Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 19, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Depreciation allowability - determination of WDV - AO is directed to employ the deeming provision for computing the written down value de hors the depreciation granted under the AIT Act and take 35% of the cost of the total assets as written down value, allowing the depreciation for the relevant assessment year to that extent. - HC
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Revision u/s 263 - capital gain on sale of agricultural land - the contention of the ld. CIT in the order u/s 263 of the Act that Tehsildar’s certificate should have been corroborated with other evidence cannot be accepted - AT
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Claim of deduction u/s 80IE(2)(ii) - water supply system and irrigation system admittedly are not part of tea manufacturing processes. Therefore, the said opening valuation of said machineries should not be considered for the purpose of claiming deduction u/s 80IE of the Act - AT
Customs
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Gazetted Officer of Customs can obtain Customer details of phone numbers directly from telecom service providers u/s 108 of the Customs Act, 1962 by issuing summons if they refuse.
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Refund claim - valuation - air freight - the freight element has to be restricted to 20% of the FOB value when the cost of transportation of the goods is ascertainable and the transportation is by air - excess duty paid allowed to be refunded - AT
DGFT
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Directives for processing of application for MEIS claims under Foreign Trade Policy 2015-20 - Public Notice
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Inclusion of Seaports located at Dhamra Port and Dighi Port under Para 4.37 of Hand Book of Procedures 2015-20. - reg. - Public Notice
Service Tax
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CENVAT credit - input services - We wonder as to why Revenue brings appeals after appeals to this Court, and gets them routinely dismissed. The volume does not impress us and merely because 21 services are in issue means nothing to us. - HC
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Refund claim - time limitation - export of services out of India - validity of SCN - The refund has not accrued to the petitioner on account of any order or judgment but on account of statutory provisions coupled with the notification where input services are used for export of services - SCN quashed - HC
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Advertising Service - non-payment of service tax - the payment of main contractor on behalf of the appellant shall be treated as payment made by the appellant. - AT
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CENVAT credit - certain equipments procured for providing taxable output service - FACT-10 Meter RF Shielded EME chamber - they do not qualify as capital goods as per Rule 2(a) - these goods be treated as inputs in terms of rule 2(k)(ii) of Cenvat Credit Rules, 2004. - AT
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Valuation - if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - demand set aside - AT
Central Excise
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Refund claim - trade discount - price variation clause - Variation on the transaction value on a subsequent date cannot result in re-determination of assessable value - refund cannot be allowed - AT
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CENVAT credit - inputs/capital goods - Steels goods such as Shape & Section, angles, M.S. Plates/rounds, beams, rails etc. falling under Chapter Heading 72, 73 & 83 of CET Act, also welding electrodes used in fabrication/construction of capital goods including structural support, etc. - credit allowed - AT
Case Laws:
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Income Tax
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2018 (2) TMI 1163
Purpose of setting up High Power Committee appellant - CIT, Delhi has been directed to approach the High Powered Committee for permission/clearance of Committee on Disputes for filing appeal by relying upon a decision of this Court in the case of Oil & Natural Gas Commission v. CCE (1994 (1) TMI 88 - SUPREME COURT OF INDIA). Learned senior counsel has invited our attention to the Constitution Bench judgment of this Court in the case of Electronics Corporation of India Ltd. v. Union of India (1994 (1) TMI 88 - SUPREME COURT OF INDIA) wherein held that the mechanism for approaching the High Powered Committee later on called as “Committee of Secretaries” and finally termed as “Committee on Disputes” has outlived its utility and therefore, orders in the case of Oil and Natural Gas Commission's case supra has been recalled. Held that:- We set aside the impugned order and remand the matter to the High Court for deciding the appeal on merits in accordance with law. Thus, the appeal succeeds and is allowed.
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2018 (2) TMI 1162
Reopening of assessment - business loss claimed by the assessee as previously accumulated on account of sale of shares - disallowance u/s 14A - eligibility of reasons to believe - Held that:- Assessing Officer in the reasons had begun with expression “verification of case records it is found that/seen that”. Thus on both issues, AO was referring to the materials on record to form a belief that income chargeable to tax had escaped assessment. There was thus nothing extraneous to the record which led the Assessing Officer to form such a belief. On both counts thus, there was clear and ample material on the basis of which the assessee had made respective claims. When therefore the Assessing Officer was seeking to reopen the assessment beyond a period of four years from the end of the relevant assessment year, the question of failure on part of the assessee to disclose truly and fully all material facts for such assessment was an important aspect. Ignoring such additional requirement flowing from section 147 the Assessing Officer issued the impugned notice. There being no element of failure on part of the assessee to disclose true and full facts, the impugned notice could not have been issued. - Decided in favour of assessee
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2018 (2) TMI 1161
Addition of unexplained cash credit u/s 68 for unscecured loan - no genuine transactions - Held that:- The entire issue is based on appreciation of evidence on record and thus factual in nature. The Tribunal has given elaborate reasons to come to the conclusion that the entire transaction was not genuine. In absence of any perversity, we do not see any reason to interfere. As the assessee however vehemently contended that the assessee had received loans through cheques from lenders who had confirmed the same. Their accounts are audited and filed before the Revenue authorities. Thus, the genuineness of the transactions, the capacity of the lender and the factum of lending all have been established. Addition u/s 68 there could not have been made. However, as noted, the Tribunal has minutely examined the position of the lenders, the circumstances under which, the amounts were allegedly loaned to come to the conclusion that the transactions were not genuine. - Decided against assessee.
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2018 (2) TMI 1160
Addition for TDS Default made under provisions of Section 206C(6A) - addition of the interest u/s. 206C(7) - Tribunal deleted the addition - Held that:- The Tribunal was of the opinion that the order of the CIT (Appeals) is not clear on certain aspects of the matter namely regarding dates of filing of declaration in Form No. 27C by the assessee. It was for this purpose the Tribunal remanded the proceedings to the file of the Assessing Officer for verification of such facts and to examine such facts in light of the judgement of this Court in case of Siyaram Metal Udyog (P) Ltd. (2016 (7) TMI 68 - GUJARAT HIGH COURT). - Decided against revenue
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2018 (2) TMI 1159
Registration u/s. 12AA denied - Respondent did not have a registered trust deed - Held that:- From the materials on record, it can be seen that the Tribunal had gone through the registration details of the respondent trust contained in the order of Wakf Board and was satisfied that full details of the functions of the trust were available which would establish the existence of the trust, its registration by the Gujarat State Wakf Board which also contained details of objects of the trust, manner of appointment of Mutawalli etc. Rule 17A nowhere envisages the existence of a trust deed or its registration. The factum of existence of trust can also be established by producing documents evidencing the creation of the trust. This is precisely what has been done in the present case. The order passed by Wakf board dated 20.11.1999 recognises various Daudi Vora trust and in case of present assessee also enlisted the objects of the trust, who would be the managers of the trust and how such managers would be appointed or removed. - Decided against revenue
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2018 (2) TMI 1158
Additions u/s. 14A in respect investments in subsidiary company - application of Rule of consistency - sufficiency of own funds - Held that:- For the relevant Assessment Year, Assessee has not earned any tax free income, the corresponding expenditure incurred cannot be taken into consideration for dis-allowance. See Pr. CIT Vs. M/s. Rivian International (P.) Ltd. [2017 (12) TMI 811 - BOMBAY HIGH COURT] - Decided against revenue.
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2018 (2) TMI 1157
Depreciation allowability - tribunal restricting the depreciation allowed to the amount worked out on the written down value of the assets as against the original cost of the assets claimed by the assessee - Income from the manufacture of rubber which was earlier treated as agricultural income was made assessable to the extent of 35% of the income derived from the business - Held that:- As has been held in J.K.Synthetics Ltd. Vs. C.T.O [1994 (5) TMI 233 - SUPREME COURT] and Maruti Wire Industries Ltd. Vs. S.T.O Mattancherry [2001 (3) TMI 856 - SUPREME COURT OF INDIA] “a legislative casus omissus cannot be supplied by a judicial interpretative process” (sic). On the above reasoning, we are unable to accept the dis-allowance of the depreciation and the computation made of the written down value. We answer the questions raised by the assessee in favour of the assessee and against the Revenue. AO is directed to employ the deeming provision for computing the written down value de hors the depreciation granted under the AIT Act and take 35% of the cost of the total assets as written down value, allowing the depreciation for the relevant assessment year to that extent. The Assessing Officer shall deem the written down value to be the cost of the assets and compute the depreciation allowable at 35% of such deemed written down value and apply it to the portion of the income derived from the agricultural business, that is assessable under the IT Act.
