Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 22, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance made u/s 40A(2) towards salary and professional fees paid to the relative of a director of the company - assessee had duly provided the complete details of nature of services rendered - no disallowance - AT
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Grant of registration u/s. 12A and 80G refused - non Charitable purpose - assessee incurred advertisement expenditure for procuring more admission of the students with sole motive of earning profit, is wrong. - AT
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Interest subsidy - Composite income - growing and manufacturing of tea - there is no reason why this income should not be considered as part of the composite income before apportionment between income from agriculture and income from nonagricultural income. - AT
Customs
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Valuation of imported goods - Pistachio - Rule 8 of Customs Valuation Rules, 1988 - the comparison with the price of the different goods of different period cannot be held correct - AT
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Classification - Broken Copper Cathode - Even if imported goods are not considered as ‘Sections of Cathodes’ then also the imported goods could be classified as ‘-Other’ under CTH 7403 19 00 so long as the imported goods satisfy the criteria of ‘Refined Copper’ - AT
Indian Laws
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Applicability of Key provisions of SARFAESI ACT to the J&K - legislative competence of Parliament - Sections 13(1) and (4) cannot be held to be beyond the legislative competence of Parliament as has wrongly been held by the High Court. - SC
Service Tax
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Construction activity of commercial portion of ISBT - When the construction of ISBT is not a taxable service, there cannot be any bifurcation of that activity for service tax. - AT
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The appellant cannot be blamed for entertaining a bona fide belief that the activity undertaken by them and the commission received from airlines not be liable to payment of service tax. - AT
Central Excise
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SSI exemption - the duty evasion is pre-planned, to evade duty by using others brand was planned by the appellant assessee. It is corollary that during the same period they also had the intention to evade payment of duty by way of under-valuation and surreptitious removal - demand confirmed - AT
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Manufacture - Chargeability of excise duty - manufacture of Pepfiz Effervescent Tables ( Pepfiz ) using, among other things, absolute alcohol/ethanol - the usage of alcohol in the manufacturing activity of the impugned goods by itself is found to be sufficient - no excise duty liability - AT
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Unjust enrichment - Whether the duty paid in excess or short paid can be adjusted suo motto by the appellant? - appellant was not entitled to suo motto adjust the excess/short payment of duties. - AT
VAT
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Valuation - whether the freight charges for transporting dolomite by the petitioners to the respondent/Bhilai Steel Plant would be a part of sale price and hence exigible to commercial tax? - Held Yes - HC
Case Laws:
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Income Tax
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2016 (12) TMI 1091
Deduction under Section 80IB(10) - eligible housing project - Hed that:- HC order confirmed [2016 (9) TMI 295 - DELHI HIGH COURT]. The income from the housing schemes in respect of which deductions are claimed are by themselves standalone complete housing projects. - Decided in favour of assessee
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2016 (12) TMI 1090
Payment of interest under Section 234B and Section 234C - Levy of interest as ordered/affirmed by the High Court[2012 (8) TMI 526 - MADRAS HIGH COURT] - nature of receipt - whether amount received is on account of 'salary' or the same is a 'capital receipt'? Held that:- A perusal of the relevant provisions of Chapter VII of the Act [Part A, B, C and F of Chapter VII] would go to show that against salary a deduction, at the requisite rate at which income tax is to be paid by the person entitled to receive the salary, is required to be made by the employer failing which the employer is liable to pay simple interest thereon. The provisions relating to payment of advance tax is contained in Part 'C' and interest thereon in Part 'F' of Chapter VII of the Act. In cases where receipt is by way of salary, deductions under Section 192 of the Act is required to be made. No question of payment of advance tax under Part 'C' of Chapter VII of the Act can arise in cases of receipt by way of 'salary'. If that is so, Part 'F' of Chapter VII dealing with interest chargeable in certain cases (Section 234B – Interest for defaults in payment of advance tax and Section 234C – Interest for deferment of advance tax) would have no application to the present situation in view of the finality that has to be attached to the decision that what was received by the appellant – assessee under the Non-Compete Agreement was by way of salary. For the aforesaid reasons, the appeals are allowed; the order of the High Court so far as the payment of interest under Section 234B and Section 234C of the Act is set aside.
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2016 (12) TMI 1089
Levy penalty under Section 271(1) (c) - Held that:- In the present case there is not even a remote suggestion of there being any falsehood of about there being any material details and particulars supplied by the assessee to the department. It is true that their claim was not accepted but that not in itself comes to the inevitable conclusion that the details supplied by the assessee were false, inaccurate or suffered from any concealment. In the absence of any finding with regard to the concealment or with regard to lack of bonafidies of the assessee in furnishing correct material particulars, no penalty would be attracted under the provisions of Section 271 (1) (c) of the Act. - Decided in favour of assessee
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2016 (12) TMI 1088
Depreciation on activities undertaken in relation to the installation of windmill - Held that:- All the components used for the structure of a windmill were entitled for higher depreciation and is a part of a integrated machinery. - Decided in favour of assessee Disallowance u/s 36(1)(iii) - loans and advances and advances have been given to these family concerns out of the sale of land - Held that:- Any amount taken from the loan was diverted towards any non-business purpose and therefore the tribunal has rightly arrived at the conclusion that the claim for deduction made by the assessee for the sums given by it to one of its members from the proceeds which has been received from the sale of property were liable to be given allowance under section 36 (1)(iii) of the Income Tax Act. The matter is thus concluded on facts.- Decided in favour of assessee Allowance of expenses on earth filing and other miscellaneous expenses - Held that:- The tribunal categorically records the finding of fact that the assessee genuinely incurred expenses on earth filling and other miscellaneous expenses for the purpose of business on the property that they had purchased from the Agra Development Authority. This question too is therefore concluded by facts and answered in favour of the assessee - Decided in favour of assessee
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2016 (12) TMI 1087
Levy of penalty under Section 271(1) (c) - surrender of cash credit - Held that:- Once the surrender of cash credit had been accepted by the Settlement Commission and the immunity granted then the claim of interest on the same as expenditure in the succeeding assessment years cannot straightaway give rise to penalty proceedings and normally would merely be a case of disallowance of interest. While the immunity with regard to the loan amount may not apply to the interest claimed thereon but the effect shall normally be to the extent of disallowance of the said interest as expenditure in the few succeeding assessment years, particularly when the claim had been made much before the final surrender of the said cash credit before the Settlement Commission. Finally it has to be held that the present matter is squarely covered by the decision of the Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) wherein it was held that making an incorrect claim cannot tantamount to furnishing incorrect particulars and it has to be shown that there has been concealment of particulars of income and incorrect particulars have been furnished. - Decided in favour of assessee
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2016 (12) TMI 1086
Amounts of advance tax paid adjustment while determining the balance - settlement of tax payable - Held that:- The major bulk of the demands appear to have been made on 30.03.1995, i.e. much after the advance tax payments were due. Furthermore, these amounts were to be adjusted towards outstanding arrears for previous years. That such interest arrears existed is not in dispute. Therefore, the petitioners are not correct in contending that the amounts of advance tax paid had to be necessarily adjusted while determining the balance. The dispute which has remained pending for long does not show that any substantial injustice was done warranting exercise of discretion. Concededly, the petitioner Inter Craft appears to have deposited the modified amount of ₹ 68,61,775/- during the pendency of these proceedings. In its case the claim would, therefore, undoubtedly not only involve interpretation of provisions of the Income Tax Act at the risk of doing violence to them but would also include an intricate exercise and mathematical calculation. Likewise in the case of Old Village, too, the argument is not tenable. The propositions that the petitioners advance are unsound in law and have no basis under the Scheme. Once the statute clarified that amounts paid towards tax are not to be deemed "unpaid" for any reason, the normal provisions which had applied, when they did- during the course of assessment, could not have been reversed or given a go bye, which is what is asked by these petitioners. Doing so would be contrary to law. For the foregoing reasons, this Court holds that the petitions are bereft of merit and are accordingly dismissed.
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2016 (12) TMI 1085
Entitlement to depreciation under Section 32 - assessee was not the owner of the property in question and was in possession thereof as a lessee during the year under consideration - Held that:- As decided in Podar Cement[1997 (5) TMI 2 - SUPREME Court] the benefits under Section 53A of the TP Act could be considered for the purposes of income tax and permissibility of depreciation. Mysore Minerals Ltd. vs CIT (1999 (9) TMI 1 - SUPREME Court) the finding of fact arrived at in the case at hand' is that though a document of title was not executed by the Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like housing boards, houses are constructed on a large scale and allotted on part payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of documents transferring title necessarily follows if the schedule of payment is observed by the allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person intervenes. The part payments made by allottee are with the intention of acquiring title. The delivery of possession by the Housing Board to the allottee is also a step towards conferring ownership. Documentation is delayed only with the idea of compelling the allottee to observe the schedule of payment.- Decided against revenue.
