Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 22, 2019
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Deduction u/s 80P (2) - scope of introduction of sub-section (4) - Primary Agricultural Credit Society or a Co-operative Bank - AO has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P
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Revision u/s 263 - there is no finding that the GTD activity expenses were not for furtherance of the aims and objects of the assessee society or that the assessment order is erroneous for any reasons to be recorded by the Ld. CIT(E) - it difficult to sustain the impugned order for want of an enquiry to reach such a conclusion
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Treatment of loss from share trading - The specific admission of the assessee before the assessing officer assumes significance that share trading is sole business during the assessment year - The assessee made an admission on a statement of fact which in our view, must bind it. - the deeming fiction u/s 73 would be attracted.
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Treatment of loss from share trading - speculative loss OR business loss - a specific amendment by Parliament in the Explanation to Section 73, insofar as trading in shares is concerned, w.e.f. 01.04.2015. It was intended to take effect from the date stipulated by Parliament - no reason to hold either that it was clarificatory or that the intent of Parliament was to give it retrospective effect
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Unexplained investment u/s. 69 - Asstt. Comm. of Commercial Taxes estimated the valuation of WIP without mentioning the quantity or rate of the individual item - AO consider the same as unexplained investment - AO has to reject the books of account and thereafter, he has to estimate the unexplained investment in WIP in the relevant assessment year by following the market price or cost which was lower which the AO has failed to do so - no addition
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Exemption 10(37) - consideration of CBDT circular No.36 of 2016 and Circular No.11011/30/2015-LA - the department is duty bound to adhere to the instruction of the CBDT while disposing the proceedings before them even if both the circulars, now referred, were not furnished before them by the assessee - restored back to the file of the AO for denovo assessment
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Foreign tax credit u/s 91 - Section 6(6) carves out another category of person in ‘Residents’, who is said to be ‘not ordinarily resident’ in India form part of larger group of the persons who are ‘resident’ - section 91 provides relief/deduction of taxes paid with respect to a person who is a ‘resident’ in India - hence credit allowable to resident but not ordinarily resident
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Disallowance of deduction u/s 80JJAA - employment equal to or more than 300 days - by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year - second proviso is clarifactory in nature and is intended to remove the anomaly must be given retrospective effect
Customs
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Imposition of safeguard duty - imports of Solar Cells - the balance of convenience lies in favour of the domestic industry. - the domestic industry would suffer irreparable injury if the ad interim relief granted earlier is permitted to continue.
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Valuation of imported goods - rejection of declared value - The mandate to record reasons at the second stage of enquiry is not expressly stipulated, albeit it has been read by us by implication in Rule 12 - mandate if applied to past cases would possibly lead to complications and difficulties - decision will be applicable prospective - past cases will be decided on a case to case basis
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Valuation of imported goods - rejection of declared value - Formation of belief and recording of reasons as to reasonable doubt and communication of the reasons when required is the only way and manner in which the proper officer in terms of Rule 12 can proceed to make assessment under Rules 4 to 9 after rejecting the transaction value as declared - mandate of Rule 12(2) cannot be ignored or waived
IBC
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Reduction of claim - 'existence of dispute' between the 'Corporate Debtor' and the 'Operational Creditor' with regard to supply of coal - Since that order attained finality, the duty is cast upon this Applicant to place the invoices before the RP as against the dates and invoices mentioned in the Original Company Petition.
Service Tax
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Reverse charge - import of services or reimbursement of various expenses incurred to associated group companies abroad - These charges are not reimbursement but payments towards the specific service provided by the overseas group associate company and are not reimbursements - Tax liability under RCM confirmed.
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Export of Services - intermediary service or not - the services provided by the appellant in respect of the sale of goods of associated group companies cannot be said to be services provided by intermediary as defined in the Rules - Benefit of export allowed.
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CENVAT Credit - input services used in ‘setting up’ of their office premises - Some of the services undertaken by the Appellant though are in the nature of civil works, but considering with other works it is definitely relate to repair/renovation, modernization of the existing office premises and eligible to CENVAT Credit.
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CENVAT credit - the insurance policy is not availed under any statutory obligation and it is for the personal consumption of the employee and therefore not eligible for credit.
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Demand of service tax - brokerage received on IPO related service - Business Auxiliary Services - appellant’s activity is neither covered u/s 65(19)(i) as they are not promoting or marketing or selling any goods nor u/s 65(19)(i) as it is nor rendered in relation to promotion or marketing of service - IPO is only an offer to the prospective buyers - appellant not covered u/s 65(19)- no service tax
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CENVAT Credit - no service tax on residential accommodation - When service tax was collected by service provider even on providing for residential accommodation which is admissibly not subjected to service tax, there is no point in denying benefits of availment of CENVAT credit to the appellant when legality of such collection at the receivers end was not questioned
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Condonation of delay in filing appeal - Section 85(3A) of the Finance Act, 1994 - Once the period of limitation is specifically prescribed in a statute and stipulates the maximum period/extent of delay which can be condoned, it cannot be condoned under Article 226 of the Constitution of India
Central Excise
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Clandestine removal - Bags and Soft Luggage items - bags were not seized from outside the factory premises or during transit and that were seized from the factory premises - duty is payable only at the time of clearance of goods from the factory and addressing presumptions that they were not accounted with intent to clear without payment of duty is not tenable in law.
