Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 17, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Interest expenditure on borrowed fund advanced to its sister concern u/s 36(1)(iii) - Assessee did not give any explanation as to how there is a commercial expediency in advancing the money to sister concerns - AO to re-adjudicate the facts and details - AT
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Disallowance u/s. 40A(3) - assessee has made cash payment of ₹ 2 Lakhs to a sister concern - this amount was not claimed as an expenditure, no disallowance is called for u/s. 40A(3) - AT
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Rejection of books of accounts - the assessee is not maintaining the proper books of account with regard to stock - to plug the leakage of revenue, certain disallowance is inevitable - the lower authorities are justified in rejecting the books of account of the assessee by invoking the provisions of Section 145(3) - AT
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Rental income from the property - income from other sources OR income from house property - By not recording construction expenses in books of account, the rights of ownership of the assessee over the property cannot be taken away and it remains the owner of the property - rental income from the property to be assessed under the head “income from house property” - AT
Customs
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Increase in the rate of duty vide notification dated 21.01.2013 - goods were assessed and cleared was 21.01.2013 - admittedly the Notification was printed, published and offered for public only on 04.02.2013 as such the affect of the Notification cannot be given to any day prior to that date - demand of differential duty unjustified - AT
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Valuation - transaction value was enhanced on the basis of certain alleged emails of third party - under-valuation must be established through proper methods under the law and that burden cannot be shifted to the importer - AT
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DFIA benefits - validity of transfer of DFIA issued under SION E-5 (Biscuits) - There is no actual user condition in existence prior to the issue of PN 84 - There is no merits in the arguement of revenue that the amendments in the DFIA licenses have been obtained through fraudulent means and suppression of facts before the licensing authorities. - AT
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Exemption from Cost Recovery Charges - The denial of exemption to the appellant on the ground that the due application was not filed in time and the matter was not followed-up is not justifiable. - CBEC to decide the issue - AT
Indian Laws
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Offence punishable under Sections 138 read with 142 of the Negotiable Instruments Act - petitioner is the independent non-executive nominee director - No vicarious liability can be fastened on the petitioner in the absence of specific role being attributed to the petitioner. - HC
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Co-operative Bank jurisdiction to invoke the provisions of SARFAESI Act, 2002 - load was taken by the father who has died - the petitioner, who has approached this Court, with unclean hands, suppressed knowledge of the loan transaction, steps taken by the bank for recovery, is not entitled to any equitable relief. - HC
Service Tax
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CENVAT credit - goods imported for providing taxable services - Lighting equipments - Gloves and Tissues - the imported goods fall within the definition of parts and accessories of capital goods - credit allowed - AT
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The dual approach by the Revenue is not legally sustainable. Having accepted the appellant assessee as advertising agency, a portion of the consideration in the same bill cannot be taxed under Business Auxiliary Service (BAS) - AT
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Classification of services - additional activity related to main activity which is production process - Unloading of coal is only incidental operation in work, that cannot be only reason to categories the work order for taxing under cargo handling service - AT
Central Excise
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100% EOU - Valuation - The whole proceedings for demanding differential duty was solely on the ground that LME price of copper ingot as well as tariff value for import of brass scrap which were much higher and accordingly, the transaction value is held to be not correct - demand is not legal, set aside - AT
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Exemption from duty - building a body or fabrication or mounting or fitting of structure or equipment on a chassis - denial of exemption on the premise that the car carrier trailer manufactured by the appellant is not mounted on the duty paid chassis is not correct - AT
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CENVAT credit - eligible inputs - drawings and designs imported from Germany for setting up the plan - The property of designs and drawings are intangible and do not fall within the description of either inputs or capital goods - credit not allowed - AT
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Refund claim - unjust enrichment - the price charged by the appellant did not include the element of duty - though they have mentioned the duty element, the same has not been received from the dealer - refund allowed - AT
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Refund claim - when invoice showed duty and ex-duty price separately in invoice and on scrap being held non-excisable, refund of duty shown in invoice is not hit by bar of unjust enrichment as contracted price for scrap was inclusive of duty - AT
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Transfer of CENVAT credit - Large Tax Payers Units (LTU) - the denial is only on the ground that such transfer was done before formal addition of Pune Unit in the revised registration - - there is no violation of any provisions or any serious threat to the Revenue of the Govt - transfer of credit allowed - AT
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Manufacture - They are merely the scum thrown out in the process of manufacture of aluminium sheets. Therefore it cannot be said that dross and skimmings are transformation resulting in a new and different article with a distinctive name, character or use or that they ordinarily come to the market to be bought and sold and are known to the market, and duty cannot be levied - AT
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CENVAT credit - bought out item - Without saree guard, the vehicle ( motor cycle) will remain incomplete and the same cannot be said to the finished goods ready for sale - credit allowed - AT
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Imposition of penalty u/r 26 - wrongly passing of fraudulent cenvat credit - Issuance of cenvatable invoices without supply of goods for passing out fraudulent credit - Levy of penalty u/r 26 confirmed through reduced - AT
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“Saree” which has undergone further processing such as embroidery, stitching of lace and tikki etc. and stitched with two or more kinds of fabrics will be classifiable as “Saree” under Chapter 50, 52 and 54 of the Central Excise Tariff Act, 1985 (CETA) depending upon the material of the fabrics, and not as made-ups under Chapter 63
VAT
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Natural justice - The petitioner is right in contending that he had no clue as to whether or not his request for adjournment had been considered. Therefore, quite naturally, the petitioner would have been taken by surprise, when the impugned orders were passed - matter restored - HC
Case Laws:
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Income Tax
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2017 (3) TMI 667
Validity of reopening of assessment - reasons were not recorded and in fact copy was not supplied to the assessee in order to file its objections - Held that:- Letter dated 30th August, 2016 addressed by the DCIT, Circle-3(2), Hyderabad to the Senior Authorised Representative clearly indicate that no such reasons were recorded by the A.O. in the order sheet and, at any rate, the reasons if any, recorded was not served upon the assessee to enable the assessee to file its objections. Even otherwise there is no fresh tangible material to come to the conclusion that income of the assessee has escaped assessment. Under these circumstances while dealing with the scope and ambit of section 147 r.w.s.148 of the Act, reopening of assessment is bad in law. - Decided in favour of assessee
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2017 (3) TMI 666
Interest expenditure on borrowed fund advanced to its sister concern u/s 36(1)(iii) - whether borrowed fund has been advanced in the form of share application money but not as a loan - CIT (Appeals) placing reliance on the decision of the Hon’ble Supreme Court in the case of SA Builders Ltd. Vs. CIT [2006 (12) TMI 82 - SUPREME COURT] deleted the disallowance - Held that:- On perusal of the findings of the Ld. CIT (Appeals), we are of the view that the Ld. CIT (Appeals) has not gone into the aspect of commercial expediency in advancing the money by the Assessee to its sister concerns. As could be seen from the above, it was made very clear by the Hon’ble Supreme Court that to consider whether deduction u/s 36(1)(iii) should be allowed on the amount borrowed by Assessee for advancing to sister concern, the authorities and courts should examine the purpose for which the Assessee advanced the money and what the sister concern did with the money. It was also further held that what is relevant is to see whether the amount was advanced as a measure of commercial expediency but not whether the Assessee advanced those for earning profits. The lower authorities have not examined the facts and the above aspect of the matter in this case so as to arrive at a conclusion that there is commercial expediency. The Assessee also did not give any explanation as to how there is a commercial expediency in advancing the money to sister concerns. Therefore, we are of the view that this aspect of the matter has to be re-examined by the Assessing Officer and the Assessee shall furnish all necessary details in this regard. Thus, we restore the matter to the file of the Assessing Officer who shall decide the issue afresh . Appeal of the Revenue allowed for statistical purpose.
