Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 11, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exemption from GST - supply of cereals, pulses and flour - sale under the brand name or not - the goods are being supplied through the “More Stores” which is a registered brand as on the 15th May 2017 irrespective of whether or not the brand would be subsequently deregistered and further, the name “Aditya Birla Retail Limited” also appears on the unit container. - Not eligible for exemption - AAR
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Classification of goods - rate of tax - E-rickshaw tyres - the e-rickshaw is not within the sweep of the word "bicycles" or "cycle Rickshaw" - The product is classified and covered by Tariff Heading 4011 - taxable @9% CGST and @9% SGST (i.e. @18%) - AAR
Income Tax
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Rates of Tax Collection at Source for the Financial Year 2018-19 - Rates of TDS and TCS
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Rate of Tax Deduction at Source (TDS Chart) with Threshold Limit for the Financial Year 2018-19 - Rates of TDS and TCS
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TDS u/s 194C - works contract - purchase of packing material with trade name, logo, particulars of product and other information printed on it - there is no works contract involved in supply of printed material - No TDS liability - AT
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Capital gain tax liability - The power and control of land was conferred on the builder/ developer under GPA - since the agreement was not registered, there cannot be a transfer within the meaning of section 2(47)(v) - AT
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Nature of receipt - subsidy on account of power consumption - the real purpose of the incentive in this case has to be seen as a capital subsidy and has to be regarded, as such, as a capital receipt and not a revenue receipt. - HC
Customs
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Valuation - import of light melting steel scrap turning - enhancement of value - original authority simply adopted the opinion suggested by the said chartered engineer who did not have authority as empanelled chartered engineer relating to metals - he opinion of the chartered engineer, who is not a metallurgical engineer, should not be relied upon and value can not be enhanced. -AT
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Import of crude Palm oil at concessional rate of duty - Proof of manufacture of laundry soap - The allegations in the SCN are presumptive and unsubstantiated - the demand of penalty have been confirmed mechanically, without application of mind - AT
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Duty Drawback alongwith interest - The Department admitted the fact that the documents are not traceable. When the petitioner was directed to produce the documents, they were also in the position because, at the time when the claims were made in the year 1978, all original documents were submitted. - Refund allowed - HC
DGFT
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Requirement of Pre-Shipment Inspection Certification (PSIC) dispensed with for Import of metallic waste and scrap from safe countries through six ports
IBC
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Correction of the decision of the Resolution Professional - This court being Adjudicating Authority under the Code is not expected to substitute its view upon the discretion and wisdom of the RP and CoC to opt for only which a particular view until and unless it is the case of patent illegality or arbitrariness. - Tri
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Limitation Act, 1963 applicability for triggering 'Corporate Insolvency Resolution Process' - whether 'I & B Code' is a 'self-contained Code' or not? - the Adjudicating Authority was not correct in dismissing the application on the ground that the application is beyond the period of limitation. - AT
Service Tax
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Input service distribution - Recovery u/r 14 of CCR, 2004 - Input service distributor does not fall under Rule 14 of the Cenvat Credit Rules as they neither avail the cenvat credit nor utilize the same for payment of any service tax/excise duty. - AT
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Works Contract Service - original works - service tax liability @40% or otherwise - There is failure on the part of learned Commissioner to allow the admissible abatement under the Service Tax (Determination of Value) Amendment Rules, 2012, read with the Service Tax (Determination of Value) Rules, 2006. - AT
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Valuation - inclusion of reimbursement expenses - C&F Agent - if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included - AT
Central Excise
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SSI exemption - migration from concessional rate of duty with Cenvat Credit to fill exemption - subsequent rescinding of the notification - allowing benefit of Notification No.8/03-CE (as against 9/03) - benefit of full exemption notification allowed - AT
Case Laws:
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GST
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2018 (5) TMI 700
Exemption from GST - supply of cereals, pulses and flour - sale under the brand name or not - Whether the subject goods, proposed to be sold under Stream 1, where the package of the subject goods would merely have a declaration mentioning the name and registered address of the Applicant as the manufacturer, as per the statutory requirement under Subject Statutory Provisions, can be considered as 'not bearing a brand name', and, accordingly eligible for exemption from GST in terms of relevant entries to N/N. 2/2017 Central tax (Rate) dated 28th June 2017 and, the corresponding entries under N/N. 2T2017-lntergrated tax (Rate) dated 28th June 2017 and N/N. 2/2017-State Tax (Rate) dated 29th June 2017)? Whether the subject goods proposed to be sold under Stream 2 (refer Annexure I), where the package of the subject goods would have a declaration mentioning the name and registered address of the manufacturer as per the statutory requirement under the Subject Statutory Provisions as also the declaration 'Marketed by- Aditya Birla Retail Limited' can be considered as 'not bearing a brand name', and, accordingly eligible for exemption in terms of relevant entries to the Exemption Notifications? Whether the declarations made on the package, by inter alia using common/generic terms viz. 'Value', 'Daily', 'Superior' and 'Choice', for the sole purpose of indicating the quality of the product so as to enable the customers to identify and buy products based on their requirements, budget and preferences can be construed to be a 'brand name' for the purpose of the Exemption Notifications? Held that: - there is mention of the name “Aditya Birla Retail Limited”. It is indicative of the situation that the product belongs to Aditya Birla Retail Limited which is a big name in the business world, world over - It can be seen that a 'mark' includes a 'name'. Further, it also includes a combination of colours. In the present case, we see that the packaging for both the Streams would be using a combination of colours from the logo of the Aditya Birla Group. And we see that the name Aditya Birla also appears on the package. The name “Aditya Birla” is more than sufficient to establish an identity with the goods. The observation as to whether the brand name appears in entirety or in parts does not appear at all cannot be the chief criterion; primary focus has to be on whether an indication of a is conveyed in the course of trade between such specified goods and some person using the mark - In the present case, the applicant also has a family of customers purchasing from the More Stores and associating the Brand with some quality standards. Thus, the customers are aware of the More brand as well as the products of the More brand which are available in the More Stores alongwith products of other manufacturers. Therefore, a new strategy, all of a sudden, in view of the provisions of the GST Act, to discontinue the earlier practice of mentioning the Aditya Birla logo or the More brand would not mean that the customers would have any difficulty in associating or identifying the products with the More brand. The applicant though is proposing to make changes as per the Stream 1 and 2 mentioned above, it is equally clear that the goods are being supplied through the “More Stores” which is a registered brand as on the 15th May 2017 irrespective of whether or not the brand would be subsequently deregistered and further, the name “Aditya Birla Retail Limited” also appears on the unit container. The products supplied under Stream 1 and Stream 2 would amount to supply under a brand name on the basis of all the above factors and the attending circumstances. Ist and 2nd question answered in negative - as regards 3rd question, The question cannot be raised in isolation, Refer to the answers in respect of the Streams 1 and 2.
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2018 (5) TMI 699
Classification of goods - rate of tax - E-rickshaw tyres - What is the classification and rate of Central Goods and Service Tax leviable on the product "E-rickshaw tyres"? Held that: - Three Wheeled Electric Motor Vehicle (known as E-Rickshaw in market) is a Motor Vehicle in Motor Vehicle Act also. It has to be registered with State Transport Authorities as a Motor Vehicle. Tyres and Tubes used in these Vehicles are Automobile Tyres and Tubes of size 300-12, 300-14, 90-90/12 and 3.75-12, which are duly prescribed as Automobile Tyres in Bureau of Indian Standards for Two and Three Wheeled Motor Vehicles IS 15627:2005. By no means the Tyres and Tubes cleared by them are Tyres and Tubes of Three Wheeled Powered Cycle Rickshaw - the Tyres cleared by these manufacturers attract a peak rate of 14% percent instead of 2.5% percent, as these Tyres and Tubes are meant for Electric Motor Vehicles (known as E-Rickshaw). The sizes of these tyres and tubes mentioned are also used widely in scooters and motorcycles. It is necessary to verify what duty these companies were paying in pre-GST. The product introduced by the appellant is with electric battery whereas the simple meaning of "cycle" is a pedal driven, human powered, single track vehicle, having two wheels attached to a frame, one behind the other - the e-rickshaw is not within the sweep of the word "bicycles" or "cycle Rickshaw" and also does not appear to be in consonance with the legislative intent. When legislature has classified the product and put them under a different entries Entry 160 of schedule-I and Entry-46 of schedule-IV and being capable to be understood in common parlance as a different commercial commodity, the basis of the classification is not open to question. Moreover, the schedule entry 46 is very specific in nature and is considered for all pneumatic tyres, of rubber. The schedule entry is provided with the exclusion clause. Ruling:- The product is classified and covered by Tariff Heading 4011 and the rate of tax shall be at the rate of 14 percent under MGST ACT, 2017 and 14 percent under CGST ACT, 2017.
