no tax was deducted - HELD THAT:- CIT(A) after appreciating the submissions of the assessee concluded that the expenses were relatable to the previous year and therefore, to be provided under mercantile system of accounting on due basis, which is the requirement of this system of accounting to take in to account of expenses which has become due but could not be paid by reasons of non receipt of bills. It was further concluded that the TDS provisions are applicable to the payees who are clearly identifiable by the assessee. The TDS made has to be linked with PAN of the payee s. Further the payer has to issue a certificate to that effect. The payee s were not identifiable at that time. No contrary material that the assessee made such liability not on adhoc basis but a realistic evaluation based on the pending past liability. It was further concluded that outstanding expenses were reversed in the subsequent year upon receipt of bill and deducted tax when the liability was crystallized on receipt of bill. There is no loss of revenue in such cases. On the basis of the above conclusion the ld CIT(A) directed to delete the disallowances. No contrary facts or material or law is brought to our notice to take other view. In the result this ground of appeal is dismissed.
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2020 (1) TMI 203
TP Adjustment - arm s length price adjustment relating to corporate guarantee involving overseas associated enterprise and @3.75% of the amount of guarantee itself - HELD THAT:- CIT(A) has followed various judicial precedents i.e Tega Industries Ltd. vs. DCIT [ 2016 (9) TMI 1456 - ITAT KOLKATA] Bharti Airtel Ltd. vs. Addl. CIT [ 2014 (3) TMI 496 - ITAT DELHI] that a corporate guarantee does not amount to an international transaction u/s 92B of the Act. Learned coordinate bench(s) have also taken into consideration section 92B Explanation by the Finance Act 2012 w.e.f. 01.04.02. We therefore decline Revenue s arguments in support of its first substantive ground raised in both the instant appeals. Book profit adjustment u/s 115JB regarding retention money - HELD THAT:- As decided in own case [ 2017 (3) TMI 207 - ITAT KOLKATA] the admitted factual and legal position in the present case is that retention money is not in the nature of income till such time the contractual obligations are fully performed to the satisfaction of the customer by the Assessee. Therefore the retention money cannot be regarded as income even for the purpose of book profits u/s.115JB of the Act though credited in the profit and loss account and have to be excluded for arriving at the book profits u/s.115JB of the Act. We hold accordingly and confirm the order of the CIT(A) in this regard. Section 14A r.w.r. 8D disallowance in relation to the exempt income in nature of dividends - Revenue s former case is that the impugned disallowance also deserves to be added for book profits computation u/s 115JB - HELD THAT:- Hon ble apex court s decision in Maxopp Investment Ltd. vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] holds that the purpose of making exempt income yielding investments is no more a guiding factor, we therefore decline the assessee s foregoing argument. The fact also remains that this tribunal s coordinate bench s decision in REI Agro Ltd. vs. DCIT [ 2013 (9) TMI 156 - ITAT KOLKATA] holds that only exempt income yielding investment have to be considered for computing the impugned disallowance. The same has nowhere been considered in either of the lower proceedings. This tribunal s yet another decision in Maruti Traders Investors vs. ACIT [ 2019 (1) TMI 258 - ITAT KOLKATA] holds that since administrative expenditure is an indirect head, the same has to be disallowed on pro rata basis i.e exempt income vis-a-vis total income. We therefore accept this last limb of section 14A r.w. Rule 8D disallowance in Revenue s favour for statistical purposes and direct the Assessing Officer to compute impugned administrative expenditure disallowance in terms of foregoing case law in consequential proceedings. Revenue s further contention that the impugned section 14A r.w. Rule 8D disallowance deserves to be added for book profit adjustment is declined in view of ACIT v. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . We therefore partly accept the Revenue s instant last issue and restore it back to the Assessing Officer for a fresh computation in above terms Leave encashment disallowance u/s 43B(f) - HELD THAT:- Both the learned lower authorities have treated the same as a contingent liability being a mere provision only. It transpires during the course of hearing the hon ble jurisdictional high court s decision in the case of Exide Industries Ltd. vs. UOI [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] had quashed the very statutory provision itself as ultra vires. Hon ble apex court stated [ 2009 (5) TMI 894 - SC ORDER] stated to be pending till date. We therefore direct the Assessing Officer to keep this issue in abeyance for a fresh decision in view of their lordships final call in the above stated lis. Education cess disallowance - TDS u/s 40(a)(ii) - HELD THAT:- This issue is also no more res integra. Hon ble Rajasthan in M/s Chambal Fertilisers Chemicals Ltd. vs. JCIT [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] considers the CBDT s old circular at 18.05.67 to conclude the statutory expenses tax u/s 40(a)(ii) does not include cess.
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Customs
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2020 (1) TMI 212
Claim of re-credit of the amount to the MEIS and SEIS scheme - Social Welfare Surcharge (SWS) was debited to the script - petitioner was informed that 49.5% 49.5% on assessable value (BCD at 45% and Social Welfare Surcharge at 4.5%) of the goods imported is being debited from Scrips and no excess duty is being collected and thus, the question of refund does not arise - direction to re-credit the Social Welfare Surcharge component in all the MEIS and SEIS duty credit scrips of the petitioner from which such surcharge was deducted. The revenue sought to contend that the present issue is not a case of exemption of basic customs duty to test whether the exemption is at all applicable to social welfare surcharge and on the other hand, the issue revolves around the question whether the payment of SWS can be debited from the duty credit scrips like the customs duty. Whether SWS is an independent levy or it also takes the colour of the parental levy viz., the customs duty? - HELD THAT:- Since this issue raised in respect of nature of levy of SWS is no more res integra in view of the latest decision of the Apex Court made in the case of M/s.Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT ] as referred and discussed supra. By relying on SRD Nutrients Private Limited and Bajaj Auto Limited cases , the Revenue originally sought to contend that the Social Welfare Surcharge is not an independent levy and on the other hand, it forms part of the customs duty or takes the colour and nature of the parent levy viz., customs duty. It is true that in both the above decisions, the Apex Court has taken such view. The above two decisions are now considered by the Larger Bench of the Apex Court in M/s.Unicorn Industries case . The Hon'ble Supreme Court, after considering those two decisions and also the earlier decision of the Apex Court made in Union of India v. Modi Rubber Limited, [ 1986 (8) TMI 60 - SUPREME COURT ] , found that the duty on NCCD, Educational Cess and Secondary and Higher Education Cess are in the nature of additional duties imposed by different legislation for a different purpose - in view of the above recent decision of the Apex Court made in M/s.Unicorn Industries , I hold that Social Welfare Surcharge levied under Section 110(3) of the Finance Act, 2018, is an independent levy imposed and collected under different enactment viz., Finance Act 2018. Thus, SWS intended totally for a different purpose is not taking the colour of parent levy viz., customs duty. Whether the petitioner is correct in claiming that the customs duty for the subject matter imported goods is exempted in total and not paid by them? - If the customs duty is totally exempted and not paid, as claimed by the petitioner, whether the Revenue is justified in making deduction towards Social Welfare Surcharge out of the value of the scrips, apart from deducting the customs duty? - Whether Notification Nos.24/2015 and 25/2015 dated 08.04.2015 empower the Revenue to deduct SWS, apart from the duty of customs and additional duty of customs? - HELD THAT:- The exemption notifications, specifically stipulate that those duty credit scrips should be produced before the concerned officer of customs by the importer, who imports goods against those scrips, for the purpose of debiting the duty leviable on such goods, but for exemption. It is to be noted at this juncture that the term but for exemption is to denote that the duty liable to be paid in cash, in view of exemption, is to be accepted by way of debiting such quantum of duty from the value of scrips - it is evident that the exemption granted under the above notifications is only in respect of payment of customs duty in cash and on the other hand, such value of the customs duty is debited from the value of the scrips. The customs duty leviable and payable, though deducted from the value of the scrips, in effect, no money representing the duty goes to the Government exchequer. It is true that it may give an impression, as pointed out by the learned counsel for the petitioner, that it is the Duty Forgone. When the value of the duty, leviable on such goods of import, is debited from the scrips, he stands as a person discharging his duty liability through the duty credit scrips - Therefore, he cannot contend that the duty paid is Nil. Neutralization of duty does not mean that there was no duty levied and collected at all. On the other hand, when such duty is debited from the scrips which has a money value, such act of debiting, amounts to levy and collection of the duty from the importer. Since the duty is not paid in cash and on the other hand it is discharged by utilizing the scrips, it is true that such value of the duty in money has not gone to the Government Exchequer. But, that does not mean that the duty was not collected from the importer at all. An adjustment of duty from the duty credit scrips by way of debit is not to be termed as Nil duty. It is like an adjustment on balance sheet - Hence, it cannot be said that there was no payment or collection of duty at all. As I pointed out earlier, collection of duty in this case, in view of the exempted notifications, is by way of debiting the value of such duty from the scrips. If no duty is leviable and payable in view of the exemption granted under the above said notifications, as contended by the petitioner, it makes no sense for imposing conditions therein for making debits towards customs duty leviable from and out of the value of the scrips. Admittedly, in this case, the petitioner is not opposing or denying or disputing the debit of customs duty from the value of the scrips. Their only grievance is against the levy and collection of SWS. One of the decisions relied on, no doubt is by the Division Bench of this Court made in DCW Ltd., case . It is true that in the above said decision, the Division Bench of this Court found that when the goods are fully exempted from excise duty and customs duty, the question of levying Educational Cess does not arise. However, it is to be noted that well before the said decision made in DCW Ltd., case, already another Division Bench of this Court in TANFAC Industries Ltd., Vs. Assistant Commissioner of Customs, Cuddalore, reported in [ 2009 (4) TMI 92 - MADRAS HIGH COURT ] had taken a different view and found that the goods cleared under the DEPB scheme cannot be treated as exempted goods, but they can only be treated to be duty paid goods. It was observed therein that the debit of any amount under the DEPB scheme is a mode of payment of duty on the imported goods and cannot be treated as exempted goods - it is evident that as on the date of rendering the decision in DCW Ltd., by the subsequent Division Bench, the decision made by the earlier Division Bench in Tanfac Industries Ltd., confirmed by the Apex Court on 09.10.2009, had already come into existence and in force. I am bound to follow the above binding decision of this Court made in Tanfac Industries Ltd. Case . It appears that the other Division Bench decision of this Court made in DCW Ltd., case seems to have not reached the Apex Court. Under such circumstances, when there are two Division Bench decisions of this Court, out of which, one is confirmed by the Apex Court, I am bound to follow the decision of the Division Bench which is confirmed by the Apex Court. Thus, the petitioner is not justified in contending that total exemption is granted to them from payment of customs duty and that there is nil rate of duty. Whether the Revenue is justified in making debit of the Social Welfare Surcharge from the value of the scrips? - HELD THAT:- It is well settled that the exemption notifications are to be construed strictly. Scope and ambit of exemption notifications cannot be enlarged or extended beyond its intend as specifically spoken to therein. A benefit given in an exemption notification must be confined only with such of those benefits referred to therein in strict sense and not to be extended beyond its scope. If the notification is unambiguous, there is no need to interpret the same. Thus, under the guide of interpreting an exemption notification, a benefit conferred on a person cannot be extended as an undue benefit , which he is not entitled to otherwise under the notification. Going by the terms of the above exemption notifications and in view of the fact that levy and collection of Social Welfare Surcharge is an independent levy, that too, under a different enactment viz., the Finance Act, 2018, I am of the view that the respondents/Revenue are not empowered to make the debit of Social Welfare Surcharge, from and out of the value of the scrips apart from making debit of the duties leviable on the subject matter goods. Thus, it can be concluded that: (a) The petitioner is liable to pay the appropriate Social Welfare Surcharge on Basic Customs Duty in respect of the subject matter imported goods. (b) However, recovery of such Social Welfare Surcharge cannot be done by making debit from the value of the scrips produced by the petitioner, as Social Welfare Surcharge is not the subject matter of exemption granted under Notification Nos.24 and 25 /2015. (c) Consequently, the respondents are liable and thus, directed to re-credit the value of Social Welfare Surcharge so far debited from the scrips held by the petitioner, subject to a condition that the petitioner pays such Social Welfare Surcharge either in cash or in any other mode before the concerned respondent within a period of four weeks from the date of receipt of a copy of this order. (d) On receipt of such payment, the respondents are directed to re-credit the value of the Social Welfare Surcharge so far debited from the scrips held by the petitioner, within a period of two weeks thereafter. Petition closed.
