Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 8, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance of the legal and professional expenses - assessee claimed that said amount has been paid to the Government account as TDS, and therefore it is a business expenditure allowable to the assessee - assessee failed to substantiate its claim - no deduction - AT
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Penalty u/s 271(1)(c) - willful evasion of tax by claiming deprecation on building - This is a bonafide mistake made by the assessee without any intention to evade tax. - no penalty - AT
Customs
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BCD tariff rate on import of Chana (Chickpeas), [Tariff item 0713 20 0] increased from 30% to 40% by invoking section 8A (1) of the Customs Tariff Act, 1975 and accordingly, the effective rate of BCD on Chana (Chickpeas), will also be 40%
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Import duty increased on all types of sugar under tariff head 1701, [Raw sugar, Refined or White sugar, Raw sugar if imported by bulk consumer] from the present 50% to 100% (Tariff rate) with immediate effect and without an end date.
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Extending eSANCHIT application on all EDI locations - Order-Instruction
IBC
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Approval of resolution plan - Amendments in the Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Resolution plan. - Amendments in the Regulation 37 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Invitation of Resolution Plans - Insertion of New Regulation 36A to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Information memorandum. - Amendments in the Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Manner of determining Fair value and Liquidation value. - Amended regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Who can be appointment as registered valuers - Amended Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
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Definitions - Amendments in the Regulation 2 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016
RBI
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Relief for MSME Borrowers registered under Goods and Services Tax (GST) - Circular
Service Tax
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Refund claim - Due to ignorance of law, the appellant had paid service tax on Inward Legal Services rendered by the advocates for the period March 2012 to March 2013 under reverse charge mechanism - refund allowed - AT
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Refund claim - appellant has paid the service tax as an advance as he was under the impression that service tax is payable on the Export of Services rendered by him - period of limitation is not applicable - AT
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BAS - Department took the view that the assessee were paying service tax under Business Auxiliary Service only on the commission amount without considering the incentive amount - mere sale and purchase of cargo space and earning profit in the process is not a taxable activity - demand set aside - AT
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Supply of manpower to job-worker - the assessee has been utilizing his own labour for packing activities. Viewed in this light, we are not able to appreciate how tax can be levied on the assessee for utilizing his own labour - tax liability do not sustain - AT
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BAS - Logistic Support Services - It appeared to the Department that appellants are providing the services on behalf of overseas logistics company appointed by the overseas buyer and hence service tax liability would arise under the heading of Business Auxiliary Services - Revenue failed to prove its case - demand set aside - AT
Central Excise
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Penalty u/r 27 of CER 2002 - Delay in submitting ARE-1 Applications against export of goods - contravention of Rule 19 of CER 2002 - The delay caused is nothing but procedural irregularity - no penalty - AT
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CENVAT credit - air conditioners, which is installed in the Control Panel room of the factory - admittedly the goods have been used in the factory of production - Credit allowed - AT
VAT
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Valuation - VAT - It must be remembered that taxable turnover is turnover net of deductions. All trade discounts are allowable as permissible deductions - SC
Case Laws:
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Income Tax
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2018 (2) TMI 368
Reopening of assessment - failure on part of the assessee to disclose true and full facts - contribution made towards the fund and the agreement of the LIC to manage the fund - Held that:- In the present case, the petitioner had raised a claim and had also placed all necessary computation on record in connection with such a claim. It is of course true that the contribution to the gratuity scheme itself was not sufficient to enable an assessee to claim deduction. Additional requirement that such scheme in which the contribution is made must also have been approved by the Commissioner is undisputable. In normal case therefore, nondisclosure of such claim not being approved, if such was the fact, may amount to not disclosing true and full facts. According to the petitioner, factually, the scheme was approved by the Commissioner way back in the year 1976. It was only after it, the LIC would undertake the responsibility to manage the same. It was on this basis that the petitioner had been raising the claim year after year right since its inception every year. In none of the past years, any such issue was raised by the Assessing Officers in this respect. Therefore, the petitioner produced what it had been producing all along namely, the contribution made towards the fund and the agreement of the LIC to manage the fund. If the Assessing Officer had any doubt about such a claim, it was always open for him to examine it, ask the petitioner to fulfill further requirements. Merely because the petitioner did not provide an additional declaration in the return that the scheme though approved, the petitioner is unable to produce a copy of the order approved by the Commissioner after long gap of time, cannot be categorized as failure on the part of the petitioner to disclose truly and fully all material facts. Only on this ground, we are inclined to quash the notice. - Decided in favour of assessee
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2018 (2) TMI 355
Reopening of assessment - validity of reasons to believe - computation of income as NIL - Held that:- The assessment order clearly reveals that a detailed questionnaire had been issued to the assessee along with the notice under section 142(1). The submissions of details and explanation furnished by the petitioner clearly show that it has explained that the firm was converted into a company with all assets and liabilities and that the profit earned by the firm was disclosed in the profit and loss account of the company. The Assessing Officer, upon being convinced by the explanation given by the petitioner, has accepted the return of income as filed by the petitioner during the course of scrutiny assessment. Thus, it is evident that the Assessing Officer has applied his mind to the issue in question and has accepted the same. Assessing Officer in the assessment order, has recorded that after verification and discussion and from the data made available, the total income of the assessee is computed as nil. Evidently therefore, the Assessing Officer has applied his mind to the fact that the assessee had filed nil return of income and had accepted the same. Under the circumstances, the court is of the view that the reasons recorded for reopening the assessment reflect a mere change of opinion, inasmuch as, the Assessing Officer has already applied his mind to this aspect. Reopening of assessment being based upon a mere change of opinion. - Decided in favour of assessee
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2018 (2) TMI 354
Reopening of assessment - validity of reasons to believe - non deciding the objections raised by the petitioners - time line for submission of objections and deciding the same - Held that:- Court has set out a time line for submission of objections and deciding the same. However, at the same time, the court has also clarified that it would not mean that if in either case, the assessee misses the time limit, the procedure provided by the Supreme Court in the case of GKN Driveshafts (India) Limited (2002 (11) TMI 7 - SUPREME Court) would not apply. It only means that the time frame provided therein would not apply in such cases. Thus, in case where the objections are submitted by the assessee belatedly the time prescribed by the court would not apply, however, this does not absolve the Assessing Officer from deciding the objections in the light of the decision of the Supreme Court in the case of GKN Driveshafts (India) Limited (supra). Therefore, the Assessing Officer was not justified in proceeding to pass the impugned order without deciding the objections raised by the petitioner. In any case, since the notice, which is the foundation for the assessment order, itself is held to be unsustainable, the assessment order would also be rendered unsustainable. - Decided in favour of assessee.