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2018 (2) TMI 1156
Grant of registration u/s 12A - respondent has failed to produce books of accounts for FY 2013-14 - Held that:- The provision contained under Section 12A nowhere empowers the CIT to assess the objects vis-a-vis the books of accounts. Even otherwise, it is not to be seen at this stage as to whether the fulfillment of the charitable trust would eventually benefit the members of the society. If the constituent of the trust engage in some genuine charitable activity which may benefit them in some other aspect of their personality which may include their vocation in life, it would not affect the genuineness of the objects of the trust. In the case at hand, the order passed by the CIT does not say in definite terms, that the objects of the society are not charitable in nature. Merely because the trust consists of Urologist Doctors and the charitable activity may mutually benefit those members, the object itself would not cease to be charitable in nature. Appellate Tribunal has rightly interfered with the order passed by the CIT - Decided in favour of assessee.
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2018 (2) TMI 1155
Amortization of premium on securities held by the bank under category of 'Held Till Maturity” - whether a revenue expenditure? - Held that:- Issue urged herein stands concluded against the Revenue and in favour of the Respondent – Assessee by virtue of the decision of this Court in CIT Vs. Thane Bharat Sahakari Bank Ltd. [2015 (3) TMI 1026 - BOMBAY HIGH COURT] Addition of excess provisions made which remained a provision and not utilized even in the immediately succeeding year - Held that:- It is a settled position as held in E.D. Sasoon Co. Ltd. Vs. CIT [1954 (5) TMI 2 - SUPREME Court] that profits of a business implies a comparison between the state of a business at two different / specific dates separated by a year. The comparison between two dates given as the extent of profits / loss. Thus normally accounts are made up every year. In this case accounts have to accounted at 31 March of each year. The Assessee had made a provision on 31 March 2009 i.e. at the end of the previous year relevant to subject assessment year i.e. 2009-10 and determine profit as on 31 March 2003. Thus the position as exists on 31 March 2009 is due to be considered and not any other date. Appeal admitted on question 3) - Whether on the facts and in the circumstances of the case and in law, Tribunal was justified in deleting the addition made by the Assessing Officer on account of voluntary retirement payments made to the staff at the time of their leaving the employment without taking into account Section 35DDA of the Act”?
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2018 (2) TMI 1154
Capital gain computation - year of assessment - transfer within the meaning of Section 2(47)(v) - development agreement by way of Power of Attorney, based on which transfer of possession and development have taken place - reopening of assessment - Held that:- Tribunal has committed no illegality in reversing the order of the Commissioner by holding that the transfer within the meaning of Section 2(47)(v) had taken place only in the Assessment Year 2002-2003 as we find that vide agreement dated 30th April, 2001, the actual possession was given to the Developer and it was not given the basis of Power of Attorneys and so called oral agreement entered into between the Appellants and the Developer in the year 1993-94. Thus, A.O. as also the Tribunal have correctly appreciated and interpreted the Power of Attorney/s the agreement dated 30th April, 2001 and the stand taken by the Appellants in reply to the notice under Section 148 of the Act. We affirm the order passed by the Tribunal by holding that the Tribunal has rightly reversed the order of the Commissioner and while reversing the order of the Commissioner, it has correctly appreciated the facts and law and there is no illegality or perversity in the order of the Tribunal warranting interference. Appeal dismissed.
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2018 (2) TMI 1153
Addition u/s 14A r.w.r. 8D(ii) - part of interest payable on the loan attributable to the investment made to earn exempt income - sufficiency of own funds - Held that:- This Court in CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] has held that where Assessee's own funds are in excess of the investment made, then it shall be presumed that investments are made out of own funds. In the present case it is found on facts that the interest paid was nowhere related to investments made to earn exempt income either directly or indirectly. - Decided in favour of assessee
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2018 (2) TMI 1152
Addition of interest income - whether interest on FDs cannot be taxed in the hands of the assessee u/s.56? - Held that:- The interest on fixed deposits are not taxable under income from other sources and, accordingly, we uphold the findings of the CIT(A) and dismiss the ground of appeal taken by the revenue for both the assessment years. Addition of expenses u/s.14A - Held that:- There is no claim and the Assessing Officer by applying the provisions of section 14A r.w.Rule 8D has made the addition. Looking to the facts of the case in its entirety, we are of the opinion that when the assessee has not claimed any expenditure in its return of income either under the head “business income” or “other sources”, the reduction of expenses has no base or legal scrutiny. Therefore the provisions of section 14A are not applicable in this case and, we allow the cross objections of the assessee and delete the addition in both the assessment years under consideration. - Decided in favour of assessee.
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2018 (2) TMI 1151
Transfer pricing adjustment - international transaction of ‘Provision of ITES ’- aggregation of both the SDS and ITES and treating the assessee as an ITES provider for the purposes of choosing comparables and benchmarking - Held that:- The assessee did not have any authenticated figures of revenue and costs in respect of ITES and SDS separately. Once the position is such that neither the revenue from two segments can be ascertained nor its costs, we fail to appreciate as to how the benchmarking can be done for two separate transactions of ITES and SDS in a separate manner. Ergo, we approve the action of the authorities below in aggregating the ITES and SDS segments for the purpose of benchmarking. Selection of the comparables - selecting companies rendering only ITES renders the comparison incompatible due to the basic functional difference, thereby vitiating the entire exercise of benchmarking. What is required to be done is to select companies rendering both ITES and SDS. As this exercise can be properly done at the end of the TPO, we set aside the impugned order on this score and remit the matter to the file of TPO/Assessing Officer for determining the ALP of the assessee’s combined international transaction of ‘Provision of ITES and SDS’ afresh by considering such companies as comparable which are rendering both ITES and SDS. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such proceedings. Transfer pricing adjustment in the international transaction of ‘Interest on receivables' - It is seen that the assessee reported an international transaction of ‘Interest on receivables’ amounting to ₹ 49,18,007/-. It is further discernible from the Agreement that no credit period has been prescribed for realization of invoices. On a specific query, it was admitted that there were no trade transactions with non AEs. In such a scenario, it is difficult to make any comparative analysis of the time allowed for realization by the assessee to AEs vis-à-vis non-AEs. Applying the decision in Kusum Health Care (2017 (4) TMI 1254 - DELHI HIGH COURT), the Hon’ble High Court directed the TPO to study the impact of the receivables appearing in the accounts of the assessee; looking into the various factors as to the reasons why the same are shown as receivables and also as to whether the said transactions can be characterized as international transactions. In view of the above decision in Avenue Asia Advisors (2017 (9) TMI 1295 - DELHI HIGH COURT), we deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Assessing Officer/TPO for deciding it in conformity with the above referred judgment
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2018 (2) TMI 1150
Revision u/s 263 - capital gain on sale of agricultural land - Held that:- It is evident that during the course of assessment proceedings issue about the taxability of capital gain was considered in assessment and a view was taken by the Assessing Officer as to the non taxability of such gain. Therefore, when the claim of the assessee was accepted in assessment order after due consideration of the facts, it cannot be said that the assessment order was erroneous as assessment was passed after application of mind The process of enquiry would be unending and no assessment order can be said to be final as all the assessment order can be found fault on the ground that enquiries should have been made more elaborate. Certificate issued by Tehsildar in the instant could not be disbelieved by the Assessing Officer inter alia for the reason that the Tehsildar is also a public officer. Certificates issued by the public officers are generally believed by the other officers as public duty unless there is some material, which suggest that such certificate has been obtained under fraud etc. Therefore, we do not agree with the contention of the ld. CIT in the order u/s 263 of the Act that Tehsildar’s certificate should have been corroborated with other evidence. Accordingly, the order passed by the ld. CIT u/s 263 of the Act for the above stated reasons is hereby set aside and quashed. Since we have quashed the order u/s 263 of the Act, we do not deal with the merit of the claim of the assessee. - Decided in favour of assessee
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2018 (2) TMI 1149
Addition u/s 68 - unexplained advances - assessee company has received share application money of ₹ 6.64 crores from Ms. Rashna Fali Press, UAE based NRI - Held that:- No evidence of creditworthiness of Ms. Rachna Fall Press to grant an advance of ₹ 6.64 crores given. No balance sheet or capital account of the said person has been submitted. The said certificate only shows that based on the information available, her net worth is US Dollar 50 million. What is the said information has not at all been specified. It is well known that Dubai/UAE has no financial regulatory network. Hence, the credence to such a vague certificate devoid of any detail cannot be given. How maintenance of account with a bank confirms the creditworthiness of the said person to grant share application of ₹ 6.64 crores is beyond our comprehension. None prevented the assessee from obtaining the statement of financial accounts/balance sheet which could have given undeniable evidence of her creditworthiness. The assessee has also not furnished the bank statement of said person. Reluctance on the part of the assessee and the said person to give proper evidence of the creditworthiness and also the failure to submit the copy of the bank statement clearly proves that the assessee has not discharged the onus of proving the creditworthiness. It is clear that the said Ms. Rashna Fali Press has not given proper details to justify the creditworthiness to grant the said advance of ₹ 6.64 crores. - Decided against assessee.