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2020 (1) TMI 211
Levy of safeguard duty - final notification issued on 16-7-2018 - import of solar cells whether or not assembled in modules or panels - petitioner argued that safeguard duty is contrary to the applicable principles and the norms governing the determination of injury and consideration of all other factors set out in the Act as well as Rule 8 of the Rules of 1997 - HELD THAT:- Duty imposition was preceded by an application filed on behalf of domestic industry. The investigation conducted covered the periods 2014-15 to 2017-18. In January, 2018, the preliminary findings were recorded. In fact, the preliminary findings had recommended imposition of 70% safeguard duty. After the findings were recorded, comments and objections of the interested parties were sought. Interestingly, the petitioner had participated in the proceedings which culminated in the final findings. This is a significant aspect because the likely prospect as to imposition of safeguard duty (at the point in time when the petitioner participated in the bid (which opened in April, 2019) in which it was ultimately successful - in June, 2019 was known to it. This aspect, in the opinion of the Court, is important because the petitioner was well aware that imposition of safeguard duty was likely- even the preliminary findings had been announced on 5-1-2018. In the opinion of this Court, on a prima facie reading of the elaborate findings, all relevant factors which the Director General had to take into account, were indeed considered when the impugned final findings were issued - it is evident that the petitioner would not be prejudiced, because it has negotiated a condition that the impact of the levy is not borne by it. Furthermore, this court also notices that being an indirect tax, the levy is borne by the ultimate consumer; the petitioner, as supplier would factor in the tax impact in the cost. This court also notices that the primary object of imposing safeguard duty is to eliminate injury or real threat of injury, posed by import of the product. That objective would be entirely defeated if the court were to blindly endorse a claim of illegality regarding imposition of the duty, which was preceded by elaborate hearing of all parties - including the petitioner, and a reasoned order, which culminated in the impugned notification. Granting such a stay or interim order would facilitate entry of the goods at vastly lower prices, precisely what Parliament intended to curb through the levy. Clearly, the balance of convenience is not in favour of the petitioner, for grant of such relief. The Court is therefore, of the opinion that no interim orders are called for. The stay application is dismissed - List both the writ petitions for final hearing on 22-10-2019.
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2020 (1) TMI 210
Legality and validity of the summons issued by the Superintendent of Customs (Preventive), SIB (Port), Customs House, Kolkata, issued under Section 108 of the Customs Act, 1962 - importation of yellow peas - diversion of consignments - allegation that the vessel could not enter port of Kolkata due to bad weather and insufficient draft condition, the vessel was redirected to Visakhapatnam and thereafter to Kakinada for discharge instead of Kolkata port - HELD THAT:- As all the documents required for investigation are annexed in this writ petition, let the respondent no. 1 being the Superintendent of Customs (Preventive), SIB (Port), Customs House, Kolkata peruse the writ petition as well as the representation dated 21st August, 2019 and pass necessary order as to whether any further investigation is required by the respondent authorities including the jurisdiction of the respondent authorities in issuing the summons dated 9th July, 2019 and 5th August, 2019 within ten days from the date of communication of this order by the petitioner to the Superintendent of Customs (Preventive), SIB (Port). I have not gone into the merits of the case and all points are left open for the Superintendent to be considered in his order - As the allegations have not been controverted and no affidavit has been called for in this writ petition, the allegations made in this writ petition are not admitted by the respondent Authorities. Petition dismissed.
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2020 (1) TMI 209
Smuggling of Gold - Detention of accused - reasons to believe and grounds of arrest - Petitioner submitted that arrest and custody of the detenue was in violation of Art. 22(1) of the Constitution of India and Section 104 of the Customs Act, 1962, and hence continued detention was illegal and the accused was entitled for release forthwith in terms of Article 21 of the Constitution of India - HELD THAT:- On perusal arrest memorandum and the remand application, it clear that prosecution has noted that one Nisar Aliyar had smuggled gold valued at ₹ 60 Crores into India one container on 26-3-2019 concealing them inside imported metal scrap, part of which has been seized by DRI. It appears that the present detenue's son by name Happy Dhakad, who had established a company by name M/s. Ekdant Commercial Pvt. Ltd. in which though the detenue was a Director, he has claimed that he was not actively participating in the operation of the business and was not a shareholder in the said company. It appears that the said Happay Dhakad had also been summoned and had been arrested. Both - Nisar and Happy Dhakad and several other accused have been released by the Advisory Board of COFEPOSA. The interim prayers ought to be granted, subject to further orders that may be passed on final adjudication of the matter - detenue is allowed to be released.
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2020 (1) TMI 208
Delay in adjudicating the case - breach in time limit as prescribed under Regulation 22 of the Customs House Agent s Licensing Regulations (CHALR), 2004 - HELD THAT:- By exceeding the time limit, the order of the Commissioner did not become invalid or non est. There is no provision in this behalf in the Customs Act, 1962, or in the rules or regulations framed thereunder. To hold that this kind of an effect would follow would be a very adventurous and incorrect interpretation of the intention of the Legislature. If an officer has made an undue delay in the adjudication of the case, the department might take disclipinary action against him. The procedure followed by him might also be attacked before an appellate or revisional forum. Matter remanded to the Tribunal by setting aside its said impugned order by directing it to adjudicate the case by hearing the parties and by a speaking order within three months of communication of this order - appeal disposed off.
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2020 (1) TMI 207
Principles of natural justice - revocation of CHA License - this fact remains uncontroverted that the appellant was asked to submit a reply to the show cause notice dated 12th March, 2012 which they omitted to do. There was also no request on their behalf for personal hearing - HELD THAT:- The appellant cannot challenge the order of the adjudicating authority on the ground of breach of the principles of natural justice. But nonetheless, they are entitled to prefer an appeal from the said order, on merits. We give a chance to the appellant to test their case on merits. Should they file an appeal from the order of the Commissioner before the Tribunal within four weeks from date the Tribunal shall proceed to hear the same on merits, condoning the delay.
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2020 (1) TMI 206
Non-speaking order - Refund of the differential duty - section 27 of the Customs Act, 1962 - rejection of refund mainly on the ground that the bills of entries has not been challenged - HELD THAT:- In view of the ratio of the judgment of Hon ble Larger Bench of the Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , the appeal is liable to be rejected. If the appellant s bills of entries have been reassessed and they sought speaking orders which have not been issued to them or the request for issue of speaking orders is rejected by the lower authority that itself becomes a decision by the lower authority which can be appealed against to the Commissioner before the Commissioner (Appeals). However, by not issuing the speaking orders or giving any reply to their requests for speaking order, the officer has denied the appellant their legitimate right to challenge the reassessments. The assessing officer are directed to issue speaking orders as sought by the appellant in cases where the Bills of Entry were re-assessed. This will enable the appellants to understand the reasons for re-assessment and if aggrieved, challenge such re-assessments - appeal dismissed.
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2020 (1) TMI 205
Refund of SAD - time limitation - allegation that the application for refund was filed after one year from the date of payment of SAD, i.e. beyond the limitation in the notification - N/N. 102/2007-Cus dated 14.09.2007 as amended by Notification No. 93/2008-Cus dated 01.08.2008 - HELD THAT:- An order accordingly has already been passed in respect of the same appellant in the case of CC, HYDERABAD CUSTOMS VERSUS KHAZANA [ 2019 (4) TMI 492 - CESTAT HYDERABAD] . It has been held that, in view of the judgment of the Hon ble High Court of Bombay in the case of M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT] , the appellant ( the respondent in that case) was not entitled to refund of SAD where claims were filed after the period of one year stipulated in the notification. It has been held that any exemption notification must be construed strictly against the person who is claiming the benefit of the notification. As a view has already been taken by this Bench in respect of same appellant for different period, there are no reason to deviate from such a decision - refund cannot be allowed - Appeal dismissed - decided against appellant.