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Clandestine removal of goods - the duty could not be demanded on the raw material found short during the course of investigation as the same was not manufactured goods by the respondent - the adjudicating authority also failed to prove that the cash recovered was the sale proceeds of clandestine removed goods - no error or illegality in the findings recorded by the Tribunal - No substantial question of law arises
Case Laws:
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Income Tax
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2019 (5) TMI 1165
Treatment of loss from share trading - speculative loss OR business loss - set off of speculation loss to be against profits of trading in futures and options - effect of statement of assessee made before AO - scope of amendment made in Explanation to Section 73 by the Finance (No 2) Act 2014 - retrospective OR prospective - HELD THAT:- In the present case, there is no dispute about the fact that the assessee was registered as an NBFC under the provisions of the Reserve Bank of India Act, 1934. Section 73(1) does not define specifically, the circumstances in which the principal business of a company would be regarded as a business of the specified description. In the present case, the principal business was urged to be the granting of loans and advances. We cannot accept this submission and are of the view that the High Court was justified in rejecting it. The circumstance, which in our view is of crucial significance, is how the assessee construed its own line of business. The specific admission of the assessee before the assessing officer assumes significance. The assessee made an admission on a statement of fact which in our view, must bind it. In this view of the matter, the principal business of the assessee was not of granting loans and advances during the assessment year. As a consequence, the deeming fiction u/s 73 would be attracted. Hence, the finding of the High Court, on the first aspect, cannot be faulted. Impact of amendment - The amendment which was brought by Parliament to the Explanation to Section 73 by the Finance (No 2) Act 2014 was with effect from 1 April 2015. In its legislative wisdom, the Parliament amended Section 43(5) with effect from 1 April 2006 in relation to the business of trading in derivatives, Parliament brought about a specific amendment in the Explanation to Section 73, insofar as trading in shares is concerned, with effect from 1 April 2015. The latter amendment was intended to take effect from the date stipulated by Parliament and we see no reason to hold either that it was clarificatory or that the intent of Parliament was to give it retrospective effect. The consequence is that in A.Y. 2008-2009, the loss which occurred to the assessee as a result of its activity of trading in shares (a loss arising from the business of speculation) was not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business. No error in the decision of the High Court. The appeal is, accordingly, dismissed.
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2019 (5) TMI 1164
Addition u/s 69 - unexplained investment in the 5 Credit Cards - Assessee submitted that cards was used by his friend Mr.Neelamegan - Affidavit given by Mr.Neelamegan that he never used the Credit Cards and took loan from the Assessee - opportunity of cross examination is not provided - HELD THAT:- The very nature of the transactions involved in the present case by allowing usage of 5 Credit Cards by the Assessee to his alleged friend Mr.Neelamegan and the credit entries given through various Firms named above, in the bank account of the Assessee, created suspicion in the mind of the Assessing Authority and therefore, they called upon the Assessee to prove such credit entries. Despite the opportunity, by way of second round of litigation, provided by the learned Tribunal, it appears that the Assessee failed to prove the credit entries. We are also unable to appreciate the usage of credit cards in the name of the Assessee by third party, which requires signatures of the person concerned using such Credit Cards. Apparently, therefore, all those transactions were undertaken by the third parties on behalf of the Assessee himself and therefore, the defence pleaded by the Assessee that they were allegedly loan taken by Mr.Neelamegan and repayments made by him to the Bank account of the Assessee does not inspire any confidence. In our opinion, therefore, the fact finding Body below have rightly added the said amount in the hands of the Assessee as unexplained income/expenditure of the Assessee. Such addition does not appear to be perverse requiring our consideration u/s 260A. The Appeal is dismissed.
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2019 (5) TMI 1163
Penalty u/s 271(1)(C) - claim u/s 80P denied - HELD THAT:- The above appeal arises out of a common order passed by the Income Tax Appellate Tribunal. Revenue came up with yet another appeal. The same was dismissed by another bench of this Court in Pr. CIT VERSUS M/S ELURU CO-OPERATIVE HOUSE MORTGAGE SOCIETY LIMITED [ 2018 (3) TMI 1765 - TELANGANA AND ANDHRA PRADESH HIGH COURT] stating that the mere fact that the respondent/assessee made a claim, even if found to be unjustified, would not amount to it furnishing any inaccurate particulars regarding its income, whereby a penalty can be levied u/s 271(1)(c) . Therefore, following the same, this appeal is also dismissed.