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2018 (2) TMI 353
Gift in pursuance of a family settlement - Whether a transaction involving transfer of shares can constitute a gift under section 2(xii) r.w.s. 4 of the Gift Tax Act in cases where the price paid for such transfer is proved to be in excess of the actual market price of the shares so transferred? - Held that:- The provisions of gift tax would ordinarily not apply to share transfers or transfer of property, as part of it is to effectuate a settlement, the questions of law framed in this appeal are answered against the revenue and in favour of the assessee. See Gawahati High Court in Ziauddin Ahmed vs. Commissioner of Gift Tax [1975 (8) TMI 40 - GAUHATI High Court]
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2018 (2) TMI 352
Penalty u/s 271(1)(c) - additions on tax evasion - Held that:- Additions made is not on a mere estimation. Only on the search and seizure and the subsequent statement from the assessee conceding a profit margin, not clearly stated that the addition was made by the Assessing Officer. Neither the assessee nor their supplier could offer a satisfactory explanation for the low profit conceded of the sale of lenses. This is the incriminating evidence which was revealed on the proceedings pursuant to search and seizure that led to the addition. It cannot be said that the same is a mere estimation. We hence sustain the Tribunal's order. However, we make it clear that the Assessing Officer has to redo the penalty and impose it only to the extend of the tax evasion with respect to the additions of ₹ 8,48,400/- and ₹ 8,70,000/- in the respective years. The tax evaded on that component of addition with respect to the profit derived on lens, would be the penalty, which is at the minimum as permitted in Section 271(1).
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2018 (2) TMI 351
Admit on following substantial question of law. “On the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was not justified in failing to appreciate that the disallowance u/s 40(a)(ia) cannot be regarded as increase in profit of the assessee's business on which deduction u/s.80IC would be allowable, as the amount has already been expended.”
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2018 (2) TMI 350
Allowability of interest u/s 244A - CIT(A) upheld the action of the AO in not allowing interest u/s 244A for the month of June, 2010 even when the approval for refund was issued on 04.06.2010 - Held that:- Where the assessee has paid the taxes and such taxes have been refunded, the assessee is to be paid interest at the prescribed rate for every month or part of a month comprising the period from the date of payment of the tax to the date on which the refund is granted. If such period is a fraction of a month, the same shall be deemed to be a full month and the interest shall be calculated for the entire month accordingly. Therefore, in order to ascertain for how many months the assessee would be entitled to receive interest, the number of months comprised in the period shall have to be determined and the term ‘month’ has to be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined under section 3(35) of the General Clauses Act. The date of payment of tax demand has been stated by the ld AR as 29.02.2008, 4.02.2008 and 3.02.2009. The date on which the refund is granted is the date of the refund voucher/order which is signed and issued on 9.6.2010. The AO shall verify the date of payment of taxes and taking the date of grant of refund as 9.6.2010, determine the number of months for which the interest is payable at the prescribed rate of interest in light of above discussions and the interest so determined is directed to be paid to the assessee.
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2018 (2) TMI 349
Treating the compensation received from terrace antenna and hall booking - “Income from Other Sources” OR “Business Income” - Held that:- It is undisputed that assessee company's only source of income is from letting out of properties. This is duly supported by the profit and loss account submitted by the assessee. Even the Assessing Officer has accepted that the entire receipt of the assessee consists of rentals for letting out of property. In these circumstances, find that Hon’ble Apex court decision in the case Rayala Corporation (P) Ltd. vs. ACIT (2016 (8) TMI 522 - SUPREME COURT) duly covers the issue in favour of the assessee. Thus assessee's receipts should be considered as business income - Decided in favour of assessee.
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2018 (2) TMI 348
Disallowance out of repairs and maintenance - Held that:- Assessee has incurred a small expenditure of ₹ 9,50,772/- at Santacruz and ₹ 5,30,232/- at Dadar premises. These are rented premises. As evident from the submission hereinabove, the expenditure incurred is totally of revenue in nature being renovation and refurbishing at rented premises. In the backdrop of aforesaid submission and on the facts and circumstances of the case the treatment of these expenditure as capital expenditure is not at all justified. Hence, set aside the orders of authorities below and decide the issue in favour of the assessee. Denial of expenditure claimed being bad debt written off - Held that:- Ground raised by the assessee in this regard is misplaced. CIT(A) has not dismissed the assessee's ground in this regard but has remitted the matter to the file of the Assessing Officer to examine the veracity of assessee’s claim and thereafter decide accordingly. There is no infirmity in the direction by the learned CIT(A). Hence, this ground raised by the assessee stands dismissed.
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2018 (2) TMI 347
Initiation of re-assessment proceedings - validity of reopening of assessment - proof of escapement of income - Held that:- AO for initiating the re-opening of the assessment proceedings beyond the period of 4 years from the end of the relevant assessment year has to establish that there was escapement of income chargeable to tax because of the failure of the assessee to disclose fully and truly the material facts necessary for the assessment. Neither in the reasons recorded for reopening the assessment nor in the order of re-assessment u/s147 of the Act. The AO has not brought out facts to show any omission on the part of the assessee to disclose fully and truly the material facts when the original assessment was completed. We are of the view that the re-opening of the completed assessment u/s 143(3) beyond the period of 4 years cannot be justified. We hold that the re-opening of the assessment is beyond the time contemplated by the proviso to sec.147 of the Act and therefore, initiation of re-assessment proceedings is held to be bad. The decisions cited by the assessee referred to in paragraph 9 and 10 support the conclusions that reassessment proceedings are not valid in law. For the reasons given above, we allow the grounds raised in the cross objection and hold that the reassessment proceedings are not validly initiated. Therefore order of the reassessment is liable to be annulled. Since the re-assessment order has has been annulled, the grounds raised by the revenue in its appeal does not require any adjudication. - Decided against revenue
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2018 (2) TMI 346
Addition u/s 69C to 12.5% of the alleged bogus purchases - Held that:- Considering assessee’s appeal on identical issue of estimation of profit on alleged bogus purchases for the very same assessment year the Tribunal though, upheld the estimation of profit on alleged bogus purchases @ 12.5%, however, directed the Assessing Officer to reduce the gross profit already declared by the assessee from the profit to be estimated at 12.5% of the bogus purchases. The learned Departmental Representative also agreed with the aforesaid submissions of the assessee. As could be seen from the material on record, while deciding assessee’s appeal arising out of the impugned order of the Commissioner (Appeals) the Tribunal has directed the AO to adopt the profit rate on alleged bogus purchases @ 12.5% and thereafter reduce the gross profit already declared by the assessee to quantify the disallowance on account of alleged bogus purchases. Addition on account of difference in closing and opening stock - Held that:- Neither before the Assessing Officer nor before the first appellate authority the assessee appeared and reconciled the difference in closing and opening stock with supporting evidence. Therefore, there were no other options before the Departmental Authorities but to treat the difference between the closing and opening stock as income of the assessee. However, considering the submissions of the learned Authorized Representative that given an opportunity the assessee will be able to reconcile the difference in closing and opening stock with supporting evidence, we are inclined to restore the issue to the file of the Assessing Officer for de novo adjudication after providing due opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
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2018 (2) TMI 345
Unexplained cash deposits in the assessee’s bank account with ICICI Bank - Held that:- (a) AO shall vet the cash flow statement (summarized at PB page 10) for f.y. 2007-08 for the veracity of the various figures (with reference to the records, viz bank statement, assessed income), as well as its calculation. Needless to all, the CFS shall be for all the bank accounts of the assessee; (b) the opening cash balance as on 01.04.2007 shall, instead of an arbitrary figure of ₹ 1.60 lacs, be adopted at 1/3 of the business income for the immediately preceding year (AY 2007-08) as returned or, as the case may be, assessed. The household expenses for f.y. 2007-08, in line with that for the current year, be taken at ₹ 1,80,000/-, as fairly agreed to by the counsel during hearing; (c) the closing cash balance for A.Y. 2008-09, i.e., as on 31.03.2008, so arrived at, shall be the opening cash balance for the current year; (d) the A.O. shall verify the CFS for the current year, prepared, similarly, aggregating all the bank accounts of the assessee, adopting the correct figures; (e) the cash flow statement for the current year (AY 2009-10) be redrawn accordingly; and (f) the shortfall in cash as at the year-end (31.03.2009), if any, would stand to be confirmed, instead of ₹ 4.67 lacs, and the cash balance as on 01/04/2009 be taken at nil. Where positive, the entire addition would stand deleted, and the cash balance arrived at shall be the cash available with the assessee as on 01.04.2009.