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2016 (12) TMI 1084
TDS on the amount of compensation and interest received pursuant to judgment and award of the Land Acquisition Reference - Held that:- The land of the petitioner was acquired for public purpose and he received compensation of ₹ 92,56,980/-, being additional amount of additional compensation and ₹ 3,06,39,391/- towards interest under the provisions of Land Acquisition Act, the assessee was not liable to pay any tax on the aforesaid amount received by him. Once on the aforesaid amounts, the petitioner was not liable to pay tax and/or the aforesaid sum of amount was not subject to tax, there was no question of deducting any tax at source, as has been done by the respondent no. 1. Identical question came to be considered in Movaliya Bhikhubhai Balabhai Versus Income Tax Officer - TDS - 1 - Surat & 1 [ 2016 (5) TMI 488 - GUJARAT HIGH COURT] held that the acquiring body was not justified in deducting the tax at source on the amount of compensation and the interest received under the provisions of the Land Acquisition Act. The impugned action of the respondent no. 1 in deducting and depositing a sum of ₹ 45,20,257/- towards TDS on the amount of compensation and interest received thereon pursuant to judgment and award of the Land Acquisition Reference is hereby quashed and set-aside. - Decided in favour of assessee
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2016 (12) TMI 1083
Validity of reopening of assessment - proceedings initiated solely at the instance of audit party and solely on the audit objections - grant of deduction under Section 35 - Held that:- On perusal of the file and notings and the relevant documents, it appears that the re-assessment proceedings have been initiated at the instance of audit party and solely on the audit objections. From the correspondence between the Assessing Officer and Principal Director of Audit [Central], it appears that even the Assessing Officer justified grant of deduction under Section 35 of the Act granted while passing original assessment order and in fact, he opined that the audit objection be dropped. While making such opinion, in fact, he specifically observed that the assessee has legitimately claimed deduction under Section 35 [2AB] of the Act. As observed herein above, in fact to the query raised by the audit party, the Assessing Officer had even opined to drop audit query by observing that the assessee was entitled to deduction claimed under Section 35 [2AB] of the Act. Under the circumstances, in view of the aforesaid ground alone, the impugned notice cannot be sustained and the same deserves to be quashed and set-aside. A speaking order came to be passed by the Assessing Officer in paragraph 4 of the assessment order granting deduction under Section 35 of the Act post August 2010. In that view of the matter, the subsequent re-assessment proceedings initiated by another Assessing Officer can be said to be a change of opinion, and therefore, on a mere change of opinion, the re-assessment proceedings cannot be sustained. - Decided in favour of assessee
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2016 (12) TMI 1082
Determining Fair Market Value in terms of Section 23(1)(a) - addition of notional interest @ 7% on interest-free deposit - Annual value understatement - Held that:- In the present case, AO has not brought on record any material to demonstrate that the actual rent charged by the assessee is less than the fair market value or the interest free security deposit has affected the rent charged by the assessee. We cannot support the mode of additions made by the AO on estimate basis in the absence of any evidence on record. Thus the decision taken by the CIT (A) in deleting the addition made by the AO is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by the Revenue in both the appeals are dismissed. Deemed dividend u/s 2(22) - Held that:- We are fully in agreement with the submissions of the ld. AR that since substantive addition has been deleted in the hands of M/s.BIEPL and thus, the protective addition be set aside and the matter be restored to the file of the AO. Accordingly, we set aside the order of the ld.CIT(A) and restore this matter to the file for AO for fresh examination of the matter and decide the same in accordance with law after being providing necessary opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
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2016 (12) TMI 1081
Eligible for exemption of the capital gains u/s 54EC - AO held that since the investment in the specified securities as stipulated u/s 54EC of the Act were not paid on or before 12th April, 2009, the assessee is not entitled to claim deduction - Held that:- The word ‘month’ as stipulated in Section 54EC of the Act clearly postulate that the investment in long term specified assets is to be made within six months from the date of transfer of original asset , as the word ‘month’ has not been defined under the Act , the reference to Section 3(35) of General Clauses Act,1897 has to be adopted which provides “Month” shall mean a month reckoned according to the British calendar. The REC bonds were subscribed by the assessee on 24-04- 2009 and were allotted to the assessee by REC on 30th April, 2009 which is within six months after the date of transfer of asset as per British Calendar month, hence, the assessee fulfilled the conditions laid down under section 54EC of the Act and as such assessee is eligible for deduction u/s 54EC of the Act of ₹ 17,50,000/- invested in long term specified assets being REC Bonds on 24-04-2009 which is within six months from the end of the month in which transfer took place i.e. October 2008 , the original asset having being sold on 13-10-2008 . - Decided in favour of assessee.
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2016 (12) TMI 1080
Addition u/s 14A - suo motu disallowance by assessee - Held that:- The total expenses charged to the profit and loss account excluding the donations and bad debts were ₹ 24,11,959/- and the disallowance if is calculated as per section 14A rule 8D(2)(iii) comes to ₹ 1,22,90,682/- which is unreasonable and excessive and therefore the assessee suo motto disallowed a sum of ₹ 9,00,907/- out of expenses as relating to exempt income. We further find that the AO without recording any satisfaction with the reference to the books of accounts as regards the expenses attributable to exempt income made the additions of ₹ 15,11,000/- apart from the suo motto disallowance by the assessee of ₹ 9,00,907/-. In our opinion the disallowance as made by the assessee is reasonable and justified and no further disallowance without pointing out any defect in working of the assessee of the said disallowance with reference to the books of accounts. Thus set aside the order of the CIT(A) by restricting the disallowance u/s 14A read with rule 8D to ₹ 9,00,907/- as voluntarily made by the assessee and according the appeal of the assessee is allowed.
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2016 (12) TMI 1079
Addition made u/s 40A(2) - assessee had purchases of goods from its holding company in excess of the fair market value - Held that:- The onus is on the ld AO to bring the fair market value of the goods purchased by bringing in comparable cases ; onus is on the ld AO to bring on record that the payment for purchases has resulted in some benefit derived by the other person to whom the payment has been made. Only in such cases, he could disallow to the extent that such payment is found to be excessive or unreasonable in his opinion. In the instant case, the ld AO had not brought any comparable cases on record to disprove the purchases made from holding company by the assessee. - Decided in favour of assessee Disallowance made u/s 40A(2) towards salary and professional fees paid to Chandana Poddar - Held that:- The business acumen is developed by a person not by educational qualification but by his / her sheer native intelligence and presence of mind which does not come from education alone. We also find that the assessee had made total payments only to the extent of ₹ 12 lakhs to Mrs Chandana Poddar as against ₹ 13 lakhs disallowed by the revenue, which was not rectified even when specifically brought to their notice. We find that in the instant case, the assessee had duly provided the complete details of nature of services rendered by Mrs Chandana Poddar. If the revenue had got any apprehension regarding the same, nothing prevented them from questioning her by recording a statement by resorting to process of issuing summons procedure contemplated u/s 131 of the Act. In the absence of bringing any other evidence to the contrary, no disallowance could be made in the facts and circumstances of the case. AO had merely disallowed the entire expenditure as not meant for the purpose of business. If that be so, he ought not to have invoked the provisions of section 40A(2) of the Act. We also find that the ld AO had without prejudice had also tried to disallow the said expenditure u/s. 37 of the act as not meant for the purpose of business. We find that this action of the ld AO is purely without any basis and is merely based on surmise and conjecture. - Decided in favour of assessee Disallowance of interest paid on borrowed funds on a proportionate basis - Held that:- The revenue did not adduce any evidence to show that the borrowed capital was utilized by the assessee for non-business purposes. We find that the test of commercial expediency is proved in the instant case beyond doubt and hence the interest paid on borrowed capital is to be allowed. We hold that the interest paid on borrowed funds in the sum of ₹ 5,34,24,658/- would be squarely allowable as deduction u/s 36(1)(iii) of the Act. - Decided in favour of assessee
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2016 (12) TMI 1078
Disallowance of expenses towards speculation business - Held that:- Since there is no speculation activity in respect of this loss on sale of shares in the facts and circumstances of the case, the expenses disallowed would also become regular business expenditure and deserve to be deleted. We find that these facts were duly brought to the notice of the ld CITA who did not understand the same and simply dismissed the grounds as not pressed. We hold in the facts and circumstances that the expenses of ₹ 19,75,939/- does not attribute to speculation business. - Decided in favour of assessee Treatment of long term capital loss on sale of unquoted equity shares - Held that:- We find from the details available on record, that the assessee had sold the shares of unquoted share (i.e Herbicure P Ltd) at ₹ 8.65 per share which is much more than the break up value per share of the said company (based on its balance sheet) of ₹ 1.09 per share. We find that the assessee had incurred long term capital loss thereon and short term capital gains thereon in respect of two lots of shares sold by it depending upon the period of holding. We find that the revenue having accepted the said sale price per share in the event of deriving gains ought not to have disputed the same in the event of incurring losses as stated supra. With regard to Modipan Ltd, we find that the shares of the said company are listed in BSE and the prevailing market price was ₹ 13.75 per share and the assessee had sold the share on off market basis at ₹ 14 per share . Accordingly, we hold that the long term capital loss on sale of shares of unquoted shares (Herbicure P Ltd) and sale of shares of quoted share (Modipan Ltd) which was done on off market on which STT was not suffered, would be separately eligible to be carried forward to subsequent years - Decided in favour of assessee Disallowance of interest on borrowed funds on a proportionate basis - Held that:- We find that the details in the paper book vide pages 40 to 92 were not properly examined by the ld AO. Hence in the facts and circumstances of the case, we deem it fit and appropriate in the interest of justice and fair play , to set aside this issue to the file of the ld AO, to decide the same afresh, in accordance with law. Disallowance u/s 94(7) - Held that:- We find that the ld AR had stated that the subject mentioned shares of Opto Circuits Ltd which were sold within a period of three months from the record date were only to the extent of 100378 shares and dividend paid thereon @ ₹ 5 per share worked out to ₹ 5,01,890/- and hence agreed for disallowance u/s 94(7) of the Act to that extent. We hereby direct the ld AO to verify the veracity of this claim based on the examination of relevant documents in that regard and decide the same afresh in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard.