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2017 (3) TMI 665
Revision u/s 263 - incorrect claim of depreciation on trucks purchased, expenditure towards insurance claims wrongly claimed and depreciation on capital expenditure wrongly allowed without any enquiry and without examining the issues involved in perspective - Held that:- No material has been brought to our notice by the assessee which goes to prove that the AO had examined the issues raised by the Pr.CIT and allowed these claims after proper factual appreciation thereof. We observe that the assessee could not bring anything on record to prove that an enquiry on the issue was conducted by the AO while completing the impugned assessment. It follows that the claims in question have been accepted without any enquiry thereon. We agree with the observation of the Pr.Commissioner that depreciation allowance under s.32 on the invoices for purchase of the vehicle on the last day calls for minimum satisfaction that the assess were put to use on that day itself. The completion of formalities at a subsequent date gives rise to reasonable and plausible inference in support of the opinion of Pr.CIT which is required to be rebutted by the assessee. Similarly, the insurance claim for the whole year has been claimed even if it is presumed for a moment that the vehicles insured wherein put to use on the last day. Clearly, a presumption would arise that expenses though paid were not incurred during the relevant FY. Similarly, we find merit in the case of the Pr.CIT that depreciation on repair expenses of capital nature have been allowed without making relevant enquiries at all as warranted. Under these circumstances, we are inclined to accept the case made out by the Pr.CIT that the assessment order has been passed without making enquiry necessitated in the circumstances of the case. - Decided against assessee.
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2017 (3) TMI 664
Penalty u/s 271(1)(c) - addition being difference between the sale consideration as per sale agreement and the valuation made by the Stamp Valuation Authority - AY 2006-07 - Held that:- It is evident from the assessment order that the AO has not questioned the actual consideration received by the assessee provisions of the Income Tax Act, 1961. The AO has not given any finding that the actual sale consideration is more than the sale consideration admitted and mentioned in the income or furnishing inaccurate particulars of income. It is also not the case of the revenue that the assessee has failed to furnish the relevant record as called by the AO to disclose the primary facts. The assessee has furnished all the relevant facts, documents/ material including the sale agreement and the AO has not doubted the genuineness and validity of the documents produced before him and the sale consideration received by the assessee. Under these facts and circumstances, it cannot be said that the assessee has not furnished correct particulars of income. Merely because the assessee agreed for addition on the basis of valuation made by the Stamp Valuation Authority would not be a conclusive proof that the sale consideration as per this agreement was incorrect and wrong - Hence the addition because of the deeming provisions does not ipso facto attract the penalty u/s 271(1) (c ). See Renu Hingorani Versus ACIT, Range, 19(3), Mumbai.[2010 (12) TMI 795 - ITAT MUMBAI ] - The appeal of the assessee is allowed. For AY 2007-08 find considerable cogency in the submissions of the assessee’s counsel that the penalty order passed u/s. 271(1)(b) is liable to be quashed/ annulled, because the “charge” was not specific in the Notice issued u/s. 274 r.w.s. 271, in which AO has simply placed tick mark against the printed line “you have without reasonable failed to comply with a notice u/s. 23(4)/23(2) of the Indian Income Tax Act, 1922 or u/s. 142(1)/143(2) of the I.T. Act, 1961 dated”. Hence, the penalty in dispute deserves to be deleted. Even otherwise , find that non-compliance was not intentional, because the assessee’s father (who used to look after the matters relating to income tax and follow up with the professional) was terminally ill due to cancer during such period and he ultimately died on 30.5.2015. In view of the above facts and circumstances, hereby delete the penalty in dispute. - Decided in favour of assessee
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2017 (3) TMI 663
Disallowance of salary paid to the employees, relatives of the partners of the assessee - Held that:- Both AO as well as CIT(A) have estimated the salary for determining the excess / unreasonable payment without considering the FMV of the services provided by these persons. The AO while invoking the provisions of section 40A(2)(a) considered the FMV of the services by comparing the salary paid to the partners. Whereas it is not ascertainable from the record whether the services rendered by these persons can be compared with the services of the partners to whom the salaries were paid by the assessee firm. It is pertinent to note that the comparison would have been more proper if the salary paid to the unrelated employees of the assessee firm was to be considered as FMV of the services provided by these persons. Therefore this issue has not been properly examined by the authorities below and requires to be reconsidered in the light of the above observation. Hence this issue is set aside to the record of AO for re-computation of the FMV of the services provided by these persons having regard to the salaries paid to the non-related employees of the assessee firm instead of the partners of the assessee firm who cannot be considered as unrelated party. Disallowance u/s. 40A(3) - assessee has made cash payment of ₹ 2 Lakhs to a sister concern - Held that:- It appears that this amount of ₹ 2 Lakhs was paid to the sister concern through the partners’ account. However, the assessee has not claimed this amount as an expenditure. Therefore the provisions of section 40A(3) cannot be invoked in the absence of any claim of expenditure. In view of the above fact that this amount was not claimed as an expenditure, no disallowance is called for u/s. 40A(3). Accordingly, this disallowance made by the AO is deleted.