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2018 (2) TMI 1148
Validity of assessment u/s 153A r.w.s 153C - non recording of satisfaction by the AO of the searched person at the time of forwarding the seized materials to the AO - Held that:- As no satisfaction has been recorded by the AO of the searched party, which is apparent from the finding given by the CIT(A) in his order that satisfaction is presumed and automatic when the seized papers are forwarded to the AO of the third party. In view of this we are quashing the proceedings under Section 153C of the Act and consequent assessment framed. See Commissioner of Income Tax, Kolkata Versus Veerprabhu Marketing Limited [2016 (8) TMI 813 - CALCUTTA HIGH COURT] - Decided in favour of assessee
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2018 (2) TMI 1147
TPA - comparable selection criteria - MAP selection - Held that:- Where part of the same transaction both in IT segment as well as ITEs Segment margins of 15.70% and 14.68% have been accepted by the assessee and by the revenue authorities. Now for the same nature of transactions it would be very difficult to accept assessee’s margin of 13% or that of the TPO who has applied higher margin. Accordingly, in wake of MAP settlement, we hold that for the Software Development Services (IT service) the profit margin for the assessment year 2007-08 should be taken as 15.70%; and for the 2008-09 it should be taken as 15.91%; whereas, in the ITeS segment the profit margin for the assessment year 2007-08 should be taken as 14.68%; and for AY 2008-09 it should be taken as 14.89%. Thus, we direct the TPO to make the adjustment after taking into the net profit margin as adopted/ agreed in the MAP to benchmark the transaction of non US AE also. In view of the above, the grounds relating to transfer pricing adjustment are treated as partly allowed. Non granting of TDS at source - Held that:- We direct the AO to verify the same and allow in accordance with law.
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2018 (2) TMI 1146
Income from undisclosed sources - cash component appearing in the Excel sheets seized from the premises of M/s AEZ group - incriminating material found in search - Held that:- The addition has been upheld by the Ld. CIT(A) mainly only on the basis of (i) details recorded in Excel sheet on hard disk found during the course of search at M/s AEZ group, wherein the payment through cheque and cash been mentioned against the name of the assessee at Serial No. 30 of the list (ii) the surrender made by Sh. I.E. Soomar, whose name was appearing at Serial No. 39 of the list (iii) the said hard disk cannot be relied upon in part as the assessee has admitted the payment through cheque but denied the cash payment therein. In view of the identical facts of the case of the assessee and the case of Sh. Subhash Khattar (2017 (7) TMI 1091 - DELHI HIGH COURT) we hold that addition cannot be made in the case of assessee without corroborating evidences, merely on the basis of surrender made by Sh. I.E. Soomar i.e. third-party and accordingly, we set aside the orders of the lower authorities and direct the Assessing Officer to delete the said addition - Decided in favour of assessee.
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2018 (2) TMI 1145
Assessment u/s 153A - addition of bogus purchases of raw material - want of proper inquiry - Held that:- CIT-(A) noticed that proper enquiries have not been conducted by the Assessing Officer, however, rather than getting the enquiries done, he simply allowed the appeal of the assessee. In view of the facts and circumstances of the instant case, being more or less similar to the facts and circumstances in the case of Jansampark advertising and marketing private limited (2015 (3) TMI 410 - DELHI HIGH COURT), we feel it appropriate to restore the matter to the Ld. CIT-(A) for adjudicating afresh in accordance with law. The Ld. CIT-(A) will ensure that effective inquiries are made in the case. If required so, he may remand the matter to the Ld. Assessing Officer and carry out enquiry to ascertain delivery, transportation & consumption of goods. He may also examine bank account of the purchasing parties to find out, whether the assessee or its employees has withdrawn the money in cash from those accounts Unexplained receipt in the transactions with M/s Moon Buildtech Private Limited. - Held that:- CIT-(A) has mentioned that these flats continued to be reflected in the balance sheet of the assessee company, however, he has not mentioned, whether – the evidences relied upon by him in this regard are additional evidence. AO has also not been provided opportunity to rebut those evidences. If according to the Ld. CIT-(A), there was no sale of the flats to M/s MBPL, then he has not brought on record whether the money invested by MBPL was returned back by the assessee alongwith interest. Hon’ble Delhi High Court in the case of Jansampark Advertising and Marketing Private Limited (supra) has observed that in the event of AO failing to discharge its function properly, the obligation to conduct proper Inquiry on the facts were naturally shift to the door of the first appellate authority. Thus we feel it appropriate to restore the issue to the file of the Ld. CIT-(A), with the direction to carry out effective inquiries and decide the issue afresh Addition on account of scrap sales - Held that:- Since in the instant case, it is not clear, whether that assessee has debited the cost of construction in the profit and loss account or it has carried the cost of construction as work in progress for adjustment in subsequent years as expenditure. In case, the cost of construction has been carried as work in progress, in that situation the finding of the Assessing Officer would be logical as income from sale of the scrap is received/accrued in the instant assessment year, and, thus, assessee should have offered the receipt from sale of scrap as income in the year under consideration. Thus restore the matter to the file of the Ld. CIT-(A) to verify the fact that cost of construction has been claimed as expenditure in the year under consideration or not and adjudicate the issue accordingly
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2018 (2) TMI 1144
Sale of software - assessee claimed sale as a capital receipt thereby resulting into short term capital loss - assessee’s case was that three parties had sponsored the above software. Former two of them denied any such sponsorship and third entity namely M/s. R. R. Agency filed its confirmation of sponsorship - Held that:- We notice that there is no elaborate discussion either in assessment or during lower appellate proceedings as to how three parties could have allegedly sponsored the same relevant software. No justification as to how the resultant capital loss would be disallowed as the same would prima facie indicate a double addition of the very amount i.e. acquisition cost as well as loss arising from sale of the relevant capital asset. We therefore deem it appropriate that ld. CIT(A) needs to adjudicate this entire three folded issue once again as per law after affording adequate opportunity of hearing to the assessee to place on record all details. These three substantive grounds are therefore treated as accepted for statistical purposes. Section 14A r.w. Rule 8D disallowance - Held that:- We notice that the assessee’s stand throughout has been that it had re-invested dividend receipt from already invested mutual funds for the purpose of deriving exempt income in question. It emerges that a co-ordinate bench of this tribunal in M/s. Academy for Computer Training (Guj) Pvt. Ltd. vs. DCIT [2016 (11) TMI 1527 - ITAT AHMEDABAD] as decided holds that the impugned disallowance is not to be made in case of mutual funds. Thus delete the impugned disallowance pertaining to assessee’s exempt income. - Decided in favour of assessee
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2018 (2) TMI 1143
Disallowance on account of levy of cess on green leaves - Held that:- As relying on Commissioner of Income Tax Versus AFT Industries Ltd. [2004 (7) TMI 81 - CALCUTTA High Court] Cess levied on the production of green leaf would come under the purview of composite income. Thus, ground no-1 raised by the revenue is, accordingly dismissed. Addition made on account of Section 80IE (2)(ii) - only plant and machinery of manufacturing is to be considered - Held that:- It is observed that the assessee has two processes in tea business i.e. growing of tea and manufacturing of tea. The assessee grows tea in its own gardens and manufactures tea from such produce. The case of the assessee is that this deduction is available in case a assessee manufacturing of tea and hence only plant and machinery of manufacturing is to be considered. Whether the opening valuations of plant and machineries of water supply system and irrigation system as shown under farm account is to be considered the part and parcel of the value of plant and machinery as on 01.04.2009 for calculating the percentage of addition to plant and machinery for claiming deduction u/s 80IE or not is the issue before us. We find that the water supply system and irrigation system admittedly are not part of tea manufacturing processes. Therefore, the said opening valuation of said machineries should not be considered for the purpose of claiming deduction u/s 80IE of the Act. - Decided against revenue
