Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 4, 2023
Case Laws in this Newsletter:
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
By: Kamal Aggarwal
Summary: The Allahabad High Court ruled that when an assessee fails to respond to a show cause notice, the requirement for a hearing under Section 75(4) of the GST Act is not mandatory. This decision contrasts with prior rulings that emphasized the necessity of a hearing before any adverse order, regardless of the assessee's response. The court's decision indicates a shift from established principles of natural justice, which traditionally mandate a hearing to ensure fair treatment. Despite the settled jurisprudence advocating for minimal opportunity of hearing, the court's stance suggests a deviation from this norm.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The article discusses the legal obligations under Section 148 of the Companies Act, 2023, regarding the maintenance and audit of cost records by certain classes of companies. Companies with a turnover exceeding specified thresholds must maintain cost records and have them audited by a cost accountant. Failure to file the cost audit report with the Central Government can result in fines and penalties for both the company and its officers. A case involving several companies was highlighted, where criminal proceedings were initiated for failing to file cost audit reports. The High Court ruled that the issue should be addressed in the trial court.
By: Bimal jain
Summary: The CESTAT, Kolkata ruled that excise duty is applicable on coal clearances from sister units of a company, despite the revenue neutrality of the situation. The case involved a coal company transferring coal between its units without initially paying duty, although the receiving unit paid the duty upon final sale. The tribunal acknowledged that the excise authorities were aware of this practice but found that the demand for unpaid duties, issued through a Show Cause Notice, was barred by limitation due to the extended period invoked. Consequently, the demand was deemed unsustainable and set aside.
Notifications
GST - States
1.
F.12 (11)FD/Tax/2023-37 - dated
20-9-2023
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Rajasthan SGST
Rajasthan Goods and Services Tax (Second Amendment) Rules, 2023
Summary: The Rajasthan Goods and Services Tax (Second Amendment) Rules, 2023, effective from August 4, 2023, introduce several changes to the Rajasthan GST Rules, 2017. Key amendments include modifications to registration procedures, such as the omission of the requirement for physical presence during registration verification and the introduction of a 30-day deadline for bank account information submission post-registration. The rules also address discrepancies in input tax credit claims, suspension, and potential cancellation of registration for non-compliance. Additional changes involve adjustments to the filing and verification processes, including provisions for electronic communication and manual filing under specific circumstances. These amendments aim to streamline GST compliance and enhance the regulatory framework.
Circulars / Instructions / Orders
GST - States
1.
149/2023-GST - dated
1-11-2023
Clarification on issues pertaining to taxability of personal guarantee and corporate guarantee in GST
Summary: The circular issued by the Principal Commissioner of State Tax, Assam, clarifies the taxability of personal and corporate guarantees under the Assam GST Act. It states that personal guarantees provided by company directors to banks for securing credit facilities are considered a supply of service, even without consideration, but have a taxable value of zero if no remuneration is involved. Corporate guarantees between related persons, such as a holding company and its subsidiary, are also treated as taxable supplies. The taxable value for these services is determined by Rule 28 of the Assam GST Rules, with recent amendments ensuring uniformity in valuation practices.
2.
148/2023-GST - dated
1-11-2023
Clarification regarding determination of place of supply in various cases
Summary: The circular from the Assam State Tax Office provides clarifications on determining the place of supply for various services under the GST framework. For transportation services, including mail and courier, the place of supply is based on the recipient's location if available, otherwise, the supplier's location is used. In the advertising sector, if space is sold or rights to use space are granted, the place of supply is where the property is located; otherwise, it follows the general rule. For co-location services, the place of supply is typically the recipient's location unless it involves merely renting space, in which case it is where the property is located.
3.
147/2023-GST - dated
1-11-2023
Clarification relating to export of services — sub-clause (iv) of the Section 2 (6) of the IGST Act 2017
Summary: The circular issued by the Office of the Principal Commissioner of State Tax in Assam provides clarification on the export of services under the IGST Act, 2017. It addresses the admissibility of export remittances received in Special INR Vostro accounts, as permitted by the Reserve Bank of India (RBI), for qualifying as export of services. The circular confirms that payments received in INR through these accounts fulfill the conditions of sub-clause (iv) of Section 2(6) of the IGST Act, provided they comply with the Foreign Trade Policy 2023 and relevant RBI regulations. This clarification aims to ensure uniformity in the application of the law.
4.
146/2023-GST - dated
16-8-2023
Clarifications regarding applicability of GST on certain services
Summary: The circular from the Government of Assam provides clarifications on the applicability of GST on specific services. It states that services supplied by a director of a company in a personal capacity, such as renting immovable property to the company, are not subject to the Reverse Charge Mechanism (RCM). Only services provided in the capacity of a director are taxable under RCM. Additionally, the supply of food or beverages in cinema halls is taxable as a restaurant service if provided independently of cinema exhibition services. If bundled with cinema tickets, the entire supply is taxed at the rate applicable to cinema exhibition.
5.
145/2023-GST - dated
16-8-2023
Clarification regarding GST rates and classification of certain goods based on the recommendations of the GST Council in its 50th meeting held on 11th July, 2023
Summary: The circular issued by the Government of Assam provides clarifications on GST rates and classifications for specific goods following the GST Council's 50th meeting recommendations. Key changes include the reduction of GST rates to 5% for un-fried snack pellets, fish soluble paste, and imitation zari thread. The supply of raw cotton to cooperatives is taxed at 5% on a reverse charge basis. Past GST issues for desiccated coconut, biomass briquettes, areca leaf products, and goods under HSN 9021 are regularized as is. No refunds will be issued for GST paid at higher rates prior to these clarifications.
Customs
6.
PUBLIC NOTICE No. - 44/2023 - dated
27-10-2023
Revision of All Industry Rates (AIRs) of Duty Drawbackreg.