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2017 (3) TMI 662
Rejection of books of accounts - trading addition - Held that:- The gross profit rate of the assessee is better than preceding year and the turnover is also higher for the year under consideration. However, the assessee is not maintaining the proper books of account with regard to stock. Therefore, to plug the leakage of revenue, certain disallowance is inevitable as the opening stock, purchases & sales and closing stock of the assessee are not verifiable. Thus the lower authorities are justified in rejecting the books of account of the assessee by invoking the provisions of Section 145(3) of the Act but the addition sustained by the ld. CIT(A) to the extent of ₹ 2.00 lacs appears to be on higher side in the present facts and circumstances of the case and the same is sustained to the extent of ₹ 50,000/-. Thus the Ground of the assessee is partly allowed. Disallowance of expenditure - Held that:- When the books of account are rejected and trading addition are made, there is no justification in making further adhoc disallowance qua telephone and conveyance. This view is supported by ITAT in assessee's own case for preceding year. Thus we direct to delete the addition of ₹ 27,585/- (being 10% of the total claim) sustained by the ld. CIT(A). - Decided in favour of assessee
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2017 (3) TMI 661
Rectification of mistake - Disallowance of deduction for the lease rentals paid for the vehicle taken on finance lease - non-consideration of the I.C.D.S [2013 (1) TMI 344 - SUPREME COURT] case - Held that:- We have heard the rival contentions of both the parties and perused and carefully considered the materials on record; including the judicial pronouncements cited and placed reliance upon. Indeed, the Article 141 of the Constitution of India creates obligation on all the Courts and Tribunals to abide by the law declared by the Hon'ble Apex Court in the Indian Territory. The declaration of law is complete once the judgment is pronounced. However, the issues which are not covered by the judgment of Hon'ble Supreme Court, can be decided keeping in view the law laid down by the Hon'ble High Courts in the country which hold the field. Applying the above principles in the facts on hand, we find that there are other judgments of Hon'ble Supreme Court which are in favour of the Revenue in the given facts and circumstances. These cases have been discussed in the preceding paragraph and the same are not repeated here for the sake of brevity. In view of above, we find that the instant issue is debatable. Further, we find it is well settled that statutory authority exercise power of review unless such power is expressly conferred. There is no express power of review conferred on this Tribunal. Even otherwise, the scope of review does not extend to re-hearing of the case on merit. All the facts in the instant case were same as of earlier years and the view with regard to the issue in those facts has already been taken up by this Tribunal which is in favour of Revenue. Therefore, we are of the view that there is no mistake apparent from the record which has crept in the order of Hon’ble ITAT which needs rectification u/s 254(2) of the Act. However, the assessee is free to explore the remedy available under the law. Hence the MA filed by the assessee is dismissed.
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2017 (3) TMI 660
Rental income from the property - “income from other sources” OR “income from house property” - CIT(Appeals) has accepted the fact that property must have been constructed in the year 2007-08, thus, in a way, he confirmed that the property consisting of building came into existence and the assessee fulfill both the conditions for assessing the rental income from the property under the head “income from house property” - Held that:- The reasoning for assessing the income under the head “income from other sources” given by the learned Commissioner of Income Tax (Appeals) is not justified because if the cost of construction is not shown in books of account, the Assessing Officer is free to take necessary action for evasion of tax, if any, in that regard. However, construction expenses not recorded in books of account, cannot be a ground for assessing the rental income under the head “income from other sources” when the conditions of Section 22 of the Act for assessing the annual value of the property have been fulfilled by the assessee. By not recording construction expenses in books of account, the rights of ownership of the assessee over the property cannot be taken away and it remains the owner of the property. In view of the above discussion, we, therefore, direct the Assessing Officer to assess the rental income from the property under the head “income from house property” - Decided in favour of assessee
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Customs
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2017 (3) TMI 633
Imposition of ADD - Cold Rolled Stainless Steel Sheets and Coils (CRSS) - import from China, Korea, EU, South Africa, Taiwan, Thailand and USA - anti circumvention investigation - Held that: - In the case of anti-circumvention proceedings u/s 9A (1A)-the procedure for which is prescribed in Rules 25-28 of the Anti-Dumping Rules, the object is entirely different. Section 9A (1A) contemplates enquiry into whether there is circumvention of anti-dumping duty imposed u/s 9A (1), either by alteration of the article’s description or its composition, or by its import “in an unassembled or disassembled form”. However, in the case of an anti-dumping investigation, the methodology adopted is geared to see if there is injury on account of the dumping practice. The nature of materials considered during those investigations focused on all those elements that make up the injury. However, in circumvention proceedings, the trajectory of the inquiry is altogether different. It is whether, given the existence of ADD (and the established existence of injury), there is any behavior – in the form of import of other products, which can be adapted or altered for use as the product or articles that are subject to ADD. Whilst the decisive nature of the observations of the DA in past instances is facially compelling for a court to hold that there should not be a fresh inquiry, yet one cannot be oblivious to the nuanced nature of the circumvention procedure. The power to resort to it should be based on objective material. In the present case, the information, which the respondents rely upon is the stagnancy in demand of the article which is subject to ADD, and the pattern of increase in import of CRSS that is wider than 1250 mm. The Petitioners” argument that the subject matter of the previous orders and observations are the same in circumvention proceedings, is unpersuasive to this court. A superficial analysis no doubt could lead one to conclude it to be so; however, for doing that, this court would have to assume that reduction of size from 1250 mm width to lower than that, is not a process of assembling or making of a new article. Petition dismissed - decided against petitioner.
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2017 (3) TMI 632
Increase in the rate of duty - Effect of N/N. 1/2013-Cus. Dated 21.01.2013 amending the N/N. 12/2012-Cus dated 17.03.2012, which had the effect of increasing the basic Customs duty from 4% to 6% - prospective effect or retrospective effect? - whether demand of differential duty justified, as the date on which the goods were assessed and cleared was 21.01.2013, but assessee claims that the said Notification was published in the Official Gazette only on 04.02.2013 and as such no differential duty arises on the import made on 21.01.2013 - Held that: - Notification 01/2013 dated 21.01.2013 which had affect on rate of duty, was sent for publication after the office hours of 21.01.2013 and was in fact printed and made available for public only on 04.02.2013. There is no dispute on these facts - admittedly the Notification was printed, published and offered for public only on 04.02.2013 as such the affect of the Notification cannot be given to any day prior to that date - demand of differential duty unjustified - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 631
Valuation - import of rubber compound from USA as well as from South Africa - transaction value was enhanced on the basis of certain alleged emails of third party - Held that: - Except for these emails, no other evidence was collected by the Department before demanding the duty. The statement of Shri Vijay Thukral was retracted immediately and it was not supported by any corroborative evidence - In the case of Sounds N Images vs Collector of Customs, [2000 (1) TMI 48 - SUPREME COURT OF INDIA], it was observed that under-valuation must be established through proper methods under the law and that burden cannot be shifted to the importer - in the instant case, no evidence has been adduced to corroborate the statement of Shri Vijay Thukral or the emails of a third party - demand set aside - appeal dismissed - decided against Department.
