Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 17, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Business expenditure u/s 37 - amount paid to the widow of the former Managing Director of the company who passed away - The Assessing Officer should have known that 'Died in Harness' would mean that a person dies while he was in service and does not mean that while on duty. This erroneous interpretation has led to an erroneous Assessment Order. - HC
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Disallowance of repairs and maintenance expenses paid to WIPRO for offshore services - it is evident from the fact that such payment is not for the purpose of assessee’s business, but for the business of assessee’s parent company. - AO was right in disallowing offshore payment made to WIPRO. - Decided against assessee - AT
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If expenditure incurred by the assessee are in the nature of annual maintenance contracts, then such expenditure certainly are in the nature of revenue expenditure - AT
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Addition on account of difference in valuation of stock - Merely non maintenance of stock register by the assessee cannot result into addition unless the AO shows with conclusive evidence that quantitative details submitted by the assessee is incorrect. - AT
Service Tax
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Liability of service tax - services availed for mobilizing finance by using services of foreign company - the IFC Act 1958 clearly provides for immunity of all transactions and operations of IFC - tax liability do not sustain. - AT
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Tax liability - facility of availing server /web hosting provided by the Foreign Service provider - the same will fall under the overall category of infrastructural support service, which is part of the BSS - the question of revenue neutrality as a legal principle to hold against a tax liability is not tenable. - AT
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Mandap Keeper Service - activity undertook undertook in their own party hall - value of service as well as the sale of food items shown separately in the invoices - appellant paid service tax on renting of immovable property services - VAT paid on sale of food should not be included in the value of service provided and billed separately - demand set aside - AT
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GTA Service - Since, the documents issued by the service provider for transportation of goods are not in confirmity with Rule 4B of the Rules - The said documents cannot be termed as consignment note - tax liability under GTA does not arise - AT
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CENVAT credit - whether the appellant is entitled to avail CENVAT credit of Service Tax on commission paid to sales commission agent who causes sale of Sugar & Molasses, manufactured by the appellants? - there are contrary judgements on the issue. - Taking independent view, credit allowed - AT
Central Excise
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Whether the appellants/respondents manufacturing Refined Vegetable Oil which is exempted under Notification, whether they are entitled to exemption on the items being Fatty acids, Wax, Gums and Spent earth under N/N. 89/1995-CE dated 18.05.1995? - Held Yes - AT
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Validity of SCN - the show cause notice issued prior to finalization of provisional assessment, when admittedly the assessees were under provisional assessment scheme, is ab initio void - AT
Case Laws:
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Income Tax
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2018 (4) TMI 750
Transactions of purchase and sale of shares - business transaction OR short term/long term capital - HUF assessee's source of income were interest income and income from purchase and sale of shares of listed companies through different stock exchanges - number of transactions - Held that:- The appellant is not disputing that he has purchased shares for 247 times and sold 263 times - the assessee-appellant to establish the intention by producing his accounts before the department disclosing that he maintained distinction between those shares which are held as stock in trade and those shares which are held as investment. In our opinion, the aforesaid burden was lying upon the appellant to prove this material aspect before the Assessing Officer but it is obvious from the material available on record that he has not been able to produce any material to show that he maintained distinction between the share held in stock in trade or those held by way of investment. If the assessee has failed to discharge his burden, caste upon him by law in support of his claim, then obviously he is not entitled to claim any benefit. The whole basis of argument of learned counsel for the appellant is that an affidavit was filed by him in which everything was explained that too before the CIT (A), Bikaner. However, in our opinion, it was the duty of the assessee to maintain record for distinction between the shares held in stock in trade and those held by way of investment, then obviously evidence was to be produced by him, therefore, we are of the opinion that the entire case is based upon factual aspect of the matter, hence, we do not think that the question of law framed in this appeal is having any significance so as to adjudicate the same. - Decided against assessee.
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2018 (4) TMI 749
Claim of deduction u/s 80IA - Held that:- Container Freight Station (CFS) run by the respondent-assessee is eligible for deduction under Section 80IA of the Act as an infrastructure facility. Thus, upholding the view of the Commissioner of Income-Tax Appeals (CIT (A)). This by following the decisions of the Special Bench of the Tribunal in M/s. All Cargo Global Logistics Ltd. Vs. DCIT (2012 (7) TMI 222 - ITAT MUMBAI(SB)) And the decision of the Regular Bench of the Tribunal in the case of Continental Warehousing Corporation (Nhava Sheva) Vs. ACIT (2012 (8) TMI 893 - ITAT MUMBAI). - Decided in favour of assessee.
