Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 1, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
Notifications
Companies Law
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F. No. 01/01/2009-CL-V (Part VIII) - dated
30-3-2019
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Co. Law
Companies (Indian Accounting Standards) Second Amendment Rules, 2019
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F. No. 01/01/2009-CL-V (Part VII) - dated
30-3-2019
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Co. Law
Companies (Indian Accounting Standards) Amendment Rules, 2019
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F. No. 1/13/2013 CL-V, Part-I, Vol II - dated
29-3-2019
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Co. Law
Companies (Incorporation) Third Amendment Rules, 2019
Customs
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15/2019 - dated
29-3-2019
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ADD
Seeks to impose definitive anti-dumping duty on 'Ethylene Vinyl Acetate (EVA) sheet for Solar Module', originating in or exported from China PR, Malaysia, Saudi Arabia and Thailand
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11/2019 - dated
29-3-2019
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Cus
Amend notification No. 50/2017-customs dated 30th June 2017 to postpone the implementation of increased customs duty on specified imports originating in USA from 1st April, 2019 to 2nd May, 2019
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27/2019 - dated
29-3-2019
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
DGFT
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59/2015-2020 - dated
29-3-2019
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FTP
Addition of provision related to the Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) notified by the Ministry of Textiles
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58/2015-2020 - dated
29-3-2019
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FTP
Transport and Marketing Assistance (TMA) for Specified Agriculture Products
GST
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Order No. 04/2019 - dated
29-3-2019
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CGST
Central Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019
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16/2019 - dated
29-3-2019
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CGST
Central Goods and Services Tax (Second Amendment) Rules, 2019
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09/2019 - dated
29-3-2019
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CGST Rate
Seeks to amend notification No. 02/2019- Central Tax (Rate) so as to provide for application of Composition rules to persons opting to pay tax under notification no. 2/2019- Central Tax (Rate)
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08/2019 - dated
29-3-2019
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CGST Rate
Seeks to amend notification No. 1/2017- Central Tax (Rate) so as to notify CGST rate of certain goods as recommended by Goods and Services Tax Council for real estate sector
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07/2019 - dated
29-3-2019
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CGST Rate
Seeks to notify certain services to be taxed under RCM under section 9(4) of CGST Act as recommended by Goods and Services Tax Council for real estate sector
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06/2019 - dated
29-3-2019
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CGST Rate
Seeks to notify certain class of persons by exercising powers conferred under section 148 of CGST Act, 2017
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05/2019 - dated
29-3-2019
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CGST Rate
Seeks to amend notification No. 13/2017- Central Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector
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04/2019 - dated
29-3-2019
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CGST Rate
Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.
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03/2019 - dated
29-3-2019
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CGST Rate
Seeks to amend notification No. 11/2017- Central Tax (Rate) so as to notify CGST rates of various services as recommended by Goods and Services Tax Council for real estate sector
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08/2019 - dated
29-3-2019
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IGST Rate
Seeks to amend notification No. 1/2017- Integrated Tax (Rate) so as to notify IGST rate of certain goods as recommended by Goods and Services Tax Council for real estate sector.
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07/2019 - dated
29-3-2019
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IGST Rate
Seeks to notify certain services to be taxed under RCM under section 5(4) of IGST Act as recommended by Goods and Services Tax Council for real estate sector.
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06/2019 - dated
29-3-2019
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IGST Rate
Seeks to notify certain class of persons by exercising powers conferred under section 148 of CGST Act, 2017. - In relation to development rights or FSI(including additional FSI)
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05/2019 - dated
29-3-2019
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IGST Rate
Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector.
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04/2019 - dated
29-3-2019
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IGST Rate
Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.
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03/2019 - dated
29-3-2019
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IGST Rate
Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.
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Order No. 3/2019 - dated
29-3-2019
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UTGST
Union Territory Goods and Services Tax (Third Removal of Difficulties) Order, 2019
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9/2019 - dated
29-3-2019
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UTGST Rate
Seeks to amend notification No. 02/2019- Union Territory Tax (Rate) so as to provide for application of Composition rules to persons opting to pay tax under notification no. 2/2019- Union Territory Tax (Rate).
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08/2019 - dated
29-3-2019
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UTGST Rate
Seeks to amend notification No. 1/2017- Union Territory Tax (Rate) so as to notify UTGST rate of certain goods as recommended by Goods and Services Tax Council for real estate sector.
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07/2019 - dated
29-3-2019
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UTGST Rate
Seeks to notify certain services to be taxed under RCM under section 7(4) of UTGST Act as recommended by Goods and Services Tax Council for real estate sector.
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06/2019 - dated
29-3-2019
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UTGST Rate
Seeks to notify certain class of persons by exercising powers conferred under section 148 of CGST Act, 2017.
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05/2019 - dated
29-3-2019
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UTGST Rate
Seeks to amend notification No. 13/2017- Union Territory Tax (Rate) so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector.
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04/2019 - dated
29-3-2019
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UTGST Rate
Seeks to amend notification No. 12/2017- Union Territory Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.
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03/2019 - dated
29-3-2019
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UTGST Rate
Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify UTGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Notice and order for demand of amounts payable under the Act. - Rule 142 of the Central Goods and Services Tax Rules, 2017 as amended
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Assessment in certain cases - Rule 100 of the Central Goods and Services Tax Rules, 2017 as amended.
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Order of utilization of input tax credit - Rule 88A of the Central Goods and Services Tax Rules, 2017 - New Rule
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Reversal of ITC in respect of Capital Goods in certain cases - Manner of determination of input tax credit - Rule 43 of the Central Goods and Services Tax Rules, 2017 as amended.
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Reversal of ITC in respect of inputs or input services in certain cases - Manner of determination of input tax credit - Rule 42 of the Central Goods and Services Tax Rules, 2017 as amended
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Determination of Value of Assets - Transfer of credit on sale, merger, amalgamation, lease or transfer of a business - Rule 41 of the Central Goods and Services Tax Rules, 2017 as amended.
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Benefit to training partner approved by NSDC in entry no. 69 under exemption Notification No. 12/2017-Central Tax (Rate) is services in relation to the schemes run by NSDC such as PMKVY, Sankalp, Udaan, STAR, Polytechnic Schemes, Vocationalisation of education run by the Ministry of Skill Development and Entrepreneurship and similar schemes run by ministries or departments and it would not be applicable in respect of other services relating to skill development provided by the appellant. Being a training partner approved by NSDC not entitled appellant to get benefit under entry 69 for other skill programed/educational course offered to corporate & business institution.
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Application of Composition rules to persons opting to pay tax under notification no. 2/2019- Central Tax (Rate)
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CGST rate of certain goods prescribed for real estate sector
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Tax payable on reverse charge basis (RCM) u/s 9(4) of CGST Act for real estate sector when procured from unregistered person for certain inward supplies including Cement, Capital Goods and such goods and services.
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Special procedure for certain processes - Seeks to notify certain class of persons by exercising powers conferred u/s 148 of CGST Act, 2017 - real estate sector
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Specified Services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector
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Certain services as recommended by Goods and Services Tax Council for real estate sector exempted including TDR or FSI or Upfront amount in case of long term lease etc.
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Central Goods and Services Tax (Second Amendment) Rules, 2019
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Rate of GST - The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST. That is, if the works contract services provided by the main contractor or sub-contractor are pertaining to the railways, the concessional rate of 12% GST is allowed
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Extension of time period for filing of GST Tran-1 - High court direct to open portal of petitioner before 31.03.2019 or process the GST TRAN-1 manually
Income Tax
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Addition u/s 69C - unexplained expenditure - Double taxation - the credit entry was effectively neutralised by corresponding entry on the debit side. This is not, therefore, a case of double taxation.
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Disallowance u/s 40A(3) - payments of expenses made in Cash - if at all, the assessee should escape from the rigour of Section 40A(3), then he should bring his case within the ambit of Rule 6DD(j), which assessee was miserably failed. - No relief.
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Alternate remedy - writ petition for stay of demand and release of bank account disposed as statutory remedy to approach the ITAT is available to assessee against order of CIT(A)
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Deduction u/s 43B - once excise duty on the basis of goods manufactured is paid same is allowable, direct correlation between the duty paid and the goods manufactured or liability to pay excise duty or removal of goods are irrelevant
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Partially rejection of books - assessee incurred the expenses for it’s two activities hence AO cannot reject books partially and if the books of the accounts are rejected then the income from both the sources needs to be estimated and no separate addition for commission payment or u/s 41(1) is called for
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Income recognition - AS-9 - under mercantile system accrual of income is relevant - the fact that bills were not raised is irrelevant - value of services recognized for the purpose of levy of service tax is not relevant in the context of computation of total income for the purpose of levy of income tax
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TP adjustment of Technical Assistance fees and project management services not claimed as expenditure but capitalized as project - capital transactions are outside the purview of TP mechanism but at time of claiming depreciation it is relevant otherwise same will be allowed only on revised value.
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Application u/s 158A - special provision for avoiding repetitive appeals - question regarding taxability of interest on compensation awarded by the Motor Accident Claims as capital or revenue is pending before Supreme court - ITAT directed AO to apply the directions of the Hon’ble Supreme Court as soon as the same is pronounced.
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Unexplained cash credit u/s. 68 - no cash involved in any stage of the transaction and squared up by the assessee company by issue of debentures - if only book entry addition u/s 68 is not permissible
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Undisclosed income - acquittal in the Criminal Proceeding is not automatic deletion of income under the Income Tax Act as both operate in different fields - Appellate Authority should arrive at its own independent findings of fact on the basis of such material.
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Benefit of exemption u/s 10B - new undertaking - 66.66% assets leased from other company - lease could also be considered as a 'transfer' for the purpose of Section 10B(2) - exemption denied
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Power of tribunal to pass order based on oral concession by AR - Tribunal should take either an Affidavit from Assessee and the counsel on behalf of the Assessee or atleast a written endorsement made on the record of the case duly signed by them.
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Actual loss due to cancellation of contract - arbitration proceedings are pending - allowable in year of loss however in conclusion of the arbitration proceedings, the assessee receives any amount it could be adjusted in the loss of that year
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Accrual of income - after defect liability period or contract completion date - if assessee's right to such amount would depend on there being no defects arising in the subsequent period then accrual occurs only on completion of the retention period (defect liability period)
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Reopening of assessment - subsequent information or material which tends to or has the potential of undermining its findings of assessment made u/s 143(3) and have an important bearing then invocation of the power to reassessment u/s 147 is warranted.
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Provisional attachment u/s 281B of bank accounts - applications for stay - High court has passed stricter and imposed cost on unreasonable rejection of stay application, notice for attachment and recovery from bank - the least that is expected of the Officers of the State is to apply the law equally to all and not be over zealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court.
Customs
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Issues related to carriage of coastal cargo from one Indian port to another port in foreign going vessels/coastal vessels through foreign territory
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Valuation - Import of software - mode of import of software - BSNL being a Government Company, which cannot be alleged that they have colluded with the appellant in erroneously splitting the value of the hardware and software component - Demand confirmed, penalty set aside.
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Revocation of CHA License - subletting of his license for filing of shipping bill - benefit of doubt given to CHA - On payment of the penalty, the appellant’s license will stand restored and the forfeiture of the security deposit also stands set aside.
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Export of Iron ore concentrates - the exemption available to Ore is also available to concentrates, the procedural infractions cannot take away benefit when substantial compliance is not disputed
FEMA
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Offence u/s 3(a) of FEMA - domestic supply of goods in India against amount received in foreign exchange from the overseas buyer - merely on the ground that SDF was not furnished, as it is only a procedural exercise, proceedings cannot sustain.
IBC
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Corporate Insolvency Resolution Process - Appellant is ready to settle the matter with the ‘Operational Creditor’. However, even after such settlement, we cannot set aside the impugned order to give any relief to the ‘Corporate Debtor’.
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Corporate Insolvency Resolution Process - the issue of VAT has been raised only after receiving the demand notice, which shows that issue of VAT has been raised for creating the defence.
Service Tax
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Liability of service tax - sob-contractor - payment of service tax by the main contractor - appellant revenue has not been able to point out any error or illegality in the findings recorded by the Tribunal in allowing the appeal of the assessee.
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CENVAT Credit - input services - services availed for sale of shares - During the said period, the definition of input services had a wide ambit as it included the words “activities relating to business” - credit allowed.
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Demand of interest - service tax paid belatedly by adjustment of the CENVAT account - Merely because the amount was lying in the CENVAT account, it cannot be said that the demand has been paid or discharged.
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The charges levied by one Division of M/s. BSNL to another and that too by way of debit notes, is only an internal financial adjustment which cannot, by any stretch of imagination, be termed as “Interconnection Usage Charges” or as a taxable service for the purpose of levying service tax
Central Excise
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Demand of interest on differential duty - the claim of the appellant that since the assessment was provisional, therefore, interest is not applicable, is not correct, hence not acceptable.
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Classification of Precipitated Chalk - whether classifiable and chargeable to duty @ 16% under chapter 28 (Inorganic Chemicals) or under Chapter 25 (Mineral Products) attracting nil rate of duty? - Demand set aside on the ground of period of limitation.
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CENVAT Credit - input services - lease rentals and operation and maintenance charges of wind mills situated outside the factory - Rule does not say that input service received by a manufacturer must be received at the factory premises.
VAT
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Scope of term "total turnover" - inclusion of turnover which is not liable to tax - the contention the determination of the rate of the turnover tax is to be ascertained on the ‘taxable turnover’ on the face of it is unsustainable and deserves outright rejection.
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Deemed exports - refund - effective date of clarification - the impugned clarification will not have any retrospective effect and that the appellants are governed by the earlier clarification
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Benefit of free sales tax deferral scheme - expression “product” found in the G.O., must be given a wider meaning to include waste and scrap, to sub-serve the object of the scheme of the incentive.
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Levy of sales tax - valuation - Sale taking place or not - transfer of goods to sister concern free of cost (Joint Venture partner) - assessee will be liable to pay sales tax on the amount collected towards the central excise duty component only.
Case Laws:
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GST
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2019 (3) TMI 1577
Scope of National Skill Development Programme - educational courses offered by the Applicant, approved by NSDC - certain educational courses for which qualification standards / framework i.e. QP/ NOS have not been defined by NSDC, whether come within the scope of National Skill Development Programme implemented by NSDC - educational courses subsequently upgraded by the Applicant within pre-defined QP/ NOS framework - N/N. 12/2017- Central Tax (Rate), dated the 28th June 2017 - Benefit of exemption if such educational courses are offered to corporate and business institutions - educational courses which are actually imparted by the business partners of the Applicant, on behalf of the Applicant as sub-contractor - challenge to AAR decision. Held that:- With respect to the first requirement the service provider has to be a training partner approved by NSDC or the sector Skill Council and at the time of Advance Ruling the appellant had submitted photocopies of certificates which shows that the appellant is a training partner of NSDC for the Financial Years 2014-15, 2015-16, 2016-17 201718. The appellant had not produced the certificate for the F.Y. 2018-19 and therefore it was held by the AAR that the statement made by the appellant that they continued to be a training partner of NSDC is not clear. However, at the appellate stage the appellant has produced the photocopies of certificates which shows that it is a training partner of NSDC for the F.Y. 2018-19 also. Therefore, the issue that the appellant is a training partner approved by NSDC is now clear. Secondly we have to examine whether the appellant provided services in relation to National Skill Development Program implemented by the NSDC. A reading of the relevant entry at Sr.No.69 of the Notification No.12 of 2017, shows that in order to claim exemption under it, the appellant has to provide any of the three conditions given at i), ii) and iii). The appellant has to prove that they provide services in relation to a) National Skill Development Program implemented by the NSDC or to Vocational Skill Development Course under the National Skill Certification and Monetary Reward Scheme. b) Any other scheme implemented by the NSDC. IMS Proschool Pvt. Ltd. i.e. the appellant in the present case offers educational training and skill courses through classroom training and virtual coaching in many areas such as Data Analysis, Digital Marketing, Fitter, Mechanical Assembly, Electrician Courses, Sales Courses etc. They also prepare programs which includes preparing crews and working professionals to appear for various national and international certification including Financial Modelling, Financial Analysis, Management Account, Business Analysis etc. - NSDC is a Public Limited Company and was set up as a Public Private partnership model to fulfill the growing needs of skilled manpower in India and narrow the gap between demand and supply of skill. It is seen that neither in the grounds of appeal nor in the hearing the appellant has given any conclusive evidence that the training programmes offered by them are covered under (i) or (iii) of the Notification entry no 69. The appellant has not made any claim in their submission that their training programs or educational courses are implemented under PMKK PMKVY or UDAN, and therefore the AAR was right in coming to the conclusion that the services offered by the applicant are not covered by Sr. No. ii iii - there are no submissions made by the appellant that they are approved training partners of the NSDC with regard to the above mentioned schemes. Therefore, we come to the conclusion that the contention of the appellant is with regard to the general mandate given to NSDC of skill development in the country and as NSDC also approves courses and funds private sector initiative of which the appellant is one, and therefore it is the contention of the appellant that they are covered by the Entry No.69 of the Notification 12/2017. The main schemes and programmes that would be covered under the National Skill Development Programmes would be PMKVY, Sankalp, Udaan, STAR, Polytechnic Schemes, Vocationalisation of education run by the Ministry of Skill Development and Entrepreneurship and similar other skill development schemes that are run by the various ministries or departments or their directorates. If the services in relation are provided by training partners in relation to the schemes as mentioned above through the partners approved by NSDC, then only the benefit of Notification as claimed would be applicable and it would not be applicable in respect of other services relating to skill development provided by the appellant. The decision of AAR upheld.
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2019 (3) TMI 1570
Extension of time period for filing of GST Tran-1 - transitional credit - transition to GST Regime - Held that:- The Respondent No.2, is directed to open the portal before 31st of March 2019. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - List this matter on 02.05.2019.
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2019 (3) TMI 1569
Detention of goods with vehicle - it is not the case of the opposite parties that the documents carried by the driver of the vehicle were forged - Held that:- Prima-facie we are satisfied that the vehicle cannot be detained by the opposite parties. The opposite parties as such shall release the vehicle on furnishing personal bond of the Vehicle No. UP16 DT 3636 forthwith. List this case for hearing after Holi holidays.