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2018 (2) TMI 1142
Revision u/s 263 - allowability of land development expenses - Held that:- Proper enquiries have been made by the Assessing Officer while accepting the claim of the assessee. Enquiries have also been made u/s. 133(6} of the Act and the details filed by the assessee have not been accepted summarily by the Assessing Officer. Thus, due application of mind was made and pursuant to the enquiries made, claim of the assessee was accepted by the Assessing Officer after fully satisfying that the land development expenses are genuine.- Decided in favour of assessee Addition u/s 14A - Held that:- During the course of the assessment proceedings, specific query was raised by the Assessing Officer as to why the interest was not received on the loans given to the related parties and also as to why disallowance of interest should not be made u/s. 14A. In response to the said query, vide letter dated 28.11.2014, the assessee filed detailed explanation on the aforesaid issue duly supported by judicial precedents. Thus the issue with respect to the claim of interest expenditure had been thoroughly examined by the Assessing Officer by calling for the specific details and the explanations on the issue involved - the revision proceedings u/s. 263 of the Act even with respect to the interest expenditure directing the AO to re-examine the same is incorrect and unjustified. - Decided in favour of assessee
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2018 (2) TMI 1141
Penalty u/s 271(1)(c) - non-striking-off of irrelevant portion in the notice issued u/s 274 r.w.s. 271(1)(c) - claim u/s 35(2AB)- Held that:- In view of the parity of reasoning flowing from the judgment in the case of Shri Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT) we are unable to accept the stand of the CIT(A) that the mistake in issue of notice does not invalidate the penalty proceedings. Therefore, on this aspect, we upheld the stand of the assessee. Accordingly, the notice issued by the Assessing Officer u/s 274 r.w.s. 271(1)(c) dated 30.03.2015 is untenable as it is ambiguous, thus, suffering from the vice of non-application of mind having regard to the ratio in the case of Dilip N. Shroff (2007 (5) TMI 198 - SUPREME Court) and also the judgment in the case of Smt. Baisetty Revathi (2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT). Thus, on this count itself, the penalty imposed u/s 271(1)(c) of the Act is liable to be deleted. Addition on which penalty has been levied is the denial of deduction u/s 35(2AB) - As per the written submission of the assessee before the lower authorities, it is revealed that the said expenditure was incurred on purchase of raw materials which were utilised during the year. It was noticed that the said expenditure was transferred to Research and Development expenditure head and, therefore, it constituted a claim u/s 35(2AB). The discussion in the assessment order as well as the assertions in the written submission before the lower authorities reveal that the search party advised that the claim u/s 35(2AB) may not be sustainable. Though no specific reasons have been brought out on record, but be that as it may, there is no finding as to why the claim for deduction of cost of raw materials was improper given the fact that there is no adverse finding that the raw materials were not consumed for the purpose of business. Thus, no reason to impose penalty on such disallowance also. we, therefore, hold that having regard to the facts and circumstances and the manner in which the amounts have been assessed to tax, does not justify the assertions of the Revenue that it constitutes furnishing of inaccurate particulars of income within the meaning of Sec. 271(1)(c) of the Act. - Decided in favour of assessee.
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2018 (2) TMI 1140
Penalty u/s 271(1)(c) - audit expenses claimed to be incurred by the assessee company towards travelling and conveyance of the Articled Clerks, who were C.A. students receiving training from the assessee-firm - Held that:- Although this claim of the assessee was not accepted by the Assessing Officer on the ground that it was specifically submitted by the assessee earlier that the audit expenses were incurred by its Audit staff and Audit Clerks without any reference to the Articled Clerks undergoing training with it, it is observed that nothing has been brought on record by the Assessing Officer to establish that the claim of the assessee was wrong and the audit expenses in question were incurred on the Audit staff, which did not include Articled Clerks undergoing training with the assessee-firm as per the stipulation of the ICAI. No doubt, the assessee firm also failed to bring anything on record to support and substantiate its explanation but such failure, in our opinion, can justify the addition made by the Assessing Officer to the value of Fringe Benefit but not the imposition of penalty under section 271(1)(d), especially when the audit expenses were separately debited by the assessee-firm in its Profit & Loss Account and all the relevant details of the same were fully and truly furnished by the assessee during the course of assessment proceedings before the Assessing Officer. No case where the assessee can be said to have furnished inaccurate particulars of Fringe Benefits to justify the imposition of penalty under section 271(1)(d). - Decided in favour of assessee.
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Customs
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2018 (2) TMI 1139
Provisional release of imported goods - areca nuts - Held that: - nature of the goods being perishable as well as the interest of Revenue as several importers in the past have subsequently not been traceable after taking release of goods in similar circumstances, we deem it fit and proper to modify the conditions of provisional release - appeal allowed subject to modification of terms.
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2018 (2) TMI 1138
Penalty under the provisions of Regulation 18 read with Regulation 20(7) and 22 of Customs Broker Licensing Regulations, 2013 - time limitation - Held that: - there is no offence report received by the licensing authority prior to the issue of show cause notice by the DRI, which is received on 05.10.2016 - No such report has been received or placed on record prior to the issue of show cause notice by the DRI. As such, we find no breach of limitation of time limit. Scope of SCN - Penalty - Held that: - the allegation made against the appellant with reference to connivance with the importer regarding non-adherence of MRP labeling is not established. Similarly, the other serious offences alleged has also found to be not established - Regarding the original authority going beyond the scope of the allegation as contented by appellant, we note that the provisions of Regulation 11 (d) are very generic and a portion of the acts of the appellant was found to be violating such obligation. We find no infirmity in the findings recorded in the original order to the effect that such infringement will attract penal action. Appeal dismissed - decided against appellant.
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2018 (2) TMI 1137
Conversion of shipping bills - EPCG scheme to drawback cum-EPCG scheme - denial on the ground that no substantive reason for seeking conversion, after two years of export, was given other than ignorance of procedures for claiming duty drawback - Held that: - The scheme allows export and import for capital goods for predetermined or specified value of exports to be effected within a specified period. However, this scheme applies only to capital goods and not to inputs to be used in the manufacture of export products. There is no bar in the EPCG scheme to avail simultaneous drawback on the exported goods. Hence the exporter is very much entitled to seek conversion of ‘zero duty EPCG shipping bills’ to ‘zero duty EPCG scheme cum drawback scheme shipping bills’. The reason for grounds for rejection of the request by the adjudicating authority also does not pass muster since the said authority has only found fault with the appellant that ‘lack of coordination and ignorance of provisions cannot be considered as reasons beyond control of exporter’. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1136
Misclassification and misdeclaration of value of imported goods - Concentrated mineral drops (CMD), Elete Electrolyte and NanoSiI etc. - penalties u/s 112 (a) and 114 AA of the CA 1962 - Held that: - the penalties imposed u/s 112 (a) requires interference as the issue with regard to the classification has now been decided in favour of the appellants - However, since there is finding by the Tribunal that the valuation of the goods is not proper and requires redetermination, for which reason the matter has been remanded, the penalties imposed under Section 112 (a) cannot be wholly set aside - the quantum of penalty is reduced. Penalties under Section 114 AA - Held that: - There is no allegation in the SCN that the appellants had used any false documents in the transaction. The ingredients stated in the said Section is not established by the department and therefore the imposition of penalties u/s 114 AA, is unwarranted - penalty set aside. Appeal allowed in part.