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2018 (4) TMI 748
Reopening of assessment - deduction under Section 80M - change of opinion - Held that:- In the present facts, we find that the claim of the Petitioner for deduction under Section 80M of the Act was made in the return of income. The computation of income had a note appended on it, stating that though it is eligible for deduction under Section 80M of the Act, same was not being claimed as gross total income was nil. AO passed an Assessment Order u/s 143(3) determining a positive income of ₹ 50.26 Crores, after having granted the benefit of deduction of ₹ 1.98 Crores as claimed under Section 80M of the Act. This was after having made enquiry during the Assessment Proceedings and the Petitioner justifying its claim for deduction of ₹ 1.98 Crores to the Assessing Officer as is evident from its letter dated 24th July, 1998. Thus, this is a clear case of change of opinion and the Assessing Officer could not have any reason to believe that income chargeable to tax has escaped Assessment. - Decided in favour of assessee.
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2018 (4) TMI 747
Deduction u/s 80IA - claim denied on the ground that the appellant's undertaking has not been set up for generation or for generation and distribution of power - Held that:- The term 'generating company' can only refer to the SPCL and not the appellant, since the Assessing Officer, the First Appellate Authority and the Tribunal, after considering the scope of the agreement entered into between the appellant and the SPCL, clearly held that the appellant is not the owner of the power plant and that it does only maintenance work, for which, it is given a fee. Even assuming that the appellant contributed technical knowhow for the purpose of generating electricity, it does so on behalf of the owner of the plant namely the SPCL. We find that the interpretation of agreement between the appellant and the SPCL, as given by the Assessing Officer, the First Appellate Authority and the Tribunal, is perfectly legal and valid and that there is no perversity in the finding rendered by all the three Authorities. We cannot re-appreciate the factual position to arrive at a different conclusion. - Decided against assessee.
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2018 (4) TMI 746
Business expenditure u/s 37 - amount paid to the widow of the former Managing Director of the company who passed away - payment of pension - Held that:- AO failed to understand the meaning of the expression 'Dying in harness'. The Assessing Officer has confused this expression with that of 'Dying in the course of employment'. The Assessing Officer should have known that 'Died in Harness' would mean that a person dies while he was in service and does not mean that while on duty. This erroneous interpretation has led to an erroneous Assessment Order. Unfortunately, the CIT (A) also did not take note of the factual position that a resolution was passed by the Respondent Board and came to the conclusion that the payment given to the widow of Mr.K.R.Sundaram is purely discretionary and not a pension. There is a resolution, which has been passed by the Board of the Assessee company recognizing the service rendered by Mr.K.R.Sundaram for over 30 years. The Commissioner of Income Tax (Appeals) while considering the decision in the case of Lucas Indian Service Ltd.[1997 (2) TMI 23 - MADRAS High Court ] has made a hair-splitting exercise of the facts of the said case and sought to distinguish the judgment by observing that initially there was a resolution passed, which was modified by another resolution granting pensionary benefit to the employee and thereafter to his wife for a fixed period of 10 years. Unfortunately, CIT-A has lost its sight that the ratio decidendi in the case of Lucas Indian Service Ltd., is that it is sufficient that the company passes a resolution granting monetary benefit to the legal heir of a former employee and such resolution is sufficient even if the company does not have a pension scheme. The said resolution was taken into consideration and the claim by the Assessee therein that the payment made was business expenditure was accepted. Therefore, the reasons assigned by the Commissioner of Income Tax in not applying the decision in Lucas Indian Service Ltd. is not acceptable. - Decided in favour of the assessee
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2018 (4) TMI 745
MAT - book profit adjustments - Computation of setting off of unabsorbed depreciation - whether tribunal was right in directing AO to determine the depreciation or business loss of each year and to carry forward the lower of two for adjustment which will result in enhancement of assessment for which the Tribunal has no power? - Held that:- There is no error in the order passed by the Tribunal in remanding the matter for fresh consideration to the Assessing Officer. In any event, we have indicated in the preceding paragraphs that the Tribunal has no power under the Income Tax Act to enhance the assessment in an appeal. Equally, it cannot be done on an order of remand being passed by the Tribunal to the Assessing Officer. Therefore, we opine that it is sufficient to clarify the legal position as held by the Honble Supreme Court in Hukumchand Mills Ltd. [1966 (9) TMI 38 - SUPREME Court] and in MCORP Global (P) Ltd.[2009 (2) TMI 5 - SUPREME COURT] followed by the High Court of Gujarat in Fidelity Shares and Security Ltd., Vs. Deputy Commissioner of Income Tax case [2016 (6) TMI 898 - GUJARAT HIGH COURT]. The Assessing Officer, while reconsidering the matter on remand, should bear the above legal principle in mind and the assessee cannot be denied whatever benefit he has granted in the Assessment Order dated 28.02.2003.