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2019 (3) TMI 1568
Levy of fees for the licence for the advertisements on hoardings in the private properties in Ahmedabad city - vires of section 386(2) of the Gujarat Provincial Municipal Corporations Act, 1949 - Held that:- Issue Notice returnable on 20th March, 2019. Ad-interim relief is granted in terms of paragraph 7.0 (B)(ii) and (iii) of the petitions subject to the petitioners continue paying the licence fees applicable prior the Resolutions at Annexures-A and AA to the petitions without prejudice to their rights and contentions.
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2019 (3) TMI 1567
Works Contract Services (WCS) pertaining to railways - original works contract - Rate of tax - sub-contractor to main contractor - whether taxable at 12% GST or 18% GST? - N/N. 11/2017 dated 28.06.2017 as amended by the N/N. 1/2018 dated 25.01.2018 - Challenge to AAR decision. Held that:- The plain reading of the item (v) of the Sr. 3 of the Notification, it is very much clear that any supply of works contract pertaining to the railways including monorail and metro is subject to concessional rate of 12% GST - In the instant case, though the respondent i.e. M/S. Shree Construction is providing works contract services to its main contractor who has entered into works contract agreement with railways, the composite supply of works contract being carried out by M/s. Shree Construction is ultimately going to the use of railways without being subjected to any change or modification, thus the said works contracts, though undertaken by the sub-contractor, is undoubtedly pertaining to the railways and no one else. Thus, the condition specified under item (v) of the Sr. 3 of the said notification is completely fulfilled and therefore the services provided by the sub- contractor would attract concessional rate of 12% GST. There is no specific mention of subcontractor providing services in Sr. (v) as provided in item (ix) and (x) which were incorporated into the Notification 11/2017-C.T. by the amending notification 1/2018 dated 25.01.2018, there was no need to include such sub-contractors in the item (v) of the Notification as there was no confusion whether the sub-contractor will be eligible to such concessional rate of GST, since the activities described under item (v) of Sr, 3 of the notification are services specific. The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST. That is, if the works contract services provided by the main contractor or sub-contractor are pertaining to the railways, the concessional rate of 12% GST is allowed to the person who carries out the such works contract pertaining to railways. The ruling pronounced by the Advance Ruling Authority upheld. - Decided against the revenue.
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2019 (3) TMI 1566
Profiteering - supply of Peps Spring Koil Bornell Normal Maroon 75x60x6” Mattress - benefit of reduction of GST rate not passed on - N/N. 41/2017-Central Tax (Rate) dated 14.11.2017 - contravention of the provisions of Section 171 of CGST Act, 2017 - Held that:- It is apparent from the perusal of the facts of the case that admittedly there was a decrease in the rate of tax on the said product from 28% to 18% w.e.f. 15.11.2017 but it is also established that the base price (excluding GST) of the product was also reduced from ₹ 7986/- to ₹ 7,034/- after offering a discount of ₹ 1,006/- which is more than the commensurate rate reduction. As the Net Base Price (excluding tax) of the above product has been reduced by the Respondent, the allegation of profiteering is not sustainable. The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 - there is no merit in the application forwarded by the Applicant No. 1 and the impugned application is accordingly dismissed.
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2019 (3) TMI 1565
Extension of time period for filing of GST Tran-1 - transitional credit - transition to GST Regime - Held that:- The respondents are directed to open the portal of the petitioner before 31st of March 2019. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - List this matter on 02.05.2019.
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2019 (3) TMI 1564
Maintainability of Advance Ruling application - subsection (6) of section 98 of the Central Goods and Service Tax Act, 2017 - Held that:- The authority shall pronounce its advance ruling in writing within 90 days from the date of receipt of application. It was submitted that, in this case, the application was made on 07.10.2017 whereas, the impugned order has been passed on 22.02.2019. It was submitted that in the interregnum, between the date of application and between the date of advance ruling by the authority, various other authorities have decided the issue in favor of the applicant therein by holding that the goods would be classified as papad in classification no.1905 90 40. Issue Notice, returnable on 24.04.2019.
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2019 (3) TMI 1563
Imposition of penalty and redemption fine - Confiscation - FORM GST MOV-10 - Held that:- A perusal of the impugned notice reveals that in paragraphs 2, 3 and 4 thereof, there are various blanks which have not been filled in which makes it manifest that the procedure as required under the provisions of the Act as referred to in paragraphs 2, 3 and 4 have not been followed by the competent authority prior to issuance of the said notice. Issue Notice to the respondents returnable on 3rd April, 2019.
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2019 (3) TMI 1562
Goods in transit in contravention of the provision of the Act or the rules made thereunder - CGST Act - penalty - redemption fine - confiscation - Held that:- Considering the fact that the petitioner has already deposited tax and penalty under section 129 of the IGST Act, by way of ad-interim relief, the respondents are directed to forthwith release Truck No.HR-55-J-2944 along with the goods contained therein. However, the petitioner shall file an undertaking before this court within a week from today to the effect that in case the petitioner, ultimately, does not succeed in the petition, he shall duly cooperate in the further proceedings. Issue Notice returnable on 10th April, 2019.
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Income Tax
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2019 (3) TMI 1576
Settlement Commission u/s 245(D)(4) - Retrospective effect to its declaration that the Petitioner’s application for settlement in relation to certain assessment years - Whether the application for settlement can be rejected in relation to certain assessment years where no additional income is disclosed, though, in the composite application for settlement, assessee has disclosed adequate undisclosed income? - Can the settlement commission entertain such an objection while passing the order under section 245D(4)? - HELD THAT:- The issues arising the Petitions would require a detail consideration. Prima facie, when it is shown that earlier the judgment of Settlement Commission by five Judges Bench and (even after the certain legislative changes were made in the Act pertaining to settlement of the case), later on seven Judges Bench of the Settlement Commission has held that the splitting of a declaration assessment year wise for examining the requirement of the declaration of undisclosed income would not be permissible, the judgment of the Settlement Commission impugned in the present Petitions would have to be stayed. In the result, Rule. By way of interim relief, implementation of the judgment of Settlement Commission is stayed. The assessment orders passed by the Assessing Officer are by way of consequence to the judgment of the Settlement Commission. Such assessment orders are also therefore stayed.
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2019 (3) TMI 1575
Addition u/s 69C - unexplained expenditure - expenditure incurred by the assessee to which he offers no explanation about the source of such expenditure - HELD THAT:- In the present case, the revenue had established that the assessee had incurred the expenses outside the books. The assessee failed to offer any explanation. Section 69C therefore, had direct applicability. This, in any case, is an issue based entirely on facts. Two revenue authorities and the Tribunal had concurrently come to factual conclusions which are not perverse. Double taxation - HELD THAT:- Here also we do not find that the assessee has made out any arguable case. As noted the amount was shown to have been assessee’s unexplained expenditure and was, therefore, brought to tax by the A.O. under section 69C. The Tribunal noted that the assessee having taken such an amount on the credit side of the P & L Account, had made corresponding entry on the debit side of the P & L Account claiming the said sum of ₹ 1.75 Crores by way of expenses for the work in progress. Thus, the credit entry was effectively neutralised by corresponding entry on the debit side. This is not, therefore, a case of double taxation.
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2019 (3) TMI 1574
Disallowance u/s 40A(3) - payments made in Cash - whether cash payments were necessitated by a written contract and therefore, should be allowed on consideration of business necessity? - HELD THAT:- Assessee has not been able to bring his case under anyone of the conditions stipulated in the said Rule and therefore, confirmed the disallowance made by the Assessing Officer. The correctness of the order passed by the CIT(A) was contested before the Tribunal. The Tribunal after re-examining the factual position held that the assessee has not been able to substantiate the existence of any circumstance which would call for application of Rule 6DD(j) and therefore, confirmed the order passed by the CIT(A). On going through the factual position, we find that the assessee himself admitted the cash payment and pleaded that there was business necessity warranting cash payment. Unfortunately, the Statute does not provide for any relief to such an assessee and if at all, the assessee should escape from the rigour of Section 40A(3), then he should bring his case within the ambit of Rule 6DD(j), which assessee was miserably failed. No substantial question of law.
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2019 (3) TMI 1573
Stay of demand - addition has been made are to the income of the assessee which is almost 16 times of the returned income without invoking the provisions of section 145 - as submitted that assessee has already paid almost 40% of the demand and therefore it deserves the stay for the balance sum - CIT – A dismissed the appeal of the assessee for non-prosecution - HELD THAT:- The assessee was assessed at INR 27766070/- against the returned income of INR 1589760 by the learned assessing officer by making usual addition of INR 26,176,311/-on 29/12/2016. The assessee preferred an appeal before the learned CIT – A who dismissed the appeal of the assessee as on 7 occasions the notices were issued to the assessee but he did not appear on he requested for adjournment. Therefore the assessee has preferred an appeal before us. On perusal of the conduct of the assessee before the learned CIT – A wherein on 7 occasions he did not remain present before him in spite of the assessee paying almost 40% of the tax demand he does not deserve the stay. Hence to petition filed by the assessee is dismissed. Looking at the facts and circumstances of the case it is apparent that the learned CIT – A has dismissed the appeal of the assessee for non-prosecution but not on the merits. Therefore it is imperative that the issue has to be decided on the merits of the case even if the assessee does not remain present before him. We have carefully considered the rival contention as well as perused the orders of the lower authorities. As the learned CIT – A has not decided the issue on the merits of the case we set aside the whole issue back to the file of the learned CIT – A with a direction to the assessee to remain present before him on 14/5/2019 and is make his submission before him. The learned CIT – A is also directed to consider the submission of the assessee and decide the issue afresh on the merits of the case. - Appeal of the assessee is allowed for the statistical purposes.
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2019 (3) TMI 1572
Assessment of trust - Addition of accumulation of income @ 15% of the gross total income - HELD THAT:- We find that the assessee has already applied its income for the various charitable activities over and above the gross total income earned for the year and for that purpose, aggregated computation of income has been furnished by the written submissions dated 11.03.2013, but the same were not considered by the AO which is not permissible in law. Since, the assessee has already applied its income, therefore no question arises of claiming 15% of deduction or making disallowance of it by the AO. We hold that CIT(A) has perfectly deleted the said addition, therefore this ground of appeal is dismissed. Disallowance of amount set apart for specified purposes and disallowance of expenditure - assessee had set apart or accumulated the amount u/s.11(2) - assessee had filed Form No.10 along with resolution for accumulation of income along with Return of Income filed u/s.139(1) - HELD THAT:- Amount eceived by the assessee Trust towards corpus fund created for the specific purposes, hence, such donation receipts towards corpus fund are to be treated as capital receipts of the Trust and on such donations the provisions of section 11(2) granting exemption to the amount accumulated would not apply. All such funds have been deposited by it has fixed deposit in the bank account and only interest part of it, which has been shown as regular income, has been applied or spent towards various purposes. Therefore, the CIT(A) has rightly deleted such addition made by AO, accordingly ground no.ii) & iii) of the appeal is therefore dismissed. With regard to expenditure we find that these expenditures were incurred out of its income accumulated from year to year and not from earmarked corpus fund the assessee has duly demonstrated by showing the details of the balance sheet of the current year as well as earlier years that no amount has been spend out of the corpus fund received in various years - Decided against revenue
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2019 (3) TMI 1571
Disallowance u/s 14A - absence of exempt income - Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09 - HELD THAT:- In view of the decision of this Court in Commissioner of Income Tax 5, Mumbai vs. Essar Teleholdings Ltd. through its Manager [2018 (2) TMI 115 - SUPREME COURT OF INDIA] we see no reason to entertain this special leave petition under Article 136 of the Constitution of India. SLP dismissed.
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2019 (3) TMI 1561
Stay on recovery of demand - deposit 20% of the demand within three days of the date of receipt of the letter - no search was initiated under section 132 nor were the books of account or other documents or any assets requisitioned under section 132A and hence, no assessment could have been made under section 153A - HELD THAT:- Review of the order of the Assessing Officer, has not examined the submissions advanced on behalf of the assessee on the specious plea that none of the pleas are covered by the guidelines given by the CBDT in its revised Instruction No.1914 relating to stay on recovery of demand. As further submitted that the Principal Commissioner of Incometax has passed the impugned order on 11.03.2019, which came to be furnished to the petitioner only on 22.03.2019 and thereafter, without giving any time to the petitioner to challenge the impugned order, the bank account of the petitioner has been attached on 25.03.2019. Having regard to the submissions advanced by the learned advocate for the petitioner, issue Notice, returnable on 01.04.2019.
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2019 (3) TMI 1560
Reopening of assessment - Addition u/s 68 - genuineness of the transaction or credit and the credit worthiness of the individual providing the money not established - HELD THAT:- Revenue gets hold of information or material which tends to or has the potential of undermining its findings (previously made in the assessment proceedings) and have an important bearing, invocation of the power to reassessment is warranted. Now in the present case, the Revenue presses several such circumstances: one, that the SEBI application was made in 2014 after a questionnaire was issued by the AO; two there was nothing to justify the premium of 457 per cent over the face value of the shares even the market value of the share according to the Revenue on the date of issue of the shares was only ₹ 318/- per share. Three, the SEBI approval was given much later; four, when the authorized capital of company was ₹ 20 lakhs (mostly paid) the necessity for issuing shares worth ₹ 87 crores remained unanswered. The reassessment notice in this case was clearly warranted. Though the assessee had sought to explain that the share application amounts were received and later the shareholding rights were transferred by Mr. Analjit Singh to his family trust. The identity of Shri Analjit Singh was known; however, looking at the transaction (i.e. allotment of shares vastly in excess of the authorized capital, in the absence of any SEBI approval and retention of that money by the assessee which did not show any reason for issuing the shares) the other ingredients of Section 68 (i.e. genuineness of the transaction or credit and the credit worthiness of the individual providing the money) were apparently not established. - Decided in favour of revenue
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2019 (3) TMI 1559
Provisional attachment u/s 281B of bank accounts - applications for stay on recoveries u/s 220(6) rejected without providing reasoning in orders - claim for eligibility u/s 10(23FB) allowed by CIT(A) and Tribunal in earlier years - HELD THAT:- In the present case, we note that both the impugned order dated 29th January, 2019 passed by the respondent no.1 Assessing Officer and order dated 14th February, 2019 passed by the respondent no.2 – Pr. CIT have completely ignored the binding directions of this Court of the manner in which the stay applications are to be disposed of and the test to be applied while considering grant of a stay of demand under Section 220(6) pending disposal of appeal by CIT(A). In fact, none of the two orders set out even briefly the issue involved and the submissions of the parties in support of its application for stay and yet both the orders dispose of the stay application, adverse to the petitioner. On the above ground itself, the impugned order dated 29th January, 2019 of the Assessing Officer and 14th February, 2019 of the Pr. CIT are unsustainable. The order under Section 281B was issued just two days before the assessment order was passed and neither does the order mention any basis for apprehension of the Revenue nor does the affidavit state any reasons in support of the action nor any submission made in support of its order dated 18th December, 2018 under Section 281B of the Act. Moreover, the notices under Section 226(3) of the Act were issued on 19th December, 2018 to the petitioner's bankers. This without any amount being due from the petitioner to the Revenue on that date and calling upon the petitioner's bankers to pay over the amounts of the petitioner lying with them to the Income Tax Department. We also set aside the notice dated 15th February, 2019 by which the refund of ₹ 21.41 Crores available to the Petitioner for the Assessment Year 2013-14 is adjusted against the outstanding demand of ₹ 52.78 Crores for subject assessment year and direct the refund of ₹ 21.41 Crores to the Petitioner in accordance with law; and We set aside the order dated 18th December, 2018 passed under Section 281B of the Act. This as the Revenue has not been able to justify the basis of their apprehension that if the Petitioner's assets are not attached, the interest of the Revenue in recovering its dues would be prejudiced. we have to express our dismay at the conduct of the Officers of the Revenue in this matter. We pride ourselves as a State which believes in rule of law. Therefore, the least that is expected of the Officers of the State is to apply the law equally to all and not be over zealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court. The action of Respondent nos.1 and 2 as adverted to in para 14 herein above clearly indicates that a separate set of rules was being applied by them in the case of the Petitioner. Equal protection of law which means equal application of law has been scarified in this case by the Revenue. It appears that the Petitioner is being singled out for this unfair treatment. The desire to collect more revenue cannot be at the expense of Rule of law. In the above view, we direct the Respondent-Revenue to pay cost of ₹ 50,000/( Rupees Fifty thousand only) to the Petitioner for the unnecessary harassment, it had to undergo at the hands of the Revenue.
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2019 (3) TMI 1558
Deduction u/s 43B - provision for payment of excise duty on obsolete inventory , which was not removed from the factory premises on or before the due date for filing of Return of Income - addition insisting on a direct correlation between the duty paid and the goods manufactured - valuation of obsolete inventory - HELD THAT:- The admitted position is that the amount in question was actually paid by way of excise duty. This liability was computed on the basis of goods manufactured by the Assessee. On the valuation of such goods, the Assessee would make a provision of excise duty liability and actually pay the same either before the end of the financial year of at any rate, latest by the due date of filing the return. Tribunal was correct in holding that the deduction could not have been disallowed by insisting on a direct correlation between the duty paid and the goods manufactured. If for any reason it is found later on that the excise duty was paid in relation to certain goods manufactured, but the funds were not cleared and that therefore, no excise duty liability arose, the adjustment would automatically be made in the later years when the Assessee would estimate its liability for payment of excise duty. Such a situation may arise under various circumstances such as damage or destruction of the goods. However, it would be inconceivable that the Assessee would not claim the reduced liability for paying excise duty. - Decided against revenue Addition of closing stock being provision for obsolete inventory - provision has been made on the basis of internal guidelines and not as per provisions of Income Tax Act, which provides for valuation of closing stock either at cost or at market price - ITAT deleted the addition - HELD THAT:- Tribunal noted that the Assessee has been consistently following this method of evaluating the stock which the Department has also accepted. - Decided against revenue
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2019 (3) TMI 1557
Alternate remedy - writ petition - availability of statutory remedy of approaching the ITAT - penalty u/s 271(1)(c) - application for stay of demand - seize the bank accounts - HELD THAT:- Since the petitioner has a statutory remedy of approaching the ITAT against the order passed by the CIT (A), the petitioner has not yet approached the ITAT, all the pleas raised in the writ petition can very well be taken in the appeal filed before the ITAT, the petitioner can also make an application for interim relief which can be considered by the ITAT, we do not find any reason to grant indulgence. Writ petition is finally disposed of with the observation that in case the petitioner prefers an appeal before the ITAT, the same may be considered by the ITAT expeditiously including the application for interim relief which may be considered by the ITAT, if possible, on the date of filing of the appeal. In the meantime, the petitioner may move an application for release of bank accounts to the opposite parties who may consider the same taking into consideration the difficulties faced by the petitioner and looking to the fact that the petitioner is a Government Corporation involved in the generation of electricity which is an essential commodity.
