Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
Highlights / Catch Notes
GST
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Input tax credit - Goods which are used for installation (Foundation) of plant and machinery - input services which are used for installation (Foundation) of plant and machinery - ITC is not available u/s 17(5) of CGST Act.
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The supply of Eucalyptus / Subabul wood de-barked pulp wood in cut sizes, supplied to various paper mills for manufacture of pulp is liable to GST @5%
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Biofos Mono calcium Phosphate/Di calcium phosphate animal feed supplement”, HSN Code No: 23099090, is classifiable under exempted goods from GST
Income Tax
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Interest accrued on NPA - whether non-performing assets in the hands of the assessee- Cooperative Banks is taxable on accrual basis or not? - interest on NPA's is taxable in the year of receipt.
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LTCG or STCG - period of holding - capital gain on sale of flat at Juhu - acquisition of rights in the property - the clarification given by the CBDT is equally applicable to the booking of the flats with the builders and period of holding will be counted from the booking of the flats.
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TDS u/s 194I OR 194C - failure to deduct tax correctly on hire charges - ‘Assessee in default’ - the assessee has failed to discharge its onus to prove by furnishing documents to show that vehicles were operated by the contractor - Action of revenue sustained.
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Deduction/ Exemption of LTCG u/s 54F - use of ground floor as commercial purpose and other three floor for residential purpose - CIT(A) has rightly apportioned assessee’s deduction to 25% is to 75%; floor-wise.
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Penalty u/s 272A(2)(e) - return was not filed within due date prescribed u/s 139(4A) following the advice given by the Accounts Manger of the trust - The Act does not confer any discretion on the AO not to levy penalty in case reasonable cause is shown to exist - Penalty confirmed.
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There was a genuine transaction of purchase and sale of shares on which assessee has earned Long Term Capital Gain, and therefore, such Long Term Capital Gain cannot be taxed u/s. 68. Since Long Term Capital Gain is exempted u/s. 10(38), therefore, no addition is called for
Customs
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Renewal of CHA License - The Customs Broker Licensing Regulation, 2013, more particularly, Regulation 6, specifically exempts the persons who have already passed the examination conducted under Regulation 9 of the CHALR, 1984 and Regulation 8 of CHALR, 2004 from appearing for any further examination.
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Failure to remove the goods from the warehouse - Even if we assume the contention of the Petitioner that there was a stay of the assessment order (without accepting the same) yet it would be the obligation of the importer to protect the goods from auction till disposal of the Appeal.
Service Tax
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It is only on the inspection conducted by the Department, non-deposit of service tax collected by the petitioner has come to light. In the circumstances, the petitioner cannot make any allegations against the adjudicating authority that no opportunity of hearing was provided before passing of the order.
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Refund - export of services - appellant’s services do not get covered under ITSS but fall under BAS which were taxable during the relevant period. Since, they have exported these services they are entitled to the benefit of the refund of the input service tax.
Central Excise
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CENVAT credit - input services - Rule 2(l) of CCR 2004 - insurance taken in the name of Joint Managing Director - Insurance premiums of motor vehicles and repair of motor vehicles - credit allowed.
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CENVAT Credit - fake invoices or not - the photocopies of GR cannot be relied upon and the copies of GRs produced by the appellant having endorsement on their favour is to be taken as the admissible evidence, as the Revenue has failed to prove contrary to that - credit allowed.
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Method of Valuation - Transaction value or MRP value - sale of mineral water to PVRs (Cinema halls) who are institutional consumers - there is no question of the applicability of Section 4 - appellant has discharged duty u/s 4A (MRP based) rightly.
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Benefit of exemption - goods supplied under the certificate issued by the competent authority laying down that the same are required for research purposes are required to be extended the benefit of the notification
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As inputs has gone in the process of manufacturing, therefore Cenvat credit availed on inputs which has been destroyed while progress and in finished goods, the appellant is not required to reverse any Cenvat credit.
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CENVAT Credit - input services - renting of supply of tangible goods service used beyond the place of removal - it does not fall under the ambit of input service - credit not allowed
Case Laws:
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GST
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2018 (11) TMI 449
Rate of GST - the applicant purchases the dried leaves on auction platform, and trading. Getting the jobwork done for threshing and trading - Held that:- As per the Circular of Tax Research Unit, vide F. No. 332/2/2017, Government of India Ministry of Finance Department of Revenue Tax Research Unit, Dec 2017, question no. 42 “Tobacco leaves falling under heading 2401 attracts 5% GST on reverse charge basis in respect of supply by an agriculturist - the transactions of tobacco from auction platform to the supply made to the exporter are to be interpreted in the light of the relevant notifications and to decide the rate of tax accordingly. As seen from the different stages of commodity i.e., from the leaves stage to the final product (manufactured tobacco), the green leaf plucked from the plant undergoes different types of curing to reduce the level of moisture to the maximum extent for sustainability and to continue as leaf for further processes. The tobacco leaf will be entitled as a commercial commodity only after drying (curing) and normally put to trade in form of bundles. The same will be traded between the farmer and the trader, and trader to trader/manufacturer and so on - The commodity “tobacco leaves” shall be interpreted in the light of the entry 109, the entry no 3 inserted under the notification issued for liability under reverse charge mechanism and the relevant HSN code mentioned against the description of the commodity i.e, 2401. Though there are different entries with respect to tobacco, there is a specific entry in schedule I of Notification 1/2017 (CGST Rate) as tobacco leaves , and for the same the liability was brought under reverse charge mechanism. Hence it is clear that there is a distinction from the commodity ‘tobacco leaves’ with other entries - a clear distinction shall be drawn between the ‘tobacco leaves and the unmanufactured tobacco’. The process of tobacco, from the field to final product, the green leaves undergo curing process, and become eligible commercial commodity, for which the first transaction takes place in between the farmer and the trader on the auction platform. Further, as per the clarification issued by TRU tobacco leaves means leaves of tobacco as such or broken tobacco leaves or tobacco leaves stems” also clearly express that the leaves as long as they do not loose their basic character as ‘leaves’ shall be considered as tobacco leaves only. Ruling:- Rate of GST if tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves - Held that:- The GST Rate of tax for the tobacco leaves procured at tobacco auction platforms or directly from farmers, which are cured and dried by farmers themselves is 5% - HSN Code: 2401. Rate of GST if the applicant purchases tobacco leaves from other dealers who have purchased them farmers, for the purpose of trading - Held that:- The rate of GST will be 5% (2.5 % SGST + 2.5 % CGST) as per sr. No 109 of Schedule I Notification No. 1/2017 (CGST)Central tax) Rate. Dt 28.6.2017 Rate of GST if the applicant segregates the tobacco into grades depending upon their size (width), colour/shade, length, texture of the lear etc., and sells such graded tobacco leaf - Held that:- The rate of GST will be 5% (2.5 % SGST + 2.5 % CGST) as per Sl. No 109 of Schedule I Notification No. 1/2017 (CGST)Central tax) Rate. Dt 28.6.2017 - HSN Code: 2401. Rate of GST if the tobacco leaves are butted and sold to other dealers - Held that:- The rate will be 5% (2.5 % SGST + 2.5 % CGST) as per Sl. No 109 of Schedule I Notification No. 1/2017 (CGST)Central tax) Rate. Dt 28.6.2017 - HSN Code:- 2401. Rate of GST if the applicant gets the tobacco leaves re dried without getting them threshed - Held that:- Rate of GST will be 5% (2.5 % SGST + 2.5 % CGST) as per Sl. No 109 of Schedule I Notification No. 1/2017 (CGST)Central tax) Rate. Dt 28.6.2017 - HSN Code: 2401. Rate of GST if the applicant gets the tobacco threshed and re-dried on job work basis at GLT plants and then sells such threshed and re dried tobacco leaves - Held that:- Rate of GST will be 28% (14 % SGST + 14 % CGST) as per Sl. No 13 of Schedule IV Notification No. 1/2017 (CGST)Central tax) Rate. Dt 28.6.2017 - HSN code: 2401.