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2020 (1) TMI 204
Imposition of penalties - default on the part of Customs Broker to declare the correct value of goods - During the assessment of the bill of entry, it was found by the department that the value declared by the appellant was much lower than the value of contemporaneous imports - main allegation is that that the importer had outsourced the entire operations to the appellant customers broker who had deliberately misdeclared the quantity of the goods in order to evade payment of customs duty. HELD THAT:- The charge of customs duty is on the goods imported or exported. The importer or exporter is therefore liable to pay the customs duty. It does not matter if the importer or exporter entrusts this responsibility to somebody else, may be his own employee or an agent. The liability is on the importer or exporter only. The definition of importer also includes any person who holds himself out to be importer . In this case the appellant has not claimed to be importer. In fact, the bills of entry mention the name of the main importer as the importer for the consignments. Therefore, the liability of customs duty rests only upon the importer - Accordingly Section 114A also applied to the importer in this case. It cannot apply to customs broker whose offence was mis-declaring facts in the bills of entry. Section 114AA is meant for such offences and a penalty under this has already been imposed by the Deputy Commissioner which has been paid by the appellant. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (1) TMI 200
Stay on encashment of the Bank Guarantee - appealable order or not - HELD THAT:- As the impugned order dated 13th December, 2019 passed by the NCLT is an appealable order under Section 61 of the Code, 2016, we are not entering into the merits of the case. This is neither a case that a Labour Court is conducting a criminal case, nor a revenue Court is conducting a labour matter. In such eventuality, it can be said that there is want of jurisdiction - In the facts of the present case, the NCLT, Principal Bench, New Delhi has all power, jurisdiction and authority to decide the case in question. There can be an erroneous order of the NCLT, Principal Bench, New Delhi, but, an efficacious alternative remedy is available with the petitioner by way of statutory appeal under Section 61 of the Code, 2016 - thus, there is no reason to exercise our powers of judicial review vested under Article 226 of the Constitution of India, as there is nothing so special or extraordinary in this case. As an efficacious alternative remedy is available with the petitioner, we are not entertaining this writ petition and the same is disposed of without entering into the merits of the case.
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Insolvency & Bankruptcy
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2020 (1) TMI 180
Maintainability of application - initiation of CIRP - alleged default due to the operational creditor by the corporate debtor - operational debt within the meaning of Section 5(21) of the Code or not - pre-existing dispute between the parties even before issuance of the Section 8 demand notice or not - HELD THAT:- There is no evidence on record showing that the petitioner-operational creditor had ever agreed to adjust the rent from the Security Deposit which has an entirely different purpose. The corporate debtor is assuming on its own that the lease deed would extend to August, 2019 whereas it is determinable in June, 2019. Therefore, there is no plausible defence set up and there is no pre-existing dispute between the parties. The default stands established and there is no reason to deny the admission of the petition. It is needless to say that if any payment has been made that would be looked into by the Resolution Professional. In view of the above this Tribunal is inclined to admit this petition and accordingly initiate the process of CIRP of the Respondent-Corporate debtor. Petition admitted - moratorium declared.
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PMLA
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2020 (1) TMI 190
Restoration of appeal - delay in filing of restoration application - Default in appearance - applicant submitted that the argument from the side of the appellant was over and the argument from the side of the respondent was yet to be completed - HELD THAT:- Admittedly the restoration application has been filed without any application for condonation of delay. The appeal was dismissed for default on 19.08.2015. The application for restoration has been filed on 02.05.2019. There is a delay of about 1350 days. The applicant who is not the appellant herself could have intimated the appellant about her compulsion/situation of not appearing in the appeal. Further, the other two counsels who have signed the Vakalatnama and represented the appellant in the appeal on various occasions could have appeared on 19.03.2015, 30.04.2015 19.08.2015. Each application for condonation of delay is to be considered based on the facts and circumstances of each case. No doubt a liberal, pragmatic, justice oriented, non-pedantic approach has to be made with respect to an application for condonation of delay to advance justice. For that reason there must be sufficient cause to be understood in the proper spirit, etc. in proper perspective to the obtaining fact-situation. The other factors to be considered as to whether there is any gross negligence, lack of bonafideness, reasonableness, inordinate delay, conduct, behaviour, attitude of the applicant and others while considering an application for condonation of delay. There is an inordinate delay in filing the restoration application which is not accompanied with either any application for condonation of delay or any prayer in the restoration application to condone the inordinate delay - there are no merit in the application for restoration of appeal - appeal dismissed.
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Service Tax
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2020 (1) TMI 199
Validity of adjudication proceeding initiated by the impugned SCN - Time limitation - Interpretation of statute - Section 73(4B)(a) (b) of the Finance Act, 1994 - main ground is that the adjudication proceeding had become barred by limitation in view of the limitation period of one year for adjudication from the date of the show-cause notice prescribed under Clause (b) of sub-section (4B) of Section 73 of the Finance Act, 1994. HELD THAT:- Keeping in view the mandate of law as well as sub-section (4B) of Section 73 of the Finance Act, 1994, this Court is of the view that a statutory authority has to decide the show-cause notice within the time prescribed wherever it is possible to do so. In the present case, from the respondents list of dates, it is apparent that it was certainly possible for the adjudicating authority to adjudicate upon the show-cause notice issued to the petitioner within a period of one year at least from the conclusion of arguments on 03rd February, 2015, if not earlier - Since that has not been done, the present writ petition is liable to be allowed on the short ground of limitation alone. Petition allowed.
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2020 (1) TMI 198
Club and association service - principles of mutuality - collects subscription and usage charges from its members - levy of service tax - Since, levy of service tax on service provided by club/association was introduced in the Finance Act, 1994, it was the view of the Service Tax Department that clubs/associations in the country were liable to pay the service tax for the services rendered by them to their members - clubs contented that there was no provision of service by applying principle of mutuality. HELD THAT:- The present writ petition can be disposed in the light of the latest decision of the Hon'ble Supreme Court rendered in State of West Bengal and Others vs Calcutta Club Ltd and in Chief Commissioner of Central Excise and Service Tax and Another vs Ranchi Club Ltd, [2019 (10) TMI 160 - SUPREME COURT] - At the time when said counter was prepared by the respondent, the final order of the Hon'ble Supreme Court in the above cited case had not been pronounced. The Supreme Court has pronounced the above judgment only on 03.10.2019. It is therefore not necessary to deal with the counter filed by the respondent. The Hon'ble Supreme Court has considered the provisions of the Finance Act, 1994, as it stood prior to and after passing of the Finance Act, 2005 and after 2012 after the advent of negative list with the introduction of the definition of service in section 65B (44) of the Finance Act, 1994 vide Finance Act, 2012 w.e.f. 01.07.2012 Following the above decision of the Hon'ble Supreme Court in the above case, the present Writ Petition deserves to be allowed - Petition allowed - decided in favor of petitioner.