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2019 (3) TMI 1556
Agricultural income disallowance - no evidence produced in respect of the yield, sale amount, expenses etc. - amount disallowed as agricultural income was allowed to be adjusted against the accepted cash balance as allowed by the Settlement Commission - HELD THAT:- The issue would be regulated by the finding of the Settlement Commission. If the Settlement Commission's order is sustained, we find no reason to defer from the order of the Tribunal which confirmed the First Appellate Authority's order. If the Settlement Commission declares its own order to be void on grounds of fraud and misrepresentation, necessarily, the amount which is allowed to be adjusted against the accepted cash balance as on 31.3.2001, would have to be treated as income from other sources, since no evidence is forthcoming as to the agricultural income derived by the assessee and then the CIT Appeal's order dis-allowing 90% would have to be sustained. In that context no question of law arises in the year since the issue would be reduced to one of estimation. Accrual of income - after defect liability period or contract completion date - HELD THAT:- we do not think that there was any accrual on the completion of contract. The specific terms of the agreement provided that the amounts due to the awardee would be retained after completion for a specific period to ensure that if defects arise in the work executed, the same is rectified with the retained amounts which would also be the responsibility of the awardee to rectify as per the specific terms. The amounts are not set apart by the assessee for an apprehended defect. By the specific terms of the contract itself, the awarder is entitled to retain the said amounts so as to rectify any defects arising in the period in which as per the terms of the contract the amount is retained. There can be no accrual found on the completion of contract, since the assessee's right to such amount would depend on there being no defects arising in the subsequent period during which the awarder is enabled retention of such amounts. The accrual if at all happens, occurs only on completion of the retention period. We hence answer the first question of law against the Revenue and in favour of the assessee. Disallowance regarding work-in-progress and the bills receivable - HELD THAT:- Accountant Member had remanded most of the issues for consideration before the AO. The Judicial Member and the Third Member, however, deferred since there were certain consequences arising from the order of the Settlement Commission. Even de hors the Settlement Commission's order, we find that the order of the Accountant Member was only on the various adjustments made. There arises no question of law and the issues revolve around facts. The consequence arising from the order of the Settlement Commission as recognised by the Judicial Member and the Third Member, necessarily has to be accepted by the Department in making assessments for the subsequent years, subject, however, to the Settlement Commission's order being sustained. We, however, answer the question of law framed by us in favour of the assessee and against the Revenue. If at all the order of the Settlement Commission is set aside, then on this question, the Revenue could file an application before the Tribunal for restoring the appeal to consider questions afresh. Allowance of loss claimed on account of termination of contract when arbitration proceedings are pending and have not become final - HELD THAT:- The assessee entered into a contract and also furnished a bank guarantee for satisfactory execution of the contract. The contract was cancelled by the awarder and the bank guarantee was encashed. An arbitration proceeding is pending between the awarder and the awardee. Revenue claims that till the arbitration proceedings is concluded the assessee cannot claim the amount as business loss. As of now, the assessee does not have the amounts with it and the bank guarantee has been encashed and it is a loss occurred in the subject year. If at all in conclusion of the arbitration proceedings, the assessee receives any amount it could be adjusted in the loss of that year. Hence, we answer the said question of law in favour of the assessee Disallowance of 5% of the expenditure - HELD THAT:- While the CIT (Appeals), following the order of the Tribunal for the earlier assessment year in the case of the assessee itself, confined the disallowance to 1%. The Tribunal confirmed the same. We do not find any reason to interfere with that since it gives rise to no question of law. Penalty u/s 271(1)(c) - HELD THAT:- If the Settlement Commission's order is sustained, then the consequence flowing from that order for the subsequent years has to be accepted by the Department. In such circumstance, no penalty can be imposed on the assessee for reason of there being no addition possible. Hence, the orders of penalty are to be set aside. We set aside the orders issued by the lower authorities, answering the question of law in favour of the assessee and against the Revenue. However, we make a reservation, different from that made in the quantum appeals, that if at all the Settlement Commission's order is declared void, then necessarily the penalty imposed under Section 271(1)(c) have to be reconsidered by the AO, on the basis of the additions sustained. However, the issue of retention amount being taxed in the year of completion of contract has been held in favour of the assessee by us, independent of the order of the Settlement Commission, which portion would have to be, even then reduced.
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2019 (3) TMI 1555
Capital gain on Property sold u/s 50 - existence of building on land - Statement in survey indicate superstructure - 20 years old assessment records neither available with department nor with assessee - HELD THAT:- The Tribunal by the impugned judgment held that there was no super structure on the land, which could be subjected to depreciation. The Tribunal noted that the property remained as land and minimum structure of as shed and compound wall was constructed when the property was given on rent to L & T for parking their vehicles. Perusal of the documents on record and in particular the impugned judgment of the Tribunal would show that the entire issue is factual. The Tribunal having considered the relevant materials on record has come to conclusion which has not shown to be perverse. No question of law arises - Decided against revenue
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2019 (3) TMI 1554
Deduction u/s 80-IC - “substantial expansion” - scope of “initial assessment year” for availing the deduction under section 80-IC - exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT:- The parties very fairly point out that the above stated questions have been answered by titled as Pr. Commissioner of Income Tax, Shimla versus M/s Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] against the Revenue.
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2019 (3) TMI 1553
Power of tribunal to pass order based on oral concession by AR - Non consideration of grounds of appeal and written submission available on record - issue relates to reopening of assessment u/s 147 deemed dividend u/s 2(22)(e) - identical issue came up for consideration before the Tribunal in the Assessee's own case - HELD THAT:- In the present case despite the fact that it was brought to the knowledge of the Assessing Authority by way of written submission on 9.4.2018 that an identical issue came up for consideration before the Tribunal in the Assessee own case for the Assessment Year 2011-12 wherein Tribunal had remitted the case to the Assessing Officer for fresh consideration for verifying as to whether the amount has finally moved or reached to the individual Assessee or not, the Tribunal has proceeded to record such a concession as having been made on behalf of the Assessee. No justification on the part of the learned Members of the Tribunal to record any such concession on behalf of the Assessees and make additions invoking the provision under Section 2(22)(e) of the Act in the hands of the individual Assessees viz., the shareholders of the two Companies. Unless the findings of facts are returned by the Assessing Authority on the basis of materials that the money was received by the person concerned, there was no question of taxing the same as 'deemed dividends' in the hands of the individual Assessees, who are Directors/Shareholders with substantial interest. We, therefore, cannot sustain this type of orders passed by the learned Members of the Tribunal and we are sorry to note this kind of concessions recorded unauthorisedly by the learned Members of the Tribunal. Expressing again our anguish and pain on the same, we direct that in future, if any such concession is made by any Authorised Representative on behalf of the Assessees, the Tribunal should take either an Affidavit from Assessee and the counsel on behalf of the Assessee or atleast a written endorsement made on the record of the case duly signed by them, so that no such occasion of taking a stand otherwise or contra to the alleged concession made by them, would arise before the higher Courts. Appeals of the Assessee allowed and remit the matters to the Assessing Authority for the Assessment Year 2006-2007 for deciding the same as done in the Assessment Year 2011-2012
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2019 (3) TMI 1552
Stay of demand - Pre-condition for the grant of stay - direction to remit 20% of the demand based on CBDT circular - HELD THAT:- In the present case, the officer proceeds to mechanically call upon the petitioner to remit 20% of the demand without examining the appropriateness of the direction to the facts and circumstances of the petitioners case. For this sole reason, it is constrained to set aside the impugned order. The petitioner will appear before the first respondent on 13.03.2019 with all materials in support of its request for stay and the AO shall consider the petitioners request, afford an opportunity of personal hearing and pass a reasoned speaking order on the request for stay. Learned counsel for the petitioner states that the petitioner is in a position to offer security to protect the interests of the Revenue, pending appeal. Let the same be placed before the officer for his consideration. AO is at liberty to pass such orders as he may think fit in the facts and circumstances on the present case, in accordance with law and bearing in mind the prevailing Circulars/Instructions issued by the CBDT and nothing contained in this order shall stand in the way of such adjudication. Such order shall be passed by the Assessing Officer on or before 22.03.2019. The impugned order is set aside.
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2019 (3) TMI 1551
Method of accounting - recognition of income - interest on non-performing assets - Taxability of Apportionment of Income on Sum of Digits (SOD) Method or Internal Rate of Return (IRR) Method - HELD THAT:- Appeals were admitted, are now covered by a decision of this Court in the case of Assessee itself in Sundaram Finance Limited [2012 (9) TMI 373 - SUPREME COURT] assessee has classified its assets on the basis of the notification issued by the RBI and found that certain assets are coming under the category of non-performing assets. From such non-performing assets, the assessee has not recognised any income in consonance with the notification issued by the RBI and AS-9 issued by the ICAI. Therefore, the assessee is justified in not recognising the income as such. Once that is the case, there is no occasion to consider whether the principle of accrual would arise or not. In view of the matter, we are of the considered view that the lower authorities have erred in treating the interest on non-performing assets as income of the assessee company for the asst. yr. 1998-99. We direct the AO to delete the said interest from the computation of taxable income. The interest from such non-performing assets. As will be taxed in the appropriate assessment years on the basis of actual receipt. The issue of interest from non-performing assets is therefore decided in favour of the assessee
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2019 (3) TMI 1550
Undisclosed income - Involvement of the assessee in the textile scam - information gathered by another investigating agency and confirmed by the Special Court as sufficient basis for making addition under the Income Tax Act - acquittal of the accused persons in the Criminal Proceeding - Tribunal deleting the entire addition of undisclosed income in the assessee's hands on the ground that the same material was available even prior to the remand - finding of fact against the Assessee that 14 alleged bogus firms are belonging to the Assessee only and the transactions made in the name of said firms related to the Assessee with regard to sale of sarees and dhotis announced by the State Government in the year 1992 related to him and the alleged loss caused to the State Government in the said Scheme formed the income earned by the Assessee during the said block Assessment period HELD THAT:- We are of the opinion that the Tribunal being a fact finding body has erred in dismissing the appeal without appreciating the facts in detail on its own and in rejecting the materials before it. The Tribunal also erred in only relying upon the earlier order passed by the Income Tax Appellate Tribunal by which the matter was remanded vide order 02.03.2000 and the Tribunal while passing the subsequent order impugned before us on 30.06.2006 has taken note of the earlier remand order but still not accepting the request of the Revenue to remand the present case also back to the Assessing Authority, in case the Tribunal felt that the findings by the Assessing Authority were not sufficient. As far as acquittal of the accused persons in the Criminal Proceeding is concerned, it cannot be said to be amounting to automatic deletion of income, added in the hands of the Assessee in the present case under the Income Tax Act. Two proceedings, one under the Income Tax and another in Criminal prosecution operate in different fields and there is no doubt that the material collected during the course of criminal proceeding can also be used by the Authorities in the Income Tax proceedings also. But, the question is that the Appellate Authority should arrive at its own independent findings of fact on the basis of such material after issuing notice to the Assessee, giving him an opportunity to controvert the material against him. Therefore, mere acquittal of the Assessee along with other two co-accused by High Court, as quoted above cannot by itself result in setting aside of the assessment made by the Assessing authority in the present case. In these circumstances we are of the opinion that the matter again deserves to be remanded back to the Assessing Authority for fresh enquiry in the matter.
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2019 (3) TMI 1549
Reopening of assessment - deduction u/s 80(IA) - scope of change of opinion - Allegation that assessee was not engaged in running Diesel Power Generator Unit to generate electricity - as per 'Memorandum of Association' it was never mentioned that manufacture and production of electricity as part of the object of the Company - HELD THAT:- The concept of 'change of opinion' must be treated as an in-built test to check the abuse of power as such, after 01.04.1999. The Assessing Officer has power to re-open an assessment, provided there is tangible material to come to the conclusion that there was escape of income from the assessment. It is asserted that, reason must have a link with the formation of belief. See KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT OF INDIA] We do not have any hesitation to hold that the finding rendered by the Tribunal is within the four wall of law. This is more so, since the deviation was made by the Assessing Officer only with reference to the assessment year 2005 - '06; whereas in the case of other assessment years, the benefit was granted, since by virtue of the mandate of Section 80(IA) of the Act, it has to flow over a period of 10 years. There is no case for the Revenue that the assessment in respect of the other assessment years concerned has been interdicted for the said reason. Whether the profit generated from the Diesel Power Generating Unit is entitled to get deduction in terms of Section 80 (IA) - specific reference is made by the Tribunal to a Circular issued by the Government of India [Ministry of Finance - CBDT] dated 03.10.2001. from which it is clear that the stand taken by the assessee to sustain the claim, which has been upheld by the Tribunal while passing Annexure C order, is quite in order, as the assessee is entitled to have the benefit in respect of such Diesel Power Generating Unit. As it stands so, the said finding rendered by the Tribunal on merits, based on the actual facts and circumstances, does not involve any question of law; much less any substantial question of law. These appeals have been preferred by the appellant/revenue on the basis of a misconceived notion as to the scope of the legal provision. No substantial question of law - Decided against revenue
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2019 (3) TMI 1548
Stay of the demand - Bench of the Income Tax Appellate Tribunal, Patna Bench is not available that the appeal is delayed thus raising apprehensions for the petitioner regarding enforcement of the demand by the Department dated 15.11.2018 - HELD THAT:- This matter was heard on 08.01.2019 and on the request made by Ms. Archana Sinha, learned counsel representing the Income Tax Department and to enable her to seek instructions that the matter was adjourned and is taken up today when Ms. Archana Sinha accepts the position regarding non-availability of the concerned Bench of Appellate Tribunal but submits that steps are being taken for its constitution and thus even if, this Court be persuaded to grant interim protection to the petitioner, it be for a limited period coupled with a direction to the petitioner of cooperating in the expeditious disposal of the appeal, as and when the Appellate Tribunal is constituted. Mr. Pathy, fairly accepting the submissions so made, submits that there would be no lapse on behalf of the petitioner in cooperating in expeditious disposal of the appeal. Having considered undisputed position existing regarding nonavailability of the Appellate Bench, we deem it proper to order for stay of the demand notice dated 15.11.2018 impugned at Annexure-4 Series to the writ petition until the constitution of the Appellate Bench and its expeditious hearing/disposal by the concerned bench.
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2019 (3) TMI 1547
Benefit of exemption u/s 10B - undertaking a new one and not formed merely by transfer of plant and machinery from the lessor company? - whether lease could also be considered as a 'transfer' u/s 10B - HELD THAT:- The assessee-company was formed using 66.66% of the site, apart from the computers, work stations and machinery, used by STPL, for the very same purpose. The only difference is that it is leased out, instead of an outright transfer. In our view, lease could also be considered as a 'transfer' for the purpose of Section 10B(2). The argument of the assessee that the activity carried on by the company was manufacture of computer software, which requires input of intellectual, rather than tangible resources, is also not acceptable to us to find a dominant aspect not being involved in the transfer by lease of the premises, computers and peripherals. In the light of the above discussion, we are of the view that the Tribunal was justified in holding that the assessee is not entitled to the benefit under Section 10B(2) of the Act. - Decided against assessee.
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2019 (3) TMI 1546
Unexplained cash deposits in bank accounts - addition u/s 68/69 - AIR information received the assessee has deposited cash in three saving bank account with Vishwas Co-operative bank - Information u/s.133(6) was requisitioned from the bank - CIT-A upheld the addition u/s.69 - HELD THAT:- The facts reveal that the assessee is doing regular deposits in the aforesaid accounts without disclosing them in his return of income and thus evading tax. It was first through the AIR information that he was taken into task in 2011-12 and thereafter, he has executed Saate Khat with his relative which was also not registered and was later cancelled. The entire transaction was carried in cash so that any trail of money cannot be established. For the cash deposit in same account during 147 proceedings and in preceding year and in succeeding year the assessee has stated that the deposits are result of its unaccounted purchase and sales and has offered it for taxation under section 44AD of the Act. These are some of the facts which comes from the findings of the Ld. CIT(Appeals). No infirmity with the findings of the CIT(Appeals) in respect of these grounds and the same is therefore, upheld. - Decided against assessee. GP rate @15% with regard to the additional income in the hands of the assessee - HELD THAT:- On the similar issue, the Pune Bench of the Tribunal in assessee’s own case In respect of unexplained deposit in Bank of Baroda, we direct the Assessing Officer to apply GP rate at 15% to work out additional income in the hands of the assessee. Thus, ground Nos. 5 to 8 raised in appeal by the assessee are partly allowed. Penalty proceedings u/s.271(1)(c) - Defective notice - penalty order mentioned both the limbs of section 271(1)(c) of the Act i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ - HELD THAT:- There is ambiguity in the mind of Assessing Officer as to which limb/charge, penalty is to be levied. That taking guidance from the decision of CIT Vs. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein considered the decision of CIT Vs. Manjunath Cotton and Ginning Factory [2017 (1) TMI 1292 - BOMBAY HIGH COURT] the legal proposition that comes out and which is binding in nature is that the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Thus direct the Assessing Officer to delete the penalty from the hands of the assessee - decided in favour of assessee.