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2018 (11) TMI 448
Input tax credit - Goods which are used for installation (Foundation) of plant and machinery - input services which are used for installation (Foundation) of plant and machinery - goods which are used for protection (by creating sheds) for plant and machinery - services which are used for protection (by creating shed) for plant and machinery - Held that:- The argument of the applicant to treat civil structures as structural support for plant and machinery is not tenable. The civil structures under consideration is squarely falls other civil structures which is excluded as per the explanation to the proviso as stated above. Hence, this authority is of the opinion the claim of the applicant is not justifiable. Ruling:- As per the material on record and photographic evidences of the applicant, on which sought for clarification does not fall under the ambit of explanation to the proviso to the Section 17(5) of CGST/APGST Act,2017. The applicant is not entitled to claim the input tax credit on the goods and services.
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2018 (11) TMI 447
Rate of GST - supply of pulp wood - Whether GST @5% is paid correctly on supply of pulp wood in terms of Chapter 4401? - Held that:- On verification of invoices submitted by the applicant, the nature of product as described by the applicant, we are of the opinion that the contention of the applicant is to treat the de-barked Eucalyptus / Subabul pulp wood, supplying to paper mills in cut sizes under the entry number 198 of Schedule I of notification no.01 /2017 - Central Tax (Rate), dated : 28.06.2017, is justified. Ruling:- The supply of Eucalyptus / Subabul wood de-barked pulp wood in cut sizes, supplied to various paper mills for manufacture of pulp falls under the Entry No 198 of Schedule I of Notification No 01/201 7 - Central tax (Rate), dated: 28th June 201 7, and attracts CGST @ 2.5% and SGST @ 2.5%.
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2018 (11) TMI 446
Classification of goods - Air-Cooled condenser to be supplied by the applicant to the buyer for use in the waste-to-energy project - whether classifiable as ‘parts for the manufacture of waste to energy plants/ devices’ attracting 5% IGST or 2.5% CGST and 2.5% APGST? - Held that:- Heading 8404 of the Customs Tariff covers “Auxiliary plant for use with boilers of heading 84.02 or 84.03 (for example, economizers, super-heaters, soot removers, gas recoverers); condensers for steam or other vapour power units” and Entry 840420 specifically covers Condensers for steam or other vapors power units - The equipment under consideration viz. ACC consists of finned tubes which condense steam with the help of a forced current of air is thus rightly classifiable under heading 8404. Therefore, the ACC is classifiable under the Heading 8404 - ACC is an integral part of Waste to Energy plants. Ruling:- Air - Cooled condenser is a part of the Waste to Energy plant, which falls under the entry 234 of Schedule I of Notification 1/2017-Central Tax (Rate) dated 28.06.2017 (similar notification for state tax and integrated tax) and is liable at a rate of 5% (2.5% CGST + 2.5% SGST or 5% IGST as the case may be).
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2018 (11) TMI 445
Classification of an item - Biofos Mono calcium Phosphate/Di calcium phosphate animal feed supplement - classifiable under HSN Code No: 23099090 or otherwise - N/N. 02/2017 - Held that:- The product is being marketed as “Mono calcium phosphate for animal and poultry feed” and “Mono calcium phosphate for animal, poultry and aqua feed”. It is further observed that their labels contain “Biofos” is a feed grade Mono calcium phosphate. The products of the applicant are for aquatic/ poultry/animal feed. Accordingly, on merits the classification of the product, to be decided under Sl. 102, 105 of notification of 2/2017. CGST Rate. Ruling:- Biofos Mono calcium Phosphate/Di calcium phosphate animal feed supplement”, HSN Code No: 23099090, is classifiable under exempted goods, notified vide the Entry No. 102 of Notification No.02/2017, dated: 28th June 2017.
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Income Tax
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2018 (11) TMI 444
Addition on account of Long Term Capital Gains - reference to the District Valuation Officer for determining the fair market value of the assets as on 01.04.1981 - Held that:- As decided in LATE SHANTABEN P. PATEL, L/H GOVINDBHAI P. PATEL [2018 (11) TMI 394 - GUJARAT HIGH COURT] as relying on COMMISSIONER OF INCOME TAX VERSUS GAURANGINIBEN S. SHODHAN INDL. [2014 (2) TMI 78 - GUJARAT HIGH COURT] AO is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. The assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset - Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) - Decided against Revenue.
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2018 (11) TMI 443
Deduction u/s 80IC - initial assessment year - whether units set up after 07.01.2003 would not be entitled to enlarged deduction under Section 80IC of the Act @ 100% of profit, even after undertaking substantial expansion within the specified period? - Held that:- The matter is no longer res integra. The issue has already been decided against the assessee as relying on M/S ADMAC FORMULATIONS VERSUS COMMISSIONER OF INCOME TAX, PANCHKULA [2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT] wherein as relying on case of Commissioner of Income Tax vs. M/s Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. The matter is no longer res integra. - decided in favour of revenue.