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2017 (3) TMI 630
100% EOU - Imposition of penalty u/s 112(b) of the CA, 1962 - auction sale - demand on the ground that auction has completed on 20.03.2006, whereas appellant have stake their claim in the plant and machinery on 23.12.2005, therefore, the appellant did not protect in interest of revenue in the claim of the said plant and machinery - Held that: - sale was completed on 09.11.2005, whereas, the Revenue claims their stake on 23.12.2005. Moreover, prior to auction, the appellant had advertised in paper for auction of the said plant and machinery in daily newspaper. In that circumstances, it is held that the Revenue was well aware of the fact of auction of plant and machinery is to take place and the appellant is auctioning the same to recover its dues - the appellant was not known whether M/s perfect Gold Pvt. Ltd. was in default of duty payment to the Revenue or not? - In the absence any knowledge of the appellant, the appellant cannot be penalised - the appellant is Financial Corporation and having no mala-fides intentions - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 629
DFIA benefits - validity of transfer of DFIA issued under SION E-5 (Biscuits) - Revenue contended that, since the importer is not the actual user of the exempt material (imported saffron), the claim of duty exemption under the said DFIAs was in breach of actual user conditions of the SION - N/N. 40/2006-Cus dated 01.05.2006 - N/N. 98/2009-Cus dated 11.09.2009 Held that: - neither the SION refer to any ITC (HS) Number nor the amendment sheets issued after the endorsement of transferability in the relevant DFIA License specify any ITC (HS) No. - out of 11 DFIA’s, 7 DFIA’s were issued prior to Public Notice No. 84/2010 dated 23.07.2010 and 1 DFIA was issued after the SION E-5 was amended vide PN 93 dated 01.02.2012. There is no actual user condition in existence prior to the issue of PN 84 dated 23.07.2010 and after 01.02.2012. - As regards the Balance 3 DFIA Licenses during the period on which Public Notice No. 84/2010 dated 23.07.2010, no such Actual user condition is mentioned even in these 3 DFIA Licenses. - There is no merits in the arguement of revenue that the amendments in the DFIA licenses have been obtained through fraudulent means and suppression of facts before the licensing authorities. The duty exemption cannot be denied by construing Para 4.1.3 of the FTP to mean that only food flavour was actually used in the export product is allowed for import. Even the RTI information reveals that in the absence of specification of saffron under Para 4.32.2 of HBP means no nexus is required to be established with earlier exported products - The exporter have discharged the stipulated export obligation as mentioned in the DFIA Licenses issued by several regional licensing authorities. Therefore the contention that the license brokers in collusion with exporters fraudulently obtained transferability endorsement from licensing authorities by manipulating serial nos. 5 (d) to serial no 8 to escape the actual user condition is totally misplaced. The exporters have no role in the imports once the DFIA has been endorsed with transferability and sold in the market for a consideration. Therefore there is no justification in imposing penalty upon the exporters. Extended period of limitation - Held that: - the SCN issued admittedly beyond the normal period of one year from the relevant date. The revenue did not allege any fraud and suppression of facts - the demand for extended period is clearly unsustainable in law. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 628
Exemption from Cost Recovery Charges - The Original Authority further held that as the appellants have not paid the Cost Recovery Charges, their application for exemption cannot be considered. - Held that: - the jurisdictional Commissioner has not followed the required process of examining the exemption already granted or waiver available to the appellant from Cost Recovery Charges for various periods, year-wise as per existing guidelines. It is clear that deployment of staff and eligibility of the appellant for exemption from Cost Recovery Charges are to be considered and decided only by the Ministry - The denial of exemption to the appellant on the ground that the due application was not filed in time and the matter was not followed-up is not justifiable. In any case, the matter has to be considered by the competent authority, namely the CBEC, Ministry of Finance, and not by the Commissioner - appeal allowed by way of remand.
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Service Tax
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2017 (3) TMI 659
CENVAT credit - goods imported for providing taxable services - Lighting equipments - Gloves and Tissues - whether fall under the definition of capital goods being parts/accessories of capital goods? - Held that: - the imported goods fall within the definition of parts and accessories of capital goods - credit allowed - Decided against the revenue.
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2017 (3) TMI 658
Penalty - non payment of tax - Banking Finance and other Financial Services - mobilization of capital - service charges - reverse charge mechanism - Held that: - The allegation in the notice for imposing penalty u/s 78 did not bring out any evidence for invoking charge of fraud, willful misstatement etc. on the part of the appellant. The only reason quoted is that but for detection by the officers, the non-payment would have escaped notice. We note this assertion by himself will not support the ground for the charge of suppression, fraud, collusion etc. Further, we note that the full service tax liability along with interest has been discharged well before the issue of SCN. In normal course, the matter should have been closed without even SCN - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 657
Advertising agency service - canvassing work - 10% charges collected from various Govt. departments along with the advertisement expenses - Business Auxiliary Service or not? - Held that: - The whole consideration received by the appellant assessee has to be either taxed under advertising agency or as a canvassing work (BAS) since full money has been collected from the Govt. Departments on a single bill. The dual approach by the Revenue is not legally sustainable. Having accepted the appellant assessee as advertising agency, a portion of the consideration in the same bill cannot be taxed under BAS - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 656
Classification of services - work relates to unloading of four wheeler wagons of coal and trucks of steam and slack coal and stacking of same or to feed it directly to crusher hopper - whether cargo handling services or maintenance service? - Held that: - the work order is mainly linked with the activity undertaken by the appellant in the factory and in relation to production process. Unloading of coal is only incidental operation in work, that cannot be only reason to categories the work order for taxing under cargo handling service - nature of work done by the appellant did not come in the category of cargo handling service for service tax purpose - demand under the category of cargo handling service set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 655
CENVAT credit - whether CENVAT credit is admissible in respect of service tax paid on input services for providing output services i.e., call centre and medical transcription centre services which were exported without payment of service tax during 2005-06? - whether these services were exempted and the refund of service tax paid on input service is liable to be granted to the appellant or otherwise? - Held that: - even if the output service which are exempted services and are exported, service tax paid on input service is eligible for the refund is the law which has been decided by the Hon’ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt Ltd v. Commissioner of Service Tax, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - the issue in hand is squarely covered by the above decision - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 654
Condonation of delay - delay of 624 days in filing the appeal - Held that: - the appellant has not been able to give justifiable reason for delay in filing the appeal before the Tribunal. Since the impugned order was sent to the appellant at the last given address by the adjudicating authority and having been returned by the Post, the lower authorities have followed the procedure of pasting the order on the notice board as mandated u/s 37C of the CEA, 1944 - appeal dismissed - decided against appellant.