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2019 (3) TMI 1545
Addition u/s 14A r.w.r. 8D - no exempt income - AO made the addition placing reliance on the Circular No.5/2014 of the CBDT dated 11.02.2014 - HELD THAT:- Circular cannot override the express provisions of section 14A r.w.Rule 8D of I.T.Rules. After considering various decisions, we held that no disallowance u/s 14A of the Act was called for in case of no exempt income earned by the assessee, in the relevant assessment years. On identical facts, this Tribunal also held in favour of the assessee in the case of Sri P.Venkateswara Rao [ 2018 (12) TMI 514 - ITAT VISAKHAPATNAM] - Decided in favour of assessee
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2019 (3) TMI 1544
Bogus purchases - disallowance of purchases @ 2% confirmed by CIT(A) - HELD THAT:- The transaction was not effected with VAT and profit embedded to the bogus purchase was added to the income of the assessee in view of the law settled in case Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] mentioned above. The CIT(A) has also considered the profit ratio of diamond industries in which the 2% profit was assessed for trading activity and 3% for manufacturing activities and 2.5% across the board. Operating profit in diamond trading on international transaction was assessed by TPO around1.75% to 3%. The CIT(A) has also considered the profit ratio of the assessee in the preceding year also. The facts are not distinguishable at this stage. 100% addition is a very hard decision which is not sustainable by law settled Simit P. Sheth(supra) and other law mentioned by CIT(A) in his order. The facts are not distinguishable at this stage. Taking into account all the facts and circumstances, we are of the that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with - Decided against revenue.
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2019 (3) TMI 1543
Unexplained cash credit u/s. 68 - credit represented liability to be paid on account of outstanding dues towards purchase of investments - transaction in question was between group companies i.e. the holding company and the subsidiary company i.e. the assessee company - HELD THAT:- There is no receipt of money rather there is a liability on the assessee company to pay outstanding purchase amount to M/s. APL. From the material on record that there was no cash involved in any stage of the transaction and that in the subsequent assessment year itself the transaction has been squared up by the assessee company by issue of debentures. AO erred in understanding the nuances of the Notes forming part of the audited accounts and proceeded on an altogether wrong footing holding that the outstanding sum reflected to be payable to M/s APL in relation to the investments purchased from was required to satisfy the rigors of Section 68 - the impugned addition made u/s 68 was wholly untenable on the given facts and in law. We however are of the view that the aforesaid error had crept into the order of the AO since there was no proper compliance at the assessment stage, since the assessee had objected to the very jurisdiction of ITO- Ward 51(4) who had issued the statutory notices. Though the Ld CIT (A) has called for a remand report, and the AO had furnished his report, however the AO remained silent on the issue of receipt of actual money/ sum in his report. We set aside the impugned addition back to the AO with a limited direction to verify and ascertain the fact as to whether the assessee had actually received any money/cash pursuant to this transaction from its holding company during AY 2013-14. If it is found that there the assessee company has not received money/cash from the holding company in the relevant AY 2013-14, then in our considered view Section 68 cannot be applied and hence the impugned addition shall stand deleted. - Appeal of the assessee is allowed for statistical purpose
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2019 (3) TMI 1542
Deduction u/s 10B computation - AO made addition in respect of duty draw back claim and not including income from typesetting and scan and exchange rate fluctuation as well as not reducing the sale of scrap from the cost of sale and setting it off from the turnover - HELD THAT:- Considering assessee's submission has to be remanded back to the file of the CIT(A) for considering Duty Drawback u/s 10B in light of the decision of Topman Exports [2012 (2) TMI 100 - SUPREME COURT OF INDIA]. DR does not object for the same. We, therefore, remand back this issue to the file of the CIT(A) for fresh adjudication in light of the decision of the Apex Court in case of Topman Export (Supra). Ground No. 1 of the assessee’s appeal is partly allowed for statistical purpose. Inclusion of sale of scrap in computing deduction u/s 10B - HELD THAT:- As relying on SADHU FORGING LTD. [2011 (6) TMI 9 - DELHI HIGH COURT] receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from industrial undertaking for the purpose of computing deducting under section 80-IB. Including the constructive export computing deduction u/s 10B - HELD THAT:- CIT(A) has rightly held that there is no independent counter sale by the assessee as the assessee supplied the published material to local shopkeepers who are importers of books, from the foreign publishers as per the instruction of the foreign clients (publishers) of the assessee and the sale was actually made by the assessee to the foreign buyer and only the delivery is made to the Indian importer instead of sending the published material aboard and again bringing it back to avoid two way movements of goods. This claim was also allowed by the Revenue in A.Ys. 2005-06 to 2007-08, therefore, rule of consistency also has to be applied. also see REPLIKA PRESS PRIVATE LIMITED AND ANR VERSUS ASSISTANT COMMISSIONER OF INCOME TAX. CIRCLE 15(1). NEW DELHI [2013 (1) TMI 625 - DELHI HIGH COURT] - Decided against revenue
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2019 (3) TMI 1541
Penalty u/s 271(1)(c) - quantum addition deleted / decided in favour of the assessee by the Tribunal / Hon’ble High Court or remanded by Special bench - Income accrued in India - attribution of income to ‘Permanent Establishment’ (PE) - HELD THAT:- Characterization of revenue’s earned from supply of embedded software as ‘royalty’ and the splitting up of the revenue from supply of equipment between hardware and software in favour of the assessee and the decision rendered by special bench has been confirmed by Hon’ble Delhi High Court in DIT vs. Nokia Networks OY [2012 (9) TMI 409 - DELHI HIGH COURT]. It is also not in dispute that qua certain issues (relating to existence of PE / business connection, resulting attribution of income and vendor financing) were remanded back to be decided by the Special Bench and said issue was accordingly decided by the Special Bench [2018 (6) TMI 497 - ITAT DELHI]. It is also not in dispute that the lower revenue authorities have relied upon the order passed in A.Y. 1997-98 and 1998-99. However, now the issue has been decided in favour of the assessee very basis of levying the penalty i.e. addition made in the quantum proceedings, have been deleted / decided in favour of the assessee by the Tribunal as well as Hon’ble High Court the penalty levied u/s 271(1)(c) is not sustainable having been become infructuous. - Decided in favour of assessee
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2019 (3) TMI 1540
Addition u/s 68 - refund of advance against property - onus to substantiate the identity, creditworthiness and genuineness of the transaction - HELD THAT:- It is not a case where there was no entry in the books of accounts of the assessee and an arbitrary addition was made. There was very much a credit entry in the books of accounts of the appellant, for which the AO asked the assessee to prove the identity, creditworthiness and genuineness of the transaction. Thus, in terms of the provisions of the Act where the duty is cast upon the assessee to discharge the onus of proving the identity, creditworthiness and genuineness, the ground of the assessee that the AO failed to bring any evidence on record is totally baseless and against the principles of law. It is noted that the assessee has not furnished any confirmation, any document to suggest any such transaction. The assessee has also not submitted the details of the property for which the advance was given. Even if as per the submission of the assessee, the assessee returned the original receipt to Mr. Niraj Jain, the assessee must have kept a photocopy of the same for records, further the assessee must be aware of the property for which such advance was given, furthermore, there should have been some MOU and Agreement to Sale disclosing the total consideration of the property at that time and other terms and conditions. However, nothing was placed on record by the assessee and he has failed to furnish even a single document on record to substantiate its stand. CIT(A) has rightly confirmed the addition - CIT(A) has rightly rejected the request of the assessee for cross examination of Sh. Niraj Jain. Therefore, no interference is required on my part in the well reasoned order of the Ld. CIT(A) on this issue, hence, I uphold the action of the Ld. CIT(A) on this issue and dismiss the ground raised by the Assessee. Reopning of assessment u/s 147 - issue of notice u/s. 148 of the Act after the period of four years without mentioning in the recorded reason that the escapement of chargeable income from tax was due to omission or failure on the part of the assessee to disclose fully and truly all material facts necessarily for assessment - HELD THAT:- The said ground was not argued by the Ld. Counsel for the assessee, hence, the same is dismissed as such. However, CIT(A) has rightly adjudicated the legal ground against the assessee of the impugned order which does not require any interference on my part. Addition as commission paid - HELD THAT:- Rate of commission has reasonably been estimated by the AO at the rate of 5% on the amount of accommodation entry and therefore, CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue in dispute and reject the ground raised by the Assessee.
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2019 (3) TMI 1539
TP adjustment - determination of ALP of payment of royalty - method or mechanism of determination of ALP - Assessee has entered into an international transaction of payment of royalty fee for use of trade name and trademarks applying the CUP method as most appropriate method - qualitative and quantitative filters applied by assessee - inadequate facts about the product comparability for technology for which trademark fees is paid as Royalty - HELD THAT:- During the course of hearing both the parties also submitted that identical issue is involved with respect to the determination of the arm’s-length price of the international transaction of the payment of royalty to associated enterprises in all those years from assessment year 2009 – 10 to 2012 – 13. Therefore, it was requested that if the issues remanded to the learned transfer-pricing officer then similar direction to both the parties may be given for all those years and all those appeals may be disposed of with respect to the above ground based on the above limited remand. Therefore, at the request of the parties we also agree to give similar directions for all these years. The transfer pricing study document prepared by the assessee for benchmarking the royalty payment does not inspire any confidence but merely eyewash. Therefore, in view of a) the inadequate facts about the product comparability for technology for which trademark fees is paid as Royalty b) Absence of availability of agreement between two foreign parties, as well as terms , economic indicators, risk etc c) No adjustment on account of geographical difference between two prices d) Use of database PowerK without justification and not using other specific databases e) Use of inappropriate filters Therefore, for all these years, i.e. A Y 2009-10 to 2012 – 13, We direct limited remand to the ld TPO to examine the comparability analysis for determination of the arm’s-length price of the royalty fees paid by the assessee. For the examination of the learned transfer pricing officer we direct the assessee to submit a fresh comparability analysis before the learned transfer pricing officer justifying the use of various database with the rationale for using them, justifying each and every filter that assessee would like to use, justify the various differences in the prices and it is adjustment to be made and all the necessary details before the learned transfer pricing officer on or before 15/04/2019.
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2019 (3) TMI 1538
Application u/s 158A - special provision for avoiding repetitive appeals - interest income received from the insurance company on MACT claim - Procedure when assessee claims identical question of law is pending before High Court or Supreme Court - Taxability of interest on compensation awarded by the Motor Accident Claims - as per assessee payment of interest received by the assessee cannot be taxed pending finalization of the dispute regarding accident insurance compensation on which the said interest was granted - claim not accepted by the AO for the reason that the said interest income has already been credited in favour of the assessee and TDS has been deducted therefrom - HELD THAT:- The question relating to taxability of interest on compensation awarded by the Motor Accident Claims Tribunal is identical to the question of law framed for adjudication before the Hon’ble Supreme Court in assessee’s own case. Therefore, we admit the claim of the assessee in terms of section 158A(3) of the Act. Given that the matter is currently pending adjudication before the Hon’ble Supreme Court, the Assessing officer is directed to apply the directions of the Hon’ble Supreme Court as soon as the same is pronounced in the present case. The matter is accordingly set-aside to the file of the AO with the above directions. - Appeal of the assessee is allowed for statistical purposes.
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2019 (3) TMI 1537
Transfer pricing adjustment of Technical Assistance fees and project management services - capitalized as project not claimed as expenditure - Arms Length Price determination - TPO determine ALP at ‘Nil’ - HELD THAT:- It is an undisputed fact that the assessee has not claimed the expenditure toward payments of Technical Assistance fees and Project Management fees. The assessee has capitalized the same as the project was not complete in the period relevant to the assessment year under appeal. The capital transactions are outside the purview of Transfer Pricing mechanism. Having observed that, there is no denying the fact that in the subsequent years the assessee would be claiming depreciation on the cost of capital asset which would include payment of fees for Technical Assistance and Project Management. Therefore, determination of ALP of such services in the year of payment of such fees would be relevant. The Delhi Bench of the Tribunal in the case of Honda Motorcycle & Scooters India Pvt. Ltd. Vs. ACIT [2015 (4) TMI 502 - ITAT DELHI] has held that determining of ALP in respect of purchase of fixed assets is necessitated as in the subsequent years the value of transactions will have bearing when depreciation is claimed. TPO in the instant case at the outset had determined the services i.e. technical assistance and project management services at ‘Nil’ without determining ALP of the transactions, hence, we deem it appropriate to restore the ground No.1 and 2 of the appeal back to the file of TPO/Assessing Officer to ascertain the ALP of the transactions by adopting most appropriate method prescribed under the Act. The assessee is granted liberty to furnish necessary documents to further substantiate rendering of technical assistance and project management services by AEs to the assessee. Ground raised in the appeal by assessee are allowed for statistical purposes. Rectification of mistake u/s 154 with respect to the amount of fees paid for project management services - against Project Management Services the TPO has made upward adjustment of ₹ 1,54,78,224/- in respect of project management fees considering it as ‘Nil - HELD THAT:- It is not emanating from the orders as from where the TPO has picked the figure of ₹ 1,54,78,224/-. As per the contentions of the ld. AR the table at page 2 of order by TPO is from TP Audit Report. The TPO/ Assessing Officer is directed to look in to the discrepancies of the amount mentioned in table at page 2 and adjustment proposed by the TPO qua project management services and rectify the mistake, if any. Accordingly, additional grounds of appeal raised by the assessee are allowed for statistical purposes.
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2019 (3) TMI 1536
Income recognition - accrual of income under the mercantile system of accounting - bills were not raised on the customers for value of services which had already accrued - application of AS-9 - difference between concept of value of service for the purpose of levy of service tax and total income for the purpose of levy of income tax - HELD THAT:- There is no dispute that under mercantile system of accounting debit of value of services was not because of non-accrual of income but only because bills were not raised on the customers for value of services which had already accrued. The fact that bills were not raised does not stop accrual of income under the mercantile system of accounting. Therefore the claim of the Assessee which is purely based on AS-9 is not sustainable and the action of the revenue authorities in making the impugned addition was justified. The aforesaid observations will hold good only for AY upto AY 2012-13 because Sec.145 of the Act has undergone some statutory amendments and the position after such amendment is not and cannot be subject of decision in this appeal. The fact that value of services recognised for the purpose of levy of service tax is not relevant in the context of computation of total income for the purpose of levy of income tax under the Act. The concept of value of service for the purpose of levy of service tax and total income for the purpose of levy of income tax are different and are determined on relevant statutory provisions applicable. Income recognition of which was postponed by the Assessee by following AS-9 cannot be regarded as income in the year in which it is offered to tax by the Assessee, because the law is well settled that same income cannot be taxed twice. The burden will however be on the Assessee to show as to how the income offered in a later assessment year was income which was not recognised in earlier Assessment year by reason of application of AS-9. - Decided against assessee.
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2019 (3) TMI 1535
Disallowance on account of M.O. Commission paid and Cessation of liability u/s 41 - partially rejection of books - estimation of profit being 2% of total sales - trading Addition - HELD THAT:- It is nowhere mentioned that the AO can reject the books of accounts partially. It is also an undisputed fact there was a single set of books of accounts maintained by the assessee. The income shown by the assessee in the instant case can be bifurcated without much effort i.e. trading business and the commission business. But when the issue comes to bifurcate the expenses which have been incurred combinedly for both the sources of income, we find that it is not easy rather impractical to bifurcate the expenses. Assessee did not earn commission income just by making any reference or it was not just the brokerage income earned by arranging a deal between two parties. The assessee to earn commission income has to put continuous efforts by employing a lot of resources of workforce, infrastructure facilities etc. Therefore, it can be inferred that the gross commission income does not represent its full income or major income. AO has treated all the expenses claimed by the assessee against the commission income. Thus the overall position shows that the assessee has to incur expenses against the commission income. We are of the view that the books of accounts of the assessee cannot be rejected partially. It is because the assessee incurred the expenses for it’s both the activities and there were no separate books maintained by the assessee separately for it’s both sources of income. Thus we are of the view that the books of accounts of the assessee cannot be rejected partially in the given facts & circumstances. However, if the books of the accounts are rejected then the income from both the sources needs to be estimated. As there is no dispute that both the sources of income of the assessee, as discussed in the preceding paragraph, cannot fetch the same rate of profit in the event of the rejection of the books of accounts. It is because the nature of both the sources of income is different and distinct from each other. Thus the question arises what should be the rate of profit in the case of commission business. For this purpose we deem it fit to restore this issue to the file of AO for fresh adjudication in the light of the above discussion and as per the provisions of law. Also find pertinent to direct the AO to estimate the income in respect of commission business at the gross commission income declared in the form 26AS as discussed above. The AO will not make any separate addition for the commission income directly paid by Binani Ltd to Shiv & Associates. Also direct that there will not be any separate addition under the provisions of section 41(1) of the Act as made by the AO in the assessment proceedings. It is because the assessee has not written off its liabilities in its books of accounts. Once the books got rejected, then there will not be any separate addition under section 41(1) of the Act. Decided partly in favour of assessee for statistical purposes.
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2019 (3) TMI 1478
Stay of recovery - non speaking order rejecting stay petition - HELD THAT:- AO ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. Notwithstanding that the assessee may not have specifically invoked the three parameters for the grant of stay, it is incumbent upon the assessing officer to examine the existence of a prima facie case as well as call upon the assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. see decision of MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR [2019 (3) TMI 1 - MADRAS HIGH COURT] Thus set aside the impugned order dated 07.02.2019, as being mechanical and passed without application of mind. In the light of the above, the Writ Petition is disposed in the following terms: i) The petitioner will appear before the Principal Commissioner of Income Tax-1, the first respondent herein, on 08.03.2019 at 02:30 pm along with a stay petition covering the three (3) aspects as referred to aforesaid. ii) After hearing the petitioner, the Principal Commissioner of Income Tax shall pass a reasoned and speaking order in accordance with law and in accordance with the circulars issued by Central Board of Direct Tax (CBDT) within a period of two (2) weeks from the date of conclusion of the personal hearing i.e. on or before 22.03.2019.
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2019 (3) TMI 1477
Stay of demand - rejection of application for stay of demand stating application as perused but it cannot be considered and directed to remit 20% of the disputed demand on or before 11/02/2019 - HELD THAT:- The manner of disposal of the Stay Petition leaves much to be desired insofar as the order is wholly non-speaking. Accordingly, there shall be an order of interim stay as prayed for, for a period of two (2) weeks
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Customs
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2019 (3) TMI 1534
Release of consignments - “Yellow Peas” imported by the petitioner's Proprietor Firm - issuance of “Detention Certificate” for waiver of Demurrage and Container Detention Charges in terms of Regulation 6(1)(1) of Handling of Cargo in Customs Areas Regulations 2008 - Held that:- The petitioner will remit the entire duty component of the consignments imported by him in case were such duty is leviable as per paragraph 15(iii) above along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignment shall be released forthwith. Waiver of Demurrage and Container Detention Charges - Held that:- In the light of Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off.