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2018 (11) TMI 442
Interest accrued on NPA - Addition on account of interest accrued on non-performing assets - whether non-performing assets in the hands of the assessee- Cooperative Banks is taxable on accrual basis or not? - Held that:- The assessee being bound by the RBI Guidelines which are issued under the provisions of the 1934 Act has not shown the interest on NPA as income. By virtue of the provisions of section 45Q of the 1934 Act, the provisions of Chapter IIIB thereof have an overriding effect over other laws. Therefore, notwithstanding the provisions of section 43D of the Act, since the provisions of section 45Q of the 1934 Act have an overriding effect vis-à-vis income recognition principles in the Companies Act, the Assessing Officer is bound to follow the RBI Directions so far as income recognition is concerned. The interest on principal loan amount which has been classified as NPA cannot be held to have “accrued” so as to tax them under the Act. The contention that the assessee cannot indirectly claim the benefit which would amount to a benefit similar to that under section 43D of the Act, therefore, does not merit acceptance. Tribunal while relying upon the various pronouncements had decided the issue regarding taxability of interest on NPA's in favour of the assessee as being taxable in the year of receipt. The Tribunal had upheld the deletion made by the CIT(A) on account of addition regarding interest accrued on NPA. No illegality or perversity could be demonstrated by learned counsel for the revenue in the aforesaid findings recorded by the Tribunal. - Decided against revenue
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2018 (11) TMI 441
Deduction claimed u/s 10B disallowed - whether the new firm has been formed by splitting business of the earlier partnership of M/s Dynamech and hence hit by Section 10B(2) (ii) of the Act? - assessee submitted that the new unit and the partnership firm were producing different products with no question of transfer of business - Held that:- The products manufactured by two units are separate; any existing contracts of M/s Dynamech have been transferred to new firm; the new concern has been set up with advance and modern machinery to meet the fresh requirements of M/s Mitsubishi, Japan; there was any transfer of capital from the firm to the new concern or the capital was actually from the profit earned by the partnership firm needs to be taken into consideration. Apart from the said issues, the other issues raised by the Assessing Officer and the assessee are also required to be pointedly dealt with. It is clarified that facts mentioned herein are only illustrations. Thus be appropriate that without expressing any opinion on the merits of the case, the matter is remanded back to the Assessing Officer to decide the matter afresh after considering the material produced by the assessee and the contentions raised and by discussing the same in detail by passing a speaking order in accordance with law.
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2018 (11) TMI 440
Unexplained cash credit u/s 68 read with section 115BEE - sale of shares - exemption u/s 10(38) claimed - Held that:- No hesitation to hold that neither AO nor CIT-A has been able to controvert assessee’s copious evidences filed in present case which clearly supports the case of assessee qua LTCG claimed as exempt u/s 10(38) of the Act on sale of shares of M/s Kappac Pharma Limited and so issue framed by me above needs to be answered in favor of appellant /assessee. So addition made on a/c of LTCG /s 68 read with section 115BEE is deleted. So grounds relating to addition u/s 68 are allowed. - Decided in favour of assessee
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2018 (11) TMI 439
Claim of exemption under section 11 - proof of charitable activities - AO rejected assessee’s claim of exemption under section 10(23) - grievance of the Department is confined to allowance of assessee’s claim of deduction in the face of disallowance of part of the expenditure claimed by the assessee - Specific allegation of violation of section 13(2)(b) - Held that:- Admittedly, in the relevant assessment year, assessee was registered under section 12A of the Act. Therefore, the primary condition for availing exemption under section 11 of the Act was fulfilled. The next issue is, whether by disallowance of a part of expenditure, claim of exemption under section 11 of the Act can be disallowed on its entirety. In this context, it is necessary to examine the provisions of section 11 of the Act. A reading of section 11(1)(a) of the Act makes it clear that exemption under section 11 of the Act is allowable to the extent of income derived from property held for charitable or religious purposes is applied for charitable for religious purposes. Thus, as per the ordinary and plain meaning of the aforesaid provision, the assessee is entitled to claim exemption of income to the extent it is applied for charitable purpose. Of–course, the provisions of section 11 is subject to the conditions / exceptions provided under section 13 of the Act. However, in the present case, there is no allegation by the Assessing Officer that the assessee has violated any of the conditions of section 13 of the Act. That being the case, the contention of learned Departmental Representative that assessee’s claim of exemption under section 11 of the Act has to be disallowed entirely is not acceptable. violation of section 13(1)(d) of the Act will not lead to denial of exemption under section 11 of the Act on the total income of the assessee. Denial of exemption under section 11 of the Act should be limited to the amount disallowed under section 13(2)(b) of the Act. Thus assessee’s claim of exemption under section 11 of the Act is allowable to the extent assessee has applied such income for charitable purposes. For claim of exemption under section 10(23) the assessee’s application for issuance of notification under section 10(23) of the Act for the impugned assessment year is still pending before the appropriate authority. At least, till date the assessee has not received any communication from the Department intimating the fate of its application for grant of notification under section 10(23) of the Act. In view of the aforesaid, we direct the Assessing Officer to consider assessee’s claim of exemption under section 10(23) of the Act in case a notification under section 10(23) of the Act is issued for the impugned assessment year by the appropriate authority. However, the claim of exemption under the aforesaid provision will be available to the assessee subject to fulfillment of all the conditions of section 10(23) of the Act. This ground is allowed for statistical purposes. Part disallowance out of travel expenditure of Shri P.M. Rungta, towards his visit to Delhi - Held that:- During the remand proceedings, though, the assessee produced some evidence, however, as mentioned by the Assessing Officer in the remand report, no invoice was produced in respect of reimbursement of three air tickets for journey made on 3rd September 1998.The Assessing Officer has also mentioned that in addition to T.A./D.A. bill for ₹ 61,560, along with air fare charges, Shri P.M. Rungta has claimed hotel bill for ₹ 16,260, as well as enroute halts and entertainment and transport charges. Similar claim was made for journey undertaken during the period from 17th September 1998 and 1st September 1998. Thus, from the aforesaid observations of the Assessing Officer, it is clear that the assessee has failed to justify the expenditure claimed. In view of the aforesaid, we uphold the disallowance. 50% disallowance out of expenditure claimed towards purchase of tickets - Held that;- looking at the wide range of assessee’s operation, a very small amount had been spent for purchase of tickets, however, he has disallowed 50% out of the expenditure claimed. Thus, when in the course of remand proceedings, the assessee furnished the details of tickets purchased with supporting evidence and the learned Commissioner (Appeals) has also given a factual finding that the amount spent by the assessee for purchase of tickets is very small having regard to the operations of the assessee, in our view, the expenditure claimed by the assessee should be allowed in full. Accordingly, we delete the disallowance sustained by the learned Commissioner (Appeals). Disallowance of ₹ 2 lakh out of foreign travel expenses - Held that:- As could be seen from the impugned order of the learned Commissioner (Appeals), after perusing the material on record, he was convinced that there was a definite purpose for which all the foreign visits were undertaken by the concerned persons. In view of such finding of the learned Commissioner (Appeals), there is no need for ad–hoc disallowance of ₹ 2 lakh out of the expenditure claimed. Accordingly, we delete the disallowance made. Disallowance of entertainment expenses - Held that:- As could be seen, as per assessee’s own admission, these expenses were incurred towards food, wine and gift for Government officials and other persons. The assessee has not furnished any evidence in support of such expenditure. Even, by very nature the expenditure claimed, in our view, is not allowable. Accordingly, we uphold the disallowance made by the Departmental Authorities. Extend the benefit of section 11(2) of the Act with regard to the additions / disallowances confirmed by the appellate authority - Held that:- Assessing Officer did not consider assessee’s claim under section 11(2) of the Act since he rejected assessee’s claim of exemption under section 11 of the Act. However, the learned Commissioner (Appeals) has directed the Assessing Officer to allow the benefit of accumulation under section 11(2) of the Act if the assessee has claimed such benefit in the prescribed manner. In view of the aforesaid direction, we do not find the need for any further direction to the Assessing Officer. Suffice to say, the Assessing Officer must consider assessee’s claim of benefit of section 11(2) of the Act subject to fulfillment of all the conditions of the said provisions. With the aforesaid observations, this ground is allowed for statistical purposes.