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2018 (5) TMI 698
Seizure of goods with vehicle - Section 129(1) of the U.P. GST Act, 2017 - Held that: - we have no reason, prima facie, to disbelieve that the Assistant Commissioner had sufficient reasons at the time of inception to pass the impugned orders - petition dismissed.
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2018 (5) TMI 697
Seizure of goods - goods detained solely on the ground the goods are not accompanied with filled 'Part B' of form GST e-way bill-01 - Held that: - Since the facts of the present case are identical as of Rivigo Services Pvt. Ltd. [2018 (5) TMI 367 - ALLAHABAD HIGH COURT] we are disposing of the present petition on similar terms by directing the respondent no.3 to release the seized goods and vehicle forthwith - in the present case, the seizure proceedings are carried out illegally and the same are wholly without jurisdiction - petition allowed - decided in favor of petitioner.
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2018 (5) TMI 696
Seizure of goods - penalty u/s 129(3) of the UPGST Act, 2017 - failure to produce Transit Declaration Form-I - Held that: - on account of absence of any notification by the Central Government under Rule 138 of CGST Rules, 2017 and in view of incorrect application of notification issued by the State Government under Rule, 138 of UPGST Rules, on the date of incident Form TDF-I or any other Form was not required in the case of inter-state movements of goods - petition allowed.
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Income Tax
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2018 (5) TMI 715
Stay petition - recovery of demand - unconditional stay - Held that:- The object of grant of interim order is to preserve status-quo and not to make the appellate remedy infructuous or illusory. This principle cannot be straight away applied to Revenue matters, where a slight departure is required to be adopted. As pointed out earlier, the petitioner miserably failed to substantiate their contention that they are unable to mobilise funds to comply with the conditions nor they had brought out before the authorities as to how they have made out a prima facie case for grant of an unconditional stay or for that matter how the direction of the Assessing Officer to pay 20% of the disputed demand, is an onerous condition. Mere pendency of an appeal before the third respondent is no ground to state that there should be stay of the recovery of the tax demanded. Assessee company has established Eye Hospitals in various parts of the State and elsewhere in the country and it is stated that there are several persons employed with them and the hospitals are functioning and there are several senior citizens, who require care and attention, this Court is inclined to grant one more opportunity to the assessee company to show their bonafide and if they do so, this court is inclined to direct the assessee company to once again approach the third respondent for appropriate relief. Since the third respondent, CIT(A), is seized of with the appeal petition, the order passed by the second respondent, being earlier than the order dated 16.03.2018, passed by the third respondent, in my considered view, the order dated 16.03.2018, shall govern the proceedings and not the impugned order dated 06.03.2018. For such reason, it is unnecessary to interfere with the said order dated 06.03.2018 as already the third respondent, before whom the appeal is pending against the assessment, has already passed an order, dated 16.03.2018. W.P. disposed of by directing the petitioner/assessee company to pay 5% of the tax demanded for each of the assessment years
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2018 (5) TMI 714
Leviability of interest u/s. 158BFA(1) - whether from what date interest under section 158BFA(1) of the Income TAx Act, 1961 is leviable? - Tribunal upholding the interest u/s. 158BFA(1) even for the period of delay in filing the return of income, caused due to delay in obtaining copies of the seized materials from the Income Tax Department, which was beyond the control of the appellant? - whether the levy of such interest for a period of 21 months was just and proper? Held that:- We are convinced to take a stand in favour of the assessee for the reason that the assessee was requesting for copies of the seized documents for nearly a year and the copies of those documents were furnished to the assessee between 18.06.1999 to 22.06.1999. On a reading of statutory provision one gets an impression that no such plea is entertainable and limitation does not stop and continues to run upon issuing notice under section 158BC. We cannot ignore the principles of natural justice, which will have to be read into the provision, as the assessee without being supplied with the necessary documents, which were seized during the course of search, would not be in a position to file a proper return. Law does not compel a person to perform that which is impossible. Admittedly, the delay in not filing the return after the notice dated 20.07.1998 is not attributable to the assessee. No where, the Revenue has taken a stand that the request made by the assessee for supply of seized documents was either unreasonable or uncalled for. Later, the department has furnished the photostat copies of the seized documents. Therefore, the period during which the assessee was waiting for the copies of the documents, which were seized, has to be necessarily excluded and if this is excluded, the period between 1998 to 22.06.1999 has to be necessarily excluded. Case of Commissioner of Income Tax and another v. B.Nagendra Baliga [2014 (6) TMI 114 - KARNATAKA HIGH COURT] to be followed.
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2018 (5) TMI 713
Admit on the following substantial question of law :- (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the provisions of Section 50C of the Act does not come into operation where leasehold rights in land are transferred? As no appeal had been filed by the Revenue for the order of the Tribunal in the case of Atul Puranik (2011 (5) TMI 576 - ITAT, Mumbai) which had held that section 50C of the Act will not apply to transfer of leasehold rights in land and buildings. However, at the time when both aforesaid decisions in Greenfield Hotels and Estates (2016 (12) TMI 353 - BOMBAY HIGH COURT) and Heatex Products Pvt. Ltd. (2016 (7) TMI 1393 - BOMBAY HIGH COURT) were not entertained by this Court, the decision of this Court in Pradeep Steel Re-Rolling Mills Pvt. Ltd. (2011 (7) TMI 1101 - ITAT MUMBAI) admitting the Appeal on this very question was not brought to our notice.
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2018 (5) TMI 712
Penalty u/s. 271(1)(c) - claim of expenditure on rent disallowed - Held that:- There cannot be any reason for the assessee to deliberately claim the expenditure even knowing that it is not allowable. That being the case, the allegation of the department that the assessee has furnished inaccurate particulars of income is not borne out from the record. More so, when the assessee has furnished full particulars of the expenditure claimed and its accounts are audited. Notably, the auditors have also not pointed out that the disputed amount being in the nature of provisions are not allowable. Merely, because the assessee has accepted the addition would not automatically lead to the conclusion that it has furnished inaccurate particulars of income. Moreover, the contention of the assessee that considering the huge losses the assessee would not have derived any benefit by wrongly claiming such expenditure stands to reason . No infirmity in the order of the CIT(A) in deleting the penalty - Decided in favour of assessee.
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2018 (5) TMI 711
TDS u/s 194C - assessee has purchased packing material and supplier has supplied the material with trade name, logo, particulars of product and other information - disallowance u/s 40(a)(ia) - works contract or only contract for sale - Held that:- Circular No.681 of CBDT very clearly specified that contract for sale would not cover the provisions u/s 194C of the Act. As D.R. referred one of the purchase bills furnished in the paper book and argued that the assessee has not paid any CST or VAT and the same was in the nature of supply contract, the amount of the bill was marginal and all the remaining sample bills enclosed in the paper book proves that the transactions were sale transactions and the assessee has paid CST and sales tax on all the purchase bills. The case was scrutinized twice once at the time assessment u/s 143(3) r.w.s 153A and second time in giving effect to the Ld.CIT (C) order but no other evidence was brought on record to show that the same is works contract. Therefore, we hold that there is no works contract involved in supply of printed material and the assessee’s case is squarely covered by the decision of Chandana Brothers cited (2010 (12) TMI 1293 - ITAT VISAKHAPATNAM) and CIT Vs. Dabur India Limited (2005 (8) TMI 65 - DELHI High Court) and no disallowance is called for u/s 40(a)(ia) of the Act. - Decided in favour of assessee.
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2018 (5) TMI 710
Unexplained jewellery found in search - jewellery received from inheritance or family tradition - Held that:- Since in the instant case the brothers and sisters of the husband of the assessee have confirmed that the mother in law of the assessee had given her jewellery weighing 500 gms before her death since she was staying with her and since the Assessing Officer had also accepted the same, therefore, we find merit in the argument of the ld. counsel for the assessee that order of CIT(A) enhancing the income is not proper. We, therefore, set-aside the order of CIT(A) and allow the jewellery to the extent of 500 gms as explained. The Assessing Officer is directed to delete addition to this extent. Coming to the addition sustained by the AO we find the AO had allowed credit to the tune of 400 gms to the assessee. It is an admitted fact that no wealth-tax return was filed by the assessee to substantiate the acquisition/availability of jewellery. In absence of the same and going by CBDT Instruction No.1916 dated 11.05.1994 we allow 500 gms of jewellery in the hands of the assessee as explained as against 400 gms allowed by the Assessing Officer. Thus, in effect 284 gms of gold remains unexplained the value of which comes to ₹ 2,69,800/- i.e. (950 per gram x 284 gms). AO is directed to restrict the addition to ₹ 2,69,800/-. - Decided partly in favour of assessee.