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2018 (4) TMI 744
Revision u/s 263 - allowability of expenditure on forfeiture of shares as capital expenditure and not revenue expenditure” - Held that:- We find that there is no dispute about the loss that was incurred by the assessee, on not subscribing to the full value of the shares. The assessee has filed the copies of the balance sheets along with the relevant schedules to prove that the assessee has been trading in shares and has been treating the shares as current assets all along. Even before the AO, the assessee had stated to be a trader in shares and therefore, the treatment of the loss on forfeiture of shares is correctly accepted by the AO as revenue loss. Thus, the AO has accepted one of the possible views and there is no erroneous application of law, making the assessment order erroneous and prejudicial to the interest of revenue. We find that the CIT has not considered this issue. We accordingly set aside the order of CIT u/s 263 and restore the order of the AO dated 30.03.2015.
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2018 (4) TMI 743
Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- After perusing the aforesaid contents of the Notice dated 01.12.2010, we are of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. We are of the view that notice issued by the AO u/s. 271(1)(c) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. - Decided in favour of assessee
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2018 (4) TMI 742
TPA - benefit available under proviso to section 92C(3) - Held that:- The Tribunal in the earlier years have examined the issue in detail and having relied upon the order of the Mumbai Bench, accepted the contention of the assessee and has held that assessee was justified in claiming the benefit available to it under proviso to section 92C(3) of the Act. We accordingly have no hesitation in setting aside the order of the AO passed consequent to the direction of the DRP. Accordingly we hold that assessee is entitled for the benefit available to it under proviso to section 92C(3) of the Act. Accordingly the additions made by the AO are hereby deleted. - Decided in favour of assessee
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2018 (4) TMI 741
Addition u/s 41(1) - accounts not reconciled - remission or cessation of a trading liability - Held that:- In the case on hand, the reason why M/s. C.D.Steel chose to debit the account of M/s. Alisha Steel P. Ltd., is not known. The AO should have examined this issue. Just because the accounts have not been reconciled, the AO cannot make an addition u/s 41(1) of the Act. Thus following the propositon of law laid down by the Hon’ble Delhi High Court in the case of CIT vs Shri Vardman Overseas Ltd (2011 (12) TMI 77 - DELHI HIGH COURT) and the Bangalore Bench of the ITAT in the case of M/s Glen Williams (2015 (8) TMI 974 - ITAT BANGALORE) delete this addition and allow this ground of the assessee.