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2018 (11) TMI 438
Minimum alternate tax u/s 115JB - Applicability of MAT where normal tax payable is itself Nil - intentions of the legislature - Held that:- Section 115J was introduced as an equitable measure in order to levy tax on companies which made huge profits and declared substantial dividends but did not pay income-tax because of the various tax concessions and incentives availed of by them. It was thought that such companies had the ability to pay taxes and they ought to contribute to the exchequer. The interpretation of section 115JB which is similar to section 115J and which we have adopted, is in consonance with the object of the section namely, that all companies which make handsome profits must- pay tax irrespective of the fact that -they would not have paid tax on their profits if their profits had been computed under the normal provisions of the Act in view of present case has made substantial book profit which according to its balance sheet comes to ₹ 6,18,3 6,130/-. However, by virtue of the relief available u/s.801A, it has claimed the entire business profits of ₹ 11,97,79,339/- to be exempt from tax with the result that its total income became nil and no tax waspayable. This is exactly the situation contemplated by the section for which provision has been made to the effect that the company should pay tax on its book profit and thus contribute to the exchequer. Therefore, there can be no escape from the position that the assessee company is caught within the mischief of section 115JB, notwithstanding that the tax payable by it on its total income computed under the normal provisions of the Act is Rs. Nil. It would be anomalous to hold that where tax of Re.!!- is payable on the total income computed under the normal provisions of the Act, then section 115JB would be attracted, but it would not be attracted when the tax payable on the total income is Rs.Nil either because the total income is nil or is a negative figure. It is well settled that the section has to be interpreted in such a manner as to avoid absurdity and also in such a manner as to advance the cause and suppress the mischief
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2018 (11) TMI 437
300% addition qua "Business Income" - Business Income declared in the tentative financial statements filed - in present assessment year neither the return has been filed nor the books have been audited - Held that:- Revenue has made addition of ₹ 1,93,10,202/- on mere estimation. We are in agreement with the view of the Commissioner of Income Tax (Appeals) that the facts of the present case are at variance as no audited accounts have been furnished by the assessee and there is no tax audit report u/s. 44AB of the Act. The income declared by the assessee in tentative financial results does not carry any sanctity, therefore, the ratio applied in A.Y. 2007-08 would not hold in good in A.Y. 2008-09. At the same time we are of considered view that 300% addition made by Revenue authorities is very much on the higher site. Taking into consideration entirety of facts we restrict the addition to 200% of the Business Income declared in the tentative financial statements filed by the assessee. Accordingly, ground Nos. 1 and 2 raised in the appeal by the assessee are partly allowed. MAT computation - authorities below have not considered the book profit declared by the assessee under MAT provisions i.e. u/s. 115JB - Held that:- Remit the ground for computing the taxable income after considering the addition confirmed by the Tribunal vis-à-vis the book profits declared by the assessee under the provision of section 115JB. Addition to 15% of the income from house property - Held that:- Commissioner of Income Tax (Appeals) in the impugned order has observed that the assessee while computing income under the head Income from house property has claimed staturoty deductions only. The ld. DR has not been able to substantiate infirmity in the order of First Appellate Authority. Accordingly, the ground No. 1 raised in the appeal by the Revenue is dismissed being devoid of merit.
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2018 (11) TMI 436
Eligibility for deduction u/s 80P(2)(a)(i) - interest earned on fixed deposits placed with banks - Held that:- Identical issue arose in the case of Chandraprabhu Gramin Bigar Sheti Sahkari Patsantha Maryadit [2016 (7) TMI 1485 - ITAT PUNE] wherein after considering the decisions of Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Ltd.[2010 (2) TMI 3 - SUPREME COURT] and the decision of Hon’ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd., [2014 (9) TMI 833 - DELHI HIGH COURT] and other decisions has decided the issue in favour of the assessee as hold that assessee is entitled to deduction u/s 80P(2)(a)(i) of the Act on the interest income on fixed deposits kept with nationalized banks and private sector banks. Thus, the ground of the assessee is allowed.
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2018 (11) TMI 435
TPA - Comparable selection - Held that:- The appellant company is engaged in the business of I.T. Enables Services [ITES]. In our considered opinion, the appellant company itself is providing services in civil and structural, in accordance with the requirement of its AE, mainly related to construction activities. In our considered opinion, the functional profile of the appellant is not different from the functional profile of Mahindra Consulting Engineers Limited. We do not find any merit in the contention of the ld. AR. This comparable has been rightly used by the TPO and, therefore, no interference is called for. Companies functionally dissimilar with that of assessee need to be deselected from final list. A perusal of the directions of the DRP show that the DRP has directed to treat the gain/loss on account of forex fluctuation as non operating in nature but while following the directions of the DRP, the Assessing Officer has not disclosed the computation of revised adjustment in this regard. We, accordingly, direct the Assessing Officer to compute the revised adjustment as per directions of the DRP
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2018 (11) TMI 434
Reopening of assessment - addition towards bogus purchases - reopening on the basis of the same material which was before the Investigating Officer at the time of original Assessment Proceedings - borrowed knowledge - Held that:- Assessing Officer has acted merely on the basis of the statements/affidavits of the thirteen parties without carrying on any further verification or independent enquiry before issuing notice u/s. 148 of the Act and thus has completely failed on the duty casted upon him to independently apply his mind on the material received from the DGIT (Inv), Mumbai. Also found merit in the second limb of the submissions of the assessee that reopening on the basis of the same material which was before the Investigating Officer at the time of original Assessment Proceedings is nothing but a change of opinion which is not permissible under the law and the concept of change of opinion is a built in test to check the abuse of power to reassess but no power to review under the garb of reopening the Assessment Proceedings is available. Reopening of assessment on the basis of change of opinion is not permissible - COMMISSIONER OF INCOME TAX, DELHI VERSUS M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT OF INDIA] The Hon'ble Supreme Court in LAKHMANI MEWAL DAS [1976 (3) TMI 1 - SUPREME COURT] has held that the power of Income Tax Officer to reopen assessment though wide, are not plenary and absolute and the words of statute are “reason to believe” and not “reason to suspect”. But in this case only the AO has “reason to suspect” and not “reason to believe”. We, therefore after taking into account the ratio laid down by the various decisions and facts of the case before us, are inclined to hold that reopening of assessment not initiated validly and is void ab-initio. Accordingly we quash the reopening of assessment. - Decided in favour of assessee