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2018 (2) TMI 1135
Refund of SAD - N/N. 102/2007-Cuse dated 14/09/2007 - denial on the ground that appellants have not paid the VAT as they availed VAT exemption - Held that: - the issue whether the appellants are eligible for refund when the goods are exempted from levy of sales tax/VAT is settled by the decision of the Tribunal in the case of M/s. Kubota Agricultural Machinery India Pvt. Ltd. [2017 (6) TMI 565 - CESTAT CHENNAI], where Decision in the case of Vazir Sultan Tobacco Co. Ltd. [1996 (2) TMI 138 - SUPREME COURT OF INDIA], followed, where it was held that nil rate is also an appropriate duty - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1134
Refund claim - valuation - air freight - case of appellant is that as per Rule 10(2) of the Customs Valuation (Determination of value of the imported goods) Rules, 2007, the assessable value has to be arrived by restricting the air freight component to 20% of the FOB value of the goods - Held that: - the freight element has to be restricted to 20% of the FOB value when the cost of transportation of the goods is ascertainable and the transportation is by air - appellant has paid total duty of ₹ 23, 85,494/-. The duty payable under the proviso of Rule 10 would be ₹ 15,09,938/-. Hence, the appellants have paid excess duty of ₹ 8,75,356/- - appellant is eligible for refund - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (2) TMI 1133
Scheme of the Insurance Act read with that of IRDA Act - appointment of Administrator to manage the affairs of the Insurer under the control of the IRDAI by invoking powers conferred upon it under provisions of Section 52 (A) of the Insurance Act, 1938 - transfer the insurance business of the Appellant to an outside insurer - Held that:- The report and its outcome have potentially and adversely affected the appellant, therefore, the IRDAI must have supplied a copy of the report to the appellant before passing the impugned order dated July 28, 2017 seeking to transfer the insurance business of the Appellant to an outside insurer, namely – ICICI Prudential Life Insurance Co. Ltd., to enable the appellant to make a representation on the Administrator’s report in question. This action of the IRDAI is clearly in breach of the principles of natural justice. The same cannot be countenanced when we look at the larger scheme of the Insurance Act and the place the Respondent occupies in regulating the insurance business in the country. The impugned order dated July 28, 2017, therefore, deserves to be quashed and set aside and we order accordingly. In fact, it is not the case of the IRDAI that whenever an Administrator is appointed to manage the affair of an Insurance Company on account of certain alleged irregularities, transfer and merger of the said Insurer with another outside Insurer is the only consequence which shall invariably flow. IRDAI must apply the principles of proportionality before resorting to such extreme measures of transfer, merger or winding up of an insurance business altogether. The action must commensurate with the nature of the violation in a given case. IRDAI is obligated to look into as to whether the violation is technical, venial in nature or is a serious violation which would gravely jeopardize the interest of policyholders of the said Insurance Company. In the instant case, the order is passed mechanically rather than by due application of mind on the facts and circumstances of the case, including the overall scheme of the Insurance Act read with that of IRDA Act. While upholding the appointment of the Administrator and the consequential order we hereby quash the impugned order impugned and restore the whole matter to the file of the IRDAI with a direction to proceed from the stage of seeking a representation/response from the Appellant on the Administrator’s report in question as well as providing opportunity of being heard to the Appellant in consonance with the principles of natural justice. During the fresh hearing to be offered by the IRDAI to the appellant under this order, any of the parties, if it wishes to produce some documents or summon it from the other party, the said request shall also be considered as per law by affording an opportunity in this regard. IRDAI shall make an endeavor to complete the above said process as per law preferably within a period of three months from the date of receipt of the appellant’s reply/response to the Administrator’s report in question as per law and after giving opportunity of hearing to the Appellant.
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2018 (2) TMI 1132
Restoration of the name of the Applicant Company to the Register maintained by the concerned RoC - Held that:- We allow the Application and order for restoration of the name of the Applicant Company to the Register maintained by the concerned RoC. We direct the Applicant Company to deliver a certified copy of this Order to the Registrar of Companies within 30 days from the date of this order. On such delivery, the concerned Registrar of Companies shall in his official name and seal, publish the Order in the Official Gazette, as prescribed. We direct the Applicant Company to file all pending Financial Statements and Annual Returns with the concerned Registrar of Companies by making compliance with the requirements prescribed under the provisions of the Companies Act, 2013 and the Rules made thereunder within the time as may be granted by the concerned Registrar of Companies. The Applicant Company is further directed to submit an Undertaking to the Registrar of Companies stating therein that the accounts of the Company were not used as means to transact tainted money during the period of demonetization. We impose fine to the tune of ₹ 10,000/- on the Applicant Company which shall be disbursed to the concerned Office of the Registrar of Companies as per the procedure prescribed for the purpose of the expenses to be incurred by the Registrar of Companies for processing the case file of the Applicant Company for getting the name of the Company restored to the Register of the Companies.
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Insolvency & Bankruptcy
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2018 (2) TMI 1164
Corporate insolvency procedure - Insolvency Professionals appointment - Held that:- Insolvency Professionals for appointment as Insolvency Resolution Professional in compliance with Section 16(3)(a) of the Code in order to cut delay. The list of recommended Insolvency Professionals provides instant solution to the Adjudicating Authority to pick up the name and make appointment. It helps in meeting the time line given in the Code and the unnecessary time wasted firstly in asking the Insolvency and Bankruptcy Board of India to recommend the name and then to appoint such Interim Resolution Professional by Adjudicating Authority. Interim Resolution Professional has filed necessary declaration in accordance with the IBBI Regulations and the provisions of the Code. In pursuance of Section 13 (2) of IBC we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of IBC. We also declare moratorium in terms of Section 14 of IBC. The consequences of imposing the moratorium flows from the provisions of Section 14(1)(a),(b),(c) 8 & (d).
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Service Tax
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2018 (2) TMI 1129
CENVAT credit - input services - rejection was on the ground that there were 21 services which were held to be not used in providing output services, and hence not classifiable as input service under Rule 2(1) of the Cenvat Credit Rules. The other reason was that Cenvat Credit was availed on the input services but against input invoice which pertains to the period prior to registration. Held that: - the scope of admissibility of input services is now broadened to include input services used for providing output services. The Tribunal found that the appellate authority had rightly concluded that the input services are used for providing output services. The definition was referred and a factual finding is recorded viz. that all input services used for modernization, renovation or repair to the office premises are also covered. Even the advertising service which was questioned was also held to be an input which would qualify as an input service and used for providing output service. The Tribunal then noted that wherever the employees have contributed to the supply of food service, to that extent, the employer assessee before it has already conceded that it is not covered within the definition. We wonder as to why Revenue brings appeals after appeals to this Court, and gets them routinely dismissed. The volume does not impress us and merely because 21 services are in issue means nothing to us. So long as the Tribunal's order is within the parameters of law, and cannot be termed as perverse or shocking, the judicial conscience of this Court otherwise, we do not interfere therewith even if other view is possible. Appeal dismissed.
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2018 (2) TMI 1128
Refund claim - time limitation - export of services out of India - validity of SCN - Revenue's case is that as per Section 11(B) of the CEA 1944, the refund claim has to be filed within one (1) year from the relevant date and the relevant date in the case of the petitioner is the date of order passed by the appellate authority and if such date is reckoned, the application for refund dated 27.04.2017 is filed beyond the period of one year - Held that: - "Relevant date" means, in the case of export of services out of India, where a refund of CENVAT paid is available in respect of the export of services or as the case may be, the excisable material used in the export of services shall be the relevant date and if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or if it is exported by land, the date on which such goods pass the frontier, or if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India. The refund has not accrued to the petitioner on account of any order or judgment but on account of statutory provisions coupled with the notification where input services are used for export of services. Thus, the reliance placed on the explanation (B)(ec) does not render any support to the case of the revenue. The SCN is without jurisdiction - petition allowed - decided in favor of appellant.