Summary: The Central Government has revised the All Industry Rates (AIRs) of Duty Drawback, effective from October 30, 2023. Changes include specifying AIRs for tariff items with caps on drawback amounts and introducing new tariff items across various sectors. Notably, AIRs have increased for certain goods like chemicals, leather, textiles, and jewelry due to changes in duties and input prices. Rationalization of AIRs for nylon textiles and other items has also occurred. A clarification was issued regarding the classification of products containing cotton and multiple manmade fibers. Customs Brokers and Trade Associations are urged to disseminate this information widely.
Highlights / Catch Notes
GST
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New GST Amnesty Scheme Extends Appeal Filing Deadline for Taxable Persons Missing March 31, 2023, Cutoff.
Notifications : Amnesty Scheme for filing of Appeal under GST - FORM GST APL-01 notified for taxable persons who could not file an appeal on or before the 31st day of March, 2023 u/s 73 or 74 of CGST Act - Notification
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Coaching Fees for Entrance Exams Not Exempt from GST; Case Sent Back for Review Based on Tax Exemption Rules.
Case-Laws - HC : Exemption from GST - educational institution - fee collected by the petitioner from its enrolled students to extend the benefit of coaching for entrance examination and other educational services would not be exempted service - Matter restored back to consider the submission in view of exemption notification and CBIC circular in this regard - HC
Income Tax
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Transfer Lacks Criteria for Slump Sale: No Capital Gains Assessment on Business Assets Without Immovable Property Transfer.
Case-Laws - HC : Nature on sale - Slump Sale - capital gain u/s 50B - Transfer of asset or not? - Section 50B of the Act provides a mechanism for assessment of capital gain on ‘transfer’ of an ‘undertaking’ in a ‘slump sale’. Admittedly, immovable assets of the assessee’s business were not transferred. Therefore, it does not satisfy the essential conditions under Section 2(42C) of the Act. - HC
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Engineering Fees Claim Approved by ITAT Due to Detailed Documentation of Employee Work and Hours.
Case-Laws - HC : Disallowance of engineering fees paid to its head office - Assessee only remitted the engineering fee to the head office. There is no dispute with regard to the fact that the debit note provided sufficient information as noted above, not only concerning the names of the employees, but also as to the nature of duties and number of hours that they spent on the job assigned to them. - ITAT rightly allowed the claim - HC
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Court Invalidates Tax Reassessment Notice; Requires Evaluation of Petitioner's Claim on Notional Expenditure and Capital Gains.
Case-Laws - HC : Reopening of assessment - validity of notice u/s 148A - computation of capital gain - the petitioner is categorical that he has not received any income in the AY 2016-17 but has claimed a notional expenditure in the next Assessment Years while declaring capital gain, the merit of such claim should be considered before concluding that there is escapement of tax. - Notice u/s 148A quashed - HC
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Order Rejecting Tax Return Delay Condemnation Deemed Invalid Due to Lack of Explanation, Violating Legal Standards.
Case-Laws - HC : Validity of order u/s 119(2)(b) - Rejection of request for Condonation of delay in filing of Income Tax Return (ITR) - Non speaking order - This Court finds that the impugned order is made in violation thereof, in view of the fact that the impugned order does not assign reason but only contains the conclusion, in other words non-speaking and thus unsustainable. - HC
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Tax Refund Withholding Unjustified Without Adjudicated Demand; High Court Orders Refund Grant to Petitioner.
Case-Laws - HC : Benefit of Refund - Retention / withholding of refund in anticipation of demand - Status of the enforceability of the demand for the assessment years - Proceedings are still pending before DRP and yet to be adjudicated - There would be no justification for denying the petitioner the advantage of the refund. It is too salient that a levy cannot be unless it is with the authority of law - Grant of refend ordered - HC
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CBDT Clarifies Tax Relief for NRIs with Salary in Indian NRE Accounts Amid Diverse Work Locations.
Case-Laws - AT : Income deemed to accrue or arise in India - Salary receipts filled under NRI status - The clarification given by the CBDT is to mitigate the hardships faced by the assessees where a non-resident received his salary in the NRE account maintained with an Indian Bank, since conditions of his employment are not restricted to a single place but either in the ships or in the onshore projects elsewhere. - Benefit of beneficial circular extended to the assessee - AT
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Taxpayer Penalized for Noncompliance: Failing to File Returns and Respond to Notices Leads to Penalty Confirmation.
Case-Laws - AT : Levy of penalty u/s 271(1)(b) - As the assessee has not adduced any proof or reasons for non-compliance of the statutory notices, which has resulted in exparte assessment order. The assessee neither filed the Return nor responded to the notice - Levy of penalty confirmed - AT
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Royalty Payment for Trademark Use Classified as Revenue Expenditure, Not Capital, Due to No New Asset Acquisition.
Case-Laws - AT : Nature of expenses - payment of royalty - revenue or capital expenditure - Permission to user the name and Trade Mark - Royalty is payable on the basis of Annual Sales Turnover - No new asset was acquired by the assessee. The assessee merely acted as user. - CIT(A) rightly allowed the same as revenue expenditure - AT
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Electricity Sale Valuation Approved: Rs. 5.50/unit Matches Torrent Power Rate for Tax Deduction u/s 80IA.
Case-Laws - AT : Value of electricity supplied for the purpose ALP and claim of deduction u/s. 80IA - The assessee has rightly computed the sale of electricity generated through its CPP by adopting Rs. 5.50 per unit being the supply of electricity rate by Torrent Power Ltd. for the purpose ALP and claim of deduction u/s. 80IA of the Act - AT
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Taxpayer Wins: Section 68 Addition Deleted for Alleged Bogus Capital Gains with Shell Companies; Shares Sold at Market Value.