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2018 (11) TMI 433
LTCG or STCG - Entitlement for long term capital gain benefits - period of holding - capital gain on sale of flat at Juhu - acquisition of rights in the property - booking of the flats with the builders - Held that:- In this case no allotment letter was issued by the developer to the buyer. The Letter of Confirmation of purchase of flat dated 15.07.2005 together with Letter of Purchase Option dated 01.05.2005 constitute the allotment letter for allotting flat on 3rd floor in the proposed new building giving complete terms and conditions of the allotment such as purchase price, flat details, details of payment of installment, details of payment of stamp duty, registration etc. Both the letters were signed and confirmed by the assessee as well as the Developer/Builder. Hence, the Assessing Officer's observation that there is no commitment or allotment of flat by the developer to the assessee is not correct. Both the letters dated 01.04.2005 and 15.07.2005 are signed and confirmed by the developer and they are for the purpose of allotment of particular flat for a consideration mentioned therein. Hence, the date of acquisition of the right in the property should be taken when the option was exercised for purchase of flat i.e. 15.07.2005. CBDT Circular No.471 dated 15/10/1996 has clarified the position in regard to flat booked by an assessee under self finance scheme of DDA. It has been clarified by the CBDT that the period of holding of the property will be counted from the date of issuance of allotment letter by the DDA pursuant to which the installments have been paid by the assessee and construction has been made by DDA. Irrespective of the fact whether the agreement with the builder may have certain clauses which may not make the buyer owner of the flat as such, the intention of the builder as well as of the buyer in all these cases is that the buyer will make payment to the builder and builder will construct the flat and hand over the same to the buyer. Accordingly, the clarification given by the CBDT is equally applicable to the booking of the flats with the builders and period of holding will be counted from the booking of the flats. Thus we direct the AO to compute period of holding from 15/07/2005, which works out to be more than 36 months, accordingly, assessee is entitled for long term capital gain benefits - Decided in favour of assessee
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2018 (11) TMI 432
Rectification of mistake - proceedings initiated u/s.154 as barred by limitation - rectifying the assessed income after reducing the claim of setting of brought forward unabsorbed depreciation - Held that:- Order which is sought to be amended or rectified has to be an order which would determine the period of limitation. Here, in this case, the order which is sought to be amended cannot be order dated 02.08.2010, because such an order was strictly circumscribed to the direction and giving effect to the ld. CIT(A) order, wherein the issue relating to deferred tax liability and revaluation reserve for the purpose of computation of book profit was neither an issue nor was his direction. If any, such direction or issue would have been there in such an order of the ld. CIT(A) then perhaps limitation could have been reckoned from the order giving effect to such an appellate order dated 02.08.2010. Here, in this case, AO has raked up completely new issue which ostensibly not falling from order dated 02.08.2010. If at all there was any kind of mistake then it could have been in the original assessment order dated 31.10.2003 for which limitation to pass an order has expired on 31.03.2010. Therefore, the impugned order dated 15.10.2010 is clearly barred by limitation and the order of the CIT(A) is not only correct on facts but also in law. - Decided against revenue
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2018 (11) TMI 431
Disallowing of deduction u/s 80IB(10) - Bogus / non genuine purchases - Held that:- In the instant case, the AO has not found faults with the sales made by the assessee. In the case of CIT vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT)) has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to income of the assessee. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. Thus we set aside the order of the CIT(A) and direct the AO to restrict the disallowance to 12.5% of the bogus purchases of ₹ 1,38,01,084/-. Thus the 1st ground of appeal is partly allowed. As it is a case of bogus purchases, the question of allowability of deduction u/s 80IB(10) does not arise and accordingly, the 2nd ground of appeal is dismissed.
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2018 (11) TMI 430
TDS u/s 194I OR 194C - failure to deduct tax correctly on hire charges - ‘Assessee in default’ - no contract has been placed on record and proved by the assessee - Held that:- We find that in order to support its contentions, assessee has not produced any details to demonstrate that the vehicles were used only for transporting of employees at a particular point of time. Admittedly, no copy of contract/agreement has been furnished before the revenue authorities to show that the vehicles were owned, operated and maintained by the contractor. Since the issue whether TDS is to be made u/s 194I or 194C is a pure question of fact and this fact can only be examined by perusing the copy of contract/agreement between the assessee and the party. Since, the assessee has failed to discharge its onus to prove by furnishing documents to show that vehicles were operated by the contractor and therefore, in the absence of any such evidence, we have no other options except to uphold the action of revenue authorities. - Decided against assessee.
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2018 (11) TMI 429
Disallowance of commissions expenses - Held that:- It has come on record that this assessee is engaged in highly level employees’ requirement business. He declared income from the said business activity amounting to ₹198.70 lakh along with commission of ₹79.55 lakh debited in the profit and loss account. AO disallowed a part thereof to the extent of the impugned sum of ₹51,56,694/- mainly on the ground that the corresponding parties did not support his case. All the corresponding payments have been subjected to TDS; wherever necessary. There has not been any enquiry on part of the AO to find out as to whether all these parties who have not supported assessee’s case have claimed the corresponding TDS credit or not is respective tax records. Coupled with this, we find that the AO has also not carried out the necessary verification on assessee’s ultimate customers/clients who have appointed the highly qualified personnel through the assessee. Thus uphold the CIT(A)’s findings deleting the impugned disallowance under challenge. - Decided against revenue. Deduction/ Exemption of LTCG u/s 54F - use of ground floor as commercial purpose and other three floor for residential purpose - The question that arises for our consideration is as to whether the CIT(A) has rightly apportioned assessee’s deduction to 25% is to 75%; floor-wise or not - Held that:- Our instant adjudication supports the CIT(A)’s action to this effect as he has rightly proceeded on an assumption that section 54F is a deduction provision to the liberally construed. This is not the Revenue’s case that the 3 floors of the building in question are not used for residential purposes. We therefore affirm the CIT(A)’s findings under challenge restricting the assessee’s deduction claim to the extent residential portion of the building only by treating the same to be “a residential house” as per the true legislative intent u/s 54F - Decided against revenue.