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Central Excise
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2017 (3) TMI 653
Rejection of refund claim - benefit of N/N. 10/2004/C.E. (N.T.) dated 3rd June, 2004 - retrospective effect or prospective effect? - whether the impugned order passed by the adjudicating authority is contrary to the decision of this court in the case of Zenith Spinners v. Union of India [2005 (11) TMI 440 - GUJARAT HIGH COURT] ? - Held that: - A perusal of the decision of this court in the case of Zenith Spinners v. Union of India clearly shows that the same does not in any manner say that the same would be applicable only to the retrospective applicability of the notification. In the said decision, the court has held that the impugned notification being N/N. 10/2004/C.E. (N.T.) dated 3rd June, 2004 is bad in law for the reasons recorded in the order, namely, that it is not in consonance with the principal provisions, namely, rules 18 and 19 of the rules, and that it is, even otherwise, revenue neutral. The court held that the Central Board of Excise and Customs cannot exercise powers under rule 19 of the rules to negate a notification issued by the Central Government under rule 18 of the rules and has, accordingly, declared the same to be bad in law and quashed and set aside the same. Therefore, it is the entire notification which has been set aside and not merely the retrospective applicability thereof. The decision would be squarely applicable to the facts of the present case, and the distinction sought to be drawn by the adjudicating authority is misconceived. This court having struck down N/N. 10/2004-CE(NT) dated 3rd June, 2004 it was not permissible for the adjudicating authority to place reliance upon the same for the purpose of denying the benefit of rebate to the petitioners. The impugned order being in direct conflict with the law laid down by the jurisdictional High Court, therefore, cannot be sustained. Since the rebate claims have been disallowed solely on the basis of N/N. 10/2004-CE(NT) dated 3rd June, 2004, no useful purpose would be served by remanding the matter to the adjudicating authority and the rebate claims deserve to be allowed. Petition allowed - decided in favor of petitioner.
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2017 (3) TMI 652
Reversal of CENVAT credit - manufacture of dutiable as well as exempt goods - proportionate credit availed on common input services used for manufacture of exempted goods like rectified spirit and excisable good namely electricity - whether electricity which is shown as no rate of duty in the tariff is an exempted product or not? - Held that: - though appellants may be eligible for the credit of input services used for manufacture of electricity consumed captively they are not eligible for credit of electricity sold outside. The proportionate credit has to be reversed. However there is no discussion in the orders in regard to whether appellant is using the entire electricity captively - for the limited purpose of verifying whether appellant is selling electricity outside and therefore requires to reverse the proportionate credit, the matter requires to be remanded. Extended period of limitation - Held that: - the appellant has filed regular ER-1 returns and have disclosed the credit availed by them. In such back ground, it cannot be alleged that the appellant is guilty of willful suppression of facts. Apart from the vague allegation there is no evidence to establish that appellants have willfully suppressed facts - extended period not invokable - However the demand raised for the normal period in respect of rectified spirit as well as electricity sold outside will have to be sustained. Appeal partly allowed and partly remanded.
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2017 (3) TMI 651
CENVAT credit - MS items - Held that: - The period involved is prior to 07.07.2009 when the explanation in the definition of inputs was introduced restricting the use of MS items - The issue whether MS items used for fabrication of capital goods is eligible for credit is well settled by various judgments as in the case of Ultra Tech Cements Ltd., [2016 (1) TMI 520 - CESTAT NEW DELHI] relied upon by the appellant. Following the same, the disallowance of credit is unjustified - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 650
100% EOU - Valuation - ingots cleared in domestic tariff area - rejection of declared value on the ground that in case of Copper ingots the London Metal Exchange (LME) price is higher than what is declared by the appellant and in case of brass ingots, the price is less than the import value of brass scrap from which such ingots were manufactured - Held that: - There is no indication in the original order that such scrap based ingots are listed in LME and are compared for determining the price. Apparently, a comparison cannot be made between the ingots manufactured from ore and the ingots manufactured from scrap. Both will vary in quality and value - no attempt has been made by the Revenue to examine the contemporaneous price of similarly situated market in India, so that a comparison could have been made for examining the correctness of transaction value adopted by the appellant. The whole proceedings for demanding differential duty was solely on the ground that LME price of copper ingot as well as tariff value for import of brass scrap which were much higher and accordingly, the transaction value is held to be not correct - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 649
CENVAT credit - why cenvat credit amounting to ₹ 55,30,722/- taken on the strength of 97 invoices issued by M/s SPM Enterprises not be disallowed and recovered from them under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944? - The Revenue mainly alleges that in case of 97 invoices the subject inputs were not received by M/s GPIL and they were accordingly not utilised for manufacturing and, therefore, cenvat credit was not admissible - Held that: - the assessee M/s GPIL was a bonafide purchaser and it has not been proved that the said goods were not received by them - the goods were received by the Haridwar unit of Respondent-assessee. The Department has not submitted any substantial evidence to prove otherwise than the findings arrived at by the Commissioner in the impugned order - credit allowed - appeal dismissed - decided against Revenue. Clandestine removal - denial of credit - demand of duty with penalty - Held that: - the impugned order does not anywhere discuss to arrive at the conclusion that 109.512 MT of PP granules on which cenvat credit demand of ₹ 10,66,300/- has been confirmed was either diverted or clandestinely removed. Without the fact of clandestine removal being on record, it is not legal to disallow cenvat credit for the subject goods, if the same had been received by assessee-appellant in the factory - The impugned order notes that the subject goods were received by the appellant and when there is no diversion or clandestine removal of 109.552 MT of material, the denial of cenvat credit on the same cannot be legally sustained. Therefore, this issue needs fresh examination - appeal allowed by way of remand.
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2017 (3) TMI 648
SSI exemption - brand name - whether the assessee-Appellants are using brand name of ‘SHEETAL’ which belongs to M/s Aquaplast Industries Pvt. Ltd.? - Held that: - the brand name ‘SHEETAL’ was already there on the plastic container purchased from M/s Aquaplast Industries Pvt. Ltd. Hence, the assessee-Appellants cannot be considered as using the brand name of another person. M/s Aquaplast Industries Pvt. Ltd. has also given the ‘No Objection Certificate’ to use the containers in the original form with the label - appeal allowed - decided in favor of assessee-Appellants.