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2019 (3) TMI 1533
Compliance with the mandatory pre-deposit - demand of penalty during the pendency of the appeal - Section 129-E of the Customs Act, 1962 - Held that:- A simple reading of the section shows that the deposit of seven and a half per cent appears to a condition which has to be complied with for filing the appeal - Learned counsel for the petitioner fails to satisfy us that the appellate authority has a power to relax that condition. Concededly, the petitioner has not filed the appeal complying with the said provision. The writ petition disposed off leaving it open to the petitioner to move an appropriate application before the first respondent.
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2019 (3) TMI 1532
Valuation - Import of software - mode of import of software - inclusion of value in the assessable value - Held that:- The appellants have imported equipment wherein the software was preloaded. There was no separate mode in which software was imported. Therefore, as held by the Tribunal in Bhagyanagar Metals Ltd. [2016 (2) TMI 614 - CESTAT HYDERABAD], the Customs authorities have included the value of the same in the assessable value and the appellants have paid duty on the same and have availed credit of CVD on the same. As per the process undertaken by the appellant, it is seen that they are not making any changes in the chip that is imported. As per the submission of Shri. B. Sreenivasappa, the basic software was along with complete hardware on a separate CD. However, the facts of the case also indicate that no separate CD‟s/media were supplied and the software was loaded on the flash memory of the chip and IC. No other mode function software was imported and no other mode is being supplied to their customer that is BSNL separately. Therefore, whatever software that has been imported is remained in the system and is not separated before delivery of the equipment to M/s. BSNL. Therefore, the transaction is inclusive of the software that is loaded by ZTE Corporation prior to supply of goods to the appellants for import. The appellants have contested the use of words firmware by the learned Commissioner. Whatever be the connotation of the software the important point to be seen is whether or not the same is preloaded, embedded etc in the equipment. Such a system with preloaded software has certainly more intrinsic value then a system which is not loaded with the same. Therefore, the essentiality test is to see the condition in which the system or equipment is cleared from the factory - In the instant case, the equipment were preloaded with the software and CVD was paid on the value which included the value of software. Therefore, such software irrespective of its nomenclature has become integral part of the system or equipment and has enhanced the intrinsic value of the system or equipment. The appellants are under a contract with the Government company i.e., BSNL. They have claimed that in terms of the contract, they were billing the hardware and software separately. The Customs authorities have rightly held that the splitting up of value between hardware and software was not correct and the goods must be valued as per the transaction value - BSNL being a Government Company, which cannot be alleged that they have colluded with the appellant in erroneously splitting the value of the hardware and software component. Time limitation - Held that:- The impugned show-cause notice was issued to the appellant on 01.12.2005 after a lapse of long time. In view of this we find that the appellants‟ submissions on limitation are valid. Penalty - Held that:- No suppression or intent to evade duty can be inferred from the case records and circumstances - Consequently, the penalty imposed under Section 11AC is not maintainable. Appeal allowed in part.
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2019 (3) TMI 1531
Revocation of CHA License - forfeiture of security deposit - imposition of penalty - whether the appellant has indeed sublet his license to Shri Uma Mahesh who has filed the shipping bills in question in respect of their exporters without verifying the antecedents? - Held that:- The amount which is transferred to the appellant every month matches with the amount which he said was the fee he pays for subletting the license of the appellant. If the appellant had, himself, filed the shipping bills for the parties in question, he would have had to verify the antecedents of the exporters or at least their existence. If the exporters did not exist at the address indicated therein he should not have filed the shipping bills - there is strong force in the contention of the revenue that appellant had indeed sublet his license for the shipping bills in question to be filed. Shri S. Uma Mahesh had in fact indicated that he runs a separate company by name M/s VD Logistics which runs the business on its own using the license of the appellant. Retraction of statement during the cross examination - Held that:- When Shri S. Uma Mahesh had retracted the statement during the cross examination, it would have been proper for departmental officers to have further questioned him about the amounts being transferred at the rate of ₹ 25,000/- per month. When he said that he had not paid any amount to the appellant he should have been confronted with the bank transfers to establish that the license was, indeed, sublet to him by the appellant - we give the benefit of doubt to the appellant that he had, himself, got the shipping bills filed using the services of Shri S. Uma Mahesh. If that be so, the appellant has failed in discharging his obligation under Regulation 11(a) of CBLR, 2013 in not verifying the antecedents of the exporters and Regulation 17(a) in not supervising the work of his employees. For these violations, the penalty of ₹ 50,000/- imposed upon the appellant under Regulation 22 of CBLR, 2013 appears sufficient. On payment of the penalty, the appellant s license will stand restored and the forfeiture of the security deposit also stands set aside. Appeal allowed in part.
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2019 (3) TMI 1530
Refund of SAD - rejection on the ground of time-barred - N/N. 102/2007-Cus. - Held that:- The date of filing of application before the Dadri Commissionerate is to be taken for the purpose of computation of refund claim on SAD - Another aspect which is required to be placed on record is inaction of the departmental authorities on the said refund application filed in Dadri Commissionerate, for which five months were unnecessarily wasted and had it been the jurisdictional authority, Government of India would have been burdened with payment of interest on late disposal of the refund claim. No finding is available in the order of the Commissioner (Appeals) as to why such application was forwarded after more than 5 months after payment of SAD has been wrongly made to Dadri authorities and on that count the applicant would suffer the financial loss when the fault lies at the end of the departmental authority in not acting upon properly. The appellant is entitled to get refund of ₹ 12,62,790/- paid on SAD along with applicable interest and the respondent-department is directed to pay the same within three months from the date of communication of this order - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1529
Smuggling - Prohibited item - Gold Bars - demonetized notes - skoda car - case of Revenue is that since the seized gold cannot be identified with any legitimate purchases, hence the same has been rightly confiscated being of prohibited and smuggled nature - Held that:- The documents produced by the Appellant clearly show that the gold was legally procured by the Appellant. M/s Diamond India Ltd. has confirmed the goods to be sold by them. The revenue has not adduced any evidence nor it came during the entire investigation that the gold was procured from elsewhere i.e. other than M/s Diamond India Ltd. When once the nominated agency has certified and it is apparent from the records that the goods were procured legally, the burden lies upon the revenue to show that the gold was procured from elsewhere or to show that the documents/ records produced before them are false/ fabricated. It is also a fact that the Appellant had procured gold after discharging their export obligation and therefore the confiscation of gold on the ground that the Appellant has not discharge their burden of showing legal acquisition of gold is not sustainable. The adjudicating authority has contended that the travelling voucher shows that the travelling was to be made by bus whereas the gold was carried in car. We found that it is not such an anomaly which could lead to otherwise inference of gold being smuggled can be drawn. The gold was exported at the NRC rate which was agreed at the time of export and even the gold was procured by the Appellant at same rate as NRC. The final invoice of M/s Diamond (India) Ltd and the invoice of appellant were matching in all details except the conversion rate which clearly shows that the seized gold was against the export invoice of Appellant. Confiscation of 1000.009 gms of gold bearing serial no. scratched, the ownership of which has been claimed by Shri Satish Mehta and seized from possession of Smt. Seema Mehta - Held that:- Shri Mukesh menon is employee of the Appellant and Smt. Seema Mehta is relative of Shri Nitin. Further all the purchase documents were produced before the investigating authority but the same were nor alleged to be false/ fabricated. No investigation was conducted at M/s Kaka Gold to show otherwise. Therefore, there is no reason to confiscate the said gold bar. Confiscation of 100.001 gms of gold serial no. AG 190942 owned by Appellant Shri Satish Mehta and seized from M/s PGP Joyeria - Held that:- That the invoice was issued by M/s Raksha Bullion on 20.10.2016 whereas the gold was seized on 13.11.2016 and it would not be possible for jeweller to hold goods for so long period. We find that the above instance cannot be reason to hold that the goods are of smuggled nature. The Appellant has produced the invoice No. 1995 dated 20.10.2016 of M/S Raksha Bullion. Out of this part quantity was handed over to Shri Prakash Duggar under Transfer voucher dated 12.11.2016 for giving delivery to M/s PGP, Ahmedabad for manufacture of jewellery. There is no contrary evidence to this fact. Also the one month gap between the purchase of gold and sending it for manufacture of jewellery cannot be held to be basis of confiscation of gold on the ground of same being illegally procured - there is no reason to confiscate the seized gold. Confiscation of quantity of 190.002 gms of gold said to be owned by Appellant Shri Satish Mehta and seized from PGP Joyeria - Held that:- The purchase invoice of gold issued by TBZ was addressed to Alma Jewels which is brand of PGP. Even if there is a meagre difference of some milligrams it cannot be said that the gold was procured illegally. Also the revenue has not shown otherwise procurement of goods from the statement of any persons. Thus the above grounds taken by the adjudicating authority cannot be ground for confiscation. A quantity of 4 half cut pieces weighing 505 grams recovered from possession of Smt. Seema devi and said to be owned by Shri Satish Jain has been ordered to be confiscated on ground that the purchase invoice no. 19110964 dated 11.11 2016 issued by M/s TBZ is not fool proof evidence of legitimacy and the travel voucher shows the weight of gold pieces as 505.470 gms whereas the seized gold pieces 505 gms - The travelling documents i.e. Travelling Voucher and transfer note were issued for such transfer which shows that the gold was legally acquired. There is no statement of any person that the gold is of smuggled nature and hence there is no reason to confiscate the same. The confiscation of seized gold and the skoda car in which some of the gold was carried is not correct - confiscation set aside - penalty also set aside - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1528
Rectification of mistake - errors apparent on the face of record - Held that:- The instrument for rectification is to emend errors apparent on the face of the record. In the light of mere cursory reference in the written submission to the plea of refund of additional duties of customs, we find no reason to accept the contention that the findings in the impugned order require to be reheard - ROM Application dismissed.
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2019 (3) TMI 1527
Suspension of CHA License - the appellant had forfeited his right of challenge by not seeking appellate remedies when the tentative order of suspension under regulation 19(1) of Customs Broker Licensing Regulation, 2013 was served on them - Held that:- It would have been impossible for the appellant to challenge the prima facie order of suspension as he was yet to be granted an opportunity to be heard; it is only upon confirmation of the order of suspension that an appeal would lie. The contention of Learned Authorised Representative is not acceptable. The need for immediate action, which is a necessary pre-requisite for invocation of regulation 19 of Customs Broker Licensing Regulation, 2013, was a figment for visiting this detriment on the appellant without justifiable cause - It was patently incorrect on the part of the competent authority to consider this to be a ground for suspension, and more so, as suspension is a preliminary for revocation and revocation is a consequence of circumstances enumerated in regulation 18 of Customs Broker Licensing Regulation, 2018. There has been a perverse resort to the statutory powers without the competence to do so. Such whimsical action is deplorable. The order of suspension is revoked.
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2019 (3) TMI 1526
Principles of natural justice - DEPB license - order passed ex-parte without hearing and allowing cross-examination - Held that:- It is clear that the appellants are not serious and intend to complete the de novo adjudication proceeding by rebutting the allegations leveled against them and comply with direction of the order of this Tribunal. No doubt reasonable opportunity be allowed to the appellants to attend in person the case and advance their argument, but in the present case, the appellants had purposefully evaded the opportunities allowed to them to present their case and further opportunities will cause injustice to the Revenue - Appeal dismissed - decided against appellant.
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2019 (3) TMI 1525
Export of Iron ore concentrates - benefit of N/N. 62/2007-Cus dated 3.5.2007 - appellants contend that Iron ore concentrate is nothing but enriched and prepared ore and covered by the word Ores appearing in T1 26; Ore is the genus and concentrate is the species. Whether the iron ore concentrate exported by the Appellants can be treated as Iron Ore and whether the Appellants are eligible for the N/N. 62/2007-Customs dated 03.05.2007? Held that:- The Appellants sister concern is engaged in carrying on the business of Iron Ore mining and export of Iron Ore as such or after processing. This activity generated large quantities of tailing / waste and rejects which have no commercial value due to low Fe contents and thus unviable for both exports and domestic application. The Appellants have made use of this waste abundantly available and having a low range of Fe i.e. 30 to 40% into a commercially viable one. For this they have adopted the process of beneficiation and magnetic separation of the particles having very low Fe contents. The aforesaid activity resulted in Iron Ore concentrates which the Appellants declared to be Iron Ore concentrates. These processes apparently are not those which are not normal metallurgical operations so as to take the product away from the domain of Chapter 26 and they do not alter any chemical composition. It is pertinent to note that the application made by the Appellants to set up a 100% EOU for export of Iron Ore having Fe contents + 58%. The project report further mentions that the unit would concentrate the Iron Ore - the process undertaken by the Appellants are not those which are not normal to the metallurgical industries - In view of the Chapter notes to Chapter 26 of Custom Tariff Act, 1975, it has to be concluded that Ores includes concentrates. Therefore the benefits of notification 62/2007 is applicable to concentrates also. Having held that the exemption available to Ore is also available to concentrates, the procedural infractions cannot take away benefit when substantial compliance is not disputed and when the Tariff recognizes the description mentioned in the Notification and the description mentioned in the Shipping Bill and Other Documents. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (3) TMI 1524
Corporate insolvency process - proceedings to be transferred from BIFR authorities to NCLT authorities - Whether the present Section 10 application is to be treated as continuation of BIFR proceedings on repeal of SICA ? - Whether the DRS Scheme is to be treated as a resolution plan for the revival of this corporate applicant? - Whether this petition deserves admission?whether ‘Corporate Person’ U/s 3(7), having outstanding debts, therefore, falls within the definition of ‘Corporate Debtor’ U/s 3(8) & there was a ‘Default’ of non-payment of outstanding debt as per the terms of Sec. 3(12)? HELD THAT:- Due to the repeal of SICA Act the proceedings pending stood abated. On abatement, the proceedings pending are required to be transferred to NCLT within 180 days. So, the Petitioner had no option but to take action by filing a petition U/s 10 of the Insolvency Code. As a consequence, filed this petition on 12.12.2018 with all necessary information such as the position of financial debts and the step taken under SARFAESI provisions. Simultaneously, this petitioner has to inform the Adjudicating Authority the steps taken before BIFR Authority so that a due cognizance of resolution plans, earlier submitted, can be/ must be taken into account. It is correct on the part of the Corporate Debtor/Applicant to move separately an application U/s 30 of IBC which is meant for “submission of resolution plan”. This Applicant has made an attempt by filing this Application to place on record the ‘Resolution Plan’ already considered and taken into account by the BIFR Authorities. There should not be any ambiguity that once the proceedings are to be transferred from BIFR authorities to NCLT authorities, it is but natural that those resolution plans must also be treated as transferred and thereupon ought to be treated as “resolution plan” falling within the ambits of S. 30 of the Code. As far as the petition U/s 10 is concerned, it is almost mechanical for the Adjudicating Authority to admit the same because in all such cases there is hardly any objector. Same is the position at present. On admission, Corporate Insolvency Resolution Process shall commence henceforth, and IRP shall be appointed. He shall constitute COC and convene the meeting. For the purpose of collection of necessary details for preparation of “Information Memorandum” as prescribed U/s 29 of the Code, it is hereby directed that the Corporate Debtor /petitioner shall immediately furnish the documents and financial data to the appointed IRP so that the requisite information memorandum can be prepared and to be placed before the COC. This Bench is of the view that there is no requirement of publication to invite EoI. It can be said to be a path-breaking view, but according to my understanding, it is the only recourse available because in this case that exercise had already been completed under SIC Act. There is no requirement for inviting Resolution Plans in this case - the situation in this case is that a Resolution Plan is already in existence. Not only that the said resolution plan is in existence, but it was duly acted upon. The said resolution plan was already considered by the bankers during SARFAESI proceedings. Those very bankers are now going to constitute CoC under Insolvency Code. This very ‘Consortium’ has already acknowledged and accepted the resolution plan, hence, the right recourse available is to consider that Resolution Plan as if a resolution plan U/s 30 of the Code. Whether this petition be admitted or not stands answered in view of the fact that the petitioner being a ‘Corporate Person’ U/s 3(7), having outstanding debts, therefore, falls within the definition of ‘Corporate Debtor’ U/s 3(8) & there was a ‘Default’ of non-payment of outstanding debt as per the terms of Sec. 3(12). Therefore, this petition is fit for admission U/s 10 of the Code.The Petition is hereby “Admitted”. The commencement of the Corporate Insolvency Resolution Process shall be effective from the date of order.
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2019 (3) TMI 1523
Corporate Insolvency Resolution Process - claim hit by non-existence of debt - HELD THAT:- As to the understanding between the Operational Creditor and the Corporate Debtor, this Corporate Debtor placed Purchase Order for the material and on supply of such material, the Operational Creditor raised invoices against the Corporate Debtor, subsequent thereof, the Corporate Debtor confirmed the claim amount on 20.02.2018, not only that, the corporate debtor made promises that it would soon pay the dues to the operational creditor, indeed the Corporate Debtor made part payment of ₹ 35,37,499. By this, it is evident that the claim of the creditor is established with replete of proof disclosing existence of Operational Debt and default of operational debt. No whisper from the Corporate Debtor regarding alleged non existence of debt until after receipt of Section 8 Notice by the Corporate Debtor. All agreements the Corporate Debtor entered into with group companies and correspondence in respect to other transactions will no way cast any doubt over the existence of debt or default. In view thereof, the material subsequently set out by this Corporate Debtor pales into insignificance as against the proof of existence of debt and default against the Corporate Debtor established by the Operational Creditor. Accordingly, for the reasons aforestated, this Company Petition is hereby admitted by appointing Mrs. Jayashree S Iyer (Reg. No. IBBI/IPA-002/IP-N00741/2018-2019/12211) as the Interim Resolution Professional by declaring moratorium u/s 14 accordingly.
