Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 9, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of supply - the applicant had awarded work to the successful bidder for Supply of Materials and Erection respectively. Therefore, the contract entered by the applicant is squarely falls under the works contract - the applicable rate of tax is 18% GST
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Classification of goods - mouth fresheners (after mixing Kharak, Khopra, Sugar, Saunf, Mishri, fennel, Dates, Saccharin, menthol, Papaya fruit, or natural flavouring substances) - to classified as ‘Miscellaneous Edible Preparations not elsewhere specified or included’ chargeable at 18% GST
Income Tax
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Delay in filing the TDS returns - Penalty u/s. 271F - delay in remitting the TDS amounts to the Government account and consequential delay in filing the returns - assessee failed to make out a case of reasonable cause u/s.273B - penalty confirmed.
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Exemption u/s 54F - he meaning of “net consideration” as regards Section 54F(1) is not governed by the meaning of “full value of consideration” as mentioned in Section 50C.
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Addition on account of interest income u/s 56 - The CIT(A) has rightly held that interest income to be of capital nature linked with the process of setting up of its power plant and such receipts would go to reduce the cost of the project which also includes huge interest costs as capitalized.
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TDS u/s 194H - payment of commission of the retailers/dealers of SIM cards - It is only for the sake of completeness of the entries in the books, the commission is rooted through the assessee’s books of account. Appellant is not liable to deduct the tax at source.
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Addition of income from House Property - estimation of ALV - Interest free security deposit received by the assessee was advanced to sister concerns without any interest and no income has been reflected by the assessee against the same - the whole exercise was a colourable device to reduce overall tax burden.
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TPA - ALP determination - nature of services received by the Assessee - Mere furnishing of details of consignment without evidence of participation of holding company in procuring those business would not be sufficient to discharge the burden that lies with the assessee.
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Reopening of assessment - notice issued to the assessee long after he had passed away - legal heirs - the provisions of section 292B of the Act would not be attracted and hence, the notice u/s 148 has to be treated as invalid.
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Transfer of case u/s 127 - An assessee is entitled to know the reasons why the assessment jurisdiction is transferred u/s 127. The impugned order is non-speaking. A non-speaking order is a nullity.
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The income tax department cannot presume something to have happened five years ago just because in the assessment year 1997-98 the assessee failed to explain its source of fund u/s 68 and cash fund u/s 269SS. It did not mean that it indulged in similar activity in the previous year 1992-93.
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If the error is so apparent that without further investigation or enquiry, only one conclusion can be drawn in favour of the applicant, in such circumstances, the review will lie. Under the guise of review, the parties are not entitled to rehearing of the same issue.
Customs
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Import of restricted item or not - used machine tools and unmachined tools - Nothing has been brought on record to prove that “hand tools” are not equipment and are not required for manufacture or production either directly or indirectly of goods or for rendering services. - Goods are not restricted.
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Jurisdiction - authority of Director General of Foreign Trade (DGFT) to exercise powers u/s 3 of the Act - converting certain items from “free” to “restricted” - delegation of power - all the contentions of the petitioner rejected.
DGFT
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Export of Fertilisers under Chapter 31 of ITC(HS) Classification of Export and Import Items 2018 — Procedure to obtain permission / NoC from the Department of Fertilizers, Government of India
Corporate Law
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Authority of statutory auditor to function in the company whose relative or partner is holding any security or interest of the company - The auditor directed to immediately cease to function as statutory auditor of the company in question.
IBC
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Consideration of resolution plan - The decision as to whether the respondent banks require to support a resolution plan proposed by the petitioner is a matter of their commercial wisdom and warrants no interference from this Court.
Service Tax
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Once such personnel have to function under the overall supervision, control and management of the client, the appellant is only providing services of Manpower Supply - the appellant is liable to pay the service tax
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Valuation - inclusion of discount allowed by the IGL to DTC - discount was in fact in lieu of renting of immovable property to M/s IGL by the DTC - liability of service tax confirmed.
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Classification of services - work contract for transportation of coal from mining area - the activity of loading/ unloading mechanically or otherwise is in our view, is only incidental to the activity of transportation of the cargo in these cases - to be classified as GTA service.
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Validity of Notification dated 13.4.2017 - liability of importer to make payment of service tax in respect of ocean freight - HC stayed the further proceedings pursuant to the SCN
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Simultaneous Penalty u/s 76 and 78 of FA - The entire tax along with interest and penalty at 25% of tax demand is paid immediately upon issue of SCN and before Adjudication. So some leniency is warranted in the case.
Central Excise
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Demand on job work activity undertaken by the Appellant - the benefit of exemption notification cannot be denied to an assessee on the ground of non-following the procedure
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Classification of goods - Hand-free Flushing Systems for Urinals & WC - ROM application on classification allowed. - The products are classifiable under Chapter Heading No.8481
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Reversal of CENVAT Credit - the Adjudicating Authority has failed to interpret Rule 6(3) CCR properly while confirming the impugned demand. - the demand at 10% /8% as proposed and confirmed is the forced demand denying the option as is granted by the legislation to the assessee.
VAT
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Once the penalty notice has been found to be wanting in ingredients of offence, that is absence of charge of intention to evade tax, there did not exist any room to allow a second/fresh opportunity at the stage of appeal.
Case Laws:
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GST
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2019 (1) TMI 361
Permission to withdraw Advance Ruling application - determination of Tax liability - Held that:- Since the applicant himself have sought withdrawal of the instant application, we allow the applicant the same (withdrawal of the instant application) - The application for advance ruling filed by the applicant is dismissed as withdrawn at the behest of the applicant.
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2019 (1) TMI 360
Classification of goods - mouth fresheners (after mixing Kharak, Khopra, Sugar, Saunf, Mishri, fennel, Dates, Saccharin, menthol, Papaya fruit, or natural flavouring substances) - whether classifiable under chapter heading 2106 of HSN as ‘Miscellaneous Edible Preparations not elsewhere specified or included’ chargeable at 18% GST or under Chapter 20 i.e. ‘Preparations of Vegetable, fruit, nuts or other parts of plants’ and taxable at 12% GST? Held that:- The Applicant has been clearing/selling/supplying the impugned product under Chapter 21016 since long, i.e. much prior to roll out of GST with effect from 01.07.2017 - while the impugned product was being classified under Chapter Head 2106 of the erstwhile Central Excise Tariff Act 1985, there is neither any change in ingredients nor any change in manufacturing process. To be precise, the impugned product remains the same in GST regime with no change from pre-GST regime. The solitary reason for the Applicant in moving instant application, as we could gather from the contents of the application, appears to be alleged divergent practice of classification of similar products of some other manufacturers. Be that as it may, nothing concrete has been brought on record by the Applicant that would necessitate review of already established classification of the impugned product of the Applicant. Ruling:- The product Mouth freshener as described in the Application will merit classification under Chapter Heading 2106 of the GST Tariff as ‘Food preparations not elsewhere specified or included’ and would be chargeable to GST at applicable rate under the said tariff entry, presently read with Notification No.01/2017-Central Tax (Rate) dtd.28.06.2017 and the corresponding notification under MPGST Act 2017 (Sr. No.23 to Schedule III).
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2019 (1) TMI 359
Classification of supply - Works contract services or not - Applicability of clause (vi)(a) of Sr. No. 3 of table of Notification No. 11/2017-Central Tax(Rate) dated the 28th June, 2017 - applicability of rate of tax on the works contract services received - Held that:- The projects are undertaken for construction of electricity distribution lines, sub-stations and other infrastructure which are meant predominately for sell of electricity in urban and/or rural area - the projects under DDUGY, IPDS, ADB, SSTD, Saubhagya Yojna, FSP and all other schemes of governments are carried out for business purpose and the benefit of Concessional Rate of 12% (6% under Central tax and 6% State tax) as per notification under is not available to the applicant on works pertaining to construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration, which are carried out in respect of projects under DDUGY, IPDS, ADB, SSTD, Saubhagya Yojna, FSP and all other schemes of governments as the same is undertaken for the business purpose - The composite supply of works contract as defined at Section 2 of CGST Act '2017 and MPGST Act, 2017 is treated as supply of service in terms of serial no.6, Schedule Il of CGST Act '2017 and MPGST Act, 2017. In the instant case, the applicant had awarded work to the successful bidder for Supply of Materials and Erection respectively. Therefore, the contract entered by the applicant is squarely falls under the works contract and falls under entry no. (ii) of S. No. 3 of the table of notification no. 11/2017-Central Tax (Rate), Dated - 20 June 2017 as amended from time to time and corresponding notifications under and MPGST Act, 2017, the applicable rate of tax is 18% (9% under Central tax and 9% State tax). Ruling:- The Applicant is not entitled for the benefit of concessional rate of GST @12% (6% under Central tax and 6% State tax) for the said projects in terms of Notification No.24/2017-Central Tax (Rate) dated 21.09.2017 read with Notification No.31/2017-Central Tax (Rate) dated 13.10.2017. The applicable rate of tax is 18% (9% under Central tax and 9% State tax).
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2019 (1) TMI 358
Vires of Notification No. 5/2017 - lapsing of the input tax credit - the notification ultra-vires subsection (3) of section 54 of Central Goods and Services Tax Act or not? - Held that:- Issue Notice returnable on 18th January, 2019. By way of ad-interim relief, the petitioner is permitted to reverse the input tax credit subject to the final outcome of the petition.
