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TMI Tax Updates - e-Newsletter
November 17, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Income–tax (30th Amendment) Rules, 2016 - Specifies the limit for deposit of Cash without PAN and Issues Direction to banks for Submission of information for deposit of cash in excess of specified limit for the period from 9.11.2016 to 30.12.2016 - Notification
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Short term capital loss - transactions for purchase and sale of land are not proved by the assessee to be genuine transactions and are held by us to be sham and colorable devices and short term capital loss - cannot be allowed - AT
Customs
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Issuance of Manual Cheque for Drawback in case Amount Not Deposited in Exporter's Account due to errors- reg. - Trade Notice
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ICD Mulund is ready with Document Management System (DMS) at Nhava-Sheva - The important documents contained in these docket would be scanned using high speed scanners and stored electronically in the servers
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Refund of 4% Additional Duty of Customs (4% CVD / SAD) - the facility of waiver of pre-audit in case of ACP clients is discontinued - The refund claims shall, however, be sanctioned within the prescribed time limit
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The doctrine of merger has come into play and the show cause notice is not available any more for the petitioner to challenge - It is not the case of the petitioner that they challenged either the impugned show cause notice or the Order-in-Original at the relevant point of time on the ground that the show cause notice was issued by a person not assigned the role of a proper officer. - HC
Indian Laws
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Interpretation of the terms “mineral” and “processing” under the definition of “mine” - The Ferromanganese Alloy manufactured by the appellant using the mineral Manganese at its Ferromanganese plant is an entirely different product from its mineral raw material both physically and even chemically - SC
Service Tax
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CENVAT credit - construction services for the purpose of renting of immovable property - assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided - the appellant has correctly taken the cenvat credit- AT
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The activity of treatment of effluent waste cannot be considered as processing of the goods by any stretch of imagination - Demand under the category of Business Auxiliary Services set aside - AT
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The requirement of actual payment of VAT is not to be taken into consideration for extending the benefit of said Notification No.12/2003, but it is only to be examined whether documentary proof indicating the value of goods sold, is available on record to extend the said benefit. - AT
Central Excise
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Recovery u/s 11D - amount shown collected as central excise duty while availing SSI exemption - Demand confirmed - AT
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Valuation - receipt of additional consideration through Debit Notes - the duty liability cannot be demanded entirely on the amounts of debit notes so raised; cum-duty benefit needs to be extended to them - AT
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Manufacture - assembling activity - As the respondents are procuring some indigenous parts of photocopier machine and assembled the same in their factory - the process is a manufacturing activity - AT
VAT
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Jurisdiction of AO - levy of tax under U.P. VAT Act, 2008 on Royalty - the stand of the petitioner that notice is without jurisdiction since agreement between petitioner and JFL was executed outside India - But, petitioner failed to demonstrate how the contract was executed outside India, petition dismissed - HC
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Maintainability of appeal - Doctrine of merger - the order rectifying the original assessment order should stand merged with the original assessment order dated 31.05.2016 and the Appeal is maintainable against the said revised order on account of merger. - HC
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Constitutional validity of levy of entry tax - States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. - SC
Case Laws:
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Income Tax
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2016 (11) TMI 607
Interest on the amount borrowed for declaring dividend - allowability as deduction u/s 36(1)(iii)- Held that:- The learned counsel for the respondent/assessee placed before us bank statements of Axis Bank and Bank of India to the effect that as on the dates when the dividend was, in fact declared, there was a credit balance on account of prior foreign inward remittances. Thus, and the Learned Standing Counsel does not dispute this, the assesssee did have required resources internally to effect the declaration of dividend and did not have to resort to bank borrowings for the said purpose. In any event, even if borrowed funds had been utilized for the purposes of declaration of dividend, the payment of interest on such borrowings constitutes expenditure for the purpose of the business of the assessee and is an allowable deduction in terms of Section 36(1)(iii) of the Act. See CIT vs. Tingri Tea Company Ltd [1970 (2) TMI 25 - CALCUTTA High Court ]- Decided in favour of assessee
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2016 (11) TMI 606
Waiver or reduction of interest in terms of the order [F.No.400/234/95IT( B)] dated 23.5.1996 issued under Section 119(2)(a) - Application of provisions of Section 54(F) (4) - return being filed after the due date and the Petitioner not having paid Advance tax the assessing officer levied interest under Sections 234A, 234B and 234C vide order dated 13.3.2001 Held that:- Mr. Chatterjee’s, Senior Counsel appearing on behalf of the petitioner contention is that the Petitioner received possession and therefore entire price was “deemed to be appropriated” towards purchase price of the residential flat does not commend itself to us as already negatived in our order dated 18th August, 2016 in the petitioner's appeal. Furthermore, the phrase “as the case may be” does not carry the Petitioner's case any further. In our opinion, in the facts of the present case the petitioner is not entitled to benefit of order [F.No.400/234/95IT( B)] dated 23.5.1996 and we are unable to appreciate Mr. Chatterjee’s contention that the expression “as the case may be” used in paragraph 2(d) of the order issued by the CBDT can come to the petitioner’s rescue. We must point out that no decision of this Court on the interpretation of Section 54F(4) of the Act (as in force at the relevant time) was brought to our notice which took a view that no tax is payable on the amounts of gain made on sale of land, if not invested and also not deposited in the specified bank account as mandated by Section 54F(4) of the Act. Further, the waiver or reduction is entirely discretionary and the provisions that the circular merely indicate the conditions precedent to exercise of such discretion. The Chief Commissioner of Income Tax while considering the application dated 7th August, 2002 for waiver or reduction of tax has observed that discretion must be exercised strictly within the parameters laid down in the order. The parameters are binding upon the authorities and the petitioner was not entitled to such benefit, in case it does not fall within it. In the present facts, the petitioners have not been able to establish that non payment of the tax and/or non investment in the specified bank account in terms of Section 54F of the Act was on account of unavoidable circumstances or circumstances beyond control of the petitioner. The petitioner has not established that he is entitled to benefit of the order dated 23rd May, 1996 for waiver of interest. - Decided against assessee
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2016 (11) TMI 605
Transfer of cases - assessee’s contention at this stage is that the reasons were vague - Held that:- To constitute a fatal infirmity the reasons indicated in the order under Section 127 (1) dated 11.09.2012 should be of a nature which can be said to be no reasons at all. The order to the extent it is relevant has been extracted above; it clearly indicates that the decision to transfer assessee’s case is based upon the convenience of the income tax authorities who had conducted search in respect of the other entities and individuals in Jalandhar. The materials on record filed along with the counter affidavit support this conclusion. In Surya Pharmaceuticals’s case (2006 (5) TMI 46 - HIGH COURT, DELHI), the court held that administrative convenience could be a valid ground for transfer of the assessee’s case. In the circumstances of this case, the court is of the opinion that the opinion formation cannot be faulted – there is no gainsaying to the fact that but for the centralisation there could be different approaches leading to differing block assessment orders.
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2016 (11) TMI 604
TDS u/s 194C - non deduction of tds on machine hire charges and transport charges - Held that:- We find that the Amendment has come into effect with retrospective date and as per the amended provision if the payee has included the receipt in its books of account and has offered for taxes then the disallowance on account of non-deduction of TDS will not arise. In this view of the matter, we concur with the view of the Ld. CIT(A) where it was held that the assessee is not default for non-deduction of TDS. Addition u/s 40(A3)- Held that:- Violation of provisions of Sec. 40(A3) of the Act with regard to the payment of machine hiring charges. In this connection, we are inclined to restore the matter back to the file of AO for fresh adjudication as per law with a direction to check whether the payment to the party concerned has been made in contravention to the provision of Sec. 40A(3) of the Act after providing reasonable opportunity of being heard to assessee.