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2018 (4) TMI 740
Disallowance of lease rent paid on leasehold land - deemed owner of the property - Period of holding of lease - Held that:- Respectfully following the decision of Hon’ble Supreme Court, in the case of CIT vs Sun Pharmaceuticals Industires Ltd (2009 (12) TMI 1001 - SUPREME COURT ), we are of the considered view that the lease rentals paid on leasehold land cannot be regarded as capital in nature merely for the reason that the period of lease agreement is more than 12 years. Therefore, we direct the AO to delete additions made towards lease rent paid on leasehold land. Disallowance of repairs and maintenance expenses paid to WIPRO for offshore services - addition on the ground that the assessee has made payment for services rendered outside India to the assesse’s group companies - Held that:- No merit in the arguments of the assessee for the reason that the AO has brought out clear facts to the effect that the payment made by the assessee to WIPRO is for services rendered to the parent company of the assessee in UK. Therefore, it is evident from the fact that such payment is not for the purpose of assessee’s business, but for the business of assessee’s parent company. Therefore, we are of the considered view that the AO was right in disallowing offshore payment made to WIPRO. - Decided against assessee Disallowance of foreign travel expenses - Held that:- The assessee has failed to controvert the findings of lower authorities that foreign travel expenses have been incurred to meet the requirement of the entire shell group and such expense has no relevance to assessee’s business in India. The AO, as well as the CIT(A) has brought out clear fact that the assessee has incurred foreign travel expenses on behalf of its employees to visit foreign countries where it has no business connection. Therefore, we are of the considered view that the AO was right in disallowing foreign travel expenses and such disallowance has rightly upheld by the Ld.CIT(A). - Decided against assessee Disallowance of repairs and maintenance expenses on plant and machinery - AO disallowed expenses incurred by the assessee for the year under consideration is comparatively higher than the expenditure incurred in the previous financial year - Held that:- Expenditure incurred under the head ‘repairs and maintenance to plant & machinery’ is in accordance with its business value as revenue from operation has increased substantially during the year. Such expenditure has been incurred in respect of day to day operations of the retail outlets. The AO has not brought out any instance of discrepancy in expenditure incurred under the head ‘repairs and maintenance to plant & machinery’ before making adhoc disallowance of 25% of such expenses - AO has disallowed such expenditure only on the basis of increase in expenses without considering the increase in revenue from operations. Therefore, we are of the considered view that the AO was incorrect in making adhoc disallowance without recording any factual finding of incorrectness in claim of the assessee - Decided against revenue Disallowance of other repairs & maintenance expenses - revenue v/s capital expenditure - Held that:- AO has brought out facts which states that the expenditure incurred by the assessee is in the nature of capital expenditure. The CIT(A) has brought out the facts which states that the expenditure is in the nature of annual maintenance contract. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of claim of the assessee that all expenditure incurred towards IT support services are in the nature of annual maintenance contract. If expenditure incurred by the assessee are in the nature of annual maintenance contracts, then such expenditure certainly are in the nature of revenue expenditure and the AO is directed to allow the same as claimed by the assessee - ground raised by the revenue is allowed for statistical purpose.
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2018 (4) TMI 739
Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- After perusing the aforesaid contents of the Notice dated 01.12.2010, we are of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. We are of the view that notice issued by the AO u/s. 271(1)(c) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law. - Decided in favour of assessee
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2018 (4) TMI 738
Disallowance u/s.14A - Held that:- The assessee was holding long term investments of ₹ 32.64 crores as at the beginning of the year and of ₹ 32.64 lacs as at the end of the year; that except for a miniscule investment of ₹ 15,000/- in unquoted Government securities, all the investments as at the beginning of the year were strategic investments in Appellant’s subsidiary companies; that all these investments came to be transferred to Arvind Limited with effect from 1st January, 2011 upon the Hon’ble Gujarat High Court passing an order dated 29/11/2011 approving demerger of the Appellant’s Investments Division which thereupon stood transferred to Arvind Limited. All the investments as at the end of the year viz. ₹ 32.64 lacs had been made by the revenue this year from its own funds in its subsidiary companies only; that thus, these investments too were strategic investments. Assessee was engaged in the business of trading of cloth and readymade garments; that its entire turnover of ₹ 94.85 crore came from this business; that on the other hand, as explained before, the Appellant’s investments were confined to strategic investments in its subsidiaries only. As assessee has not earned any tax free income and therefore, no expenses can be construed as incurred by the assessee we dismiss appeal of the department and in our opinion ld. CIT(A) has passed detailed and reasoned order. - Decided in favour of assessee
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2018 (4) TMI 737
Claim of expenditure u/s 37 - commission expenditure - Held that:- We are of the opinion that the assessee paid commission to Shri Laxminiwas V. Agrawal, Director of the company and the same has the support of the Board’s Resolution. In our view this part of the claim is allowable subject to the documentation relating to the filing of computation of income of Shri Laxminiwas V. Agrawal and the applicable higher tax rates. See CIT Vs. Indo-Saudi Services (Travel) Pvt. Ltd.(2008 (8) TMI 208 - BOMBAY HIGH COURT ). Regarding the commission payments made to the commission agents, i.e. Shri Ramesh Chandak (HUF) and Shri Ravindra Agrawal (HUF), we find these payments are made to these parties for the first time and the deduction is claimed u/s.37 of the Act. Therefore, there is need for discharge of onus by the assessee with reference to the nature of services rendered by them to the company. Therefore, for want of discharge of onus by the assessee, we find this portion of the issue needs to be remanded to the file of the AO. Assessee shall be granted reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. - Appeal of the assessee is allowed for statistical purposes.
