Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 27, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Revision u/s 263 - Since, the assessee failed to appear before the CIT, the CIT cannot presume things which is in the minds of assessee, as such opined that CIT has rightly assumed his jurisdiction to revise the assessment order based on the information available on record - AT
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Bogus purchases - Without causing any further enquires in respect of the said purchases, the AO cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department - AT
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Allocation of common expenses between STPI and non-STPI units - The foreign exchange fluctuation can be linked to specific items and how it is not understandable as to how the same was treated as common expenses. At the same time, adoption of sales ratio as the basis for allocation of expenses across the board also does not appear to be correct - AT
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Prior period expenses - since these expenses/incomes are for the projects completed in the past years but were subjected to final payments to be made to the vendor or receivable from clients these difference arose and hence have been accounted for during the current period, claim of expenses allowed - AT
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Having regard to the provisions of section 292B of the Act, mere mention of wrong section in the notice does not vitiate the validity of the very notice issued for filing return of income - AT
Customs
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Project Import - valuation - drawing and documents for use during construction, erection, assembly etc and know how fees to be included in assessable value? - 10% towards technical know how includible in the value of the goods - AT
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Refund - Period of limitation - delay in filing refund application due to Seizure of goods - the provisions of Section 14 of the Limitation Act, 1963, which provides for “exclusion of time” for computation of period of limitation, applies - AT
Service Tax
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Classification of shot hole drilling activity - the purposes conducted by the assessee and by their clients the processes are inter-linked, inter-depended and inter-related which are in relation to the location or exploration of minerals - to be classified as survey and exploration of minerals services - AT
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Refund - If service tax stand paid under the category of technical testing and analysis services and the Revenue has not raised any objection at the time of acceptance of the service tax, no such objection can be raised at the end of service recipient, at the time of grant of refund. - AT
Central Excise
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Validity of order-in-original confirming the demand based on SCN - Whenever arbitrariness is present, equality is absent. Equalities and arbitrariness are strong enemies of each other. When equality is present, arbitrariness is absent. - HC
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Captive consumption - Adjustment of short payment of duty with the excess payment of duty during the same year - self adjustment in the absence of provisional assessment - demand set aside - AT
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Eligibility for exemption under N/N. 6/2006-CE - buses cleared to DMRC - buses for passengers cannot be considered as an “equipment” within the scope of Entry No.90 of the notification. - Exemption not allowed - AT
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Clandestine removal of goods - Even if the transactions on trading were to be found as bogus, the same by itself will not support the confirmation of duty demand as linkage to the clandestine manufacture and the income on bogus trading should be brought out by the evidence - AT
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Captive consumption - benefit of exemption notification no. 67/95 - further processing of goods after packing into unit container - it cannot be said that there was no exemption available on the said products for captive consumption as notification no. 67/95 does not carve out any exception. - AT
VAT
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Export sale against Form-H - conversion of commercial grade Castor oil to First Special Grade after refining process - merely because some process is carried out on the substance, the same is not to be treated as manufacturing process. - HC
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The claim for additional sales tax by treating the contract value as the taxable turnover is not permissible under the provisions of either the TNGST Act or the Additional Sales Tax Act - HC
Case Laws:
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Income Tax
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2016 (10) TMI 895
Income from the lodging house - Nature of income - business income or house property - Held that:- The license granted by the Magistrate, Lodging House Fund clearly shows that for carrying on the business of letting out the property to be used as Holiday Home or lodge, such license was granted. The agreements referred to above also clearly show that with such stipulation only the property was let out to different organisations. Further is not a case of mere letting out the property on a rent, but the assessee also provided watch and ward, furniture and fixtures and other services. All these facts unmistakeably show the intention of the assessee that he was making use of the property for business or commercial purpose. It is worth to note that in Sultan Bros. Pvt. Ltd. –vs. – CIT (1963 (12) TMI 4 - SUPREME Court) observed that whether a particular letting is business has to be decided in the circumstances of each case, and each case has to be looked at from a businessmen’s point of view to find out whether the letting was the doing of a business or the exploitation of his property by an owner. Revenue could not produce the document, which they are relying upon and at the same time they are unable to demonistrate how and where the learned CIT was wrong. Viewing from any angle we do not find any error in the finding of the learned CIT that the income from Bani Bhawan Puri constitutes business income and not income from house property. We, therefore, uphold the finding of learned CIT and answer the issue in favour of the assessee. Undisclosed or unexplained investment or income - Held that:- Merely because the documents recovered from the premises of assessee in the survey conducted on 18.902.2003 indicate that there was undisclosed turnover of ₹ 91,65,486/- as per learned AO or ₹ 1,00,79,633/- as per learned CIT, the entire turnover amount cannot treated as the undisclosed income or investment, without having regard to the facts and figures surrounding the business of the assessee. While assessing the income of the assessee, should have had to the common course of natural elements, and public and private business in relation to facts and figures obtained in a particular case. AO did not consider this aspect and the learned CIT having gone through the details relating to the purchases sales and payments in respect of the business of the assessee reached a conclusion that the total turnover was accumulated through a periodic cycling of the sales amount to purchases and it generally takes three months for each cycle to complete. This finding of the learned CIT is in conformity with the initial plea of the assessee that the funds were being rotated at least four times during the year. Enhancing the Gross Profit Ratio from 10.36% to 11.55% - Held that:- CIT has considered the Gross Profit Ratio rate by working the formula, i.e. Gross Profit Ratio on sales X 100/100-GP on sales. By working out like this he arrived at 11.55% of Gross Profit Ratio on the total turnover of ₹ 1,00,79,633/-. By calculating the G.P. in that method and adding such amount to the undisclosed amount of ₹ 25,19,908/-, learned CIT reached the amount to be added back at ₹ 39,44,106/-. By doing so, the learned CIT granted relief to a tune of ₹ 52,21,380/-. We are at loss to understand where exactly the ld. CIT erred in this process. The reasoning adopted by the learned CIT is scientific and the findings reached by him are impeccable.
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2016 (10) TMI 894
Deemed dividend addition under section 2( 22)(e) - Held that:- A perusal of the relevant Balance- sheet of M/s. Mahanagar Properties Pvt. Limited placed by him on record shows that the amount in question paid to the assessee was shown by the said Company as advance under the head “Loans and Advances” and there is nothing to show that the amount in question was paid by the said Company to the assessee as advance against property. There is also nothing brought on record on behalf of the assessee to show that the Unregistered Agreement stated to be entered into with M/s. Mahanagar Properties Pvt. Limited was subsequently cancelled before the property belonging to the assessee was ultimately sold to some third party. Therefore, find no merit in the case of the assessee on this issue and rejecting the same, uphold the impugned order of the ld. CIT(Appeals) confirming the addition made by the Assessing Officer on account of deemed dividend under section 2( 22)(e) of the Act.