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2020 (1) TMI 191
Refund/rebate of service tax - N/N. 41/2007-ST dated 06.10.2007 as amended by Notification No 3/2008-ST dated 19.02.2008 - rejection of refund on the ground that appellant have not been complied with as the details of the exporters invoice relating to export goods are not mentioned in the lorry receipt and the corresponding shipping bill which is the mandatory condition in terms of the notification. HELD THAT:- As per Notification No. 41/2007-S.T. certain co-relations are required to be made before sanctioning the refund claims. It is observed from C.B.E. C. Circular No. 120/01/2010-S.T., dated 19-1-2010 that exporters were facing certain difficulties in relation to one to one co-relation between input services and the exports made. The learned Chartered Accountant brings to the notice of the Bench para 3.2.1 of C.B.E. C. Circular dated 19-1-2010 to argue that self-certification of the exporter or a Chartered Accountant if given is sufficient to sanction refund - also, Revenue could not produce the required documents before the Bench to ascertain as to what extent co-relation can be made and whether any liberal view can be taken in these proceedings in view of C.B.E. C. Circular No. 120/01/2010-S.T., dated 19-1-2010. C.B.E. C. in Para 3.2.1 of Circular No. 120/01/2010-S.T., dated 19-1-2010 gave a clarification was with respect to Notification No. 5/2006-C.E. (N.T.) but it clearly conveys that in budget 2009 the scheme under Notification No. 41/2007-S.T. was simplified in Notification No. 17/2009-S.T. by providing self certification or Chartered Accountant s certification about co-relation and nexus between input Services the exports. That above logic can be followed for Notification No. 5/2006-C.E. (N.T.) where such simplification of Notification No. 17/2009-S.T. may not be available. Appeal allowed - decided in favor of appellant.
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2020 (1) TMI 188
Cash Refund of amount remaining unutilized in Education Cess (EC), Secondary Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC) - restriction on Carry forward of credit pertains to EC, SHEC and KKC - transition to GST regime - section 11B of the Excise Act - HELD THAT:- Section 11B allows refund of duty paid and not of Cenvat credit. In the scheme of Cenvat, the duty/service tax/cesses which have been paid can only be taken as credit by the manufacturer and utilized towards payment of duty/service tax/Cesses, etc., on their final products. There is no scheme under which Cenvat credit can be refunded to them in cash except under Rule 5 of Cenvat Credit Rules (CCR), 2004 in respect of Cenvat credit utilized in manufacture exported goods or exported services - Since export of both goods and services are exempt, cash refund of Cenvat credit which has gone into manufacture of the goods exported or services exported is allowed under Rule 5 of CCR, 2009. Otherwise, there is no provision under which Cenvat credit can be refunded in cash. The judgment of the Larger Bench of the Hon ble High Court of Bombay in M/S. GAURI PLASTICULTURE P. LTD., BOMBAY DYEING MANUFACTURING CO. LTD., M/S. SIMPLEX MILLS CO. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, INDORE, THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI IV, THE UNION OF INDIA THROUGH THE COMMISSIONER OF CENTRAL EXCISE MUMBAI I [ 2019 (6) TMI 820 - BOMBAY HIGH COURT] was precisely on the point as to whether the assessee can get cash refund of Cenvat credit which they were not able to utilize and it was answered in negative. The Hon ble High Court of Madras in SUTHERLAND GLOBAL SERVICES PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER CGST AND CENTRAL EXCISE, COMMISSIONER OF CGST AND CENTRAL EXCISE, GOVERNMENT OF TAMIL NADU, UNION OF INDIA, CENTRAL BOARD OF EXCISE AND CUSTOMS, THE CHAIRMAN, GSTN [ 2019 (11) TMI 278 - MADRAS HIGH COURT] was examining a different issue as to whether the precision of the credit of EC, SHEC KKC into the new GST regime was permissible or otherwise. The Hon ble High Court of Madras has not dealt with the issue of cash refund of unutilized Cenvat credit which is the question in dispute. Thus, there is no legal provision under which the assessee s appeal could be entertained - appeal dismissed.
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2020 (1) TMI 187
Business Support services - Branch Network Fee - whether the Branch Network Fee received by the appellant under the agreements is taxable under Business Support Service ? - time limitation. Time limitation - HELD THAT:- The documents relied on by the authority for issuing Show Cause Notice are the balance-sheet, P L Account and ST-3 returns for the period from 2005-06 to 2009-10 and clearly, these are the statutory documents which have to be prepared and filed before the respective authorities within the time-frame prescribed under the respective statutes like the Income Tax Act or the Companies Act, as the case may be. Clearly, the network access fee has been picked up from these very statutory documents and therefore, there cannot be any scope to allege suppression of the same - extended period cannot be invoked. Taxability under BSS - HELD THAT:- Business Support Services introduced with effect from 01.07.2012 covers only specific activities in the inclusive part of its definition and only those specific activities, if carried out, would get covered under Business Support Services. Admittedly, the appellant is nowhere alleged to have provided any of those services which are specified therein, but rather has only asked to keep intact for access whenever required. The exclusive definition of Business Support Service clearly does not cover this service. Further, the Revenue has nowhere endeavoured to bring on record anything as to whether the appellant did provide any other service other than merely agreeing to grant M/s. SFSH or its nominees right to access its branch network and agency force during the period under consideration. Although the consideration appears to be disproportionate, but however, in the absence of any evidence on record, we also cannot go any further - The law as it stood up to the introduction of Negative List did not take under Service Tax the agreement for providing any services and only with effect from 01.07.2012 did such services become taxable. The liability has been wrongly fastened under Business Support Service. Firstly, the definition of Business Support Service did not cover mere agreeing to grant right to access, which was introduced only with effect from 01.07.2012 and secondly, even on limitation, the Revenue has not been able to establish the suppression in any manner. Thus, the proceedings are barred by limitation of time and hence, the appeal should succeed on the ground of limitation as well - appeal allowed both on merits as well as limitation.