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2018 (4) TMI 736
Penalty u/s 271(1)(c) - Held that:- When two views are possible and when no clear and definite inference can be dawn, in a penalty proceeding penalty cannot be imposed.…in quantum proceedings, a particular provision might be attracted for addition to the income of the assessee. But when it comes to the question of imposition of penalty, then independently of the finding arrived at in the quantum proceedings, the authority has to find conclusively that the assessee owns the concealed amount. - See Durga Kamal Rice Mills [2003 (4) TMI 26 - CALCUTTA High Court] - Decided in favour of assessee.
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2018 (4) TMI 735
Addition on account of difference in valuation of stock under the head undisclosed investment - produced no books of account - Held that:- Admittedly assessee is carrying on the business of jewellery but on the date of search the books of account or stock register was not produced. The assessee in post search enquiry has submitted the reconciliation of stock by producing the copies of the bill of purchase and sale as well as the approval notes for the goods sent and received on approval. The details before the DDI stating that there is no difference in the quantity of the jewellery. Valuation is at cost and the total quantitative details of purchase and sales and receipt and issue on approval is supported by proper documentary evidences. The assessee has also submitted the quantitative details which could not be shown to be concocted. No defect could be pointed out in such quantity details. The details of jewellery recorded on approval and sent on approval is supported by the documents produced before the ld AO but AO did not find any discrepancy in those details. Further, the valuation of jewellery made by the assessee on cost basis was also not disputed contrarily the cost of the jewellery was supported with the bills showing rates of purchases. Merely non maintenance of stock register by the assessee cannot result into addition unless the AO shows with conclusive evidence that quantitative details submitted by the assessee is incorrect. Admittedly the assessee has produced the books of account before the ld AO and DDI, no defects were pointed out therein. Therefore, merely because books were not produced at the time of search, such addition cannot be made. - Decided against revenue
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Customs
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2018 (4) TMI 733
Valuation - enhancement of assessable value for the purpose of levy of CVD - Held that: - on perusal of statements recorded that of Shri Rajesh Nor, Shri Mayur Jain, Shri Mahesh Chamey and Shri Keshavji Bhai, it is very clear that they have not stated that the invoice price which they were submitting to the Customs Authorities where in respect of goods which were procured by them from the importers. They simply handed over such invoices where the description of the goods sold by them tallied with the description of the goods imported by the appellants. That does not establish the link between the goods sold by the said 4 retailers to be the goods which were imported through the above stated Bills of entry. The data used for enhancement of assessable value was not the appropriate data. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (4) TMI 732
Grant of a preliminary decree for partition of property - defendants has argued that the plaintiff No.1 was thrown out from the HUF since he had sold some other properties of the HUF - Held that:- A preliminary decree for partition be drawn up. On enquiry, it is informed that the property is constructed over land admeasuring 200 sq. yds. and comprises of ground, first and half second floors and is not divisible by metes and bounds. No purpose will thus be served in deferring the passing of the final decree for partition. A final decree for partition of property No.E-2, South Extension PartI, New Delhi is also passed, of sale of the property and distribution of sale proceeds amongst the parties as per their shares declared in the preliminary decree for partition. The parties shall however, before putting the property to sale to an outsider, be entitled to make inter se bids amongst themselves, with the highest bidder paying the value of the share/s of other/s. The Gift Deeds aforesaid are also declared to be null and void to the extent inconsistent with the shares declared in the preliminary decree for partition.