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2016 (12) TMI 1077
Levy of penalty under section 271(1)(c) - recording of satisfaction - declaration of income in revised return filed - Held that:- We find merit in the stand of assessee in this regard, wherein Explanation 5A to section 271(1)(c) of the Act categorically provides that the same is applicable in case of searches. However, the Statute is silent about the additional income offered by the persons in the revised return of income filed pursuant to Survey proceedings. The additional income was declared during the Survey and if offered by the person in the revised return of income filed thereafter, then the same does not partake the nature of additional income taken note in Explanation 5A to section 271(1)(c) of the Act. Even if it is established that the additional income is on account of concealment of income but while recording satisfaction for initiating penalty proceedings, the Assessing Officer should explicitly mentions as to whether penalty is being initiated for concealment or income or for furnishing of inaccurate particulars of income. In the absence of the same, notice issued in such circumstances, which also is not clear as to which limb of section 271(1)(c) of the Act is attracted, stands vitiated and the penalty order passed consequent to such notice is invalid in law. Accordingly, we delete the penalty levied under section 271(1)(c) of the Act in the case of assessee. - Decided in favour of assessee
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2016 (12) TMI 1076
Grant of registration u/s. 12A and 80G refused - non Charitable purpose - Held that:- It appears that the conclusion reached by the CIT that the assessee trust is profit oriented entity and not the charitable institute, is based only on the ground that the assessee would charge hefty fees from the students. The ld. CIT has failed to throw any light on the aims and objects of the society and to examine whether the activities of the society are to achieve the aims and objects as per its memorandum. Simply because the appellant will charge fee from the students, in our opinion, it does not go to suggest refusal of registration to the assessee society. CIT has also observed that governing body of the society belongs to close family members, which also does not bar for the formation of society. The society is a separate entity from its members and is governed by the Societies Registration Act, 1960 and each society makes separate Rules and Regulations. The ld. CIT has further noted that a sum of ₹ 68,531/- has been incurred towards advertisement expenditure for the purpose other than education. In this regard, the ld.AR clarified that it was incurred for hiring of faculty members for running the institute. Therefore, the expenses incurred on advertisement for hiring talented faculty members cannot be said to have incurred for other than educational purpose. Therefore, the allegation made by the ld. CIT that the assessee incurred advertisement expenditure for procuring more admission of the students with sole motive of earning profit, is wrong. Thus we allow the appeal of assessee for registration u/s. 12AA of the IT Act. - Decided in favour of assessee For approval u/s. 80G the assessee should be given one more opportunity of hearing before the ld. CIT to put its case and comply with the notices issued to him before finally deciding the issue of approval u/s. 80G.
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2016 (12) TMI 1075
Revision u/s 263 - claim of additional depreciation on the ground that the assessee company is industrial undertaking engaged in the business of generation of power and activity of power generation satisfying the condition of manufacture - Held that:- Since the Assessing Officer has not considered the amendment brought to the definition of manufacture and have allowed the claim of additional depreciation on the basis of earlier decisions mentioned hereinabove, in our considered opinion, there is an error in law in the assessment order and, therefore, we do not find any reason to interfere with the findings of the ld. Principal CIT to this extent. Set off of brought forward losses - Held that:- A perusal of the order of the authorities below shows that the assessee company has claimed set off of unabsorbed business loss/unabsorbed depreciation as per the return of income field by the assessee company. The set off of loss and depreciation are to be allowed on the basis of income/loss determined in the assessment of a particular year and if subsequently the income/loss so determined is reduced in appeal the claim of set off shall be subject to change accordingly. Therefore, this issue needs verification by the A.O. while giving effect to the orders of the appellate authorities. We, therefore, do not find any error or infirmity in the direction of the ld. Principal CIT. The order to the same effect is upheld to this extent. Treatment of Government Grant u/s. 115JB - Held that:- We find that the ld. Principal CIT has ignored the fact that the grant in question was received in terms of the Financial Restructuring Plan from the Government and the company has accounted Government Grants in terms of the mandatory Accounting Standard (AS)-12 on “Accounting for Government Grants” prescribed by the ICAI. Considering the accounting treatment in the light of the Accounting Standard-12, we do not find any error on facts or in law. Therefore, to this extent the findings of the ld. Principal CIT are reversed. Provision for Collapsed Cooling Tower u/s. 115JB - Held that:- The lower of Net Booked Value and Net Realizable Value have to be considered and expected loss is to be recognized in the Profit and Loss account. The assessee has worth 50% of the WDV on estimated basis. Therefore, it cannot be said that it has Net Realizable Value to worth 50% of the WDV. Thus, the accounts of the assessee has not been in accordance with Accounting Standarad-10 and, therefore, the same violates the provisions of Section 115JB of the Act. The ratio laid down by the Hon’ble Supreme Court in the case of Apollo Tyres [1965 (12) TMI 22 - SUPREME Court ] do not apply.In our considered opinion, the Assessing Officer has not properly verified the facts and, therefore, we do not find any error or infirmity in the directions of the ld. Principal CIT so far as this issue is concerned.
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2016 (12) TMI 1074
Income from undisclosed sources - claim of long term capital gains on sale of shares rejected - Held that:- Similar issue had been adjudicated in case of DCIT vs Sunita Khemka [2015 (12) TMI 1014 - ITAT KOLKATA ] wherein it was held that when purchase and sale of shares were supported by proper contract notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sale price of these shares is unusually high. The revenue had not brought any material on record to support its finding that there has been collusion / connivance between the broker and the assessee for the introduction of its unaccounted money. Thus we have no hesitation in directing the ld AO to accept the claim of exemption of LTCG of the assessee arising out of sale of shares of G.K.Consultants Ltd - Decided in favour of assessee Addition of gift received from his co-brother - Held that:-On perusal of the documents submitted in the paper book, we are convinced to conclude that the gift received by the assessee from his co-brother is genuine which are duly supported by all the required documents in that regard. We hold that the assessee had duly proved the identity of the donor, genuineness of the transaction and creditworthiness of the donor in the instant case. We find that the gift received by the assessee from his relative also falls under the exception clause covered in the said definition in section 56(2)(v) of the Act. We hold that when all the documents prove the factum of gift by the assessee beyond any doubt, dismissing those documents summarily on the ground that there was no occasion to give the gift would be unjust - Decided in favour of assessee
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2016 (12) TMI 1073
Composite income - Sale consideration in respect of DEPB license - nexus with the business of growing and manufacturing of tea - application of rule 8 - Held that:- All incomes (including DEPB receipts ) excluded by the AO from the composite income but taxed as Income from business separately have to be regarded as part of business income u/s.28 to 44 of the Act. We are also of the view that in the light of interpretation of Rule 8 the ratio laid down by the Hon’ble Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT ) which was rendered in the context of Sec.80IA which speaks of a direct nexus with the eligible business cannot be applied. As already observed, the tests to be applied while computing composite income under Rule 8, is to see whether the receipts fall within the ambit of receipts under Sec.28 to 44 of the Act. We therefore hold that income set out in Ground No. 1 & 3 have to be included as part of the composite income - Decided in favour of assessee Interest subsidy not considered as part of composite income for the purpose of Rule 8 - Held that:- The reasoning given while deciding Gr.No.1 & 3 in the earlier part of this order will equally apply to this ground also. As far as this ground of appeal is concerned, we also find that the CIT(A) has observed that the income in question was assessed as business income. In such circumstances, there is no reason why this income should not be considered as part of the composite income before apportionment between income from agriculture and income from nonagricultural income. We therefore direct the AO to consider the aforesaid receipt also as part of the composite income. - Decided in favour of assessee Disallowance of expenses u/s 14A - Held that:- It can be seen from the computation of total income done by the AO that he has added disallowance u/s.14A of the Act twice. Once while computing adjusted composite income and again while computing Balance business income (as part of the sum of ₹ 1,23,17,727). The quantum of disallowance u/s.14A of the Act is not in dispute. We are of the view that the disallowance has to be made only at the stage of arriving at the composite income and the further addition to the balance business income is not warranted. In this regard the conclusions while deciding ground No.1 and 2 above will equally apply to this ground of appeal also. - Decided in favour of assessee
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2016 (12) TMI 1072
Revision u/s 263 - Held that:- On perusal of the details available on record, we find that the A.O. has conducted detailed enquiry and also examined all the issues pointed out by the CIT in the show cause notice. The assessee has explained each and every issues with necessary evidences. Therefore, we are of the view that, the CIT cannot assume jurisdiction to revise the assessment order, once assessee explained that it had filed all the details before the A.O. on the issues on which CIT wants further verification. It is the general presumption of law that the A.O. has considered all the details before completion of assessment, once the assessee has filed details called for by the A.O. But, the CIT cannot presume that the enquiry conducted by the A.O. is insufficient and also the A.O. has not applied his mind, unless the CIT proves that the assessment order passed by the A.O. is erroneous. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 9.12.2009 is not erroneous in so far as it is prejudicial to the interest of the revenue. -Decided in favour of assessee
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Customs
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2016 (12) TMI 1034
Classification of imported goods - Broken Copper Cathode - classified as ‘Waste and Scrap’ of CTH 74040019 for which pre-shipment inspection certificate is required or are classified as Refined Copper under CTH 74.03 - goods confiscated and penalty imposed. Held that: - not only copper cathodes but ‘Sections of Cathodes’ are also covered under 7403 11 00 as a category of ‘Refined Copper’. Further CTH 7403 19 00 also gives scope for other categories of copper which could be ‘Refined Copper’. As per Rule-1 of the General Rules of Interpretation to the first schedule to the Customs Tariff Act, 1975 classification of imported goods shall be determined according to the terms of the headings and any relevant section or chapter notes. Under the section and chapter notes there is a definition of ‘Refined Copper’ and a definition for ‘Waste & Scrap’. Nowhere in the Customs Tariff or HSN explanatory notes it is specified that notes for waste and scrap will get precedence over chapter note on ‘Refined Copper’. It is not refuted by the department that broken copper cathodes are not a category of refined copper. Even if imported goods are not considered as ‘Sections of Cathodes’ then also the imported goods could be classified as ‘-Other’ under CTH 7403 19 00 so long as the imported goods satisfy the criteria of ‘Refined Copper’. The goods imported by the appellant will be classifiable, as a category of ‘Refined Copper’ under CTH 7403 and not as ‘Waste & Scrap’ of CTH 7404 - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1033
Mis-declaration of description of export goods - confiscation and imposition of fine and penalty - DEPB scheme - Held that: - though there was no intention of availing undue benefit but due to different descriptions on different documents mis-declaration had taken place - confiscation and fine justified. As regards penalty, it is observed that had there been any intention to avail undue benefit, there would not have been clerical errors in the description given in various connected documents. Therefore, there was no intention to avail undue benefit - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1032
Classification of imported goods - old and used tyres - hazardous goods or not - whether the tyres imported by the assessee would have to have permission of MOEF for import into the country under Entry B3140? - Held that: - The Tribunal has recorded a clear finding with regard to the item, which is sought to be imported by the assessee that it is not a waste tyre rather it is a re-usable tyre, which falls within the exclusion clause of the entry. The Tribunal, therefore, has rightly come to the conclusion that the imported goods were not hit by the mischief of hazardous waste and could not be defined as hazardous waste and, therefore, their import did not require the permission of the MOEF - re-usable tyres falls within the exclusion clause of the entry - appeal allowed in favor of appellant-assessee.