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2018 (2) TMI 344
Disallowance of the legal and professional expenses - assessee claimed that said amount has been paid to the Government account as TDS, and therefore it is a business expenditure allowable to the assessee - whether TDS paid to the Government account without incurring expenditure cannot be held to be a business expenditure for earning income? - Held that:- The tax has been deducted as tax liability of the deductee and it is not the tax liability of the assessee. In other words the tax deducted at source is the amount paid to the government on behalf of those parties, which means the said amount has been paid to those parties. Now the question arises whether this amount paid to those parties is allowable to the assessee, when those parties have not rendered any services and the balance liability of ₹ 43, 89, 165/-has already been written back by the assessee in subsequent assessment year. In our view, the amount of ₹ 5, 60, 835/-deposited as TDS, is an expenditure, which the assessee has failed to explain as incurred wholly and exclusively for the purpose of business. We also note that the assessee has failed to explain before the Assessing Officer whether this amount of tax deducted at source was deposited in Government account. - Decided against assessee Disallowance of the legal and professional expenses on the ground that same was incurred in connection with issue of preference shares and thus it was in the nature of capital expenditure - Held that:- CIT-(A) has given the finding that said expenditure was incurred for issue of redeemable preferential shares to M/s Kitson PTE Ltd and though the said express was incurred during financial year 2006-07 but has been claimed during the year as liability to pay these expenses crystallised during the year. This factual finding of the Ld. CIT-(A) has not been rebutted by the Ld. counsel of the assessee. Thus, in view of the finding of the Ld. CIT-(A) that expenses are in relation to issue of share capital, same are not allowable. In our opinion finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and we do not find any error in the same. Accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed.
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2018 (2) TMI 343
Penalty u/s 271(1)(c) - willful evasion of tax by claiming deprecation on building - Held that:- Penalty u/s 271(1)(c) of the Act cannot be levied and reliance is placed on the decision in the case of Reliance Petroproducts [P] Ltd [2010 (3) TMI 80 - SUPREME COURT] wherein has been held that no penalty u/s 271(1)(c) of the Act could be levied only in mere making a claim which is not sustainable in law by itself. No penalty proceedings were initiated by the Assessing Officer in assessment year 2006-07 and facts of the present case are identical in the impugned assessment year. Moreover, it is a case where no individual is being benefitted by the claiming wrong depreciation. This is a bonafide mistake made by the assessee without any intention to evade tax. Moreover, the assessee has already shown losses for the previous years. The assessee has submitted reasonable explanation on the basis of the report of a qualified auditor. - Decided in favour of assessee
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2018 (2) TMI 342
Disallowance of expenses attributable to the share trading activity - addition treating the same as speculation business as per the Explanation to section 73 - Held that:- In the present case, although the assessee had maintained one set of books of accounts with common funds and common management, the activities carried on by it of rendering services and trading of shares cannot be regarded as one indivisible business and since the said activities are entirely different, the indirect common expenses such as administrative expenses are required to be allocated on some reasonable basis to work out the profit or loss of each activity as rightly held by the A.O. In the present case, the assessee company while computing the income from share trading activity had considered only the direct expenses and the indirect expenses such as administrative expenses which were partly attributable to the share trading activity, going by its nature, were not considered by it. The allocation of administrative expenses made by the A.O. to share trading activity to the extent of 29.32% on the basis of the ratio of turnover is highly excessive and unreasonable and keeping in view the nature of expenses claimed by the assessee as administrative expenses as well as the nature of activity, it would be fair and reasonable to allocate 5% of the total administrative expenses to the share trading activity to compute the profit/loss on such activity. Accordingly, set aside the impugned order of the Ld. CIT(A) on this issue and direct the A.O. to re-compute the profit/loss of the share trading activity deemed to be speculative in nature in terms of section 73 by allocating 5% of the administrative expenses - Appeal of the revenue is partly allowed.
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2018 (2) TMI 341
Unexplained credit - excess of credit balance found - posting error - Held that:- Assessee has duly clarified that the amount appearing was not an unsecured loan albeit was an advance receipt for a booking of villa by M/s. Global Solutions Pvt. Ltd. The said amount was in fact refunded back to the said party on the cancellation of villa and this fact has duly been confirmed and acknowledged by M/s. Global Solutions Pvt. Ltd. directly before the AO that the said company made the payment towards advance for purchase of villa. The assessee has again duly explained the fact that the said amount of cheque was entered into books of accounts twice and such a mistake was rectified only in the subsequent financial year and that is a reason why as on 31.3.20008 there was an excess of credit balance in the name of the said party. Such an accounting error has been duly appreciated by the Ld. CIT(A) and if that is so, then ostensibly there is no revenue impact, because it has not resulted into any kind of cash inflow and any kind of receipt or income in the hands of the assessee. Such a mistake has duly been rectified in the subsequent year and hence it cannot be held that it is an unexplained credit in the hands of the assessee as on 31.3.2008. What the AO has narrated in the assessment order is only the nature of transaction in assessee’s bank account, that is, one cheque received from M/s. Global Solutions Pvt. Ltd. is reflected only once but has failed to took note of the fact that this booking amount was returned and both these transactions is reflected in the bank account on 27.3.2008 and 31.3.2008. Ld. CIT (A) has duly incorporated the relevant transactions as per the bank books from there it is quite clear that receipt of one particular cheque No. 7581 was shown twice. Thus, it was a pure case of posting error in the accounts book - Decided against revenue
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2018 (2) TMI 340
Eligibility to benefit u/s 80-IA - initial assessment year - choice of year - Held that:- It is the option given by the Act to the assessee to opt for the initial year for availing of the benefit of section 80-IA. It is not for the Assessing Officer to decide which year would be the initial year for claiming the benefit under section 80-IA. Therefore, once the assessee exercises his right and opted the initial year, then the benefit flowing under section 80-IA is available to the assessee. See COMMISSIONER OF INCOME TAX And DEPUTY COMMISSIONER OF INCOME TAX Versus SHRI ANIL H LAD [2014 (3) TMI 808 - KARNATAKA HIGH COURT] - Decided against revenue
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Customs
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2018 (2) TMI 339
Grant of CHA License - Regulation 9 of the Customs House Agents Licencing Regulations, 2004 - validity of new regulations issued in the year 2004 vide order dated 01.10.2010 - Held that: - identical issue decided in the case of SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT], where it was held that The examinations held under the 1984 Regulations did not get nullified with the enactment of the 2004 Regulations and the candidates who had qualified the examinations held under the 1984 Regulations are not required to again qualify the examination which may be held under the 2004 Regulations - appeal dismissed - decided against Revenue.