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2018 (4) TMI 731
Winding up petition - existence of eligible outstanding debt - Held that:- A clear case is made out in this case that the respondents are despite having admitted the dues of ₹ 13,23,057/- refusing to pay. Respondent company is hence unable to pay its debt. Keeping in view the above, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers “Statesman” (English) and "Veer Arjun" (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing.
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Insolvency & Bankruptcy
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2018 (4) TMI 734
Complaint against Amrapali group - There are certain projects which could not be included for one reason or the other in the said note. We request the learned counsel appearing for the parties to submit details of M/s. Amrapali group to Mr. Gaurav Bhatia, Advocate. As undertaken by Amrapali Group that they are going to convene joint meeting of officers of NOIDA/Greater NOIDA authorities and the buyers/representatives and other interested stakeholders and submit their opinion on the note submitted by Mr. M.L. Lahoti, learned counsel today in this Court and other left out projects. We direct the concerned officers of the Noida and Greater Noida Authorities also to submit in details the inspection report as to what are deficiencies and the requisites to be completed before issuance of the completion certificate. Let tower wise position be specified by the Noida/Greater NOIDA Authority on the next date. Let a proposal be submitted. Amarpalli builders also to submit their opinion and the money required and how they are going to arrange it and how much work has been completed by now pursuant to the order passed by this court on 15th March, 2018. Status Report with respect to the Leisure Park be submitted in this Court on the next date of hearing with respect to the time to be consumed for completion of the A & B part as well as what is the proposal contained in the C part of the note submitted by Sh. M.L. Lahoti, today.
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Service Tax
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2018 (4) TMI 730
Works contract service - composition scheme - whether the composition scheme under Works Contract can be opted or not in case of ongoing projects on the date when such option is exercised? - Held that: - The Tribunal in the case of B.R. Kohli Construction Pvt. Ltd. [2017 (4) TMI 38 - CESTAT NEW DELHI] has held that such option can be exercised in case of ongoing projects also - the Appellant is eligible for composition scheme under Works Contract - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 729
Benefit of N/N. 18/2009 ST dated 07/07/2009 - Transport of Goods by Road - Overseas Commission Agent - export of goods - denial on the ground that the appellant has not produced various documents such as the relevant invoices for verification - Held that: - the Notification grants exemption from payment of Service Tax in respect of services received by the exporter of goods and used for such export. The Notification is subject to certain conditions, to the effect that the exporter shall produce the relevant document evidencing their claim that such services have been used for export. The appellant has failed to produce copies of the relevant documents - however, appellant says that the appellant is in possession of all the necessary documents and the same can be submitted once again for verification. Matter remanded to the Original Authority for verification of the documents - appeal allowed by way of remand.
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2018 (4) TMI 728
Liability of service tax - services availed for mobilizing finance by using services of foreign company - transaction covered by IFC Act, 1958 - Held that: - identical issue decided in appellant own case M/s Petronet LNG Limited Versus CCE, New Delhi [2017 (3) TMI 120 - CESTAT NEW DELHI], where it was held that the IFC Act 1958 clearly provides for immunity of all transactions and operations of IFC - tax liability do not sustain. Penalty - Held that: - the disputed amount was paid immediately after the notice and the same was appropriated in the impugned order - penalty not sustainable. Appeal allowed.
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2018 (4) TMI 727
Liability of service tax - Intellectual Property Service - trade secrets - Held that: - an identical issue in the assessee-Appellants’ own case came up before the Tribunal in M/s Dharampal Satyapal Sons Pvt. Ltd. Versus CST, Delhi [2017 (5) TMI 467 - CESTAT NEW DELHI] and Tribunal has held that, no Service Tax liability will arise in respect of such trade secrets regarding nature, process of products etc. - appeal allowed - decided in favor of appellant-assessee.