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2020 (1) TMI 186
Refund of service tax - export of services - rejection on the ground of time-barred or no nexus with the service received and service exported - also alleged that the payment has not been received from the service recipient - Rule 5 of the CENVAT Credit Rules, 2004 - whether the refund claims are time-barred? - HELD THAT:- As the issue has been settled by the Larger Bench of the Tribunal CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] holding that the time-limit under Section 11B of the Act for filing refund claims of Rule 5 of the CENVAT Credit Rules, 2004 has to be counted one year from the last date of the quarter and not from the date of receipt of FIRCs - Admittedly, the refund claim for the quarter January, 2015 to March, 2015 and April, 2015 to June, 2015 are filed on 11/03/2016 which are well within the one year period - the refund claims for January, 2015 to June, 2015 cannot be rejected as time-barred. Whether the amount of refund claim of ₹ 5,55,616/- can be rejected on the ground that the same pertains to earlier period? - HELD THAT:- The refund claim has been filed in time. Therefore, refund of ₹ 5,55,616/- cannot be held to be time-barred. Therefore, the said refund claim is admissible to the appellant. Whether the refund claim can be rejected on the ground that there was no nexus with input service and the service exported at the time of entertaining refund claims? - HELD THAT:- It is an admitted fact that, at the time of availment of CENVAT credit on input service on general insurance , it was not questioned to the appellant of this service having no nexus with the services exported by them. Therefore, the same cannot be questioned at the time of entertaining refund claim as held by this Tribunal in VERISIGN SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I [ 2018 (2) TMI 927 - CESTAT, BANGALORE] . Further, the said insurance has been availed by the appellant in insurance of various movable assets which has been used for providing output service - Further, whether CENVAT credit is admissible on the service has been decided by the Tribunal in the case of M/S SARITA HANDA EXPORTS (P) LTD. VERSUS CCE, GURGAON-II [ 2016 (7) TMI 554 - CESTAT CHANDIGARH] wherein it has been held that the said service is having direct nexus with the output service provided by the appellant - on merits also the appellant is entitled to avail CENVAT credit on general insurance . Therefore, refund of the said CENVAT credit cannot be rejected. Whether it is mandatory that the service recipient itself is required to make payment for the service received and then only refund can be entertained? - HELD THAT:- There is no provision in law that payment of service provided by the appellant has to be made by the service recipient for entertaining refund application. It is a fact on record that the appellant provided the service and received FIRCs against those service. Therefore, refund claim is admissible to the appellant. The refund claims, except ₹ 1,35,319/- and ₹ 3,549/- on account of tour operator service , the appellant is entitled to claim refund - Appeal allowed in part.
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2020 (1) TMI 185
Non-payment of service tax - mobilisation advance received from the client - irregular availment of CENVAT credit on common input services used for rendering taxable as well as exempted services - HELD THAT:- Commissioner (Appeals) has recorded that appellants had enclosed certain ST-3 returns pertaining to 2012-13 and 2014-15 but had not produced relevant ST-3 returns to prove their claim that they had reversed the amount. This is a fit case to be remanded to the original authority for verification of the following: (1) the amount of service tax paid by them on the mobilisation advances received by them; (2) the amount of CENVAT credit reversed by them and its calculation - The original authority shall give the appellant an opportunity of being heard and presenting the documents in support of their claims and accordingly redetermine the tax liability, if any. Appeal allowed by way of remand.
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2020 (1) TMI 184
Refund of accumulated Cenvat credit - export of services - case of Revenue is that two invoices were filed beyond the period of limitation - N/N. 27/2012- CE (NT) dt.18.06.2012 - HELD THAT:- Para 3(b)(ii) of this notification requires the claims of refunds to be filed before one year from the date of receipt of payment in convertible foreign exchange in cases of export of services. HELD THAT:- During hearing before this bench, learned Chartered Accountant representing the appellant presented various data but could not show that the foreign exchange in respect of these three invoices were received on any other date other than the dates mentioned above or that the refund claim was filed prior to the date indicated above. The first appellate authority has correctly modified the order of the lower authority only denying the refund of Cenvat credit under Rule 5 of CCR, 2004 to the extent the refund claims were filed beyond the period of one year from the date of realisation of foreign exchange in terms of the notification. He did not deny the refund of entire Cenvat credit. Appeal dismissed.
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2020 (1) TMI 181
Refund of service tax - erroneous payment of service tax which was not required to be paid by them, but was to be paid by the developers namely M/s M. Construction Co and Associates - CBEC Circular issued vide F No 354/311/2015-TRU dated 20.01.2016 - section 11B of CEA - principles of natural justice - HELD THAT:- Undisputedly, Appellants have collected the service tax paid by them from their customer, the fact not disputed by the appellants at anytime. During the course of hearing of appeal, to the specific query made by bench, learned counsel replied and affirmed that they have collected the service tax from their customers - It is settled law that once the appellant has passed on the burden of Service Tax paid to their customers, the amount of tax paid even erroneously cannot be refunded to them. There is no provision in law for transferring the amount, from the account of on registered tax payer to the account of another tax payer from whom said amount of tax was actually due. Even otherwise the amount, which had been paid by the appellants as tax which was not due from them but has been collected by them from customers, will have to be credited to the Consumer Welfare as per Section 11B, and cannot be retained as Service Tax in Consolidated Fund. The request made by the appellant for adjusting this amount paid by them against the tax liability of M/s M Construction Co cannot be acceded too - appeal dismissed - decided against appellant.
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Central Excise
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2020 (1) TMI 195
Clandestine removal - Commissioner had relied upon extensive evidence supported by detailed reasons to come to the conclusion that there was clandestine removal of excisable goods - HELD THAT:- The Tribunal by his impugned order dated 23rd July 2018 set aside that order - We regret to note that the reasons in support of its order are grossly inadequate and most unconvincing. If such detailed order of the Commissioner had to be set aside, the Tribunal ought to have backed its order with cogent reasons. After all, a huge amount of revenue is involved. There is perversity in the order of the Tribunal - Since questions of facts are involved, we do not think it fit to hear out the appeal but to remand it to the Tribunal to hear out the matter afresh - whole matter is remanded to the Tribunal to pass a reasoned order after hearing the parties within six months of communication of this order.
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2020 (1) TMI 194
Valuation - principal-job-worker relationship - appellant assessee as the principal sent raw materials to the other party to the agreement, the job worker which after completing the necessary job returned the manufactured goods to the appellant - HELD THAT:- Now, the appellant cannot shrug off its responsibility of payment of excise duty by saying that the contract between them and the job worker was on principal to principal basis and since they manufactured the goods they had to pay the excise duty. There is no perversity in the fact finding process of the learned tribunal or in its order - Appeal dismissed.