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2019 (1) TMI 357
Retrospective effect of rule 96 (10) (b) of the Central Goods and Service Tax Rules, 2017 - Held that:- Vide Notification No. 54/2018-Central Tax dated 9.10.2018, sub-rule (10) of rule 96 has been substituted making it applicable prospectively - It was submitted that, since the grievance of the petitioner was against the retrospective effect given to rule 96, such grievance no longer survives - petition dismissed.
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Income Tax
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2019 (1) TMI 356
Review petition - Assessment u/s 153A - addition u/s 68 - Held that:- As dealing with the scope of interference and limitation of review in the case of Inderchand Jain (dead) Through LRs Vs. Motilal (dead) Through LRs, [2009 (7) TMI 1029 - SUPREME COURT] held that re-appreciation of evidence and rehearing of case without there being any error apparent on the face of the record is not permissible in light of provisions as contained u/s 114 and Order 47 Rule 1 of Code of Civil Procedure, 1908. When does an error cease to be mere error and becomes an error apparent on the face of the record depends upon the materials placed before the court. If the error is so apparent that without further investigation or enquiry, only one conclusion can be drawn in favour of the applicant, in such circumstances, the review will lie. Under the guise of review, the parties are not entitled to rehearing of the same issue but the issue can be decided just by a perusal of the records and if it is manifest can be set right by reviewing the order. See S. Bagirathi Ammal Vs. Palani Roman Catholic Mission [2007 (12) TMI 456 - SUPREME COURT] Thus, this court does not find any reason to review the order.
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2019 (1) TMI 355
Reopening of assessment - unexplained source of fund under Section 68 and cash fund under Section 269SS - Held that:- The application of mind of the income tax officer should be that of a prudent and reasonable man. Some material may subsequently be discovered along with other discovery which the income tax authority would use to form the opinion that the assessee was guilty of concealment of income. Furthermore the case of the department cannot be whimsical. On a given set of facts it cannot at one point of time say that there was no concealment of income and at another point of time say, otherwise. There was no scope of change of opinion. The income tax department cannot presume something to have happened five years ago just because in the assessment year 1997-98 the assessee failed to explain its source of fund under Section 68 and cash fund under Section 269SS. It did not mean that it indulged in similar activity in the previous year 1992-93. For all those reasons we feel that the Tribunal was absolutely right in dismissing the appeal against the order of the CIT(A). - decided in favour of assessee
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2019 (1) TMI 354
Transfer of case u/s 127 - reasons for transfer - transfer of jurisdiction from Kolkata to Aurangabad - Held that:- Neither the impugned show cause notice nor the order dated October 4, 2018 passed under Section 127 of the Income Tax Act, 1961 contains any reason for transfer of jurisdiction from Kolkata to Aurangabad. The contention of the department made at this stage is not supported by any material made available on record. An assessee is entitled to know the reasons why the assessment jurisdiction is transferred under Section 127 of the Act of 1961. The impugned order is non-speaking. A non-speaking order is a nullity. Transfer order is to be quashed.
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2019 (1) TMI 353
Reopening of assessment - notice issued to the assessee long after he had passed away - heir of the deceased informed the Assessing Officer that the assessee has passed away and, therefore, the notice under section 148 of the Act is invalid - whether the notice under section 148 of the Act issued against the deceased assessee can be said to be in conformity with or according to the intent and purposes of the Act? - curable defect for the Revenue to invoke Section 292B Held that:- The notice under section 148 which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the AO has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. - Decided against revenue
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2019 (1) TMI 352
TPA - ALP determination - nature of services received by the Assessee - burden to establish the ALP of the transaction - whether the payment made for such service were at Arm’s Length? - Held that:- The material brought to our notice by the assessee do not substantiate the nature of services rendered by the holding company to the assessee for which the assessee made the payment. A mere explanation of the process by which the business of assessee is conducted and the placement of holding company in such chart does not establish that services were indeed rendered by the holding company. The fact that there were agreements between the assessee and the holding company for rendering of certain services, again is not sufficient to discharge the onus that lies on the assessee. Mere furnishing of details of consignment without evidence of participation of holding company in procuring those business would not be sufficient to discharge the burden that lies with the assessee. We are of the view the conclusions of the revenue authorities that assessee failed to discharge the burden to establish the ALP of the transaction is justified. - decided against assessee.
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2019 (1) TMI 351
Penalty u/s 271(1)(c) - defective notice - Held that:- As perused the copy of the notice issued u/s 274 r.w.s 271 of the Act; dated 30/03/2015 and find that it reveals that the AO has not deleted the inappropriate words and parts in the relevant paragraph of the notice, whereby it is not clear as to which default has been committed by the assessee; i.e., whether it is for furnishing of inaccurate particulars of income or concealing particulars of income that penalty u/s 271(1)(c) of the Act is sought to be levied. As in the case of M/s Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that a notice issued u/s 274 r.ws 271 of the Act without specifying the nature of default; i.e. whether the notice is issued for concealment of particulars of income or furnishing of inaccurate particulars of income; is invalid and the consequential penalty proceedings/order are also not valid. - Decided in favour of assessee.
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2019 (1) TMI 350
Levy of penalty u/s 271(1)(c) - difference between the assessed income and the income as returned by the assessee in the return of income - defective notice - Held that:- When the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of. the relevant clauses will lead to an inference as to non-application of mind. Hon’ble Karnataka High Court in the case of CIT & Another Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that the assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice is offended. - Decided in favour of assessee.
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2019 (1) TMI 349
Deduction u/s 80P(2)(a)(i) on interest income derived from deposit of surplus funds in fixed deposits in State Bank of India Bellary - Since interest income was not income derived from the business of co-operative society, the deduction claimed by the assessee cannot be allowed - Held that:- Interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon’ble Supreme Court. Therefore, whether the source of funds were Assessee’s own funds or out of liability, was not subject matter of the decision of the Hon’ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Co-operative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgments of the Hon’ble Apex Court rendered in the case of The Totgars Co-operative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT) and of Hon’ble Karnataka high Court rendered in the case of Tumkur Merchants Souharda Co-operative Ltd. (supra). Appeal of assessee is treated as allowed for statistical purpose.
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2019 (1) TMI 348
Addition of income from House Property - estimation of ALV - Held that:- As noted that property situated at Flat No.72, L Block, Maker Tower, Cuffe Parade, Mumbai was actually let out to Bank of America during AY 2007-08 @ ₹ 2 Lacs per month. This rent has drastically been reduced to ₹ 25,000/- per month upon receipt of interest free security deposit of ₹ 4 Crore from the tenant. No plausible / cogent explanation regarding drastic reduction has been placed on record. Similar addition in immediately preceding AY 2009-10 was accepted by the assessee by not preferring second appeal and the matter had already attained finality in preceding year - Interest free security deposit received by the assessee was advanced to sister concerns without any interest and no income has been reflected by the assessee against the same. The totality of the above facts lends credence to the reasoning of both the lower authorities and therefore, the conclusion that the whole exercise was a colourable device to reduce overall tax burden, could not be said to be without any sound basis. We concur with the same. Accordingly, the ground raised by the assessee, in this regard, stand dismissed. The office premise situated at Raheja Centre, Nariman Point was stated to be leased out to a corporate entity in which the assessee was a director. No rental income was reflected by the assessee against the same. It is settled law that corporate entity is a separate legal entity in the eyes of law and the business carried out by the corporate entity could not be said to be the business of shareholders / directors. Therefore, the reasoning that the premise was being used for assessee’s business, hold no water. AR has submitted that the assessee was not provided an opportunity to rebut the estimated rental rates adopted by AO in violation of principle of natural justice. As submitted that the property was covered by State Rent Control Act and the notional rent could not exceed the standard rent fixed under the act in terms of certain judicial pronouncements. Keeping in view the same, while upholding the stand of lower authorities in bringing to tax the notional rental value, the matter of estimation stand remitted back to the file of AO to consider the valuation proposed by the assessee, who, in turn, is directed to substantiate his stand. The ground stand partly allowed. The shops / units situated at Hilton Center, Belapur, Navi Mumbai are stated to be used by the assessee by one of his partnership firm. The first appellate authority concurred with the stand of assessee that use of premise by assessee’s partnership firm could be said to be use of premise by the assessee for own business. We concur with the same since a firm is constituted, collectively by its partners and the business of the firm could be said to be the business of its partner. However, upon perusal of quantum assessment order, it transpire that the assessee failed to substantiate the fact that the premise was being used by the firm. Therefore, for limited purpose of verification, the matter stand remitted back to the file of Ld. AO with a direction to the assessee to demonstrate the same. The revenue’s appeal stands allowed for statistical purposes. Regarding flat at Seawood, it is undisputed fact that the assessee had already taken the possession of the same during January, 2009 and the flat was never let out at any point of time since inception. In such a case, the provisions of Section 23(1)(c) could not apply to the fact of the case since for the applicability of the same, the property should have actually been let out at some point of time, which is not the case here. The notional rental value of the same was required to be brought to tax since under law only one property, at the option of the assessee, could be termed as self-occupied property whereas all the other properties are deemed to be let out. Therefore, while upholding the stand of lower authorities in assessing the notional value of this property, the matter stand remitted back to the file of AO to consider the valuation thereof as proposed by the assessee since a plea of violation of natural justice has been raised before us.