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2018 (2) TMI 338
Imposition of ADD - Flexible Slabstock Polyol - import from Australia, the European Union and Singapore - statutory remedy - maintainability of petition - Held that: - the Court is not satisfied that the ground urged by the Petitioner before this Court regarding violation of principle of natural justice cannot be urged by it before the CESTAT. It is certainly within the scope of the proceedings before the CESTAT challenging the Final Findings as well as the consequential notification - the Court declines to entertain these writ petitions while reserving the liberty of the Petitioners to approach the CESTAT with fresh petitions in terms of the liberty already granted by the CESTAT - petition dismissed.
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2018 (2) TMI 337
Refund claim - finalization of provisional assessment - Held that: - issue has been settled in appellant's own case Mangalore Refinery And Petrochemicals Ltd. Versus Commissioner of Customs, Mangalore [2015 (9) TMI 245 - SUPREME COURT], where it was held that the quantity of crude oil actually received into a shore tank in a port in India should be the basis for payment of Customs duty. Consequential action, in accordance with this declaration of law, be carried out by the Customs authorities in accordance with law - the impugned order is liable to be set aside and the matter is required to be remanded back to the original authority for fresh adjudication - appeal allowed by way of remand.
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2018 (2) TMI 336
Awaiting decision of the Hon'ble High Court of Bombay in Apar Industries Limited (former known as Apar Limited) v. Commissioner of Customs (Exports) [2011 (5) TMI 683 - CESTAT, MUMBAI] - Held that: - it is considered proper that the Tribunal should go slow to decide the issue which is before Hon'ble High Court and Hon'ble Court is in sessin of the matter, following guidelines of the Hon'ble High Court in Titanor Components Ltd. v. Commissioner of Income Tax [2009 (4) TMI 67 - BOMBAY HIGH COURT] - reference is returned back to the original bench.
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Corporate Laws
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2018 (2) TMI 335
Dissolution of the company in liquidation under section 481 - Held that:- There are no assets and properties of the company in liquidation and only ₹ 12,801/- is in the balance of the company’s account, the Official Liquidator shall not be required to do any further act for winding up of the company and therefore the company could be dissolved and the Official Liquidator could be discharged and relieved of his duty to function as liquidator of company in liquidation. In view of the above, the company-M/s.Geeta Fabrics Ltd. (in Liquidation) is ordered to be dissolved under section 481 of the Act. The Official Liquidator shall stand discharged and relieved as liquidator of the company in liquidation. The ex-directors of the company are directed to give undertaking to the Official Liquidator that if any, liability in future arises in connection with the company in liquidation, they shall be responsible. The Official Liquidator shall call for such undertaking of the ex-directors within a period of 15 days from today
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2018 (2) TMI 334
Company under liquidation expended for construction of superstructures on lands - whether superstructures up for sale which respondent no.3 purchased during the auction proceedings? - Held that:- It is universally accepted that the applicant is the owner of the lands bearing survey nos. 340/2 and 340/3 and not the company in liquidation.The superstructures standing on such lands were put up by the company at its cost. The labourers of the company were residing in such quarters when the company was actually operational. We are informed that currently the labourers employed by respondent no.3 in the factory are occupying such premises for their residential use.Neither the lands nor the superstructures standing thereon were put for sale under the advertisement dated 30.5.2007.Neither the lands nor the superstructures formed part of the sale deed dated 16.6.2005. Consequently, respondent no.3 never became and is not the owner of the superstructures standing on lands bearing survey nos. 340/2 and 340/3. Despite these conclusions, we are not inclined to grant reliefs of the applicant as claimed. This is so because, as noted, the superstructures were constructed by the company at its own cost and would therefore, be the property of the company. If the applicant seeks restoration of the possession, the applicant must pay the cost of such construction to the Official Liquidator which proceeds can be used for the purpose of discharging Company's remaining debts We pass the following order : 1) The Official Liquidator shall have the cost of construction standing on lands bearing survey nos. 340/2 and 340/3 assessed by a Government approved valuer. The construction is quite an old one. Value of such construction as on date therefore, shall have to be on the basis of the current cost of similar construction reduced by depreciation for the period between the completion of construction till date. We make it clear that the valuer shall not apply the rate of depreciation provided in the Incometax Act which is entirely for different purpose but actual reduction in value of construction with passage of time. 2) Such report shall be placed before the Court on the next date of hearing. SO to 21.3.2018. 3) The applicant shall deposit an adhoc sum of ₹ 50,000/with the Official Liquidator towards the possible cost of such valuation subject to adjustments in future latest by 5.2.2018.
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FEMA
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2018 (2) TMI 333
Offence under FEMA - reject the petitioner's application for cross-examination - Held that:- A plain reading of the application filed by the petitioner seeking cross-examination of certain individuals named above also indicates that the petitioner had reiterated its contention that the material or evidence on record does not substantiate the allegation made against him. At the outset, the petitioner had denied all the allegations made against him in the complaint filed against him. The only reason provided by the petitioner for seeking cross-examination of Mr. Manoj Garg, Investigation Officer and the complainant is that they can be confronted with the documents in question. According to the petitioner, the documents do not implicate or establish any offence on the part of the petitioner. The documents referred to by the petitioner are not documents that have been created or initiated by the investigating officer or the complainant; the documents have been found during the search and seizure operations conducted by the concerned officers. In the circumstances, this Court is not persuaded to accept that there is any ground to permit cross-examination as sought for by the petitioner. Similarly, there is also no ground to permit cross-examination of signatories to the Panchnama and the Panch witnesses either. In the facts of the present case, it is apparent that the case set up against the petitioner is not based on any testimony of the investigating officer but on documents. In the aforesaid circumstances, this Court finds no infirmity with the decision to reject the petitioner's application for cross-examination.