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2019 (3) TMI 1522
Corporate Insolvency Resolution Process - Application u/s 9 of I&B Code preferred by Operational Creditor admitted - order of ‘Moratorium’ has been passed and ‘Interim Resolution Professional’ has been appointed - whether there is a debt payable by the ‘Corporate Debtor’ and whether there is an existence of dispute? - HELD THAT:- The Adjudicating Authority having noticed that there is debt payable which is more than ₹ 1,00,000/- and in absence of any existence of dispute rightly admitted the application under Section 9 of the ‘I&B Code’. At this stage, learned counsel appearing on behalf of the Appellant submits that the Appellant is ready to settle the matter with the ‘Operational Creditor’. However, even after such settlement, we cannot set aside the impugned order to give any relief to the ‘Corporate Debtor’. In fact, the appeal at the instance ‘Corporate Debtor’- ‘AP Coated Drums and Barrels Pvt. Ltd.’ is not maintainable in the light of the decision of “Innoventive Industries Limited” [2017 (9) TMI 58 - SUPREME COURT OF INDIA]. While no relief can be granted in this appeal, make it clear that this order will not come in the way of any other person to move an appropriate application before the ‘Committee of Creditors’ under Section 12 A of the ‘I&B Code’ for appropriate relief.
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2019 (3) TMI 1521
Financial Creditor reinitiate the Insolvency Resolution Process under Section 7 against the Corporate Debtor - HELD THAT:- A limited notice should have been issued by the Adjudicating Authority and on hearing the parties order of admission or rejection should have been passed. Admittedly, in this case, such procedure was not followed by the Adjudicating Authority and for said reason, the impugned order dated 28th September, 2018 being violative of principle of natural justice, we set aside the said impugned order. In view of the Letter of Settlement, we are not remitting the matter to the Adjudicating Authority. However, on failure to act as per settlement, it will be open to the Financial Creditor to reinitiate the Insolvency Resolution Process under Section 7 against the Corporate Debtor. Order(s) passed by Adjudicating Authority appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of account and all other order(s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’, including the advertisement, if any, published in the newspaper calling for applications and all such orders and actions are declared illegal and are set aside. The application preferred by Respondent is dismissed. AR will close the proceeding. The ‘Corporate Debtor’ (Company) is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect. The Adjudicating Authority will decide the fee of ‘Interim Resolution Professional’ and the actual expenditure to which he is entitled and the ‘Corporate Debtor’ will pay the same. The appeal is allowed with aforesaid observations.
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2019 (3) TMI 1520
Corporate Insolvency Resolution Process - Whether dispute of VAT do not come under the definition of “Dispute” under the Insolvency and Bankruptcy Code? - allegation made by the Corporate Debtor that the Operational Creditor has not paid the sales tax collected from the Corporate Debtor into the Government treasury - whether there is a default of the operational debt of ₹1,00,000/- or more to be paid? - HELD THAT:- This Adjudication Authority is only required to ascertain whether there is a default of the operational debt of ₹1,00,000/- or more to be paid. It is evident from the fact that the default of the operational debt is more than ₹1,00,000/-. Therefore, the plea taken by the Corporate Debtor in respect of VAT is not sustainable. The dispute about non depositing of the VAT amount after its collection is a different issue,but this issue is not covered in the definition of existing dispute. However the issue of VAT has been raised only after receiving the demand notice, which shows that issue of VAT has been raised for creating the defence. The Demand notice demanding payment was served upon the Corporate Debtor, after that, the Corporate Debtor had filed reply to the Demand Notice wherein it had admitted that that it has to pay the Principal amount to the Operational Creditor. As appears from the record that the Corporate Debtor having defaulted in making payment to the operational creditor.As discussed above there being no dispute in respect of the quality of goods or service, the dispute which has been raised after receiving the demand notice is not covered under the meaning of existence of dispute given in the case law of Mobilox supra.Thus saying that dispute is in existence in respect to the services provided by the Operational Creditor is not sustainable. Petition filed by the operational creditor for initiation of Corporate Insolvency Resolution Process is admitted.
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2019 (3) TMI 1519
Initiating Corporate Insolvency Resolution Process - default in repaying the loan availed by the corporate debtor - default in repayment of the monthly instalment due and payable by the Corporate Debtor to the Financial Creditor - HELD THAT:- The existence of default stand proved in this case. So also financial creditor produced Form-2 along with the written communication to prove that no disciplinary proceeding is pending against the proposed Interim Resolution Professional. The corporate debtor in the instant case did not turn up to contest the petition. The applicant has produced all the required documents. The existence of default also stands proved. The applicant herein, in this case, succeeds in proving that it has complied with all the requirements to be meted out under Section 7(3) of the I & B Code, 2016. Therefore, the application is liable to be admitted. Accordingly, this application is admitted .application filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Downtown Temptations Private Limited is hereby admitted.
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FEMA
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2019 (3) TMI 1518
Offence u/s 3(a) of FEMA - domestic supply of goods in India against amount received in foreign exchange from the overseas buyer - no general or special permission of Reserve Bank dealt in receipt of foreign exchange - Proof of compilation of conditions prescribed under Regulation 12 - HELD THAT:- It is the obligation of the Authorised Dealer to ensure compliance of all conditions before acceptance of documents for negotiations. It is a matter of fact that Letter of credit opened by the overseas buyer was negotiated by the Authorised Dealer against Shipping Bill No. 1862349 dated 30.07.2002, therefore presumption must be that all conditions prescribed under Regulation 12 has been duly complied including the condition with respect to SDF. In absence of any evidence, it cannot be assumed that Authorised Dealer has accepted the shipping documents without SDF. And even no action was taken against the Authorised Dealer if there was no compliance of about SDF. Once the said stand is taken, the onus is on the on the Directorate that Padmaja was allowed export without filing of SDF, and also documents were negotiated by the Authorised Dealer without SDF. In the present case, export proceeds to the full extent of value of shipping bill were realised and repatriated and even penalty amount of ₹ 23 Lakhs has been deposited on behalf of Padmaja in case of any breach. It is a settled principle of law that the procedures have been prescribed to facilitate verification of substantive requirement, as long as a fundamental requirement is met other procedural deviation can be condoned. As far as the Appellant No. 2 is concerned, Appellant No. 2 guilty although there is no evidence against him. As the burden of proof to show contravention of a particular statutory provision is on the Respondent and not the Appellants. In the impugned order, the understanding between the two set of parties and evidence produced have not been dealt properly. On August 2018, the Hon‟ble Tribunal desired to know as to whether Shri Gangadharan Manari, proprietor of M/s Padamja Impex has deposited the penalty amount of ₹ 23,00,000 (Rupees Twenty Three Lakhs Only) or not. Appeals filed by the appellants are allowed. The impugned order against the appellants is set-aside.
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2019 (3) TMI 1517
Violation of S.18 of the FERA - non-recovery of the export proceeds relating to various items of exports made to Iraq, USSR etc. - waiver applications pending - penalty imposed on the Appellant Company for the alleged violation - personal penalty on directors - Held that:- No penalty could be imposed in respect of outstanding recovery from Iraq for which extension of time had already been granted and the extended time was not yet over. No penalty could also have been imposed for outstanding amounts from other 5 countries in respect of which waiver application was pending. The appeal filed in the appellant-Hindustan Lever Ltd. is allowed in the light of above said facts. Personal penalty on directors - As mentioned a penalty of ₹ 25 Lakhs was also imposed in respect of each of the 3 Directors - NO PENALTY COULD BE IMPOSED ON THE DIRECTORS The penalty of ₹ 25 Lakhs each imposed in respect of the 3 Directors are also liable to be set aside. Firstly, the appellants have filed an affidavit in this regard. In para 5 of the said Affidavit, at pg. 4 it is clarified that the 3 Directors were not in-charge of Exports. Mr. Buckle the 3rd Director was not even a Director during the relevant period. (He took charge of the office with effect from 1.1.93 when the exports are within the period 1982 to 1991.) (See para 3(i) at pg. 2 of the said affidavit). The details regarding the other two Directors are also set out in the said Affidavit. In the Show Cause Notice dated 25.11.1993 only the names of the aforesaid 3 Directors are mentioned. Their names are included only on account they being Directors. No further allegation or statement is made as to ‘how’ they were in-charge and were responsible to the Company for the conduct of business of the Company in relation to such exports and the recovery of the amounts in relation thereto, as contemplated under Section 68. It is settled law that mere repetition of the language of the Section in the Show Cause Notice is not enough. Unless it is specifically stated as to how the said Directors are responsible and in-charge of, as contemplated in Section 68. In the light of settled law, the impugned order with regard to penalty imposed to three directors is also set-aside. Appeal allowed.
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PMLA
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2019 (3) TMI 1516
Offence under PMLA - attachment orders - Special Court has initiated the proceedings in the present case and taken cognizance - HELD THAT:- Section 8 deals with adjudication by the adjudicating authority which as per Section 8(3) authorises, the adjudicating authority to confirm the attachment of the property if it is involved in money laundering. Hence, while the attachment powers are with the adjudicating authority the power to confiscate, release or restore to a claimant of the said property lies specifically with the Special Courts. This Tribunal has not been assigned any specific powers under PMLA with relation to confiscation, release or restoration of the property attached. Since the Special Court has initiated the proceedings in the present case and taken cognizance of the same, the Special Court has to decide the case including the offence of money laundering as discussed above, which in any case only the Special Court can decide and not the Appellate Tribunal. The scheme of things as it exists under the PML Act shows that it is the same property which can be provisionally attached, thereafter this attachment can be confirmed by the adjudicating authority, that the order with regard to the same property would become final after an order of confiscation is passed by the Special Court (Section 8(3)(b), or released or restored as per Section 8(6) or Section 8(8) second proviso as the case may be. In this background, it would be appropriate to keep this appeal in abeyance until the Special Court, who has already taken cognizance finally disposes of the case
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Service Tax
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2019 (3) TMI 1515
Liability of service tax - sob-contractor - payment of service tax by the main contractor - site formation service - mining service - service tax paid by main contractor - Whether the CESTAT is right in holding that the service tax paid by the main contractor on behalf of the party can be treated as payment made by the party when the service tax law in the instant case, provides for assessment and payment of the due tax by the service provider? Held that:- Since the payment made by the main contractor had not been disputed by the revenue, it was treated as payment made by the assessee. Further, in view of Section 97 of the Finance Act, 2012, it was recorded that the assessee was not liable to pay service tax on the activity of maintenance and repair roads and demand on this account was set aside. As a result, the matter was remanded back to the adjudicating authority for verification purposes whether the assessee paid service tax for the remaining part of the demand. Learned counsel for the appellant revenue has not been able to point out any error or illegality in the findings recorded by the Tribunal, warranting interference by this Court - Appeal dismissed - decided against Revenue.
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2019 (3) TMI 1514
Rectification of mistake - it was alleged that the issue not considered in proper perspective - apparent error on the face of record or not - Held that:- On perusal of the order dated 10.04.2018 vis-à-vis the proposals made in the show cause notice, we find that the Tribunal has not discussed about the applicability of the provisions of clause (zx) of clause (105) of Section 65 ibid to the facts of the present case - there is apparent mistake in the order dated 10.04.2018, which can be called for rectification - ROM application allowed.
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2019 (3) TMI 1513
Imposition of penalty - Non-payment of service tax - Construction services under the Works Contract - bonafide belief - issue under confusion - no intent to evade - Held that:- Indubitably, there was confusion in respect of taxability on composite works contract service, under the category of CICS, which was only laid to rest by the Hon'ble Supreme Court in CCE Vs. Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT] - It is also pertinent to note that the appellant did not collect tax from their service recipients and that they have paid up the tax liability immediately on pointed out. There is a definite case for waiver of penalty under Section 80 of the Act ibid - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1512
Valuation - Commercial or Industrial Construction Service - quantum of abatement - N/N. 15/2004-ST dated 10.09.2004 and N/N. 01/2006 dated 01.03.2006 - no reasonable opportunity for personal hearing accorded to appellant - principles of natural justice - Held that:- Although personal hearing was adjourned on two occasions (to 21.07.2011 and 25.08.2011), there does not seem to be any evidence in the Order that a third opportunity was provided after receipt of the relied upon documents as permissible by proviso to Section 33A (2) of the Central Excise Act, 1944, as applicable to service tax matters. This being the case, the impugned Order suffers from lack of natural justice accorded to appellants to present their case. It is proper to remand the matter back to the adjudicating authority for de novo proceedings - appeal allowed by way of remand.
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2019 (3) TMI 1511
Condonation of delay in filing appeal - time limitation - Held that:- The delay ranges between the period from 123 to 129 days. The reason of delay explained by the appellant seems reasonable and accordingly, the delay in filing the appeals before the Tribunal is condoned. Appeals dismissed on the ground that the appeals were filed before him beyond 90 days from the date of receipt of the adjudication order - Held that:- As per Section 85 of the Finance Act, 1994 he is not empowered to condone such delay. In this contest, the Hon’ble Supreme Court in the case of Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] have held that the statutory time limit for filing appeal provided under the statute should be strictly adhered to. In view of the admitted fact that these two appeals were filed beyond the period of 90 days from the date of receipt of the adjudication order, we do not find any justifiable reason to interfere with the impugned order passed by the Commissioner (Appeals) in dismissing the appeals on the ground of limitation. Scope of SCN - Held that:- We cannot address the issue raised by the appellant for the first time before this Tribunal, which was not the dispute before the lower authorities. Therefore, we do not find any justifiable reason to entertain the prayer made by the appellant for allowing its appeal in respect of the appeal No ST/89456/2018. Accordingly, the said appeal filed by the appellant is also dismissed.
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2019 (3) TMI 1510
CENVAT Credit - input services - services availed for sale of shares - period March 2010 and April 2010 to September 2010 - Held that:- Undisputedly, the appellant is engaged in manufacturing activity as well as providing output service - One of the allegations of the department is that credit cannot be availed on the service tax paid as the services availed for sale of shares since the products manufactured by the appellant are exempted. The second allegation is that the input services used for raising capital has no nexus with the output service and therefore is not eligible for credit - Though the appellant is engaged in manufacturing activity as well as providing output service, it can be seen that services of sale of shares was consumed by the appellant for raising the capital. The definition of input services includes the services of ‘financing’. Thus, the services consumed for financing or availment of loan will be input service for an assessee who is providing output service or engaged in manufacture of dutiable final product. The period of dispute is prior to 1.4.2011. During the said period, the definition of input services had a wide ambit as it included the words “activities relating to business” - The Tribunal in the case of Hinduja Global Solutions Ltd. Vs. Commissioner of Central Excise, Bangalore [2016 (3) TMI 401 - CESTAT BANGALORE] has categorically held that the activity of raising capital by the disinvestment is directly connected with output service and has correlation with the business activity of the appellant. The allegation raised by the department for disallowing the credit to be unsustainable in law - Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1509
Demand of interest and penalty - service tax paid belatedly by adjustment of the CENVAT account - Held that:- When there was sufficient balance in the CENVAT account for payment of service tax, the appellant cannot be burdened with payment of interest. Undoubtedly, though there was sufficient balance in the CENVAT account, the adjustment of the same by causing a debit entry in the CENVAT account has been made by the appellant only on 21.3.2012 when the department was informed about such adjustment from the CENVAT account. The demand therefore stands discharged fully only on 21.3.2012. Merely because the amount was lying in the CENVAT account, it cannot be said that the demand has been paid or discharged. Appellant has discharged the liability of service tax only on21.3.2012 when they informed the department that they are using the CENVAT credit to pay the service tax demand. Service tax has to be paid by the assessee on due dates as prescribed by statute. Whenever the service tax is not paid within such due dates it becomes belated payment. As per section 75 of Finance Act, 1994, liability to pay interest follows in case of belated payment or short-payment of service tax. Merely because there is some balance lying unutilized in the CENVAT account, it cannot be said that the assessee has discharged the liability to pay service tax. The liability to pay service tax will stand discharged only when such payment is made or manifested in the records - The liability to pay service tax will stand discharged only when such payment is made or manifested in the records. Until such payment, or manifestation in the accounts, the assessee is liable to pay interest on the amount of tax. Section 75 does not state that when there is sufficient balance in the CENVAT account and if utilized for payment of service ax, the assessee need not pay any interest - the claim of the assessee that they are not liable to pay interest when the tax amount is adjusted from credit lying in CENVAT account is without any legal basis. In the case of Nicholas Piramal (India) Ltd. (supra), the issue analysed was whether interest is liable to be paid on differential amount when there is credit available and whether penalty imposable. In the said case, credit was availed on inputs which was already reversed by the assessee and no duty was to be paid. Therefore, the question of payment of interest and imposition of penalty was held in favour of the assessee. Time limitation - penalty - Held that:- The appellant is not contesting the tax liability adjusted from CENVAT account. Taking these facts into consideration, the invocation of extended period requires no interference - The argument of the ld. counsel that sub-section (3) of Section 73 would apply is not tenable for the reason that the appellant has not paid up the demand along with entire interest before issuance of show cause notice. The service tax demand of ₹ 11,01,03,335/- having been fully paid up before issuance of show cause notice and part of the interest relating to the cash payment also having been paid up before issuance of show cause notice, the equal penalty imposed under section 78 is unwarranted. The impugned order is modified to the extent of setting aside the penalty imposed under section 78 without disturbing the remaining portion of the impugned order - appeal allowed in part.