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2016 (11) TMI 603
Unexplained purchases - Held that:- DR had merely stated in his written submission that mere settlement of dues to the said parties does not sanctify the purchase transactions as genuine. This goes to prove that there is no case for making any addition towards unrecorded purchases and it could only have to be concluded that the unrecorded purchases found during survey were subsequently recorded in the books of accounts. Consequentially there is no question of making any addition on account of gross profit on the same. But we find that the additions sustained by the ld CITA towards unrecorded purchases and undisclosed gross profit has not been contested by the assessee before us. Hence in these circumstances, we feel that no interference need to be made to the order of the ld CITA in this regard. - Decided in favour of assessee Addition u/s 40A(2)(b) - Held that:- AO had not doubted the genuineness of the expenditure incurred and the services rendered by these two parties to the assessee. AO had not brought any comparable cases for fair market value to prove that the payment made by the assessee is excessive or unreasonable even in the remand proceedings. Without bringing the same, simply invoking the provisions of section 40A(2)(b) of the Act would be highly improper. We also find that the nature of services rendered by these two parties were also not denied or doubted by the ld AO in the remand report. Hence we hold that the ld CIT-A had rightly granted relief to the assessee.- Decided in favour of assessee Addition on unexplained investment in fixed assets - Hel that:- We find that the fixed assets have been duly reflected in the audited balance sheet filed by the assessee which represents assets and liabilities. The liabilities reflected therein clearly reflect the bank loans availed by the assessee such as auto loan from HDFC Bank, loan from Citi Bank against hypothecation of showroom, cash credit limit from Centurion Bank against the hypothecation of stocks of business of the assessee. The liabilities reflected in the liability side in the form of bank loans were treated as explained by the ld AO. Hence, it could be safely concluded that the assets appearing in the balance sheet would be treated as explained once the corresponding entries on the liability side are explained. There is no case made out for framing an addition towards unexplained investment in fixed assets.- Decided in favour of assessee Addition made towards sundry creditors as bogus - Held that:- We find that the entire details of sundry creditors for expenses and for goods were provided by the assessee before the ld AO in the remand proceedings. With regard to sundry creditors for expenses, they are only expenses provided on accrual basis at the end of the year which would get immediately discharged in the subsequent year and the ld CITA on factual verification of the same granted relief to the assessee. We do not deem fit to interfere with the said findings of the ld CITA. With regard to creditors for goods, the ld AO did not give any comments with regard to 31 creditors out of total 47 creditors. In the absence of any adverse remarks with regard to 31 creditors, it would be just and fair to conclude that the ld AO had accepted those creditors to be genuine. With regard to 16 sundry creditors verified by the ld AO, we find that those creditors were duly settled in the subsequent year by account payee cheques which were also reflected in the ledger account of the assessee for the Asst year 2004-05 and duly cross verified with the books of creditors. Hence the ld CITA rightly concluded that no adverse inference could be drawn on the same. With regard to 5 the parties did not respond to notice u/s 133(6) of the Act and ld CITA fairly concluded the same to be bogus.- Decided in favour of assessee in part Addition towards unexplained cash credit - Held that:- We find that the assessee had stated that the fresh loan was availed from American Express Bank in the sum of ₹ 1,96,445/- during the year under appeal which is also reflected in the audited balance sheet filed along with the return as a separate item under ‘unsecured loans’. Hence the belief entertained by the ld CITA that the said bank loan cannot be treated as unexplained cash credit cannot be faulted with.- Decided in favour of assessee Disallowance of various expenses - Held that:- We find that the expenditure has been disallowed on an arbitrary basis without any material on record. - Decided in favour of assessee
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2016 (11) TMI 602
Revision u/s 263 - allowability of exemption u/s 54F - Held that:- We find that the A.O. has conducted detailed enquiry and also examined the issue of allowability of exemption u/s 54F of the Act. The assessee has filed necessary details and also made a fresh claim u/s 54F of the Act, by filing revised statement of total income. The A.O. after satisfied with the explanations offered by the assessee has accepted the claim. Therefore, we are of the view that the CIT was incorrect in assuming jurisdiction to revise the assessment order, once assessee explained that it had filed all the details before the A.O. on the issue, on which CIT wants further verification. It is a general presumption of law that the A.O. has considered all the details before completion of assessment and the CIT cannot presume that the enquiries conducted by the A.O. is insufficient and also the A.O. has not applied his mind, unless the CIT categorically proves that the assessment order passed by the A.O. is erroneous. In so far as the observation of the CIT, with regard to the decision of Goetz (India) Ltd. (2006 (3) TMI 75 - SUPREME Court ), we are of the view that though the Supreme Court held that a fresh claim before the A.O. can be made only by filing a revised return and not otherwise, the A.O. is well aware of the legal position and after considering the relevant facts chosen to allow the exemption claimed by the assessee, which cannot be termed as erroneous in so far as it is prejudicial to the interest of the revenue. Therefore, the assessment order passed by the A.O. u/s 143(3) of the Act, is not erroneous in so far as it is prejudicial to the interest of the revenue. Order passed by the CIT u/s 263 quashed - Decided in favour of assessee
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2016 (11) TMI 601
Reopening of assessment - disallowance of the cost of the roads and fees paid to HUDA - Held that:- We do not find any reason to disallow the expenditure, when assessee’s project on 1/4th land is using those lands developed by ‘land owning companies’ as well as other companies. The total cost incurred by them was reimbursed by assessee to an extent of 25% which is same as that of land given for development to assessee. We do not find any merit in the order of the AO and CIT(A) in disallowing the expenditure by reading in between the lines of the agreement. The agreement specifically provides for bearing the cost of roads and development fee payable to HUDA and so assessee reimbursed the cost and also fees paid to HUDA. The Ld. CIT(A) allowed the cost of fees of HUDA paid directly by assessee, but did not allow the amount of fee reimbursed to the ‘land owning companies’ on the reason that they paid the HUDA fees much earlier to the incorporation of assessee- company. In fact, assessee-company was floated for completing the project which was approved in various individual companies and agreements specifically provide for the cost to be borne by assessee-company. Accordingly, it has made debit entries in the Books of Account, crediting those companies to an extent of 25% of the amount of cost on roads and the HUDA fees paid. Considering the agreements and the entries in the Books of Account, we are of the opinion that this expenditure is allowable as part of project cost. We are also not sure how the expenditure debited to project cost could be disallowed and brought to tax when the project is not complete and assessee was estimating a proportionate income to the extent of the project completed. In view of that, we are not in a position to approve the orders of the AO even on the merits of the additions made. - Decided in favour of assessee
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2016 (11) TMI 600
Revision u/s 263 - as per CIT(A) the activities of the assessee are commercial in nature and Secondly the income of assessee has been applied in foreign country which is the contravention of the provision of section 11(1)(a) of the Act - Held that:- The facts of the case are squarely applicable of case of Indian Chamber of Commerce Vs. ITO (2014 (12) TMI 256 - ITAT KOLKATA ), wherein it was held that the activities of the assessee are charitable in nature. The activity of conducting the trade fair in foreign country of the assessee is within the object clause which was permitted while granting the registration under section 12AA of the Act. We also find that the income which has arisen from the non-members has already been taxed by the AO while framing the assessment u/s 143(3) of the Act. In view of above, we hold that the assessee has not spent any money in a country outside India although the fair was organized in a foreign country.As from the facts it is clear that the expenses are not incurred by the assessee outside India therefore in our considered view there is no violation to the provisions of section 11(1)(a) of the Act. Accordingly we conclude that the impugned order of the ld. CIT passed u/s 263 of the Act is not sustainable in law and accordingly directed to be set aside. - Decided in favour of assessee.
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2016 (11) TMI 599
Short term capital loss - sale of land at Hasteda(Rajasthan) - sham transaction - Held that:- The assessee in its agreement to sale dated 10-03-2008 with Siyaram Exports India Private Limited for purchase of the said land for ₹ 171.50 lacs wherein cash advance of ₹ 10 lacs was only paid by the assessee on 10-03-2008 had an exit clause in the said agreement wherein the assessee could have asked the Siyaram Exports India Private Limited to forfeit advance of ₹ 10 lacs paid by the assessee on 10-03-2008 if the assessee was not able to complete the transaction of purchase of land of its own by 31-12-2008 due to any reasons whatsoever and the loss would have been limited and restricted to ₹ 10 lacs only, but the manner in which the assessee went ahead in January 2009 and entered into two sales deed both dated 16-01-2009 for sale of aforesaid land to Smt Anju Yadav and secondly to Smt Savitri Yadav and Smt. Nirmala Yadav for a meager sum of ₹ 58.40 lacs to self prejudice itself by saddling with an avoidable and unwarranted capital loss of ₹ 114 lacs instead of restricting the said capital loss to ₹ 10 lacs as described above by asking the seller Siyaram Exports India Private Limited to forfeit the advance, clearly defies all logic, rationality and principles of commercial expediency known to the business world which clearly indicates to irresistible as well one and only one conclusion that the whole transaction for purchase and sale of afore-stated land Were accommodating in nature whereby interests of both the purchaser and seller in receiving or giving sale consideration through consideration amounts recorded in books of accounts were duly looked by the assessee wherein seller was accommodated with making of higher payments on record and buyers were accommodated to give lesser price on record for the same parcel of land , and on the touchstone of preponderance of probabilities it reflects that the rest of the money purportedly exchange hands as ‘on-money’ which were not brought to tax on record . The transactions for sale and purchase of land were entered into by the assessee and once the Revenue has doubted the transactions as being not genuine for the reasons as set out above, then the onus shifts back to the assessee to prove by cogent evidences and explanations that the transactions for purchase and sale of land were in fact genuine which the assessee in the instant case failed to do so. Thus, these transactions for purchase and sale are not proved by the assessee to be genuine transactions and are held by us to be sham and colorable devices and short term capital loss of ₹ 114 lacs incurred by the assessee cannot be allowed under the provisions of the Act. - Decided against assessee.