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2016 (10) TMI 893
Revision u/s 263 - as per CIT(a) A.O. has completed the assessment without examining the issue of applicability of TDS provisions u/s 194C on hire charges paid by the assessee - Held that:- It is true that the issue involved in revision proceedings i.e. disallowance of hire charges u/s 40(a)(ia) of the Act is covered by the special bench decision of ITAT, Visakhapatnam in the case of Merilyn Shipping & Transports Vs. ACIT ( 2012 (4) TMI 290 - ITAT VISAKHAPATNAM ). Although, no prejudice is caused to the revenue as pointed out by the Ld. A.R., the assessee failed to offer any explanation why he could not appear before the Principal CIT and explained the fact that the question raised by the Principal CIT is considered by the A.O. and also the provisions of section 194C of the Act are not applicable, as the impugned amount has been paid before the end of the relevant financial year. It is also an admitted fact that the A.O. has not examined the issue at the time of completion of assessment, however, there is no revenue loss is caused to the exchequer because the issue is covered by the decision of ITAT, special bench (SB), wherein the ITAT held that no disallowance can be made u/s 40(a)(ia) of the Act, on the amounts paid within the end of the financial year. Since, the assessee failed to appear before the CIT, we are of the opinion that the CIT cannot presume things which is in the minds of assessee, as such opined that CIT has rightly assumed his jurisdiction to revise the assessment order based on the information available on record and his order is upheld. Thus we deem it appropriate to modify the directions given by the CIT to disallow impugned expenditure and set aside the assessment order passed by the A.O. u/s 143(3) and direct the A.O. to re-do the assessment afresh in the light of above discussion in accordance with law, after affording an opportunity of hearing to the assessee. - Decided partly in favour of assessee
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2016 (10) TMI 892
Share transactions - business income or capital gain - Held that:- When the claim of the assessee was accepted by the revenue authorities in the earlier years as well as in the subsequent year, therefore AO was not permitted to take a different view on a particular issue in the absence of any change in the facts and circumstances of the case, even otherwise to maintain the principle of consistency, the claim of the assessee cannot be denied ‘until and unless’, there is a material change in the facts and circumstances of the case. Therefore in view of the above facts and circumstances we hold that the amount received from the purchase and sale of shares in the case of assessee cannot be treated as ‘business’ income. Accordingly, we allow the claim of assessee and hence the order of CIT(A) of treating the short term capital gain as business income is set aside.
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2016 (10) TMI 891
Disallowance u/s 14A - Held that:- Following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2009-10 we set aside the order of the learned CIT(A) and restore the issue of re-working the disallowance under section 14A r.w. Rule 8D of the I.T. Rules, to the file of the AO to verify the contention of the assessee that the investments made by it in group concerns, foreign entities , the income of which is exigible to tax be excluded while computing the disallowance under Rule 8D(2)(iii), which is in respect ½% of the average value of investment, the income of which does not form part of total income. Disallowance under section 40(a)(ia) - non-deduction of tax by the assessee for transaction charges payments made to Stock Exchanges, i.e. BSE and NSE - Held that:-Respectfully following the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. (2016 (3) TMI 1026 - SUPREME COURT ), we hold that the transaction charges paid by the assessee to BSE and NSE as a member is in the nature of payments made for facilities provided by the Stock Exchange and therefore no TDS on such payment would be deductible under section 194C/194J of the Act. The orders of the authorities below making disallowance under section 40(a)(ia) for non-deduction of tax on such payment of transaction charges are accordingly reversed
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2016 (10) TMI 890
Bogus purchases - information obtained from the Sales Tax Department relied upon - Held that:- The assessee itself had filed conformations for purchases from two of the three parties, copies of purchase bills, copies of bank account statements to show payment for the same were through banking channels, copies of stock register to show that the material from these parties had been received, etc. to establish the genuineness of these purchases. It is a fact on record that the AO has not doubted the sales effected by the assessee and therefore, it is in order to conclude that without corresponding purchases being effected, the assessee would not have made sales. AO has not brought on record any material evidence to conclusively prove that the purchases are bogus. Mere reliance by the AO on information obtained from the Sales Tax Department or the statement of a third party before the Sales Tax Department, without affording the assessee adequate opportunity to cross examine that person or the fact that these parties did not respond to notice under section 133(6) of the Act would not suffice to treat the purchases as bogus and make the addition. If the AO doubted the genuineness of this said purchases, it was incumbent upon him to cause further inquiries in the matter to ascertain the genuineness or otherwise of the transactions. Without causing any further enquires in respect of the said purchases, the AO cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department, the statement/affidavit of a third party, Shri Rajendra Dodhiwala wherein the assessee was not named or afforded opportunity of cross examination of that person and issue of notices under section 133(6) of the Act. - Decided in favour of assessee
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2016 (10) TMI 889
Rejection of books of account - addition on low GP ratio - Held that:- The undisputed fact is that the only reason for lower GP by ₹ 10,10,213/- was due to overstated closing work in progress in FY 2007-08 i.e. Asst. year 2008-09 due to wrong estimate taken by the assessee. We are of the view that purpose of assessment is to assess the correct income of the assessee for the year. If there is a mistake in the preceding year then that needs to be corrected. One cannot take a plea to take a set off of excess income shown in the preceding year against the income in the current year. Further if we calculate GP for this year by correctly taking working in progress as reduced by ₹ 10,10,213/- then we will be able to reach to the correct GP and the resultant figure is what the ld. CIT(A) has sustained. Therefore, we are of the view that ld. CIT(A) has rightly sustained this amount of ₹ 10,10,213/- as the assessee was having all possible ways to rectify its mistake in the preceding FY by revising the return, correcting the financial statement and getting it duly certified by the auditors. We, therefore find no reason to interfere with the order of ld. CIT(A). We uphold the same. The grounds raised by the assessee are dismissed.
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2016 (10) TMI 888
Disallowance of consultancy charges - whether the expenditure was not incurred wholly and exclusively for the purpose of business of the assessee ? - Held that:- We find that in the instant case, the AO has agreed that submissions were duly made and all payments cannot be doubted. In our considered opinion, it is not the duty of the Department to hold that where the expenditure is to be made. It is for the business-man to decide where the expenditure is to be made for smooth functioning of the business. Looking to the totality of the facts of the case, we do not find any ambiguity or irregularities in the order passed by the ld.CIT(A), the same is hereby upheld. Thus, grounds raising by the Revenue in this appeal are dismissed. - Decided in favour of assessee
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2016 (10) TMI 887
Assessment of interest income under the head ‘Income from other sources’ - Held that:- As noticed earlier that the business of the assessee is related to information technology and IT enabled services. Hence, we do not find merit in the submissions of the assessee that the above said loan of ₹ 3 crores was given in the ordinary course of carrying on business. The assessee itself has submitted that the loan was given to M/s. Acme Housing India Pvt. Ltd., since the term loan proceeds were not immediately required. The Ld D.R has also pointed out that the lending of money is not part of business activities carried on by the assessee. Hence the interest income cannot be considered to be the business income of the assessee, since the interest corporate loan was given out of the term loan availed by the assessee for purchasing a house property, i.e., the loan has been given as the term loan was not required to be used immediately. Thus the tax authorities are justified in assessing the interest income as income of the assessee under the head ‘Income from other sources'. Interest paid on term loan set off against the interest income - Held that:- With regard to alternative contention of the assessee that the interest paid on term loan should be set off against the interest income, we are of the view that the same requires examination at the end of the AO, since the alternative contention has not been examined by him. It is not clear from the record as to how the interest expenditure relating to the term loan was treated in the books of account and how it was allowed by the AO. Disallowance made under section 14A - Held that:- As decided in the case of “Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT” [2010 (8) TMI 77 - BOMBAY HIGH COURT ] that the provisions of Rule 8D shall be applicable from assessment year 2008-09 onwards and for the earlier years the disallowance should be made on reasonable basis. The contention of the assessee that the interest free funds available with was more than the investments made and hence, no disallowance is required out of interest expenditure is acceptable. Hence the disallowance, if any, is required to be made only in respect of administrative expenses incurred in the dividend income. Accordingly, we are of the view that the disallowance of ₹ 50,000/- confirmed by Ld. CIT(A) is also on the higher side. Accordingly, we modify the order of Ld. CIT(A) and direct the AO to restrict the disallowance to 2% of the dividend income as held by Hon’ble Bombay High Court in the case of “Godrej Agrovet Ltd. vs. DCIT” (2010 (2) TMI 27 - BOMBAY HIGH COURT ). Allocation of common expenses between STPI and non-STPI units - Held that:- We notice that the assessee has not given the justification for adopting different criteria for apportioning the expenses. Hence, we are of the view that the Ld. CIT(A) was justified in rejecting the claim of the assessee that the criteria adopted by it was scientific, particularly in the case of electricity expenses, i.e., the allocation has been done on the basis of employee ratio instead of floor space used. For the allocation of Canteen expenses on the basis of employee ratio, Courier charges on the basis of Domain Name registration expenses ratio, Personal expenses on the basis of employee ratio cannot be found fault with. However, the allocation of electricity expenses, Insurance expenses, Travelling expenses, Selling & distribution expenses on the basis of employee ratio does not appear to be scientific. Similarly, the allocation of foreign exchange fluctuation on the basis of domain registration etc. does not appear to be scientific. The foreign exchange fluctuation can be linked to specific items and how it is not understandable as to how the same was treated as common expenses. At the same time, adoption of sales ratio as the basis for allocation of expenses across the board also does not appear to be correct. Accordingly we are of the view that this issue also requires fresh examination at the end of the AO.