Case-Laws - AT : Addition u/s 68 - bogus LTCG - Transaction with shell companies - No adverse inference can be drawn against the assessee on basis of doubtful credentials of SVPL as the assessee has parted away with a valuable asset i.e. shares of a company having prime immovable property at Hailey Road Delhi and in lieu thereof, the assessee had received sale consideration at market price/fair market value. - CIT(A) rightly deleted the additions - AT
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Penalty for Cash Loan Overturned as Source Taxed as Unexplained Income, Eliminating Contradictory Claims by Tax Department.
Case-Laws - AT : Penalty u/s. 271D - Cash Loan - AO treated it as undisclosed investment - Once the source of money invested by the assessee has been given the color as that of unexplained income and accordingly brought to tax by the AO, thereafter the department could not have taken a contrary view and held that part of the said investment was sourced out of a cash loan raised by the assessee - AT
Customs
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Appeal Dismissed: Tribunal Overturns Penalty on Customs Broker, No Substantial Legal Question Raised by Revenue Dept.
Case-Laws - HC : Maintainability appeal before High Court - Substantial Question of Law - Imposition of penalty u/s 114AA of Customs Broker / CHA - CESTAT found that the case of the appellant that respondent/CHA was in violation of regulation 10(a), 10(d) and 10(n) of CBLR was not made out, and consequently the impugned order as well as the penalty imposed were set aside. - Revenue failed to raise any question of law - HC
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Delay in Duty Drawback Recovery Deemed Procedural Lapse; Appellant's Claim Rightfully Allowed.
Case-Laws - AT : Recovery of Duty Drawback - realization of sale proceeds in Foreign Exhange - only reason for filing this appeal is that the amount was released beyond the period prescribed. - Once, the fact of realization is not disputed there cannot be any reason for denial of substantiated benefit to the appellant for this delay which is nothing but a procedural laps. - Commissioner (Appeal) rightly allowed the claim - AT
Indian Laws
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Non-bailable warrants issued in cheque dishonor case deemed beyond jurisdiction; proceedings declared invalid.
Case-Laws - HC : Dishonour of Cheque - noncompliance of certain terms of the settlement agreement - once a compromise has been arrived at and an offence u/s 138 of the NI Act is compounded, the concerned Court, after passing an order compounding the offence can only proceed for attachment in terms of Sections 421 and 431 of the CrPC. Thus, the non-bailable warrants issued were without jurisdiction and therefore, the consequent proceedings u/s 82 of the CrPC were also invalid. - HC
IBC
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CIRP Application Admitted; Cheque Security Argument Irrelevant, Appeal Dismissed Due to Ongoing Section 138 Proceedings.
Case-Laws - AT : Admission of Section 9 application - CIRP - Insofar as the submission that the cheques which were submitted in the Bank by the Operational Creditor were security cheques, these are the issues which need not be adverted to the present proceedings. Section 138 proceedings have already been initiated and that can be looked into in the said proceedings. - Appeal dismissed - AT
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Order Reserved, Appeal Dismissed: New Facts Insufficient to Prevent Corporate Insolvency Resolution Process Initiation.
Case-Laws - AT : Validity of order if Initiation of CIRP - After the final hearing of the matter, ITAT reserved the order for passing - Thereafter, appellant prayed for recall the reserved order and re-hear the matter on the basis of new facts - Since in the facts of the present case, a debt has arisen which is due and payable by the Corporate Debtor and a default has occurred, admission of Section 7 application cannot be obfuscated by raising technical pleas and that too after hearing in the main petition stood concluded and matter was reserved for hearing. - Appeal dismissed - AT
PMLA
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Money Laundering Case: Retroactive Application of Arrest Communication Rules and Procedural Mandates Explored.
Case-Laws - HC : Money Laundering - proceeds of crime - Schedule/Predicate Offence - the mandate that grounds of arrest would have to be conveyed in writing to the accused would not operate prospectively. - HC
Service Tax
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Service Tax Limitation Extended to 30 Months for Ongoing Cases; Applies from October 2014 Periods Onward.
Case-Laws - AT : Determination of normal period of limitation - Extension of period from 18 months to 30 months - The amendment will not put life into dead cases but those which are still live on the date of amendment will be governed by the new limitation - Therefore, for the half year ending September 2014 in the present case, the last date for filing returns was 25 October 2014 and the normal period of limitation ended on 24 April 2014. The new limit of 30 months came into force only on 13 May 2016. The normal period of limitation ended for the period upto September 2014 and for the period from October 2014, the new limit of 30 months applies. - AT
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Best judgment assessment upheld; assessee's objections dismissed. Form 26AS could have been submitted by the assessee.
Case-Laws - AT : Best judgment assessment - The assertion of the learned counsel that Form 26AS can be provided only by the Income Tax department to the Central Excise officers is not correct. The assessee himself could have provided this form to the central excise department as well - the assessee’s objections to best judgment assessment in the impugned order has no legs to stand on and deserves to be dismissed. - AT
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Entities Supplying Medicines for Government Exempt from Reverse Charge Service Tax Due to Non-Business Status.
Case-Laws - AT : Liabillity of pay service on reverse charge basis (RCM) - Business Entity or not - The collection of processing charges or a cost markup on the medicines purchased on behalf of the Government and supplied as per their direction would not make them a business entity, per se. There is no other evidence on record to suggest that they are a business entity - they are not required to pay any service tax on reverse charge basis on the WCS provided to them - AT
Central Excise
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Refund of Duty Paid Under Protest: Unjust Enrichment and Evidentiary Value of Professional Certificates.
Case-Laws - AT : Refund of duty paid under protest - principles of unjust enrichment - incidence of duty passed upon to their customers or not - A certificate given by a professional cannot be dis-regarded unless it is proved to be blatantly wrong and contrary to the facts and evidence available on the hand. Thus, the certificate given by the Cost Accountant has an evidentiary value and cannot be rejected in a half-handed manner - AT
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Excise Duty Linked to Production Time, Not Clearance, Says Court in Ruling on Post-July 2014 Goods.
