Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 14, 2016
Case Laws in this Newsletter:
Income Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
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GST good economics; demonetisation is not: Basu
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FAQs on Withdrawal of Legal Tender Character of the existing Bank Notes in the denominations of ₹ 500/- and ₹ 1000/- (Revised)
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Chaos grows, queues get longer at banks, ATMs on weekend
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To provide a level playing field to Indian service providers, the exemption given to service providers located in foreign territory but providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, is being withdrawn with effect from 1st December, 2016
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The Chairman and Vice-Chairman, SIT on Black Money & Former Judges of the Supreme Court of India, Justice MB Shah and Justice Arijit Pasayat in a jointly written letter to the Union Finance Minister, Shri Arun Jaitley: The Government has taken a bold step to demonetize ₹ 500 and ₹ 1,000 notes
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Auction for Sale (Re-issue) of Government of India Floating Rate Bonds 2024 and Government Stocks
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Government extends existing exemptions with rergard to cancellation of the legal tender character of the existing series of high denomination bank notes of ₹ 500 and ₹ 1,000 denominations until the expiry of 14th November, 2016, with certain modifications / additions to the existing exemptions; Governments reassures that there is enough cash with RBI and Supply of cash to Bank branches and ATMs are being stepped up gradually
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Feng Sui Consultancy charges - nature of expenses - charges related to the layout and location of the various items of its assets - allowed as revenue expenditure - AT
Central Excise
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Manufacture - The assembly of a system from various equipments as a ‘turnkey project’ may be a professional performance of a specialized contract which would not, however, render such turnkey projects to be manufactured unless the product that emerges is classifiable under one of the specific headings of the tariff - AT
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Confiscation - Unrecorded stock - There is no force in the assertion made in the notice that the goods manufactured during the presence of Revenue in the factory were intended to be cleared clandestinely - AT
VAT
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Whether the State Bank of India (SBI) and its branches, which are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 would be liable to levy of purchase tax under Section 5(6a) of the Act for accepting the Exim Scrips (Export Import Licence) on payment of premium of 20 per cent of the face value of the scrips in compliance with the direction of the RBI - Held No - SC
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Best judgement assessment - Job-work - turnover pertaining to job-work and repairing activity - the receipt of repairing charges from the aforesaid two persons can not be doubted and the addition in the turnover on the basis of receipt of repairing from these two persons is wholly unjustified. - HC
Case Laws:
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Income Tax
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2016 (11) TMI 441
Penalty u/s.271(1)(c) - expenditure incurred on account of capital assets was claimed as revenue expenditure and depreciation was also claimed - Indo- Mauritius DTAA - Held that:- Intention of the assessees in claiming capital expenditure as allowable expenditure and further claiming depreciation is visible to the proverbial ‘naked eyes’ ,so, if the AO/FAA decided not to remain a mute spectator to such an attempt, no fault can be found with them. The FAA has in his elaborate order clearly proved that as to how the explanation of the assessee was not genuine or bona fide and how it is not supported by any authority. Rather the available material was against the stand taken by the assessee. It is also a fact that the assessee not a small time trader running a proprietary concern or a shop in the remote part of the country and is not aware of the tax laws.It is supported by a team of professionals. Such assessees are expected to lead from front and not to claim deductions that are prima facie not admissible. Let us make it clear that we do not want to mix ethics and penalty matters. What we are emphasising is that assessee availing professional services should not make claims that are prima facie inadmissible to avoid penal consequences. We would also like to mention that the cases relied upon by the assessee are distinguishable on facts. N.G. Technologies (2013 (7) TMI 451 - KARNATAKA HIGH COURT ) is useful in deciding the issue In that matter the assessee had pleaded that claim made by it was bonafide and all the facts were disclosed. The FAA, upholding the order of the AO, had held that mistake committed by the assessee could not be said to be bonafide. However, the Tribunal reversed the order of the FAA. The Hon’ble Apex Court [ 2016 (4) TMI 1152 - SUPREME COURT ] dismissed the SLP against High Court's ruling that where against basic principle of accountancy, assessee claimed capital loss on sale of fixed assets in profit and loss account and had not revised return voluntarily, penalty for concealment of income was justified - Decided against assessee
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2016 (11) TMI 440
Stay of demand - Disallowance made u/s 14A - Held that:- AO have himself granted the stay and all conditions and other facts and circumstances of the case remains the same, then the stay must be extended as per principles of natural justice and fair play. Further, if we take into account merits of the case also, we find that the major disallowance is on account of section 14A. It has been contended by the Ld. Counsel that prima facie balance of convenience of the merits of the disallowance lies in favour of the assessee, in view of various judgments of few High Courts available on this issue. Though, the legal position cited by the Ld. Counsel was not disputed by the Ld. DR, but we are not going into the same at this stage. It is noted by us that in case disallowance made u/s 14A is deleted, then taxable income of the assessee gets converted into loss and therefore no demand would be left as payable. Therefore, totality of the facts of the case suggests that as on date prima facie case and balance of convenience lies in favour of the assessee. - stay granted.