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PMLA
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2018 (2) TMI 310
Offence under PMLA - grant of bail - Held that:- As in (Nikesh Tarachand Shah Vs. Union of India & Anr [2017 (11) TMI 1336 - SUPREME COURT OF INDIA] as directed to declare Section 45 (1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India. All the matters before us in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail. All such orders are set aside, and the cases remanded to the respective Courts to be heard on merits, without application of the twin conditions contained in Section 45 of the 2002 Act. Considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. The writ petitions and the appeals are disposed of accordingly In view of the aforesaid, the present matter is also liable to be remitted back for consideration in terms of the aforesaid.
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Service Tax
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2018 (2) TMI 332
GTA Service - whether the category of “Goods Transport Agency” is exigible to service tax as per Section 65(105) (zzp) and Section 65 (50b) of the Finance Act as well as Rule 2(1)(d)(v) of the Service Tax Rules, 1994? - Held that: - the High Court was required to decide as to whether the services provided by the respondent(s)/assessee(s) herein are covered by the aforesaid definitions. The High Court has not discussed the aforesaid issue - the matter is remitted to the High Court for de novo consideration - appeal allowed by way of remand.
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2018 (2) TMI 331
Liability of service tax - amount received for transfer of copyright of programmes to various TV channels amounts to service under the category of "TV or Radio Programme Production service - demand has been raised alleging appellant has assigned their own programme and received consideration - Held that: - There is no evidence placed to show that the appellant has produced the programme on behalf of another person. The appellant produces the programme on its own and after the completion it may or may not be accepted by the channel / broadcasting agency. After production, they have transferred the copy right in the programme temporarily to the broadcasting agency. Such transfer of copy right does not attract levy of service tax under "TV or Radio Programme Production Service" - the demand under programme production services is unsustainable. Short payment of service tax - it was alleged that appellant has not correctly paid service tax on the gross amount realized for discharging service tax on the output service "Sale of space or time for Advertisement" service by including the three components, variable cost, fixed cost and profit sharing - Held that: - appellant has strongly argued that from the beginning itself, the appellant has contended that they have been discharging service tax including on all the three components; that the same has not been considered by the authorities below - the issue has to be verified and for this limited purpose, the matter requires to be remanded to the adjudicating authority - matter on remand. CENVAT credit - service tax paid on telecasting fee which was paid for broadcasting tele serials - Held that: - the telecasting charges paid are used for providing the said output service of 'Sale of space or time for Advertisement' - it was already found that the appellant is not liable to discharge service tax under the category of programme producing service - The contention of the department that programmes are telecast after production of the serials etc. is flimsy and not supported by any legal basis - credit allowed. Appeal allowed in part and part matter on remand.
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2018 (2) TMI 330
100% EOU - time limitation - whether the appellant is liable to pay service tax under Reverse Charge Mechanism of services imported from outside India and received in India rendered by the service provider located outside India? - Held that: - the SCN is barred by limitation, as the appellant had taken a categorical stand, as early as on 06/03/2014 that they are not liable to pay service tax with respect to services received from outside India and most of such services were received and consumed outside India - SCN dated 16.10.2015 is not maintainable and the same is hit by limitation - Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 329
Refund claim - payment under protest - service tax paid on service of blending and bottling of IMFL on behalf of their clients was not taxable under Business Auxiliary Service as clarified by Ministry of Finance vide F.No. 249/1/2006 CX.4 dated 27.10.2008 - denial on the ground of time limitation and unjust enrichment - Held that: - Punjab & Haryana High Court in the case of Sarita Handa Exports (P) Ltd. [2010 (9) TMI 254 - PUNJAB AND HARYANA HIGH COURT] has held that any refund application beyond period specified under 11B of the CEA should not be entertained unless refund is as a consequence of declaration of a provision as unconstitutional - Though the learned counsel for the assessee has submitted that the entire amount which is claimed as refund was paid under protest but it is not clear from the order of the Commissioner (Appeals) that whether the entire amount which is sought to be claimed as refund was paid under protest or not. This case is required to be remanded back to the original authority to examine two things: - (a) Whether the entire service tax was paid under protest or not? - (b) the aspect of unjust enrichment should also be considered by the original authority in view of the documents produced by the assessee along with the certificate of CA certifying that incidence has not been passed on to the client. Appeal allowed by way of remand.
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2018 (2) TMI 328
Refund claim - Due to ignorance of law, the appellant had paid service tax on Inward Legal Services rendered by the advocates for the period March 2012 to March 2013 under reverse charge mechanism - N/N. 25/2012-ST dated 20.06.2012 - denial on the ground of time limitation. Held that: - the findings of the Commissioner (Appeals) that the claim is barred by limitation is not sustainable in law as the lower authority has already held that the refund claim is not barred by limitation. The appellant's case is squarely covered by N/N. 25/2012 which exempts service tax levy on advocate services received by business entities with turnover of less than ₹ 10 lakhs. Once an activity is exempted under Section 66B in terms of Exemption N/N. 25/2012, the question of invoking N/N. 30/2012 issued under Section 68(2) dealing with reverse charge mechanism does not arise at all. The Education Guide dated 20.06.2012 issued by CBEC has also stated that exemption is available to business entities with less than turnover of ₹ 10 lakhs in respect of service tax payable under reverse charge mechanism. Matter remanded for verification of documents - appeal allowed by way of remand.
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2018 (2) TMI 327
Renting of Immovable Property Service - service tax short paid - extended period of limitation - Held that: - there was a doubt regarding the levy of tax on Renting of Immovable Property and it was set right by retrospective amendment of Finance Act 2010 - assessee cannot be accused of suppression of material facts and therefore, extended period cannot be invoked. Reliance placed in the case of Commissioner of Central Excise & Service Tax, Allahabad. Versus M/s. Trimurti Build Tech Private Ltd. [2016 (6) TMI 1175 - CESTAT ALLAHABAD], where it was held that No case of any contumacious conduct and/or suppression on the part of the respondent is made out. It is further held that the appellant have rightly paid Service Tax on receipt basis. The assessee is liable to pay the rent on immovable property for the normal period along with interest and invoking of the extended period is set aside - appeal allowed in part.
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2018 (2) TMI 326
Refund claim - service tax paid on the transaction between the two Divisions of the legal entity, which was not required to be paid - denial on the ground that the assessment becomes final and was not challenged in appeal - Held that: - the decision of the Rajasthan High Court in the case of Central Office Mewar Palace Org. Vs. Union of India [2008 (10) TMI 47 - RAJASTHAN HIGH COURT], is squarely applicable in the facts and circumstances of this case, where it was held that tribunal is not justified in rejecting the refund claim on the ground that assessee has not challenged assessment order - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 325
Refund claim - appellant had erroneously paid the service tax on services exported in terms of Rule 3(2) of the Export of Service Rules - denial on the ground of time limitation - Section 11B of CEA 1944 - Held that: - it is an admitted position that the appellant has exported these services on which service tax was not applicable during the material time but the appellant has paid the service tax as an advance as he was under the impression that service tax is payable on the Export of Services rendered by him - in view of the fact that the service tax was not paid as tax but as an advance, therefore the period of limitation as prescribed u/s 11B of the CEA will not be applicable - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 324
Penalty u/s 77 and 78 of FA - Recovery Agent Services - appellant had not taken any registration nor was making any compliance. Held that: - it is not the case of Revenue that the appellant was a highly educated person understanding and/or having knowledge of the service tax provisions. In the statement recorded the appellant proprietor have stated that he was not aware of the provisions of service tax. He was entirely dependent on the bank which used to calculate the payments/commission payable to him, which was credited to his account, after deducting of income tax TDS at source. Further it is admitted fact on record that the appellant was not preparing any bills on the Bank nor have charged service tax and/or collected any service tax. Thus, there is no conscious attempt on the part of the appellant to evade payment of service tax. There is no deliberate attempt and/or contumacious conduct on the part of the appellant in compliance with the service tax provisions. Penalty u/s 78 set aside - penalty u/s 77 reduced - appeal allowed in part.