Case-Laws - AT : Levy of Additional duty of excise - clearance of pre-budget stock after 10.07.2014 - Once the levy is not there at the time when the goods are manufactured or produced, it cannot be levied at the stage of removal of the said goods. - AT
VAT
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Penalty Overturned Due to Clerical Error in Consignee's Name; Court Rules Against Penalizing Genuine Mistakes.
Case-Laws - HC : Levy of penalty under Section 51(7)(b) of PVAT Act - it was merely a clerical mistake, that only the name of the consignee was wrongly mentioned while picking the name of the appellant from drop-down menu in the software used by the Noida Head Office of the appellant. - Penalty can be imposed to evade tax and not for bona fide mistake. - HC
Case Laws:
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PMLA
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2023 (11) TMI 157
Money Laundering - proceeds of crime - Schedule/Predicate Offence - attachment of properties - whether in the present case, the provisions of Section 19 of the PMLA were duly complied with? - HELD THAT:- From the documents submitted by the respondents, during the course of arguments, it becomes clear that there was material in possession of the Assistant Director of the ED on the basis of which he had reason to believe that the petitioner should be arrested. The document dated 08.06.2023 which has duly been perused by us runs into 17 pages wherein the details of the investigation carried out and the material in possession of the Officer concerned has been referred to. All that had been revealed during the course of investigation was duly put in writing . Detailed reference was made to the material in possession - Both officers perused the facts as given in the noting/document dated 08.06.2023 and concurred with the proposal submitted by the Assistant Director and approved the same. There was, therefore, sufficient compliance of the provisions of Section 19 of the PMLA with regard to the authorities having material in their possession giving them reason to believe (recorded in writing) that the petitioner was guilty of an offence punishable under the PMLA and that he was required to be arrested. The question which would, therefore, arise would be as to whether this would be sufficient compliance of the provisions of Section 19 of the PMLA or not. In view of the ratio laid down by the Hon ble Apex Court in the case of PANKAJ BANSAL VERSUS UNION OF INDIA ORS. [ 2023 (10) TMI 175 - SUPREME COURT] , the answer would be in the negative. It has categorically been held in Pankaj Bansal Versus Union of India and others s case that the grounds of arrest would have to be conveyed in writing. The Hon ble Apex Court noted that the mode of conveying information of the grounds of arrest must necessarily be meaningful so as to serve the intended purpose. Reference was made to Section 45 of the PMLA which enables the arrested person to seek release on bail. It was noticed that Section 45 prescribes twin conditions which are required to be satisfied in the absence of which, the arrested person would not be entitled to bail. The Hon ble Apex Court held that to meet the requirement of Section 45 of the PMLA, it would be essential for the arrested person to be aware of the grounds of arrest and the basis for the officer s reason to believe that the arrested person was guilty of offence punishable under the PMLA. Only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. It was held that the communication of the grounds of arrest, as mandated by Article 22 (1) of the Constitution and Section 19 of the PMLA, is, therefore, meant to serve this higher purpose and must be given due importance. It is, therefore, clear that the mandate that grounds of arrest would have to be conveyed in writing to the accused would not operate prospectively. The arrest of the petitioner and the subsequent orders remanding the petitioner to the custody of the ED cannot be sustained. The present petition is, therefore, allowed.
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Service Tax
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2023 (11) TMI 156
Liabillity of pay service on reverse charge basis (RCM) - Business Entity or not - Works Contract Service - construction of BSc Nursing College Hostel Building at Singupuram - denial of benefit on the grounds that the work order was given on 06.02.2016 and the exemption notification as amended was applicable only to contracts entered prior to 01.03.2015 - HELD THAT:- Department has not been able to adduce to support that APMSIDC is a business entity. It is also an admitted position that they are Governmental authority , though in terms of Notification No.25/2012-ST as well as in terms of relevant documents perused by the Adjudicating Authority. A holistic view would indicate that even though they might be considered as body corporate, they cannot be considered as business entity, which intrinsically involves profit motive. The collection of processing charges or a cost markup on the medicines purchased on behalf of the Government and supplied as per their direction would not make them a business entity, per se. There is no other evidence on record to suggest that they are a business entity - they are not required to pay any service tax on reverse charge basis on the WCS provided to them by M/s Satya Sai Constructions and therefore, Notification No.30/2012-ST would not be applicable to them. Therefore, neither Original Order nor Impugned Order has been able to establish that they will be within the ambit of Notification No.30/2012-ST and therefore, liable to pay 50% of the service tax payable on the WCS provided by M/s Satya Sai Constructions to APMSIDC. Therefore, Appellant is entitled to get the relief. Appeal allowed.
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2023 (11) TMI 155
Liability of appellant to pay service tax - services rendered by appellant and, their principals have discharged the duty on behalf of all the agents - Extended Period of Limitation - HELD THAT:- It is clear that the applicable service tax stands paid in the instant case. The facts of the impugned case are different from those in the case of M/s Melange Developers [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] relied upon by the learned Authorized Representative. The issue before the Larger Bench in the case of M/s Melange Developers was that whether a sub-contractor is liable to pay service tax where the main contractor has paid service tax on the total value of the contract. In the instant case, however, it is clear that M/s SETD have discharged the service tax payable by the Agent. Payment of service tax into the Revenue Exchequer is not in dispute. What is in dispute is who has to discharge the service tax liability - service tax having been paid, though, by the principal on the services rendered by the appellant, it cannot be a case of non-payment of applicable service tax. Once service tax is paid, there is no loss to the revenue of the Government, the question as to who has paid the same, remains a procedural issue and thereto, an empty one. Extended period of limitation - HELD THAT:- There are cogent reasons for the appellant to believe that they are not obliged to pay service tax again; therefore, the ambiguity in the minds of the appellant is a bona fide one. Therefore, extended period cannot be invoked. Appeal allowed both on merits and limitation.