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2016 (10) TMI 886
Penalty u/s.271(1)(c)- addition on account of provision for detention charges and demurrage charges - Held that:- The assessee has genuinely disclosed all the facts qua the claim of the expenses which were based on a scientific method and also in respect of goods actually imported from Sri Lanka, and therefore, we do not doubt and dispute the genuineness of the claim made by the assessee. We also find that the provisions were written back when the assessee lost the quantum appeal before CIT(A) and due taxes were paid in A.Y.2011-12. In our opinion, the penalty confirmed by the CIT(A) is wrong and cannot be sustained on the ground that the assessee made genuine claim for the expenses payable to Jawahar Lal Nehru Port Trust in respect of the goods actually imported and lying at the port which in no way can be described as filing of inaccurate particulars of income or concealment of income - Decided in favour of assessee
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2016 (10) TMI 885
Inclusion of service tax for the purpose of presumptive income under Section 44B - Held that:- Respectfully following the decision of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Ltd. (2015 (10) TMI 259 - DELHI HIGH COURT ) and of the Coordinate Bench of this Tribunal in the assessee’s own case for assessment years 2007-08, 2008-09 & 2010-11 (supra), we hold that for the purpose of computing the ‘presumptive income’ of the assessee under section 44BB of the Act, since service tax collected by the assessee does not have any element of income, it therefore cannot form part of the gross receipts and consequently delete the addition made in this regard by the authorities below. Short credit of advance tax and tax deducted at source (TDS) - Held that:- We direct the AO to consider, examine and verify the assessee’s claim of grant of short credit of Advance Tax of ₹ 10,95,525/- and TDS of ₹ 34,583/- while giving effect to this order, after affording the assessee of adequate opportunity of being heard in the matter and to file details/submissions required in this regard. Uuphold the action of the AO in charging the assessee interest under sections 234C and 234D of the Act. See Commissioner of Income Tax Versus Anjum MH Ghaswala And Others [2001 (10) TMI 4 - SUPREME Court ]
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2016 (10) TMI 884
Provisions of sec. 50C applicability - Claim of exemption u/s 54 - Held that:- the sale consideration adopted for the purposes of income tax purposes is more than the stamp duty valuation and hence, in view, the provisions of sec. 50C are not applicable in the instant cases. Accordingly, set aside the orders passed by Ld CIT(A) on this issue and direct the AO not to apply the provisions of sec. 50C in the instant cases. - Decided in favour of the assessee. Entitlement to deduction u/s 54 on the cost of new flat acquired - Held that:- Unable to agree with the view of the Ld CIT(A) that the possession should have been taken within three years. Since the assessees have been considered to have paid entire cost of new flats, they should be allowed deduction u/s 54 of the Act in respect of cost of new flats. See Commissioner Of Income-Tax Versus Mrs. Hilla JB. Wadia [1993 (3) TMI 7 - BOMBAY High Court] and circular No.471 dated 15.10.1986 and Part 2 of Circular No.672 dated 16.3.1993 - Decided in favour of the assessee.
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2016 (10) TMI 883
Dsiallowance u/s 14A - NIL disallowance by the assessee - Held that:- We are unable to see any observations and conclusion of the A.O which states that the A.O was not satisfied with the correctness of NIL disallowance claim of the assessee and thus, as per sub-section (2) of section 14A of the Act, the A.O cannot proceed to determine the amount of expenditure incurred in relation to such income which does not form part of total income under this Act in accordance with the method as prescribed in Rule 8D of the Rules. In our humble understanding and language used by the Legislature in section 14A of the Act. The word ‘A.O’ has been used and we are unable to see any intention of the Legislature which mandates that compliance of sub-section (2) of section 14A of the Act can be made at the first appellate stage by the ld. CIT(A). Thus, we decline to accept the contention of the ld. counsel of the Revenue. On the basis of foregoing discussion, we are of the considered opinion that the disallowance made by the A.O and partly upheld by the ld. CIT(A) u/s 14A r.w.r. 8D(2)(ii) of the Rules is not sustainable in view of the proposition laid down by the Hon'ble High Court of Delhi in the case of Taishika [2014 (12) TMI 482 - DELHI HIGH COURT] and thus we demolish the same. Prior period expenses - disallowance on the preliminary ground these were not in fact in the nature of prior period expenses - Held that:- since these expenses/incomes are for the projects completed in the past years but were subjected to final payments to be made to the vendor or receivable from clients these difference arose and hence have been accounted for during the current period. The A.O has not controverted the above explanation and submission of the assessee and proceeded to make disallowance and addition by observing that the assessee is maintaining its books of accounts on mercantile basis. - the claim of the assessee was allowed consistently during the earlier and subsequent A.Y and expenses claimed by the assessee were shown under the heard of prior period expenses but it was incurred during the previous year relevant to A.Y 2009- 10. Thus the same cannot be disallowed and added to the income of the assessee. Therefore, the A.O is directed to allow the claim of the assessee
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2016 (10) TMI 882
Addition towards interest on money lending - Held that:- The assessee himself offered interest income exorbitantly higher figure. When the assessee himself offered the higher rate of interest from money lending business, this Tribunal is of the considered opinion that estimating the interest income does not arise for consideration. Moreover, the estimation made by the Assessing Officer at 25% is highly arbitrary and without any supporting material. Therefore, this Tribunal is unable to sustain the estimation made by the Assessing Officer. When the assessee himself offered the interest income at higher rate, it may not be justified to estimate the interest income any further. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted. Income from agriculture - assessee filed the copy of patta and details of the crop cultivated - CIT(Appeals) rejected the claim of the assessee on the ground that the assessee has not produced bills or vouchers - Held that:- When the assessee has filed the copies of the patta to substantiate the land holding and the details of the crop, the Assessing Officer is not justified in restricting the income from agriculture. Expecting bills and vouchers from the agriculturist for sale of agricultural produce is something which could not be produced by the ordinary agriculturist. The assessee is an individual and not maintaining any books of account. This Tribunal is of the considered opinion that when the assessee filed the copies of the patta and the details of the crop cultivated, the Assessing Officer is not justified in disallowing the claim of the assessee. Accordingly, the orders of both the authorities below are set aside and the addition made by the Assessing Officer as income from other sources is deleted. The Assessing Officer shall take the income declared by the assessee as income from agriculture. Loan received treated as undisclosed income - contention of the Revenue is that the assessee deposited the cash for issue of DD - Held that:- No material is available on record to suggest that the assessee deposited the cash in the bank account of Shri Pugazhendi. The Assessing Officer on presumption observed that money belongs to the assessee was