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2017 (3) TMI 647
SSI exemption - manufacture of branded manufactured tobacco falling under Chapter Heading 24039990 and Roasted Cut Supari falling under Chapter Heading 21069030 of the First Schedule to the CETA 1985 - whether the products are correctly classified and whether these are eligible for exemption under N/N. 8/2003-CE dated 01.03.2003 - Held that: - the cut roasted supari is correctly and legally classifiable under Tariff Item 08029012 of the CETA as betel nuts – split, attracting NIL tariff rate of duty. It may be mentioned that the process of roasting and cutting of supari undertaken by them does not amount to manufacture since such process has not been defined as amounting to manufacture in the said Chapter Note 6 of Chapter 21 of the CETA. It is evident that after cutting and roasting, betel nut remains a betel nut and no change occurs in the end product. Therefore, their cut roasted supari is correctly classifiable under Tariff Item No. 0802 90 12 of the CETA which attracts the NIL tariff rate of duty - tobacco product can be classified under Chapter heading 24039990 only when it contains betel nut and tobacco and any one or more of lime and kattha (catechu) whether or not contained any other ingredients. In the instant case, seized manufactured tobacco contains neither lime nor kattha, therefore, it cannot be classified under Chapter heading 24039990. At the maximum, it can be classified under the Chapter heading no. 24039910 as Chewing Tobacco which attracts NIL duty. The N/N. 8/2003-CE dated 01.03.2003 provides exemption to the chewing tobacco, chewing tobacco preparations and tobacco extract and essences falling under Heading 2403, other than those bearing a brand name - the seized manufactured tobacco is unbranded goods and, therefore, entitled for the SSI exemption - appeal dismissed - decided against Department.
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2017 (3) TMI 646
Exemption from duty - building a body or fabrication or mounting or fitting of structure or equipment on a chassis - denial on the premise that the car carrier trailer manufactured by the appellant is not mounted on the duty paid chassis - Benefit of N/N. 6/2002-CE (Sl. No. 239) as amended by N/N. 6/2006-CE (Sl. No. 87) - Held that: - different types of bodies are built for transport of goods depending on the nature of goods to be transported. Some lorrys have open platform for transport of steel rods, sheets etc. Others will have closed box type body for transport of cement etc. Yet another type like tank is for gases and liquids - In the present case, the transportation is for cars to be carried by these trailers. Accordingly, the design and integration is specific. We do not see that to claim the exemption under the notification the body built should be inseperably attached to the said chassis. No such meaning can be attributed to the notification entry. The mounting or fitting mentioned in the notification thus covers the scope of the activity carried out by the appellant in the manufacture of car trailers and their integration with the prime movers (duty paid chassis) - benefit extended - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 645
CENVAT credit - eligible inputs - drawings and designs imported from Germany for setting up the plant - Held that: - drawings do not fall within the definition of inputs in as much as they are not "goods" used in or in relation to the manufacture of final products directly or indirectly. They can also not be considered as components, spares and accessories of capital goods. These drawings have been used in setting up of the cement plant which in turn consist of various capital goods such as calciner, cooler blender etc. The drawings cannot be considered as part of any of these capital goods. In fact, the complete cement plant which has been erected making use of these designs and drawings did not remain as excisable goods any more in as much as all these capital goods have been embedded to earth on foundation making up the entire cement plant. The property of designs and drawings are intangible and do not fall within the description of either inputs or capital goods - credit not allowed - appeal dismissed - decided against appellant.
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2017 (3) TMI 644
Classification of goods - printed paper products like inserts, Headers, Tags, Labels, Stickers, Envelopes, Belly bands, PVC bags, Stiffeners etc - classified under CETH 48211020 or CETH 49111030? - Held that: - The impugned order is very cryptic and did not examine all legal provisions, more specifically chapter notes and HSN explanation alongwith nature of product manufactured by the appellant - The scope of classification under these three categories are to be specifically examined for a clear finding by the Jurisdictional officer - the claim of the appellant for exemption with reference to products cleared to exporters and who ultimately exported these goods with merchandise out of country, has to be examined for a finding - appeal allowed by way of remand.
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2017 (3) TMI 643
Refund claim - unjust enrichment - the price charged by the appellant did not include the element of duty - Held that: - It is thus the case of the appellant that though they have mentioned the duty element, the same has not been received from the dealer. To support the contention the appellant has produced the Chartered Accountant certificate who has certified that the duty Incidence has not been passed on to the buyers. - The presumption envisaged in Rule 12B is a rebuttable one. - reliance was placed in the case of Amadalavalasa Cooperative Sugars Ltd. v. CCE, Visakhapatnam [2007 (1) TMI 432 - CESTAT, BANGALORE], Union of India Vs Mulder India (P) Ltd [2006 (8) TMI 210 - HIGH COURT OF KARNATAKA] and others - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 642
CENVAT credit - Staff Quarter Maintenance - Banquet Services - Pandal & Shamiana Services for Artificial Function Hall - Guest House Services - recovery on the ground that the said services do not fall under the scope of the definition of input services prescribed u/r 2(l) of the CCR, 2004 - Held that: - recovery of inadmissible CENVAT credit with regard to Staff Quarter and Guest House services cannot be upheld in view of judgment of the Hon’ble High Court in the case of Commissioner of Central Excise & S.T. vs. Saurashtra Cement Limited [2016 (2) TMI 185 - GUJARAT HIGH COURT] for the extended period of limitation - the demand is enforceable for the normal period of limitation which the ld. Advocate agrees to reverse with interest. The CENVAT Credit on input services namely, Banquet, Pandal & Shamiana Services for Artificial Function Hall is admissible to credit in view of the judgment of the Tribunal in the case of Idea Cellular Limited [2011 (1) TMI 811 - CESTAT, NEW DELHI] - appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 641
CENVAT credit - outward freight (Goods Transport Agency service) - whether credit availed by the Appellant on the outward freight (GTA service) relates to the export of goods on FOB basis or otherwise? - Held that: - the authorities below have rejected their claim for non-production of the relevant documents which now they claim are in their possession. In the interest of justice, the matter is remitted to the adjudicating authority for scrutiny of the documents in the light of the claim made by the appellants that export are on FOB basis and the credit was availed on the outward freight(GTA service) for export goods only - appeal allowed by way of remand.