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Central Excise
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2023 (11) TMI 154
Refund of duty paid under protest - principles of unjust enrichment - rejection of refund on the ground that the appellants have passed on the incidence of duty to their customers - HELD THAT:- Revenue claims that the refund is hit by the doctrine of unjust enrichment i.e. the presumption that the incidence of duty has been passed on by the appellant unless the appellant establishes with documentary proof that the said incidence of duty has been actually borne by him and has not been passed on to the ultimate customers. We find that the presumption contained in the provisions pertaining to refund of Central Excise duty are rebuttable - Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] held that A manufacturer who has not passed on the duty can always prove that fact and if it is found that duty was not leviable on the transaction, he will get back the duty paid. Ordinarily speaking, no manufacturer would take the risk of not passing on the burden of duty. It would not be an exaggeration to say that whenever a manufacturer entertains a doubt, he would pass on the duty rather than not passing it on. The Hon ble Supreme Court rendered the above judgment in a different context. However, the observations of the Apex Court throw light on the fact that the presumption vis- -vis doctrine of unjust enrichment is a rebuttable presumption. The appellants have submitted the evidence and argument in their favour. To that extent, it is found that the presumption has been rebutted by the appellants. As a result, it is for the Department to negate the evidence submitted by the appellants. It is found that once the presumption under the doctrine of unjust enrichment is rebutted with documentary evidence, it cannot be negated by another presumption. It can only be negated by producing evidence contrary to the rebuttal of the appellant. Mere stating that the fact of price remaining same will not be an inevitable conclusion to establish that incidence of duty has not been passed on, is not enough. Looking into the facts of the case and other evidence produced by the appellants, the fact of MRP being constant goes in favour of the appellants. Revenue did not rebut this submission by documentary data or evidence, except making a general statement that all taxes and duties would have been considered while fixing the MRP. In the instant case, Revenue has lost sight of the fact that the said MRP was fixed by the appellants during the no-duty regime. Therefore, the very fact of non-upgrading the MRP when the taxes were paid would in itself constitute evidence that the incidence of duty has not been passed on - The ultimate test of passing on the incidence of duty lies in the transaction of the appellants with the ultimate customers i.e. in the transaction between their depot and the customers. The MRP being constant, the test of presumption, that duty must have been inbuilt in MRP and must have been passed on, fails the test of reasonable fairness. Revenue has not even considered the Cost Accountant certificate leave alone countering the same with valid reasons. Cost Accountant has issued the certificate after going through the accounts of the appellants and after satisfying himself about the truthfulness of the same. A certificate given by a professional cannot be dis-regarded unless it is proved to be blatantly wrong and contrary to the facts and evidence available on the hand. Thus, the certificate given by the Cost Accountant has an evidentiary value and cannot be rejected in a half-handed manner - The impugned order having been issued despite the evidence in the form of the certificate and without giving reasons as to why the same has not been taken into account cannot be held to be legally sustainable. Appeal allowed.
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2023 (11) TMI 153
Demand of duty alongwith interest and penalty - appellant have deposited the demand even though under wrong registration number which was otherwise surrendered and the same was accepted by the department - HELD THAT:- The only mistake that inadvertently happened on the part of the appellant is that they have mentioned wrong registration while making the payment of excise duty. Therefore, except such mistake there is not a case of non-payment of duty, hence, the demand of duty cannot be sustained. Consecutively, the demand of interest and imposition of penalty shall also not sustain - the appellant had a bona fide view that the department have rectified the mistake occurred during the payment of excise duty under wrong registration number therefore, the revenue instead of issuing the show cause notice should have carried out the rectification in their record and closed the matter - it is not a mistake of the appellant only but equally it is a system fault of the department for which the appellant should not be made to suffer. The demand of duty which was already paid and corresponding interest and penalties are not sustainable. Hence, the impugned order is set aside. Appeal is allowed.
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2023 (11) TMI 152
Clandestine removal - Who is the manufacturer liable for payment of duty under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - seizure of two Pouch Packing Machines [PPM] found installed in the premises of M/s Laxmi Tobacco Company, during search of the said Premises by the Central Excise officers on 19.09.2013. HELD THAT:- There is no dispute on the facts that on a specific information, Central Excise Officers have detected an unregistered factory on 19.09.2013, where 2 Pouch Packing Machines [PPM] were found installed and in working condition, manufacturing notified goods i.e. Pan Masala Containing Tobacco known as Gutkha . Some notified goods, raw materials and packing materials totally worth Rs. 15 lakhs required to manufacture such Gutkha were also found lying there, which are seized on 19.09.2013. Both the sides have fairly agreed that said unregistered factory has not followed Rules or paid duty under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 in respect of 2 pouch packing machines [PPM] found installed at the premises of M/s Laxmi Tobacco Company on 19.09.2013. There is no clinching tangible evidence or any corroborative evidence against Appellant Shri Paresh R Amin to connect him with actual manufacture and also to establish him as a manufacturer. Thus, Shri Paresh R Amin cannot be treated as the manufacturer liable to duty, interest and penalty in this case. However, the facts of seizure of two PPM found duly installed and goods seized in the premises on 19.09.2013 also have to be considered independently even without the support of any such of statements - It is not acceptable that owner of any premises would allow any third party to enter his premises to carry on business, may it is for the licit or the illicit business by any such third party. Any person with reasonable prudence will at least prepare a written rent agreement and clear evidences of rent receipts to keep his skin safe of any such illicit business, if any. Shri Purshottambhai C Patel is father of Shri Ashwinbhai Patel and in their Father-Son relation partnership document may not be necessarily prepared at all times. In view of the undisputed fact that there is no partnership deed between the appellant Shri Pareshbhai R Amin and Shri Ashwinbhai Patel, factory premises was not rented out to so called partnership firm as there was no rent agreement or payment of rent, the machines were not found purchased by the so called partnership firm or even Shri Pareshbhai R. Amin, the goods were cleared on the letterhead of Laxmi Tobacco Company etc, it cannot be said that the appellant is the manufacturer therefore even if the fact of clandestine manufacture and its clearance is established but the appellant not being manufacturer, liability of duty, penalty cannot be fastened against the appellant. The impugned order confirming demand of duty with interest and Penalty is not sustainable against the Appellant Shri Paresh Ramanbhai Amin - The impugned order-in-original qua Shri Paresh Amin is set aside - Appeal of Appellant Shri Paresh Ramanbhai Amin is allowed - Appeal disposed off.