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2018 (5) TMI 709
Undisclosed sources u/s 68 - Held that:- It is a serious lapse which requires investigation at the highest level, how the A.O. passed two orders one in favour of Revenue and another in favour of Assessee. It may also be noted that the Ld. CIT(A) simply followed his order for A.Y. 2005-2006 for the purpose of deleting the addition. Learned Counsel for the Assessee however, fairly stated that in A.Y. 2005-2006, the issue was of unexplained share application money, but, in assessment year under appeal, the issue is of unsecured loans. CIT(A) has co-terminus powers to that of the A.O. Therefore, it is his duty to verify the facts and then pass the order as per Law. The Ld. CIT(A) without giving any reasons for decision in the appellate order passed the order following his order for A.Y. 2005-2006 which may not be relevant to the matter in issue. Ld. CIT(A) have also not verified as to how two different orders have been passed by the A.O. on the same matter in issue showing different additions against the assessee. In this view of the matter, we are of the view that the matter in issue requires reconsideration at the level of the Ld. CIT(A). - Appeal of Revenue is allowed for statistical purposes.
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2018 (5) TMI 708
Assessments framed u/s 153A - assessment in the name of non-existent amalgamating company - Held that:- No hesitation in holding that the framing of assessments against a non- existing entity/person goes to the very root of the matter and is a jurisdictional defect as there cannot be any assessment against a 'dead person'. Accordingly, the impugned assessments are bad in law and are liable to be quashed being void ab initio. We observe that the facts of the present case are quite similar to the facts of the case in Spice Entertainment (2011 (8) TMI 544 - DELHI HIGH COURT) wherein their Lordships have held that framing of assessment against non-existent entity/person goes to the root of the validity of the assessment which is not a procedural irregularity curable u/s 292B or under any other provision of the Act but it is a jurisdictional defect because there cannot be framing of any assessment order against a dead person or entity which is non-existent on the date of framing/passing assessment order - assessments in the name of nonexistent amalgamating company being jurisdictional defect are not sustainable and, therefore, we quash the same. - Decided in favour of assessee.
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2018 (5) TMI 707
Unexplained money deposited in the bank account - assessee has opened a bank account with the professional who was authorised representative of the assessee - absence of source of the cash deposited in this bank account - Assessee did not produce any supporting evidence to substantiate his claim - Held that:- When first account holder is authorised representative of the assessee would clearly support the findings of the authorities below that it was an unaccounted bank account maintained by the assessee with his Authorised Representative and in the absence of any explanation of source of the cash deposited in the bank account, no interference is called for in the matter. There is no reason why a professional will provide his own money and operate bank account with the assessee. If there was money of Shri Mahesh Sharma, he could have given confirmation or would have appear before A.O. for recording his statement. However, he did not support the case of the assessee and did not appear before A.O. for recording his statement. The explanation of assessee is clearly an afterthought.- Decided against assessee.
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2018 (5) TMI 706
Penalty u/s 271(1)(c) - survey conducted u/s 133A - assessee surrendered additional stock and paid the taxes thereon but not disclosed in return of income - non specification of charge - Held that:- The assessee not only surrendered the income during the course of survey but also paid the tax thereon before filing the return of income - assessee did not reflect the surrendered amount and tax paid thereon in the said return but when the mistake was pointed out, the assessee surrendered that income. It is well settled that the assessment proceedings and the penalty proceedings are two different and separate proceedings. Therefore, even when some addition is to be made to the income of the assessee, it is not always necessary that the penalty u/s 271(1)(c) of the Act is to be levied. In the present case, it cannot be said that the surrendered income was not voluntarily and the assessee wanted to conceal the income since the tax had already been paid on the amount which was surrendered during the course of survey. AO in the notice issued u/s 274 r.w.s. 271 was not sure as to whether the assessee concealed the particulars of income or furnished inaccurate particulars of such income which is evident from the said notice wherein neither of the two was struck off. Penalty u/s 271(1)(c) of the Act was not leviable - Decided in favour of assessee.
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2018 (5) TMI 705
Capital gain tax liability - unregistered development agreement for development of property - The power and control of land was conferred on the builder/developer under GPA - whether no transfer arise giving rise to any transfer of right u/s.53A of the Transfer of Property Act? - Held that:- The undisputed facts are that the agreement dated 15.1.2007 with the builder M/s. Odyssa Home & Commercials (P) Ltd., for construction and sale of 9 dwelling units by the assessee on his land situated at Plot No.137/A, Surya Nagar, Bhubaneswar was not registered. In view of the decision of Hon’ble Supreme Court in the case of CS Atwal [2017 (10) TMI 323 - SUPREME COURT OF INDIA] the same would not amount to transfer u/s.53A of the Transfer of Property Act, 1882 and consequently cannot be a transfer within the meaning of section 2(47)(v) of the Act. Thus, there cannot be any capital gains in the hands of the assessee which can be brought to tax during the year under consideration - Addition to be deleted. - Decided in favour of assessee.
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2018 (5) TMI 704
Income from transaction of shares - busniss income or capital gain - period of holding of shares - intention and treatment in the books of accounts - Held that:- Whether the income in question has to be assessed under the head income from capital gain or income from business, the assessee should demonstrate the intention and treatment in the books of accounts, whether he holds these shares and securities as an ‘investment’ or as a ‘stock in trade’.This intention can be judged by the entry made by the assessee in his books of accounts, that is, the treatment in the books of accounts of the assessee. We note that since, the assessee has shown the investment in its books of accounts under the head investment and not under the head stock in trade, therefore, the intention of the assessee is not to trade in shares but to treat them as an investment. We note that the Department has been consistently accepting the assessee`s computation under the head ‘short term capital gain, therefore, we uphold the order of the ld. CIT(A) following the Rule of consistency. Department has been accepting the stand of the assessee, during the previous year as well as in subsequent years to disclose the income on account of sale of investments under the head ‘short term capital gain’. Moreover, the assessee`s intention is to be as an ‘Investor, as has been observed by the treatment in the books of accounts as ‘investment’. Case of RadhasoamiSatsang [1991 (11) TMI 2 - SUPREME Court] to be followed. - Decided against revenue
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2018 (5) TMI 703
TDS u/s 194H - discounts allowed to the distributors on bulk sale of starter kits and recharge vouchers (RCVs) - tds liability - assessee in default - transaction on principal–to–principal basis or on principal-to-agent basis - Held that:- The transaction relating to commission is agreed between the assessee and the channel partner/distributor, but the assessee has not been able to address as to for which segment of business, both the parties agreed to pay and receive commission. In view of what has been discussed above, and respectfully following the decision of Idea Cellular Ltd. (2010 (2) TMI 24 - DELHI HIGH COURT)held the discounts allowed on Starter Kits liable to TDS and since the assessee failed to deduct the tax at source, held the assessee in default on this count, determining the total liability and interest thereon at ₹ 2,15,45,233/- u/s. 194H - Decided against assessee TDS u/s 194J - Non-deducting of TDS on payment of IUC - Held that:- Keeping in view the similar nature of charges, i.e., roaming charges paid, this Bench of Tribunal in the case of Bharat Sanchar Nigam Ltd. vs. Addl. CIT (2017 (10) TMI 1093 - ITAT DELHI) the issue under consideration has been decided in favour of the assessee. The provisions of roaming services do not require any human intervention and therefore, the payment of roaming charges does not fall under the net of TDS provisions u/s. 194J of the Act. - Decided in favour of assessee.
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2018 (5) TMI 702
Nature of receipt - revenue or capital - subsidy allowed by the State Government on account of power consumption - purpose of the scheme under which such incentive or subsidy is made available to a business unit - scope of purpose test - Held that:- When an entrepreneur sets up a business unit, particularly a manufacturing unit, or embarks on an exercise for expanding an existing unit, the entrepreneur factors in the cost of setting up the unit or the cost of its expansion and the costs to be incurred in running the unit or the expanded unit. Capital expenditure and the expenses to run it that are taken into account by the entrepreneur. The investment by an entrepreneur by way of capital expenditure is recovered over a period of time and has a gestation gap. If the running expenses are made cheaper by way of any subsidy or incentive and made applicable only to new units or expanded units, the realisation of the capital investment is quicker and the decision as to the quantum of capital investment is influenced thereby. That is the exact scenario in the present case where the lower operational costs by way of subsidy on consumption of power helps in the quicker realisation of the capital expenditure or the servicing the debt incurred for such purpose. In view of the acceptance of the wider ambit of the “purpose test” in the most recent judgment of the Supreme Court cited by the parties and the scheme in this case being available only to new units and units which have undergone an expansion, the real purpose of the incentive in this case has to be seen as a capital subsidy and has to be regarded, as such, as a capital receipt and not a revenue receipt.