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2016 (11) TMI 439
Reopening of assessment - income from undisclosed source - LTCG - Held that:- It is not in dispute that the assessee has purchased the 9500 shares of Talent Infoway Ltd. for ₹ 14,655/- vide bill dated 04.03.2003 (contract Note placed at page 23 of the paper book) and that the same have been sold for a total consideration amounting to ₹ 7,08,982/- in the year under consideration on 20.03.2004 and 26.03.2004 (details/summary placed at page 47 to 59 of paper book). Once the date and source of purchase of the said shares and the date and sale consideration thereof are not disputed, in our considered view, the transaction is one of LTCG as declared by the assessee in the return of income for A.Y. 2004-05 and therefore the treatment of the same as income from undisclosed source by the authorities below is incorrect. Accordingly on merits of the issue we hold that the gain of ₹ 6,94,327/- on sale of 95000 shares of Talent Infoway Ltd. by the assessee in the year under consideration is to be assessed under the head long term capital gain and we therefore delete the finding of the authorities below that this income be assessed as undisclosed income alongwith the addition of ₹ 8,679/- under section 69C of the Act on account of alleged commission @1.25% thereon. - Decided in favour of assessee
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2016 (11) TMI 438
Penalty under Section 271(1)(c) - confirming the levy of penalty without due opportunity - Held that:- We are of the opinion that the Ld. CIT(Appeals) should give due opportunity to the assessee before confirming the penalty order. Hence, the issue is remitted back to the file of the Ld. CIT(Appeals) for giving adequate opportunity to the assessee and then pass an appropriate order.
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2016 (11) TMI 437
Addition on low G.P. - non rejection of books of account - Held that:- No defect has been pointed out by the AO in the books of account of the assessee which had been audited as per the provisions of section 44AB of the Act, nor have the same been rejected and therefore in our view the AO could not have disturbed the profits declared and proceeded to estimate the GP. We also find that the learned CIT(A) had, on factual examination, observed that the GP earned by the assessee on different items had a very wide GP range and therefore the assessee could not have earned consistent GP year after year. Details on record in this respect show that the assessee’s GP varied from 7.66% in A.Y. 2007-08 to 15.38% in A.Y. 2008-09, 5.9% in A.Y. 2009-10 (i.e. the year under consideration), 4.6% in A.Y. 2010-11 and 9.6% in A.Y. 2011-12. It is seen that the learned CIT(A) had also observed that apart from huge foreign exchange fluctuation loss suffered, i.e. of ₹ 1,01,98,459/- in the year under consideration, there were also instances of high sea sales which resulted in GP @ 2% and that such sales were not there in the immediately preceding year. Lastly, we also find that the learned CIT(A) observed that the assessee was able to place on record many instances of cases in the similar line of business in which may instance of sale had resulted in low GP and in loss also. In the peculiar factual matrix of the case, as discussed above, we concur with and uphold the finding of the learned CIT(A) that the AO was not justified in making the addition on account of low GP. - Decided against revenue
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2016 (11) TMI 436
Penalty levied u/s 271(1)(c) - LTCG on sale of shares - Held that:- AO could not examine the details of purchase transactions as directed by the Tribunal, since the concerned broker did not co-operate. Further, we notice that the AO did not make any attempt to collect details from the return of income filed by M/s G.R Pandya Share broking Ltd. On the contrary, the assessee has furnished confirmation letter and an affidavit in support of the purchase transactions. We have noticed earlier that M/s G.R Pandya Share broking Ltd has denied the transactions out of air, i.e., without bringing any material. The broking firm could not have also brought any material against the assessee, since they have claimed that their records have been destroyed. Under these set of facts, we are of the view that the AO was not justified in taking adverse view in the matter. We have earlier noticed that the assessee has sold the shares through another broker by dematerializing