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2019 (1) TMI 347
Addition on account of cash received out of regular books of accounts - additions based on documents found in survey u/s 133A - Held that:- Loose sheets are only dumb documents without any corroborative evidence. Assessee has submitted that all its purchases from Choudhury Hydrocarbon (P) Ltd. were duly recorded in its books of accounts and no unaccounted money is received. The loose sheets which were taken the base for addition by the Assessing Officer have not been corroborated by any further evidence. We note that neither Assessing Officer nor the ld. CIT(A) has brought any cogent evidence on record to show that the receipt to the tune of ₹ 13,40,331/- is out of unaccounted money. We note that neither the AO nor the CIT(A) has tried to cross-verify the alleged transaction by doing independent enquiry, hence, in the absence of said enquiry addition should not be made solely on the basis of loose sheets. Case of DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE – 7, HYDERABAD VERSUS M. AJA BABU, HYDERABAD. [2014 (4) TMI 1087 - ITAT HYDERABAD] to followed. - Decided in favour of assessee. Disallowance in respect of Long Term Capital Loss suffered by Assessee Company on sale of equity shares of its group companies - group of the Assessee is gaining by collusive transactions leading to fictitious loss as the shares of group companies had been sold at a price much lower than its market value without the dynamics of market force - Held that:- AO was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct, and preponderance of probability without bringing on record any legal evidence against the assessee in respect of the market value of the shares vis-ŕ-vis price bargained by the parties. That is, ld AO failed to bring any cogent evidence on record to show that ‘price bargained by the parties’ to compute capital gain is not correct. CIT- A was wrong in confirming the aforesaid disallowance wrongly relying on the concept of fair market value of the transactions referred to in section 45(2) and Section 45(4) which has no relevance to the facts of this case relating to transfer of shares on actual sale value/price bargained. Considering all we are unable to uphold the stand of the Revenue. Hence, we are inclined to accept the arguments tendered by counsel of the assessee in this respect. No hesitation to hold that the impugned addition sustained by the CIT(A), is not justified and accordingly addition made on this count is directed to be deleted. - decided in favour of assessee.
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2019 (1) TMI 346
Addition on account of interest income u/s 56 - characterization of interest income earned on advances given to AWEL and interest earned on fixed deposits pending utilization as independent receipt of revenue nature liable to be taxed as ‘income from other sources’ u/s.56 - Held that:- As noticing the process of reasoning applied by CIT(A) and approve his action affirmatively in so far as interest generated on temporary advances given to group concern he has rightly held that interest income to be of capital nature linked with the process of setting up of its power plant and such receipts would go to reduce the cost of the project which also includes huge interest costs as capitalized. Decision of Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME COURT], Karnataka corporation Sugar Mills Ltd. & Bongaigaon Refinery & Petro Chemicals Ltd. vs. CIT [2001 (7) TMI 4 - SUPREME COURT] which in turn distinguish the decision of the Hon’ble Supreme court in Tuticorin Alkali Chemicals Fertilizers Ltd. [1997 (7) TMI 4 - SUPREME COURT]. Thus, we find ourselves in complete agreement with the action of the CIT(A) in upholding the action of AO to reduce interest income arising from short term advances placed with sister concern out of project development expenditure and in reversing the action of the AO in treating the same as revenue income de hors the projects development in progress. The grievance of the Revenue thus is bereft of any merits. Appeal of the Revenue is dismissed. Cross objection filed by the assessee to impugne the action of the CIT(A) in sustaining the interest income on funds kept as fixed deposits pending utilization to be revenue income and consequently not liable to be set off against project development costs CIT(A) in our view, has failed to take notice of the plea that interest expenditure and interest income arise from the same source i.e. borrowed funds. The income and expenditure are thus inextricably linked. We thus are of the view that when the facts are seen in perspective, the action of the CIT(A) appears to suffer from this cardinal error. In the absence of any other activity other than the construction of power plant, the interest expenditure on borrowed funds and incidental income by way of interest mobilized are required to be treated at par. The interest income therefore is eligible for set off against the corresponding interest costs and consequently, such income should be reduced out of interest costs which also form part of the capital expenditure. In this view of the matter, we set aside the action of the CIT(A) and direct the AO to delete the addition made on this score. - decided in favour of assessee
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2019 (1) TMI 345
TPA - Addition on account of adjustment in sales price - MAM -mechanism for selecting the most appropriate method - CUP method application - Held that:- A method of determining arm’s length price, to be held as a ‘most appropriate method’ (MAM), should be, as provided in rule 10C(1), a method “which is best suited to the facts and circumstances of each particular transaction” and a method and “which provides the most reliable measure of arm’s length price of the international transaction”. Under rule 10C(2)(c), “the availability, coverage and reliability of data necessary for application of the method” is one of the crucial factors determining suitability of a method of determination of arm’s length price in a particular fact situation. Quite clearly, therefore, unless suitable reliable data inputs necessary for application of a particular method, as CUP in this case, are available, CUP method cannot be said to be most appropriate methods on the facts of this case. What has been relied upon by the TPO is Internal CUP data but then rather than taking the comparable uncontrolled price of the transaction, the TPO has compared average of intra AE transactions and independent transactions. We donot see legally sustainable merits in the case of the learned Commissioner (DR) and we reject his plea that on the facts and in the circumstances of this case, CUP method is required to be applied. In any case, the issue is squarely covered by the decision of the coordinate benches, in favour of the assessee. Addition on account of Guarantee fees - International transactions - Held that:- As decided in assessee's own case issuance of corporate guarantees does not constitute an international transaction with the meanings of section 92B. Learned representatives fairly agree that the issue is thus covered, in favour of the assessee and in assessee’s own cases, by coordinate benches of Tribunal. Addition on account of addition u/s 145A - Held that:- we see no need to interfere with the findings of the CIT(A) on this ground either. The law is by now well settled. There is no impact on profitability whether the assessee follows the exclusive method or inclusive method, and there cannot be an addition, thus, on that score. That is what the coordinate benches of this Tribunal, including in the cases of ITO Vs Mamta Brampton Engineering Pvt Ltd [2016 (10) TMI 694 - ITAT AHMEDABAD] have consistently have consistently relying upon the judgment of Hon’ble Supreme Court in the case of CIT Vs Indo Nippon Chemicals Ltd [2003 (1) TMI 8 - SUPREME COURT] and ACIT Vs Narmada Chematur Petrochemicals [2010 (8) TMI 263 - GUJARAT HIGH COURT]. Learned Departmental Representative does not dispute this position Addition on account of disallowance under section 10B to be deleted relying on assessee’s own cases for the assessment years 2006-07, 2007-08, 2008-09 and 2009-10 Claim of deduction under section 10B to be allowed.
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2019 (1) TMI 344
Assessment u/s 153A - addition u/s 68 - unsecured loans as well as introduction of capital by the partners - Held that:- The transactions were duly recorded in the books of account and available with the AO. - Neither in the assessment order nor in the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon the report of the Investigation Wing Kolkata and statement of one Shri Anand Sharma recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. Addition u/s 68 - receipt of unsecured loans - accommodation entry - Held that:- There is no dispute that the AO was not having any evidence or even any statement to impugn the transactions as bogus accommodation entries. Further, the assessee has produced all the relevant supporting documentary evidence as we have reproduced in the foregoing paras as referred by the ld. A/R of the assessee and these creditor companies were subject to regular assessments and scrutiny assessments under section 143(3). As at the time of granting of loans to the assessee the companies were having sufficient funds. Further, we have already recorded the details of repayment made by the assessee of these loans and once regular repayment was there even prior to the date of search, then the transactions cannot be doubted as nothing can be achieved by taking the loan and then repaying the same through banking channel even if there is corresponding channelization of cash. As discussed earlier AO has not pointed out any discrepancy in the financial statements or in the bank account statements of the loan creditors to show that there was deposit or introduction of the cash prior to giving the loan to the assessee, accordingly, addition to be deleted. Addition on account of partners’ capital received from four parties - Held that:- the finding of the ld. CIT (A) are based on the facts as well as the documentary evidence produced by the assessee whereas the AO has not brought on record any contrary evidence except the allegation made in the report of the Investigation Wing Kolkata. Therefore, the documentary evidences brought by the assessee cannot be negated merely on the basis or allegation made in the report which is nothing but narration of the statements recorded of certain persons. The report of the DDIT Investigation cannot substitute the documentary evidence. No error or illegality in the order of the ld. CIT (A) qua this issue. Typographical error in the finding of the AO/CIT (A) on account of late delivery charges of ₹ 12 lacs - Held that:- It is apparent that there is a mistake in the amount recorded by the ld. CIT (A) while giving the finding in para 7.3.3. Accordingly, we modify the said part of the order of the ld. CIT (A) and disallowance made by the AO of ₹ 4,23,19,238/- is deleted. Addition after rejection of books of account - Fall in GP - Held that:- t in the facts and circumstances of present case, account books are maintained as they were ordinarily maintained years after years and which were found to yield a fair result. Mere deviation in GP rate cannot be a ground for rejecting books of account, and entering realm of estimate and guesswork. Lower GP rate shown in the books of account during current year and fall in GP rate was justified and also admitted by the Assessing Officer as well as CIT(A) as well as the Tribunal. Fall in GP rate lost its significance. Having accepted the reason for fall in GP rate, namely, stiff competition in market and also that huge loss caused in particular transaction, neither the rejection of books of account was justified nor resort to substitution of estimated GP by rule of thumb merely for making certain additions. We are, therefore, of the opinion that the findings arrived at by the Tribunal suffers from basic defect of not applying its mind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could not have been any other result except what has been shown by the assessee in the books of account. - Appeal decided against revenue
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2019 (1) TMI 343
TDS u/s 194H - assessee is deriving income from distributorship of Idea Cellular Limited for sale of SIM cards and mobile recharge coupons - AO held that the payment of commission of the retailers/dealers was liable to TDS U/s 194H - Held that:- It is not in dispute that the said commission amount was subjected to TDS as the Idea Cellular Limited has already deducted TDS at the time of payment of the said commission. It is not a commission payment by the assessee in the capacity of principal to the retailers/dealers as an agent of the assessee but the commission is originally paid by the Idea Cellular Limited who is acting as a principal and all other parties being distributor, dealers and retailers are receiving the commission from Idea Cellular Limited. It is only for the sake of completeness of the entries in the books, the commission is rooted through the assessee’s books of account. Appellant is not liable to deduct the tax at source. - Decided in favour of assessee.