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2016 (11) TMI 598
Applicability of section 14A on insurance business - Held that:- In view of non obstante clause of Section 44 of the Act read with Rule 5 of Schedule 1 of the Act, provisions of Section 14A of the Act, as no application to the profit and gains of insurance business. See Bajaj Allianz General Insurance Company Limited. Versus Additional Commissioner Of Income-Tax. [2009 (8) TMI 810 - ITAT PUNE-A] Claim of exemption under section 10(23AAB) of surplus of Participating Pension Business and also dividend under section 10(34) allowed Addition on account of negative reserve at zero, the surplus of the assessee has been made less than the real actuarial valuation - Held that:- We find that the assessee followed the IRDA Recommendations and accordingly prepared the actuarial valuation report including the surplus or deficit. The Rule 2 prescribes only actual valuation in accordance with Insurance Act 1938. Looking at the issue, we noticed that the computation made by the assessee is in accordance with Rule 2 of the Insurance Act 1938, according to which only AO can base his computation. The Revenue has not contested that the working of actuarial surplus / deficit is not in accordance with Rule 2 of 1st Schedule. Accordingly we are of the view that the CIT(A) has rightly deleted the addition and we confirmed the same. This issue of Revenue‟s appeal is dismissed. Disallowance towards claim of assessee in non-participating linked pension business segment - claim for deficit from Pension business - Held that:- The object of inserting section 10(23AAB) as per the Board Circular No. 762, dated 18/02/1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10(23AAB) was not with a view to treat the pension fund like jeevan Suraksha Fund outside the purview of insurance business but to promote insurance business by exempting the income from such fund. Therefore, even after insertion of section 10(23AAB), the loss incurred from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted. See CIT Vs. LIC Of India [2011 (8) TMI 47 - BOMBAY HIGH COURT]
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2016 (11) TMI 597
Validity of reopening of assessment - Held that:- The assessing officer has recorded the reasons for re-opening, he has not alleged that there is a failure on the part of the assessee to disclose fully, truly all material facts relevant to complete the assessment in that assessment year. Therefore, as per the proviso to section 147 of the Act when the assessment is re-opened beyond 4 years, it is necessary to allege that there is a failure on the part of the assessee to disclose fully and truly all the material facts to complete the assessment of such assessment year. The A.O. has not alleged that there is a failure on the part of the assessee. No doubt that each case has to be examined by considering the facts and circumstances of the case and also reasons recorded. In the present case, by considering facts and circumstances and also reasons recorded by the A.O. and by following the judicial precedents, we hold that the notice issued by the A.O. by recording the reasons not in accordance with the proviso to section 147 of the Act, thus, the notice is quashed and consequently held that the assessment is invalid. It is to be noted whether full and true disclosure of the facts was done by the assessee, the department cannot re-open the assessment even after there is a loss of revenue or even after legal inference drawn by the assessing authority was erroneous in the first place. Even mere change of opinion by the assessing authority is not enough to re-open the assessment - Decided in favour of assessee
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2016 (11) TMI 596
Unexplained cash credit - commission income from providing accommodating entries - Held that:- We conclude that assessee has furnished his statement on oath stating that he is engaged in providing accommodating entries to various parties and for this act earned nominal amount of commission income. From the perusal of bank statement, we find that cash was deposited and immediately it was transferred to the account of the party leaving negligent amount of balance in the bank account of assessee. In our considered view, we conclude that assessee is engaged in providing accommodated entries to the parties. Had there been the business of the iron and steel of the assessee then the lower authorities should have brought on record the evidence of the business but the ld. DR failed to bring the same. We also find that the cash was immediately withdrawn after the deposit of the cash. This transaction shows that the money does not belong to the assessee. In the absence of any information about the iron & steel business of the assessee, we are accordingly inclined to apply the peak credit theory to tax the undisclosed income of assessee. - Decided in favour of assessee.
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2016 (11) TMI 595
Addition being disallowance made u/s 14A while computing book profit u/s 115JB - Held that:- Perusal of the assessment order reveals that the AO has blindly added disallowance made u/s 14A r.w.r. 8D while computing book profits u/s 115JB without testing it independently under the provisions of clause (f) to explanation 1 of section 115JB (2). The approach of the AO and resultant addition made by him are not valid as per law. Thus, in view of the aforesaid discussion and circumstances, accepting the request of the assessee, we send this issue back to the AO with the following directions:- (1) The AO shall first recompute disallowance u/s 14A so as to bring it in line with the judgement of Hon’ble jurisdictional High Court in the case of HDFC Bank Ltd (2016 (3) TMI 755 - BOMBAY HIGH COURT ). (2) The assessee shall furnish requisite details and working of the amount of expenditure relatable to any income exempt u/s 10 [excluding income exempt u/s 10(38)], as envisaged in clause (f) of Explanation 1 to section 115JB (2). The AO shall examine the same and determine the amount to be added under clause (f) keeping in view the provisions of law and facts of the case; (3) In case, the assessee does not furnish requisite information to enable the AO to compute amount disallowable under clause (f) as directed above in point no (2), then the AO shall be free to treat the amount determined as disallowable u/s 14A in terms of our first direction above, as the amount to be added under clause (f) of explanation 1 to section 115JB. (4) In any case, amount to be added under clause (f) of explanation 1 to section 115JB (2) cannot exceed amount of disallowance that can be made u/s 14A, the latter being wider in its scope.
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2016 (11) TMI 594
Undisclosed receipt - difference in gross receipts and as per NSDL e-TDS record - bills raised is not supported by any documentary evidence such as confirmation from M/s Amalgamated Bean Coffee Trading Co. Ltd - appellant has stated that these accounts has been audited and there has been no understatement of turnover and the disputed turnover was part of work in progress and that out of ₹ 1,02,64,469/- for various sites, out of which work was completed and bill raised of ₹ 73,69,626/- and the same amount has been offered for tax. Held that:- Therefore keeping in view the facts of the present case we allow this ground in,principle in favour of the assessee as the assessee has argued that he has also offered the balance of ₹ 28,94,843/- in subsequent years and tax has been paid in subsequent years. Since the AO as well as Ld. CIT(A) has taken a specific stand that the assessee has not submitted any copy of return of income which would shows that the assessee has offered the balance of ₹ 28,94,843/- from M/s Amalgamated Bean Coffee Trading Co. Ltd. for taxation. Therefore, in the interest of justice and while setting aside the order of Ld. CIT(A), we remit the matter back to the file of AO with a direction to the assessee to file copy of return of income which shows that assessee had already paid tax on the balance of ₹ 28,94,843/- from M/s Amalgamated Bean Coffee Trading Co. Ltd. and there after AO is directed to verify the same and if the AO found that the amount has already been offered for taxation, then the Assessing Officer is directed to delete the addition. Following the discussion we allow this ground of appeal of the assessee.