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2018 (11) TMI 428
Rejection of books of account - estimation of income - CIT-A estimated the net profit at 4% of the cost of the goods sold as against 5% assessed by AO - assessee in the business of liquor - Held that:- As relying on case of SECUNDERABAD WINES, SECUNDERABAD VERSUS THE INCOME TAX OFFICER, WARD-10 (4) , HYDERABAD. [2016 (7) TMI 1449 - ITAT HYDERABAD] we direct the AO to adopt 3% of the cost of the goods sold as income of assessee, subject to not being less than the returned income. Since assessee did not press for the grounds about rejection of books of account, the grounds pertaining to that extent are rejected. - Decided partly in favour of assessee
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2018 (11) TMI 427
Penalty u/s 272A(2)(e) - return was not filed within due date prescribed u/s 139(4A) following the advice given by the Accounts Manger of the trust - reasonable cause for the failure - bonafide belief - delay due to ignorance of law - Held that:- The provisions of section 139(4A) lay down that every religious or charitable institution whose income was exempt u/s 11 and 12 of the Act is required to furnish return of income of the previous year within due date prescribed u/s 139(1) of the Act. In the present case, undisputedly, there is delay in filing return of income by 541 days. As held in the case of Aditanar Educational Institution [1997 (2) TMI 3 - SUPREME COURT] the assessee claiming exemption u/ss.11 and 12 of the Act, should mandatorily file return of income as the assessee’s claim for exemption could be decided by the department only after relevant material is placed before the department by filing the return of income. The provisions of section 273-B mandates that penalty is not to be levied if a reasonable cause is established. In the present case, the Parliament had inserted section 272A in the provisions of section 273-B only by Finance Act, 2012 w.e.f. 01/04/2012. Therefore, during the previous year relevant to assessment year under consideration, levy of penalty is mandatory even if there is a reasonable cause. Therefore, no merit in the submission made by the assessee. The Act does not confer any discretion on the AO not to levy penalty in case reasonable cause is shown to exist. - decided against assessee.
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2018 (11) TMI 408
Addition u/s 68 - Long Term Capital Gain by the assessee on sale of listed equity shares treated as bogus - income from other sources - shady transaction of getting accommodation entry in the form of Long Term Capital Gain - Held that:- It is to be noted here is that purchase made in the earlier year has not been disturbed and once the entire transaction is through DEMAT account with the reputed broker without having any link with any such entities pointed out by the learned Assessing Officer then no adverse inference at all can be drawn against the assessee. If the sales are evidenced through proper contract notes by HDFC Security Ltd., sold on BSE after paying STT and duly credited in the DEMAT account, then source of the credit has to be accepted that it is from transaction of sale of shares held for a Long Term Capital Gain. If purchase of shares is not doubted and these shares are not in possession with the assessee, then there cannot be any adverse inference that it is unexplained credit to be added u/s.68 - there was a genuine transaction of purchase and sale of shares on which assessee has earned Long Term Capital Gain, and therefore, such Long Term Capital Gain cannot be taxed u/s.68. Since Long Term Capital Gain is exempted u/s.10 (38), therefore, no addition is called for. - Decided in favour of assessee.
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Customs
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2018 (11) TMI 426
Implementation of the order dated 22nd November 2016 - release of imported goods in terms of the order - Held that:- The Customs cannot be held responsible for the auction of the goods by the Container Freight Station All Cargo Logistic Limited after issue of the notice to the Petitioner, which the Petitioner chose not to respond - Besides even if we assume the contention of the Petitioner that there was a stay of the assessment order dated 22nd August 2016 in view of the Appeal filed by the Petitioner (without accepting the same) yet it would be the obligation of the importer to protect the goods from auction till disposal of the Appeal. This fact of pending Appeal resulting in automatic stay was also not brought to the notice of All Cargo Logistic Limited prior to the auction. Petition dismissed.
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2018 (11) TMI 425
Maintainability of petition - alternative remedy of appeal - Validity of SCN - SCN issued without seizing the goods - whether the goods are liable to be confiscated? - Held that:- The Customs Act, 1962, as seen, provides for an effective Appellate mechanism. Any person aggrieved by any Order or decision passed by a Lower Adjudicating Authority is entitled, under Section 128 of the Act, to appeal against it before the Commissioner of Customs [Appeals]. Later on, if the grievance subsists, that person, under Section 129, can appeal to the Customs, Excise and Service Tax Appellate Tribunal - A statute may provide to an aggrieved person an efficacious remedy through an appeal to the prescribed Authority and a second appeal to the Tribunal. Only after exhausting them can an aggrieved person knock the High Court’s doors. The Ezek’s plea is declined to be entertained, by invoking this Court’s extraordinary jurisdiction under Article 226, for Ezke does have an efficacious alternative remedy - but the respondent authorities will hear Ezek’s representative and dispose of its claim for the release, provisional or otherwise, of the imported goods, expeditiously, in one week - petition disposed off.
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2018 (11) TMI 424
Renewal of CHA License - denial on the ground that the partner of the petitioner-Firm viz., E.Rajendran has not qualified the examination conducted by Chennai Customs House Agents as per the Board Circular No.42 of 2004 dated 10.06.2004 - Held that:- There is no dispute to the fact that the sole proprietor of the petitioner-Firm viz., E.Rajendran has already passed the required examination conducted under Regulation 9 of the CHALR, 1984. The Customs Broker Licensing Regulation, 2013, more particularly, Regulation 6, specifically exempts the persons who have already passed the examination conducted under Regulation 9 of the CHALR, 1984 and Regulation 8 of CHALR, 2004 from appearing for any further examination. There is no dispute to the fact that as per Regulation 6 of the Customs Brokers Licensing Regulation (CBLR) 2013, the sole proprietor of the petitioner who has admittedly undergone the examination successfully, under Regulation 9 of the CHALR 1984, is not required to appear for any further examination. In other words, the qualification already acquired by the sole proprietor of the petitioner holds good even as on today and therefore, with that qualification, the petitioner-Firm is entitled to get the renewal. This Court has already considered the identical issues and also the scope of the said Circular in the case of M/S. MAVIN CLEARING & FORWARDING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE DEPUTY COMMISSIONER OF CUSTOMS (CHA-UNIT) [2017 (11) TMI 104 - MADRAS HIGH COURT], where it was held that Regulation 17(4) of the New Regulation, empowers the respondents to exempt the employee who has already passed such examination. - the decision of this Court is squarely applicable to the facts and circumstances of the case and in favor of the petitioner. Petitioner is entitled to succeed - petition allowed - decided in favor of petitioner.
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Service Tax
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2018 (11) TMI 423
Penalty u/s 78 - Held that:- Considering Section 78 of the Finance Act, 1994, only in a case where any tax has not been levied or paid or short levied or short paid or erroneously refund in short or short paid or erroneously refunded by reason of (a) fraud or (b) collusion or (c) wilful mis-statement or (d) suppression of facts or (e) contravention of this Chapter, the penalty is leviable. It is not in dispute that in the balance sheet published in June 2013, the respondent Company has shown the liability of the service tax payable by them and infact, the same was paid in January 2014 alongwith interest. It is not in dispute that thereafter after approximately of a period of one year, the proceedings for penalty were initiated - Thus, the case does not fall in any of the clauses mentioned under Section 78 of the Finance Act, 1994. Appeal dismissed.