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2018 (2) TMI 1127
Banking and other financial services - Whether the appellant is liable to discharge the Service Tax liability on the amount retained by him while conducting the Chit Fund services? Held that: - in the case of Margadarshi Chit Funds [2017 (7) TMI 224 - SUPREME COURT OF INDIA] it was held that the amount retained by the Chit Fund Manager (like the appellant herein) is not liable for tax under Finance Act, 1994 under the category of Banking and other financial services - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1126
Construction of individual residential houses for Rajasthan Housing Board - case of appellant is that these houses are not to be considered as residential complexes as they do not share any common facilities and hence do not attract service tax - Held that: - Since a categorical finding is required before confirming tax liability under "Residential Complex Service", we find it fit and proper to set aside the impugned order and to remand the matter to the Original Authority for a fresh decision - appeal allowed by way of remand.
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2018 (2) TMI 1125
Commercial or Industrial Construction Services - demand pertains to 4 construction projects undertaken by the appellants viz. (a) Era Business School, (b) National Automotive Testing and R& D Infrastructure Projects, (c) Office Building for Naya Raipur Development Authority and (d) Hostel for NIT Calicut. Era Business School - Held that: - Era Education School is imparting only education and the same cannot be considered as a commercial activity. Therefore, for the project carried for construction of Era Business School cannot be taxed under “Commercial or Industrial Construction Service” - demand set aside. National Automotive Testing and R& D Infrastructure Projects - Held that: - although the said centre has been registered with the Government but the said centre is not recognized as a centre for testing the vehicles for homologation by the Government of India. The said testing centre is charging money for testing and giving its reports. The said activity is commercial in nature - demand upheld. Office Building for Naya Raipur Development Authority - Held that: - From the scope of the project undertaken by the appellant for construction of building for Naya Raipur Development Authority, who involves in commercial activity of sale and purchase of land qualifies to be taxed under the category of “Commercial and Industrial Construction Service - demand upheld. Hostel for NIT Calicut - Held that: - the construction of the said hostel cannot be considered as construction of building which is used for business commerce or commercial building. In that circumstance, for the said project, the appellant is not liable to pay service tax - demand set aside. Appeal allowed in part.
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2018 (2) TMI 1124
Penalty u/s 78 - intent to evade - Held that: - there was no intention to evade service tax on the part of the appellant because the appellant has filed the returns and in ST-3 return, he has shown the adjustment under Column ‘D2’ instead of ‘D4’ which is only an error in disclosure - from the perusal of the service invoice which is placed on record and also the credit notes issued by the appellant and the disclosure in the service tax return, there is no revenue loss in the present case as it is only an adjustment of the credit availed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1123
Monetary limit involved in appeal - Non-discharge of tax liability - Held that: - the disputed tax liability is less than ` 10 lakhs and as per the litigation policy of the Government of India, the appeal stands dismissed.
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2018 (2) TMI 1122
Manpower and recruitment agency service - demand of service tax of ₹ 6,60,859/- pertaining to EPF and ESI - Held that: - service tax demand cannot be confirmed on the employer s contributed amount towards P.F., E.P.F. and E.S.I. - demand set aside. Service of packing - job of packing / branding of toilet soap in the factory of M/s. Godrej Consumer Products - demand of service tax - Held that: - it appears that packing cost included in the final product and excise duty was paid by M/s. Godrej. But no duty was paid by the appellant. Appellant is providing the services of packing of soap cake which is essentially a labour supply contract and not a packaging service as contended by the appellant. The appellant has not paid the service tax on the final product - demand upheld. Demand of ₹ 60,728/- pertaining stitching and washing charges which has been received from clients - Held that: - learned Counsel has submitted that she is not contesting this demand. Same is dismissed as not contested. Appeal allowed in part.
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2018 (2) TMI 1121
Advertising Service - non-payment of service tax - Held that: - the service Tax in respect of the services provided by the appellant had already been discharged by the main advertiser. Hence, it is not the case of non-payment of tax by the appellant for providing the taxable service. Chandigarh Bench of the Tribunal in the case of Lone Star Engineers [2016 (9) TMI 489 - CESTAT CHANDIGARH] have held that the payment of main contractor on behalf of the appellant shall be treated as payment made by the appellant. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1120
Taxability - manpower supply and recruitment agency services - Held that: - the respondent was awarded specific jobs and not the supplies of labour and the consideration paid for such specific jobs was based upon per piece and not on salary basis to the employees/labour utilized for such activity - appeal dismissed - decided against Revenue.
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2018 (2) TMI 1119
Levy of service - works contract service - execute turnkey contracts for supply, erection, installation and commissioning of power transmission and distribution systems - Held that: - this issue is no more res integra and has been settled by the Hon'ble Supreme Court in the case of L&T Ltd. [2015 (8) TMI 749 - SUPREME COURT] wherein the Hon'ble apex court has held that prior to 01/062007, there was no charging section to specifically levy service tax on WCS, or mechanism to tax service tax element derived from gross amount charged for works contract less value of the property in goods transferred in execution of works contract. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1118
Jurisdiction - power of Commissioner (A) to remand - Held that: - there is no infirmity in the impugned order whereby the Commissioner (A) has only remanded the matter to the original authority - the Commissioner (A) has the power to remand the case to the original authority under the Service Tax - appeal dismissed - decided against Revenue.
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2018 (2) TMI 1117
Penalty u/s 78 - Erection, commissioning and installation services - short-payment of service tax - Held that: - substantial amount of the service tax has been discharged prior to issuance of show cause notice - the penalty imposed in the present case is unwarranted - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1116
Clearing and forwarding agency service - appellant received ₹ 2,91,000/- per month from IOCL and did not discharge the service tax on said amount - Department was of the view that the said amount is also includible in the total taxable value in respect of C&F Agency services - Held that: - Larger Bench decision in the case of Sri Bhagawathy Traders Vs CCE Cochin [2011 (8) TMI 430 - CESTAT, BANGALORE] relied upon which has held that only the actuals can be considered to be reimbursable expenses which are to be excluded from the total taxable value. For the limited purpose of re-consideration whether the amount received is reimbursable expenses or not and whether the decisions relied upon would apply to the case, we remand the matter to the adjudicating authority. Penalty imposed is unwarranted and is set aside. Appeal allowed in part and part matter on remand.
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2018 (2) TMI 1115
Refund of service tax - N/N. 40/2007-ST dated 17.9.2007 - input services - Held that: - It is not disputed that the appellant has filed the refund claim under the said notification. However, later by N/N. 17/2008 dated 1.4.2008, the impugned services have been included in the specified services. Since the refund claim pertains to services prior to 1.4.2008, the appellant having sought refund under N/N. 40/2007 is not eligible for the refund since these are not specified / exempted services as per this notification - refund rightly rejected - appeal dismissed - decided against appellant.