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2018 (5) TMI 701
Revision u/s 263 - denial of principle of natural justice - appellant had not been served any notice prior to such order being made and that the appellant was not afforded any opportunity of hearing before the commissioner passed the relevant order - addressed to a defunct entity and not to successor-in-interest - Held that:- It was imperative for the appellate tribunal to address the issue since a previous opportunity of hearing is necessary to be afforded to an assessee before an order under Section 263 can be made by a commissioner. On the limited aspect as to the violation of the principles of natural justice, the order impugned cannot be sustained in so far as it pertains to company Brolly Dealcom Pvt. Ltd. which has been taken over as a going concern by the appellant herein. Appellate tribunal has to satisfy itself as to whether the appellant herein as the successor-in-interest of Brolly Dealcom Pvt. Ltd. had notice of the hearing under Section 263 of the Act. If there is sufficient material that the original assessee and the present appellant carried on business at the same premises and notice was served at such premises, it will not do for the appellant to feign ignorance by merely stating that the notice was erroneously addressed to a defunct entity.
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Customs
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2018 (5) TMI 689
Mis-declaration of goods - allegation of import of Nylon Flocked Member Tricot Fabrics in the guise of lining material - petitioner complains that though it is ready and willing to pay all applicable dues, the consignments are not allowed to be cleared nor are respondent nos. 1 to 3 issuing the detention certificate - Held that: - The instant petition is pre-mature because the goods have not been allowed to be completely tested and examined. The first check examination itself raised the serious doubt - when such is the finding reached by the respondents on examination of the previous import material and the acts indulged in by the similar importers, then, this is not a case where we can agree with the petitioner's counsel that the refusal is ex-facie illegal, arbitrary and without any justification or legal basis - petition dismissed.
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2018 (5) TMI 688
Duty Drawback alongwith interest - failure on the part of Revenue to provide necessary documents - Held that: - the export made by the petitioner has not been denied. In fact, in the counter affidavit filed by the respondent in this writ petition, it has been candidly admitted that the question of export has never been disputed by the Department. In such a situation, it has to be seen as to whether the respondent was justified in rejecting the petitioner's claim for drawback. The Department admitted the fact that the documents are not traceable. When the petitioner was directed to produce the documents, they were also in the position because, at the time when the claims were made in the year 1978, all original documents were submitted. Therefore, the petitioner had produced such of those documents, which were available with them and most of which are found mentioned in writ petition and counter affidavit filed by the Department. The respondents cannot deny the claims for the reasons set out in the impugned orders. In fact the petitioner's rights cannot be infringed for the fault committed by the Department. Entitlement to interest - Whether interest is payable on the said amount and the period for which interest has to be paid? - Held that: - the fault lies on the Department in not keeping the file safe and at this distance of time, the Department cannot state that the petitioner should have produced adequate copies as and when the Department called for. The Department having accepted the drawback claim along with original documents, was bound to protect the same till orders are passed and disposal of the documents should be done in accordance with the Rules, which cover destruction of records. Therefore, the petitioner is entitled for interest on the delay in effecting payment of the drawback claimed. Rate of interest - from what date interest is payable? - Held that: - Since the Court is convinced that the petitioner is entitled for the amount, interest of justice would be met if the respondent paid interest from the date of filing of this writ petition, i.e., 31.07.2003 - With regard to rate of interest, this Court is of the view that there has been variable rate of interest fixed under Section 27 A of the Customs Act by several notifications and the notification, which came to be issued in September, 2003 could be very well adopted and the rate of the interest is fixed at 6%. Petition allowed.
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2018 (5) TMI 687
Mis-declaration of imported goods - allegation in the present case is that the appellant has declared the imported goods as Alloy Steel Melting Scrap . But amidst the declared melting scrap, the examination by Customs Officers revealed that Grinding Media Balls were found which were new and unused - Held that: - for purposes of assessment of imported goods, the examination of goods at the port in India is more relevant. Hence, we are inclined to give more credence to the opinion of the experts obtained locally. The three experts commissioned by Customs has unanimously opined that the impugned goods were new Grinding Media Balls . Sh. I.P.S. Arora, Chartered Engineer who has originally given a contrary opinion, has during cross-examination, retracted his original view. The order passed by the lower authority, who has gone by the majority of the opinions, merits no interference. Appeal dismissed - decided against appellant.
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2018 (5) TMI 686
Mis-declaration of imported goods - confiscation - Held that: - extra items have been found including adult jacket ‘Versace’ brand. In particular, it is evident that the branded goods bearing the brand name Versace stand imported in the consignment which has not been declared at all - there has been mis-declaration on the part of the importer and hence, confiscation of the imported goods under Section 111(l) is upheld. Valuation of imported goods - Held that: - Since the importer had failed to advance any documents / invoice to substantiate the value of the goods, the transaction value stands rejected and the value of the goods have been re-determined as per Rule 7 of the Customs Valuation Rules, 2007 - It is settled position of law that the facts which are admitted need not be proved. In the case of CCE, Madras vs. Systems & Components Pvt. Ltd. [2004 (2) TMI 65 - SUPREME COURT OF INDIA], it was held that once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use, there is no need for the department to prove the same. Appeal allowed in part.
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2018 (5) TMI 685
Import of crude Palm oil at concessional rate of duty - Proof of manufacture of laundry soap - Principles of natural justice - directions given to cross-examine the said Shri Rajeev Singhal of M/s. Mega Sales - Held that: - there is failure on the part of the Ld.Commissioner to exercise jurisdiction vested in him for ensuring the attendance of witnesses. As Mr.Raveev Sighal was the witness of Revenue, it was the duty of Revenue to produce him for examination and cross- examination, as required under the provisions of section 9D of the Central Excise Act. In absence of such examination/cross-examination of Mr.Rajeev Singhal, the evidence recorded from him has to be eschewed and/or excluded and cannot be relied upon for taking any adverse view against the appellant assessee. The appellant have maintained proper records and there are periodical remarks of checking by the appropriate officer of the Department. Further it is also admitted fact that the appellant have cleared laundry soap on payment of applicable state tax/VAT upon removal of laundry soap, which fact is not controverted on investigation. In view of these facts and circumstances, there is no violation on the part of the appellant under the provisions of the Customs Act read with Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The allegations in the SCN are presumptive and unsubstantiated - the demand of penalty have been confirmed mechanically, without application of mind - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 684
Valuation - enhancement of value - import of light melting steel scrap turning - reliability on the report of Chartered Engineer - Whether in the facts and circumstances of the case, the opinion of the chartered engineer, who is not a metallurgical engineer, should not be relied upon and value can not be enhanced on that basis and the appeals of the appellants allowed, as held by the Member (Judicial)? - difference of opinion - majority order. Held that: - the said chartered engineer was empanelled for valuation of second hand machinery and he was mechanical engineer and as per the said Public Notice, he did not have authority to give opinion on metals - the original authority has not discarded the transaction value as required under Section 14 of the Customs Act, 1962 - the original authority has not exercised his power to adjudicate the same but simply adopted the opinion suggested by the said chartered engineer who did not have authority as empanelled chartered engineer relating to metals - the opinion of the chartered engineer, who is not a metallurgical engineer, should not be relied upon and value can not be enhanced. In view of the majority order, both the appeals are allowed with consequential relief.