the same. The dematerialization of shares would not happen without physical shares. We have noticed that the Tribunal has already given finding that the genuineness of shares cannot be doubted. The only dispute, in our view, was with regard to the mode and time of purchase of shares and the claim of the assessee in this regard could not be proved by the AO as wrong. Under these set of facts, we are of the view that the Ld CIT(A) was justified in reversing the order passed by the AO and directing the AO to accept the long term capital gain declared by the assessee. Hence the estimated addition made towards expenses was also rightly deleted by Ld CIT(A). Accordingly we uphold the order passed by Ld CIT(A). We have upheld the order passed by Ld CIT(A) in cancelling the additions made by the AO. We notice that the Ld CIT(A) has deleted the penalty on the ground that the additions made by the AO stood deleted. We notice that the Ld CIT(A) has deleted the penalty on correct reasoning and hence order does not call for any interference. - Decided against revenue
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2016 (11) TMI 435
Revision u/s 263 - as per CIT(A) future development expenses were not verified by the AO at the time of assessment and that the future development expenses represents the cost which will be incurred in future and the therefore the same has not been crystallised in the year under consideration - Held that:- We disagree with the argument of the ld. AR that the twin conditions as specified under section 263 of the Act have not been satisfied for holding the order of the AO erroneous and prejudicial to the interest of Revenue. In the instant case the AO has failed to make sufficient enquiries at the time of assessment with regard to the future development cost expenses claimed by the assessee. Accordingly in this case where the tax is paid under normal provisions of tax or under the provisions of MAT under section 115JB of the Act, it does not make any difference. It is because the Hon’ble High Court of Delhi in the case of GEE VEE Enterprises (1974 (10) TMI 29 - DELHI High Court ) has held the order of the appeal in the aforesaid facts and circumstances as erroneous and prejudicial to the interest of revenue. In view of above we do not find any reason to interfere in the order of learned CIT passed under section 263 of the Act. Hence this ground of appeal of the assessee is dismissed.
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2016 (11) TMI 434
Undisclosed bank account - Undisclosed transactions - Held that:- The receipt of cash or funds from out-station parties may though perhaps explain the inordinate increase in the postage expenses claimed qua the undisclosed transactions. We are in this regard, however, not in agreement with the ld. counsel for a direction to the AO to adopt a particular percentage as a net profit, i.e., as claimed to have been accepted by him for other years. The assessment orders for those years are not on record. The AO, where he has issued definite findings upon examination/verification, would though be obliged to take guidance from the factual findings or inferences drawn for those years. He has to, we may though add, act in a reasonable, yet, cogent manner, taking a broad view of the matter in that the full details and evidences in respect of expenses, hitherto undisclosed, may not be forthcoming. That apart, even the assessee’s undisclosed capital, i.e., the capital deployed in the assessee’s undisclosed business, would have to be separately considered for addition. Toward this, in our view, the AO shall himself or cause the assessee to compile the consolidated balance sheet, incorporating the erstwhile undisclosed bank account also. This, on a comparison with the balance-sheet already furnished, would reveal the additional capital, so that the same, to the extent unexplained, would merit being separately added u/s.69/69A. The accounts, including the final accounts, compiled on the basis of the said account, are only the assessee’s explanation toward the credits appearing therein, also enabling the determination of the correct income, i.e., liable to be brought to tax qua the said credits, which the Revenue has extended to the entire credit, disbelieving the assessee’s explanation. The A.O. shall, accordingly, redo the assessment with reference to the assessee’s undisclosed bank account, determining the amount that is in the facts and circumstances of the case properly assessable as income.