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2016 (12) TMI 1031
Release of bank guarantee - EPCG Scheme - N/N. 44/95 - Held that: - the petitioner is a victim of technicalities. It may be true that on the date when the first respondent adjudicated the show cause notice, the petitioner did not have the requisite certificates. However, the certificates have been issued by the Competent Authority - the certificates are in the possession of the petitioner. Therefore, the petitioner s case should be considered and the certificates should be examined and if they are found to be proper and valid, necessary relief as a consequence thereof should be granted - appeal allowed by way of remand.
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2016 (12) TMI 1030
Misdeclaration of value of imported goods - confiscation - Revision of Redemption Fine and Penalty - Held that: - the wrong declaration of value was on account of a mistake by the supplier sending in giving the wrong invoice. However, no mala fide intention can be attributed to the importer - the Bill of Entry was filed declaring the value as 35 Euro [Rs 2583/-However, the goods were found to be valued at Euro 1628. It is also a fact that but for the /customs opening the consignment, the mistake in declaration of value would have gone unnoticed - even though the goods are liable for confiscation under Section 111(m), there is no justification for imposing any redemption fine and penalty - appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1029
Valuation of imported goods - rejection of declared value on the ground that the parties were related - related party transaction - Held that: - we find that there is no evidence brought on record that contemporaneous imports were at a higher price and there being one common director of the importers was also a director and supplier in Walltracts, Dubai, had influenced the price. In the absence of any such evidence, we find that the transaction value as declared by the appellant should not have been rejected. Compliance of provisions of rule 4(3)(a) - Held that: - we do agree with the submission of the Id. counsel that provisions of rule 4(3)(a) needs to be complied, assuming that there is a relationship between the supplier and the appellant herein, the circumstances warrant the same should be examined and the transaction value shall be accepted as the value of the imported goods provided that relationship did not influence the price. In the case in hand, there is nothing on record to show that due to commonality of one director the prices were influenced. Burden of proof of under invoicing is on the revenue, which has not been done. The loading of the price by 100% is incorrect and the impugned order is unsustainable - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1028
Valuation of imported goods - Pistachio - Rule 8 of Customs Valuation Rules, 1988 - enhancement of value on the basis of contemporaneous import - Held that: - The fact that the price of US$ 4.8 per kg is of the Pistachio crop of Nov - Dec, 1999, whereas the appellant’s import of Pistachio is from the crop of 1998 at US$ 3.6 per kg. which is vital fact which should have been considered by the lower authorities - in case of agriculture produce, quality of the goods varies from one of the crop to another particularly edible agriculture produce by lapse of time the product get deteriorated and obviously the price of old stock of agriculture produce will not be equal to the fresh stock of agriculture produce - the comparison with the price of the different goods of different period cannot be held correct - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1027
Maintainability of appeal - Time limitation - Held that: - We find that fact is not under dispute that order-in-original against which the appellant filed an appeal before the Commissioner(Appeals) was passed on 15.12.1995 - The submission of the Ld. Counsel that the order is not signed does not hold water for the reason that it is attested copy issued by the department wherein it is clearly mentioned that it is copy of the signed order, secondly if there is dispute impugned order that cannot be raised for dealing with the time in filing appeal before the Commissioner(Appeals). As regard the submission being Government factory there should not be levy of duty is subject matter of the merit of the case, which cannot be raised when the appeal itself is not maintainable being time bar before the Commissioner(Appeals) - appeal dismissed.
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2016 (12) TMI 1026
Imposition of penalty u/s 114 of the Customs Act, 1962 - penalty imposed based on the statements of Shri Krishna Pal Singh and Shri Goutam Prasad Jaiswal - request for cross-examination not considered - principles of natural justice - Held that: - In the absence of any reasoning for denying the opportunity of cross-examination the case of Shri Prahlad Agarwal is required to be remanded back to the Adjudicating authority for making efforts to extend the cross-examination of the witnesses whose statements are relied upon by the investigation for penal action against the Appellant. Appeal of Shri Prahlad Agarwal is allowed by way of remand to the Adjudicating authority to decide the issue afresh after extending cross-examination of the relied upon witnesses and also by giving an opportunity to the Appellant to explain his case - appeal allowed by way of remand. Imposition of penalty on other Appellant Shri Subhas Oraon - none appeared on his behalf - Held that: - it is observed that he is not interested in pursuing his Appeal. Accordingly Appeal is dismissed for non-prosecution.
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2016 (12) TMI 1025
Quantum of redemption fine - M/s. Nitu Enterprises imported two consignments of ‘Bearings’ of third country origin from M/s.Kumar Trading Co.Ltd. (LLC), Dubai and sought transit of the same to Nepal - consignments were found to be of Russian/Japanese/Police/Romanian origin - on overseas enquiries the addresses of the importer was found to be fictitious - whether the redemption fine imposed is adequate or is needed to be enhanced? - Held that: - It is observed from the case records that declared value of the two consignments, intended to be cleared to Nepal against Customs Transit Declaration(CTD) was ₹ 24,13,642/-. At the time of seizure department estimated the market value of Bearings to be ₹ 1,93,09,139/-. At the time of disposal of the said goods as per the direction of Hon’ble Apex Court an amount of ₹ 1,01,05,990/- was realized and deposited with State Bank of India, Main Branch, Kolkata. Even if the sale proceeds of ₹ 1,01,05,990/- is taken to be the market value of the seized goods then also the margin of profit will be more than 300%. Accordingly Bench is of the considered view that redemption fine imposed by the Adjudicating authority is highly inadequate. In the interest of justice redemption fine is enhanced from ₹ 1.00 Lakh to ₹ 25.00 Lakhs under Section 125 of the Customs Act, 1962 - quantum of redemption fine enhanced - appeal allowed - decided in favor of Revenue.
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2016 (12) TMI 1024
Imposition of penalty u/s 114 (i) & Sec 114 AA of the Customs Act 1962 - Whether feathers used in the making of silk fabrics, being exported by the appellant, are prohibited Ostrich feathers as per CITES? - certificate of origin - Held that: - Ostrich is a flightless bird of African origin & all the countries specified above in CITES are African countries. If the imported feather were of imitation nature or of non African origin then supplier of the feathers was required to produce a certificate from the appropriate authorities in Spain that the same were of non prohibited nature, to honour international convention on protection of wild flora & fauna. As a signatory to CITES it is the duty of member countries to be strict while dealing with endangered plant & animal species. In the absence of any certificate of origin from the an appropriate authority it can not be said that feathers used in the silk fabrics were from non prohibited area. Export of consignment valued at ₹ 1,51,303/- has thus been correctly confiscated. Imposition of penalty - Held that: - it is observed that appellant did not play any role when the consignment of feathers was imported & received. The consignment of imported feathers processed through courier Agency was never got cleared by the Appellant - Ostrich feathers are not a prohibited item under wildlife (Protection) Act 1972 - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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Corporate Laws
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2016 (12) TMI 1019
Scheme of Amalgamation is in the interest of its shareholders and creditors as well as in the public interest. The same deserves to be sanctioned. Accordingly, the Scheme is hereby sanctioned. The attention of the Court is drawn to the fact that the other six Transferor Companies have filed similar Petitions in the Bombay High Court and that the Transferee Company has filed a Petition at Madras High Court seeking sanction of the Scheme. Therefore, the Scheme is sanctioned subject to it being sanctioned by the High Courts of Bombay and Madras.
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2016 (12) TMI 1018
Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioner Transferor Company shall preserve its books of accounts, papers and record and shall not dispose of the records without the prior permission of the Central Government under Section 396 A of the Companies Act, 1956. It is further observed that the sanction of this Scheme shall not absolve the Transferor Company from statutory liabilities, if any.