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2018 (2) TMI 1114
Valuation - includibility - amount of ₹ 3,39,539/- was received by the appellants towards reimbursement of advertisement charges from their client M/s. Watanmal Pvt. Ltd. - Department was of the view that these expenses are incurred in providing the taxable service and has to be included in the total value for the purpose of discharging service tax - whether the amount of ₹ 3,39,539/- received by the appellant would fall under reimbursable expenses or not? Held that: - The appellants are engaged in rendering Manpower Recruitment and Supply Agency service and not any Advertisement Agency service - it can be seen from the advertisement charges, which was incurred to be a one-time occasion and was only expenses incurred on behalf of the client which are reimbursed on actual basis - reliance placed in the case of Commissioner of Service Tax Versus M/s. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1113
Classification of services - appellant constructed a shopping mall namely Chennai Citi Centre and also individual dwellings in Tsunami affected areas at Kanyakumari on behalf of World Vision India which is a non-profitable organisation - also, another project undertaken by the appellant was construction of residential quarters for Central Government and Defence Department and Theni Medical College - appellant contends the activities to fall under works contract services, whereas, Revenue alleges these activities to fall under Commercial or Industrial Construction Services. Held that: - Hon. Apex Court in the case of Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT] has held that works contract services are not subject to levy of service tax prior to 1.6.2007 - Admittedly appellants are registered under the category of works contract services from 1.6.2007 and are discharging the service tax under this category. The demand is raised for the period from 10.9.2004 to 30.9.2007 under the category of ‘Construction of residential complex’ and ‘Commercial or Industrial Construction Services’. On perusal of the records, it shows that the appellant had undertaken the works on a turnkey project basis - it is seen that the construction services were completed prior to 1.6.2007. In such case, the decision laid in Larsen & Toubro judgement (supra) would squarely apply to the demand raised prior to 1.6.2007 and requires to be set aside, which we hereby do. Whether the decision of L$T is applicable to the amount received by appellant after 1.6.2007 requires verification. For this limited purpose, the matter requires to be remanded to the adjudicating authority who shall verify, whether, the amount received after 1.6.2007 is in respect of construction services completed prior to 1.6.2007 or not - appeal allowed by way of remand.
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2018 (2) TMI 1109
CENVAT credit - certain equipments procured for providing taxable output service - FACT-10 Meter RF Shielded EME chamber - Heater with blower & panel with accessories - Clean air management system and prefabricated clean room enclosure - Infiniti Pro P-IV 3.2 Ghz personal computer - whether on the items in question appellant is entitled to avail Cenvat credit on not? - Held that: - the appellant has taken Cenvat credit as capital goods on the goods in question. Although they do not qualify as capital goods as per Rule 2(a) of Cenvat Credit Rules, 2004, but in alternate it is the claim of the appellant that these goods be treated as inputs in terms of rule 2(k)(ii) of Cenvat Credit Rules, 2004. The input is required to be used for providing output service. Admittedly these inputs have been used by the appellant for providing output service - similar issue came up before the Tribunal in the case of GTL Infrastructure Ltd. [2014 (9) TMI 647 - CESTAT MUMBAI] wherein this Tribunal has held that As per Rule 2 (k) (ii) of the Cenvat Credit Rules, 2004 all goods are entitled for Cenvat Credit which are used for providing any output service. Appellant has correctly availed the Cenvat Credit on the goods in question and same may be treated as input for providing output service - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (2) TMI 1112
Classification of goods - components/parts of a boiler - whether the essential components/parts of a boiler cleared by the assessee would attract duty under sub-heading 8402.10 of the first schedule of Central Excise Tariff Act, 1985 or sub-heading 8402.90 of the said schedule? - Held that: - relying on the HSN note Part V under Section XVI, it is concluded that such components which are essential to classify the boiler as a machine, even if transported as components, must be understood to have been transported as a complete machine - the components of the boilers cleared as parts but essential to put into operation the boilers, would be classifiable under sub-heading 8402.10 and not as claimed by Revenue under sub-heading 8402.90 - appeal dismissed - decided against Revenue.
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2018 (2) TMI 1111
CENVAT credit - input service - outward transportation of final products from the place of removal - Rule 2(I)(ii) of CCR - Held that: - issue has been decided in the case of COMMISSIONER OF C. EX. & CUSTOMS Versus PARTH POLY WOOVEN PVT. LTD. [2011 (4) TMI 975 - GUJARAT HIGH COURT], where it was held that main body of the definition of term ‘input service’ is wide and expansive and covers variety of services utilized by the manufacturer. By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal - credit allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 1110
Clandestine removal - Gutkha under the brand name Dilbagh - It appeared to the officers of Central Excise department from the loose slips found, clearances of Gutkha without payment of duty - demand based on loose slips found and statements of persons - Held that: - the Annexure A which quantified the demand was based on various presumptions including the quantity of HSD required for running for one hour, the number of pouches that can be manufactured per hour from each machine and that 81 machines were running all throughout - the evidence of consumption of HSD was based on the record collected by Revenue from fuel stations and the same record was not confronted before the partner of the appellant M/s.Som Aromatics and therefore the said evidence became third party evidence. The entire show cause notice is presumptive - Revenue could not establish manufacture of 116582400 pouches of Gutkha during the period from October, 2006 to November, 2006 and Revenue could not establish manufacture of 1437782400 pouches of Gutkha for the period from December, 2006 to August, 2007 alleged in the said show cause notice. Central Excise duty is on manufacture - In the present case the burden to prove that above stated quantity of pouches were manufactured by M/s.Som Aromatics was on Revenue. Revenue could not establish manufacture of above stated quantities of pouches of Gutkha during above stated period. The SCN is presumptive - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1108
Deposit of Excise Duty with Central Government - Section 11D of the Central Excise Act, 1944 - CENVAT credit on intermediate goods - Held that: -issue decided in appellant own case M/s Lamicoat International Pvt. Ltd., Shri Lok Nath Prasad Gupta, Director, Shri Om Prakash Gupta, Director, Shri Dipankar Ghosh, Manager Versus Commissioner of Central Excise, Noida [2015 (9) TMI 679 - CESTAT NEW DELHI], where it was held that as the appellant has paid duty on their final product therefore the said amount cannot be recovered twice under section 11D of the act. Further, As appellant is discharging duty on final product therefore although same is exempt, the demands are not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1107
Sub-contract - job-work - case of the department is that even though the job work fabrication and erection of the pipeline was sub-contracted to Shri K.A Jaysinha Reddy, M/s.Ganesh Builders was held to be the manufacturer as the ownership of pipes was with Ganesh Builders - Held that: - Irrespective of the fact that the Ganesh Builders is the owner of the goods but manufacturing was not carried out by Ganesh Builders and it is admittedly carried out by Shri Reddy. In this fact, the demand cannot be raised from Ganesh Builders - If at all any demand is to be made it is from the manufacturer which in the present case is Shri K.A. Jaisinha Reddy, for which no SCN was issued to Shri Reddy - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1106
CENVAT CREDIT - invoices issued without receipt of goods - Held that: - only for the reason that the transporter refused the transportation of goods or that invoices were not appearing in gate register or no GRN was prepared by M/s Yash Industries, credit cannot be denied - It is not disputed that M/s Yash Industries are regularly purchasing rejected profile from M/s Shreeji and are using the same as raw material. The goods stands recorded in raw material account of the consignee and the payment towards purchase was made through banks. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1105
Refund claim - trade discount - price variation clause - Held that: - the trade discount was not known to prior to the clearance and thus at the time of clearance, the assessable value can only be ascertained on the basis of trade discount which was known to the buyer - Variation on the transaction value on a subsequent date cannot result in re-determination of assessable value - refund cannot be allowed - appeal dismissed - decided against appellant.
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2018 (2) TMI 1104
Interest on delayed reversal of CENVAT credit - DTA unit is converted into a 100% EOU - Held that: - the issue is squarely covered in favour of the appellant by the decision rendered in the case of CCE vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available - appellant had sufficient balance in their CENVAT credit account and had not utilized the same and therefore, they are not liable to pay the interest - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1103
Rectification of Mistake - the ROM application refers to three paragraphs of the Final Order i.e., paragraph 15, 20 and 22 - With reference to paragraph 15, it is contended that the observation of the Tribunal that the authenticity of the evidences relating to lime and cotton canvas bags purchased without proper accounting has not been challenged, is an apparent error on record - Held that: - The grounds before the Hon’ble High Court was that there was mismatch in the determination of duty demand between the show-cause notice and the Statement of Facts, as far as the calculation of duty demand is concerned. Accordingly, the plea for rectification of this observation is rejected as it is without merit. With reference to paragraph 20 of the Final Order, it has been contended that the following observation of the Tribunal made in the paragraph is erroneous “adjudicating authority in the impugned order has discussed and confirmed the duty liability on the basis of evidences discussed at (i) and (ii) of above para - On perusal of the record of the case, we find that the observations made in paragraph 20 above are based on record of the case and there is no error apparent which requires correction. Hence, the plea for rectification relating to para 20 is rejected. With reference to paragraph 22, it is contended that the observations of the Tribunal that “the appellant also admitted such liability during the course of hearing” is apparently erroneous - it appears that the appellant has not specifically admitted the liability during the course of hearing of the appeal. Hence, the sentence “the appellant also admitted such liability during the course of hearing” at the end of paragraph 22 of the Final Order is deleted. ROM application allowed in part.