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2018 (5) TMI 683
Mis-declaration of imported goods - four consignments of Lead Ore cleared by the appellant on payment of customs duty - The department has made out the case of mis-declaration and claimed that the seized goods are Lead concentrate - Held that: - the definition mentioned in the Wikipedia is not a reliable source. The Lead Ores are different types, namely, Galena, Cerussite, Anglesite. In the SCN, it is mentioned that the percentage of Lead in Galena Ore is 86.6% - The Hon’ble Supreme Court of India in the case of M/s Indian Hard Metals P Ltd. Vs. Union of India [1978 (11) TMI 60 - SUPREME COURT OF INDIA] observed that the ore may contained 62% to 79% of Tungsten. In the Lead Ore contents varies from 37.20% to 68.71%. It may also be mentioned that in the iron ore also the process of washing has taken place and iron ore become the super quantity of iron ore, but, remains the iron ore. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 682
Valuation - software - whether or not value of the software is liable to be included in the assessable value of equipment imported by the appellant? - Held that: - In the case of Vodafone Essar Gujarat Ltd [2008 (10) TMI 173 - CESTAT, MUMBAI], the Bench held that software meant for telecommunication equipment is classifiable under Chapter Heading No 85.24 and the value of such software cannot be included in the value of hardware. In the case in hand it is undisputed that software imported is in relation to the software which is embedded in the equipment and this software is used for exporting certain controlling in the equipment. The separate sale of hardware and software thereof is not the criteria for determining whether the price of software is to be included in the price of hardware or otherwise. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 681
100% EOU - time limitation - warehousing of goods - warehouse period was renewed upto 16.02.1991 and the SCN was issued on 29.06.1995 i.e. after approximately 41/2 years - The objection of the Revenue is that no period of limitation could be made applicable to warehoused goods - Held that: - even though the appellant had imported duty free capital goods and installed in their factory premises but failed to commence commercial production making use of those capital goods and thereby violated the condition of import. The issue is no more res-integra and covered by the judgment of the Hon ble Gujarat High Court in Raj Exports case [2013 (3) TMI 29 - GUJARAT HIGH COURT], where it was held that initial inaction on part of the customs authorities for four years before the petition was filed by itself must be seen as unreasonable delay on their part - demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (5) TMI 695
Correction of the decision of the Resolution Professional - Eligibility for submission of resolution plan by the Resolution Applicant, M/s. Numetal Limited - Held that:- As expressed the Numetal Limited (Resolution Applicant) is a single and independent corporate entity and it cannot be termed as a consortium of its shareholders not it intend to implement the Resolution Plan jointly with another person hence, in view of this the amended clause 4.11.2 (1) to the RFP would neither be applicable or binding upon the resolution applicant and thus, it is not required at all to seek an approval from the RP or the CoC. In respect of proposed change its shareholding of ESIL in terms of RFP and also are required under the other provisions of the Law. It has been also emphasised that the Numetal Limited is not a SPV brought into existence merely for the purpose of submitting the Resolution Plan in respect of Corporate Debtor ESIL as it has recently entered into an agreement to acquire majority stock in Odisha Slurry Pipeline Infrastructure Limited by an independent contract from the Resolution Plan, Thus, it cannot be presume that the applicant is such a Corporate entity which is brought into the existence only for the purpose of putting forth resolution plan for the ESIL. Since, there is difference in the legal opinions among the learned Luminaries and law firms and more than one views are possible in present case to be acted upon then, it cannot be said that there is patently illegality in the conclusion of the RP or it acted arbitrarily or mala fidely in rejecting the resolution plan by relying on the legal opinion received and believed to be true by him and which were placed before the CoC. Moreover, the RP under the provision of the Code it is expected to make scrutiny of a resolution plan in conformity with the law of the land and to take such a prudent decision which a common man in normal course may arrive and think just and proper. This court being Adjudicating Authority under the Code is not expected to substitute its view upon the discretion and wisdom of the RP and CoC to opt for only which a particular view until and unless it is the case of patent illegality or arbitrariness. Therefore, for the aforesaid reason in our prima facie view we do not find any patent illegality in the decision of the RP for declaring ineligible to applicants which is a prudent decision where there is possibility of more than one legal view then this court at this stage is not expected to substitute its view and to interfere with the conclusion of the RP.
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2018 (5) TMI 694
Corporate insolvency process - existence of eligible outstanding debt - Held that:- The revenue as well as the accumulated loss and liability of the corporate debtor as compared to revenue receipts is much more for which there is need for initiation of resolution process. So this is a fit case for setting in motion the insolvency resolution process as contemplated under the Code. The applicant-corporate debtor has proposed the name of Mr. Ashutosh Mishra to act as Interim Resolution Professional which the corporate debtor is mandatorily required to propose in accordance with clause (b) of Section 10 (3) of the Code. On perusal of the written communication in Form 2 at page 18 of the paper book, furnished by the proposed Interim Resolution Professional, the same is found to be in order. The applicant-company save some sketchy particulars and has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, we are satisfied that the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant Company/Corporate Debtor. Instant petition is admitted. Moratorium declared accordingly.
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2018 (5) TMI 693
Appointment of Resolution Professional as the Interim Resolution Professional - Held that:- The petitioner named Mr.Anjum Goyal, registered Resolution Professional having allotted Registration No. IBBI/IPA-002/IP-N00251/2017-18/10765 has filed written communication in Form 2 which is found in order. As Advocate for respondent-corporate debtor submits that the respondent is prepared to pay the outstanding amount and has also brought the cheque/demand draft for delivering the same to the petitioner. Having heard learned counsel for respondent, we find that this submission cannot be acceded to in view of Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which says that “The Adjudicating Authority may permit withdrawal of the application made under rules 4, 6 or 7, as the case may be, on a request made by the applicant before its admission.” Also while admitting the application on 12.03.2018, moratorium in accordance with Section 14(1) of the Insolvency and Bankruptcy Code, 2016 was declared.
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2018 (5) TMI 692
Corporate insolvency resolution process - unpaid operational debt - Held that:- Petitioner has filed the confirmation of the respondent for the account of the respondent in the books of the petitioner from 01.04.2015 to 28.03.2017 showing closing debit balance of ₹2,28,89,593/-. This is not disputed by the respondent. As already discussed above, the balance confirmed of ₹2,28,89,593/- is almost the same as the balance shown of the respondent in the petitioner’s books for the period 01.04.2017 to 27.07.2017. In these circumstances, the contentions raised with regard to defects in the index of invoices filed along with the application as well as in the revised index of invoice as corrected (Annexure AA-3 of diary No.318 dated 29.01.2018) do not have any significance. Therefore, we conclude that there is no plausible contention of the respondent which requires further investigation and that the “dispute” is a patently feeble argument or an assertion of fact unsupported by evidence. The dispute is, therefore, spurious, hypothetical and illusory. All the compliances have been made and the application is complete and the petition deserves to be admitted. In view of the above, the instant petition is admitted declaring moratorium
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2018 (5) TMI 691
Initiation of ‘Corporate Insolvency Resolution Process’ - application rejected rejected on the ground of ‘existence of dispute’ - e-mail supply for which the payment is due from the Appellant which shows substandard quality of sending e-mails - Held that:- For one of the month it is shown that out of 100% mails, ‘spam’ is 37.4% and ‘inbox’ is 62.6%. Similarly, for another month the ‘spam’ is 31.9% and ‘inbox’ is 68.1%. Similarly, in another month the ‘spam’ is 67.3% and ‘inbox’ is 32.7%. The aforesaid e-mail of Respondent itself suggest that a number of e-mails were not reached the ‘inbox’ which shows inefficiency on the part of the Appellant, though they claimed 100% payment. From the record, we find that the Appellant has also replied to the aforesaid e-mails and denied the allegations whereinafter part payment has been made. Payments have been made against some of the bills and TDS has been deducted. From the aforesaid facts, it is clear that there is an ‘existence of dispute’. Appeal dismissed.
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Service Tax
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2018 (5) TMI 679
Penalties - Business Auxiliary Service - appellant had received an amount of ₹ 46,69,647/- for providing the said services to M/s. Mysore Paper Mills Ltd., for the period from 10/2009 to 9/2010 but did not discharge service tax on the same - Held that: - the appellant has paid the tax along with interest - the Commissioner (A), Mysore in the similarly placed other assessees covered by the same Final Order has set aside the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 - penalties set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 678
Works Contract Service - original works - service tax liability @40% or otherwise - work relating to laying of underground cables under or alongside the road - Abatement - Held that: - the learned Commissioner have rightly allowed deduction for work relating to laying of underground cables under or alongside the road, following N/N. 123/5/2010-TRU dated 24 May, 2010. The learned Commissioner have erred in not allowing the abatement is provided in Rule 2A Clause (ii) (A) which provides – where the value has not been determined under Clause (i), the person liable to pay tax on the taxable service involved in the execution of the works contract shall determine the service tax payable in the following manner –(A) In case of works contract entered into for execution of original works, service tax shall be payable on 40% of the total amount charged for the works contract. There is failure on the part of learned Commissioner to allow the admissible abatement under the Service Tax (Determination of Value) Amendment Rules, 2012, read with the Service Tax (Determination of Value) Rules, 2006. The show cause notice is not maintainable and misconceived - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 677
Liability of service tax - whether the appellants are liable to pay service tax on the value of spares / parts on which VAT has been discharged? - Held that: - the cost of spare parts cannot be included for purposes of levy of service tax - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 676
Penalty u/s 78 - failure to discharge service tax - Visa charges - reverse charge mechanism - Held that: - The issue whether an assessee is liable to pay service tax under reverse charge mechanism was contentious for a long time and later settled - penalty imposed under section 78 is unwarranted and requires to be set aside. Penalty u/s 76 and 77 - Held that: - the appellant had taken wrong interpretation of the said provision under section 65(104c) - penalty u/s 76 set aside - penalty u/s 77 upheld. Appeal allowed in part.