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PMLA
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2016 (12) TMI 1014
Money laundering - bail application - nature of offence - Held that:- The offence alleged against the Petitioner is of money-laundering. The report submitted to the Special Court, on the basis of which the Special Court has taken cognizance vide its order dated 27th April 2016, reveals that M/s. K.S. Chamankar Enterprises secured RTO Development Project amounting to ₹ 4,700/- Crores from the Maharashtra Government by misrepresentation and fraud and in connivance with the public servants and the Petitioner, who was the then PWD Minister of Maharashtra State. As a result, the State Government has suffered loss to the tune of ₹ 840.16 Crores; whereas, the Petitioner and the others have reaped undue gain of the said amount. The Special Court has observed the reasons why it found that cognizance needs to be taken of the offence, having regard to the specific allegation not only in respect of generation of the proceeds of crime, but also in its laundering and thereafter issued the process. Thus, there was sufficient material before the arresting authority for the reason to believe that the Petitioner is guilty of the offence punishable under Section 3 r/w. Section 4 of the PML Act. If for such a serious offence in view of this prima facie material, Respondent No.2 had reason to believe that the Petitioner is guilty of the offence of moneylaundering and hence Respondent No.2 arrests the Petitioner and the Special Court remands him to Custody, then neither the arrest nor the detention of the Petitioner can be called as illegal to issue Writ of Habeas Corpus. Having regard to the gravity of the offence, the very object of the PML Act would be frustrated, if the Petitioner projects some loophole or infirmity in the implementation of the provisions of the PML Act, in order to get his release from detention, that too by invoking such extra-ordinary remedy, circumventing the very specific provisions of bail, as laid down under Section 45 of the PML Act. After all, the provisions of PML Act or any Statute are to be interpreted in order to advance the substantial cause of justice and not to curtail the same in any way or to create an hindrance in achieving the said cause. If the provisions of PML Act are to be interpreted, therefore, in the proper perspective, then, we do not find that there was any such lacunae, infirmity or, much less, illegality in the arrest and detention of the Petitioner, for this Court to invoke its extra-ordinary jurisdiction for release of the Petitioner. Thus, none of the contention raised by the Petitioner to challenge his arrest as illegal holds merit. As a result, the Petitioner has failed to show that his arrest is wholly illegal, null and void and further failed to show that the Special Court has passed the Remand Order mechanically without application of mind, his petition for Habeas Corpus cannot be maintainable. Hence, we do not find this is a fit case either to admit, much less, to grant the relief, as prayed for.
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Service Tax
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2016 (12) TMI 1071
Nature of transaction - bifurcation of works contract - While the petitioner's say is that the transactions are separate and not composite in nature, it is the contention of the respondents that the transactions are composite in nature and that they have been artificially split - Held that: - Whether or not, the impugned transactions are composite in nature, as alleged by the respondents is a mixed question of fact and law. The impugned order refers to a judgment, State of Andhra Pradesh V. M/s.Kone Elevators (India) Limited, 2005 [2005 (2) TMI 519 - SUPREME COURT OF INDIA], (in short Kone-I), and the principles articulated therein, which has been overruled by a Larger Bench of the Supreme Court inKone Elevator India Pvt. Ltd., V. State of Tamil Nadu [2014 (5) TMI 265 - SUPREME COURT] (in short Kone-II) - As to what extent the Adjudicating Authority/respondent No.1 was influenced by the ratio of the judgement in Kone-I cannot be known. The judgement in Kone-I has had a bearing on the manner in which subject contracts have been viewed - the writ petition is thus disposed off - matter remanded back.
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2016 (12) TMI 1070
Maintainability of appeal - monetary limit - Held that: - an appeal shall not be filed before the High Court in case where the monetary limits is less than ₹ 15,00,000/- - In the instant case, tax effect is less than the limit of ₹ 15 lakhs prescribed in the said Instructions - appeal not maintainable.
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2016 (12) TMI 1069
Principles of natural justice - counsel had offered to appear on 16/12/2015, but, on account of certain personal reasons, counsel could not appear in the matter and therefore petitioner submitted Ext.P4 application seeking adjournment. In Ext.P4, the counsel also sought for time to post the hearing by another week. It seems that the officer did not take note of Ext.P4 and had proceeded to pass the impugned order - whether there is any violation of principles of natural justice or rather one more opportunity should be granted to the petitioner to contest the matter? Held that: - Though there is justification on the part of the officer to have proceeded further in the matter, still, when the petitioner has a contention that certain documents are required to be produced to substantiate the defence taken in the matter, I am of the view that one more opportunity has to be given to the petitioner to ventilate their grievance - petition allowed in favor of petitioner by way of remand.
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2016 (12) TMI 1068
Construction activity of commercial portion of ISBT - whether the exclusions available under “Commercial or Industrial Construction Service” for transport terminals can be applied to the commercial portion of the ISBT? - Held that: - in terms of Section 65(25b) of Finance Act, 1994, the taxable service does not include such service provided in respect of the roads, airports, railways, transport terminals, bridges, tunnels and dams. Admittedly, ISBT is transport terminal which is clearly excluded from the definition of “Commercial or Industrial Construction Service” for service tax purposes. When the construction of ISBT is not a taxable service, there cannot be any bifurcation of that activity for service tax. Decided in favor of the assessee.
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2016 (12) TMI 1067
Commission received from airlines - Business Auxiliary Service - the appellant has not provided any services to the airlines, and have provided services only to cargo companies for which service tax already stands paid - whether the commission received by the appellant from the airlines is towards any services rendered by the appellants to them, and is taxable? Held that: - during the said period, the definition of BAS underwent significant change with effect from 10.09.2004. The subject matter of levy of service tax on airline agent was the subject matter of lot of litigations - Suffice to say that the appellant cannot be blamed for entertaining a bona fide belief that the activity undertaken by them and the commission received by them may not be liable to payment of service tax. There can be no basis for alleging suppression or willful mis-statement, and invoking extended time limit for recovery of service tax - demand restricted within the normal time period available under Section 73 of the Act - imposition of penalty also set aside - For re-quantification of demand falling within the normal time, the case is remanded to the original adjudicating authority - appeal allowed by way of remand.
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2016 (12) TMI 1066
Refund claim - N/N. 41/2007-ST - denial on the ground that the services do not fall under the category of port services - Held that: - reliance placed on the decision of the case of SRF Ltd. vs. CCE, Jaipur I [2015 (9) TMI 1281 - CESTAT NEW DELHI], where it was held that the assessee would be entitled to the refund of service tax paid on the said services - refund allowed. Denial also on the ground that the appellant have not submitted proper invoices and have only produced debit notes - Held that: - the said debit notes would be admissible documents for the purpose of refund. Denial also on the ground that no proof of the payment of the same by the service provider to the Revenue stands produced - Held that: - the decision relied upon also takes this issue into account and refund is allowed on this part. Appeal allowed by way of remand.
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2016 (12) TMI 1065
Availment of credit prior to registration of the unit - construction of ICD - denial of credit on the ground that neither their head office nor Pithampur ICD was registered during the period when the construction service was received and bills received - Held that: - the issue stands decided in the case of Doshion Ltd. vs. CCE, Ahmedabad [2012 (10) TMI 952 - CESTAT AHMEDABAD], where it was held that registration with the department is not a pre-requisite for claiming the credit - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1064
Demand - Foreign Agent Commission - reverse charge mechanism - limitation period - Held that: - the services were provided outside India and tax liability fell on the appellant on reverse charge basis, a bona fide belief entertained by the appellant was justified. Further, the appellant has been reflecting the payment of commission in their balance sheet in which case, it can be held that there was no suppression or mis-statement on the part of the assessee so as to avoid the service tax payment with a mala fide intention - longer period of limitation is not available to the Revenue. For quantification of demand falling within the normal period of limitation, matter is remanded - as there is no suppression or mala fide intention on the part of the appellant, the penalty imposed upon them is set aside in toto - appeal allowed by way of remand.
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2016 (12) TMI 1063
Imposition of penalty - Business Exhibition Service - demand on the ground that certain transactions were left out of consideration and service tax liability was not calculated in respect of the same - Held that: - the decision of the Tribunal in the case of ZAK Trade Fairs & Exhibitions Pvt. Ltd. Vs. CST, Chennai [2008 (5) TMI 80 - CESTAT, CHENNAI] has appreciated identical situation and has observed that the assessee having acted on account of inadvertent mistake of accountant, the imposition of penalty upon the assessee was not justified - when the consideration of service tax in respect of which no service tax liability discharged was shown in the returns, there could be no mala fide on their part so as to evade the payment of service tax - penalty set aside - decided in favor of assessee.
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2016 (12) TMI 1062
Providing multi level marketing (MLM) services to the principle - whether ‘Business Auxiliary Services’ or not? - Time limitation - Held that: - We find that the issue of multi level marketing falling under the category of ‘Business Auxiliary Services’ stands finally concluded by the Tribunal in the case of Charanjeet Singh Khanuja Vs. CST Indore [2015 (6) TMI 585 - CESTAT NEW DELHI]. However, in the same very decision, the Tribunal has observed that since there was bonafide belief in the industry itself and in as much as two views stands held by the department itself regarding taxability of activity, longer period of limitation would not be available to the Revenue. She submits that the entire demand against Shri Sunil Wadhwa would fall outside the normal period of limitation. However, demand against Mrs. Neela Wadhwa is within the limitation period. However, he submits that penalty imposed upon Mrs. Neela Wadhwa under section 78 of the Act may be set aside, in as much as there was no suppression on her part with an intention to evade demand of service tax. In view of the above we set aside the orders and allow the appeal of Shri Sunil Wadhwa on limitation. In respect of the appeal of Mrs. Neela Wadhwa, we remand the matter to the lower authorities for re-quantification of the demand falling within the limitation period after examining the applicability of the small scale industry notification number 08/2008. As regards penalty, we agree with Ld. Advocate that section 78 penalty is invokable when there is fraud with an intention to avoid payment of duty. As we have also observed that there was bonafide belief in the industry itself, imposition of penalty under the said section would not be justified. Accordingly, by confirming the demand against Mrs. Neela Wadhwa, we set aside the penalty imposed upon her. Her appeal is allowed accordingly. Appeal allowed by way of remand.