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2016 (11) TMI 433
Revision u/s 263 - disallowance 14A - Held that:- The Revenue invoked Section 263 of the Act by issuing notice dated 17-01-2013 u/s 263 of the Act post appellate order passed by the learned CIT(A) on 19- 12-2012 which was also on the same issue of disallowance of expenditure under Section 14A of the Act read with Rule 8D of Income Tax Rules, 1962 in relation to earning of income which does not form part of the total income, which was earlier adjudicated by learned CIT(A) vide orders dated 19-12-2012 which in our considered view is not permissible with respect to the same issue of disallowance u/s 14A read with Rule 8D of Income Tax Rules, 1962. The learned counsel for the assessee rightly relied on the decisions/judgment in this regard which are cited in preceding para’s . Keeping in view our detailed discussions and reasoning, we hereby order quashing of the revisionary order passed by learned CIT dated 28-03-2014 u/s. 263 of the Act proposing to set aside assessment order dated 21.12.2011 passed by the AO u/s. 143(3) of the Act for making de-novo assessment.
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2016 (11) TMI 432
Feng Sui Consultancy charges - nature of expenses - revenue or capital - charges related to the layout and location of the various items of its assets - AO had treated the expenditure as capital expenditure because he was of the opinion that the expenditure was incurred in relation with the fixed capital assets - FAA has given a categorical finding of fact that the payment was made only on account of consultancy and it was for Re-allocation/re adjustment of furniture or certain other items - Held that:- FAA was justified in holding that expenditure did not bring into existence any asset. In the case of Estel Technologies Pvt. Ltd. (2010 (11) TMI 1046 - ITAT DELHI), the Tribunal has allowed the expenditure incurred by the assessee under the head Vastu-Puja as revenue expenditure. Respectfully following the above order and considering the facts of the case, we hold that the order of the FAA does not suffer from any legal infirmity - Decided against revenue TDS u/s 195 - Disallowance of professional charges u/s.40 (a)(i) - non deduction of tax while making payments to non-resident companies - Held that:- All the payments made by an Indian assessee does not attract the provisions of Chapter XVIIB. It is a fact that payments were made to the non-residents who had not rendered any services in India and the job was carried out outside India. There is nothing on record to prove that the non-resident entity had rendered any technical service to the assessee. The FAA had analysed the invoice issued by the nonresident and had found that payment was made only for job-work done and no royalty was paid by the assessee. The non-resident entity did not have any PE in India. Therefore, in our opinion, the FAA were justified in holding that the tax deducted at source provisions were not applicable for such remittances.- Decided against revenue
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Central Excise
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2016 (11) TMI 431
Denial of CENVAT credit - demand of tax with interest and penalty - House keeping services - Held that: - Housekeeping services are undisputedly used for keeping the factory premises neat and clean which is a statutory requirement under Section 11 of the Factories Act, 1948. The service has to be treated as services used by the manufacturer in or in relation to the manufacture of final product as without compliance with the said provisions of the Factories Act, manufacturing operations are not possible. Without the factory being clean tidy, the efficiency of the machinery would get drastically reduced. Further, it should be borne in mind that Housekeeping is crucial for safe workplaces. It: can help in preventing injuries and improve the productivity and morale of the employees. It can also help an employer avoid potential fines for non-compliance. Slips, trips and falls are the leading causes of nonfatal occupational injuries or illnesses involving days away from work which is due to bad Housekeeping, which would in turn affect productivity - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 430
Disallowance of Cenvat credit - Group Medical Insurance for employees - Held that: - there is no evidence to show that the same does not relate to the working group. This has relevancy to the manufacturing and the cost thereof is also considered in the cost of manufacturing - CENVAT credit allowed. Supply of Manpower Service - Held that: - there is no contrary finding of no use of such manpower in manufacture - CENVAT credit allowed. Transit Insurance - Outward Freight Service - Held that: - decision in the case of Commissioner of Central Excise, Chennai-II Vs M/s. Lucas TVS Ltd., & Ors. [2016 (4) TMI 189 - CESTAT CHENNAI] relied upon where it was held that It is evident from the invoices that the C&F agents are registered with the Service Tax authorities and have paid service tax on the services rendered by them as C&F agents to the appellants. The services include freight, delivery charges, transportation charges, airway bill charges, surcharges, handling charges (both loading and unloading). It is clear from the invoices, the C&F agents have rendered the said services to the appellant not only on transportation but other charges and paid service tax, credit allowed. - only a limited remand is made to the Adjudicating Authority to examine various aspects stated therein and appropriate order will be passed granting reasonable opportunity of hearing to the respondent. CENVAT credit allowed - matter remanded for Transit Insurance and Outward Freight Service - decided partly in favor of assessee.