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2016 (11) TMI 593
Addition on capital gain by invoking the provisions of Section 50C - Held that:- As before the ld. CIT (A) proper representation could not be made by the counsel and assessee being salaried employee could not himself represent its case properly. This is evident from the order of Ld. CIT(A) wherein he has observed that, since assessee’s Counsel has not made any request for making reference to the DVO, therefore, the same is not being made. Now, before us, a huge compilation of additional evidences has been filed, which at the fact of it goes to the very root of issue involved. Thus, under the facts and circumstances as narrated above, we are admitting the evidences as well as the additional ground filed by the assessee and the entire matter is restored back to the file of the AO for fresh consideration and adjudication of Long-term-capital-gain after giving due and effective opportunity to the assessee to present his case. Thus, we remand back the entire issue to the file of the AO for fresh adjudication - Decided in favour of assessee for statistical purposes.
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2016 (11) TMI 592
Levy of penalty u/s 271(1)(c) - disallowance u/s 80IB - Held that:- "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. Must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. Even if a wrong claim is made by the assessee that itself does not tantamount to concealment of income. - Decided in favour of assessee
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2016 (11) TMI 591
Disallowance u/s.14A r.w.r. 8D - Held that:- The disallowance under Rule 8D(2)(iii) of Income Tax Rules, 1962 read with Section 14A of the Act can be made having regard to the accounts of the assessee as per the mandate of Section 14A(2) of the Act and it cannot be applied straight-away without having regard to the accounts of the assessee. The assessee has not submitted any details of the expenses incurred and claimed that no expenditure has been incurred which could be attributable to the earning of exempt income. The assessee has incurred expenses of ₹ 8.31 crores towards personnel costs and ₹ 10.05 crores towards administrative expenses which needed to be scrutinized by the authorities to compute indirect expenses which were incurred for earning the exempt income for which onus is on the assessee to submit the details before the authorities. In our considered view, the matter needs to be set aside and restored to the file of the A.O. for de-novo determination of the administrative and other indirect expenses to be disallowed u/s 14A of the Act and accordingly we set aside matter to the file of the A.O. who is directed to work out the reasonable disallowance towards indirect expenses incurred for earning exempt income having regards to the accounts of the assessee . - Decided in favour of assessee for statistical purpose.
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2016 (11) TMI 590
Share transaction - Long term/short term capital gain on profit on sale of shares OR business income - assessment was completed by treating the income from business of trading in shares as business income instead of capital gains, computed by the assessee - Held that:- Frequency and magnitude of transaction cannot be the criteria for determining the head of income. The ratio laid down in NEO Polypack (P.) Ltd. (2000 (4) TMI 26 - DELHI High Court ) supports the case of the assessee. Considering the totality of facts and the judicial pronouncements discussed hereinabove, the appeal of the assessee is allowed.
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2016 (11) TMI 589
Validity of reopening of assessment - Held that:- We have to necessarily conclude that the reasons were recorded without application of mind. Therefore, on this ground itself, the reopening of assessment has to be held bad in law by following the judgements of the jurisdictional High Court in the case Signature Hotels Pvt. Ltd. vs. ITO (2011 (7) TMI 361 - Delhi High Court ) wherein it was held that notice issued based on a report from Investigation Wing is invalid where the AO does not examine the evidence. - Decided in favour of assessee
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Customs
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2016 (11) TMI 559
Smuggling of gold - gold jewellery confiscated on the ground that it was not declared - the petitioner in his voluntary statement stated that he was carrying the Gold jewellery given by some other person in Singapore to deliver the same to his family without declaring to the customs - whether confiscation justified? - jurisdiction under Article 226 of the Constitution of India - this Court will consider as to whether the impugned order suffers from any perversity or non-application of mind - Held that: - the first respondent has given independent reasons as to why the revision petition does not merit consideration. The petitioner cannot take umbrage to N/N.31/2003 dated 1.3.2003 as he does not fall within the definition of "eligible passenger". That apart, the authorities have concurrently recorded that the petitioner did not file true and correct declaration and attempted to smuggle the Gold Jewellery. That apart, while ordering absolute confiscation, the first respondent has referred to a decision of the Bombay High Court in the case of Union of India vs. Mohammed Aijaj Ahmed, [2009 (7) TMI 308 - BOMBAY HIGH COURT]. In the light of the independent reasonings given by the first respondent, this Court is not inclined to interfere with the factual reasons recorded and consequently, the petitioner has not made out any case for interference - petition dismissed - decided against petitioner.
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2016 (11) TMI 558
Imposition of penalty on petitioner - IEC - petitioner permitted the IEC to be used by a person known to petitioner (very closely) and that too for a consideration, though for a very insignificant amount - Held that: - When once the IEC is allowed to be used by someone else, the associated risks could be understood to have been well within the realm of knowledge of such an individual. In that view of the matter, we think that for the acts of lending IEC, rubber stamp and letter heads of the firm, the consequences which follow from Sections 113 and 114 of the said Act, cannot be avoided - However, what still remains to be examined by us is the justification behind the adjudicating authority in imposing a penalty of ₹ 1,00,000/- on the appellant before us, while all others, including the individual who has misused the IEC of the appellant and also the Customs House Agent, were imposed with lesser punishment of penalty of ₹ 50,000/-. Section 114 of the said Act has provided for discretion in the hands of the Adjudicating Authority to impose a penalty, which can go up to three times the value of the intended goods to be exported. Therefore, it is axiomatic that such a discretion should be exercised on sound lines. When discretion has been used while imposing the penalty of ₹ 50,000/- on all others, the same does not appear to have been exercised properly and even handed manner. At any rate, when it came to the appellant, in the absence of any specific mallacious intent attributable to the appellant exclusively for the entire episode, imposition of greater amount of penalty of ₹ 1,00,000/-, which is double the amount of penalty imposed on the others, does not appear to be justifiable - the amount of penalty against the appellant substituted to ₹ 50,000/- as against ₹ 1,00,000/-. Petition disposed off - penalty imposed, only penalty on petitioner reduced - decided partly in favor of petitioner.
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2016 (11) TMI 557
Challenge to the show cause notice (SCN) - Classification of imported goods - blank C.Ds - classified under Ch.Sh.No.85238020 or under Ch.Sh.No.85234090 - whether the benefit of exemption claimed under Notification No.6/2016-CE, dated 01-03-2016 should be denied? - Held that: - The show cause notice dated 30-07- 2009, which is under challenge in the present writ petition, is no longer in force. The show cause notice has already culminated in a Order of adjudication and the order of adjudication has also been confirmed by the Tribunal, the High Court and the Supreme Court. The doctrine of merger has come into play and the show cause notice is not available any more for the petitioner to challenge - It is not the case of the petitioner that they challenged either the impugned show cause notice or the Order-in-Original at the relevant point of time on the ground that the show cause notice was issued by a person not assigned the role of a proper officer. The petitioner had challenged the show cause notice and the order of adjudication on other grounds, which stand rejected up to Supreme Court. Therefore, the principle of finality to litigation would put a seal on the present attempt on the part of the petitioner to reopen the issue all over again. Petition dismissed.
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2016 (11) TMI 556
Waiver of interest, in terms of Section 61(2) of the Customs Act, 1962 - goods warehoused to public bonded warehouse - auction of goods - Held that: - if the goods had not been auctioned, the petitioner would have had the benefit of the goods and the amount already paid by them would come to nearly 50% of the duty demanded. By making payment of the remaining amount, they could have retained the goods. Today, the payments made by them to the tune of about ₹ 75.00 lakhs, is in addition to the goods that they have lost. Therefore, if this is not a case, which will fall under the parameters of the first proviso to Section 61(2), we do not know which other case would fall. Therefore, the Writ Petition is allowed and the impugned demand is set aside. However, it is made clear that the petitioner will not be entitled to refund of the amounts already paid by them - petition dismissed - decided against petitioner.
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2016 (11) TMI 555
Release of imported confiscated goods - Held that: - SIIB is not investigating the case and has recommended for release of the goods in accordance with law. Accordingly, there will be a direction to the first respondent to release the consignment after completion of the formalities within a period of two weeks from the date of receipt of a copy of this order.
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2016 (11) TMI 554
Reward money - legal right to claim a reward - Held that: - reliance placed on the decision of the case Union of India and others Versus C. Krishna Reddy [2003 (12) TMI 55 - SUPREME COURT OF INDIA] relied upon, where it was held that By the very nature of things, no one has a legal right to claim a reward. The scheme itself shows that it is purely an ex gratia payment subject to guidelines and may be granted on the absolute discretion of the competent authority and cannot be claimed by anyone as a matter of right. In such circumstances the High Court committed manifest error of law in issuing a writ of mandamus directing the appellant to pay the amount to the respondent. The claim of the appellant for reward through a writ of mandamus is wholly misconceived. The same is not entertainable in terms of the Scheme framed as the reward is contemplated only on the final determination - the appellant has rightly not been found entitled to reward money as the Circulars contemplates the payment of reward money after actual realization of the Central Excise Duty, Customs Duty, penalty, fine etc. Appeal dismissed - decided against appellant.