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2016 (12) TMI 1061
Demand - composite scheme - works contract - period of limitation - Held that: - the appellant has opted for the composite scheme on 11/03/2010 and thereafter on 22/03/2010 they submitted a letter for withdrawal of the composite scheme. As per these two letters they have discharged the service tax during the period 2010-11 - the show cause notice should have been issued within the normal period of one year as prescribed under section 73(1), whereas the show cause notice for the period 2010-11 was issued on 02/04/2014 i.e. after prescribed limit of one year - there is no suppression of fact on the part of the appellant. Therefore, the demand raised in the show cause notice is clearly time-barred - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (12) TMI 1060
Benefit of N/N. 125/84-CE - EPCG scheme - Rule 8(1) of the Central Excise Rules, 1944 - commitment of fraud - Held that: - the learned counsel shall restrict their arguments to the points framed hereinabove. They shall file their written notes of submissions within four weeks hence.
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2016 (12) TMI 1059
Manufacture - cutting and slitting of H.R. Coils/Chequered Coil - Held that: - reliance placed on the decision of the case of Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises [2013 (6) TMI 610 - CESTAT MUMBAI], where it was held that the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 saying that the said activity does not amount to manufacture - Circular No.607/44/2001-CX dated 13.12.2001 clarifies that the assessee would be entitled to the facility of Rule 16 of Central Excise Rules, 2002 - appeal is allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1058
CENVAT credit - air travel services - courier services - reversal on the ground that credit irregularly availed - Held that: - appellant's case is fully covered by judgement in the case of Apollo Tyres Ltd. vs. CCE [2001 (9) TMI 135 - CEGAT, COURT NO. I, NEW DELHI], where it was held that In order to attract the provisions of Section 11AB as also Section 11AC, it has to be proved that there was wilful suppression on the part of the assessee to evade payment of duty - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1057
SSI exemption - use of brand name of others - clandestine removal - undervaluation - Held that: - it appears that the duty evasion is pre-planned, to evade duty by using others brand was planned by the appellant assessee. It is corollary that during the same period they also had the intention to evade payment of duty by way of under-valuation and surreptitious removal. The very act of resorting to usage of brand name of another established manufacturer in itself proves the mala fide intention of the assesee - also the opportunity of cross exemination as sought by appellant, was provided, but appellant failed to appear - appeal dismissed - decided against appellant-assessee.
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2016 (12) TMI 1056
Clandestine removal - Wastage arising at the second stage in the manufacture of craft paper - whether appellants cleared finished excisable goods under the guise of loss shown in such waste? - Held that: - the appellants produced certificate by Chartered Engineer and the Central Paper and Pulp Research Institute regarding the process of manufacture, there is no justification to the conclusion that the appellants cleared kraft paper in the guise of trimming waste without payment of duty - A charge of clandestine removal based solely on technical issue of waste arising at stage two cannot be made without any technical examination or corroboration. The original order did not give any reason to support the allegation of clandestine removal - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1055
Exemption under N/N. 6/2006 dated 01.03.2006 - product manufactured by the appellant are wood free plain or pre laminated particle or fiberboard, made from sugarcane bagasse or other agro waste - is the appellant eligible for benefit of N/N. 6/2006 or are eligible to concessional duty in terms of Sl. No. 87 of N/N. 4/2006-CE? - Held that: - the appellant is manufacturing bagasse board which is covered by Sl. No. 82 of notification no. 6/2006. No reason has been recorded as to why the product manufactured by the appellant cannot be called as baggasse board - the impugned goods are eligible to get exemption without any condition under these two notifications - The Hon’ble Supreme Court in various decisions held that the assessee can claim a notification which is more beneficial to them. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1054
CENVAT credit - job work - inputs sent to job workers factory from the sellers premises - inputs not received back - Held that: - I find that originally the notice alleged denial of credit on the ground that the inputs were not received directly in the assessees factory and were sent to the job workers premise. There is no issue of non-receipt of goods back from the job worker factory within 180 days. When the attention of the authorities were drawn to the provisions of Rule 4(5)(a) of the Cenvat Credit Rules which permit such sending of inputs to the job workers factory for processing, the Revenue shifted its stand and denied the credit on the ground that there is no evidence of receipt back of goods within a period of 180 days. When the above allegation was not the subject matter of the show cause notice, there is no requirement on the part of the assessee to produce the evidence to that effect. Further, the Commissioner (Appeals) by observing so, has travelled beyond the show cause notice, which is not permissible. As such, I am of the view that there being no such allegation of non-receipt of goods from the job worker, the denial of credit to the appellant is not justified. Apart from above that credit was availed by the appellant on 2010-2011 whereas show cause notice stands issued on 14.1.2013, by invoking the longer period of limitation. The credit was availed by the appellant by reflecting the same in statutory documents and there is no evidence of any positive suppression or misstatement on the part of the appellant reflecting upon any malafide on their part. As such, I am of the view that the demand is also barred by limitation. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1053
Whether the appellant procuring duty paid Black Wire and subjecting it to process of galvanization & clear the same, does it amount to manufacture? - Held that: - we take notice that prior to 01.03.2005, both plated or coated wire with zinc and un-plated wire were listed in heading 7217 and subsequent to March 01, 2005 under the 8 digit Tariff, Black wire was listed under heading 72171010 and G.I. Wire under heading 72172010. We hold that process of galvanization simplicitor does not amount to manufacture and accordingly the whole show cause is misconceived, demanding Central Excise duty from the appellant. Further, we hold that the appellant have rightly paid duty by reversal of credit under the provisions of Rule 6(3)(b) of Cenvat Credit Rules, 2004. We also hold that the show cause notice is misconceived as it ignores the CBEC Circular, wherein it has been said that galvanization of black wire does not amount to manufacture - decided in favor of appellant-assessee.
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2016 (12) TMI 1052
Manufacture - Chargeability of excise duty - manufacture of Pepfiz Effervescent Tables ( Pepfiz ) using, among other things, absolute alcohol/ethanol. - Held that: - the Hon’ble Supreme Court had occasion to examine similar set of facts in Dabur India Ltd. vs. State of Uttar Pradesh [1990 (7) TMI 109 - SUPREME COURT OF INDIA] and held that in order to attract duty under the 1955 Act all that is required is that a medicinal preparation should contain alcohol. Alcohol may be part of the preparation either because it is directly added to the solution or it came to be included in it because one of the components of that preparation contained alcohol. In the present case also, we note that appellant produced test report which indicated presence of alcohol in the impugned goods. Even otherwise, the usage of alcohol in the manufacturing activity of the impugned goods by itself is found to be sufficient - goods under Medicinal and Toilet preparations (Excise Duties) Act, 1955 (the M & TP Act) - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1051
Maintainability of appeal - Penalty - Held that: - Tribunal has discretion to refuse of to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/-(before 6/8/2014) and ₹ 2 Lakhs (on or after 6/8/2014) - appeal dismissed - decided against the assessee.
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2016 (12) TMI 1050
Denial of exemption under N/N. 11/88-CE - The authority held that activity carried out by the appellant was manufacturing and to claim exemption on clearances to 100% EOU, it should have followed the conditions prescribed under Notification No. 11/88-CE strictly - the appellant was not registered although it was manufacturing twisted yarn of various counts and ID yarn of various colours and twisted yarn of polyester out of duty paid single yarn in various counts and cleared the same without payment of duty. No procedure of excise law was followed nor registration taken. Returns were also not filed. Held that: - The extent of examination done by the ld. Commissioner (Appeals) exhibits that he was quite aware of the matter in controversy before him and the manner and reasoning of his decision also exhibits his application of mind. He has held that when the manufacturing activity was carried out, the assesse ought to have fulfilled the conditions of the notification to avail benefit of law. That not being done, the exemption claimed in respect of clearances to 100% EOU was denied - For no good reasons stated in the grounds of appeal except bringing out a calculation of the clearances by the appellant, we agree with the finding and conclusion of the ld. Commissioner (Appeals)- appeal dismissed - decided against appellant-assessee.
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2016 (12) TMI 1049
Availability of Cenvat credit - items namely H.R. Plates, M.S. Plates, M.S. Angles, Joints, Channels etc. used by the appellant manufacturer in fabrication of capital goods, staging structures and/or supporting structures of the machinery during the period from June, 2006 to January, 2007 - Held that: - I am satisfied that the Revenue have not disputed the contention of the appellant that they have fabricated several capital goods as their factory was under expansion. Further, as per the grounds of the Revenue, even if the, appellant have fabricated staging structure and supporting structures the same are eligible for Cenvat credit in view of the Ruling of Hon’ble Madras High Court in India Cement Ltd. [2015 (3) TMI 661 - MADRAS HIGH COURT]. Accordingly, the appeal of Revenue is dismissed - decided in favor of respondent-assessee.