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2019 (3) TMI 1508
Refund claim - rejection on the ground of time bar - Section 11B of CEA - Held that:- The relevant date in terms of Section 11B of the Act is the date on which litigation comes to an end i.e. 05.01.2017, thereafter, within almost one month, the appellant filed refund claim. In that circumstances, the refund claim cannot be held as barred by limitation. Accordingly, on the said ground, the appellant is entitled to claim refund. The Ld. Commissioner (Appeals) has held that the appellant has failed to show that whether the order dated 05.01.2017 has attained finality or not? It is not the duty of the appellant to provide all details whether the said order has attainted finality or not, it is the duty of Revenue to show that the said order has not attained finality and has misunderstood by the Ld. Commissioner (Appeals) that the appellant is required to show that the said order has attained finality - Therefore, the Revenue has failed to discharge their onus to show that the said order dated 05.01.2017 has attained finality or not. In that circumstances, the refund claim cannot be rejected. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1507
Penalty - service tax with interest paid on being pointed out - sub-section (3) of section 73 of FA - rent-a-cab service - bonafide belief - Held that:- The appellant has discharged the service tax along with interest before issuance of the show cause notice - As per sub-section (3) of section 73, when service tax along with interest is paid up by the assessee, on being pointed out by the officers, no penalties are to be imposed - penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1506
Erection, Commissioning and Installation Services - Management, Maintenance and Repair Services - business of erection of transmission lines for State Electricity Boards, electrification for Indian Railways, setting up of high voltage sub-stations etc. - demand of service tax - Held that:- Though department alleges that appellant collected service tax, there is no evidence to support this allegation. Further the show cause notice does not invoke Section 73A of Finance Act, 1994. The appellants undertook turnkey projects of laying electrical cables between grids and also construction of sub-station between the grids, which is incidental activity of laying the electrical cables. The Board's Circular No. 332/05/2010-TRU, dated 24.05.2010 has clarified that the activity of laying of electrical cables between grids does not fall within the ambit of any taxable services. Further, N/N. 45/2010-ST, dated 20.07.2010 expressly states that no service tax is payable on services relating to transmission and distribution of electricity. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1505
Commercial or Industrial Construction Services - Residential Complex Services - demand of service tax - Held that:- The works undertaken are of composite nature involving both service element and supply of goods. The demand prior to 01.06.2007 for such composite indivisible contracts cannot sustain as per the decision of the Hon'ble Apex Court in M/s. Larsen & Touboro Ltd., [2015 (8) TMI 749 - SUPREME COURT] - The demand after 01.06.2007 is also not sustainable under the category of Commercial or Industrial Construction Services or Construction of Residential Complex Services as per the decision laid down by the Tribunal in the case of M/s. Real Value Promoters [2018 (9) TMI 1149 - CESTAT CHENNAI] - The demand under Construction of Residential Complex Services and Commercial or Industrial Construction Services cannot sustain and requires to be set aside. Management, Maintenance or Repair Services - toll plaza - demand of service tax - Held that:- Undisputedly, Toll shed / Plaza is constructed on the side of road which is national highway. The activities of constructions and repair and maintenance of roads are exempted from levy of service tax - The decision in the case of M/s. Phoenix Engineering [2015 (12) TMI 749 - CESTAT MUMBAI] has discussed the issue and held that Repair and Maintenance of Roads and Toll Plaza are not subject to levy of service tax - the demand under Management, Maintenance or Repair Service is not sustainable and requires to be set aside. Consulting Engineering Services - demand of service tax - Held that:- The appellants are engaged in construction activities. The definition of Consulting Engineering Services show that a professional engaged in giving advices of consultancy would alone fall under this category. The department has not produced any evidence to show that the appellants have rendered any advice of this nature - the demand under Consulting Engineering Services is incorrect and requires to be set aside. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1504
Works Contract Service - Erection, Commissioning and Installation Services - levy of service tax - Held that:- The period involved is 2006-07 and it is stated therein that the works include provision of services along with supply of materials. The demand is raised in SCN and confirmed in the impugned order under ECIS. From the impugned order it is seen that the adjudicating authority has held that some of the contracts are not of composite nature observing that certain invoices only show the supply of material and VAT paid whereas certain invoices do not show materials supplied. We do not think such a vivisection can be made. The nature of the contract or work executed for the customer has to be looked into to consider whether it is a composite contract involving both supply of material and supply of service - The Hon'ble Apex Court in the case of M/s. Larsen & Toubro Ltd., [2015 (8) TMI 749 - SUPREME COURT] has held that for the period prior to 01.06.2007, the demand in respect of contracts of composite nature cannot sustain. The demands confirmed under ECIS where the works executed are of composite in nature involving both supply of materials and provision of services, the demand requires to be set aside - the entire demand under ECIS, which involves both labour and materials prior to 01.06.2007 is set aside. For the period after 01.06.2007, for all the amounts which have been confirmed under ECIS, wherein, the contracts are of composite nature involving both supply of materials and provision of services the demand cannot sustain as per the decision of the Tribunal in the case of M/s. Real Value Promoters. Pvt Ltd., [2018 (9) TMI 1149 - CESTAT CHENNAI]. As such, the demands after 1/6/2007 under the category of ECIS for composite contracts are set aside. Penalties - Held that:- The issue whether composite contracts are subject to levy of service tax was contentious during the relevant period. Taking note of this fact that the issue being interpretational one, the penalties imposed in regard to the demands confirmed under WCS after 1/6/2007 is unwarranted and requires to be set aside, which we hereby do. Thus, the penalties imposed in regard to WCS after 01.06.2007 are set aside in toto. The demand under ECIS for M/s. Dalmia Cements Ltd., is remanded for considering the cum-tax benefit - appeals are partly allowed and partly remanded.
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2019 (3) TMI 1503
Telecommunication Service - Service to oneself - inter unit adjustments - Interconnection Service to their own Landline segment - period 2007 to 2012 - demand of service tax - Held that:- The services provided by the appellants to their Landline segment, namely, Interconnect Usage Charges and the consequent collection of Interconnect Usage Charges, have been considered as taxable under the category of Telecommunication Charges defined in Section 65(109a) ibid. While the said definition is an expansive and detailed one, there is no definition of what are Interconnect Usage Charges - Interconnection Usage Charges would only be such charges levied by a service provider on another service provider. This interpretation is further reinforced by the fact that the said Regulations include the definitions of Interconnection Provider as a service provider to whose network interconnection is sought and Interconnection Seeker as a service provider who seeks such interconnection. The disputed services pertain to interconnectivity provided by M/s. BSNL, Cellular Mobile Telephone Services (CMTS) Division and M/s. BSNL, appellants herein to their own landline network. Surely, by no stretch of imagination can these two Divisions of M/s. BSNL be termed as two separate service providers for the purposes of the definitions contained in the aforesaid TRAI Regulations that we have just analyzed, etc. - In the present scenario, most, if not every, service provider extends a gamut of connectivity services like landline connectivity, connectivity on mobiles through GSM, CDMA connectivity, data and voice through optical fibre and so on. A service provider like M/s. BSNL may be providing one or more of these connectivities as may be subscribed to by their subscribers. But the important point to be noted is that when the CMTS Division of BSNL is providing interconnectivity to their Landline Division, the service provider BSNL is only providing service to itself. Thus, it becomes a case of service to oneself. The Tribunal in the case of Precot Mills Ltd. [2006 (2) TMI 25 - APPELLATE TRIBUNAL, BANGALORE] has held that when one renders service to oneself, there is no question of leviability of service tax; that there is no client-principal relationship in transactions and service tax is not leviable. Thus, the charges levied by one Division of M/s. BSNL to another and that too by way of debit notes, is only an internal financial adjustment which cannot, by any stretch of imagination, be termed as Interconnection Usage Charges or as a taxable service for the purpose of levying service tax - Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1502
Levy of service tax - reimbursable expenses or not - Held that:- It can be seen that the charges are in the nature of CMS/EDI Charges, Insurance Charges, Demurrage Charges etc. Being actuals in the nature of Reimbursable Expenses, the decision of the Hon'ble Apex Court in the case of M/s. Inter-continental Technocrats and Consultants [2012 (12) TMI 150 - DELHI HIGH COURT] would squarely apply and the demand of service tax on these charges cannot be sustained - demand set aside. Demand of service tax - Ocean Freight Charges - Held that:- This Tribunal in the case of M/s. Greenwich Meridian Logictics (I) Pvt Ltd. Vs Commissioner of Service Tax, Mumbai [2016 (4) TMI 547 - CESTAT MUMBAI] for the appellants has considered the very same issue in detail and has held that Ocean Freight Charges are not liable to service tax - the demand on Ocean Freight Charges cannot be sustained and require to be set aside. Scope of SCN - Held that:- Though the demand in the show-cause notice is made under Business Support Service, the Commissioner has travelled beyond the show-cause notice and confirmed the demand under Business Auxiliary Service. For this reason also, the impugned order cannot sustain. Appeal disposed off.
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Central Excise
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2019 (3) TMI 1501
Process amounting to manufacture or not - fabrication of various items - section 2(f) of Central Excise Act, 1944 - Held that:- The issue decided in appellant own case MCCOY ARCHITECTURAL SYSTEMS PVT. LTD., AJAY ARTREYA VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI – V [2018 (2) TMI 792 - CESTAT MUMBAI], where reliance placed in the case of Shapoorji Pallonji [2005 (4) TMI 91 - HIGH COURT OF JUDICATURE AT BOMBAY] where it was observed that the cutting / drilling / welding steel channels angles, etc. and thereafter erecting, them does not amounts to excisable production. Appeal dismissed - decided against Revenue.
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2019 (3) TMI 1500
CENVAT Credit - process amounting to manufacture or not - it was alleged that process of assembly of various inputs into packing kits do not amount to manufacture and credit is denied - Held that:- There is no dispute of fact that appropriate duty has been paid and collected by the Revenue on the packing kits. The issue is no more res-integra and stand decided in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [2012 (7) TMI 141 - BOMBAY HIGH COURT], where it was held that Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. Credit cannot be denied - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1499
Valuation - allowability of deductions - whether the appellant is entitled to deductions on account of freight charge, interest on receivable and bank charges during the relevant period from April, 1997 to January, 1999? - Held that:- In principle, there is no dispute of the fact that all these elements of expenses are eligible as deduction from the price in arriving at the assessable value and their admissibility to the appellant during the said period. The adjudicating authority in the order observed that the appellant had failed to produce relevant records in support of quantification of deductions claimed by them to arrive at assessable value - For the purpose of quantification, the matter needs to be remanded to the adjudicating authority. Applicability of interest on differential duty - Provisional assessment - Held that:- This issue is settled by the Hon'ble Jharkhand High Court in the case of Pre-Stressed Udyog (India) Pvt. Ltd. [2015 (7) TMI 1078 - JHARKHAND HIGH COURT], where it was held that Respondent is bound to make payment of interest under Rule 7 (4) even if the earlier assessment is provisional in nature - Besides, during the relevant period there was no provisional assessment resorted to by the appellant by following the prescribed procedure - the claim of the appellant that since the assessment was provisional, therefore, interest is not applicable, is not correct, hence not acceptable. The appeal is remanded to the adjudicating authority for the purpose of quantification of differential duty and interest - appeal allowed by way of remand.
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2019 (3) TMI 1498
SSI Exemption - crossing of threshold limit - N/N. 8/2003-CE dt. 1.3.2003 - Applicability of Rule 3A of the Interpretative Rules - the items, cakes and pastries, are supplied with other items in a set - Held that:- The appellant has brought this contention for the first time at the Tribunal stage. Also, as correctly pointed out by the Ld. A.R, they had themselves classified cakes, pastries etc. as per their individual tariff entries on which there was no dispute between them and the department. In the circumstances, we are afraid that this argument does not hold water. Time limitation - penalty - Held that:- A number of related proceedings had earlier been initiated against the appellant, including one of denial of SSI exemption Notification No.8/2002-CE and 8/2003-CE. SCN has proposed penalty on him on the ground of “non payment of central excise duty was within his knowledge”. However, it is found that appellants were continuously reiterating with the department, at least from 2002, that they were eligible to claim small scale exemption. In the circumstances, employee of the appellant cannot then be saddled with such charge and penalty imposed under Rule 26 ibid - From the records, it is not forth coming that any appeal was preferred by the department against the said OIA. This being so, subsequent show cause notices proposing similar denial of SSI exemption should have been issued for the normal period of one year instead of invoking extended period of limitation as has been done in this case. It follows that there cannot also be any ingredients present for imposition of penalty under Section 11AC. The impugned demand per se cannot then be sustained, on the grounds of limitation, and will require to be set aside - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1497
Clandestine removal - Chewing Tobacco - Section 9D of the Central Excise Act - Held that:- In the present case, mandate of Section 9D of the Central Excise Act has not been followed by the learned Commissioner - The Hón’ble High Court of Punjab and Haryana in the case of Jindal Drugs vs. Union of India [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] has held that if the provisions of Section 9D is not followed, then the statement recorded under Section 14, cannot be relied upon In the present case, the learned Commissioner has not followed the mandate of section 9D, which requires the witness to be examined in Adjudication proceedings, which includes cross –examination, therefore, the statements recorded under Section 14 have to be eschewed from evidence. Also, the department is relying upon the records recovered from the premises of M/s. Rudraksha Marketing, Delhi. However, it is found that appellants were having a family dispute with them, which is evident from the pleadings and various documents annexed with the appeal. Therefore, the recovered documents (from Rudraksha) cannot be relied upon in isolation. In the present case, there is no credible evidence which shows that the appellant is involved in clandestine removal of goods - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1496
Classification of goods - Precipitated Chalk - whether classifiable and chargeable to duty @ 16% under chapter 28 (Inorganic Chemicals) or under Chapter 25 (Mineral Products) attracting nil rate of duty? - Time limitation - Held that:- In the present case, the period involved is March 1994 to August 1996, November 1997 to January 2011 and December 2002 to February 2004. It is observed that the issue involved in the present case has been disputed right from the year 1987 and for the period 01.06.1987 to 30.09.1987 and 01.10.1987 to 08.12.1987 - For the subsequent period from 13.06.1994 onwards Commissioner (appeals) vide order in Appeal No. Commr.(A)/234/VDR/98 dated 25.02.1998 dropped the demand. In this fact, the appellant has a bonofide belief that in view of Commissioner (appeals) order, their case stand decided in their favour, therefore, for subsequent period demand notice issued invoking extended period is clearly hit by time limit as prescribed under proviso to Section 11A of Central Excise Act, 1944. The Revenue despite the recurring nature of the issue delayed, the issuance of SCN involved in the present appeals. There is no suppression of fact, mis-declaration, collusion, fraud on the part of the appellant in the facts and circumstance of the present case, therefore, the demand for the extended period in every SCN involved in the present case is not sustainable. However, if any demand pertains to the normal period, the same is liable to be confirmed and recovered from the appellant. Since there is no suppression of fact, the appellant is also not liable for any penalty, accordingly, the penalty is set aside. The impugned orders are modified to the above extent and appeals are disposed of by way of remand to the adjudicating authority only for re-quantification of demand of duty in respect of normal period of limitation.
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2019 (3) TMI 1495
CENVAT Credit - input services - lease rentals and operation and maintenance charges of wind mills situated outside the factory - Held that:- The matter is no longer res integra and has been settled to rest in respondent’s own case by the Hon’ble High Court of Madras in the case of CCE & ST Vs Ashok Leyland Ltd. [2019 (1) TMI 430 - MADRAS HIGH COURT], where it was held that The decision of the High Court of Bombay in Endurance Technology Pvt. Ltd. [2015 (6) TMI 82 - BOMBAY HIGH COURT], which has been followed by the Larger Bench of the Tribunal in Parry Engg. & Electronics P. Ltd. [2016 (1) TMI 546 - CESTAT AHMEDABAD], where it was held that Management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "l" of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. Appeal dismissed - decided against Revenue.
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2019 (3) TMI 1494
Rectification of Mistake - main plank of the ROM application is that although the issue of invocation of extended period of limitation was raised, the same had not been considered in the impugned Order - Held that:- There is no error in the first place which is apparent on the face of record and admittedly, in the peculiar facts of the case, the dispute regarding invoking larger period was undoubtedly debatable, hence going into a decided issue is tantamount to revision, for which, we lack jurisdiction. This is also in conformity with Section 35C(2) of the Central Excise Act, 1944. There is no mistake apparent on record which requires rectification, as provided in Section 35C (2) of the Central Excise Act, 1944 - ROM application dismissed.
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2019 (3) TMI 1493
Recovery of erroneous refunds - demand made on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J&K based units and absence of evidence of power by the appellant - Held that:- The appellant had shown from the records that there was periodical checks conducted by the jurisdictional Central Excise officers, who found that the appellants are manufacturers of the goods and we also take note of the fact that the appellant has obtained necessary permission from the Directorate of Industries to manufacture the goods and necessary permission from the Pollution Control Board and moreover during the period, the appellant is selling the goods and it was found that there was movement of goods inward/outward. Similar issue has been dealt by this Tribunal in the case of S.B. Aromatics vs. CCE & ST, Jammu & Kashmir [2018 (11) TMI 830 - CESTAT CHANDIGARH], where it was held that The appellant (M/s S.B Aromatics) was manufacturer during the impugned period and paid the duty on the goods manufactured by them, therefore, duty on account of erroneous refund cannot be demanded on the allegation that the appellant was not a manufacturer. Thus, the demand against the appellant on account of erroneous refund cannot be demanded on the allegation that the appellant was not manufacturer - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1492
Recovery of erroneous refunds - demand made on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J&K based units and absence of evidence of power by the appellant - Held that:- The appellant had shown from the records that there was periodical checks conducted by the jurisdictional Central Excise officers, who found that the appellants are manufacturers of the goods and we also take note of the fact that the appellant has obtained necessary permission from the Directorate of Industries to manufacture the goods and necessary permission from the Pollution Control Board and moreover during the period, the appellant is selling the goods and it was found that there was movement of goods inward/outward. Similar issue has been dealt by this Tribunal in the case of S.B. Aromatics vs. CCE & ST, Jammu & Kashmir [2018 (11) TMI 830 - CESTAT CHANDIGARH], where it was held that The appellant (M/s S.B Aromatics) was manufacturer during the impugned period and paid the duty on the goods manufactured by them, therefore, duty on account of erroneous refund cannot be demanded on the allegation that the appellant was not a manufacturer. The demand against the supplier of invoices is not sustainable and it has been held that the suppliers are manufacture of goods and have cleared the same on payment of duty, in that circumstances, the cenvat credit availed by the appellant cannot be denied - the appellant have correctly availed the CENVAT credit on the goods supplied by their suppliers located in the state of Jammu & Kashmir. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1491
Recovery of erroneous refunds - demand made on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J&K based units and absence of evidence of power by the appellant - Held that:- The appellant had shown from the records that there was periodical checks conducted by the jurisdictional Central Excise officers, who found that the appellants are manufacturers of the goods and we also take note of the fact that the appellant has obtained necessary permission from the Directorate of Industries to manufacture the goods and necessary permission from the Pollution Control Board and moreover during the period, the appellant is selling the goods and it was found that there was movement of goods inward/outward. Similar issue has been dealt by this Tribunal in the case of S.B. Aromatics vs. CCE & ST, Jammu & Kashmir [2018 (11) TMI 830 - CESTAT CHANDIGARH], where it was held that The appellant (M/s S.B Aromatics) was manufacturer during the impugned period and paid the duty on the goods manufactured by them, therefore, duty on account of erroneous refund cannot be demanded on the allegation that the appellant was not a manufacturer. Thus, the demand against the appellants on account of erroneous refund cannot be demanded on the allegation that the appellants were not manufacturer - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1490
Rectification of mistake - error apparent on the face of record or not - Held that:- The issue that came up in appeal was thoroughly analyzed and interference was made with the impugned Order by relying on the ratio laid down by the Hon'ble High Court of Madras in the case of the same respondent [2013 (12) TMI 817 - MADRAS HIGH COURT]. It is also noted that the case in appeal was very much similar to the case before the Hon'ble High Court, which was relied upon. Thus, the impugned Order having been disposed on merits, there is no error on the face of record that requires rectification.