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2018 (5) TMI 675
Refund claim - services received prior to April 2008 - refund rejected on the ground that export clearances have been made beyond the period specified in the notification - Held that: - the issue is covered by the decision in the case of M/s SRF Ltd. Versus C.C.E., Jaipur-I [2015 (9) TMI 1281 - CESTAT NEW DELHI], where it has been clearly laid down that the exporter should not be unduly burdened with a condition to establish a service provider was registered under port services, when making a claim for refund for such services under N/N. 41/2007-ST - refund allowed. Refund claim - services availed of commission agent - Held that: - the issue is not pressed by the Ld. Advocate, impugned order upheld. Refund claim - export clearances made prior to 01.04.2008 - Held that: - this aspect is not forthcoming from the annexure to the SCN - it is fit to remand this issue to the adjudicating authority for reconsideration of this issue as per law - matter on remand. Refund claim - courier services - Held that: - the matter is being remanded to enable the appellants to produce all the related invoices issued by the service provider. Once the appellant is able to establish the co-relation between the goods exported and/or export documents and the invoices issued by such service provider, the refund should be sanctioned - matter on remand. Appeal disposed off.
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2018 (5) TMI 674
Extended period of limitation - intent to evade not present - Advertising Agency’s Service - Held that: - the demand SCN raised in the period 2005-06 and 2006-07 in the year 2010. Thus the entire period falls outside the normal period of limitation - it can be reasonable concluded that there was no intention to evade payment of duty at the bonafide believe at they were not liable to pay duty - appeal allowed on the ground of limitation.
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2018 (5) TMI 673
Input service distribution - Recovery u/r 14 of CCR, 2004 - demand on the ground that the input service viz. air travel agent service, is not admissible as the service related to business activity shall exclude on the definition of input service with effect from 1.4.2011 - Held that: - Rule 14 applies to the person who avails credit wrongly which is recoverable - In the present case, the appellant has not availed the credit whereas they have distributed the input service credit to their respective manufacturing unit who, in turn, availed the credit. Input service distributor does not fall under Rule 14 of the Cenvat Credit Rules as they neither avail the cenvat credit nor utilize the same for payment of any service tax/excise duty. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 672
100% EOU - Penalty u/s 76 and 78 - service tax along with interest paid before issuance of SCN - revenue neutrality - Held that: - It is a fact that the appellant is 100% export oriented service provider. In such case, whatever the input service suffered the service tax, the said service tax is refundable u/r 5 of the CCR 2004. Therefore, even though, had the appellant paid the service tax in time, they would have got the refund of the same from the department. Therefore, neither any gain or loss either to the department or to the assessee. The allegation of intention to evade payment of service tax cannot be made against the appellant, which is the essential ingredient for imposing penalty - penalty cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 671
Valuation - inclusion of reimbursement expenses - whether the amounts received as reimbursement by the C & F Agent from the principal is to be included in the taxable value for the purpose of calculation of service tax? - Held that: - the issue is already settled in the case of CST vs. M/s. Sangamitra Service Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - appeal dismissed - decided against Revenue.
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2018 (5) TMI 670
Commercial training and coaching centre services - N/N. 9/2003 - Scope of 'degree' - whether degrees provided by universities or institutes to which the college is affiliated and the completion reports leads to issuance of a degree? - Circular No. DOF/334/1/2010-TRU dated 26.02.2010 - Held that: - the college cannot be said to be providing commercial training or coaching service since such degree will be recognised by law for time being in force. The CBEC circular has kept the institutions which are providing courses that lead to award of recognised diplomas, degrees and sport education out of the tax net, The Circular would apply in its full force in respect of these cases in hand as we have seen the various certificates and degrees issued, name of the universities being included in the IJGC maintained list of universities and the universities have been established under the respective State Acts. The certificates issued by the appellants are under the law recognised by the State Acts, the Board circular would cover the matter in favor of these appellants. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 669
Liability of interest and penalty - sale of space or time for advertisement - Point of Taxation Rules - Revenue felt that since the appellants had realised a part of the amount of service in advance before the date on which service tax was levied on the said service, the appellant were liable to pay service tax on that value of service tax, which was attributable to the service rendered in the period after the service tax was levied on the said service. Held that: - Rule 6 provides for payment of service tax on taxable services on receipt of payment of the value of taxable services, which may be after the completion of taxable service, during the course of providing the taxable service or in advance before the provisioning of taxable service - In the case of appellant, subject services being provided by them became taxable from 01.05.2006 onwards and on that day they were already in receipt of payment in advance in respect of taxable services to be provided subsequently. As such the twin requirements for payment of service tax by 5 th day of the following month namely, (i) that payment should be for value of taxable service to be provided and (ii) the actual receipt of the said payment, existed on 01.05.2006. Demand of interest - difference of opinion - Whether the impugned order is required to be upheld for the purpose of confirmation of demand of interest as held by Ld. Member (Technical) or the interest demand has to be set aside as barred by limitation, as held by Member (Judicial).
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Central Excise
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2018 (5) TMI 668
Clandestine removal - the duty demand is made on the search conducted at the business premises of the appellant from where unaccounted goods were found - Held that: - From the papers seized from Shri Ajay Singh and his statement, it is evident that he has supplied the raw materials to the appellant as per details. So when Shri Ajay has refused to attend the cross examination then we are of the view that the duty demand should be confined on the basis of the raw materials seized from the appellant’s business premises and the same has been done as the shortage of the stock of the finished goods and incriminating documents were found from the business premises of the appellant. The appellant is involved in the evasion of central excise duties. The value of the clearances of unaccounted finished goods were made. Appeal dismissed - decided against appellant.
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2018 (5) TMI 667
Method of valuation - MRP based valuation - It is the allegation of Revenue that the activity of changing the MRP/ affixing MRP stickers in their godown will fall within the deeming provision in Section 2(f) (iii) and consequently, Central Excise duty is required to be discharged in terms of Section 4A of the CEA - Held that: - It is established during the course of investigation that the price list circulated by TAPL have also been adopted for selling of goods imported in the name of 3D. The modus-operandi adopted is not challenged by the appellants. It stands admitted that such activity amounts to manufacture in terms of Section 2(f)(iii). The demand raised is w.e.f. June 2012 - It has also been argued before us that the various contentions raised in the reply to the show cause notice was not considered and discussed by the Adjudicating Authority - matter placed on remand for reconsideration. SSI exemption - clubbing of clearances - case of Revenue is that clearances of both TAPL as well as 3D are liable for clubbing - Held that: - both TAPL as well as 3D have separate existence in the eyes of law. The former is a Private Limited company whereas the latter is a Partnership firm. The goods were imported under both names and have also been sold under both names, inspite of the fact that the goods were mixed up at the godown and have been sold on the basis of price list circulated by TAPL - It is settled position of law that in the absence of mutuality of interest and financial flow back from one firm to another, clubbing of clearances is not permissible merely on the ground that both firms are in the common premises and affairs of all firm are looked after by one person. Since TAPL as well as 3D have separate existence and have separate registration for VAT, Income Tax etc each one will be entitled to the benefit of SSI exemption separately. The case is required to be remanded to the Adjudicating Authority to work out the demand denovo separately from TAPL as well as 3D after extending the benefit of SSI exemption separately to the two companies - appeal allowed by way of remand.
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2018 (5) TMI 666
CENVAT credit - wrongly availed CENVAT credit - interest - penalty - Held that: - Since this material fact whether the appellant has availed as well as utilized the inadmissible credit during the period November 2008 to October 2009 is disputed, therefore, it is necessary for me to remand this case to the original authority to verify and quantify the inadmissible credit whether utilized by the appellant during the period November 2008 to October 2009 and thereafter, pass de novo order deciding the quantum of penalty to be imposed on the appellant for utilizing the inadmissible credit - appeal allowed by way of remand.