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2016 (12) TMI 1048
Demand - clandestine removal - Held that: - I am satisfied that the stocktaking exercise by Revenue is by way of estimation, and possibility of errors cannot be ruled out. Further, I find that no instance of clandestine removal have been found by the Revenue. Considering the fact that the appellant never raised any dispute as to the method of valuation and or estimation of stock prior to issue of Show Cause Notice, I uphold confirmation of duty but I delete the penalty retained by the ld. Commissioner (Appeals) as there is no contumacious conduct or suppression found by Revenue on the part of appellant - Appeal partly allowed.
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2016 (12) TMI 1047
Cenvat Credit - Welding Electrodes used as inputs for repair and maintenance of capital goods in the factory of manufacture of sugar - Held that: - the decision in the case of Ganga Kishan Sahkari Chinni Mills Ltd. Vs. Commissioner of Central Excise, Meerut-I [2015 (10) TMI 2526 - CESTAT ALLAHABAD] relied upon, where it was held that the Cenvat credit of duty paid on welding electrodes used in repair and maintenance of capital goods is treated as inputs and is admissible - Following the decisions of this Tribunal, I hold that in the present four cases Cenvat credit of duty paid on welding electrodes used for repair and maintenance of capital goods is admissible to the appellant - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1046
Demand - Cenvat credit - outdoor catering services - Held that: - as per the fact of the case as appearing from the demand of service tax on the outdoor catering made in the show cause notice as well as from the CA certificate given by the appellant, there is no dispute that amount calculated equal to 50% amount calculated towards catering charges by the appellant represents 50% of the basic cost of the catering charges which does not include VAT and Service Tax. As per the Hon’ble Bombay High Court decision in case of Ultratech Cement Ltd.[2010 (10) TMI 13 - BOMBAY HIGH COURT] it was held that if the service tax /Cenvat amount is not recovered from the employee the credit is admissible in respect of outdoor catering services - As per the fact of the present case and having support of the above quoted judgment, appellant is entitle for the Cenvat credit in respect of outdoor catering service. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1045
Eligibility to notification 14/2002-CE dated 1st March 2002 - denial on the ground that condition of non-availment of CENVAT credit on inputs and capital goods had not been complied with - Held that: - Reliance has been placed on the decision of the Tribunal in Indore Steel & Iron Mills Ltd v. Commissioner of Central Excise Indore [2002 (2) TMI 255 - CEGAT, NEW DELHI] which has held that credit taken on fuel does not have to be reversed - the appellant has complied with the conditions of non-availment of CENVAT credit and is, therefore, eligible for the exemption - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1044
Demand - clandestine removal - clearance of samples without payment of duty - Held that: - It has been correctly indicated by Learned AR that Sr. No. 3 of the Annexure to the show cause notice dt 22/7/09, at page No. 17 of the appeal papers, show the date of short supply under k-series challan as 20/7/05 whereas the date of Central Excise invoice in this case is 22/7/05. It is observed that short supply can not take place before the date of clearance under a Central Excise invoice. Appellant is not able to demonstrate that goods sent out as samples or for demonstration purposes or as short supplied goods are accounted for - demand of duty and interest justified. Imposition of penalty - Held that: - appellant did give some explanation for nonpayment of duty by certain co-relation which is not considered adequate - investigation also did not extend the inquiry to the persons to whom the samples were sent either as sale or for demonstration - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1043
CENVAT credit - certain casting and casting articles falling under chapter 73 of the Central Excise Tariff Act, 1985 - This issue was disputable during the relevant period and confronting case laws on the subject were available - Whether equivalent penalty under Rule 15(2) of the Cenvat Credit Rules, 2004; read with Section 11 AC of the Central Excise Act, 1944; is imposable upon the appellant? Held that: - The items, on which credit is taken, are used in the capital goods which are further used in the manufacturing activity. The case of the department on merits can be that this casting and casting articles are used in making of support structures for the machinery. This issue was disputable during the relevant period and confronting case laws on the subject were available. The matter was finally decided by the larger bench in the case of Vandana Global Ltd. -vs.-Commissioner of Central Excise, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - Under the above factual matrix appellant cannot be visited with equivalent penalty when conflicting views were given on the admissibility of Cenvat credit of such items. Appeal allowed - penalty set aside - decided in favor of assessee.
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2016 (12) TMI 1042
Denial of CENVAT credit on manpower services - security services - loading and unloading services - running of canteen services - denial of credit on the ground that the services have no relation with manufacture - the appellant submitted that certain Cenvat credit amounts for these services may not be admissible for these services which are not utilized in or in relation to manufacturing. Appellant has not given any breakup of such inadmissible credit. Held that: - In the interest of justice order passed by the first appellate authority is set aside and the matter is remanded to the Adjudicating Authority to decide the case afresh. Needless to say that appellant will be extended a personal hearing before deciding the issue in remand proceedings. Appellant should also provide breakup of services where Cenvat credit is not admissible to the Adjudicating Authority and also bring latest case laws on the issue to the notice of the Adjudicating Authority which they wish to rely upon - appeal allowed by way of remand.
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2016 (12) TMI 1041
Unjust enrichment - Whether the duty paid in excess or short paid can be adjusted suo motto by the appellant? - Held that: - Larger Bench in the case of Excel Rubber Ltd. Vs. Commr. of Central Excise, Hyderabad [2011 (3) TMI 527 - CESTAT, NEW DELHI (LB)] has held that even in case of provisional assessment leading to refund, an assessee will be required to file refund claim to justify that unjust enrichment is not attracted, assessee has to approach Central Excise authorities with refund application and proof in support of the claim that excess amount has not been recovered from the customers - thus, appellant was not entitled to suo motto adjust the excess/short payment of duties. Time bar - Held that: - the Ld. Advocate appearing on behalf of the appellant argued that in a letter dated 8/8/2007 written to the department appellant has clearly brought to the notice of the Department that adjustment of duty as a result of escalation/de escalation of price of their final products was intimated. On careful perusal of this letter it is observed that only the excess duty required to be paid by the appellant as a result of escalation was intimated to the department after payment. There is no mention in this letter as to how much excess duty was paid and how much less duty paid by the appellant was adjusted. The said intimation will not help the case of the appellant and it is held that extended period and penalty are invokable in these proceeding against appellant. Appeal dismissed - decided against assessee.
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2016 (12) TMI 1040
Whether Cenvat Credit with respect to items used in fabricated steel structures and fish plates are eligible to Cenvat Credit as capital goods? - Held that: - It is observed from the case records that the items are used for making steel platform on which welding of railway wagons is undertaken by the Appellant. Such a steel structure/fish plate cannot be considered either as capital goods or inputs of such structures under Rule 2 of the CCR and accordingly Cenvat Credit has been correctly denied by the First Appellate Authority. So far as imposition of penalties is concerned, it is observed from the submissions made by the Appellant before the First Appellate Authority that certain favourable case laws on the issue were also existing. Accordingly, it is held that penalty imposed upon the Appellant is not justified and is accordingly set aside. Appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 1039
CENVAT credit - input service - membership of club or association - Held that: - From the activities carried out by ATMA for the appellant, it is observed that the Association acts as a conduit between Government Department and the tyre companies. The Association also briefs its members of the changes in Government Policy on issues related to Indian economy and industry in general and tyre industry in particular. Frequent meetings are also held by the Associations with Government Department to sort out problems being faced by the tyre industry. The findings given by the First Appellate Authority that services availed have relation to the manufacturing activities of the appellant is not the correct appreciation of law and the scheme of Cenvat credit and is required to be set aside. The services availed are in relation to the manufacturing activity of the appellant - Cenvat credit correctly taken - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1038
Imposition of penalty u/r 15(4) of the Cenvat Credit Rules, 2004 - Held that: - It is observed from Rule 15(4) that the same is applicable to an output service provider if wrong credit is taken by way of fraud, collusion etc. In the present case it has been strongly contested by the respondent that they are only manufacturer and not an output service providers. The correct rule for imposing penalty in the present proceedings will thus be Rule 15(3) as decided by the First Appellate Authority. It is also observed from the case records that the Adjudicating Authority under Order-in-Original dated 17.02.2013 imposed penalty under Rule 15(2) of the Cenvat Credit Rules, 2004. No appeal was filed by the Department against the said OIO dated 17.02.2013 - appeal dismissed - decided against Revenue.
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2016 (12) TMI 1037
Refund - Duty paid on captive consumption - chapter X of Central Excise rules 1944 - Held that: - It is undisputed that the appellant has not followed any procedures for availing benefit of N/N. 68/92 dated 11.06.1992 - the original authority was justified in holding that In the instant case there is no mere technical lapse as the appellant failed to follow the mandatory conditions prescribed in the exemption N/N. 68/92 dated 11.06.1992 - the Order-in-Original is sustainable and needs no interference - appellants not eligible for refund - appeal rejected - decided against assessee.
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2016 (12) TMI 1036
Intermediate goods - valuation - job-work - Rule 8 of the Valuation Rules, 2000 - Held that: - In view of the confusion of both sides on valuation of goods, appellant shall place entire facts and figures with a copy of the Larger Bench decision in the case of I.T.C. Ltd. case [2016 (4) TMI 280 - CESTAT CHENNAI] and the ratio laid by Hon’ble Supreme Court in Ujagar Prints case [1989 (1) TMI 124 - SUPREME COURT OF INDIA] before the adjudicating authority by 31.08.2016 with a prayer to hear the matter as expeditiously as possible in September, 2016. On the date fixed, the Appellant shall co-operate with the adjudicating authority - matter on remand.