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2016 (11) TMI 553
Refund of erroneous duty paid - section 27 of the Customs Act, 1962 - jurisdiction - Held that: - an amendment to section 27 of the Act, made operative with effect from April 8, 2011 - Non-application of mind by the Commissioner is apparent - Although an appellate remedy is available to the petitioner, this Bench is not inclined to relegate it to the appellate remedy, for, there appears to be a clear case of erroneous exercise of jurisdiction. The application for refund consequently revives and shall be considered and disposed of afresh by the Commissioner upon granting appropriate opportunity of hearing to the petitioner and by passing a reasoned order as early as possible, preferably within four weeks - petition allowed - decided in favor of petitioner.
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2016 (11) TMI 551
Demand - undervaluation - sales effected at the price higher than the RSP - Held that: - Learned counsel for the Appellant referred to the observation in the Order-in-Original that a Government Department would not purchase goods at a price higher than the RSP. In the considered view of the Court, instead of surmising on this aspect the Commissioner could easily have undertaken an enquiry with the concerned Department to ascertain whether in fact the goods were purchased at a price higher than the RSP. Consequently, the Court does not see any substantial question arising from the impugned order of the CESTAT - appeal dismissed.
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Service Tax
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2016 (11) TMI 588
Rejection of Refund claim - time bar - SEZ unit - banking and other financial services - limitation of time to file the refund claim of service tax under Notification No.09/2009-ST dated 3.3.2009 - Held that: - The discretionary powers given to the Assistant Commissioner has to be exercised by application of mind to the facts of the case. When the delay in filing the claim is sought to be condoned by the claimant, the competent Officer (here Assistant Commissioner) has to examine and decide whether such delayed claim can be accepted. The reasons for the same or for rejecting the request for condonation are to be recorded. There is no provision to have two separate proceedings in such cases viz., first to decide on delay/request for condonation and then on the refund claim per se. Both can be taken together and decided. This is done in various such situations in cases where delayed appeals etc., are taken up for decision. Rejection of refund claim justified - appeal dismissed - decided against appellant.
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2016 (11) TMI 587
CENVAT credit - renting of immovable property - rule 2(1) of the CCR, 2004 - CBEC circular 98/1/2008-ST dated 04.01.2008 - Whether the cenvat credit on construction services is available to the appellant or not? - Held that: - reliance placed in the decision of the case COMMR. OF C. EX., VISAKHAPATNAM-II Versus SAI SAHMITA STORAGES (P) LTD. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] where it was held that unless excluded, ail goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit - assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided - the appellant has correctly taken the cenvat credit to the tune of ₹ 20,84,900/- on construction services. Accordingly the same is allowed. Imposition of penalty - Held that: - During the period April' 2009 to March' 2010 there was a stay on the levy of service tax under the category of renting of immovable properties services which is ultimately paid by the appellant alongwith interest. Further, the issue is pending before the Hon'ble Apex Court. In that circumstance, I hold that no penalty is imposable on the appellant - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 586
Demand - sale of liquor in terms of para 10.5 of Board Circular dated 27/7/2005 - Held that: - I find that sale figure was taken from the balance sheet and VAT payment documents and they have also submitted some sample invoices towards sale of liquor and Ld. Commissioner(Appeals) considering all these evidences with C.A. certificate came to the conclusion that there is indeed the sale of liquor which according to para 10.5 of Board Circular 27/7/2005. For dropping of demand the Commissioner(Appeals) has considered sufficient evidences such as sale bills, balance sheet, C.A. certificate and VAT statements submitted to the Sales Tax Department therefore I am of the view that Ld. Commissioner (Appeals) has applied his mind rightly in dropping demand after establishing that there is sale of liquor and no service tax can be demanded on such sale. Therefore I do not find any infirmity in the Ld. Commissioner’s(Appeals) order which is therefore upheld. Revenue’s appeal is dismissed
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2016 (11) TMI 585
Levy of penalty - bonafide belief - nonpayment of service tax on due date - Held that: - As per the section 73(3), if the service tax either ascertained by the assessee or by the departmental officer and the same is paid alongwith interest, no show cause notice is required to be issued. I find that from the fact and the action of the appellant the case is clearly covers under Section 73(3). I have gone through judgments relied upon by both sides. Since the fact for imposition of penalty under Section 78 or to deal the case under provisions of Section 73(3) facts of individual case has to be ascertained therefore fact of each judgments varies from the fact of the present case, hence in my view as per facts of the present case these judgments are not applicable. As per my above discussion, I find that appellant’s case is covered by provision of Section 73(3) and also under Section 80 of the Finance Act, accordingly penalty is set aside, service tax along with interest admittedly paid by the appellant is maintained. Appeal is allowed in the above terms
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2016 (11) TMI 584
Demand - business auxiliary services - processing disposable waste water and releasing the same through common drainage into common effluent treatment plant will amount to services rendered to a client for processing of goods? - Held that: - It is also to be noted and is a common knowledge that disposal of waste water in the common effluent treatment plant of Maharashtra pollution control board, needs to adhere specifications acceptable for such disposal, which are achieved by the treatment undertaken by the appellant. We notice that treatment of effluent waste cannot be considered as processing of the goods by any stretch of imagination, and we also note that the show cause notice does not invoke specific clause of the definition of Business Auxiliary Services for levy of tax - Impugned order is set aside and appeal is allowed.
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2016 (11) TMI 583
Renting of immovable property services - Section 65 (104) (zzzz) of Finance Act, 1994 and Finance Act, 2010 - discharge of service tax on demand, but interest not paid - Held that: - it mandates about recovery of service tax, interest, or penalty a fine or other charges which may not have been collected. As against such as specific clause which provides for recovery of interest, nothing survives in this appeal filed by the assessee for non-recovery of interest by the adjudicating authority. We do not find any reason to interfere in adjudicating authority’s order for recovery of interest from the appellants - The appeal filed by the appellant to that extent is rejected. In view of the foregoing, the impugned order to the extent it confirms the demand of service tax liability and interest thereof is upheld and the appeal is disposed of.
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2016 (11) TMI 582
Rejection of refund claim - section 11B of the Central Excise Act, 1944 - time bar - Held that: - the relevant date for the purpose of Section 11B for the purpose of Refund of accumulated Cenvat Credit is not the date when service is provided but the date on which payment for service provided is received in foreign exchange. As submitted by ld. Counsel for appellant and taking the date of foreign exchange receipt into consideration in both the appeals as relevant date both the claims for refund were filed within the period of limitation of one year. Therefore I hold that both the applications for refund of accumulated Cenvat credit filed on 9.5.2014 and 29.8.2014 are within the period of limitation - rejection of refund not justified - appeals allowed.
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2016 (11) TMI 581
Levy of tax - construction of residential complex - The grounds of appeal, inter alia, including that the certificate dated 04.12.2010 issued by Ghaziabad Development Authority to the effect that the complex is being constructed by respondent to this appeal are 54 staff quarters does not clearly indicate as to for whom Ghaziabad Development Authority is getting them constructed whether for themselves or for any other agency. Therefore, said certificate is not concrete evidence. Further, the Revenue has raised another ground that in the case of clarification issued by CBEC dated 24.05.2010, Government of India was service receiver and Ghaziabad Development Authority is not government and the staff quarters are whether for government staff or not on that there is no factual evidence.