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2018 (2) TMI 323
Penalty - liability of service tax on the amount of security deposit collected from the prospective flat owners which was subsequently handed over to the newly formed flat owners society - validity of SCN. Penalty u/s 78 - Held that: - there is no case of suppression or contumacious conduct or any attempt on the part of the appellant to evade payment of service tax. Further it is admitted fact that there was disturbance in the normal carrying out of the business due to freezing of withdrawal in the bank account of the appellant company, which is a reasonable cause for delay in submission of their payment of taxes - penalty u/s 78 set aside. Penalty u/s 77(2) for taking service tax registration late - Held that: - the appellant had suo motu taken registration with the Department. Further it is not the case of Revenue that the appellants had taxable receipts during the period prior to the date of taking registration - no case of penalty under Section 77(2) is made out and accordingly the said penalty is also set aside. Penalty/late fee of ₹ 1,03,000/- u/s 70 of the FA read with Rule 7C of STR 1994, towards late filing of the returns - Held that: - there is reasonable cause for furnishing of returns late due to disturbance in the business, being freezing of withdrawal from the Bank account, but as levy of late fee is not discretionary the same is not interfered with. Levy of service tax on the amount of security deposit - Held that: - the said amount was received by the appellants having character of pure agent and on behalf of the flat owners as their trustee, which amount have been subsequently given to the society formed of the flat owners and this fact is not disputed - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 322
Manpower recruitment or supply agency services - the appellant had placed services of well qualified engineers and professional to cater to their operational needs of their associated groups like BALCO MALCO, HEZ etc. - Department took the view that such activity would come within the ambit of manpower recruitment or supply agency services - Held that: - the issue has been decided in the case of Spirax Marshall P. Ltd., Forbes Marshall P. Ltd. & J.N. Marshall P. Ltd. Versus Commissioner of Central Excise, Pune I [2015 (11) TMI 978 - CESTAT MUMBAI], where it was held that There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of the company. There was no relation of agency and client. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 321
Short payment of service tax - Works Contract Services - demand for the period Oct, 2008 to June, 2012 - Held that: - it is established from the records that the buildings are predominantly used for educational activities. Merely because some incidental activities of renting of space for Scientific or Technical Services or Man-power Recruitment services occurs, it cannot be said that the buildings are not primarily used for educational services - demand set aside. Penalties - for the period Apr.'13 to Jul.'13 - Held that: - the appellant had discharged the tax liability on being pointed out by the department and much before the issuance of the SCN - the imposition of penalty for the period from Apr,'13 to July, '13 is not justified. Appeal allowed in part.
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2018 (2) TMI 320
Business Auxiliary Services - activities of booking domestic and international air cargo for various airlines for rendering the said bookings - Department took the view that the assessee were paying service tax under Business Auxiliary Service only on the commission amount without considering the incentive amount - Held that: - reliance placed in the case of Suraj Forwarders Vs Commissioner of Service Tax, Ahmedabad [2014 (4) TMI 1169 - CESTAT AHMEDABAD], where it was held in favor of the assessee noting that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity and that commission earned by the assessee while acting on behalf of the exporter and mark-up value was of freight charges are not to be considered as commission - demand set aside - appeal allowed - decided in favor of appelalnt.
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2018 (2) TMI 319
Rectification of mistake - Since the grounds stated in the appeal was not considered by the Tribunal, he pleaded that the final order may be recalled and that those grounds stated in the appeal memorandum may be considered - Held that: - the Tribunal has noted that there is no dispute that Catering Services provided by the appellant, was taxable. It is also seen that the order was dictated and pronounced in open court on the same date of hearing of the appeal. Thus, there is a categorical recording by the Tribunal that the appellant does not dispute the taxability of the services - The present application for rectification of mistake is filed by another counsel Shri S. Murugappan, who has not appeared at the time of hearing of the appeal. Therefore, there is no basis to contend that there was no concession on the part of the counsel for the appellant, that the taxability of the services was not disputed. In the case of Anshita Chawla and Ramesh Chawla [2015 (8) TMI 1366 - CESTAT NEW DELHI], it was noted by the Tribunal that when no objection was raised by the appellant's counsel with regard to the recordings made at the time of disposing the case finally, the contention raised by the appellant for rectification of mistake thereafter cannot be entertained. There is no error apparent on the face of record, which requires rectification - ROM application dismissed.
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2018 (2) TMI 318
Business Auxiliary Services - whether the the impugned activity carried out by the assessee was not BAS but only manufacture? - Held that: - there is no fault with the conclusion of the lower appellate authority that activity undertaken by the assessee amounts to manufacture u/s 2(f) of the CEA, 1994 - demand rightly set aside. Supply of manpower to job-worker - liability of service tax - Held that: - while allegation has been raised that assessee is supplying man power, however there is no clarity given therein with regard to terms of supply - the assessee has been utilizing his own labour for packing activities. Viewed in this light, we are not able to appreciate how tax can be levied on the assessee for utilizing his own labour - tax liability do not sustain. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 317
Business auxiliary services - appellants herein are engaged in providing "Logistic Support Services," such as, Cargo Consolidation, De-consolidation, Documentation, Customs Clearance, Freight Forwarding and other related services - It appeared to the Department that appellants are providing the services on behalf of overseas logistics company appointed by the overseas buyer and hence service tax liability would arise under the heading of Business Auxiliary Services. Held that: - to qualify as a service provider of Business Auxiliary Service, the services have to be provided which would augment or enhance or supplement the business of the client, which would obviously result in improvement of the business income/profit of the client. In cases, where there is promotion or marketing of services, or provision of service on behalf of the client, there is more often an arrangement by which the service provider takes or is given the responsibility for increasing the scope for the service activity of the client, generally in a specific geographical area. No portion of the container freight services (CFS) chargers and Cargo Receipt or CR Charges received by the appellants from the Indian exporters of cargo are alleged to have been remitted or transferred to the foreign client to APL WMS HKL - no portion of the amount collected by the appellants from the Indian exporters of Cargo is being transmitted to APL WMS HKL. It is also pertinent to note that APL WMS HKL, do not also pay any commission fees or incentives to the appellants. Demand set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (2) TMI 367
Benefit of N/N. 6/2002-CE dt. 1.3.2002 - allegation is that M/s.Visaka Industries Ltd. intentionally resorted to accounting of bogus / excess fly ash receipts in their registers with a motive to inflate the percentage of fly ash used in the final products to be 25% or above in order to avail exemption under N/N. 6/2002-CE dt. 1.3.2002 - case of the department is mainly based on the variation in the figures of fly ash allotted / lifted for M/s.Visaka Industries Ltd. as shown in the records of MTPS and that of the appellant. Held that: - The quantity shown to have allotted to appellant as per records of MTPS is much lower than that shown to have received in the records of appellant. The difference is quantified in Annexure-I and II of the SCN for respective periods 2002-03 and 2004-05. Accordingly, the bogus fly ash receipt accounted in excess by Vinayaka Industries for the year 2003-04 is 2251.311 MTs. The appellants have shown the use of 27.91% of fly ash in the various Forms and returns furnished to the department. According to department if the bogus receipts are deducted, the use of fly ash would be reduced to 24.54% for the year 2003-04. Similarly, the bogus fly ash receipt accounted in excess by Visaka Industries for the year 2004-05 is 7957.69. The appellants have shown use of 26.65% of fly ash for this year and when the alleged bogus fly ash receipt is deducted, the use of fly ash would be reduced by 16.27%, thereby the appellants would not be eligible for the benefit of N/N. 6/2002. Shri Santhosh Kumar, Proprietor of M/s.NEC has deposed that he is procuring fly ash from MTPS as well as from other sources and supplied to appellants. It is very much clear that the additional documents do not set up a new case or a new plea for the appellants. The matter requires to be remanded to the adjudicating authority who shall reconsider the whole issue after giving sufficient opportunity to the appellants to furnish documents and also reasonable opportunity of hearing - appeal allowed by way of remand.