deposited. The fact remains that DD was issued from the account of Shri Pugazhendi. The cash was deposited to the account of Shri Pugazhendi. Therefore, it is for Shri Pugazhendi to explain the source for making deposit in his bank account. From the orders of the lower authorities it appears that the said Shri Pugazhendi was examined by the Assessing Officer and he confirmed the fact of giving the money to assessee. The Assessing Officer apparently disbelieved the statement of Shri Pugazhendi on the ground that a sum of ₹ 3 lakhs was entrusted to the assessee to maintain Shri Pugazhendi’s mother. The fact remains that money was given by Shri Pugazhendi to the assessee by DD and the DD was issued from the bank account of the above said Shri Pugazhendi. Therefore, as observed earlier, addition, if any, has to be made in the hands of Shri Pugazhendi and not in the hands of the assessee. Accordingly, the orders of both the authorities below are set aside and the addition made by the Assessing Officer is deleted. Addition made towards investment in chits - Held that:- AO estimated the assessee’s contribution on the basis of the statement said to be recorded from one Shri Ramasamy. Other than this statement of Shri Ramasamy, no other material is available on record. The Assessing Officer presumed that the total contribution was ₹ 96 lakhs and the assessee’s share was ₹ 16 lakhs. From the material available on record and the statement recorded from Shri Ramasamy, it appears that they are conducting 3 lakh and 5 lakh chits and each group had 20 members. The chit was conducted by a partnership firm consisting of six persons. Therefore, the contribution to the chit was made by 20 members and the firm consisting of six partners is acting as foreman. The contribution to chit was made by other members and not by the partners. Therefore, the addition made in the hands of the assessee is not justified. If at all any addition is to be made, it has to be made in the hands of 20 members who contributed / subscribed to the chits. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below are set aside and the addition made by the Assessing Officer is deleted. Addition on account of sale of jewellery - Held that:- In view of the smallness of the amount involved, the assessee cannot be blamed for non-production of bills and vouchers. Since the small time goldsmiths are also purchasing jewellery without issuing bills, the Assessing Officer is not justified in making addition. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted. Cost of construction - Held that:- As rightly submitted by the Ld.counsel for the assessee, the addition made by the Assessing Officer is less than 15% of cost of construction. In fact, the cost of construction declared by the assessee is at ₹ 82,75,777/-, whereas, the Departmental Valuation Officer has valued at ₹ 90,81,900/-. Admittedly, the difference between the two is only less than 15%. The allowance for supervision and purchase of material by the assessee would go to reduce the cost of construction more than 20%. Therefore, this Tribunal is of the considered opinion that the addition made by the Assessing Officer towards cost of construction is not justified. Accordingly, the addition made towards cost of construction is deleted.
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2016 (10) TMI 881
Penalty u/s 271(1)(c) - Held that:- The income disclosed by the assessee has been accepted. Therefore, the assessee cannot be visited with penalty with the help of Explanation-I of section 271(1)(c) of the Act. That Explanation is not attracted in the present case. Three conditions contemplated in Explanation-3 are not available here. Notice under section 148 has been issued within time limit available for assessment of the income for this year under section 153(1) of the Act. Had this notice been not issued, then, assessee could be visited with penalty with the help of Explanation-3. Therefore, in view of the above discussion, allow ground of the appeal and delete the impugned penalty. - Decided in favour of assessee.
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2016 (10) TMI 880
Revision u/s 263 - depreciation for vehicle and generator said to be installed on the vehicle - the assessee let out the vehicle along with the generator installed on the vehicle - Held that:- Tthis Tribunal is of the considered opinion that the Assessing Officer is expected to record his own reasons for the conclusion reached, in the assessment order. Unfortunately, the Assessing Officer has not discussed anything in the assessment order and the facts are not coming out in the assessment order. The Assessing Officer has not applied his mind to the material available on record, therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly exercised his revisional jurisdiction under Section 263 of the Act. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee
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2016 (10) TMI 879
Validity of assessment initiated u/s 153C - validity of the notice challenged - Held that:- Having regard to the provisions of section 292B of the Act, we hold that mere mention of wrong section in the notice does not vitiate the validity of the very notice issued for filing return of income. Thus, the contention of the assessee that notice issued requiring assessee to file return of income is invalid, cannot be accepted. As regards recording of satisfaction, the CIT(A) had observed that the AO has recorded a satisfaction note and the satisfaction note was also recorded in his order. As regards the contention of the assessee that satisfaction note has to be recorded again by the AO of the assessee who has jurisdiction over him, no material was produced before us that no such satisfaction was recorded by his AO. In absence of material on record, we are unable to appreciate the contention of the assessee. Thus, in our considered opinion, the proceedings are validly initiated u/s 153C of the Act. - Decided against assessee
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Customs
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2016 (10) TMI 863
Implementation of the order passed by the Commissioner of Customs (Appeals-I) - concealment of gold in baggage - confiscated gold was given an option to be redeemed on payment of redemption fine and penalty - quantum of fine and penalty reduced by Commissioner of Customs (Appeals-I) and this order seeks to be implemented by petitioner for release of gold - Held that: - The petitioner is directed to remit the entire amount as ordered to be paid as redemption fine by Commissioner of Customs (Appeals-I) as well as the personal penalty and furnish bank guarantee for a sum of ₹ 3,50,000/- and the remaining amount to be secured by a personal bond by the petitioner and her husband supported with full details, authenticated records, especially, proof of residence etc. and such bond shall be for the differential amount of redemption fine as well as the differential amount of the personal penalty within three weeks from the date of receipt of this order. On compliance of the above direction, the Department is granted 30 days time to release the seized goods for re-exportation. Within this 30 days which shall be computed from the date of furnishing bank guarantee and bond, it is open to the Department to secure orders from the Revisional Authority - petition disposed off - decided in favor of petitioner.
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2016 (10) TMI 862
Writ of Mandamus - Release of the goods - Classification - Confiscation - Bird Scare Device - Whether the goods in question would come under the ambit of "Arms and Ammunition" - Held that: - Department is willing to undertake an exercise of getting the goods examined by the Forensic Department and seek co-operation of the petitioner - Based on the report submitted by the Forensic Science Department, the second respondent shall pass appropriate orders within a period of three weeks from the date of receipt of the report - Petition is disposed of.