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2018 (4) TMI 726
Business Auxiliary Services/Steamer Agent Services - certain incentives received from ICD operators and steamer owners - other agency income from brokerage of transport and other allied activities - Held that: - neither the original authority nor the appellate authority has examined the arrangement arrived at between the ICD/Shipping Lines and the assessee - Appellants for promotion of business. The only basis on which the tax liability was considered is that, the assessee-Appellants received certain incentives. With regard to incentives received from steamer owner, a reference can be made to the decision of the Tribunal in the case of Indo Lloyd Freight Systems Pvt. Ltd. vs CST, Chennai, [2017 (8) TMI 400 - CESTAT CHENNAI], wherein it was held that, such amount received cannot be formed under the category BAS for tax liability . Other agency income from brokerage of transport and other allied activities - Held that: - the same cannot be brought under CHA Services, in the absence of any evidence - Neither the original authority nor the appellate authority has examined these issues in detail before confirming the tax liability - Similar is the position with respect to the amounts claimed to be reimbursable expenditure by the assessee-Appellants. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 725
Telecommunication services - Revenue entertained a view that the appellants did not discharge service tax under various categories for the period from 01.10.2003 to 31.03.2008 - supply of content like news, ring tone, games, SMS, alerts etc. to telecom operators who provided it to the subscribers - whether taxable under the support of business and commerce for the period 01.05.2006 to 31.05.2007? - Held that: - similar issue decided in the case of THE STATE OF ANDHRA PRADESH Versus M/s BHARAT SANCHAR NIGAM LTD, HYDERABAD [2011 (9) TMI 216 - Andhra Pradesh High Court], where it was held that “Value added services” fall within the ambit of “telecommunication services” as defined in Section 2(k) of the TRAI Act and Section 65(109a) of the Finance Act, 1994. Ringtones, music downloads, wall paper, music clips etc., fall within the definition of “development and supply of content” under Section 65(36c) and constitute “taxable service” under Section 65(105) (zzzb) of the Finance Act, 1994. Pre-existing entry continue to remain with the same scope and words even after the introduction of the new tax entry, thereby revealing that the new tax entry is an altogether new addition to the taxing scope - the tax liability under BSS is not sustainable for development and supply of contents to the telecom operators. MMR and management consultancy service - reverse charge mechanism - Held that: - It is clear that the appellants have entered into a joint - venture arrangement with shared responsibilities and obligations. The income is credited with common bank account and share d as per the pre - arranged percentage between the two parties - in such arrangement in terms of the said agreement, there could be no service inter-se between parties to the agreement - in this arrangement, there can be no tax liability on the appellant. Tax liability - facility of availing server /web hosting provided by the Foreign Service provider - Held that: - Though, the explanation to BSS gives only inclusive definition of infrastructure support, examining the present context of the support received by the appellant by way of server hosting, we are of the considered view that the same will fall under the overall category of infrastructural support service, which is part of the BSS - the question of revenue neutrality as a legal principle to hold against a tax liability is not tenable. Extended period of limitation - penalty - Held that: - The issue regarding tax liability on reverse charge basis was highly contentious involving multiple interpretation and litigation - there is no scope for invoking extended period of demand on such reverse charge and also impose penalty applicable to such tax - Service tax liability shall be restricted to the normal period of limitation. Except for confirmation of tax liability on reverse charge basis on server space facility availed by the appellant for normal period, the appeal is otherwise allowed on other issues - appeal allowed in part.
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2018 (4) TMI 724
Mandap Keeper Service - activity undertook undertook in their own party hall - value of service as well as the sale of food items shown separately in the invoices - appellant paid service tax on renting of immovable property services - Held that: - the appellant had separately claimed the charges towards the hall rent and the catering services provided to its customers. The appellant had also reflected the value of service as well as the sale of food items separately in the invoices. Since the Department has not disputed the fact regarding payments of VAT on the supply of food, the benefit of Notification No. 12/2003 should be available to the appellant. VAT paid on sale of food should not be included in the value of service provided and billed separately. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 723