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2018 (11) TMI 422
Non-discharge of Service Tax liability - Manpower Recruitment Services - Supply Agency Services - case of petitioner also that no opportunity of hearing provided - Jurisdiction - Held that:- The disputed question of fact whether the adjudicating authority recorded a finding that personal hearing was conducted on 28-11-2016, is true or not, cannot be adjudicated by this court under writ jurisdiction. Further the statement of the petitioner-assessee made before the Superintendent of Service Tax also makes it clear that the petitioner-assessee has not paid the service tax due to financial constraints and ST-3 returns were not filed due to acute shortage of clerical staff. It is only on the inspection conducted by the Department, non-deposit of service tax collected by the petitioner has come to light. In the circumstances, the petitioner cannot make any allegations against the adjudicating authority that no opportunity of hearing was provided before passing of the order. Petition dismissed with an opportunity to the petitioner to approach the appellate authority of redressal of his grievance.
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2018 (11) TMI 421
Classification of services - Refund of input CENVAT Credit - export of services which are in the nature of ‘Business Auxiliary Services’ - whether the services rendered by the appellant fall under BAS or ITSS? - CBEC Circular No. 62/11/2003-ST dated 21.08.2003 - Held that:- IT services are only those services which are primarily used in relation to operation of computer system and other services even if they use computer systems do not deserve to be classified as ITSS. It is not in dispute in the present case that the nature of services rendered by the appellant through M/s Zavata Inc, USA to their clients are in the nature of documentation and other services related to health administration. Clearly it is nobody’s case that appellant is maintaining their computer systems or managing their software. CBEC’s clarification in this Circular leaves no doubt that the appellant’s services do not get covered under ITSS but fall under BAS which were taxable during the relevant period. Since, they have exported these services they are entitled to the benefit of the refund of the input service tax. The disputed services all have a direct bearing in the provision of the export services and lack of these services will definitely effect the provision of output services. Appellant is eligible for refund - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 420
Refund of Service tax paid - denial of refund on the ground of time bar - Held that:- It is brought out that the refund claim has been filed within one year from the date of payment of service tax as provided under section 11B of the Central Excise Act, 1944. When the appellant have complied the time limit prescribed under section 11B and there is provision for extension of time in the notification, the authorities below ought not to have rejected the refund claim stating that the appellants have not furnished sufficient reasons for condonation of delay - refund allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (11) TMI 419
CENVAT credit - input services - Rule 2(l) of CCR 2004 - insurance taken in the name of Joint Managing Director - Insurance premiums of motor vehicles and repair of motor vehicles - duty paying documents - not valid documents - Rule 9(2) of the CCR 2004. Insurance in the name of Joint Managing Director - Held that:- Merely insurance premium is not in the name of the Joint Managing Director of the appellant company cannot be the reason to deny the Cenvat credit - insurance has been taken by the appellant for their use and the premium has been paid by the appellant only - credit allowed. Insurance premiums of motor vehicles and repair of motor vehicles - Held that:- As these motor vehicles have been used by the appellant for their manufacturing activity and without these vehicles, the appellant is not able to manufacture their goods, therefore, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 the appellant is entitle to avail the Cenvat credit - credit allowed. Documents against which Cenvat credit has been taken are not valid documents in Rule 9(2) of the Cenvat Credit Rules, 2004 - Held that:- The documents against which the appellant has taken the Cenvat credit are the challans and having all the details required for availment of Cenvat credit in terms of Rule 9(2) of the Cenvat Credit Rules, 2004 - Credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 418
CENVAT Credit - recovery u/r 14 of CCR - inputs cleared as such in terms of Rule 3 (5) of the CCR 2004 - Held that:- Rule 14 is applicable when cenvat credit has been taken or utilized wrongly or has been erroneously refunded to the assessee. Admittedly, in this case at the time of procurement of inputs, the appellant was entitled to avail cenvat credit, therefore, it is not a case that the appellant has taken cenvat credit wrongly. Further, from the facts of case and allegation of made in the show cause notice it is not coming out whether the said cenvat credit has been utilized by the appellant or not? Therefore, benefit of doubt goes in favour of the appellant. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 417
100% EOU - demand of duty on the ground that the appellant has not directly exported the goods - case of the Revenue is that the appellant being 100% EOU, therefore, the export is to be made by the appellant directly and not through the merchant exporter against H form - Held that:- The said issue has already been settled by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-I VERSUS SIGMA PNEUMATICS PVT. LTD. [2017 (11) TMI 975 - CESTAT NEW DELHI] holding that when the goods has been exported through merchant exporter, the same shall be ‘deemed as export’ made by the appellant only - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 416
CENVAT Credit - input services - renting of supply of tangible goods service used beyond the place of removal - export of goods - reverse charge mechanism - Held that:- the supply of tangible goods i.e. renting of ISO Tank Container is not used in relation to the manufacture of final product. It is also not covered in the inclusion clause to the definition. This service was used for clearance of final product beyond the place of removal, it is also not covered in the above clause 2. Therefore, the service of supply of tangible goods in the present case is not covered in any of the above 3 category of services, therefore, does not fall under the ambit of input service - credit not allowed - appeal dismissed - decided against appellant.
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2018 (11) TMI 415
Remission of duty - rejection on the ground that the appellant did not produce relevant documents - principles of natural justice - Held that:- The Ld. Commissioner (Appeals) while passing the impugned order has not considered the records placed before him. Therefore, the impugned order deserves no merit and is set aside. CENVAT Credit - inputs which has not been put to use - Held that:- As inputs has gone in the process of manufacturing, therefore Cenvat credit availed on inputs which has been destroyed while progress and in finished goods, the appellant is not required to reverse any Cenvat credit but on inputs which has not been put to use, the appellant is required to reverse the Cenvat credit. Appeal disposed off.