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2019 (3) TMI 1489
Valuation - annual capacity of production - whether the length of gallery be included in the Hot Air Stenter for determining the annual capacity of production under Section 3A of the Central Excise Act, 1944 for the period in dispute? - Held that:- Identical issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS SPBL. LIMITED [2002 (9) TMI 113 - SUPREME COURT OF INDIA], where it was held that The Tribunal arrived at a conclusion that the Explanation to Rule 5 makes it clear that a float drying machine or any other equipments mentioned therein must be for aiding the process of heat setting or drying of fabrics. The Tribunal observed that a float drying machine is aiding the process of heat setting or drying of fabrics and other equipments contemplated by Explanation-I should also have like utility. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1488
Quantum of Penalty u/r 173Q of the Central Excise Rules, 1944 - manufacture and clearance of AC without payment of duty - Held that:- The learned Commissioner (Appeals) has reduced penalty in proportionate to reduction of duty liability from ₹ 50,000/- to ₹ 25,000/-. The argument of the appellant that no penalty is imposable on them, is devoid of merit inasmuch as they have cleared the ACs in respective financial years after exceeding the prescribed limit and failed to discharge duty. This fact came to the knowledge of the department after visit to their unit. There are no valid reason to interfere with the impugned order - appeal dismissed.
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2019 (3) TMI 1487
Classification of goods - Bakery Improvers - whether classified under Chapter heading 2108 of CETA, 1985 by the Revenue or classified under chapter heading 1905 attracting “nil” rate of duty? - Held that:- As fairly admitted by both sides, the issue of classification has travelled up to the Supreme Court and the Hon’ble Supreme Court pleased to remand the matter to the adjudicating authority to decide the issue of classification afresh taking into consideration all aspects of the case. In other words, it is an open remand by the Hon’ble Apex Court - Since the said matter is yet to be decided, it is prudent to remand the present case also to the learned adjudicating authority to decide all issues afresh, taking note of the principles of law settled in this regard. Appeal allowed by way of remand.
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2019 (3) TMI 1486
Refund of excess duty paid - finalization of provisional assessment - unjust enrichment - Held that:- Both sides have fairly admitted before us that all the sales invoices issued from depots and corresponding transfer invoices issued from the factory were not examined to ascertain whether the amount of duty shown in the depot invoice was higher in comparison to the factory gate invoices. The learned Advocate on sample basis demonstrated before us that in majority of the cases the excise duty shown in the depot invoice is higher in comparison to the factory gate invoice and on that basis the refund amount of ₹ 96,61,872/- cannot be said to hit the issue of unjust enrichment. Also, proper scrutiny has not been carried out by the adjudicating authority in examining the respective invoices along with other evidences to ascertain the fact whether the incidence of differential duty claimed as refund had been passed on to the customers or otherwise. The matter remanded to the adjudicating authority to consider the issue of unjust enrichment afresh, taking note of all the invoices issued from the factory and that of depot and other evidences on record and that would be produced by the appellant during the course of denovo proceeding - appeal allowed by way of remand.
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2019 (3) TMI 1485
CENVAT credit - input services - facility services rendered by M/s. G4S Facility Services - demand has been confirmed alleging that the services provided are in the nature of front office service, gardening service, canteen facilities gym room equipment maintenance etc. - It is the case of the department that some of these services are used for personal consumption and therefore are not eligible for credit. Held that:- Indeed the annexure to the agreement shows that the payment is based on man hours of the work. So also it is stated that in case the manpower works on Sundays and holidays, they have to pay charges on pro-rata basis. So also when additional manpower is required, charges is to be paid on pro-rata - in page 202 of the appeal memorandum a letter issued by Lenovo to G4S Facility Services dated 30.8.2007 is enclosed. This is a letter of amendment of the Annexure I of the agreement. It is stated in this letter that five more headcounts to G4S Facility Services are to be added and the salary of the receptionist post is to be increased. Thus, it is seen that Lenovo has requested for increase of headcounts (person). The requirement of such manpower is for catering services etc. In such case, they would qualify as input service. However, this argument requires to be examined. There is no discussion in the orders passed by the authorities below as to whether the services availed is in the nature of manpower recruitment and supply agency service. The appellant has not raised this contention before the authorities. For this purpose of verification, whether the services availed from G4S Facility Service is in the nature of manpower recruitment and supply agency service, the matter is remanded to the adjudicating authority who is directed to look into the documents and also consider the plea of the appellant in this regard - appeal allowed by way of remand.
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2019 (3) TMI 1484
Demand of duty - Naphtha so consumed for generation of electricity used for the manufacture of exempted goods and used for allied facilities - Department was of the view that the appellants were required to pay duty on the quantity of Naphtha relatable to the electricity consumed for manufacture of exempted goods and that used for allied facilities - Held that:- The issue is squarely covered by the decision of tribunal in case of Appellants themselves HINDUSTAN PETROLEUM CORPORATION LTD. VERSUS COMMR. OF C. EX., MUMBAI-II [2013 (9) TMI 453 - CESTAT MUMBAI], where it was held that The benefit of exemption under Notification No. 67/95-C.E., dated 16-3-1995 was allowed on account of — (a) Naphtha cleared, availing exemption under Notification No. 4/2006-C.E., dated 1-3-2006 for manufacture of fertilisers under International Competitive Bidding (ICB). - (b) On that much quantity of Naphtha, attributable to electricity generated in captive power plant/co-generation plant, used for manufacture of exempt goods viz. LPG (Domestic) and Superior Kerosene Oil (PDS). The appeal filed by Appellant is allowed and matter remanded back to the adjudicating authority for re-quantification of demand.
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2019 (3) TMI 1476
SSI exemption - dummy units - clubbing of clearances of the three units - clandestine manufacture and removal - Admissibility of evidences - section 36B of CEA - Section 9B of CEA - denial of request for cross examination - Principles of natural justice. Whether the clubbing of clearances of ADRA and Raj with ADRP (appellants herein) treating all the three units as single financial entity constituting one manufacturer, that being ADR Plastics, represented by D.Gunasingh, consequential confirmation of demand of ₹ 1,74,97,3016/- with interest and imposition of penalty on this appellant can be legally sustained or otherwise? - Held that:- In para-61 of the impugned order, the adjudicating authority has found that the statements given by raw material supplier, job worker and buyers / dealers that they have done business with ADR Group units, without bills and with bills are voluntary, truthful and unretracted statements; that the statement given by DuraiRaj, Partner of ADR Plastics and Shri D. Asir, Partner of Raj Plastics admitting that the entire business activities are managed by Shri D. Gunasingh are voluntary, truthful and unreatracted; that statements given by employees of ADR group units are also voluntary statements. It has also been noted by the adjudicating authority that Gunasingh has not retracted from his statement. Therefore, same coupled with documents seized from premises of ADR group units are substantive and corroborative evidences - Thus, there are a disturbing number of discrepancies and inadequacies in the entire proceedings which have been flagged by the Ld. Advocate. Admissibility of evidences - section 36B of CEA - Held that:- From the records it is not forthcoming if the Certificate as required under Section 36B (4) of the Central Excise Act was recorded from Ms.Amsavalli the computer operator of Raj Plastics. Hence the mandatory requirements of Section 36B ibid have been clearly followed in the breach. It is also pertinent to note that although pen drives and CPU were seized on 09.03.2010, the data therein was admittedly copied / printed out only on 20/21.05.2010, i.e after more than two months. The statement of Ms.Amsavalli, Computer Operator of Raj Plastics was recorded after a further gap of three months, on 30.08.2010. It also emerges that the said Ms.Amsavalli had joined Raj Plastics less than a month before the seizure of the pen drives, namely, on 14.02.2010. In the circumstances, we find that Ld. Advocate is correct in his assertion that the requirement of Section 36B have not been complied with; so also, the evidence of a newly joined employee (Ms. Amsavalli) cannot be relied upon - further, the printouts taken from the pen drives cannot be said to have passed the strict proceduralities mandated in Section 9B ibid and hence cannot be treated as admissible evidence. The law as laid down in Section 9D of the Central Excise Act is very clear that adjudicating authority is required to examine the witnesses before admitting the statement recorded from them as admissible evidence. There is merit in the contention of Ld.Advocate that such statements which have been recorded, relied upon and however not cross examined even after a specific request was made for the same by the appellant, cannot be considered as admissible evidence. In the case of Vijaya Samundeshwari Textiles (P) Ltd. and others [2017 (11) TMI 815 - CESTAT CHENNAI], where this very Bench, relying upon the judgment of the Hon’ble High Court of Delhi in the case of J.K Cigarettes [2009 (8) TMI 64 - DELHI HIGH COURT], held that in the absence of examination of witnesses of the cross examination, the statements are inadmissible evidence and the demand of duty based on such statements alone is unsustainable. Thus, the denial of request for cross examination by the adjudicating authority will only serve to vitiate the entire proceedings particularly when the purported corroborative documentary evidence in the form of printouts from pen drive have been held to be as failing the test of Section 36B ibid - Even otherwise, the department has not proved its case on merits. The clubbing of clearances of different units can only be done when there is irrefutable evidence that they are actually running as one with financial flow back between the units, if all the units in question are using just one set of machinery showing that each of them have manufactured and cleared goods separately and so on. The allegations of clubbing made by the department that the clearances of ADRP is required to be clubbed with that of ADRP and Raj are not on a sound or legal footing. There is no allegation that the three units have separate manufacturing set up with their own machinery. There is also no allegation that there is any transfer or use of funds between the group units and that there was financial flow back between them - There is no charge of intermingling of goods manufactured since each units manufactured different products. Each unit have separate electricity service connection, and capital of each firm is separate. Nothing has been brought on record during investigation or brought forth in adjudication to disprove or demolish the above averments of the appellant. This being so, only for the reason that D.Gunasingh is a common factor in all the three units or assists in decisions thereof, this alone cannot be a reason for holding that appellant has ‚persuasive financial control over other two units‛ and that therefore the clearances of the appellants need to be clubbed with ADRA and Raj. A number of higher appellate forums have consistently set aside the demands by the department for clubbing of clearances based on such presumptions - The Hon’ble Supreme Court in CCE Jaipur Vs Electro Mechanical Engineering Corporation [2008 (7) TMI 77 - SUPREME COURT] has inter alia upheld the finding of Tribunal that notwithstanding certain employees of three firms being common and their premises are adjoining each other, there is absence of evidence on record to prove mutuality interest or flow back of funds from one unit to another. The impugned order holding that clubbing the clearances of the appellant with ADRA and Raj by treating them as single financial entity constituting one single manufacturer, cannot be sustained and is therefore set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (3) TMI 1483
Applicability of the turnover tax - scope of total turnover - inclusion of turnover which is not liable to tax - Section 6B (1) of Karnataka Sales Tax Act, 1957 - main thrust of the submission of Mr. Mohit Chaudhary, learned counsel for the appellant is that Courts below have manifestly erred in appreciating that the total turnover as defined under Section 6B (1) for the purpose of levy turnover tax can in no event include the turnover with reference to which the State has no power to levy tax under the constitutional scheme and the submission proceeds that the levy of tax under Section 6B can be on the taxable turnover alone. Held that:- In the instant scheme of the Act of which reference has been made in detail, the expression total turnover has been referred to for the purpose of identification/classification of dealers for prescribing various rates/slabs of tax leviable to the dealer and read with first and second proviso to Section 6B( 1), this makes the intention of the legislature clear and unambiguous that except the deductions provided under the first proviso to Section 6B( 1) nothing else can be deducted from the total turnover as defined under Section 2(u2) for the purpose of levy of turnover tax under Section 6B of the Act - The submission of learned counsel for the appellant that the total turnover in Section 6B( 1) is to be read as taxable turnover and the determination of the rate of the turnover tax is to be ascertained on the taxable turnover on the face of it is unsustainable and deserves outright rejection. The appeals are without substance and the same are dismissed.
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2019 (3) TMI 1482
Vires of Entry No.45 of ScheduleII to the Gujarat Value Added Tax Act, 2003 - validity of assessment order - maintainability of petition against the order passed by the assessing authority - Held that:- Issue Notice, returnable on 11.04.2019. By way of adinterim relief, the respondents are restrained from taking any coercive action against the petitioner pursuant to the assessment order dated 31.12.2018 read with order dated 23.02.2019.
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2019 (3) TMI 1481
Deemed exports - exemption under Section 6(7)(b) - input tax credit - whether the sale made by the appellants to a unit in the SEZ would qualify to be export sales? - KVAT Act - Held that:- For the period till 30.08.2013, the date on which the impugned clarification was issued, the appellant will be governed by the situation as clarified in the earlier Circular dated 15.9.2007 - Since we have made it clear that the impugned clarification will not have any retrospective effect and that the appellants are governed by the earlier clarification, we hold that they will be entitled for refund of the amount if any paid, without allowing them the exemptions. The appeals are dismissed by declining the challenge raised against the impugned clarification.
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2019 (3) TMI 1480
Benefit of free sales tax deferral scheme - deferral towards the sale of scrap - whether the deferral would be limited only to the particular product, i.e., sheets or would it also include to scrap? - Held that:- This issue was settled by a judgment of this Court, in COMMERCIAL TAX OFFICER, THIRUPPARANGUNDRAM ASSESSMENT CIRCLE & OTHERS Vs. THIAGARAJAR MILLS LTD [2001 (12) TMI 859 - MADRAS HIGH COURT], stating that the object of G.O.P.No.92, dated 22/2/1991, is to promote industrialization, within in the State of Tamil Nadu and that it would be only in consonance with the spirit of the Government Order that the benefit of deferral of sales tax is extended on the sale of waste and scrap. This Court, therefore, held that expression “product” found in the G.O., must be given a wider meaning to include waste and scrap, to sub-serve the object of the scheme of the incentive. This issue has been answered, in favor of the industry, which has set up its unit, in accordance with the Government orders. The appellant is having its manufacturing unit in its very same place. The appellant is manufacturing steel sheets. Scrap is a by-product. The Hon'ble Supreme Court and this Court have repeatedly held that the turnover by sale of by-product would also be entitled to the benefit of deferral scheme. Benefit is being given to the industry which has been set up in a remote place in accordance with the government order - The technical objection raised by the appellant therefore, cannot be sustained. In the facts of this very case, the issue stands governed by the order, dated 13/9/2006, made in W.P.No.6754 of 2005, whereby the order, dated 11/5/2004, rejecting the application has been set aside by this Court. The authorities were therefore, duty bound to grant the deferral. In fact, the authorities have actually committed contempt of the order of this Court - appeal allowed.
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2019 (3) TMI 1479
Levy of sales tax - valuation - Sale taking place or not - transfer of goods to sister concern free of cost (Joint Venture partner) - Form XVII declaration - assessee's case is that the excise duty payable by the assessee for clearance of CO2 to TAC was alone collected and it was remitted to the Department including sales tax - Held that:- The transaction between the assessee and TAC would qualify for a sale transaction, as defined under Section 2(n) of the Act. There has been transfer of the property in goods from the assessee to TAC and such transfer is in the course of business and it was for a consideration. Though the assessee may state that the consideration received is only to meet the central excise liability, it is still a consideration payable for the goods transferred - Further, the transaction would also fall within the definition of “turnover” as defined under Section 2(r), as goods have been supplied by the assessee to TAC and it has been for valuable consideration. The assessee's contention cannot be agreed upon that there was no sale. Though the assessee would contend that Form XVII declaration was filed without prejudice to their rights, having taken note of the factual situation involved in the case and the type of transaction, there is no doubt that the transaction is a sale transaction and the assessee is liable for payment of tax applying the definitions under the Act. The Assessing Officer, in the instant case, has adopted the second method under sub-Clause (ii) of Rule 6(b) by taking into consideration the valuation shown in the central excise invoices and alleged that the assessee had suppressed the basic value of CO2 and completed the assessment by demanding tax on the entire value of CO2 as per the central excise invoices. Under what circumstances, Section 12A could be invoked and what are the prerequisites? - Held that:- The first and foremost pre-requisite is that the Assessing Officer should be satisfied that a dealer with a view to evade payment of tax, shown in his accounts sales or purchase of goods at prices, which are abnormally low comparing to the prevailing market rate of such goods. If the Assessing Officer is satisfied that the dealer has done so, then the Assessing Officer would be empowered to assess or re-assess the dealer to the best of his judgment, on the turnover of such sales or purchases, after making such enquiry as he may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment - There is no iota of evidence produced by the Department to disbelieve the records produced by the assessee. The entire financials of TAC were produced to show that no other payment was made by TAC; the Chief Manager of the assessee has filed an affidavit; the copy of the annual report of TAC was produced. Thus, if the Assessing Officer did not have any material to show that the financials of the assessee were incorrect or false, the question of making a best judgment assessment that too invoking the power under Section 12A of the Act cannot be resorted to. The power under Section 12A is a power exercisable only upon satisfaction of the Assessing Officer that the assessee with a view to evade payment of tax, has shown to have sold/purchased goods at abnormally low prices compared to the prevailing market rate. Thus, merely by surmises and conjectures, the Assessing Officer cannot treat the value of CO2 for the purposes of calculation of central excise to be adopted as the sale price for the purposes of levy of sales tax under the TNGST Act. The assessee will be liable to pay sales tax on the amount collected towards the central excise duty component from TAC, which we have held to be a consideration, payable by TAC to the assessee for CO2 supply. The Assessing Officer is directed to redo the assessment in terms of the above direction - These tax case revisions are allowed - the substantial question of law is answered in favor of the assessee.
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