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2019 (1) TMI 342
Exemption u/s 54F - whether the actual sale consideration has to be taken or the value adopted by the Stamp Valuation Authority (SVA) for the purpose of levy of stamp duty for registration as per Section 50C has to be taken - Held that:- We are of the considered view that the view taken, on this issue that the deeming fiction provided u/s 50C in respect of the term “full value of consideration” is to be applied only to Section 48. The meaning of “net consideration” as regards Section 54F(1) is not governed by the meaning of “full value of consideration” as mentioned in Section 50C. Similar view was taken by the Mumbai ‘B’ Bench of the Tribunal in the case of Raj Babbar v. Income-tax Officer - 11(1)(3), Mumbai [2013 (1) TMI 237 - ITAT MUMBAI]- We direct AO not to adopt the deemed consideration arrived at u/s 50C of the Act, while computing the deduction of the assessee for the purpose of Section 54F of the Act and take into account only “net consideration” as held by different benches of the ITAT. Denying the claim u/s 54F on the ground that what was purchased was a plot of land and not a residential house - Held that:- In this case the assessee has investment the net sale consideration in a plot of land and had advanced money to the builder for construction. This action as per the propositions of the Courts is sufficient compliance of Section 54F of the Act. Mere investment would be enough - AO without any material holds the agreement entered into by the assessee with M/s. Hill View Builders as an afterthought. No investigation is done nor any material contrary to the evidence produced by the assessee is brought on record. Such an action of AO cannot be countenanced. The assessee has discharged the burden of proof that lay on her. The onus shifted to the revenue and this burden is not discharged by the revenue. Thus, we hold that the Assessing Officer was wrong in denying the claim of the assessee for deduction u/s 54F Exemption u/s 54F on the deposit made by the assessee in the Capital Gains Accounts Scheme - Held that:- As decided in the case of ITO vs. K.C. Gopalan [1999 (9) TMI 955 - KERALA HIGH COURT] has taken a similar view that it is not necessary that the very same consideration that is received on sale of property, as such, should be utilised for construction of new building. Also in the case of CIT vs. Kapil Kumar Agarwal [2015 (12) TMI 1075 - PUNJAB AND HARYANA HIGH COURT] held that Section 54F nowhere envisages that sale consideration obtained by assessee from sale of original capital asset is mandatorily required to be utilized for purposes of meeting cost of new asset. It held that investment made by the assessee may be sourced other than entirely from the capital gains. The propositions laid down in these case-law, when applied to the facts of the case on hand, has to lead to a conclusion that this objection of the revenue authorities cannot be sustained. Whether the assessee, at the time of claim of exemption u/s 54F was already in possession of two residential properties i.e., a house in Gurgaon and a pent house - The assessee was owner of 1/4th share in a residential house in Gurgaon - Held that:- Section 2(47) of the Act, lays down that transfer would include a transaction allowing possession of an immovable property in part performance of a contract of a nature referred to in Section 53A of the transfer of property Act. In the case on hand, part performance of a contract has taken place and possession has been handed over. Under these circumstances, the claim of the assessee that her 1/4th share in the house property in Gurgaon has been transferred, has to be accepted. Hence we hold that the assessee has only one house property as on the date of sale of the plots of land giving rise to long term capital gain. Hence this issue is decided in favour of the assessee. Thus the assessee is entitled to deduction u/s 54F on the “net sale consideration invested ₹ 52,40,000/-. AO is directed to compute the long term capital gain accordingly. - decided in favour of assessee
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2019 (1) TMI 341
Revision u/s 263 - CIT-A set aside the assessment order passed by AO u/s 147 and directed the AO to initiate fresh assessment proceedings and carry out necessary verification - bogus purchases - receipt of information from DGIT(Inv.) Kolkata, that the assessee had taken accommodation entry from an entry operator of Mumbai, who had provided bogus entries for purchases - exercise of revisionary powers u/s 263 by CIT-A - finding of the Pr. CIT is that AO could have made proper verification in the absence of relevant vital information as that the material placed by the assessee before the Assessing Officer was not sufficient to come to a conclusion that only 3% of the bogus purchases are to be considered for the additions - no proper enquiry/verification conducted by the Assessing Officer. Held that:- In our view this conclusion of the ld. Pr. CIT, is factually incorrect. The quantitative details have not been found fault with. None of the facts stated, have been controverted. The reply of the assessee extracted above demonstrated that all necessary documents and evidences were furnished before the Assessing Officer. AO had also issued notice u/s 133(6) of the Act, to the sellers at the addresses given by the DGIT-(Inv.), Kolkata. He had received replies from these persons confirming the transactions. He only doubted the mode of delivery of these diamonds. The assessee furnished sufficient evidence to prove the mode of delivery. On these facts, the Assessing Officer chose not to bring to tax 97% of the value of the purchases to tax as bogus purchases. The issue is covered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in the case Tejua Rohitkumar Kapadia [2017 (10) TMI 729 - GUJARAT HIGH COURT]. Even otherwise, when the issue is pending before the ld. CIT(A)-3, Kolkata, the ld. Pr. CIT, does not have the jurisdiction to exercise his powers u/s 263 of the Act, in view of explanation 1 (c) of Section 263 - revisionary powers cannot be exercise under these facts and circumstances of this case. The Assessing Officer in this case considered all the evidences and had taken a possible view under the law. - Decided in favour of assessee
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2019 (1) TMI 340
Revision u/s 263 - Sundry Creditors have not been properly examined by the Assessing Officer - outstanding advances received against the booking of plots / flats / Showrooms - Held that:- The power of revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry. Regarding the advances from customers namely the Akash Cooperative Housing Society Ltd. it was found that these societies are registered in the year 1999 and have huge chunk of land which was acquired by these societies to colonize and allot the same to its members at cost to cost basis hence members of both the societies offered their respective ownership of land to the assessee company and transfer the required funds for further acquisition of land for the development of the same in the residential plots and later on to allot the same to the members of the society as per the list given by the respective societies. Hence we see no reason to examine the land cost and the sources obtained from these two societies. Regarding the other individuals in the instant case, AO has not conducted absolutely any enquiry pertaining to the advances received which gives rise to situation where the assessment was done without any enquiry. There is no such activity conducted by the Assessing Officer in the instant case. This proposition has been held by the Hon’ble High Court of Karnataka in the case of CIT Vs. Infosys Technologies Ltd.[2012 (1) TMI 76 - KARNATAKA HIGH COURT]. Similarly in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the instant case the Assessing Officer has presumed without any basic enquiry that the details filed or in order, to that extent the order of AO can be treated as erroneous and the action of the Ld. PCIT referring the matter for re-examination can be well accepted. Non enquiry of validity of transactions of advances for land/ bianas / land pooling - Held that:- The argument that the assessee has not claimed this expenditure cannot be treated as valid as the assessment does not restrict itself to the claims in the P&L Account but to the entire financial affairs of the assessee. The amounts which stands capitalized would certainly have an impact on the profits and the taxation in the subsequent years. The amounts spent and subsequently capitalized or taken as work in progress would certainly a matter of examination in the year in which the amounts were spent or brought in to the books as it will have a corresponding effect in the future years on the taxation. Hence ,the contention of the Ld. AR that Revenue is not affected cannot be accepted as the expenditure has not been claimed. AO has not conducted any preliminary enquiries about the genuineness of the advances received. Thus making it a fit case for revision under the provisions of Section 263. Assessing Officer has accepted the bianas received of ₹ 48.53 crores without conducting any enquiry or investigation and hence the Ld. PCIT has rightly invoked the provisions of Section 263. Income Tax paid in dispute - held that:- this amount has been shown in the balance sheet as at 31/03/2011 and also as at 31/03/2012. Hence it can be conveniently taken that this amount cannot be an issue for investigation or examination for the year under consideration. Hence the action of the Ld. Pr. CIT on this ground cannot be held to be valid. Allowability of Site expenses - held that:- we are not in agreement with the arguments of the Ld. DR that insufficient enquiry should be a reason for upholding of order under section 263. Ld. PCIT cannot determine as to what extent the enquiries have to be conducted for allowing an expenses as genuine. In this case, since the Assessing Officer has examined books of accounts, TDS details which allowed her to come to a reasonable conclusion, we cannot support the order of the Ld. PCIT on this ground. Interest free deposit from associated concern - Held that:- As AR submitted that the assessee has no money invested in the shares of AB Apartments Pvt Ltd., we also find that the matter stands examined by the Assessing Officer with reference to the reply submitted by the assessee vide their letter dt. 10/06/2014. Further it is apparent from the records that the amount has been received by the assessee on 16/03/2010 hence cannot be a subject matter of proceedings under section 263 for the A.Y. 2012-13. Applicability of Section 40(a)(ia) pertaining to project expenses - Held that:- Since prima facie the facts have been examined and the amounts have not been claimed in P&L Account, hence 40(a)(ia) provisions attract to the items of expenditure claimed in P&L Account, we don’t find any merit in the order of the Ld. Pr. CIT on this issue. Applicability of wealth tax - Held that:- We are not in agreement with the explanation of the Ld.AR that the motor cars be treated as stock in trade and hence to be exempted from the definition of the “asset”. The cars cannot be treated as stock in trade of the assessee in this case and neither the assessee claimed them as part of stock in trade. In fact they have been duly made an integral part of the fixed assets. However, this issue of Wealth Tax cannot be a subject matter of proceedings under section 263 of Income Tax Act,1961 which otherwise could well be taken care by the Section 25(2) of the Wealth Tax Act which the Ld. Pr. CIT failed to invoke. Hence, the revision proposed by the Ld. Pr. CIT on this ground is hereby held to be invalid.