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2016 (11) TMI 580
CENVAT credit - output service of maintenance and repair - Held that: - We find that going by the wording of the said Notification No.12/2003, there is no requirement of payment of VAT to become eligible for exemption in respect of said goods for availing the benefit of Notification No.12/2003. The notification provides that there should be documentary proof indicating the value of the goods sold so as to avail benefit of exemption of such value from the assessable value for arriving at service tax. This crucial aspect was not properly understood by the Original Authority. We, therefore, hold that the requirement of actual payment of VAT is not to be taken into consideration for extending the benefit of said Notification No.12/2003, but it is only to be examined whether documentary proof indicating the value of goods sold, is available on record to extend the said benefit. Further, the Original Authority has not taken into consideration the provisions of Rule 6(3) of Cenvat Credit Rule 2004, that existed during the material period allowing the Cenvat Credit to the appellants. So, we direct Original Authority to re-adjudicate the matter taking into consideration the documentary proof of sale of goods and taking into consideration the provisions of said Rules 6(3) available during the material period. With these directions, we remand the matter back to the Original Authority by setting aside the Order-in-Original. The issue of limitation is kept open to be examined by the Original Authority. The appeal is allowed by way of remand.
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Central Excise
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2016 (11) TMI 579
Duty drawback - inferior quality of goods - opportunity to cross examine the witnesses - Held that: - a petition u/s 91 Cr.P.C. cannot be pressed into service for making a fishing or roving enquiry. The petitioners must first make out a prima facie case that the document that is called for is in existence and that it is available with the concerned Department. That apart, the petitioner should also explain as to how that said document would be just and relevant for the enquiry or trial at hand. Application for requesting for a copy of the order that is said to have been passed by Mr.Madhavan, Deputy Commissioner of Customs, ICD, filed by petitioner rejected - Held that: - the Public Information Officer has not denied the existence of the document, but has only stated that it is not traceable. Be that as it may, for maintaining a petition under Section 91 Cr.P.C., it is the duty of the petitioner to give entire description of the document for the Court to issue a subpoena. In the absence of those particulars, by merely relying upon the reply given by the Public Information Officer, which is indeed vague, one cannot come to the conclusion that the said Madhavan had passed an order as contended by the petitioners/accused. Therefore, the trial Court was perfectly right in dismissing the petition with observation that the same has been filed only to protract the proceedings. The petition is devoid of merits and the same is dismissed - The trial Court is directed to proceed with the trial and if the accused do not co-operate in the trial, it is open to the trial Court to insist upon their presence and remand them to custody.
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2016 (11) TMI 578
Refund of unutilised CENVAT credit - Rule 5 of CENVAT Credit Rules - 100% EOU - Inter Unit Transfer (IUT) clearances - Legal consultancy service - erection, commissioning or installation charges - Held that: - both fall in the definition of input service under Rule 21 of CCR, Rules. Management, maintenance and repair service - project management consultancy service - Held that: - both fall in the definition of input service but the appellant has to produce sufficient document before the original authority to prove that the same are used in or in relation to the business of the appellant. Appeal allowed by way of remand by holding that the deemed exports are considered at par with the physical export and with regard to management, maintenance and repair service and project management consultancy, though in principle they fall in the definition of input service but for quantification purpose, the appellant is directed to appear before the original authority and produce the requisite documents for the purpose of quantification - The original authority is directed to dispose of the matter within a period of three months after affording an opportunity of hearing to the appellant and giving him an opportunity to produce the documents.
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2016 (11) TMI 577
Levy of tax - manufacture of certain parts and accessories in the said workshop which are used for mining machines - N/N. 182/87 dated 10/07/1987 as amended by Notification 234/1988 and 63/1995 - workshop not situated within the precincts of the mines - Held that: - the workshop is not within the mining area but situated adjacent to the mining area. However, workshop belongs to the same company which is exclusively engaged in mining of coal. It is also not disputed that the parts manufactured in the workshop is used for mining machines of the appellant. The issue is no more res integra, reliance placed on the decision of the case of South Eastern Coal Fields Ltd. v. Commissioner of Customs & Central Excise [2006 (8) TMI 3 - SUPREME COURT OF INDIA] where it was held that A workshop which is in an area in the environs of a mine and directly serving mining operations are entitled for the purpose of grant of exemption from excise duty. Excise duty exempted - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 576
Recovery u/s 11D - amount shown collected as central excise duty while availing SSI exemption - Held that: - the appellants plea now is that these invoices are for stock transfer and they have not collected any duty from the buyers. No documentary/ supporting evidence to that effect has been produced before us. The appellant’s own invoices indicate Central Excise duty separately. Accordingly, we find no merit in the appeal. Imposition of penalty - Held that: - the original authority imposed penalty of ₹ 10,17,780/- which is equal to the Central Excise duty confirmed on both the grounds. On perusal of the order, we find no discussion or justification for imposing such penalty. Considering the facts and circumstances of the case, we find that the ends of justice will be met if the penalty is reduced to ₹ 2 lakhs. The recovery of excise duty from the appellants whether or not the SSI exemption is available to them is sustainable. We find no reason to interfere with the findings of the lower authority except for the modification of penalty as above. Appeal is partly allowed.
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2016 (11) TMI 575
Reversal of CENVAT credit - inputs relatable to such ore cleared without payment of duty - Held that: - the appellant reversed the credit attributable to the exempted clearances, as such the substantial compliance with reference to Rule 6 has been recorded. However, we note that there is a delay in reversing the proportionate credit by the appellant. The liability of interest for the delayed reversal of credit is confirmed against the appellant. Except for this, we find that there is no legal justification to demand 5% on the value of exempted clearances in the present case - reversal of CENVAT credit not sustainable - appeal is allowed - the appellant liability to interest on delayed reversal of credit is confirmed.
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2016 (11) TMI 574
Valuation - receipt of additional consideration through Debit Notes - Held that: - The debit notes raised by the respondent in the case in hand are equivalent to supplementary invoices. It cannot be the case that supplementary invoices raised by assessee in pursuance to the escalation clause despite increase in value, Central Excise duty is not payable. The same analogy will apply in the case in hand. In view of this we hold that the respondent is liable to discharge duty on the debit notes raised by them for the period post July 2000 - the duty liability cannot be demanded entirely on the amounts of debit notes so raised; cum-duty benefit needs to be extended to them. For limited purpose of requantifying the demand of duty for the post July 2000 by extending the benefit cum-duty, we remand this matter to the lower authorities to ascertain correct quantification of demand of duty along with interest thereof. As regards the penalty, we find that the issue is of interpretation of the provisions of Section 4 hence the question of visiting the respondent with penalty does not arise. The appeal is disposed of partly in favour of the assessee and partly in favour of the Revenue.
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2016 (11) TMI 573
CENVAT credit - services used in construction - input service - Rule 2(l) of CENVAT Credit Rules 2004 - Held that: - the issue is covered by the decision of Hon'ble Gujarat High Court in the case of Gujarat Heavy Chemicals Ltd [2011 (5) TMI 132 - GUJARAT HIGH COURT] and in the case of Ultratech Cement Ltd [2014 (5) TMI 540 - GUJARAT HIGH COURT]. Therefore, the Appellants are not eligible to CENVAT Credit of various services used in the construction and maintenance of employees’ quarters. Imposition of penalty u/r 15(2) of CENVAT Credit Rules 2004 - Held that: - the Appellant under the bonafide belief had availed CENVAT Credit on the services and the demand is issued for the normal period of limitation. In absence of proposal for penalty under other penal provisions, in my opinion, the penalty under Rule 15(2) of CENVAT Credit Rules 2004 read with Section 11AC of Central Excise Act, 1944 is un-tenable in law and accordingly set aside. Appeal disposed off - decided partly in favor of appellant.
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2016 (11) TMI 572
Withdrawal of appeal No. E/1447/2009 - it has becomes infructuous since the Assistant Commissioner has already issued denovo order-in-original on remand by the Commissioner (Appeals) in the impugned order-in-appeal - The Ld. Authorised Representative has no objection to the same - appeal dismissed. Appeal No. E/1448/2009 - imposition of penalty of ₹ 1,50,000/- on the Shri Rashikbhai M Patel, partner of M/s. Prime Containers - Held that: - since penalty has been imposed on M/s Prime Containers, which is a partnership firm, there cannot be separate penalty on the partner. However, the Ld. Counsel seeks time to produce the denovo adjudication order of the Assistant Commissioner wherein penalty has been imposed on the partnership firm. The Ld. Authorised Representative has no objection for granting time to the ld. Counsel - Appeal No. E/1448/2009 is adjourned to 06.10.2016
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2016 (11) TMI 571
Interest on refund - Section 11 BB of the Central Excise Act, 1944 - Whether interest would be payable on the refund sanctioned w.e.f. 3 months of filing refund application, or from 3 months after the final decision in favour of the appellants by the appellate authority? - Held that: - reliance placed on the decision of the case of C.C., Airport & ACC, Banglore vs. Pfizer Products India Pvt. Ltd. [2015 (9) TMI 34 - KARNATAKA HIGH COURT] where it was held that the interest on delayed refund would be payable from the date of expiry of 3 months from the date of refund application, even when the issue of eligibility of refund was settled only subsequently in appeal by the Commissioner, Tribunal or Court. The Hon’ble High Court has held that even in such cases, the interest would be payable from 3 months from the date of refund application. The appellants would be eligible for interest on delayed refund from the date of expiry 3 months from the date of filing the refund application as per the provisions of Section 11 BB of the Act. However as Section 11 BB was enacted only on 26.05.1999, the appellants would be eligible for interest on delayed refunds from 26.05.1999 till the date of sanction of refund - appeal allowed.