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2016 (11) TMI 429
Reversal of Cenvat credit - Capital Goods - Rule 3(5) of CCR 2004 - Held that: - treating of the cleared/removed JCB machines as waste and scrap on the basis of description in the invoice old and discarded not usable is erroneous in absence of any ground rules for the same - In the facts of the present case, even by the rule of thumb, the price received on sale of the JCB machines (about 40% of purchase value) by the appellant, cannot be said to be scrap value - the appellant is entitled to 100% depreciation under the provisions of Rule 3 (5) as the admittedly user of JCB machines in question is for 40 quarters - Appeal allowed.
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2016 (11) TMI 428
Interest on Refund - Commencement of liability of revenue to pay Interest - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - Held that: - reliance placed on the decision of the case of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. [2011 (10) TMI 16 - Supreme Court of India] where it was held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made - the appellants are entitled for the claim of interest over delayed sanction of the refund - appeal allowed - decided in favor of appellant assessee.
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2016 (11) TMI 427
Clandestine removal of goods - imposition of penalties on M/s. Skywin Match Industries - Held that: - the appellant has settled the issue by paying the entire amount of duty liability along with interest, redemption fine and 25% of the penalty imposed by the adjudicating authority. Since the appellant is not contesting the duty liability and has paid the entire demand alongwith interest and has also paid 25% of the penalty within 30 days from the passing of the O-in-O, which is in line with the provisions of sec 11 AC, the appeal is allowed in the above terms. Imposition of penalties on M/s. Nancy Traders, whose proprietor Shri A. Kathiresan happens to be the managing partner of the appellant M/s. Skywin Match Industries - Held that: - there is no finding to the effect that Nancy Traders had, "dealt with any excisable goods which he knows or has reason to believe are liable for confiscation under the Act or the Rules.” In view of the above discussions in the foregoing paras, I set aside the penalty imposed on the second appellant M/s. Nancy Traders. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 426
Manufacturing activity or not - assembly of ‘turnkey’ supplies - computer stationary and forms - proceedings were initiated on the basis of section note 4 of Chapter VI of the Tariff - Held that:- The assembly of a system from various equipments as a ‘turnkey project’ may be a professional performance of a specialized contract which would not, however, render such turnkey projects to be manufactured unless the product that emerges is classifiable under one of the specific headings of the tariff. The rule of convenience for determining rate of duty from the classification of the dominant equipment cannot substitute for ascertainment of manufacture as legally understood. The machines supplied by M/s. AGMPL are not having a single clearly defined function and those are capable of working independently. And hence, the congregation of machines supplied and assembled by M/s. AGMPL do not create any independent excisable goods which attract Central Excise duty under chapter heading 84.43 - Demand set aside.