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2018 (11) TMI 414
Clearance of uninterrupted power supply systems to M/s. BEL, Bangalore - goods cleared by BEL, procured from the appellants to ISRO, were made for implementation of Tele Education through ‘EDUSAT’ programme - N/N. 10/97-CE dt. 01/03/1997 - Held that:- The appellants having produced the certificate to the required extent are entitled for exemption contained in the said notification - Tribunal in the case of Featherlite Products Pvt. Ltd. Vs. CCE, Bangalore-III [2006 (8) TMI 453 - CESTAT, BANGALORE] held that goods supplied under the certificate issued by the competent authority laying down that the same are required for research purposes are required to be extended the benefit of the notification - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 413
100% EOU - refund of accumulated CENVAT Credit - case of appellant is that no show cause notice has been issued to the appellant to deny cenvat credit on inputs/input services in question, the refund claim cannot be rejected - extended period of limitation - Held that:- It is admitted the position that no show cause notice has been issued to the appellant either for denial of cenvat credit on inputs and input services or for rejection of refund claim. After adjudication, the revenue cannot take law in their hand to issue the show cause notice by invoking extended period of limitation. Therefore, understanding by law by departmental officer is misconceived. Admittedly, no show cause notice has been issued to deny cenvat credit on inputs and input services in question, the denial of rejection of refund claim does not arise as held by this Tribunal in the case of Verisign Services India Pvt. Ltd. [2018 (2) TMI 927 - CESTAT, BANGALORE] - the appellant is entitled for refund claim in dispute and accordingly the adjudicating authority is directed to sanction the refund claim of the appellant within 30 days of the date of receipt of this order - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 412
CENVAT Credit - fake invoices - non-receipt of raw materials like Pig Iron, Iron Scrap and MS Scrap - case of Revenue is that these items were neither received by the appellants nor used in their factory premises for manufacture of their finished goods and only the invoices were received to take ineligible cenvat credit - demand mainly based on statements and opinion of various persons - Held that:- The report of the Daily News Paper i.e. Financial Express of 06.02.2004 confirms the version of the appellant that during the impugned period there was a shortage of pig iron and the appellants have to supply goods to their buyers, therefore, the appellants used HR Coils/Sheets to manufacture of iron castings and no contrary evidence has been produced by the revenue to counter the contents of the article published in Financial Express, therefore, it cannot be said that the appellants have never used H.R. Coils/Sheets to manufacture of Iron Castings. Reliability on statements - Held that:- During the course of investigation, various statements of Shri Rakesh Gupta, proprietor of M/s Shivam Corporation were relied upon but during the course of cross examination, Shri Rakesh Gupta confirmed that his statements were recorded in threat and coercion and he has supplied goods against all the invoices and received consolidated payments periodically from the buyers in respect of all the raw materials. No counter statements of Shri Rakesh Gupta in cross examination has been produced by the revenue, therefore, the statements given by Shri Rakesh Gupta during the course of investigation cannot be relied upon - Moreover, the other supplier, namely, M/s Ganesh Enterprises and M/s Gautam Steel Traders were not appeared for cross examination, therefore, their statements cannot be relied upon. Also it cannot be said that the use of HR Coils/Sheets is not economically viable when the appellants have earned profit during the impugned period. Another allegation made against the appellant is that they have received the payments made through cheque in cash, therefore, it is only the paper transaction - Held that:- The revenue has failed to come up with positive evidence to show that the appellants have received cash against the cheques issued by the appellant for the impugned goods against the invoices. It is also revealed from the records that the appellants are procuring pig iron from the same supplier and mode payment in the same, in that circumstances, how it can be possible with regard to H.R. Coils/Sheets, therefore, the said allegation is not justified by the Revenue. If it is presumed that the impugned goods, namely, H.R. Coils/Sheets were not received by the appellants then from where the appellants received the raw-materials to the manufacture of such huge quantity of goods which have been cleared on payment of duty, no investigation was conducted by the revenue to that effect, in that circumstances, it cannot he held that the appellants have not received H.R. Coils/Sheets to manufacture of iron castings. Revenue has failed to establish with the corroborative evidence that the appellants have not received H.R. Coils/Sheets to manufacture of iron castings in their factory premises, therefore, the demands against the appellants are not sustainable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 411
CENVAT Credit - fake invoices - appellant wrongly availed cenvat credit based on the invoices issued by the dealer without physical received of the inputs in their factory - Held that:- Appellant has not contested the said amount and the same has been paid along with interest - demand upheld. CENVAT Credit - denied on the basis of the statement of the transporters and on the ground that EVA were not used in the factory of the appellant - denial of credit also on the ground that the vehicles no. mentioned in the invoice issued by Shilex Chemicals is not capable for transporting the said goods - Held that:- The whole of the demand is based on the various statements of the transporters supplier, Shri. Naresh Goyal and one of the employees of the appellant. The statement of Shri. Naresh Goyal is not inculpatory. In fact, he has admitted non-receipt of PVC but he has not admitted that they have not receipt EVA in their factory premises and on account of non-receipt of PVC physically in their factory, the appellant has already conceded, therefore, on the basis of the statement of Shri. Naresh Goyal, the impugned order is not sustainable. Reliability on statements - Held that:- The statements of various transporters and Shri. Jayant.K. Viz were never examined in chief, nor offered for cross examination, therefore, the statements on the basis on which cenvat credit sought to be denied are not admissible. The appellants have used these inputs in manufacturing of their final product which have been cleared on payment of duty. These inputs has been procured and paid the payment through banking challans - cenvat credit cannot be denied in the absence of any corroborative evidence. Credit also sought to be denied on the ground that vehicles no. mentioned in the invoices are not capable for transportation of goods up to the factory of the appellants, therefore, the appellants have not received the goods - Held that:- As per the GR issued by the transporter vehicles no. is mentioned as MH04AL829 but due to mistake vehicles no. mentioned in the invoices MH04AC829. Admittedly, c stands for car, L stands for lorry, this mistake is apparent on the invoices but on this ground cenvat credit cannot be denied to the appellant - credit allowed. Reliance is placed by Revenue in the photocopies of GRs - Held that:- The photocopies of GRs relied upon by the Revenue are not admissible evidence. In that circumstances, the photocopies of GR cannot be relied upon and the copies of GRs produced by the appellant having endorsement on their favour is to be taken as the admissible evidence, as the Revenue has failed to prove contrary to that - credit allowed. Appeal disposed off.
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2018 (11) TMI 410
Method of Valuation -sale of mineral water to PVRs who are institutional consumers - whether valued in terms of section 4 or section 4A of CEA? - appellant availed area based exemption under N/N. 56/02-CE dt.14.11.2002 - Held that:- Admittedly, in this case, PVRs although are buying the goods in bulk from the appellant not using the same and ultimately are selling to their customers in retail. Therefore, these PVRs cannot be said institutional buyers - As there is only dispute whether the PVRs are institutional buyers, who are ultimately selling the mineral water to their customers against the certain price printed on the bottles, in that circumstance, it can be said the appellant is not clearing the goods to institutional buyers. Therefore, the appellant has discharged duty in terms of Section 4A of the Act. The issue decided in the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [2007 (8) TMI 3 - SUPREME COURT], where it was held that there is no question of the applicability of Section 4 of the Act as the “package” as it is a retail sale of the package to the Jet Airways which supplies the same to the passengers on demand. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (11) TMI 409
Validity of assessment order - Section 84 of the TNVAT Act, 2006 - determination of total and taxable turn over - opportunity of heard not provided to petitioner - principles of natural justice - Held that:- The Assessing Officer has violated the principles of natural justice in not affording personal hearing to the petitioner, when admittedly, the day fixed by him happens to be a public holiday. Therefore, it is evident that the petitioner was reasonably prevented from appearing on that day before the respondent, who in turn also was not expected to attend the office on a holiday. Therefore, without expressing any view on the merits of the matter, this Court is inclined to set aside only the order dated 24.09.2018 passed under Section 84 of the TNVAT Act, solely on the ground of violation of principles of natural justice. The matter is remitted back to the respondent for passing fresh order, after giving due opportunity of personal hearing to the petitioner - Petition allowed by way of remand.
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