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2017 (3) TMI 640
Area based exemption - Benefit of N/N. 50/2003-CE dated 10.06.2003 - denial on the ground that no capital goods were installed in the appellant’s unit except one compressor, stating that manufacturing activities by the appellant is not possible - whether the appellant has started its commercial production prior to 31.03.2010, in order to get the benefit in the Notification No. 50/2003 dated 10.06.2003? - Held that: - the department has not properly conducted the inquiry in order to arrive at the conclusion that the appellant is not entitled for the exemption provided in Notification dated 16.03.2010. The evidences submitted by the appellant show the commencement of commercial production and VAT paid clearances of excisable goods by the unit prior to 31.03.2010 - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 639
CENVAT credit - Large Tax Payers Units (LTU) - transfer of credit from unit to another - whether the appellants are right in transferring the portion of their credit available in Pune factory to other two factories, all three being part of single point registration under LTU, New Delhi? - the denial is only on the ground that such transfer was done before formal addition of Pune Unit in the revised registration. Held that: - upon enrolling as a assessee in LTU, all the units of the assessee will fall under Jurisdiction of LTU. The non-mentioning of Pune Unit in the original consent letter is due to the fact that at that time the unit was not in existence. Later the same was added, intimation was given to the officers of LTU, the credit was transferred, thereafter only. In such situation, there is no reason to deny the transfer of such credit which is otherwise legitimately available to the appellant - there is no violation of any provisions or any serious threat to the Revenue of the Govt. in such transfer which involves procedure available to the units enrolled in LTU - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 638
Clearance of Aluminium Dross without payment of duty - demand - the appellant claims that the appellant has not manufactured aluminium dross, therefore, no duty of excise is payable by the appellant on the said aluminium dross - Held that: - the issue is no more res-integra that no duty is payable on the aluminium dross being by-product emerges during the course of manufacturing of final product - reliance was placed in the case of Hindalco Industries Limited v. UOI [2014 (12) TMI 657 - BOMBAY HIGH COURT], where it was held that Dross and skimmings may be capable of fetching some sale price, for that matter any rubbish can be sold. But that is not the criterion. It cannot be said that dross and skimmings are the result of treatment, labour or manipulation whereby the end product is dross and skimmings. They are merely the scum thrown out in the process of manufacture of aluminium sheets. Therefore it cannot be said that dross and skimmings are transformation resulting in a new and different article with a distinctive name, character or use or that they ordinarily come to the market to be bought and sold and are known to the market, and duty cannot be levied - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 637
CENVAT credit - whether the appellant is entitled to avail cenvat credit on saree guard which have been attached to the vehicle cleared by the appellant? - Held that: - the appellant is under a statutory obligation to sale the motor cycle with the provisions of the saree guard covering not less than half of the rear wheel so as to prevent the clothes of the person sitting on the pillion from being entangled in the wheel, therefore, without saree guard, the specified item cannot be sold by the appellant as per Note 6 to Section XVII of the Central Excise Tariff Act, 1985 - Without saree guard, the vehicle will remain incomplete and the same cannot be said to the finished goods ready for sale - the appellant is entitled to avail cenvat credit on saree guard - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 636
Liability of interest - differential duty paid on being pointed out - Held that: - the issue whether interest is payable on differential duty is pending before the Hon’ble Larger Bench of the Supreme Court as referred by the Hon'ble Apex Court in the case of M/s Steel Authority of India Ltd., (SAIL) Vs CCE, Raipur reported in [2015 (12) TMI 594 - SUPREME COURT] - the issue whether assessee is liable to pay interest upon the differential duty requires to be remanded to the adjudicating authority - appeal allowed by way of remand. Penalty - Held that: - the issue whether interest is payable on differential duty is still a contentious one. Further, the appellants have paid differential duty immediately on being pointed out by the department - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 635
Imposition of penalty u/r 26 - wrongly passing of fraudulent cenvat credit - Held that: - appellant was involved in arranging the invoices from registered dealer whereas no goods mentioned in the invoices were supplied. He was involved in the transaction of money in the entire modus operandi. Therefore he was liable for penalty u/r 26 - However, whether penalty is imposable u/r 26(2) which came into effect from 01.03.2007 for the substantial period the provision of rule 26(2) was not applicable prior to 01.03.2007. Considering this position and overall facts of the case, the appellant deserves some leniency in the quantum of penalty. Issuance of cenvatable invoices without supply of goods for passing out fraudulent credit - Held that: - the penalty is imposable u/r 26(2) of Central Excise Rules, 2002. On the same observation as made hereinabove, rule 26(2) came into effect on 01.03.2007; accordingly, penalty deserved to be reduced. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 634
Refund of EMD - Recovery of arrears - auction conducted to recover dues from M/s. Moghul Textiles Ltd. - refund claimed on the ground that the the property is Shikkam land - whether the property is Shikkam land (Property belonging to Government) and therefore requested for setting aside the sale and to return the EMD is justified? - Held that: - This question falls within the jurisdiction of a Civil Court and the Tribunal cannot sit and decide the Civil rights regarding to property. If the Department contends that the counter affidavit filed by the Government in the Honorable High Court is sufficient document to hold that the property belongs to M/s. Moghul Textiles Ltd then they can very well put the property for re-auction - The adjudicating authority has set aside the sale and returned the EMD. After such long time, the department would be more benefited if the property is put for re-auction to recover the dues; the property being immovable property - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2017 (3) TMI 669
Imposition of penalty u/s 61 of VAT Act - non-payment of tax - manufacture of Bidi - Held that: - It is an admitted fact that though goods were being sold through challan but it was mentioned “VAT Payable as per Schedule, if applicable as on date”. Therefore, the assessee was not hiding anything from the Revenue. It is also noticed that on perusal of the impugned order that as per notification dt.17.02.2004, the assessee was entitled to deposit the tax on or before 14 days of the close of the month and such notification was in force and therefore the assessee deposited the entire tax on or before 14 days of the close of the month - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 668
Rate of tax - Levy of tax on sale of Battery-parts - whether the battery plates and battery material is part of the battery or not? - Held that: - reliance was placed in the case of Assistant Commercial Tax Officer Vs. M/s. Swastik Agencies, Ajmer [2015 (11) TMI 1390 - RAJASTHAN HIGH COURT] where it has been held that battery parts are also to be considered as part of battery and the same rate should be applied - petition dismissed - decided against Revenue.
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2017 (3) TMI 627
Entertainment tax - who is liable to pay - the grievance of the petitioner (MSOs) is that by virtue of the circular dated 17.12.2012 they are being foisted with the liability to collect and pay entertainment tax when, according to them, such liability/responsibility is that of the cable operators - also it is contended that the circular dated 17.12.2012 is, in any event, without the authority of law and cannot be sustained in view of the provisions of the said Act and the said Rules - Held that: - tax is levied on entertainment. It is not on the content provider or the content transporter or the person entertained. The subscriber may be the person on whom the incidence of the tax falls. But, that is not the subject matter of the tax. The tax is collected by the proprietor and paid to the Government in the manner prescribed. If there is any ambiguity or vagueness associated with any of the components of the tax which includes the person who is liable to pay the tax, then the validity of the tax/levy itself would be in jeopardy and if that was the case, then it would be for the Legislature to do the needful in the matter. Fortunately for us, the Legislative intent is clear as indicated above. It is only the circular dated 17.12.2012 which has brought in the ambiguity - Such ambiguity is impermissible in law particularly in the field of taxation. We do not understand as to how the Entertainment Tax Officer held the MSOs and LCOs jointly and severally responsible for payment of entertainment tax. It appears that because of the change over to the new system, the Entertainment Tax Officer was finding it difficult administratively to regulate the collection of taxes and it is perhaps for this reason that in the circular dated 17.12.2012, it is mentioned that ‘it would be ideal for the Department in the changed situation” to collect tax only through MSOs. The circular dated 17.12.2012 is without any authority of law. The respondents claim that the said circular has been issued in exercise of the powers u/s 46 of the said Act. That power is given to the Commissioner. We have not been shown any provision whereby the Entertainment Tax Officer derives its power from the Commissioner. In any event, the Commissioner can only issue directions which are not inconsistent with the provisions of the said Act or the Rules. MSOs to the extent that they directly provide cable service to the subscribers without the intervention of any LCO, would be regarded as the ‘proprietors’ u/s 7(1) and would be liable to collect and pay the entertainment tax to the Government. However, where the MSOs provide the service through the LCOs, the individual LCOs having their own subscriber networks, would be regarded as the proprietors in respect of their individual networks and would be liable to collect the entertainment tax and pay the same to the Government. Petition allowed - decided in favor of petitioner.