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2016 (11) TMI 425
Rectification of mistake - demand of duty based upon provisional determination of duty in 1997 - Held that:- We find that the application filed by the applicant-appellant for rectification of mistake is mis-construed and liable to be rejected on the face of it. It is seen from the application made by the applicant-appellant that there is an error on the face of the record is seeking to reargue entire case on merits which is not the purpose of an application for rectification of mistake. Be that as it may, we find that the entire issue involved in this case is regarding the demand of differential duty based upon the definitive determination of annual capacity of production of the plant of the applicant-appellant. In the entire application the appellant has not disputed the fact that annual capacity of production was finally determined by the Jurisdictional Commissioner in March 20000. If that be so, in our view the hyper technical points raised as to the show-cause notice proceed on the demand of duty based upon provisional determination of duty in 1997 are irrelevant, as if the final determination has not been challenged before the higher judicial forum, it is bounden duty of the applicant-appellant to discharge the duty liability in accordance with law.
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2016 (11) TMI 424
Cenvat credit - Input service - Sales promotion and market research - Rule 2 (l) of the Cenvat Credit Rules, 2004 - Held that: - In the instant case, the activities undertaken by the appellant clearly falls under the head of sales promotion and therefore, credit on the same cannot be denied - Appeal allowed.
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2016 (11) TMI 423
Confiscation - Unrecorded stock - Penalty - Rule 25 (1) of Central Excise Rules, 2002 - Held that: - It is strange that the Revenue Officers are seeking to allege that the production which happened during their presence at the time of drawal of panchnama was unrecorded and intended to be cleared without payment of duty - There is no force in the assertion made in the notice that the goods manufactured during the presence of Revenue in the factory were intended to be cleared clandestinely - Appeal allowed.
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2016 (11) TMI 422
Cenvat credit on Capital goods when Cenvat credit availed as well as claimed depreciation - subsequent reversal of Cenvat credit and depreciation by issuing voucher - Penalty imposed - Held that:- Adjudicating authority has not properly examined the facts that whether depreciation initially claimed by the appellant have been reversed and finally not claimed in their balance sheet. If the depreciation has not been claimed in the balance sheet even though initially it was claimed, Cenvat Credit cannot be denied. However it appears from the order that this aspect has not been examined by the Adjudicating Authority. As regard the imposition of penalty, find that not only in the show cause notice but in the Adjudication order also demand confirmed under Section 11A for an amount of ₹ 7,091/- whereas penalty under Section 11AC was imposed for an amount of ₹ 4,49,357/-. Penalty under Section 11AC can only be imposed when the duty demand is determined under Section 11A(1). In the present case the duty determined under Section 11A(1) is limited to ₹ 7,091/- therefore penalty over and above this amount is not sustainable as the same is not corresponding to any amount of duty determined under Section 11A(1). However issue of admissibility of Cenvat credit is yet to be decided by the Adjudicating authority. In view of my above observations penalty if at all, is imposable it is to be commensurate to the duty if any confirmed. This matter needs to be remanded.
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2016 (11) TMI 421
Reversal of CENVAT Credit - Penalty - Rule 6 of the Cenvat Credit Rules, 2004 - Held that: - The learned Counsel for the GPL argued that there are a number of High Court’s decision which have discussed the said decision of Hon'ble Supreme Court. Since in respect of the main issue regarding confirmation of the reversal of the credit itself, the Order-in-Original is not a speaking order, the issue regarding interest raised in the Revenue’s appeal cannot be decided - Appeal is disposed of.