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2018 (5) TMI 665
SSI exemption - migration from concessional rate of duty with Cenvat Credit to fill exemption - subsequent rescinding of the notification - allowing benefit of Notification No.8/03-CE (as against 9/03) - it was alleged that with the rescinding of Notification No.9/03-CE, concessional rate of duty was not available and they should have paid full rate of duty - contention of the appellant is that they continued to avail notification in question under mistaken belief and inadvertently that the said notification was holding the field during the relevant period. As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon’ble President to appoint the Third Member for resolve:- Whether in view of Revenue neutral situation, the benefit of Notification No.8/03-CE should be extended to the assessee and the appeal be allowed, as held by the Member (Judicial)? - Difference of opinion - majority order. Held that: - Whatever credit was availed stand utilized by them for payment of 60% of duty. However, if any balance credit is available the same stands reversed by the appellant which leads to a situation where the entire credit so availed by the appellant stand either utilized for payment of 40% tariff rate or stands reversed and is not available with the appellant. It can be concluded that no credit stands availed by them so as to benefit them at any point of time. It will amount to Revenue neutral situation as credit availed by the appellant would become nil and as such the condition of the Notification No.8/03-CE, stands fulfilled by the assessee. Instead of raising differential duty, at full rate of duty, the Revenue should have extended the benefit of Notification No..8/03-CE to the assessee N/N. 9/03-CE dated 1.3.2003 has prescribed effective rate of duty at the rate of 60% of tariff rate. It is settled position of law that if the duty is paid under mistake of law it should be compensated towards recovery of cenvat credit. In view of the said settled position of law, I agree with the view expressed by Member (J). In view of the majority order, the impugned order is set aside and the appeal is allowed with consequential relief.
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2018 (5) TMI 664
Manufacture / marketability of intermediate product - Cream - cream is prepared to be used in making of cream biscuits - It appeared to Revenue that the cream was classifiable under Tariff Item No. 2106.90 - Held that: - Coordinate Bench in the case of Rishi Bakers Pvt. Ltd., Kanpur [2015 (4) TMI 893 - CESTAT NEW DELHI] has held inte-alia, that, there was no evidence to prove that the sugar syrup in question, in the form in which it comes into existence in the appellants’ factory, is marketable. The cream which is produced captively is having unique flavour, colour and taste and the cream biscuits manufactured by different manufacturers have different flavours and taste. The Department has not been able to bring any evidence of marketability of creams so manufactured by the appellant. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 663
Abatement claim - closure of one furnace installed in the factory - Manufacturing of steel products - duty was to be discharged based on Annual Capacity of Production (ACP) - whether the appellant is eligible for abatement on pro-rata basis when only one of the furnaces were closed? - Held that: - The jurisdictional High Court in the case of Chamundi Steel Castings India Ltd. [2018 (2) TMI 379 - CESTAT CHENNAI] had considered the very same issue and held that the claim of the assessee for pro-rata basis is to be allowed - rejection of abatement is unjustified. The appellant is eligible for abatement for the period from 20.4.1998 to 13.7.1998 as claimed to the tune of ₹ 13,76,881/- - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 662
N/N. 6/02-CE dated 1st March 2002 - clearance of 30 nos volume bottle valued at ₹ 63,30,000/- to M/s Dresser Rand (I) Ltd, Ahmedabad - Held that: - It is not in dispute that the volume bottles were supplied for a project which was being executed for M/s ONGC and that the said project had been awarded by M/s ONGC in an international competitive bidding process - volume bottle is not an integral part of the compressor which is manufactured but, even so, is indispensable for installation of the compressor facility at the project site. Hence, the impugned goods are undoubtedly accessories - As notification no. 21/2002-Cus dated 1st March 2002 enables exemption from duties of customs for accessories of compressors, the benefit of duty free clearance envisaged at serial no. 301 read with condition no. 64 in notification no. 6/2002-CE, is available to the appellant. Denial of exemption also on the ground of non-participation in international competitive bidding process - Held that: - the decision of Tribunal in Toshniwal Industries Pvt. Ltd [2017 (5) TMI 387 - CESTAT NEW DELHI] relied upon, where it was held that exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding - The ineligibility for non-participation in bidding process, will also not sustain. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 661
Demand of differential duty - goods cleared on payment of duty were not sold by the job worker but transferred to the principal manufacturer on the basis of indent of delivery and taxes like VAT was also not shown by the job worker, but paid by the principal manufacturer - Held that: - The job worker is doing the job work on the inputs received from the principal and clearing the said goods after doing the job work i.e. manufacture the AC Pipes and Couplings as per the requirement of assessee-Respondents on payment of Central Excise duty, who in turn cleared the same after fixing value as per the agreement with the buyers. The case is squarely covered by the decision of the Hon’ble Supreme Court in the case of Ujagar Prints vs UOI [1988 (11) TMI 106 - SUPREME COURT OF INDIA], where it was held that value for assessment of the goods manufactured by a job worker will consist of the total of the cost of raw material, manufacturing cost and the manufacturing profit. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 660
CENVAT credit - ISD - distribution of credit on pro-rata basis - Rule 7 (d) of the CCR 2004 - Extended period of limitation - suppression of facts - Held that: - Rule 7 states that the service distributor may distribute the CENVAT credit in respect of service tax paid on the input service to its manufacturing units subject to certain conditions. If he chooses to distribute: he will have to follow all the conditions laid down therein including clause (d) which mandates that such distribution be done on pro rata basis. The assessee has not violated the CENVAT Credit Rules as they existed during the period by not distributing the credit of service tax for common services between two Units - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 659
Clandestine removal - amount of ₹ 1,54,58,307/- has been confirmed towards Excise duty for the period from 2004-05 to 2006-07 on the presumption that the appellant have clandestinely cleared their finished goods, by showing excessive generation of scrap and burning loss - Held that: - The weight of the goods received back was apparently different in the three registers. Accordingly, we find without quantifying the material difference, revenue has presumed that there could be situation where the goods were issued/ sent for job work but not received back and that the goods shown as received in the job work register, but not reflected as received in register no.64/55, were actually not received. Further, we find that Shri Brijesh Kumar Agarwal, Director in his statement had categorically stated that such private registers were prepared by employees and the said registers were not related to management and as such we find that the same are not reliable nor have any evidential value, for drawing adverse inference against the appellant - further, it is an admitted fact that the appellants have disclosed higher percentage of production and less percentage of scrap plus burning loss, during the periods under consideration and accordingly, adverse inference drawn by revenue on assumption and presumption is not tenable. Thus, duty- of ₹ 1,54,58,307/- is set aside. Demand of ₹ 25,52,260/- relating to disallowance of captive consumption of inputs/ semi finished goods - Held that: - the same is also based on the presumptions, that these were actually converted into forgings, but were used for repair of plant and machinery and manufacture of tools, dies & fixtures, etc. - there is no proper basis for such presumption and the denial of benefit of exemption under Notification No.67/95-CE, is only on the basis of suspicion - demand of duty of ₹ 25,52 260/- is not tenable and the same is set aside. Demand with respect to alleged shortage in the stock of raw materials, scrap and finished goods on the date of inspection - Held that: - there is no calculation sheet and/or weighment slips available on record. From perusal of panchnama, it is the evident that the physical verification is done by eye estimation - the demand of duty is bad and the same is without following the procedure and is set aside. Demand relating to receipts of inputs from M/S RINL which were sent on job work to M/S R.K.G. International without cover of invoice and without reversal of Cenvat credit - held that: - As the mistake is committed by the management of the appellant's company, the same is confirmed, As the amount was reversed during investigation, the penalty on the same is also set aside. Disallowance of Cenvat credit of ₹ 2,86,791/ relating to three invoices, being inputs dispatched by M/S Shyam Forgings - natural justice - Held that: - In absence of providing cross-examination, and copy of G.R. etc. we find that the appellants had not been provided proper opportunity of hearing - matter remanded for de novo adjudication. Appeal allowed in part.