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2016 (11) TMI 570
Process amounting to manufacture or not - assembling activity - importing parts of photocopier and thereafter procuring some indigenous parts assembled photocopier machine and clearing the same without payment of duty - Held that: - As the respondents are procuring some indigenous parts of photocopier machine and assembled the same in their factory. Therefore, we hold that the activity undertaken by the respondent amount to manufacture. The next issue is whether the respondent is manufacturing branded goods or not? We have seen that photocopier machine which the respondent is importing are already branded and the appellant is not affixing any brand name during the course of manufacture of the same. In that view, we hold that the respondent cannot be denied the benefit for SSI Exemption notification in the light of the decision of this Tribunal in the case of Texind Corporation Pvt Ltd [2000 (11) TMI 550 - CEGAT, MUMBAI]. The respondents are not liable to pay duty - appeal dismissed - decided against Revenue.
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2016 (11) TMI 569
Rectification of mistake - mistake in the order against the appeal filed by appellant [2016 (4) TMI 323 - CESTAT MUMBAI] - Held that: - rectification allowed.
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2016 (11) TMI 568
Abatement under sub-section (3) of Section 3A of the Central Excise Act, 1944 - the decision in the case of Maharshi Commerce Ltd. Versus Commr. of Cus. & C. Ex., Hyderabad-III [015 (7) TMI 1159 - ANDHRA PRADESH HIGH COURT] contested - appeal dismissed.
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2016 (11) TMI 567
Recovery from company in liquidation - Held that: - even if this appeal is allowed and the Excise Department is held entitled to recover the amount, it would not be in a position to recover any amount from the company in liquidation. Therefore, we do not deem it proper to go into the merits of this appeal because of the aforesaid reason - appeal dismissed.
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2016 (11) TMI 566
Manufacture - the decision in the case of DEPUTY COMMR. OF CUS. Versus BACCAROSE PERFUME & BEAUTY PRODUCTS LTD. [2010 (1) TMI 437 - Gujarat HIGH COURT] contested - Held that: - The special leave petitions are dismissed, both on the ground of delay, as also on merits.
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2016 (11) TMI 565
Demand - Undervaluation - the decision in the case of LIME CHEMICALS LTD. Versus COMMISSIONER OF C. EX., BELAPUR [2007 (12) TMI 380 - CESTAT, MUMBAI] contested - Held that: - Since the tax effect is low, we are not inclined to entertain these appeals. - appeal dismissed.
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2016 (11) TMI 564
Valuation - MRP based valuation - Rental charges on bottles and crates - the decision in the case of HINDUSTAN COCA-COLA BEVERAGES P. LTD. Versus COMMR. OF C. EX., ALLAHABAD [2006 (3) TMI 392 - CESTAT, NEW DELHI] contested - Held that: - tax effect is nominal. Therefore, the appeals are dismissed on this ground. The question of law is left open.
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2016 (11) TMI 563
CENVAT credit - CVD - The decision in the case of M/s. Saraogi Paper Mills Pvt. Ltd. Versus Commissioner of Central Excise, Patna [2007 (8) TMI 761 - CESTAT KOLKATA] contested - Held that: - appeal dismissed.
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2016 (11) TMI 562
SSI exemption - the decision in the case of METRIPLEX PUMPS (P) LTD. Versus COMMISSIONER OF C. EX., COIMBATORE [2012 (5) TMI 245 - CESTAT, CHENNAI] contested - Held that: - Since the tax effect involved in the instant appeal is negligible, the appeal is dismissed on this ground alone, leaving the question of law open.
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2016 (11) TMI 561
The decision in the case of COMMR. OF C. EX., ALLAHABAD Versus KANORIA CHEM. & INDUSTRIES LTD. [ 2009 (9) TMI 832 - CESTAT NEW DELHI] contested - Held that: - the issue that falls for determination in this appeal is clearly covered against the Revenue by our order dated 25-10-2007 passed by this Court in the case of Union of India & Anr. v. M/s. Tata SSL Ltd. & Anr. [2007 (10) TMI 16 - SUPREME COURT OF INDIA] - In the circumstances, therefore, and for the reasons stated in the said order, this appeal fails and is accordingly dismissed.
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2016 (11) TMI 560
Imposition of penalty - Assessee supplied the raw material to the loan licencee/job workers - They have paid the duty on the cost of raw materials and conversion charges - the decision in the case of M/s Intas Pharmaceuticals Ltd. and Others Versus Commissioner, Central Excise & Service Tax, Ahmedabad-II [2015 (10) TMI 1355 - CESTAT AHMEDABAD] contested - Held that: - The appeal, being sans merit, stands dismissed.
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CST, VAT & Sales Tax
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2016 (11) TMI 550
Jurisdiction of AO - levy of tax under U.P. VAT Act, 2008 on Royalty - palace of execution of contract - franchise service u/s 65(105)(zze) of Finance Act, 1994 - Reverse charge mechanism - whether the stand of the petitioner that notice is without jurisdiction since agreement between petitioner and JFL was executed outside India, therefore, AO has no jurisdiction to levy tax on transaction executed outside India is justified? Held that: - There is no averment regarding mode of communication adopted by petitioner communicating its acceptance. There is not even a whisper as to how and in what manner communication of acceptance was made. In absence of any specific pleading so as to attract exceptions with regard to communication, we have no option but to hold that acceptance will be completed only when it is communicated to offeror and that communication obviously would be at a place wherefrom offer was made. That be so, the agreement can be said to become a concluded contract and executed when it is communicated to Proposer/ Offeror at NOIDA wherefrom offer was made. The ultimate result would be that the very foundation of argument that taxing authorities in Uttar Pradesh had no jurisdiction, disappears and vanishes. It cannot thus be said that impugned orders are patently without jurisdiction - Quantum of assessment made by Assessing Officer is not under challenge. Assessment was challenged before us only on the ground of jurisdiction, i.e., transfer of right to use goods came into effect outside India and, therefore, taxing authorities in State of U.P. have no jurisdiction to demand any tax, which question we have already answered against petitioner. We, therefore, leave it open to petitioner that if there is any dispute with regard to quantum of assessment made by Assessing Officer, same being a question of fact, it will be open to petitioner to raise such dispute by filing appeal under the statute. Jurisdiction of AO not questionable and is justified - petition dismissed - decided against petitioner.
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2016 (11) TMI 549
Taxable turnover - surprise inspection by Enforcement Wing - natural justice - Held that: - there is an observation that in spite of a lapse of 46 days, the petitioner has not submitted his reply to the show cause notice. However, one important fact, which was lost sight of by the respondent is that the petitioner made a request for furnishing of copies of documents, which were seized by the officials of the Enforcement Wing. Therefore, without furnishing the copies sought for by the petitioner, the respondent could not have taken a stand that the petitioner was guilty of not submitting a reply to the show cause notice. For the above reasons, this Court holds that the impugned orders have been passed in violation of the principles of natural justice, as the petitioner did not have an opportunity to put forth his submissions. This is sufficient to hold that the impugned orders are unsustainable in law - appeal disposed off - matter on remand.