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2016 (11) TMI 420
Whether the appellant is entitle for the Cenvat credit on the services namely maintenance of Xerox machine installed in the appellant’s factory and Services of Cars? - Held that: - reliance placed in the decision of the case of Commissioner of C. Ex. Nagpur Vs. Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT ] where it was held that activity related to business activities integrally connected with business of assessees therefore the credit on such activity which is in relation to business is input service. There is no dispute that photocopier and cars are used for the factories activity which is related to the business activity of the appellant. Hence the services received in respect of photocopier and cars falls within the category of activity in relation to the business - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 419
Rejection of refund claim - N/N. 27/2012-CE (NT) dated 18.6.2012 - failure to debit the CENVAT Credit account before filing the refund claim - the decision in the case of Sandoz Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur [2015 (10) TMI 882 - CESTAT MUMBAI] referred - Held that: - the issue is similar to the case and the decision apply where it was held that The short question to be decided is if the refund can be granted to the appellant's when they have debited the amount not on the date of filing refund claim but on a later date. It is seen that the conditions prescribed in the notification having met although on a later date. The failure to debit on the date of filing the refund claim is not such a lapse that it would debar the appellants from the refund. On the day of debiting the CENVAT account they have fulfilled the conditions of the notification. In that event they become entitled to refund on that date. In view of above the impugned order is set aside, the appeal is allowed with consequential benefit. The matter is remanded for the limited matter of verification of arithmetical accuracy of refund. Refund allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 418
Refund claim - SSI exemption - unjust enrichment - Held that: - I find that Original Adjudicating authority has not gone into the issue of unjust enrichment. Before the Commissioner(Appeals), appellant had produced C.A. certificate which certifies that incidence of duty has not been passed on the customers or any other persons. If Ld. Commisisoner(Appeals) not satisfied with this evidence, he could have very well asked the other documents such as balance sheet etc., which he failed to do so and passed the order without asking such documents. In view of the above fact, I am of the considered view that since Original authority as well as Commissioner(Appeals) has not verified the balance sheet, matter needs to be remanded to the original adjudicating authority. I therefore set aside the impugned order and remand the matter to the original adjudicating authority to pass a fresh denovo adjudication order after considering the documents such as balance sheet etc. to be submitted by the appellant. Needless to say, the Adjudicating authority shall grant personal hearing to the appellant. Denovo adjudication shall be completed within a period of three months - appeal disposed off - matter remanded.
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2016 (11) TMI 417
Imposition of penalties u/r 25 of Central Excise Rules - reversal of CENVAT credit under sub rule (5) of Rule 3 of the CCR, 2004 - engraving/dechroming /rechroming of cylinder - Held that: - the period involved is December, 2007 to November, 2008, it is subsequent to the amendment in Rule 3 of the Cenvat Credit Rules, 2004 according to which the demand of duty in respect of capital goods cleared after use, should be quantified by reducing 2.5% for each quarter. I do not find any reason why this amended provision should not be extended to the appellant. The Ld. Commissioner could have atleast allowed this reduction following the amended provision and for which no information is required for holding that this reduced amount is payable. In view of the above, I remand the matter to the Adjudicating authority to re-quantify the demand amount following the proviso to Rule 3(5) of Cenvat Credit Rules, 2004. I also find that even prior to period 13/11/2007 i.e. before the amendment the issue was contentious and there are various judgments wherein it was held that in absence of any provision for payment of any duty on removal of capital goods, no demand can be made. Considering this legal position at the relevant time, I am of the view that penalty is not imposable in the present case, hence the penalty is waived - appeal disposed off - matter remanded back.
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CST, VAT & Sales Tax
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2016 (11) TMI 416
Whether the State Bank of India (SBI) and its branches, which are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 (for brevity, ‘the Act’) would be liable to levy of purchase tax under Section 5(6a) of the Act for accepting the Exim Scrips (Export Import Licence) on payment of premium of 20 per cent of the face value of the scrips in compliance with the direction contained in the letter of Reserve Bank of India (RBI) dated 18th March, 1992 - Held that: - The SBI, when it took the said instruments as an agent of the RBI did not hold or purchase any goods. It was merely acting as per the directions of the RBI, as its agent and as a participant in the process of cancellation, to ensure that the replenishment licences or Exim scrips were no longer transferred. The intent and purpose was not to purchase goods in the form of replenishment licences or Exim scrips, but to nullify them - When the RBI acquires and seeks the return of replenishment licences or Exim scrips with the intention to cancel and destroy them, the replenishment licences or Exim scrips would not be treated as marketable commodity purchased by the grantor - The intent and purpose was not to purchase the replenishment licences because the scheme was to extinguish the right granted by issue of replenishment licences - Appeal dismissed - Decided in favor of the assessee.