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2019 (1) TMI 339
Delay in filing the TDS returns - Penalty u/s. 271F - delay in remitting the TDS amounts to the Government account and consequential delay in filing the returns - reasonable cause for the failure alleged in terms of Section 272A(2)(K) - Held that:- The period for filing the return is required to be contemporaneously reckoned from the date of limitation provided for depositing the tax deducted at source within the time limit of the respective quarter as mentioned by the CIT (A) in the composite order. Merely because the tax after deduction was not deposited in time by the assessee would not be a ground for giving laxity or enlarging the time for filing the information/ return of TDS and hence it cannot be pleaded a ground for non imposition of penalty ,as the date of filing of the return was for was 15th July, 15th October, 15th January and 15th May of the respective financial year were provided U/s.200 read with sub-rule of Rule 31A. In our view the explanation given by the assessee is required to be examined u/s.273B r.w. other provisions which cast a duty on the assessee to deduct the tax / deposit the tax and file the return and also in the light of Rule 31A of the Act, but nonetheless, the assessee has to make out a case of reasonable cause for not filing the return under Rule 31 of the Rules r.w.section 200(3), In the present case the assessee failed to make out a case of reasonable cause. - decided against assessee.
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Customs
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2019 (1) TMI 337
Jurisdiction - authority of Director General of Foreign Trade (DGFT) to exercise powers u/s 3 of the Act - converting certain items from free to restricted - delegation of power - sub-section (3) of section 6 of the Act - Validity of N/N. 19/2015-2020 dated 5.8.2017 - direction to the respondents to allow the petitioners to import the goods in terms of the contract at Annexure-A to the respective petitions - Restricted item or not - Held that:- A perusal of the impugned notification reveals that the same has been issued by the Government of India, Ministry of Commerce and Industries, Department of Commerce, Directorate General of Foreign Trade. Thus, by the impugned notification the amendment made by the Central Government in the import policy in exercise of powers under section 3 of the Act has been notified which relates to the Directorate General of Foreign Trade, accordingly, the same is authenticated by the Director General of Foreign Trade. Therefore, it is crystal clear that the DGFT has not exercised powers under section 3 of the Act but has merely authenticated an order which relates to the Directorate General of Foreign Trade in accordance with the Authentication Rules. The Authentication Rules do not envisage the authentication of only administrative orders but of all executive orders of the Government of India. The contention that the authentication by the DGFT can be only in respect of administrative orders, is, therefore, not in consonance with the provisions of clause (2) of article 77 of the Constitution. Laying of the notifications before the Parliament - Held that:- On a plain reading of sub-section (3) of section 19 of the Act, it is evident that the requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament. Apart from a bare assertion, there is nothing to show that the provisions of sub-section (3) of section 19 of the Act have not been satisfied, even otherwise, the contention based upon non-compliance with the provisions of sub-section (3) of section 19 of the Act deserves to be rejected. The challenge to the validity of the impugned notifications, fails - petition dismissed.
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2019 (1) TMI 336
Maintainability of appeal - mixed questions of law are involved - one of the issue involves valuation of goods - Held that:- The appeal is admitted on the substantial questions of law - List the appeal for hearing on 14th February, 2019.
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2019 (1) TMI 335
Detention Order u/s 142 1(a)(b) of the Customs Act, 1962 - recovery of Duty Drawback - petition for rectification of mistake is pending before the first respondent - Held that:- There is no dispute to the fact that the order of the Adjudicating Authority, which was confirmed in appeal has not reached its finality, as admittedly, the rectification petition filed by the petitioner is still pending before the first respondent and that the same is posted for hearing on 31.01.2019. The order to be passed in the rectification petition will certainly have a bearing on the subject matter in issue and therefore, this Court is of the view that in all fairness, the respondents can await till an order is passed in the rectification petition - petition is disposed of, only by directing the respondents to keep the detention notice in abeyance, till the disposal of the rectification petition by the first respondent.
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2019 (1) TMI 334
Export of prohibited item or not - proportion of non-basmati rice in export being in excess of 20% - prohibition in terms of Notification No.67 dated 23.1.2003 issued under rule 11 of the Export (Quality Control and Inspection) Act, 1963 - Held that:- The appeal is admitted on substantial questions of law.
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2019 (1) TMI 333
Import of restricted item or not - used machine tools and unmachined tools - restrictions placed as per para 9.12 of the Foreign Trade Policy - Held that:- It is the functionality and utility of the equipments which would qualify for inclusion as capital goods for the purpose of para 9.12 of the FTP, or otherwise. Nothing has been brought on record to prove that hand tools are not equipment and are not required for manufacture or production either directly or indirectly of goods or for rendering services. This being so, the impugned hand tools will very much come within the scope of hand tools for the purpose of para 9.12 of the policy and will then not become restricted for import in terms of para 2.17 of the FTP. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (1) TMI 338
Authority of statutory auditor to function in the company whose relative or partner is holding any security or interest of the company - Held that:- It is recorded that family members of R1 are share holders of the R2 Company whereas Section 141(3)(d) specifically prohibits a statutory auditor whose relative or partner is holding any security or interest of the company - It is amply clear that family members of the statutory auditor of R1 are share holders of R2 company and R1 has issued audit certificate of the company even without examining any Books of Account of the R2 Company which is clear cut violation of the statutory provision of the Section 141(3)(d) of the Companies Act, 2013. The Respondent No. 1 shall immediately cease to function as statutory auditor of Respondent No. 2 Company - Petitioner is permitted to appoint an independent auditor for the Respondent No 2 Company to replace Respondent No 1, in terms of the first proviso to Section 140(5) of the Companies Act, 2013 read with Explanation I thereto. List on 04.02.2019 for final argument.
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Insolvency & Bankruptcy
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2019 (1) TMI 332
Consideration of resolution plan and options put forth by the Petitioner Company for repayment of the total debt owned by the Petitioner Company - Held that:- A plain reading of the Minutes of the JLF Meeting held on 16.01.2018 and 15.05.2018 clearly indicate that the bankers had held discussions with regard to the proposals submitted by the petitioner. However, the respondents were not agreeable to the same - the contention that the respondent banks have not explored the possibility of a restructuring plan, is unmerited. The relief as sought by the petitioner, to direct the respondent banks to consider and accept the resolution plan and the options put by the petitioner – is plainly not maintainable. This Court cannot issue a mandamus directing the respondent banks to restructure the financial assistance granted by them to the petitioner. Direction to the respondent banks to provide necessary guidelines and/or resolution plans for continuing of daily business of the petitioner - Held that:- The same is also unmerited - This is so as the respondent banks have already examined the petitioner’s case within the framework of the circulars issued by the Reserve Bank of India. It is also relevant to note that the CAP, as envisaged in the RBI’s circular dated 26.02.2014, also includes the option for recovery of dues. The decision as to whether the respondent banks require to support a resolution plan proposed by the petitioner is a matter of their commercial wisdom and warrants no interference from this Court. Petition dismissed.
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2019 (1) TMI 331
Validity of admission order dated 11th May, 2018 - ex-parte order - the notice was spent by Speed Post, which was never received by the Appellant - application under Section 7 of the ‘I&B Code’ - Corporate debtor and financial debtor - Held that:- Clause (i) of sub-section (8) of Section 5 shows that any liability in respect of any ‘guarantee’ or ‘indemnity’ for any of the items referred to in sub-clauses (a) to (h) comes within the meaning of ‘Financial Debt’. The ‘Corporate Debtor’ having given ‘guarantee’ on behalf of the principal borrower for the items referred to in sub-clause (a), guarantor company will also come within the meaning of ‘Corporate Debtor’ qua the ‘Financial Creditor’ in whose favour the guarantee has been given. Service of notice of admission - Held that:- Even if it is accepted that it was not served, we are not inclined to remit the case on such ground as it will be mere formality, as admittedly debt is payable by the ‘Corporate Debtor’ and the ‘Corporate Debtor’ defaulted to pay. It is not the case of the Appellant that if the notice would have been served before admission of the application under Section 7, the ‘Corporate Debtor’ would have cleared the debt amount. No relief can be granted - appeal dismissed.