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2018 (2) TMI 1102
Penalty u/s 11AC - Refund of duty paid on the free supply of biscuits - rejection on the ground that the same is assessable to duty in terms of section 4A of the Act - Held that: - the issue per se was mired in confusion during the period and was only laid to rest by the decision of the Larger Bench of the Tribunal in the case of INDICA LABORATORIES PVT. LTD. Versus COMMISSIONER OF C. EX., AHMEDABAD [2007 (5) TMI 19 - CESTAT,AHMEDABAD] - there is a case for setting aside the penalty imposed under section 11AC - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1101
N/N. 33/2005-CE dated 08.09.2005 - clearance of industrial valves and parts thereof without payment of duty - Held that: - It is amply clear that the goods have in fact been consigned only to M/s. Rake Power Ltd., and have been used for the purpose intended, benefit of notification cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1100
Benefit of N/N. 25/99-Cus. dated 28.02.99 - import of inputs for use in the manufacture of relays - Department was of the view that the goods/inputs having not been put to use in the manufacture of excisable commodity i.e. Relays, the benefit of notification is not available to them - Held that: - The Tribunal in the appellant’s own case Areva T And D India Ltd. Versus Commissioner of Central, Excise (LTU) [2017 (10) TMI 129 - CESTAT CHENNAI] analyzed the issue and observed that no duty demand can be made when the inputs have been re-exported - The appellants have explained that substantial portion of the imported inputs were used for the manufacture of relays and the balance could not be used by them was re-exported in order to reduce their obligation to that extent - benefit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1099
Benefit of N/N. 67/1995-CE dated 16.03.1995 - process of extraction of catechin from gambier extracts - Indian Katha - it appeared to Revenue that India Katha was attracting nil rate of duty and, therefore, the benefit of Notification was not admissible - Held that: - It is undisputed fact that catechin were manufactured by Bareilly Chemicals Pvt. Ltd. and the main appellant used the said goods in the manufacture of their final product. Therefore, by no stretch of imagination use of catechin in the manufacture of Indian Katha can be treated as captive consumption and, therefore, the question of eligibility of main appellant for the benefit of Notification No. 67/1995 does not arise. It is admitted fact that the goods manufactured by the main appellant i.e. Indian Katha were attracting nil rate of duty. Therefore, the question of opting to file any declaration under Notification No. 214/1986-CE did not arise in the circumstances of the case. In the present appeals the liability to pay Central Excise Duty on catechins manufactured by Bareilly Chemicals Pvt. Ltd was not on M/s Indian Wood Products Company Ltd. - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1098
CENVAT credit - input/capital goods - MS Plates, Chequered Plates, RS Joist, Prime Hot Rolled Over Rolling etc. used in the manufacture of EOT, Gantry Cranes and in the construction of supporting structures - Held that: - issue on eligibility of input credit for goods like MS Plates, Chequered Plates, RS Joist, Prime Hot Rolled Over Rolling etc., used in the manufacture of structures for movement of EOT Cranes, Iron Frames for EOT Cranes etc., is no longer res integra and has been put to rest in favour of the assessee in a plethora of cases - the disputed inputs are very much eligible inputs for the purpose of availment of Cenvat credit by the assessee. Capital goods used outside the factory premises of the assessee - Held that: - all the capital goods had been manufactured only in the assessee's main Unit and were cleared to their own extended premises/Units where the job work of the main Unit was undertaken - credit allowed. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 1097
CENVAT credit - inputs/capital goods - whether the appellant-assessee, a manufacturer of Sugar, etc., is entitled to Cenvat credit on Steels goods such as Shape & Section, angles, M.S. Plates/rounds, beams, rails etc. falling under Chapter Heading 72, 73 & 83 of CET Act, also welding electrodes used in fabrication/construction of capital goods including structural support, etc. - whether the demand is barred by limitation and whether the appellant is liable for interest and penalty? Held that: - The Hon’ble Andhra Pradesh High Court in CCE V/s Sai Samhita Storages (P) Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] have held that the assessee engaged in business of providing storage and warehousing services, is entitled to take Cenvat credit on inputs like Cement, Iron Bars, Pipes etc. used in construction of warehouse, without which the assessee could not have provided the taxable service of storage & warehousing - the appellant have constructed/fabricated machinery and its support structures, accordingly they are entitled to Cenvat credit on the goods in question including welding electrodes, relying on the findings of Hon’ble Madras High Court in India Cement [2015 (3) TMI 661 - MADRAS HIGH COURT]. Extended period of limitation - Held that: - issue being wholly interpretational as there existed contrary judgments of this Tribunal, extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 1096
SSI Exemption - dummy unit - Revenue entertained a view that the assessee-appellant had split up the turnover in the name of another unit M/s.The Coastal Paper Packaging which is held to be fictitious unit, in order to have lesser turnover accounted for the purpose of availing the said SSI exemption - Held that: - Admittedly no notice was issued making allegation about the legal status of M/s.The Coastal Paper Packaging. The lower authorities held the said units as fictitious. Though the appellant strongly contested on merit and established the legal status and independence of M/s.The Coastal Paper Packaging, since no notice was issued to them, the whole proceedings are in violation of principles of natural justice. The proceedings without notice to one of the parties and holding the adverse view against such party is not sustainable. Appeal allowed - decided in favor of assessee.
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Indian Laws
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2018 (2) TMI 1131
Court by which decree may be executed - Transfer of decree - Arbitration award - Procedure where court desires that its own decree shall be executed by another court - whether an award under the Arbitration Conciliation Act, 1996 is required to be first filed in the court having jurisdiction over the arbitration proceedings for execution and then to obtain transfer of the decree or whether the award can be straightway filed and executed in the Court where the assets are located is required to be settled in the present appeal - Held that:- The enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings. The appeal is accordingly allowed and the impugned order dated 20.3.2014 is set aside restoring the execution application filed by the appellant before the Morena courts.
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2018 (2) TMI 1130
Whether the Chief Metropolitan Magistrate and the Additional Chief Metropolitan Magistrate are of the same status having the same and identical jurisdiction so far as the trial of criminal cases is concerned? - Held that: - Subsection (1) of Section 19 lays down that the Chief Metropolitan Magistrate and every Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge; and every other Metropolitan Magistrate shall, subject to the general control of the Sessions Judge, be subordinate to the Chief Metropolitan Magistrate. Sub-section (2) empowers High Court to define the extent of subordination, if any, of the Additional Chief Metropolitan Magistrates to the Chief Metropolitan Magistrate - the Chief Metropolitan Magistrate and the Additional Chief Metropolitan Magistrate are the Courts of the same status having same and identical jurisdiction so far as the trial of criminal cases is concerned. Having held status of Chief Metropolitan Magistrate and the Additional Chief Metropolitan Magistrate is same and identical, whether Additional Chief Metropolitan Magistrate can exercise powers under Section 14 of the SARFAESI Act? - Held that: - Though the Court of Additional Chief Metropolitan Magistrate is subordinate to the Court of Chief Metropolitan Magistrate on administrative count and for certain purposes, it does not affect status or judicial power of additional Court vis-a-vis the principle. It may be stated that the Court of Additional Chief Metropolitan Magistrate handles the similar kind of litigation which is handled by the Court of Chief Metropolitan Magistrate and, therefore, we hold that the Court of Additional Chief Metropolitan Magistrate so far as the judicial functions are concerned has all powers of Chief Metropolitan Magistrate. Application under Section 14 of the SARFAESI Act could be disposed of in time bound period as intended by the Legislature. Petition disposed off.
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