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2016 (12) TMI 1035
Pre-deposit - applicability of percentage of deposit as existed prior to amendment - Whether the appellant’s right of appeal continues to be governed by the appellate provisions of the Central Excise Act, 1944 as they existed on the date of issuance of the show cause notice viz. April 1, 2014 and the provisions of Section 35F substituted with effect from August 6, 2014 have no application in its case? - Held that: - Prima facie we are of the view that to reduce the litigation the law as in force prior to 06.08.2014 is invocable to the present applications without multiplying the pendency and accordingly these stay applications are disposed by this common order for similar facts involved - reliance placed on the decision of the case of Anjani Technoplast Ltd. Versus The Commissioner of Customs [2015 (10) TMI 2446 - DELHI HIGH COURT], where it was held that Section 35 F indicated that on and after the date of its enforcement an Assessee in appeal was required to deposit the stipulated percentage of duty and if it failed to do so, CESTAT shall not entertain the appeal. Petition disposed off - decided in favor of petitioner.
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CST, VAT & Sales Tax
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2016 (12) TMI 1023
Valuation - whether the freight charges for transporting dolomite by the petitioners to the respondent/Bhilai Steel Plant would be a part of sale price and hence exigible to commercial tax or not? - Section 2(u) of the Act, 1994 - Held that: - clause-13 of the agreement provides break-up of the landed cost per tonne of dolomite which includes freight by road on pre-paid door delivery basis. Thus, the freight charges were already included in the 'sale price' by express agreement entered between the parties - reliance placed on the case of Hindustan Sugar Mills [1978 (8) TMI 186 - SUPREME COURT OF INDIA] to hold that first part of the definition would apply in the present case also and the exclusion clause is irrelevant and cannot be called in aid by the petitioners. The assessment order has only referred to separate billing of freight charges by the petitioners but it has not dealt with the issue as to whether the freight charges are part of 'sale price' or not so as to conclude that it cannot be included in the taxable turn over. There being no finding to this effect by Assessing Officer, it is a case where there is omission or escape to deal with the issue by the Assessing Officer and Section 28 has rightly been invoked for initiating escapement proceeding. By clause 14 of the agreement, the parties have bound themselves that the price of contract shall remain firm during the currency of contract and as such, no escalation is payable on any amount whatsoever including freight, however, any change in the statutory levies viz. Royalty, Sales Tax and Labour Welfare Cess during the pendency of the contract shall be borne by the buyer as per the actuals against the documentary evidence/Government notification. Admittedly, there is no change in the statutory levies like Royalty, Sales Tax and Labour Welfare Cess. It is a case where freight charges were part of 'sale price' but it escaped assessment, therefore, liability which fallen on the assessee on the date of assessment for the relevant year has been saddled on him and they have not been made liable to any additional statutory levy. Petition dismissed - decided against petitioner.
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2016 (12) TMI 1022
Validity of assessment order - failure to call for documents - independent application of mind - Held that: - if the respondents/Assessing Officers was of the opinion that documents are required to be produced, then the dealer can be directed to appear in person and produce the documents and this will avoid unnecessary litigation and also will ensure prompt collection of correct rate and quantum of tax - the petitioner is directed to file objections under Section 84 of the Tamil Nadu Value Added Tax for rectification of the assessment in which the petitioner is entitled to raise all contentions and produce the documents and that application will be filed within a period of one week from the date of receipt of a copy of this order. On receipt of the same, the respondents shall consider the same and pass orders within a period of two weeks. Petition disposed off - decided in favor of petitioner.
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2016 (12) TMI 1021
Maintainability of appeal - appeal was filed against the rectified order - Held that: - similar issue was decided in the case of Artis Leathers Versus The Assistant Commissioner (CT) , The Appellate Deputy Commissioner (CT) (FAC) [2016 (9) TMI 824 - MADRAS HIGH COURT], where it was held that as against the order of rectification passed resulting in the modification of the original order passed, the assessee has the right of appeal before the appellate forum. Petition allowed in favor of petitioner.
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2016 (12) TMI 1020
Maintainability of appeal - non-deposit of amount of pre-deposit - Held that: - on non-compliance of the order dated 4/4/2016 on non deposit of the amount of pre-deposit as per the order dated 4/4/2016, when the learned tribunal has dismissed the appeal, thereafter it cannot be said that the learned tribunal has committed any error - when the appellant has failed to deposit ₹ 29,29,979/- towards the amount of pre-deposit as ordered earlier vide order dated 4/4/2016 and when the learned tribunal has dismissed the said appeal on non-deposit of amount of pre-deposit, no substantial question of law arise - appeal dismissed.
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Indian Laws
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2016 (12) TMI 1017
Applicability of Key provisions of SARFAESI ACT to the J&K - legislative competence of Parliament - whether SARFAESI cannot be held to apply to the State of Jammu & Kashmir? - Held that:- Section 140 of the Transfer of Property Act of Jammu & Kashmir will be respected in auction sales that take place within the State. This being the case, it is clear that there is no collision or repugnancy with any of the provisions of SARFAESI, and therefore it is clear that the High Court is absolutely wrong in finding that as Section 140 of the Transfer of Property Act will be infracted, SARFAESI cannot be held to apply to the State of Jammu & Kashmir. The High court judgment begins from the wrong end and therefore reaches the wrong conclusion. It states that in terms of Section 5 of the Constitution of Jammu & Kashmir, the State has absolute sovereign power to legislate in respect of laws touching the rights of its permanent residents qua their immovable properties. The State legislature having enacted Section 140 of the Jammu & Kashmir Transfer of Property Act, therefore, having clearly stated that the State’s subjects/citizens are by virtue of the said provision protected, SARFAESI cannot intrude and disturb such protection. The whole approach is erroneous. As has been stated hereinabove, Entries 45 and 95 of List I clothe Parliament with exclusive power to make laws with respect to banking, and the entirety of SARFAESI can be said to be referable to Entry 45 and 95 of List I, 7th Schedule to the Constitution of India. This being the case, Section 5 of the Jammu & Kashmir Constitution will only operate in areas in which Parliament has no power to make laws for the State. Thus, it is clear that anything that comes in the way of SARFAESI by way of a Jammu & Kashmir law must necessarily give way to the said law by virtue of Article 246 of the Constitution of India as extended to the State of Jammu & Kashmir, read with Section 5 of the Constitution of Jammu & Kashmir. This being the case, it is clear that Sections 13(1) and (4) cannot be held to be beyond the legislative competence of Parliament as has wrongly been held by the High Court. It is thus clear that the State of Jammu & Kashmir has no vestige of sovereignty outside the Constitution of India and its own Constitution, which is subordinate to the Constitution of India. It is therefore wholly incorrect to describe it as being sovereign in the sense of its residents constituting a separate and distinct class in themselves. The residents of Jammu & Kashmir, we need to remind the High Court, are first and foremost citizens of India.
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2016 (12) TMI 1016
Demonetization - Undisclosed income disclosure - petitioner submitted that the Union of India could have come with a better scheme regard being had to the Statement of Objects and Reasons behind the scheme - Held that:- Appreciating the submission of Mr. Kapur, we are disposed to think that he is suggesting a different scheme to be implemented by the Union of India. Needless to say, this Court cannot enter into or encroach upon the policy making arena and suggest a different policy on the foundation that the policy framed by the Union of India could have been better. That is not within the domain of the Court. There is a distinction between assailment of the constitutional validity of a policy and conception of framing of a better policy. In view of the aforesaid analysis, we do not find any justification to issue notice in the present writ petition and it is, accordingly, dismissed.
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2016 (12) TMI 1015
Demonetization - Forbid the District Cooperative Banks from accepting deposits and exchanging demonetized notes - Held that:- The learned Attorney General on instructions submitted that the policy of replacement of legal tender notes as applicable to Public Sector Banks and other Banks will be applied even in the case of District Cooperative Banks for exchange of demonetized currency with the legal tender currency. We accept the assurance given by the learned Attorney General in this behalf. Extension of time limit for exemption for use of demonetized currency notes of ₹ 500/- and ₹ 1000/- at specified counters - Held that:- Whether the exemption period should be extended or not must be best left to the judgment of the Government of the day with a hope that the Government will be responsive and sensitive to the problems encountered by the common man. Accordingly, we decline to issue any interim direction to the Government in the matter of extending the period of exemption and leave it open to the Government to take appropriate decision in that behalf, as may be advised. Denial of right to withdraw the prescribed amount of ₹ 24,000/- per week per account holder, in spite of Notification issued by the Reserve Bank of India permitting such withdrawal - Held that:- Considering the stand taken by the learned Attorney General, we may commend to the Authorities to fulfill their commitment made in terms of the stated Notification permitting withdrawal of ₹ 24,000/- per account holder of the Bank per week to the extent possible and review that decision periodically and take necessary corrective measures in that behalf. In our opinion, besides the observations made hitherto, no other direction can be given at this stage by way of an interim relief. Writ Petitions/proceedings pending - Held that:- It would be just and proper to withdraw all the Writ Petitions/proceedings pending in different High Courts across the country and to be heard by this Court along with the Writ Petitions which are already pending in this Court raising same or similar issues, to avoid multiplicity of hearing and conflicting decisions on the same subject matter. Accordingly, we issue notice in the respective Transfer Petitions and by way of interim direction, stay the further proceedings of the Writ Petitions/proceedings in the concerned High Court.We further direct that no other Court shall entertain, hear or decide any Writ Petition/proceedings on the issue or in relation to or arising from the decision of the Government of India to demonetize the old notes of ₹ 500/- and ₹ 1000/-, as the entire issue in relation thereto is pending consideration before this Court in the present proceedings.
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