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2017 (3) TMI 626
Natural justice - petitioner had no intimation as to whether or not, his request for adjournment was accepted by the respondent. In other words, according to the petitioner, the passing of the impugned orders, came as a surprise, no opportunity of being heard was given to them - Held that: - The petitioner is right in contending that he had no clue as to whether or not his request for adjournment had been considered. Therefore, quite naturally, the petitioner would have been taken by surprise, when the impugned orders were passed. Therefore, notwithstanding the fact that the orders were passed after a period of one month had expired, which is the period of accommodation sought for by the petitioner, the grievance of the petitioner did not get addressed, which is that he had no opportunity to present his case - impugned order set aside - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 625
Recovery of dues - auction sale - a sum of ₹ 14,30,734/- was adjusted as against the sales tax arrears payable by the partnership firm A.K.Sivaprakasa Mudaliar and sons and out of the remaining amount, a sum of ₹ 6,85,541/- was adjusted against the dues of a proprietary concern Sri Lakshmi Traders in which the wife of late A.K.Lala Lajapathy namely, Tmt.Devaki Ammal was the sole proprietor - jurisdiction of the officer - Held that: - the Revenue Recovery Act proceedings has been done by the first respondent and not the territorial Assistant Commissioner - Section 29(4) of the Act states that the territorial Assistant Commissioner and the Assistant Commissioner (Assessment) may subject to control and supervision of the Deputy Commissioner and the Commissioner of Commercial Taxes, delegate the power vested in them under Sub-sections (1) and (2) of Section 29 to any officer not below the rank of the Assistant Commercial Tax Officer. Admittedly, the first respondent is an officer below in rank than that of a Assistant Commissioner. Whether all the legal heirs should be issued notice of such sale? - Held that: - The contention raised by the respondent in the counter affidavit in page 3 that they need not inform all the legal heirs is an incorrect stands since the property which is individual property of late A.K.Lala Lajapathy is brought for sale and on the date when it is brought for sale, the owner of the property is no more and he has left behind his widow, two sons and nine daughters. This is also one other inherent defect. Notice period - Held that: - the auction notice should give 30 clear days to enable any objection to be filed and this 30 days is required to be computed from the date of publication in the district gazette and such publication was admittedly effected only on 22.09.2004 and the auction was held on 22.10.2004, well before the expiry of 30 days. This is also one other inherent defect in the proceedings. Lastly, it has to be pointed out that if the property is sold for recovery of the tax dues of A.K.Sivaprakasa Mudaliar and sons, which is a registered dealer, then adjustment could have been made only as against the said dues and there is no jurisdiction for the respondents to adjust the balance amount towards the alleged dues payable by a proprietorship concern namely, M/s.Lakshmi Traders which was a separate entity having a separate registration. Petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 624
Offence punishable under Sections 138 read with 142 of the Negotiable Instruments Act - summon orders - contentions of the petitioner that the petitioner is the independent non-executive nominee director and thus cannot be fastened with the vicarious liability to pay the dues of the company, and that the petitioner resigned from the company on 10th November, 2015 before the cause of action accrued i.e. payment was not made despite service of legal demand notice - Held that:- Petitioner was appointed as an independent non-executive nominee director in 2009 and he subsequently resigned from the company in the year 2015. In terms of Section 149(12) of the Companies Act, 2013 he shall be held liable, only in respect of such acts of omission or commission by the company which had occurred with his knowledge or consent or connivance or where he had not acted diligently attributable through Board processes. Thus specific averments are required to be made in the complaint to show that the offence was committed with the knowledge/ consent/ connivance of the Petitioner. Merely because the petitioner is the Director of Sequoia India Investment Holding which finances Vasan Health Care and by virtue thereof is a nominee independent director of Vasan Health Care, he cannot be held to be responsible for the day-to-day affairs of Vasan Health Care. Even otherwise the contentions now raised during the course of arguments and in the reply affidavits are not part of the complaints. In the complaints it is merely stated that accused No.2 to 8 are the directors of the company and have been actively participating in day-to-day affairs of the company and take all the decisions for the company. Admittedly, the petitioner is not the Managing Director of Vasan Health Care nor the signatory to the cheque. He is also not the person responsible for day-to-day functioning of Vasan Health Care. No vicarious liability can be fastened on the petitioner in the absence of specific role being attributed to the petitioner. Thus the petitions are allowed.
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2017 (3) TMI 623
Co-operative Bank jurisdiction to invoke the provisions of SARFAESI Act, 2002 - load was taken by the father who has died - suppressed knowledge of the loan transaction - Held that:- Material on record shows that Reserve Bank of India, Rural Planning and Credit Department, Chennai, has granted licence to Puducherry State Co-operative Bank Ltd., Puducherry, to carry on banking business. In the letter, dated 08.03.2002, submitted by Mr.Veerappan (since deceased), the borrower and father of the petitioner, the petitioner has signed as a witness. Same is the case in letter of the borrower, dated 06.01.2015, submitted to the Manager, Puducherry Co-operative Bank Ltd., Puducherry, in which, the petitioner has signed as a witness. When the petitioner has signed as a witnesss, to the letters, dated 08.03.2002 and 06.01.2015, respectively, submitted by the borrower/his father, it is not open to him to contend that he was not aware of the loan transaction. It is the considered view of this Court that having full knowledge of the loan availed by his father, steps taken by the secured creditor, the petitioner has suppressed the above facts, in the supporting affidavit and feigned ignorance of the same. As rightly contended by the Bank, the petitioner, who has approached this Court, with unclean hands, suppressed knowledge of the loan transaction, steps taken by the bank for recovery, is not entitled to any equitable relief. During the hearing of this writ petition, the writ petitioner has undertaken not to make any alteration to the building and in this regard, Mr.T.P.Prabhakaran, learned counsel appearing for the petitioner has made submissions. While dismissing the writ petition, it is made clear that the statement made across the bar, shall not be breached. If there is any breach, the bank is at liberty to seek for appropriate relief, including invoking the provisions of the Contempt of Courts Act, 1971.
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