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2019 (1) TMI 330
Functions of Interim Resolution Professional - Held that:- The Interim Resolution Professional has to perform onerous statutory functions under the provisions of Insolvency and Bankruptcy Code, 2016 and Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - In cases the complaint discloses commission of a cognizable offence the Incharge Police Station i.e. Station House Officer is under legal obligation to take cognizance of the complaint as is mandated by Section 190 of Criminal Procedure Code, 1973 - List the matter on 03.07.2018 before the Regular Bench as per the roster.
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PMLA
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2019 (1) TMI 329
Provisional attachment of assets - recovery of dues by banks - mortgaged/hypothecated properties - charge/lien over the property - priority over debts due to the Appellant Bank - Section 26E of the SARFAESI Act, 2002 - Section 31B of the Recovery of Debts due to Banks and Financial' Institutions Act, 1993 - non-obstante clause - Held that:- The Appellant-Bank being a Secured Creditor, since it had lent its own money to the Predicate Offender earlier, is entitled to priority over all other debts and government dues, including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Hence, the Respondent - Deputy Director has no power to attach the property of the mortgagors. The Hon'ble Andhra Pradesh High Court in the case of B. Rama Raju vs. Union of India &Ors. [2012 (5) TMI 240 - HIGH COURT OF ANDHRA PRADESH] in which the Hon'ble High Court has held that if the Adjudicating Authority is satisfied as to the bona fide acquisition of property, it should relieve such property from provisional attachment by declining to pass anOrder of confirmation of the provisional attachment. The Adjudicating Authority also has no power to confirm the Attachment under Section8(2) of PMLA. Similarly, it is a simple case of recovery by the Appellant-Bank from its Borrower its own stressed Asset, since the Bank had already lent the money owned by it, which the Bank is entitled to recover the same - In the present case, this Appellant - Bank is an innocent party since it had already lent its own money to the Predicate Offender and the property in question being mortgaged to the Bank which is provisionally attached by the Respondent- Deputy Director ought to have been released by the Adjudicating Authority under Section 8(2) of PMLA. The provisions of The Prevention of Money-Laundering Act, 2002 cannot be construed and implemented to the detriment of third parties having no connection with and involvement in the scheduled offences which fall within the domain of the Act. The provisions of the Act can only entail penal consequences on those who are not guilty of committing of scheduled offences - The rights of a third party having no involvement in the scheduled offences cannot be jeopardized and decimated by the operation of Act as the same would be violative of their legal right under bond fide contracts. The provisional attachment order is legally erroneous and untenable and could not have been passed more particularly in view of the fact that the complainant was aware of the fact that there is an exclusive and paramount claim of the Appellant Bank, therefore, The Adjudicating Authority had no justification/jurisdiction for attachment of the aforesaid hypothecated/Equitably Mortgaged Moveable and immovable properties.
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2019 (1) TMI 328
Provisional attachment of mortgaged property - priority over other debtors - continuation of attachment during the pendency of the proceedings relating to the Offence under the said Act - Section 26E of the SARFAESI Act, 2002 - Held that:- The Appellant-Bank being a Secured Creditor, is entitled to priority over all other debts and government dues, including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Even Hon‘ble Andhra Pradesh High Court in the case of B. Rama Raju Vs. Union of India & Ors. [2012 (5) TMI 240 - HIGH COURT OF ANDHRA PRADESH] in which the Hon'ble High Court has held that if the Adjudicating Authority is satisfied as to the bona fide acquisition of property, it should relieve such property from provisional attachment by declining to pass an Order of confirmation of the provisional attachment. As admitted by the respondent that the Appellant-Bank is an innocent party and the property, in question, which is provisionally attached by the Respondent-Deputy Director ought to have been released by the Adjudicating Authority under Section 8(2) of PMLA, but despite of the same, the impugned order is passed which is against the law. The Respondent has since the Reply dated 24.09.2018 filed who is silent except stating that the PMLA has got overriding effect in the matter of attachment of any property, as value of proceeds of crime, by virtue of the non-obstante clause contained therein, as against the legal dictum created in all other enactments, the Department had failed to address as to how the property (mortgaged property) can be attached in the facts of present case - It appears that it is mere case of harassment to the financial institution. If it will continue which bank and financial institution would lend the loan against the mortgaged property. The order has been passed without appreciating the law and the judgement rendered by the Supreme Court. The attached property is released forthwith - impugned order set aside - appeal allowed.
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Service Tax
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2019 (1) TMI 327
Validity of Notification dated 13.4.2017 - liability of importer to make payment of service tax in respect of ocean freight - whether notification is ultra vires the provisions of section 66B and section 68(2) of the Finance Act, 1994 - Held that:- Issue Notice returnable on 6th February, 2019. By way of ad-interim relief, further proceedings pursuant to the impugned show cause notice dated 28.6.2018 (Annexure-H to the petition) are hereby stayed.
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2019 (1) TMI 326
Validity of SCN demanding service tax after repeal and introduction of GST - Educational institutions or not - Maharashtra State Council of Examinations - Maharashtra State Board of Secondary and Higher Secondary Education - Gujarat Secondary and Higher Secondary Education Board and (iv) Gujarat Technological University - activity of result processing and pre/post examination facilities provided to these institutions - taxable service or not - Held that:- Issue Notice returnable on 23.01.2019. By way of adinterim relief, the further proceedings pursuant to the impugned show cause notice dated 20.04.2018 are hereby stayed.
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2019 (1) TMI 325
Vires of rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - section 67 of the Finance Act, 1994 - disputed period 2012-13 to 2014-15 - applicability of decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] - Held that:- Issue Notice returnable on 23rd January, 2019.
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2019 (1) TMI 324
Simultaneous Penalty u/s 76 and 78 of FA - Non-payment of Service Tax - Commercial construction Services - tax alongwith interest and part penalty paid before adjudication - Held that:- Various High Courts had taken conflicting views in the question of simultaneous penalties under Section 76 and Section 78. The petitioner's view is supported in as much as the Act itself got amended at a later date to the effect that both penalties cannot be imposed simultaneously. Therefore, in all fairness the penalty imposed under Section 76 of the Act is liable to be set aside. The entire tax along with interest and penalty at 25% of tax demand is paid immediately upon issue of SCN and before Adjudication. So some leniency is warranted in the case. The case was adjudicated on 20.06.2008. The entire demand was paid on 12.05.2008. The interest and penalty at 25% of the demand were paid on 19.07.2008. Therefore, all the dues came to be paid before one month of the date of issue of the adjudication Order. Penalty imposed under Section 76 of the Finance Act, 1994 is liable to be set aside - the payment of the full demand along with interest and the payment of penalty @ 25 % of the duty demanded within/before 30 days of the issue of OIO discharges the petitioner of all the obligations cast upon him under the law - petition allowed in part.
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2019 (1) TMI 323
Non-payment of service tax - Manpower supply services - Demand of Service tax - input services - CENVAT Credit - Held that:- The appellant had supplied personnel to M/s. Infosys and other clients as per requirements of the latter. These personnel are utilized for development, enhancement, implementation and maintenance of software projects. It is also pertinent to note that such development, enhancement, etc., of software is not assigned to the appellants themselves, but is done only by M/s. Infosys and the other clients. No doubt, the personnel so supplied may well be qualified software personnel. Nonetheless, once such personnel have to function under the overall supervision, control and management of the client, the appellant is only providing services of Manpower Supply - the appellant is liable to pay the service tax - demand upheld. The identical issue was addressed by this Bench in the case of M/s. Future Focus Infotech Pvt. Ltd. [2018 (4) TMI 1041 - CESTAT CHENNAI] wherein this Bench has held that the appellant was supplying skilled manpower for which it was liable to pay service tax for supply of manpower services. Time Limitation - Held that:- Indeed the issue is an interpretational one - the invocation of extended period is unsustainable. However, the Show Cause Notice itself suffers from an incurable deficiency with respect to the calculation of tax liability proposed therein - the demand of ₹ 95,68,100/- with interest thereon in respect of alleged Manpower Supply Services for the period June 2005 to 15.05.2008 will not sustain even for the normal period on this score and will require to be set aside - penalty also set aside. CENVAT Credit - input services - Staff Insurance - Travels - Catering Services - Held that:- The period involved is from June 2005 to May 2008 when the definition of input services had a wide ambit as it included the words activities relating to business . This being so, denial of these input Credits on the ground that they have no nexus in providing output services cannot sustain - credit allowed. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 322
Classification of services - appellant has been provided work contract for transportation of coal from mining area either to washery or to the railway siding by employing tippers and trucks for this purposes - Cargo Handling services or GTA Service? - Reverse Charge Mechanism - Held that:- It can be seen from a plain reading of 65A (2)(b) that the classification in the case of combined service is to be decided by analyzing the fact as to which service gives essential character to the service being performed - As can be seen from the contract that the essential character of the service for which contract has been entered by the service provider is that the service received are for transportation of coal for mining area to the railway siding and the activity of loading/ unloading mechanically or otherwise is in our view, is only incidental to the activity of transportation of the cargo in these cases - thus, the service provided by the appellants have rightly been classified in the Goods Transportation Agency service. This issue has already been examined by the Hon’ble Supreme Court in their decision in the case of CCE & ST Raipur Vs Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] wherein the Hon’ble Supreme Court has held that activity undertaken by the assessee of transporting of coal from the pithead of the mines to railway siding is more appropriately classifiable under service head of Transport of Goods by road services. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 321
Demand of service tax - support services - management, maintenance or repair services - Held that:- The demand on both the services do not sustain - appeal dismissed - decided against Revenue.