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2020 (1) TMI 193
Maintainability of appeal - appellant filed an application for rectification which was dismissed. Instead of challenging the order passed by the CESTAT, rejecting the rectification application, the appellant has instead preferred the present appeals questioning the very same order passed by CESTAT, New Delhi - HELD THAT:- While seeking permission to withdraw Central Excise Appeal Nos. 41 42 of 2018, the appellant neither sought liberty to file an appeal, later against the order passed by CESTAT in Excise Appeal Nos. 50166 and 51678 of 2016, dated 20-9-2017 nor was any such leave granted. Reliance placed in the case of Sarguja Transport Service v. S.T.A. Tribunal, Gwalior [ 1986 (11) TMI 377 - SUPREME COURT ] where it was held that the principle underlying rule 1 of Order XXIII of the Code should be extended in the interests of administration of justice to cases of withdrawal of writ petition also, not on the ground of res judicata but on the ground of public policy. The principles laid down by the Supreme Court, in Sarguja Transport, both with regards Order 23 Rule 1(3) C.P.C, and Articles 226 and 227 of the Constitution, would also apply to an appeal under Section 35G of the Central Excise Act, 1944 - Since the appellant neither sought, nor were they granted, liberty to prefer an appeal against before this Court, these two appeals are liable to be dismissed on this short ground. Appeal dismissed.
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2020 (1) TMI 192
Time Limitation - Valuation - Biscuit Cone is cleared on payment of Excise Duty on their sale price to their customer - inclusion of packing material cost in assessable value - case of the department is that the sleeve which is packing material supplied by the customer to the appellant the cost thereof needs to be included in the Transaction Value and duty should be charged on the said value - HELD THAT:- The appeal can be disposed of on limitation itself as the entire period is beyond the normal period of One year. As regard time bar we find that the appellant have been filing their declaration under Rule 173(b) 173(c) of erstwhile Central Excise Rules, 1944 - as the appellant have categorically declared to the department regarding packing material being supplied Free of Cost by their customer and the cost thereof was not being include, there are no instance of suppression of facts. The entire demand being beyond one year from the date of Show Cause Notice, hence stands time barred - appeal allowed on time bar.
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2020 (1) TMI 189
Vires of Rule 8(3A) of the Central Excise Rules, 2002 - Default of monthly payment of duty - denial of utilization of Cenvat credit under Rule 8(3A) of the Central Excise Rules, 2002 - period September, 2009 to August, 2010 - HELD THAT:- In the case of Indsur Global Ltd [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] the Hon ble High Court of Gujarat has struck it down as unconstitutional. This judgment of the Hon ble High Court of Gujarat has been stayed by the Hon ble Apex Court. Similar decision was taken by the Hon ble High Court of Gujarat in the case of Shreeji Surface Coatings Pvt Ltd (supra) and it does not appear that this order has been struck down or stayed by the Hon ble Supreme Court. However, an appeal against this appears to have been admitted by the Hon ble Apex Court. In the case of Malladi Drugs Pharmaceuticals Ltd (supra) a batch of writ petitions filed by various parties were decided by the Hon ble High Court of Madras striking down Rule 8(3A) as ultra vires. At least four different High Courts have struck down the constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 and appeals against such judgments have been admitted by the Hon ble Supreme Court and have yet to be decided. There was a stay in one case i.e., Indsur Global Ltd (supra) only but there was no stay in respect of the other judgments - What needs to be decided in this factual matrix is where there are judgments by four different High Courts holding Rule 8(3A) as ultra vires and there is no judgment of any High Court upholding it and where the appeals against these judgments have been admitted and are under consideration of the Hon ble Apex Court, whether the ratio of these judgments bind this tribunal or otherwise. We find that the last in the series of judgments was passed by the Hon ble High Court of Bombay in the case of Nashik Forge Pvt Ltd (supra) on 17.09.2018 holding that the ratio of the judgment of the Hon ble High Court of Madras, Gujarat and Punjab Haryana apply. Demand set aside - appeal allowed - decided in favor of appellant.
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2020 (1) TMI 183
Benefit of exemption - job-work - manufacture of Pipes on behalf of M/s. ITD Cementation India Limited on job work basis - demand on the ground that the pile liners fabricated at site of construction were used at the marine site, is exempted vide N/N. 23/2011-CE (NT) dated 01.12.2011 - HELD THAT:- As per the nature of contract, there is absolutely no doubt that MS pipes/ tubes manufactured at site for fabrication pile liners. Though the N/N. 3/2005-CE dated 24.02.2005, under serial No. 64 of the table appended thereto, grants exemption to all goods of Chapter heading 7308. However, by issue of N/N. 23/2011-CE (NT) dated 01.12.2011, under Section 11C of the Act with retrospective effect, the goods falling under Chapter heading 7305 are clearly exempted - the contention of the Revenue, in the grounds of appeal that the goods become exempted as per the amending N/N. 41/2011-CE dated 18.11.2011, is not relevant in view of N/N. 23/2011-CE (NT) dated 01.12.2011 issued under Section 11C of the Central Excise Act, 1944. Appeal dismissed - decided against Revenue.
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2020 (1) TMI 182
Classification of goods - industrial paints - industrial varnish - whether the goods are classifiable under chapter heading 2715 00 90 as done by the Department or chapter heading 3208 10 90 which the assessee has chosen? - HELD THAT:- The letter dated 07.12.2015 issued by the Ld. Asstt. Commissioner, Kalyani Division, has not been dealt wherein it is stated that the subject goods manufactured by the appellant assessee is classifiable under chapter heading 3208 10 90. In the said letter, a specific reference has been made by the Ld. Asst Commissioner to the examination report issued by the National Test House. The justice would be met if the matter is re-examined by the Ld. Commissioner duly considering the contents of the aforesaid letter issued by the Ld. Asst Commissioner. While re-examining the classification, the Ld. Commissioner will specifically deal with the test reports considered in the said letter of the Asstt. Commissioner - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2020 (1) TMI 196
Process amounting to manufacture or not - TN VAT - purchase of minced tobacco in bulk quantity and repacking the same with added flavour in small packs - HELD THAT:- The petitioners are in the business of purchasing minced tobacco on whole sale basis, add some scent, repack it in small packs and sell it. The respondent has taxed them, on the ground that adding scent and making in small packs involves manufacturing process and the tobacco is converted from raw tobacco to chewing tobacco, which is a different commercial product and, therefore, they are liable for paying tax. Reliance placed in the case of CRANE BETEL NUT POWDER WORKS VERSUS COMMR. OF CUS. C. EX., TIRUPATHI [ 2007 (3) TMI 6 - SUPREME COURT ] where it was held that The process involved in the manufacture of sweetened betel nut pieces does not result in the manufacture of a new product as the end-product continues to retain its original character though in a modified form. From the facts of the cases, it is clearly seen that the minced tobacco, which is purchased in larger quantity, is repacked and sold in smaller packs. The identity of the product remains the same and it does not get changed to a different commercial product or distinct commodity - As held by the Hon ble Supreme Court in the case of Crane Betel Nut Powder Works, adding scent or flavour did not result in a new and distinct product having a different character and use. Therefore, in the considered opinion of this Court, there is no manufacturing process involved in the activities of the petitioners. Petition allowed - decided in favor of petitioner.