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2018 (2) TMI 366
Doctrine of merger - CENVAT credit - input services - whether the issue which has been already settled in earlier round of litigation can be raised again? - Held that: - Revenue is trying to raise an issue which is already settled by the earlier order of this Tribunal in the earlier round of litigation - under the doctrine of merger, Revenue cannot raise concluded issue in the remanded matter by Tribunal wherein directions were specific that the Adjudicating Authority is required only to examine whether debit notes in question contain all the particulars as required under Rule 4A of Service Tax Rule, 1994 - appeal dismissed - decided against Revenue.
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2018 (2) TMI 365
Liability of duty - intermediate goods - resins namely, Melamine Formaldehyde Resin (MFR) and Phenolic Formaldehyde Resin (PFR) - Held that: - identical issue decided in the case of M/s. Balaji Action Buildwell Versus CCE, Meerut-II [2016 (4) TMI 59 - CESTAT NEW DELHI], where it was held that on the intermediate products emerges in manufacturing process of particle boards, the appellant is not required to pay duty - Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 364
CENVAT credit - the credit has been denied by invoking the N/N. 21/2014 dated 11.07.2014 which was issued to amend Rule 4(1) and 4(7) of CCR 2004 which prescribes the Rule for availing the credit to the period of 6 months - Held that: - the N/N. 21/2014 dated 11.07.2014 became effective for invoices raised post September 2014 and in the present case, credit was availed prior to September 2014 therefore, the appellants are not affected by the said Notification and the Commissioner (Appeals) has wrongly invoked the Notification. Scope of SCN - Held that: - the Commissioner (Appeals) has also traveled beyond the SCN and has raised completely new ground for denying the credit which is not permissible under law. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 363
CENVAT credit - input/input services - Welding Electrodes, Paint & Thinner, Flexible Rolls and Water Treatment Chemicals - sale commission - Held that: - The issue is covered by this Tribunal judgment in the case of U.G. Sugar & Indus. Ltd. [2016 (11) TMI 1326 - CESTAT ALLAHABAD] wherein it has been held CENVAT credit on Capital goods, Welding electrodes, winding wire, MS wire, MS angle, CAF jointing sheets and asbestos packings used as capital goods in sugar factory eligible to credit as per Rules 2 and 3 of CCR 2004 - credit allowed. Cenvat Credit of service tax on commission paid to agents - the respondent made a submission that agents procures Orders for which commission is charged, therefore there is nexus in procurement of Orders and manufacture & clearance of sugar - Held that: - reliance placed in the case of Dwarikesh Sugar Industries Ltd. & others [2017 (10) TMI 1114 - CESTAT, ALLAHABAD], where it was held that appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the CCR 2004 - credit allowed. Appeal dismissed - decided against appellant-Revenue.
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2018 (2) TMI 362
Penalty u/r 27 of CER 2002 - Delay in submitting ARE-1 Applications against export of goods - contravention of Rule 19 of CER 2002 - Held that: - there is no dispute or allegation that Appellant had not effected the export or not met with essential conditions as enumerated under N/N. 42/2001-CE(N.T.) dated 26.06.2001. The case is limited to the extent that Appellant could not file the ARE-1 Applications within 24 hours of removal of goods. The delay occurred, owning to the reason that concerned employee met with road accident. However, the said ARE-1 Applications were filed on 30.12.2013 as soon as said employee resumed his duty. The delay caused is nothing but procedural irregularity. The Appellant is not a habitual offender as there has been no delay in filing the application prior to aforesaid period (December, 2013) or post to the aforesaid period - penalty cannot be levied. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 361
CENVAT credit - air conditioners, which is installed in the Control Panel room of the factory - items being PVC Pipe, PVC End Cap, PVC Elbow/Tap, Black Steel Tubes, M. S. Tubes, Galvanized Steel Tubes, M. S. Tubes Welded, M. S. Beam, etc. - Held that: - tubes and pipes and fittings thereof which are the items under dispute are specifically mentioned in the list of capital goods in Rule 2(a)(A)(vi) of CCR 2004 - admittedly the goods have been used in the factory of production - Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 360
Clandestine removal - excesses of raw material and finished goods - personal penalty u/r 26 of CER, 2002 on co-noticees - Held that: - Revenue has accepted that 21 Co-noticees were innocent - the entire Show Cause Notice for demand of Central Excise duty amounting to ₹ 7,38,84,853/- was based on the statements and the said statements did not stand the scrutiny before the Original Authority - there was no evidence brought forward by Revenue in respect of procurement of raw-materials, engaging labourers, transportation of goods, buyers of the goods and realization of sale proceed in respect of goods alleged to have been clandestinely manufactured and cleared. Demand set aside - appeal dismissed - decided against Revenue.