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2019 (1) TMI 320
Interest on Delayed payment of service tax - payment of tax made before issuance of SCN - amendment in Section 80 of the Finance Act, 1944 - time limitation - Held that:- Section 80 of the Finance Act, 1944 makes it clear that once the payment has been made before the issuance of Show Cause Notice no question of any penalty nor of interest at all arises - The payment in the present case was made after the said amendment but before the issuance of Show Cause Notice. No doubt the payment is for the period prior the said amendment but since the amendment is beneficial in nature, retrospect effect can be given to the said amendment. Therefore, no question of imposition of penalty at all arises. Time limitation - Held that:- SCN is apparently beyond the normal period of one year. There is the apparent acknowledgment on the part of the Adjudicating Authority about the decision of Delhi High Court as has been impressed upon by the appellant. In the given circumstances, the non-payment was actually due to the said prevalent confusion. There is nothing on record which may be considered as an evidence qua positive act of the appellant of having an intention to evade the duty for the said period - SCN definitely barred by time. The Adjudicating Authority below are held to have committed an error while confirming the demand of interest, ignoring the legislative intent under Section 73 of the Act - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 319
Valuation - inclusion of discount allowed by the IGL to DTC - Department after detailed investigation reached to the conclusion that discount of ₹ 1.20 in the prevailing price of per kg. CNG was in fact in lieu of renting of immovable property to M/s IGL by the appellant - demand of service tax on such amount - whether Department is correct in treating the discount portion as renting of immovable property service? - invocation of penalty u/s 77 and 78 of FA. Held that:- The appellant have let out a part of bus depot premises to M/s IGL for purpose of furtherance of business and commerce. As it is an admitted fact that M/s IGL is a business concerned engaged in the business of purchase and sale of Compressed Natural Gas on profit basis. The above-mentioned agreements between the appellant and IGL categorically mentions that discount which is given by M/s IGL to the appellant on the sale of CNG to them from the prevailing market prices is primarily in lieu of the space and logistic infrastructure provided by the appellant to M/s IGL. As per the provision of Section 67 (3) the gross amount charged for the taxable service shall include any amount received towards taxable service before during or after provision of such service - the amount of the discount received by the appellant is, in a way payment of rent for renting of immovable property in the form of space provided by them in their Bus depot to M/s IGL, that is to say the use of the space by M/s IGL and thus as per the provision of Section 67 the amount of discount need to be considered as a consideration for providing the service of renting out of the immovable property. The order-in-original is legally correct in holding that providing the space for setting up of dispensation units at DTC Bus depot premises with related infrastructure, on the consideration of discount @ 1.20 per kg. on CNG from the prevailing prices, amount to renting of immovable property for consideration. Penalty u/s 78 of FA - Held that:- The crucial details and information have been suppressed from the Department which have led to the evasion of service tax - the provision of Section 78 and 77 of Finance Act, 1994 rightly invoked. Appeal dismissed - decided against appellant.
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Central Excise
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2019 (1) TMI 318
Maintainability of review application - failure to make pre-deposit - Section 35F of the Central Excise Act, 1944 - Held that:- An order dismissing an appeal on the ground of failure of the appellant to make the pre-deposit is like dismissal of an appeal for non-prosecution. It is never on merits. Like the Court has the power to restore a suit dismissed for non-prosecution, the Court enjoys similar powers to restore such appeals. The tribunal is directed to hear the appeal before it without insisting on any further pre-deposit within six months from the date of communication of this order - application disposed off.
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2019 (1) TMI 317
Non-compliance with pre-deposit - ex parte order - the contentions raised in the application for modification/variation of such ex parte order not addressed - Held that:- The appellant is now agreeable to put in the statutory pre-deposit for an appeal as now required. In addition to the statutory pre-deposit of 7.5 per cent of the duty amount, the appellant is directed to put in a further 2.5 per cent of the duty amount as deposit with the Appellate Tribunal which additional amount will abide by the result of the appeal before the Appellate Tribunal. The appellant says that a sum of ₹ 4 lakh remains deposited with the Appellate Tribunal. The total amount of 10 per cent in terms of this order will be computed after taking into account the sum of ₹ 4 lakh already deposited - application disposed off.
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2019 (1) TMI 316
Clandestine removal - MS Scrap - absence of any evidence regarding illicit activities - Held that:- No statements of either the MD or any other person were made available for us to weigh in the light of the arguments advanced by the Ld. Advocate. Nor is there any statement of dealers or office clerks. Further, on going through the Order-in-Original as well as the impugned Order-in-Appeal, we do not find any plea of the appellants herein making out a case that the uncorroborative statements have been used which should not have been done - It is not the case of the appellants that they sought for cross-examination and that the same was denied. The bona fides of the appellant have not been disproved and even the statements of the very employees of the appellant confirm that what they received was MS scrap. On a perusal of the analysis of various statements recorded in the Show Cause Notice as well as the Order-in-Original, we find that nothing is apparently put across to the deponents about the “bogus” invoice raised by M/s. SIT with the description as “MS Wires/Coils”. The Department has not been able to sufficiently prove its allegations nor there is any solid documentary evidence in support of its allegations - the allegations having not been proved satisfactorily, the demand cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 315
Clandestine removal - parallel invoices - the demand is mainly based upon the handwritten pencil ledgers seized by the Revenue - statement of Shri Ravindra Singh relied upon which was later on retracted - Held that:- On the basis of the computerized statement of clearances, which was made on the basis of illegible hand written ledgers and the statement of Shri Ravindra Singh, which stands retracted in his cross-examination, the demand cannot be made against the Appellant unit - further, no corroborative evidence has been brought on record to show transportation or procurement in the form of bilty receipts or goods receiving note by the recipient of the goods. We find that once the pencil written ledger entries were not legible, it was not possible to re-write the ledger and prepare ledger on the basis of such entries. Further, no statement of the supplier of the raw material has been recorded to show that the raw materials were supplied to the Appellant unit for manufacture of finished goods. When the Revenue has alleged huge evasion by clandestine clearances, it was obvious that there would have been discrepancy either in the stock of raw material or finished goods, which is absent in the present case. Demand on the basis of alleged clandestine removal under the cover of 8 parallel invoices - Held that:- The Revenue has not shown either in the show cause notice or in the impugned order as to from where these invoices, which were photocopies, were retrieved by the Department. No Corroboration of these invoices are appearing on record. In such case when the authenticity of these invoices is in question and the same has not been substantiated by the Revenue, the demand made on the basis of such invoices does not sustain. Demand on job work activity undertaken by the Appellant - benefit of exemption notification has been denied to the Appellant on the ground that they have failed to maintain challan and register of such job work activity - Held that:- When the Revenue themselves are of the view that the Appellant had undertaken the job work activity and the name of persons for whom such job work activity was undertaken, the Revenue should have investigated as to whether the principal manufacturer has paid the duty on the said finished goods or not - the benefit of exemption notification cannot be denied to an assessee on the ground of non-following the procedure - the demand against Appellant are not sustainable. The demand and penalty against the Appellant M/s Deepak Industries is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 314
CENVAT Credit - inputs used in both dutiable as well as exempted goods - non-maintenance of separate records - Rule 6 of the credit Rules - Held that:- The cenvat credit for an amount much more than what has been confirmed by the original adjudicating authority has already been reversed - Hon’ble Apex Court in the case of Chandrapur Magnet Wires Pvt. Ltd. vs. CCE, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA] has held that once cenvat credit is reversed, it is to be considered ab initio not availed, the appellant herein in compliance of Rule 6 (a) as had also intimated about exercising the option of availing the amended provisions contained in Cenvat Credit Rules 2002 and Cenvat Credit Rules 2004 for the period April 2004 to 31st March, 2008 vide their letter dated 2nd November, 2011. Demand in respect of financial year 2008.09 for an amount of ₹ 8,85,719/- - Held that:- It is observed that the same is based on 10% of sale-price of exempted goods and that the Department has not computed the quantum of credit actually attributable to the exempted goods, as is otherwise been clarified in the CA certificated and also is apparent from the verification report. Thus, the demand for this period is also held to not to be sustainable. Violation of rule 6 of Cenvat Credit Rules, 2004 - interpretation of statute - Held that:- The appellant is entitled to exercise the option as provided under Rule 6(3) in absence of maintaining the proper records. The word used in the provision is ‘option’, which clarifies that it is the appellant who has liberty to decide which option to be exercised and Revenue cannot insist the appellant to avail a particular option - Where the assessee has categorically by way of intimation opted for option provided under 6(3)(ii), CCR then the Revenue cannot insist the assessee to opt for Rule 6(3)(i) - the Adjudicating Authority has failed to interpret Rule 6(3) CCR properly while confirming the impugned demand. Thus, it is clear that the demand at 10% /8% as proposed and confirmed is the forced demand denying the option as is granted by the legislation to the assessee. Time Limitation - Held that:- The records of appellant had regularly been reviewed and were reviewed even in the year 2006 as well. But the department did not raise any dispute at that time. Also the things were absolutely in their notice after the letter of the appellant dated 02.11.2010 intimating about their option - SCN is barred by limitation of time. Appeal allowed - decided in favor of appellant.