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2016 (10) TMI 861
Refund of SAD - N/N. 102/2007 dated 14.09.2007 - import of set top boxes on payment of applicable customs duty, additional duty, educational cess and also special additional duty on the STBs on the basis of declared retail sale price (RSP) - whether claim for refund of SAD on set top boxes justified? - recall of the sanctioned refund by a proceeding under Section 11A - Held that: - reliance placed on the decision of Eveready Industries Ld. Vs CESTAT [2016 (4) TMI 688 - MADRAS HIGH COURT] where it was held that the Hon'ble High Court has faulted the Department for recall of the sanctioned refund by a proceeding under Section 11A without reviewing refund sanction order under Section 35E. Inasmuch as we are convinced that the refund sanctioned is proper, we do not consider it necessary to discuss this ground. Refund sanctioned - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 860
Jurisdiction of Adjudicating Authority - smuggling of gold - provisional release of gold - extension of period for issuance of show cause notice was sought for and the adjudicating authority came to a conclusion that the gold is liable for absolute confiscation. Whether such act of adjudicating authority justified? - Held that: - the adjudicating authority while passing order only for extension of period for issuance of show cause notice, made a reference and observed that the gold seized is liable for absolute confiscation. However, without any show cause notice proposing specifically absolute confiscation of gold, giving finding that the seized gold is liable for absolute confiscation, is incorrect on the part of the adjudicating authority. Moreover, unless the principles of natural justice are complied with, the adjudicating authority is not supposed to decide the confiscability of the seized goods - as regards the issue of provisional release of the seized goods, the matter needs to be reconsidered by the adjudicating authority - As regards the order for extension of period for issuance of show cause notice in respect of seized gold, the same stands intact. Appeal disposed off - matter remanded.
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2016 (10) TMI 859
Project Import - valuation - drawing and documents for use during construction, erection, assembly etc and know how fees to be included in assessable value? - the case of COLLECTOR OF CUSTOMS (PREV.), AHMEDABAD Versus ESSAR GUJARAT LTD. [1996 (11) TMI 426 - SUPREME COURT OF INDIA] referred - Held that: - the judgment of Essar Gujarat Ltd. is clearly applicable as the issue is similar where it was held that Process licence fee paid being the cost of technical services provided and a sum of on account of engineering and consultancy fee payable to V.A., should be added to the value of the imported plant. It is clear that the foreign supplier of the machine is under obligation to provide the technical know how and training along with supply of the machine. Therefore, the technical know how is the integral condition of the supply agreement. Thus it is a condition of sale of the machine. In such situation, the technical know how fees was rightly added to the extent of 10% as decided in the case of Essar Gujarat Ltd. On going through the said judgment, we find that even technical services, engineering and consultancy even provided by the third party, the fees thereon was held to be added in the value of the imported capital goods under Rule 9 of the Customs Valuation Rules, 1988. 10% towards technical know how includible in the value of the goods - appeal dismissed - decided against appellant.
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2016 (10) TMI 858
Levy of penalty - Principal of natural justice - demand based on statement of dealers - cross-examine the dealers whose statements were relied upon - 100% EOU - manufacture of readymade garments - duty free material imported and indigenously procured for use in the export of these garments diverted - finished products actually not exported - Held that: - during the course of investigation of evasion of Customs as well as Central Excise duty by M/s Dhanlaxmi, the officers also investigated the offence committed by other co-noticees including the present two appellants. On the basis of statements and other documentary evidences, both the appellants have been penalised. It is their common grievance that inspite of their specific request for cross examination of witnesses, whose statements have been relied in the issuance of Notice to them, the same was not allowed by the learned Commissioner during the adjudication proceedings, hence the findings recorded against them and imposition of penalty, is in gross violation of principles of natural justice. - reliance placed on the decision of Andman Timber Industries Vs CCE Kolkata II [2015 (10) TMI 442 - SUPREME COURT] where it was held that not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. The Appellants allowed to cross examination of the witnesses requested by them in their respective reply to the Show Cause Notice; whose statements were relied upon in the Notice and used against the Appellants. The question of imposition of penalty would arise only thereafter - Needless to say that reasonable opportunity of hearing be allowed to the Appellant - appeal disposed off.
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Service Tax
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2016 (10) TMI 878
Classification of shot hole drilling activity - taxable under ‘survey and exploration service’ or not? - reliance placed on the decision of Saipem (Portugal) Comercio Maritimo vs. CCE, ST & CUS., Visakhapatnam II [2014 (10) TMI 94 - CESTAT BANGALORE] - Held that: - is not relevant to the facts of the present case. The terms of agreement in the present case are much more elaborate and specific. The Tribunal held in terms of the agreement in that case that the appellant were not involved in exploring for oil or for prospecting for oil in terms of the agreement. The shot hole drilling activity undertaken in the present case is sought to be taxed as an activity in relation to survey and exploration of minerals. This ground of appeal is dismissed. The combined activities of both the assessee and clients, can be considered as an act of survey related to location or exploration of minerals. Undoubtedly, the entire activity, partly done by the assessee and remaining done by ONGC, is otherwise activity related to location or exploration of minerals. This fact is already admitted by the assessee in their written submissions, wherein they have opined that it is ONGC who are conducting survey operations. However, the activities conducted by the assessee even in isolation depict that are being carried out in the direction related to location or exploration of minerals. It is also matter of fact and evidence that shot hole drilling is an activity per se without which the activity of further surveying in relation to a location or exploration of minerals would not be possible. The further activity of using explosives for the said purpose would not be achievable without the drilling of specified and technically drilled holes. Thus, it is materially evident that such holes are basically meant for withstanding the shots and involve several processes for the entire activity of blasting shot to be made possible. Such entire process is undertaken by the assessee by drilling the shot holes, which are technically highly important, based on sound technology and expertise. Thus, in the entirety of the issue, it is also observed that the purposes conducted by the assessee and by their clients the processes are inter-linked, inter-depended and inter-related which are in relation to the location or exploration of minerals. Hence, it is not the issue of mere drilling of a hole, rather involves several process for the said purpose and are not ordinary holes. Extended period of limitation - Held that: - for invoking extended period as well as for imposing penalty under Section 78, the legal provisions are identical. The words used like fraud, collusion, willful mis-statement, suppression of fact or contravention of any provisions of Chapter V of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of service tax, will show that the ingredient of malafide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78). The Original Authority recorded that it may be true that the assessee has not contravened any provisions with intend to evade payment of service tax, however, he proceeded to confirm the demand for extended period and to impose penalty of an equal amount under Section 78 - reliance placed on the decision of Cosmic Dye Chemical vs. CCE, Bombay [1994 (9) TMI 86 - SUPREME COURT OF INDIA] where it was held that It is not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be willful - there is no intent on the part of the appellant to evade payment of duty, we find that the justification for invoking extended period for demand as well as imposing penalty under Section 78 fails. Accordingly, the demand in this case is to be restricted to normal period and the penalty under Section 76 being in the nature of penalty on delayed payment will be sustainable. Appeal disposed off - decided partly in favor of appellant.