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Indian Laws
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2020 (1) TMI 202
Smuggling - Opium - offence punishable under Section 18 of Narcotic Drugs and Psychotropic Substances Act, 1985 - cogent evidence of offence or not - HELD THAT:- From the evidence on record in this case the prosecution has proved the guilt of the appellant beyond reasonable doubt. The conviction recorded and the sentence imposed is in conformity with the provisions of law and evidence on record, thus no interference is called for - this appeal is devoid of merits, and the same is dismissed. As the appellant-accused is on bail, the bail bonds are cancelled. He shall surrender within a period of four weeks from today, to serve remaining period of sentence, failing which, the Chief Judicial Magistrate, shall take necessary steps to take the appellant into custody to serve remaining period of sentence.
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2020 (1) TMI 201
Dishonor of cheque - section 138 of NI Act - Maintainability of complaint - territorial jurisdiction - delay in filing complaint - appellant had re-presented its complaint but the same was not entertained, as it was filed beyond the period as stipulated by the court where it was initially filed, while returning the complaint - whether the appellant could maintain its complaint as re-presented? - HELD THAT:- There is no dispute that the complaint filed by the appellant before the learned Metropolitan Magistrate, Patiala House Courts was not maintainable at the material time, as the said Court did not have the jurisdiction to entertain the said complaint when it was instituted. The cheques in question were drawn on Vijaya Bank, Defence Colony Branch, New Delhi. The appellant had presented the cheques through its banker IDBI Bank, Nehru Palace Branch. The complaint was filed before the learned M.M. Patiala House as the cause of action was stated to have arisen within the jurisdiction of Police Station Kalkaji New Delhi, that is, where the complainant s bank (IDBI Nehru Palace) where the cheques in question were deposited is located. It was not open for the appellant to file its complaint before the learned M.M., Patiala House Courts, who did not have territorial jurisdiction over the place where the respondent s bank was located (that is, Defence Colony, New Delhi) - Admittedly, in this case, the complaint had not reached the stage of Section 145(2) of the NI Act and thus, at the material time, the learned M.M., Patiala House Courts did not have the jurisdiction to try the said complaint. In terms of Section 142 (A) of the NI Act, as amended by the Negotiable Instrument (Amendment) Act, 2015 which was enacted with retrospective effect from 15.06.2015 all cases transferred under the Negotiable Instruments (Amendment) Ordinance, 2015 were deemed to have been transferred under the NI Act. There is no dispute that if the appellant s complaint was pending before the learned M.M. (Patiala House Courts) or had been re-filed before the Learned MM, South East, Saket Courts the appellant could have the benefit of Section 142(A) (1) of the NI Act as inserted by the Negotiable Instruments (Amendment) Ordinance 2015. However, the said ordinance is of little assistance to the appellant since the said case was neither pending before the learned M.M. Patiala House Court nor before the court of learned MM, South East Distt. as on 15th June, 2015, that is, the date on which the said ordinance came into force. The appellant s complaint stood returned to the appellant by virtue of the order dated 25th August, 2018 passed by the learned M.M. This Court is also of the view that the aforesaid contention is without merit. The logical sequitur of accepting the above contention would be that even if the appellant had not re-filed the said complaint, its complaint would, nonetheless, be required to be adjudicated as a pending case. The present petition seeking leave to appeal against the impugned judgment is dismissed.
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2020 (1) TMI 197
Interpretation of statute - Section 60(1)(ccc) of the Code of Civil Procedure, 1908 - Attachment and sale of the property - HELD THAT:- he expression judgment debtor used in Clause (ccc) of proviso to Section 60(1) of the Code has to be read and understood in the context of the meaning ascribed to the expression debtor in the parent Act, i.e. the PRI Act as amended, and the expression judgment debtor cannot be understood to mean any judgment debtor , as generally understood - Thus, clause (iv) was read and understood in the context of Section 205 of the Companies Act, 1956. Similarly, the expression judgment debtor used in Clause (ccc) of proviso to Section 60(1) of the Code has to be read and understood in the context of the expression debtor used in the PRI Act, lest it leads to wholly unintended benefits being showered upon debtors for whose benefit the said clause was not introduced, and causes injustice to creditors against whom it was never intended to be used as a shield. The intention of the Legislature could never have been to provide protection against attachment and sale in execution of a decree, of the residential property owned by a judgment debtor - irrespective of the nature and extent of the residential property that the judgment debtor may own, and irrespective of the standing/ avocation/ background of the debtor, or the creditor. The interpretation of Clause (ccc) of proviso to Section 60(1) of the Code in a plain and grammatical way, de hors the context in which the said Clause came to be introduced by the extension of the PRI Act as amended to Delhi, in the Code as applicable to Delhi, would continue to throw up completely absurd results, where debtors occupying extremely large and valuable properties the value whereof far exceeds the debt owed to the decree holder/ certificate holder, would get away without discharging their adjudicated liability. Such an interpretation would strike at the very foundation of the Rule of Law - The interpretation sought to be canvassed by the petitioner in respect of Clause (ccc) of proviso to Section 60(1) of the Code would encourage fraudulent contrive by debtors to evade their liability which, certainly, would not be conducive to the preservation of the Rule of Law. The Legislature, in its wisdom, sought to carve out exceptions to Section 60(1) only in exceptional cases of agriculturists, labourers and domestic servants (under Clause (c) of proviso to Section 60(1) of the Code). Other Clauses contained in the Proviso, similarly, provide protection against attachment and sale in execution of a decree. Clause (ccc) has also to be viewed in the light of the other Clauses contained in the Proviso to Section 60(1). If the submission of the petitioner premised on the basic needs of a man for shelter were to be accepted, there would be no justification to allow the attachment and sale in execution of a decree of any residential property, of any person whatsoever. However, that is not the intendment of the law. The submission of learned counsel for the petitioner that the said property is exempted from attachment and sale in execution of a decree of a Civil Court under the Code, is rejected - Reliance placed by the petitioner on Rule 10 of the Rules is, therefore, of no avail and the same is rejected. Petition dismissed.
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