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2019 (1) TMI 313
Refund claim - claims on the belief that during the said period, the Commissioner (Appeals) had held that there is no provision for recovery of the Credit availed on common inputs used for manufacture of exempted goods - CENVAT Credit - common inputs have been used in the manufacture of dutiable and exempted goods - non-maintenance of separate records - demand of 8% of the sale value of exempted goods - Held that:- While adjudicating the refund proceedings, the same has been taken note of by the Refund Sanctioning Authority whereby it is seen that during the relevant period, there was amendment brought forth with retrospective application so that the appellant has to pay 8% of the value of exempted goods if common inputs are used for the manufacture of dutiable and exempted products - appeal dismissed - decided against appellant.
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2019 (1) TMI 312
Classification of goods - Hand-free Flushing Systems for Urinals WC - whether the plumbing products (valves) being manufactured by the applicant/appellant are classifiable under 8481 as claimed by the appellant or under 9032 as alleged by the Revenue? - Held that:- The goods manufactured by the appellant are simply solenoid valves, which permit the flow of water for the flushing. There is no provision for maintaining or controlling any factor involved therein as required under Chapter Heading 9032. Only the additional feature, as compared to manually operated Valves is that that it gets operated by battery power automatically, the switch of which is controlled by infrared beam. Similar product has been classified under Chapter Heading 8481 by US Customs Also, which follow the HSN based System of classification and the same is also applicable in India, both for Customs Tariff and Central Excise Tariff. The products of the appellant are classifiable under Chapter Heading No.8481 - appeal allowed - decided in favor of appellant.
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2019 (1) TMI 311
Clandestine removal - MS ingots - consumption of electricity in excess during its manufacture - demand based on third party evidence - Held that:- Since the drop of demand qua excess electricity consumption has not been objected on the part of the Department, there is no appeal filed otherwise. And that the same has been dropped. Third party evidence - Held that:- The case of Revenue is based upon the statement of the representative of M/s. Monu Steels i.e. the third party evidence. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - There is a plethora of judgments to hold that to stand upon the charges as that of clandestine removal, there has to be some clinching evidence and the demand cannot be confirmed based on presumptions and assumptions - the present case is also the one where the Department has relied upon the 3rd party evidence. As already discussed above, the demand is not sustainable on the said basis. Penalty - Held that:- Appellant herein is merely a consignment agent that too for providing the raw material to the manufacturer i.e. M/s. Ispat India Ltd. The allegations of any clandestine removal of final products by M/s. Ispat India Ltd. are opined to have no bearing upon the appellant unless and until there is a corroborative cogent evidence to support the allegation of providing the raw-material without discharging the liability. The same is missing. Commissioner (Appeals) has committed an error while relying upon third party evidence to confirm the demand qua serious charge of clandestine removal - appeal allowed.
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2019 (1) TMI 310
CENVAT Credit - unutilized balance of Cenvat Credit lying in the credit account - N/N. 30/2004 dated 09.07.2014 denied - contravention of provision of Rule 11(3)(i) & (ii) of Cenvat Credit Rules - denial of benefit of notification on the ground that they had not struck off balance of Cenvat credit lying in their account at the time of opting for the exemption from the whole of the excise duty - Held that:- Identical issue decided in the case of M/S. WEARIT GLOBAL LTD. VERSUS C.C.E., UDAIPUR [2018 (8) TMI 1094 - CESTAT NEW DELHI], where it was held that As per Rule 11 (3)(ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No. 30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11 (3)(i) of CCR would apply which does not mandate any such lapsing. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (1) TMI 309
Penalty u/s 54(1)(14) of the U.P. VAT Act - no intent to evade - validity of remand order - Held that:- It could not be denied by learned Standing Counsel that the First Appellate Authority had recorded a finding that the penalty notice insofar as it had been issued solely on account of security money not been deposited by the assessee was not proper. Once that finding had arisen and been recorded by the First Appellate Authority, there did not survive any further issue as may have resulted in a direction of remand notwithstanding with the fact that the proceedings upto the stage of imposition of penalty had been conducted exparte against the assessee. For the purpose of imposing penalty, the burden clearly lay on the revenue authority to issue a proper notice bringing out the charge of violation alleged against the assessee. Once the First Appellate Authority found that the allegation did not constitute offence of violation, the matter had to rest there - The discretion is always with the Assessing Authority while issuing the notice to examine the matter and frame such charge against the assessee as it felt proper. Once the charge had been framed, there is no room for seeking improvement that too at the stage of first appeal. Once the penalty notice has been found to be wanting in ingredients of offence, that is absence of charge of intention to evade tax, there did not exist any room to allow a second/fresh opportunity at the stage of appeal or to allow the Assessing Authority to issue a fresh notice to level all fresh charge - revision allowed - decided in favor of assessee.
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2019 (1) TMI 308
Rejection of books of accounts - non-production of books - enhancement of turnover - no material or evidence of any concealed turnover of purchase or sale of goods made by the assessee - Held that:- While rejection of books of accounts may arise on non-production of books, as is the fact of the present case, however, it cannot be disputed that for the purposes of making the estimation of turnover, the authorities were burdened to justify the estimation on the basis of any material or evidence that may have been existing on record. The fact that the assessee may not have produced it's account books, may only have given rise to rejection of it's books of accounts but not to enhanced estimation of it's turnover. In the present case, the Tribunal had recorded a specific finding that the estimation made by the assessing authority and the first appellate authority did not rest on any valid ground. In face of such finding, the further conclusion drawn by the Tribunal to estimate the enhanced/concealed turnover is, therefore, clearly selfcontradicted and cannot be sustained. Rejection of books of accounts cannot be upheld - revision allowed - decided in favour of the applicant-assessee.
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2019 (1) TMI 307
Deemed Sales or not - purchase of the stone grit has been made from the registered dealer without issuing Form-3A - further sale of such stone grits to the person other than the registered dealer without furnishing the declaration form - levy of sales tax - N/N. ST-II-5785/X-10(1)-80-UP-Act XV/48-Order-81, dated 07.09.1981 - Held that:- The revisionist though has shown in his return the supply of stone grit as exempted from payment of tax and further that the stone grit was purchased from the registered dealers and thereafter was supplied, however, during the course of verification of the book of accounts the assessing authority has noticed that the revisionist has issued the invoices in which he has charged the tax - The tax charged was paid to the revisionist by the purchasers/consumers. The revisionist is liable to pay tax on stone grit treating the same to be sales to the consumer in the hands of the revisionist. Revision petition dismissed.
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2019 (1) TMI 306
Validity of attachment order - stay application pending before the Tribunal - stay granted against recovery of the amount in connection with the demand raised - Held that:- Nothing has been pointed out to this court to establish that the stay application was not decided expeditiously by the Tribunal on account of any default on the part of the petitioner. Moreover, the petitioner has already deposited the tax component of the demand. In the absence of any exceptional circumstances having been made out, there was no warrant on the part of the respondents to initiate coercive recovery against the petitioner by attaching his immoveable properties - the decision in the case of Automark Industries (I) Ltd. v. State of Gujarat [2015 (11) TMI 1016 - GUJARAT HIGH COURT] is squarely applicable to the facts of the present case, where it was held that the respondents should stay their hands till the stay application is decided, unless the stay application is not decided on account of default on the part of the petitioner or it is found that the petitioner is unnecessarily delaying the hearing of the stay application. Whether after the Tribunal had granted stay against recovery of the amount in connection with the demand raised, whether it is permissible for the respondents to continue with the attachment made vide the impugned order dated 03.10.2013? - Held that:- Since the Tribunal has only granted stay against recovery, the respondents are not required to lift the attachment on the property in question. In this regard, a perusal of the provisions of the Gujarat Value Added Tax Act, 2003 shows that the powers exercised by the respondents while attaching the property of the petitioner are relatable to section 46 thereof, which makes provision for special powers of tax authorities for recovery of tax as arrears of land revenue. Since the powers exercised by the respondents are under section 155 of the Code, it evident that the same is in the nature of recovery proceedings. Therefore, once the Tribunal had stayed the recovery by virtue of its order dated 24.01.2014, the respondents were bound to respect such orders and lift the attachment on the properties of the petitioner made vide the impugned order. Since, the attachment is part of recovery proceedings, the contention that there is no recovery and/or attachment, cannot be countenanced. The respondents are directed to forthwith lift the attachment on the property in question of the petitioner and any proceedings taken subsequent thereto, including any entry having been made in the revenue record in relation to such attachment - Petition allowed.
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2019 (1) TMI 305
Principles of Natural Justice - assessment in view of Section 22(2) of the TNVAT Act - opportunity of personal hearing not provided to the petitioner - Held that:- It is not in dispute that the petitioner was served with pre-revision notices dated 29.05.2017, inviting objections, but, the petitioner did not respond. But still, it is mandatory on the part of the authorities to post the matter for personal hearing. As per the circular issued by the Head of the Department, pursuant to the recommendations issued by the Justice Ramanujam Committee, it is mandatory to give an opportunity of personal hearing, by specifying the dates of such personal hearing, whether it is asked or not by the petitioner. But, in the impugned order, there is no whisper as to the same. Division Bench of this Court in an unreported decision in G.V.Cotton Mills (P) Ltd., Rep. by its Managing Director Vs. The Assistant Commissioner (CT), Avarayampalayam Assessment Circle Corporation of Shopping Complex, Coimbatore), [2018 (3) TMI 1617 - MADRAS HIGH COURT], has held that failure to submit objection to the pre-assessment notice would not give a right to the Assessing Officer to deny opportunity of personal hearing. This Court is of the view that the matter should be remanded for fresh consideration - petition allowed by way of remand.
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