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2016 (11) TMI 548
Validity of revised assessment order - TNVAT Act, 2006 - non-production of necessary documents - whether the petitioners have produced necessary records, invoice, etc., to substantiate their plea? - Held that: - When the Appellate Authority was satisfied that the petitioners have produced the invoice copies and were directed to produce the same before the Assessing Officer and the petitioner having produced the same, nothing prevented the Assessing Officer to cause a thorough verification and then pass a speaking order. Therefore, the impugned orders in all these cases are out come of non-application of mind as have been passed in violation of the principles of natural justice, apart from not taking into consideration the direction issued by the Appellate Deputy Commissioner (CT), Cuddalore - petition allowed - matter remanded for fresh consideration to the respondent, who shall afford an opportunity of personal hearing and direct the petitioners to produce all the invoices and other documents, make thorough verification of the same and thereafter redo the assessments in accordance with law
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2016 (11) TMI 547
Maintainability of appeal - Doctrine of merger - whether the petitioner was entitled to concessional rate of tax, in the absence of appropriate Declaration Forms? - Held that: - This very issue came up for consideration before this Court in the case of ARTIS LEATHERS v. THE ASSISTANT COMMISSIONER (CT) AND ANR [2016 (9) TMI 824 - MADRAS HIGH COURT] where the Appellate Authority refused to entertain the Appeal on the ground that it was passed as against the rectified order under section 84 of the TNVAT Act - it was held in the case that there is a clear and a real distinction between an order allowing an application for rectification and thereby rectifying or modifying the original order of assessment and an order rejecting an application for rectification. When the rectification proceedings resulted in a positive action, which has the effect of destroying the finality of original assessment, thereby reopening the assessment order itself, then the provisions relating to appeal would lie. On the other hand, when the Assessing Officer refuses to interfere with the original order and that order is allowed to remain intact, the said order would not be amenable normally to appeal remedy. In so holding, this Court referred to the provisions under Section 55(4) of the Tamil Nadu General Sales Tax Act, 1959, inserted by Amendment Act No. 31 of 1972, providing for appeal and revision remedy when an order of rectification is made, and not when the authority concerned refuses to pass an order of rectification. The proper interpretation that should be given to the case on hand is that the order rectifying the original assessment order should stand merged with the original assessment order dated 31.05.2016 and the Appeal is maintainable against the said revised order on account of merger. Thus, the impugned memo issued by the second respondent is not sustainable in law. Whether the remittance of 25% of the disputed tax was within the time permissible? - Held that: - on the date of presenting the Appeal on 12.07.2016, 25% of the disputed tax was not paid. However, within a short period, i.e subsequent to the Assessing Officer giving credit the Declaration Forms, revised assessment order was passed and as per the revised order, the petitioner has remitted 25% of the disputed tax. Therefore, for all purposes, the date of remittance of ₹ 3,55,000/-, being the 25% of the disputed tax should be taken as the proper pre-deposit for entertaining the Appeal. Petition allowed - petitioner is directed to re-present appeal before the second respondent within a period of two weeks from the date of receipt of a copy of this order and the second respondent shall take the Appeal on file by reckoning the pre-deposit and decide the Appeal on merits and in accordance with law. It is also open to the first respondent to pass appropriate orders on the stay petition filed by the petitioner.
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2016 (11) TMI 546
Application of clarification dated 23.10.2014 - Polyurethane Foam (PU Sheets) - Held that: - matter remanded to the respondent with a direction to apply clarification given by the authority for Clarification and Advance Ruling in ACAAR No.15/2012-13 & ACAAR No.30/2013-14, dated 23.10.2014, and redo the assessments - petition allowed - decided in favor of petitioner.
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2016 (11) TMI 545
Constitutional validity of levy of entry tax - power of the state legislature - Article 304(a) of the Constitution - non-obstante clause - interpretation - concept of compensatory tax - Levy of a nondiscriminatory tax may constitute infraction of Article 301 of the Constitution of India if it impedes the freedom of trade, commerce and intercourse. All taxes which contain restrictions to trade, commerce and intercourse, discriminatory or nondiscriminatory infringe Article 301 unless they are saved under Article 302 304. Article 304 (a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304(a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters. States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304(a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters. The questions whether the entire State can be notified as a local area and whether entry tax can be levied on goods entering the landmass of India from another country are left open to be determined in appropriate proceedings.
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Indian Laws
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2016 (11) TMI 552
Production of the documents with respect to appointment and educational qualifications - A.N.M in the Health Center, Meral - whether the information sought for is the personal information and is required to be produced or not? - Held that: - the information being sought for from the petitioner relates to her appointment to a Govt. job, and the educational qualification of the petitioner. In my considered view, these are not the personal information of a person who is appointed to a Govt. job and the people at large are entitled to have the information about the appointment of such person and the fact whether the person concerned is holding the required educational qualification for the same or not. As such the information, which are sought for from the petitioner, are not the personal information which could not be furnished under the RTI Act - writ application dismissed.
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2016 (11) TMI 544
Reference to arbitration - Non-filing of either original or certified copy of retirement deed and partnership deed along with application entailed dismissal of the application as per section 8(2) of 1996 Act - entitlement to make the reference relying on arbitration agreement - Whether dispute pertaining to unregistered partnership deed cannot be referred to an arbitration despite there being arbitration agreement in the deed of retirement/partnership deed - Held that:- The original Retirement Deed and Partnership Deed were filed by the defendants on 12th May and it is only after filing of original deeds that Court proceeded to decide the application I.A.No. IV. Section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under Section 8(1) unless it is accompanied by original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the Court is considering the application shall not entail rejection of the application under Section 8(2). In the present case it is relevant to note the Retirement Deed and Partnership Deed have also been relied by the plaintiffs. Hence, the argument of plaintiffs that defendants' application I.A.No. IV was not accompanied by original deeds, hence, liable to be rejected, cannot be accepted. We are thus of the view that the appellants submission that the application of defendants under Section 8 was liable to be rejected, cannot be accepted. In the facts of the present case, it cannot be said that merely because one of the defendants i.e. defendant no. 6 was not party to the arbitration agreement, the dispute between the parties which essentially relates to the benefits arising out of Retirement Deed and Partnership deed cannot be referred. When the partners and those who claim through partners agreed to get the dispute settled by arbitration, it is not open for the appellants to contend that partnership being unregistered partnership, the dispute cannot be referred. The petitioners have not been able to show any statutory provision either in 1996 Act or in any other statute from which it can be said that dispute concerning unregistered partnership deed cannot be referred to arbitration. We thus do not find any substance in the third submission of the appellant.
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2016 (11) TMI 543
Interpretation of the terms “mineral” and “processing” under the definition of “mine” as defined under Explanation (b) of Part-B of Madhya Pradesh Electricity Duty Act, 1949 - It is urged that Ferromanganese is an alloy and is not a mineral - Held that:- To bring to the Ferro Manganese Plant of the appellant within the meaning of ‘mine’, the State has argued before this Court that the Ferro Manganese Plant is being “used for crushing, processing, treating or transporting” the mineral, that is, manganese ore. This is clearly unsustainable as the appellant is neither crushing or processing or treating or transporting manganese ore but rather using it as one of the raw materials and consuming the same while manufacturing ferromanganese alloy. The state of crushing, treating, processing, etc. of the manganese ore (mineral) was in the IMB Plant (second stage), where the appellant is paying electricity duty at 40%. The same rate cannot be applied in the Ferro Manganese Plant (the third stage) as it cannot be taken to be within the meaning of ‘mine’ for the aforesaid reason. Thus, the Ferro Manganese Plant, being a unit involved in manufacturing of ferromanganese alloy as opposed to a unit involved in crushing, treating, processing, etc. of manganese ore, cannot be treated within the extended definition of ‘mine’ within the Explanation (b) of Part B of Table of Rates of Duty to Section 3(1) of the Act. The Ferromanganese Alloy so manufactured by the appellant using the mineral Manganese at its Ferromanganese plant is an entirely different product from its mineral raw material both physically and even chemically. Moreover, unlike Manganese ore a ferromanganese alloy can never be found in the natural state and it has to be manufactured from the manganese ore and other minerals only. The same logic applies to copper concentrate as a different and distinct product comes into existence. Thus analyzed, we find that in both the cases, the different products in commercial parlance have emerged. Hence, we are inclined to think that the principle of noscitur a sociis has to be applied. As a logical corollary, tariff has to be levied as meant for manufacturing unit. Therefore, the analysis made by the High Court is not correct and, accordingly, the judgments rendered by it deserve to be set aside and we so direct. However, during this period if any amount has been paid by the appellants to the revenue, the same shall be adjusted towards future demands.
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