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2016 (11) TMI 415
Interpretation of statute - section 11(3)(b) of the GVAT Act, 2003 - input tax credit - pre-deposit - Held that: - the issue is not res-integra and the matter decided in the case of Commissioner of Central Excise, Chandigarh v. Smithkline Beecham Company Holding Limited [2003 (9) TMI 82 - SUPREME COURT OF INDIA] where it was held that Parties are agreed that the order of the Tribunal should be set aside and the matter be referred back to the Commissioner (Appeals) with the condition that the pre-deposit is dispensed with. Accordingly, the impugned order is set aside. The Commissioner (Appeals) to see that pre-deposit is waived. As the appeal before the learned Tribunal was against the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit only. The learned Tribunal ought not to have decided the appeal on merits and ought not to have restricted the appeal with respect to pre-deposit only. The impugned judgment and order passed by the learned Tribunal deserves to be quashed and set aside and the matter is required to be remanded to the learned Tribunal to consider the issue with respect to pre-deposit only and/or the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit. Without further entering into the merits of the case and without expressing any opinion on merits of the matter, the impugned judgment and order passed by the learned Tribunal is hereby quashed and set aside and the matter is remitted back to the learned Tribunal to decide the issue of pre-deposit and to consider the legality and validity of the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit and decide the same on merits, in accordance with law - appeal disposed off - decided partly in favor of appellant.
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2016 (11) TMI 414
Best judgement assessment - Job-work - turnover pertaining to job-work and repairing activity - Held that: - The findings of manufacture of furniture and sales thereof is supported by concurrent findings of fact recorded by the authorities based on material on record. That apart the Assessee, in his reply to the show cause notice, has himself admitted the nature of his business activity to be manufacture, repair and job work. However, he could not prove job work. Thus the findings of the Tribunal that the Assessee is engaged in the manufacture and sales of furniture, does not require any interference. Repair activity - the Assesee has clearly stated and produced sufficient material before the Assessing Authority, the First Appellate Authority and the Tribunal with regard to receipt of amount on account of repairs from two agencies, namely, UCO Bank and the I.T.A.T. which comes to ₹ 9,900. The Assessing Authority has not made any inquiry from the aforesaid UCO Bank and I.T.A.T. with regard to the genuineness of repairing disclosed by the Assessee. Thus the receipt of repairing charges from the aforesaid two persons can not be doubted and the addition in the turnover on the basis of receipt of repairing from these two persons is wholly unjustified. Rest of the amount of receipts from repairs could not be proved by the Assessee. Since the profit shown from repairing has been proved by the Assessee to the extent of ₹ 9,900/- hence proportionate addition in sales turnover deserves to be reduced. Consequently, the sales turnover, applying the gross profit rate of 10% as adopted by the Tribunal, is reduced by ₹ 1 lac and the evaded sales turnover is fixed at ₹ 24 lacs - the Revisions are partly allowed to the extent indicated above. The addition in sales turnover of furniture is reduced by Rs. one lac and the unaccounted purchases subjected to tax is deleted.
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2016 (11) TMI 413
Revision of assessment - evaded turnover - suppression of facts - Held that: - the Tribunal observed that to determine the evaded turnover on the basis of suppressed purchases of waste paper, applying the ratio between purchases of raw material and final product as disclosed by the assessee, opportunity is necessary to be afforded to the assessee and consequently, the matter deserves to be remanded to the assessing officer for assessment. I do not find any infirmity in the order of remand passed by the Tribunal inasmuch as the assessing officer would be best placed to consider all the evidences on record and evidences which may be led by the assessee so as to appropriately determine the manufacture and sales of the assessee. Under the circumstances, the revisions deserve to be dismissed and the questions of law as framed above, deserve to be answered against the assessee and in favour of the respondent - revision failed - the AO shall pass speaking and reasoned assessment orders in accordance with law after considering the reply and the evidences which may be led by the assessee - decided in favor of respondent.
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