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2023 (11) TMI 151
Suo motu re-credit taken by the respondent - outward transportation - HELD THAT:- As regard the suo motu re-credit, the entire proceeding was to disallow the cenvat credit on outward transportation and during the proceeding the respondent had reversed the credit when the Tribunal has allowed the credit on merit in respect of outward transportation vide Tribunal in Welspun Gujarat Stahl Rohren Ltd. [ 2012 (4) TMI 386 - CESTAT, AHMEDABAD ]. The respondent was legally entitled for re-credit as consequential relief flowing from the said Tribunal s order. Therefore there are nothing wrong in taking the suo moto re-credit which is clearly in compliance to the Tribunal s order. This issue has been considered by this Tribunal in case of COMMISSIONER OF CENTRAL EXCISE SURAT VERSUS M/S. VARDHMAN ACRYLICS LIMITED [ 2013 (5) TMI 6 - CESTAT AHMEDABAD] wherein the Tribunal has held that suo motu admissible Cenvat credit taken, after getting a favourable decision from the first appellate authority, is correct. Thus, there are nothing wrong in respondent s taking suo moto re-credit of cenvat credit which was reversed - there is no infirmity in the impugned order - appeal of revenue dismissed.
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2023 (11) TMI 150
CENVAT Credit - input services commonly used by the appellant in the manufacture of their own dutiable final products as well as in the manufacture of forgings which was cleared to M/s.TENGEL without payment of duty - non-maintenance of separate records - HELD THAT:- On perusal of the facts as brought out from the records, it is understood that goods cleared to the principal manufacturer has suffered duty at the hands of the principal manufacturer. This being so, the final product cleared by the appellant to the principal manufacturer cannot be considered as exempted goods. All the products cleared by the appellant viz. forgings are dutiable products and has suffered duty at the hands of the appellant or the principal manufacturer. Then, Rule 6 (3) does not come into application. The appellant is not liable to reverse the credit. The issue was considered by the Hon ble Apex Court in the case of ESCORTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [ 2004 (8) TMI 106 - SUPREME COURT] wherein the Hon ble Apex Court held that when the final product has been subject to duty, it cannot be said that intermediate product which is cleared without payment of duty is an exempted good for compliance with the provisions of Rule 57C of erstwhile Modvat Credit. Thus, the demand cannot sustain. The impugned order is set aside. Appeal is allowed.
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2023 (11) TMI 149
Lapse of Unutilized Credit - Absolute exemption or Conditional exemption notification - Balance of Cenvat Credit shall lapse in terms of Rule 11(3) of Cenvat Credit Rules, 2004 - availment of Notification No. 30/2004-CE dated 09.07.2004 after reversal of Cenvat Credit on input, input in process and input contained in final product - HELD THAT:- It is found that the revenue s contention is that on availment of exemption notification No. 30/2004-CE dated 09.07.2004 after reversal of Cenvat Credit on input, input in process and input contained in the final product, whatever balance credit is left out the same shall lapse in terms of Rule 11(3) of Cenvat Credit Rules, 2004. From the plain reading of the Rule 11(3) of Cenvat Credit Rules, 2004, it can be seen that as per 11(3)(i) if an assessee opt for exemption from whole of the duty under a notification issued under Section 5A, the assessee is required to pay an amount equalent to Cenvat Credit in respect of input lying in stock, input in process and input contained in the final product lying in stock. As per this rule irrespective of whether the notification is absolute or otherwise the assessee is required to reverse the credit in respect of input, input in process or input contained in final product lying in stock as on date of opting the exemption notification - it is clear that the reversal of credit on the stock of input, input in process and input contained in final product is required to be reversed by an assessee who avails any exemption. However, the provision for lapsing of credit on remaining balance shall apply only in case where the exemption notification is absolute. In the present case the notification No. 30/2004-CE contains a condition namely provided that nothing contain in this notification shall apply to the goods in respect of which credit of duty on input has been taken under the provision of Cenvat Credit Rule, 2002 . Since the notification contained the said condition the notification No. 30/2004-CE is not an absolute exemption. Consequently, the provision of lapsing of the remaining credit in terms of Rule 11(3) (ii) shall not apply in the fact of the present case. This issue has been considered time and again in various judgments as cited by the appellant. Therefore, the issue is no longer res-integra. The impugned order is not sustainable. Hence, the same is set aside appeal is allowed.