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2016 (10) TMI 877
Refund of amount deposited as Service Tax on account of Maintenance & Repair Services - classification of services - Maintenance & Repair Services - upgradation of aircraft - Held that: - the up-gradation activity undertaken by M/s Hindustan Aeronautics Limited, the same did not amount to providing of service for Maintenance & Repair Services. Therefore, the amount deposited by M/s Hindustan Aeronautics Limited, in respect of which they sought refund was not due to exchequer as Service Tax. Therefore, we direct the Original Authority to refund the amount deposited as Service Tax on account of Maintenance & Repair Services in respect of the activity by M/s Hindustan Aeronautics Limited for up-gradation of aircrafts which were undertaken by them on behalf of Establishments of Defence of Government of India through said four contracts. M/s Hindustan Aeronautics Limited, may submit a copy of this order to the Office of the Original Authority and on receipt of such copy in the Office of Original Authority, the Original Authority shall allow the application for refund within sixty days - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 876
Business Auxiliary Services (BAS)- operator of COCO Retail outlets - whether contract with BPCL would fall under the category of BAS? - Held that: - reliance placed in the decision of Sajjid Ahmad and others V/s. Commissioner of C.CE & ST [2013 (11) TMI 1305 - CESTAT BANGALORE] where it was held that The amounts received by ways of reimbursement from HPCL needs to be reduced from the gross value of taxable service. Thus, lit us desirable in the interest of justice to remand the matter for correct determination of tax liability of the appellants. As the appellant has not filed a reply to the show-cause notice, we are of the considered opinion that the present appeal also requires to be likewise remanded for denovo consideration - appeal allowed - matter remanded.
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2016 (10) TMI 875
Rejection of refund claim - classification of service in dispute - export of DOC - loading / unloading of wagons and supervision of wagons etc - whether the allowing of refund on the ground that the service falls under the category of technical testing and analysis services is incorrect and need to be reversed? - Held that: - Revenue is assailing the orders of the authorities below on the ground that the activity and service provided by the service provider are not covered by the definition of technical testing and analysis services. However, they have accepted that the service tax was paid under the said category and there is no reopening of the classification at the end of service provider. Without going into the said aspect as to whether the activities fall under the category of technical testing and analysis services, we agree with the views of the lower authorities that the classification adopted at the end of service provider, cannot be re-opened at the service recipients end. If service tax stand paid under the category of technical testing and analysis services and the Revenue has not raised any objection at the time of acceptance of the service tax, no such objection can be raised at the end of service recipient, at the time of grant of refund. Reliance placed on the decision of COMMISSIONER OF C. EX., LUDHIANA Versus PAWAN ISPAT UDYOG [2007 (1) TMI 399 - CESTAT, NEW DELHI]. Refund allowed - appeal disposed off - decided against Revenue.
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2016 (10) TMI 874
100% EOU - manufacturer of wire connector - service provider under the category of “Renting of Immovable Property” - whether utilisation of the Cenvat credit in their 100% EOU for payment of service tax under renting service allowed? - Rule 3(1) of the CCR - decision in the case of CCE,Coimbatore Vs. Luxmi Technology & Engineering Indus. Ltd. [2011 (2) TMI 1275 - CESTAT, CHENNAI] relied upon - Held that: - there is no such restriction for utilisation of the Cenvat credit by a manufacturer, being 100% EOU under the Cenvat Credit Rules. Further, I find that the facts of this case are squarely covered by the earlier ruling of this Tribunal in the case of CCE,Coimbatore Vs. Luxmi Technology & Engineering Indus. Ltd. in favour of the appellant, where it was held that Rule 3(1) of the CENVAT Credit Rules - a provider of taxable service is also entitled to take credit of specified excise duty, additional duty of customs and service tax in respect of input services and utilize the credit from all these sources for the purpose of paying service tax. Extended period of limitation is not attracted in view of the earlier Audit Report for December to January, 2009-2010 and also under the fact that the whole exercise is revenue neutral. Appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (10) TMI 873
Condonation of delay - appeal against the case M/s Nirmit Tele Infra Pvt Ltd Versus Commissioner of Central Excise And Service Tax, Hyderabad [2016 (10) TMI 387 - ANDHRA PRADESH HIGH COURT] - SLP dismissed.
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2016 (10) TMI 872
Validity of order-in-original confirming the demand based on SCN - show cause notice issued on presumption and surmises - M.S. Ingot - unrealistic electricity consumption, high cost of production vis-a-vis income from sale, unrealistically low amount of expenditure towards salary of employees and though manufacturing activity incurs losses - principles of natural justice - Held that: - the variation is from 555 units to 1800 kWH/Per Ton. This is mainly because of the nature of the machinery utilized by the noticee. Looking to the facts of the present case, the electricity consumption pattern as has been given in Annexure- RUD-7, as stated in paragraph 4 of the show cause notice, which is at page no. 63 of this memo of writ petition which reveals that this petitioner has consumed electricity absolutely in consonance with the report given by Joint Plant Committee, constituted by the Ministry of Steel, Government of India and for few months it is even less than that. Thus, there are varieties of report available in the markets, one could not have been chosen by the respondents, arbitrarily, without carrying out the experiment of consumption of electricity for one ton of manufacturing at the noticee's manufacturing unit. This type of experiment is a must by the department, whenever respondents are canvassing the ground of electricity consumption pattern vis-a-vis clandestine removal of finished products. Otherwise, without such experiment, if any one of the aforesaid report relied upon, then it is arbitrariness on the part of the respondents and whenever there is any arbitrariness, there is always violation of Article 14 of the Constitution of India because for few of the noticees such type of reports are not relied upon whereas for rest of the assessee, as per the choice of the respondents, such type of reports will be relied upon and in fact, this has happened in this case - Thus, without experiment is being carried out at the premises of the noticees, use of any of the committee's report for electricity consumption pattern always leads to arbitrariness on the part of the respondent-department. Whenever arbitrariness is present, equality is absent. Equalities and arbitrariness are strong enemies of each other. When equality is present, arbitrariness is absent. This Court is not much going into detail of further arbitrariness in the Order-in-Original about the lower remuneration to the employees of the petitioner no. 1 as well as the manufacturing unit is running in loss and the profit is made from non-core activities etc. There appears to be very high sounding reasons, but, if they are viewed with zoom lens camera, it appears that nothing is proved by the respondents. “Low remuneration” is a relative word and therefore, statement of the employees of the noticee, ought to have been reduced to writing by the respondents- department. If the employees are stating that they are getting more remuneration than what is shown in the books of account by the noticee, then these statements ought to have been reduced in writing and they must be referred in the show cause notice. Copies of the gist of the statements should be given to the noticee and those employees must be kept ready for cross examination. This type of procedure ought to have been followed by the respondents- department. Instead of doing this exercise, allegation has been levelled that there is low remuneration paid by the noticee, is not sufficient at all. The Order-in-Original is based upon mere presumptions and possibilities, and, nothing has been proved at all by the respondents, especially unaccounted manufacturing of M.S. Ingots and the clandestine removal thereof - matter remanded for adjudication of the SCN - petition allowed.