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2018 (5) TMI 658
Valuation - manufacture of Gutkha - whether the appellant have been rightly imposed with Central Excise duty of ₹ 2,51,94,517/- for the period from 01/04/2011 to 06/09/2012 under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (for short PMPM Rules) read with Section 11 A (4) of the Act along with equal amount of penalty? - reliability on statements - Held that: - there is no abnormal delay in retracting the statement dated 07/09/2012 by the appellant. Such retraction was done in about 10 days time from the date of search - the statement of the appellant dated 07/09/2012 is not a valid piece of evidence also hold that the same is bad under Section 9D of the central excise Act. The appellant have led cogent evidence that he had acquired the packaging machine-FFS only on 20th of August. 2012 and the same was transported to the factory premises on 21/08/2012 and further the said machine was repaired and/or put in working order on 01/09/2012 when the new single phase motor was purchased for the said machine. Such evidence have not been found to be untrue and the learned Commissioner have erred in rejecting the evidence without any proper enquiry and oppertunity of hearing. The appellant is liable to Central Excise duty under Section 3A of the Act read with the PMPM Rules for the period 02/09/2012 to 06/09/2012 - the appellant is liable to penalty equal to the amount of duty - appeal allowed in part.
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2018 (5) TMI 657
CENVAT credit - the capital goods which were received before 10.09.2004 on the invoices prior to that date - interpretation of statute - Held that: - there is no dispute as to the fact that the capital goods on which Central Excise duty was paid were received by the appellant prior to 10.09.2004, undisputedly used/installed in the factory premises for manufacture of dutiable excise goods credit was availed in 2007 and 2008. In the case of Coromandel Fertilizers Ltd., [2008 (8) TMI 333 - CESTAT, BANGALORE] the Tribunal held for interpretation of the rule which states that credit may be taken immediately, the same cannot be interpreted in a manner to destroy the right created for an availment of CENVAT credit. Credit allowed - appeal dismissed - decided against Revenue.
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2018 (5) TMI 656
CENVAT credit - inputs/capital goods - HR Plates, Steel Plates - Held that: - in an identical issue in respect of the very same assessee, CCE, C&ST, Visakhapatnam-I Versus Hindustan Petroleum Corpn. Ltd [2017 (12) TMI 695 - CESTAT HYDERABAD], wherein the Bench held that on structural items credit availed was allowable - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 655
CENVAT credit - Pig Moulds and C.I. Castings - appellant had availed CENVAT credit on these items without receipt of the same - Held that: - the Adjudicating Authority given the findings that assesses have not produced any valid evidence to prove that the subject goods were manufactured by their suppliers, supplied, transported and received in their factory of production - the appellant has not effectively controverted the said findings in the grounds of appeal and has argued the matter more on limitation - appeal dismissed - decided against appellant.
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2018 (5) TMI 654
CENVAT credit - inputs procured by the appellant as a job worker and consumed for manufacturing of items under job work basis and clearance of the same to principal manufacturer - Held that: - law is well settled by the Larger Bench decision of the Tribunal in the case of Sterlite Industries (I) Limited [2004 (12) TMI 108 - CESTAT, MUMBAI], where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C - demand not sustainable. CENVAT credit - health insurance for the employees - Held that: - for the period in question, the law is settled in the case of Stanzen Toyotetsu India (P) Limited [2011 (4) TMI 201 - KARNATAKA HIGH COURT], wherein the Hon’ble High Court stated that CENVAT credit cannot be denied of the service tax paid on health insurance services - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 653
CENVAT credit - inputs - cement, TOR steel and structural steel - Held that: - in the case of Mundra Ports and Special Economic Zone Ltd (supra), Hon’ble High Court of Gujarat, it was held that prior to 07.07.2009, the CENVAT credit availed on cement and steel which are used in the form of construction of jetty is to be allowed as jetty is used for providing output service taxed - the CENVAT credit availed on cement, TOR steel, structural steel during the period prior to 07.07.2009 is to be considered as eligible for CENVAT credit, as they were used for setting up of a factory. CENVAT credit - structural steel - time limitation - Held that: - there is no dispute as to the fact that appellant had filed monthly returns with the authorities indicating therein the receipt of the inputs and the credit availed by them. When it is also a fact that the entire demands raised on the appellant is on scrutiny of AR-1 returns, the appellant has made out a case for setting aside the demand of ₹ 52,09,536 on the ground of limitation. CENVAT credit - GTA Services - these services were used by the appellant in relation to setting up of a factory - Held that: - CENVAT credit needs to be allowed in respect of input services used for setting up of a factory - credit allowed. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 652
Entry tax - scope of State - Whether the entire State can be treated as 'local area' for the purposes of entry tax? - Whether entry tax can be levied on the goods which are directly imported from other countries and brought in a particular State? - Whether the benefits given to certain categories of manufacturers would amount to discrimination under Section 304? Held that: - The contention that the impugned Act was not covered under Entry 52 List II since Entry 52 is in essence power of local bodies to levy octroi and thus State legislature had no legislative competence to impose entry tax, is no more res-integra, having been repelled by the Supreme Court in Fr. Williams [2017 (10) TMI 491 - SUPREME COURT OF INDIA]. The contention that the entire State cannot be treated as one local area, is devoid of any merit, as the definition clause of local area under Section 2 (d) did not treat the entire State as one local area. The other provisions of the Act also do not amount to treating the entire State as one local area vis-a-vis the taxable event and merely because the tax is collected as general revenue and credited to a central fund would not result in altering the taxable event nor would be fatal to the vires of the Act. Thus, the first question framed for consideration by the Supreme Court, does not directly arise in the context of the provisions of the impugned Act. The contention that the entry tax is a local levy, the power of a local body to impose such tax and the State Government was not competent to realise entry tax as general revenue or to direct the same being credited to a central fund or its appropriation for facilitating trade, commerce and industry in the entire State, rather than passing it to the local body from where the tax had been collected, is based on a wrong premise that the entry tax is a local levy and not the power of the State Government to impose tax. None of the provisions of the Act suffer from the vice of excessive delegation of power as sought to be contended on behalf of the petitioners. The provisions of the Act relating to reversal of levy of tax (Section 5), rebate (Section 6) and exemption (Section 7) are neither violative of Article 14 nor Article 304 (a). The rebate and exemption notifications, which have been challenged, also pass muster of Article 14 and Article 304 (a). The doctrine of unbroken package having been abandoned by Courts in the United States where the doctrine was propounded and no more followed by the Supreme Court would not come to the rescue of IOC in contending that crude oil could not be subjected to entry tax in course of its transportation to Mathura Refinery through the underground pipelines - goods which are directly imported from other country could, in a given case, be subject matter of entry tax. Section 12 of the Act was only a machinery provision to facilitate collection of tax and prevent its evasion. It was neither illegal nor arbitrary nor resulted in shifting the liability of the person who in fact was liable under the Act nor the taxable event. Petition dismissed.
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2018 (5) TMI 651
Levy of sales tax - First sales of software - whether sale taking place or not? - Held that: - both the appellate authority and Tribunal have rightly held that there was no sale, warranting levy of tax and consequently, penalty under Section 16(2) of the Act - tax case revision dismissed.
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2018 (5) TMI 650
Levy of turnover tax - penalty u/s 12(3)(b) of TNGST Act - Held that: - There is no suppression in the books of accounts and this fact has been categorically stated by the appellate authority, in his order, in which event, the assessee is entitled to invoke explanations (i) and (ii) to Section 12(3)(b) of the Act. Reliance placed in the case of Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others [2001 (10) TMI 1100 - MADRAS HIGH COURT], where it was held that n and after April 1, 1996 an explanation has been added below Section 12 (3) which requires the turnover relating to the tax assessed on the basis of the accounts of the assessee, to be disregarded, while determining the turnover on which the penalty is to be levied under Section 12 (3). Petition dismissed - decided against petitioner-Revenue.
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Indian Laws
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2018 (5) TMI 680
Reference for arbitration - Maintainability of application - Section 8 of the Arbitration and Conciliation Act, 1996 - application dismissed on the ground that the agreements between the parties are not inter-connected with the principal agreement dated 05.03.2012 and therefore, the parties cannot be referred to arbitration. Held that: - Since all the three agreements of Rishabh with Juwi India and Astonfield had the purpose of commissioning the Photovoltaic Solar Plant project at Dongri, Raksa, District Jhansi, Uttar Pradesh, the High Court was not right in saying that the Sale and Purchase Agreement (05.03.2012) is the main agreement. The High Court, in our view, erred in not keeping in view the various clauses in all the three agreements which make them as an integral part of the principal agreement namely Equipment Lease Agreement (14.03.2012) and the impugned order of the High Court cannot be sustained. Under the Act, an arbitration agreement means an agreement which is enforceable in law and the jurisdiction of the arbitrator is on the basis of an arbitration clause contained in the arbitration agreement - However, in a case where the parties alleged that the arbitration agreement is vitiated on account of fraud, the Court may refuse to refer the parties to arbitration. All the agreements and the parties thereon are referred to arbitration - appeal allowed.
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