GTA Service - vehicles taken on hire from various truck owners/operators for movement of goods from its warehouse to the client’s premises - Held that: - the conditions prescribed in Section 65 (105) (zzp) read with Section 65 (50b) of the Finance Act, 1944 have not been fulfilled inasmuch as, a person is to be categorized as a “goods transport agent”, when only he issues the consignement note in the manner prescribed in the statute. Since, the documents issued by the service provider for transportation of goods are not in confirmity with Rule 4B of the Rules - The said documents cannot be termed as consignment note, and the transporters cannot be termed as goods transport agents, for the purpose of payment of Service Tax by the appellant, as a recipient of service, under reverse charge mechanism. Tribunal in an identical set of facts, in the case of Southeastern Coal Field Ltd. [2016 (8) TMI 677 - CESTAT NEW DELHI] has held that in absence of issuance of consignment note, the transporters cannot be treated as goods transport agency for the purpose of levy of Service Tax under GTA services. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 722
CENVAT credit - whether the appellant is entitled to avail CENVAT credit of Service Tax on commission paid to sales commission agent who causes sale of Sugar & Molasses, manufactured by the appellants? - there are contrary judgements on the issue. Held that: - Tribunal in the case of Maheshwari Solvent Extraction Ltd. Versus Commissioner of Central Excise, Nagpur [2013 (7) TMI 51 - CESTAT MUMBAI] wherein it has been held that if there are contrary view of the Apex Court, in that circumstance the Adjudicating Authority is independent to take any view on merits of the case. Therefore, we are taking independent view and hold that appellants are entitled to avail CENVAT credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (4) TMI 721
Classification of goods - coconut oil in packings upto 2 litres/packings upto 500ml - While the assessee(s) contended that coconut oil in small packings is also classifiable as coconut oil under Heading 1513 the revenue claimed classification of the said products as “hair oil” under Heading 3305 while conceding that coconut oil in large packings i.e. beyond 2 Kgs. merited classification under Heading 1513 - Whether classifiable under Heading 1513 or under Heading 3305 of the Central Excise Tariff Act, 1985? - difference of opinion. Held that: - In view of the difference of opinion in terms of the judgments pronounced by us in the present appeals, the Registry is directed to place the said appeals before Hon’ble the Chief Justice of India for appropriate orders.
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2018 (4) TMI 720
N/N. 89/1995-CE dated 18.05.1995 - benefit of notification on waste items being Fatty acids, Wax, Gums and Spent earth - manufacture of exempted goods - whether the appellants/respondents manufacturing Refined Vegetable Oil which is exempted under Notification, whether they are entitled to exemption on the items being Fatty acids, Wax, Gums and Spent earth under N/N. 89/1995-CE dated 18.05.1995? Held that: - similar issue decided in the case of M/s Ricela Health Foods Ltd., M/s J.V.L. Agro Industrial Ltd., M/s Kissan Fats Limited Versus CCE, Chandigarh, Allahabad [2018 (2) TMI 1395 - CESTAT NEW DELHI], where it was held that the removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture of these gums, waxes and fatty acid with odour. These cannot be considered as anything other than waste and as such will be covered by the exemption N/N. 89/95-CE. The manufacturer-assessees herein are entitled to exemption under the N/N. 89/1995-CE dated 18.05.1995 on their waste generated in the course of manufacture such as Fatty acids, Wax, Gums and Spent earth. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 719
Clandestine Removal - shortage of sponge iron - it appeared to Revenue that appellant surreptitiously procured the aforementioned quantity of sponge iron from AIPL without cover of valid Central Excise invoices and used the same for unaccounted production of ingots and thereafter removed the same clandestinely during the period September, 2010 to December 2010. Held that: - allegations are based on statement of Director of AIPL, statement of transporters, whole case is made out against the appellant. There is no documents recovered from AIPL wherein it is stated that goods were cleared to the appellants. Further in the course of inquiry at the end of appellant, no such corroboration of receipt of alleged sponge iron was found. Neither the Director of AIPL nor the transporters were examined in the adjudication proceedings, relating to the present case. There is no evidence worthwhile against the appellant except assumption and presumptions by the Revenue - demand is hit by the provision of section 9D of the Act - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 718
Validity of SCN - Whether issue of SCN for recovery of duty allegedly short paid on the ground of undervaluation, under the provisions of the law, Section 11A of Central Excise Act read with Rule 9B of CER 1944, was valid? - whether the SCN issued, pending the finalization of provisional assessment is valid? Held that: - the show cause notice issued prior to finalization of provisional assessment, when admittedly the assessees were under provisional assessment scheme, is ab initio void - SCN not maintainable. The concerned Adjudicating/Competent Authority directed to finalize provisional assessment of M/s Venugopal Engineering Ltd., now known as M/s Electroparts India Private Ltd. and M/s Domebell Electronics India Private Ltd., with effect from 01/03/1994. Appeal allowed - decided in favor of appellant.
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