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2016 (10) TMI 871
Clandestine removal - SSI unit - Notification No. 8/98 dt. 02.06.1998 and 8/99 dt. 28.02. 1999 - Seizure of the goods and commercial invoices, register containing details of sales and a chart containing details of sales - demand of duty on the value excess of the turnover eligible for exemption - Held that: - duty demand was confirmed by the authorities below based on the commercial invoice which are alleged to have been corroborated either with the transporter LR, follow up reports of the alleged consignee or details of payment - except commercial invoices there is no other evidence of clearances of goods, or no confirmation of receipt of goods by the alleged consignee of such goods and no payment receipt against such invoices. Deduction was claimed on the ground that though Lorry receipt numbers was mentioned against such commercial invoices but no LR was found either from the Appellant premises or from the transporter or from the consignee - Held that: - the statement of two of the transporters were recorded and relied upon but only two dispatch register were recovered which has not been corroborated with the Lorry receipt or commercial invoice - when except confirmation from alleged consignee, no single statement is on record and no cross examination was allowed to check veracity of confirmation; the demand cannot be made on such value. Even though the demand is mainly based upon the commercial invoices, but during investigation any excess production than recorded in books of the Appellant concern was not found - Appeal is partly allowed.
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2016 (10) TMI 870
Captive consumption - Adjustment of short payment of duty with the excess payment of duty during the same year - self adjustment in the absence of provisional assessment - the correct value for excise duty purpose has been arrived at only on completion of the financial year and based on final accounts and following the CAS-4. When the value is arrived at based on annual data it is apparent that whatever value adopted by the appellant for captive clearances during the year are not based on final price as the same is not known at the time of clearance. - hot-rolled products of iron and steel. Held that:- the appellant was not allowed to have provisional assessment and the department now proceeds to demand of duty selectively for periods within the same financial year wherever the value is less than the Rule 8 value and refused adjustment within the same financial year when the value is determined higher than the Rule 8 value. It is apparent that the duty liability as already discharged on the basis of value which is not final. The net excess or shortage will have to be considered. In the present case, admittedly, no refund has been claimed or under consideration for the impugned period even though overall payment by the appellant for the whole year is much higher than the actual liability. Appeal allowed - decided in favor of appellant.
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2016 (10) TMI 869
Eligibility for exemption under N/N. 6/2006-CE dated 1.3.2006 (Sl.No.19) - manufacture of bus bodies - buses cleared to M/s. Delhi Metro Railway Corporation (DMRC) - Held that: - The wordings of Entry No.90 in the Notification is specific and the appellant’s claim that bus is an equipment cannot be accepted even by plain reading. The Original Authority also relied on the Board’s letter dated 14.09.2004 addressed to the DMRC enclosing two lists of items, for which exemption was sought by the DMRC. The Original Authority referred to the proceedings of the Empowered Committed on Delhi MRTS Project. The Original Authority, after examining in detail, the background of DMRC’s claim with the Department of Revenue recorded that bus cannot be even by implication considered as “equipment” It was also recorded that if the intention is to include the bus for exemption, the same could have found place in the original list of items submitted by the DMRC for consideration before the issue of the exemption notification - buses for passengers cannot be considered as an “equipment” within the scope of Entry No.90 of the above said notification. The appellant’s claim for such exemption is not tenable. Imposition of penalty - Held that: - the penalties imposed on the main appellant as well as the Director of the DMRC cannot be sustained. We find no justification for imposing equal amount of penalty on the main appellant in terms of Section 11 AC. The main appellant produced a certificate given by DMRC and claimed the exemption. DMRC gave such certificate based on their understanding of the claim for exemption. No fraudulent intent could be brought out in these transactions. DMRC is a Government Promoted Utility Organization and considering the facts and circumstances of the case, we find no justification in the imposition of equal penalty on the appellant and personal penalty on the Director of DMRC. Accordingly, we set aside the penalties imposed on them. Appeal disposed off - decided partly in favor of appellant.
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2016 (10) TMI 868
Clandestine removal of goods - clubbing of clearances for SSI exemption - moulds for footwear - Held that: - the turnovers for the year 2004-05 and 2005-06, as recorded by the Original Authority, were mainly based on the assumptions and presumptions and theoretical calculation of average production/value of clearances. Accordingly, without giving weightage to the presumptive calculation, the aggregate value of clearances of these two respondents were found to be below SSI limit of ₹ 1 crore even taken together. Regarding recovery of cash, we note that there is nothing on record to link the said amount as sale proceeds of clandestinely removed excisable goods. Due explanation has been filed by the respondent to account for said cash claimed to be the sale proceeds of the agricultural land. In the absence of any evidence and also in view of the findings against the Revenue regarding clandestine manufacture and clearance, we hold that the seizure and confiscation of the cash and also of the finished goods are not sustainable - appeal dismissed - decided against Revenue.
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2016 (10) TMI 867
Suppression of production - clandestine removal of goods - window sections, angles, flats, CTD bars, etc. - unusual deviation of electricity consumption figures for different months - Held that: - the products being manufactured by the respondent are shown as window sections, angles, flats, CTD bars, etc. There is no details about the proportion of manufacture of these items or the nature of standard machinery used in the manufacture. It is also not known what will be the normal consumption per machine for a given period of time when in continuous normal operation. We have only electricity consumption for few months in 2008-2009 and certain calculation based on purported average electricity used for production of 1 M.T. of final product. We are also not very clear as to how 91 units are considered as standard for calculation as nothing is recorded regarding the nature of machinery and the consumption capacity of said machinery. We find that the calculation made is completely presumptive. There is no evidence relating to procurement of extra unaccounted raw materials/inputs, deployment of additional labour, unaccounted transportation/sale, identity of any of the buyers of such goods, etc. Even where certain verifications were made regarding trading activities, no substantial evidence could be attributed to allege that the tradings undertaken by the respondent firm are all bogus. We have already noticed in the absence of any tangible evidence, allegation of clandestine manufacture/clearance of excisable goods cannot be sustained. Even if the transactions on trading were to be found as bogus, the same by itself will not support the confirmation of duty demand as linkage to the clandestine manufacture and the income on bogus trading should be brought out by the evidence - appeal dismissed - decided against Revenue.
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2016 (10) TMI 866
Refund claim - whether the appellant is eligible to refund for the period prior to 1/6/2000 when appellant was not registered? - That Notification No. 33/99-CE is conditional and contained mandatory procedure to be followed before a refund is made admissible to a manufacturer - Held that: - It is also observed that one time eligibility can not give license to the appellant to get refund for all the periods before & after 16/11/2006 because refund for each month under Notification No. 33/99-CE is an independent claim required to be filed under the exemption notification. Whether each of such a refund claim filed by the appellant is admissible has to be seen only at the time of deciding that refund claim - appeal disposed off - decided against assessee.
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2016 (10) TMI 865
Captive consumption - benefit of exemption notification no. 67/95 - further processing of goods after packing into unit container - skimmed milk powder, branded butter and branded ghee - interpretation of the words “intended for captive use” of “intended for sale” - the demands raised by recording a finding that the goods were packed in unit containers and were branded and were intended for sale, hence having consumed captively duty liability arises. - Held that: - The said goods were packed in unit containers is an accepted fact but at the same time due to exigency i.e. shortage of the said goods, respondent consumed the goods which were manufactured and put up in 20 kgs. Corrugated boxes for captive consumption. - though the goods were intended to be cleared outside the factory, due to shortage of milk and milk products, respondent consumed the same within the factory premises. - there is no dispute that the goods were consumed within the factory premises and as such it cannot be said that there was no exemption available on the said products for captive consumption as notification no. 67/95 does not carve out any exception. It is seen that the inputs and final products in this case are both specified products in the Notification No. 8/98 dated 02/06/98 and in terms of para 4(c) of the said Notification clearances of specified goods captively as inputs are deemed to be exempt from the whole of excise duty. Therefore the clearances of Skimmed Milk Powder and Branded Butter though put up in unit container but used for captive consumption as inputs for regeneration of Milk are not dutiable. Appeal disposed off - decided against Revenue.