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2023 (11) TMI 148
Refund of duty paid under protest - Department is of the view that goods cleared are not used at the water treatment plant itself and therefore the benefit of notification is not available to the goods - eligibility for the benefit of exemption of the Notification 6/2006 dated 1/3/2006 - HELD THAT:- The condition no. 23 of the said notification for availing the exemption is that the assessee has to produce a certificate issued by the District Collector, certifying that the goods are intended for use as specified in column 3 of the table. In column 3 of the table as per para (1), all items of machinery, including instruments apparatus and appliances, auxillary equipment and other components / parts required for setting up of water treatment plant is eligible for exemption. The department has denied the exemption alleging that the goods are used for the sub station / pumping station as part of the water supply project and not specifically at the water treatment plant. Similar issue was considered by the Tribunal in the case of M/S MAN INDUSTRIES (INDIA) LTD, M/S SUBHASH PROJECTS MARKETING LTD, M/S THE INDIAN HUME PIPE CO. LTD VERSUS COMMISSIONER CE ST (LTU) MUMBAI [ 2019 (5) TMI 367 - CESTAT MUMBAI] . The issue under consideration was whether the benefit of Notification is available to the pipes which were used beyond the first storage facility. The Tribunal held that the assessee would be eligible for the benefit of notification. In the case of P C CONSTRUCTIONS P. LTD. VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, SALEM [ 2017 (8) TMI 1045 - CESTAT CHENNAI] , the Tribunal observed that when certificate has been issued by District Collector, and TWAD Board stating that the goods are intended for setting up of the water treatment plant, the department cannot deny the exemption. The issue was in respect to the eligibility of credit on PSC pipes which were used for setting up of the water treatment plant and needed for carrying water from its source to the plant and from there to the storage facility. The Ld. AR has relied upon the decision in the case of M/S. PRECISE ENGINEER VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2019 (3) TMI 944 - CESTAT AHMEDABAD] . On perusal of the facts of the case, it is seen that the goods on which exemption was claimed by the appellant was Extension Bellows. The assessee claimed that these are components of water treatment plant. However, the facts do not show that the appellant had produced certificate issued by the District Collector stating that the goods were intended for setting up of water treatment plant. The rejection of the refund claims is not justified. The impugned orders are set aside - appeal allowed.
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2023 (11) TMI 147
Excisability - intermediate goods - sugar syrup produced for use in manufacture of biscuits that were exempted from payment of duty - N/N. 67/95-CE dated 1st March 1995 - HELD THAT:-The appellant supplies biscuits to M/s Parle Products Pvt Ltd and that sugar syrup generated within the factory of the appellant is an essential ingredient in manufacture - The decision of the Hon ble Supreme Court in NICHOLAS PIRAMAL INDIA LTD VERSUS CCE, MUMBAI [ 2010 (11) TMI 36 - SUPREME COURT] , while elaborating upon shelf-life , has held that marketability is a question of fact. The decision of the Tribunal in THE MAHARASHTRA AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2017 (2) TMI 244 - CESTAT MUMBAI] relates to an entirely different product, viz. sugar concentrate , utilized in the manufacture of fruit juice. In terms of the above decision of the Tribunal on sugar syrup deployed in identical circumstances for identical purpose would apply in full. Accordingly, the impugned order cannot sustain and is set aside to allow the appeal - Appeal allowed.
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2023 (11) TMI 146
Admissibility of Cenvat Credit Rules paid on service tax under reverse charge mechanism - service fees paid to the principals namely Honda Motor Company Ltd., Japan for development of Part Manual and Service Manual - HELD THAT:- Part catalogue is the document created for codification of all the parts for proper understanding and management of inventory. This codification is used not only for inventory management but also for placing the orders on the suppliers and receiving the orders from the dealers/customers. Even the storage bins are to be identified as per these part catalogue. Orders are placed by referring to the part as codified in this manual and is essential uniform understanding of the part by all in the chain. Without this manual all the operations of the appellant will be haphazard. So, this part catalogue is essentially the part inventory management, procurement and supply system of the parts to the dealers and through them to the ultimate customers - there are no merits in the submissions or the observations made by the lower authority contrary to this. It is quite evident that the maintenance repairs and construction manual, is like an idiot guide to the dealers for undertaking the work of repairs and maintenance of the vehicles ensuring compliance with the high safety standards set by Honda Motors, by use of the genuine parts supplied by the appellant. It provides how to further maintain and repair the vehicles brought to the dealers by their customers. Such standardization is absolutely essential to ensure that standard set by the manufacturer are achieved irrespective of the person or the dealer servicing the vehicle - This standardization will promote the sale of genuine parts which are supplied or sold by the appellants. Thus this manual is essential to the activities undertaken by the appellant through supply of genuine spare parts. Thus, denial of CENVAT credit in respect of services of development of Part Catalogue and Maintenance, Repair and Construction Manual cannot be upheld. As no demand survives the demand for interest and penalties imposed also are set aside. There are no merits in the impugned order and the same is accordingly set aside - appeal allowed.
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2023 (11) TMI 145
Levy of Additional duty of excise - clearance of pre-budget stock after 10.07.2014 - HELD THAT:- The Finance Act 2014 introduced an additional duty of Excise (AED) on waters including mineral water and aerated waters containing sugar or other sweetening matter falling under chapter heading 220210. d) The changes in the Finance Act 2005 were announced on 10.7.2014 and it was understood by the Appellant that the same shall be effective from midnight 10/11 July 2014. It is relevant to mention that the declaration under Provisional Collection of Taxes Act, 1931 provided that clause 110 of the Bill shall have immediate effect under the Provisional Collection of Taxes Act, 1931. The issue is no longer res-integra and is settled by the judgment of Hon ble Supreme Court in the case of COLLECTOR OF C. EX., HYDERABAD VERSUS VAZIR SULTAN TOBACCO CO. LTD. [ 1996 (2) TMI 138 - SUPREME COURT] . The Hon ble Supreme Court while dealing with special duty of excise has held that Section 3 cannot be read as shifting the levy from the stage of manufacture or production of goods to the stage of removal. The levy is and remains upon the manufacture or production alone. Only the collection part of it is shifted to the stage of removal. Once this is so, the fact that the provisions of the Central Excise Act are applied in the matter of levy and collection of special excise duty cannot and does not mean that wherever the Central Excise duty is payable, the special excise duty is also payable automatically. That CCE, Hyderabad Vs. Vazir Sultan Tobacco Company reiterates a settled position that duty of excise is leviable on manufacture or production of the goods as contemplated by Entry 84 of List-1 of the Seventh Schedule to the Constitution. The mere fact that, for the sake of convenience, the duty is collected at the stage of removal cannot and does not change the character of the tax. It is upon the manufacture or production of goods and not on any other basis. Once the levy is not there at the time when the goods are manufactured or produced, it cannot be levied at the stage of removal of the said goods. The impugned order cannot be sustained and the same is accordingly set aside - the appeal filed by the appellant is allowed.