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2018 (2) TMI 359
Valuation of job-worked goods - the Department noticed that the appellant did not include the process loss/burning loss of the raw-materials while determining the assessable value of such goods - demand of differential duty - Held that: - the cost of raw-materials supplied to the job-worker is to be included along with the processing charges as well as the element of profit for the job-worker. It is seen from record that the appellant has included only the cost of raw-materials contained in the finished products as has been held by the authorities below. But to arrive at the proper value, the cost of entire raw-materials consumed in the manufacture is to be added - the assessable value of the job-worked goods needs to be re-worked to include the value of raw-materials attributable to the burning loss which has escaped. Time limitation - Held that: - The demand pertains to the period March 2001 to July 2004 for which show-cause notice stands issued only on 31.03.2006 which is beyond the normal period of limitation - demand hit on the ground of time bar. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 358
Valuation - Polyester Chips of Amorphous Grade (PCAG) with less than 2% IPA content - related party transaction - Held that: - the appellants are correct in contending that transaction between related persons can be rejected only if it does not closely proximate to the value of similar goods, to non-related persons - the Commissioner (Appeals) has accepted transaction value of 2 MTS of 40% IPA AGC, which is an acceptance that the relationship has not influenced the transaction value. The one-time clearance of a very small quantity of AGC, that too of a strength of 20 times the normal IPA strength normally cleared to them cannot be translated into the notional transaction value for other predominant clearances of 2% strength AGC - the adoption of value of ₹ 48.14 per kg. to revise declared values of sub-standard and normal 2% IPA AGC is arbitrary and cannot be sustained - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 357
Classification of goods - castings manufactured and cleared by the respondent - Revenue entertained a view that such castings should be classified under Chapter 73 and not as machinery parts under Chapter 84 - Held that: - No factual evidence regarding the degree of processing and the impugned goods attaining the essential characteristics of parts are available in the appeal by the Revenue - While we agree with the Revenue on the legal principle regarding the classification of products as castings if substantial further processing is required to be carried out without which the castings cannot be put to use, in the present case, no such factual finding has been arrived at in the concurrent findings of both the lower authorities - appeal dismissed - decided against Revenue.
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2018 (2) TMI 356
Valuation - section 4 or 4A? - “Coffee Bite Chocolate” cleared in bulk at the contract price - MRP not affixed - Held that: - the goods i.e., Coffee Bite Chocolates, have been cleared in bulk packs to the customers at contracted price. The packs so cleared did not have the Maximum Retail Price affixed, which were clearly printed with the words “Free with Mintz 500 gm. Jar.” - it is evident that the sale transaction is not in the nature of retail sale but one of bulk sale. The sub-section (2) of section 4A will not be applicable if there is no sale in retail to the ultimate customer - the valuation of the said goods will needs to be done by the assessee u/s 4 of the Act as has been done in the present case - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 316
MODVAT/CENVAT credit - Whether the Tribunal is correct in law in holding that the H.R. Coils cannot be considered as components or accessories of the machinery so as to be eligible for Modvat credit of duty paid in terms of Rule 57Q of CER? - Held that: - once the appellant-assessee demonstrated before the authorities that use of the HR coils in the cooling system of the power plant was essential for its functioning, they necessarily have to be treated as part of the machinery qualifying them as capital goods. Once that is so, the appellant-assessee was eligible under Rule 57Q of the Rules of 1944 to avail Modvat credit thereon - credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2018 (2) TMI 315
CENVAT/MODVAT credit - capital goods - Columns of heavy fabricated structures and bracings - Held that: - It is not in dispute that the columns of heavy fabricated structures and bracings are used to support the boiler in the power plant of the appellant-assessee - such columns and bracings cannot be equated to civil constructions and would become a part of or an accessory to the machinery. Therefore, the denial of Modvat credit on the columns of heavy fabricated structures and bracings cannot be sustained - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (2) TMI 314
Valuation - allowability - quantity discounts allowed to its distributors - appellant claims the discount as a deduction from the total turnover while arriving at the taxable turnover under the Karnataka Value Added Tax Act 2003 - disallowance on the ground that the discount was not relatable to the sales effected by the relevant tax invoices. Held that: - The liability to pay tax is on the taxable turnover. Taxable turnover is arrived at after making permissible deductions from the total turnover. Among them are “all amounts allowed as discounts.” Such a discount must, however, be in accord with the regular trade practice of the dealer or the contract or agreement entered into in a particular case. The expression “the tax invoice or bill of sale issued in respect of the sales relating to such discount shows the amount allowed as such discount” is not happily worded. The words “in respect of the sales relating to such discount” cannot be construed to mean that the discount would be inadmissible as a deduction unless the tax invoice pertaining to the goods originally issued shows the discount. This is a matter of ascertainment - The assessee must establish from its accounts that the discount relates specifically to the sales with reference to which it is allowed. In the first part of the proviso, Rule 3(2)(c) recognizes trade practice or, as the case may be, the contact or agreement of the dealer. The latter part which provides a methodology for ascertainment does not override the earlier part. Both must be construed together. It must be remembered that taxable turnover is turnover net of deductions. All trade discounts are allowable as permissible deductions. Similar issue decided in the case of M/s. Southern Motors Versus State of Karnataka And Others [2017 (1) TMI 958 - SUPREME COURT], where it was held that If taxable turnover is to be comprised of sale/purchase price, it is beyond one's comprehension as to why the trade discount should be disallowed, subject to the proof thereof, only because it was effectuated subsequent to the original sale but evidenced by contemporaneous documents and reflected in the relevant accounts. In computing the taxable turnover for the relevant years, the appellant would be entitled to a deduction of the trade discount - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 313
Pre-deposit - Whether under the facts and circumstances, the learned Tribunal has not erred in hearing the Second Appeal on merits when the First Appeal was dismiss on the ground of pre deposit? - Held that: - the Tribunal has exercised its discretion and has held that the amount deposited is sufficient for admission and stay. The order passed by the Tribunal, having regard to the facts of the case, appears to be just and proper and there is no reason to believe that the same is in any manner arbitrary or rendered without application of mind to the circumstances of the case - it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity - appeal dismissed.
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2018 (2) TMI 312
Validity of impugned notice - cancellation of registration of the firm - conversion from proprietorship to partnership without informing the Department in time - TNVAT Act - Form D - Held that: - the counter affidavit is full of contradictious and the third respondent feigns ignorance and states that she does not know that the proprietorship has been converted as a partnership when she herself admitted that Form D application was filed in February, 1986 giving names of four persons as partners including the petitioner s father. Therefore, the impugned notice is illegal, unenforceable and deserves to be set aside - The proceedings initiated by the Commercial Taxes Department especially in the light of the allegations of fraud and collusion made against the officers of the Department themselves can hardly have any impact on the civil proceedings in which the Department is not a party. The third respondent is directed to restore the registration of Tvl.Kali Chettiar & Sons as a partnership concern in terms of the application in Form D submitted during February, 1986, when the petitioner s father was alive - petition allowed - decided in favor of petitioner.
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2018 (2) TMI 311
Rejection of compounding facility - Section 8(c) of the Kerala Value Added Tax Act, 2003 - Held that: - The prohibition available in sub-clause (d) of sub-clause (i) of clause (c) of Section 8 was introduced only in the year 2014. Considering only the fact that there is a discrepancy insofar as the provision relied on by the Assessing Officer, being subsequent to the subject years, this Court would set aside the orders and direct re-consideration - petition allowed by way of remand.
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