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2016 (10) TMI 864
Clandestine removal of goods - discrepancies found in the figures of raw materials as reflected in the balance sheet and in the excise returns - Held that: - the difference in the balance sheet figures and the statutory records cannot lead to the inevitable conclusion of clandestine activities, Similarly, in the absence of evidence to show that the income reflected in Balance sheet or otherwise is on account of manufacturing activities, the same cannot be held to be sale proceeds of clandestinely removed goods. The order of the appellate authority is a detailed order passed based on the merits of the case and read with the law laid down by the Tribunal in identical matters. Appeal disposed off - decided against Revenue.
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CST, VAT & Sales Tax
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2016 (10) TMI 857
Claim of exemption from tax and Central Sales Tax (CST) - sale by the dealer to the exporter against Form-H - Nature of activity / processing amount to Manufacturing process or not - Section 2(16) of the Gujarat Sales Tax Act - Castor oil - conversion of commercial grade Castor oil to First Special Grade after refining process - Held that: - The word as may be prescribed as used under this definition clause is attracting the provision contained under Rule 3 of the rules in which the prescription is made and therefore, referring to this Rule 3 it can be seen that the process which has underwent on their product is not a manufacturing process and therefore, conjoin effect of the aforesaid statutory provision, it appears that the learned Tribunal has rightly come to the conclusion that the process carried out was not a manufacturing process as defined under Section 2(16) of the GST Act - reliance placed on the decision of SHYAM OIL CAKE LTD. Versus COLLECTOR OF CENTRAL EXCISE, JAIPUR [2004 (11) TMI 109 - SUPREME COURT OF INDIA] where it was held that merely because some process is carried out on the substance, the same is not to be treated as manufacturing process. Whether the goods exported by the exporter was the same goods purchased from the respondent (dealer) and consequently sale by the dealer to the exporter would be sale prior to export sale and would be covered by section 5(3) of the Central Act? - Held that: - wherein the basic characteristic and the use is not drastically changed and since the learned Tribunal has come to the conclusion specifically with examination of process of the material sold by the purchaser is not out of any manufacturing process and therefore, the claim of exemption from the said Sales Tax Act is justified. The categorical finding that exporter who had purchased Castor oil from the opponent herein has not sold the Castor oil in the same form, but has done some process and therefore, it cannot be considered as a manufacturing process and therefore, it appears to this court also that the learned Tribunal has rightly come to the conclusion in passing the order impugned in the appeal. No illegality or irregularity of any nature committed by the learned Tribunal - appeal dismissed - decided in favor of Tribunal.
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2016 (10) TMI 856
Condonation of delay - bona fide belief that since the second appeal in earlier point of time is very much pending which relates to the very same period and therefore, this subsequent first appeal against regular assessment order will be kept pending - Held that: - right from the beginning the innocence which has been tried to be projected appears to be not worthy to be accepted. We found that the conclusion arrived at by the Tribunal while exercising discretion is based upon the material on record and upon examination of it. Therefore, we see no reason to dislodge the said finding more particularly, when the petitioner has invoked extraordinary equitable jurisdiction. The very plea of not aware about the passing of an order by the first appellate authority is not cogently explained except by a mere assertion that neither the practitioner nor the advocate has ever informed the petitioner about the same and all thereabout for a pretty long period the petitioner has remained under a bona fide belief. The decision in the case of Brijesh Kumar and ors vs. State of Haryana and ors [2015 (7) TMI 21 - SUPREME COURT] relied upon where it was held that this Court rejected the contention that a petition should be considered ignoring the delay and laches on the ground that he filed the petition just after coming to know of the relief granted by the Court in a similar case as the same cannot furnish a proper explanation for delay and laches. The Court observed that such a plea is wholly unjustified and cannot furnish any ground for ignoring delay and laches. Delay cannot be condoned - petition dismissed.
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2016 (10) TMI 855
Reversal of input tax credit - non production of documents under Section 19(13) of the TNVAT Act - Held that: - the second respondent erroneously reversed the input tax credit on the ground of lack of clarity in the documents produced. If the second respondent was satisfied with the very same documents while considering the issue of cross-verification, this Court is at a loss to understand as to how they would not be relevant for consideration while deciding the issue of reversal of credit. Even assuming that the registration certificates were cancelled retrospectively, that would not have any impact on the petitioner's right to claim input tax credit, as, admittedly, the petitioner had produced the original tax invoices and showed that the sale price includes VAT, that they discharged their liability and that payments were effected through bank transactions. That apart, the second respondent, while completing the assessment, stated that in the absence of clarity, the petitioner's contention is not acceptable. This finding lacks clarity - If the second respondent was of the view that there was lack of clarity, nothing prevented the second respondent from calling upon the dealer to appear in person and clarify the issues arising out of the documents, which they had submitted. In such circumstances, this Court is satisfied that the manner, in which, the impugned assessment orders have been passed, is not sustainable in law. Writ petitions disposed off - finding given by the second respondent on the issue relating to reversal of the input tax credit for non production of documents under Section 19(13) of the TNVAT Act, is set aside - decided partly in favor of petitioner.
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2016 (10) TMI 854
Attachment of Bank Accounts - recovery of arrears of sales tax under the Central Sales Tax Act, 1956 - straight away garnishee order passed without serving any notice or passing any assessment order - Held that: - Considering the nature of allegation based on which, assessment has been completed and as it pertains only to production of 'C' forms, this Court is inclined to grant one more opportunity to the petitioner to produce all the documents. Accordingly, there will be a direction to the petitioner to appear before the respondent within a period of one week from the date of receipt of a copy of this order and produce all original 'C' forms and on production of the same, the respondent shall verify and if found to be in order, revise the assessment in accordance with law. If there are any other issues, the same should also be put to the petitioner and they should be able to file their objections as well - attachment order lifted. The Commissioner directed that the Assessing Officers can allow Form-C, Form E-I, E-II and F-Forms, to be filed after completion of assessment on sufficient cause.
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2016 (10) TMI 853
Constitutional authority of Explanation V under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970 - explanation contrary to the provisions of law - Works Contract Service - pay tax under Section 7-C of the TNGST Act - levy of additional sales tax - explanation added to clear the provisions of law - Held that: - the Explanation normally should be read so as to harmonise with and clear up any ambiguity in the main section and it should not be so construed as to widen the ambit of the section and also to clarify the doubtful point in law and to serve as a proviso to main section. The claim for additional sales tax by treating the contract value as the taxable turnover is not permissible under the provisions of either the TNGST Act or the Additional Sales Tax Act - there is no error apparent or infirmity in the reasons assigned in the impugned order in allowing the writ petition - appeal dismissed.
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