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CST, VAT & Sales Tax
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2023 (11) TMI 144
Levy of penalty under Section 51(7)(b) of PVAT Act - deficiency in the documents with regard to correct name and address of consignee, despite the fact that documents were produced voluntarily at the ICC, which rules out any evasion of tax - HELD THAT:- The Tribunal while dismissing the appeal of the appellant observed that all previous transactions running into crores had correctly been entered at Mohali. However, it was held that this fact could not absolve the appellant from producing true and correct invoice pertaining to the current transaction - the findings so given by the Tribunal are liable to be set aside, as it was merely a clerical mistake, that only the name of the consignee was wrongly mentioned while picking the name of the appellant from drop-down menu in the software used by the Noida Head Office of the appellant. Futher, it is not being disputed that the Dehradun Branch in whose favour, the invoice was mistakenly generated, does not deal with the goods, which were being transported, vide invoice No. 157. Penalty can be imposed to evade tax and not for bona fide mistake. The driver in the present case voluntarily reported the goods at ICC Jharmari for generating necessary information and goods were accompanied by all the necessary documents. The substantial questions of law are answered in favour of the appellant and against the revenue, as penalty cannot be imposed upon the appellant on account of a clerical mistake - The appeal stands allowed.
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Indian Laws
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2023 (11) TMI 143
Grant of Interim Relief - denial of of interim relief on the ground that there is an alternate remedy available - HELD THAT:- If the High Court has found that the matter was worth admitting then there was no question of non-considering the issue with regard to grant or refusal of interim relief, on the ground that there is an alternate remedy - When the High Court finds that there is merit in the matter and admits it, then it was also bound to consider as to whether the interim relief should have been granted or not. Non-granting of interim relief on the ground that there is an alternate remedy available is totally contradictory to the earlier part of the order admitting the matter - Non-consideration of the question of grant or refusal of interim relief, in our considered view, would be a failure to exercise the jurisdiction vested in the High Court. The impugned order set aside - matter remitted back to the High Court - appeal allowed.
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2023 (11) TMI 142
Dishonour of Cheque - noncompliance of certain terms of the settlement agreement, has been settled - compounding of offences - HELD THAT:- As per the judgment delivered by a learned Division Bench of this Court in Dayawati v. Yogesh Kumar Gosain, [ 2017 (10) TMI 1063 - DELHI HIGH COURT] once the offence under Section 138 of the NI Act is compounded in terms of Section 147 of the said Act, the recovery of the agreed upon amount, has to be realized in terms of Section 431 read with Section 421 of the CrPC. It is pertinent to note that the only thing which the Court in terms of the aforesaid provisions can do is attach the properties of the accused persons. Powers to issue non-bailable warrants with the learned Metropolitan Magistrate at the stage when the proceedings in the complaint case are over has not been provided for. A bare reading of the said provisions reflects that the mandatory presence of accused persons has not been provided for. The warrant will only be issued for attachment and not for arrest. In view of the scheme of the CrPC and the observations made in Dayawati (supra), this Court is of the considered opinion that once a compromise has been arrived at and an offence under Section 138 of the NI Act is compounded, the concerned Court, after passing an order compounding the offence can only proceed for attachment in terms of Sections 421 and 431 of the CrPC. Thus, the non-bailable warrants issued were without jurisdiction and therefore, the consequent proceedings under Section 82 of the CrPC were also invalid. This Court is of the opinion that in the present case, no useful purpose will be served by continuing with the proceedings in the subject FIR and it is an appropriate case for quashing the same in order to secure the ends of justice - Petition allowed.
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2023 (11) TMI 141
Dishonour of Cheque - no evidence given to demonstrate that notice was served on a particular date - it was nowhere written in the complaint as to when the notice was served on the accused - HELD THAT:- The date of the receipt of notice is very much important but it is not necessary that any particular date as regard receipt of demand notice should mandatorily be mentioned in the complaint itself - In judgment of Deepak Kumar and Another [ 2006 (9) TMI 617 - ALLAHABAD HIGH COURT ], this High Court observed that in case dates are not revealed in the complaint, the same can be inferred from the paper on record. In this case the complainant, in his complaint, clearly stated that the notice was sent through a registered post on 19.11.2019 and that it was never returned to the complainant. In view of the above statement in the complaint and in view of the papers produced viz, the cheque, the Bank memo, demand notice, the disclosure of material dates like, date of dishonour, date of sending the notice, the date on which 15 days elapsed, the date of the filing of the complaint clearly and explicitly mentioned in para no. 12 of the complaint, there remains no doubt that the petition is wholly without merit. It may specifically be noted that para no. 12 of the complaint discloses a date of service of notice as well, a fact which has been conveniently ignored by the accused petitioner all the while - an attempt to stall the proceedings has been made on the basis of non-existent ground. There are no infirmity, illegality or irregularity in the summoning order dated 10.12.2020 as well as the order dated 20.01.2023 - petition dismissed.
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2023 (11) TMI 140
Dishonour of Cheque - existence of legally enforceable debt or not - acquittal of accused of all charges - amicable settlement arrived at between both the parties - HELD THAT:- The contention of the petitioner that the claim of the balance amount on settlement not being the amount of cheque, the present proceeding under Section 138 N.I. Act being not maintainable, is not in accordance with law, as the payment was not made between the date when cheque was drawn and the date when the cheque was presented on maturity, and on the date of presentation, the total cheque amount was payable by the petitioner towards an enforceable debt and liability. The revisional application is accordingly dismissed.
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