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2019 (5) TMI 1162
Addition towards notional interest on loans and advances - HELD THAT:- As decided in EAST INDIA PHARMACEUTICAL WORKS LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1997 (3) TMI 5 - SUPREME COURT] it is manifest if an assessee has interest free funds as well as interest bearing funds at its disposal, then the presumption would be that investments were made from interest free funds at its disposal. Similar view has been taken by the Hon'ble Dehi High Court in CIT vs. Tin Box Company [ 2002 (11) TMI 75 - DELHI HIGH COURT] holding that when the capital and interest free unsecured loan with the assessee far exceeded the interest free loan advanced to the sister concern, disallowance of part of interest out of total interest paid by the assessee to the bank was not justified. As the shareholders fund in the instant case is far in excess of the amount of advance, we are satisfied that the disallowance made by the AO has been wrongly sustained in the first appeal to this extent. Therefore, order to delete the same. Addition towards expenses incurred through credit card - Treating such expenses as personal in nature, the AO made disallowance - CIT(A) restricted the addition to 50% - HELD THAT:- The assessee in the instant appeal is a private limited company. There is no dearth of judicial precedents holding that there cannot be any disallowance of expenses in the hands of company on account of personal use even by its directors. The Hon ble Gujarat High Court in Sayaji Iron and Engineering Company vs. CIT [ 2001 (7) TMI 70 - GUJARAT HIGH COURT] has held that there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose. CIT(A) was not justified in sustaining the disallowance at 50%. The addition is deleted. Addition for foreign tour of director - personal expenses OR business expenses - AO disallowed 50% of the expenditure - HELD THAT:- Referreing to letter from Larsen and Toubro addressed to Mr. Nitish Shastri requesting him to visit the Switchgears plant in Malaysia. It is pursuant to this letter that Mr. Nitish Shastri visited Malaysia. As such, the business purpose is established and there is no reason to make any disallowance on this score. Therefore, order to delete the addition. Addition u/s.68 - HELD THAT:- In so far as the loan from Mr. Krupali Shastri is concerned, the assessee could not file any evidence to substantiate the genuineness of transaction except confirmation despite specific requisition of the AO. Neither any return of income, balance sheet, wealth tax return of Mr. Krupali Shastri was filed nor any other evidence to show the genuineness of the transaction. Similar position prevails up to the Tribunal level as well. As such, I am satisfied that the addition has been rightly confirmed. As regards the remaining amount of loan of ₹ 1.00 lakh from Mr. Sonar Subhas, it is seen that the assessee claimed to have received this amount from his employee. It is seen that the ld. CIT(A) has restored the matter to the file of the AO, for which he has no power. In the absence of the Revenue having filed any appeal against the impugned order, I cannot put the assessee to a more disadvantageous position than in which it was before the filing of the appeal before the tribunal. In the given circumstances, I approve the action of the ld. CIT(A) in restoring the matter to the AO without granting any further relief to the assessee. Addition on ad hoc basis out of certain expenses - HELD THAT:- It is observed that the AO has made the addition on ad hoc basis, without pointing out specifically as to which particular expenses were not properly vouched. In such circumstances, there can be no partial sustenance of addition on ad hoc basis. I, therefore, order to delete the remaining addition of ₹ 1.00 lakh also. This ground is allowed
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2019 (5) TMI 1161
TDS rate u/s 206AA(1) - Treaty rate (DTAA) OR rate as per Act - whether provisions of DTAA shall prevail over the provisions of' section 206AA(1), even when the provision of section 206AA(1) are overriding in nature containing a clear non-obstante clause? - HELD THAT:- Section 206AA of the Act does not override the provisions of Section 90(2) of the Act and that in the cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per Section 206 AA of the Act because the provisions of the DTAAs were more beneficial. In view of the settled position of law, we find it difficult to sustain the orders of the authorities below. With this view of the matter, we find that the orders of the authorities below are liable to be quashed and accordingly they are quashed. Thus, we hereby direct the deletion of the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs. SEE M/S EMMSONS INTERNATIONAL LTD. VERSUS DCIT CPC -TDS, GHAZIABAD [ 2018 (4) TMI 1272 - ITAT DELHI] Whether the treaty overrides the Act ? - Having regard to the position of law explained in Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] and later followed in numerous decisions that a Double Taxation Avoidance Agreement acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty. See DANISCO INDIA PRIVATE LIMITED VERSUS UNION OF INDIA AND ORS. [ 2018 (2) TMI 1289 - DELHI HIGH COURT] - Decided against revenue.
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2019 (5) TMI 1160
Foreign tax credit u/s 91 - assessee is an individual Resident but not Ordinarily Resident in India - income accrued in India - income tax paid in foreign jurisdictions pertaining to the federal tax and state income tax - proportionate tax on salary for 224 days of stay in India - assessee declared his income under the head salaries for the proportionate period for which he was employed with his employer in USA - article 2 of the Indo US DTAA - HELD THAT:- As relying on WIPRO LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1 (3) , BANGALORE [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] and DR. RAJIV I. MODI VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX (OSD) RANGE-1, AHMEDABAD [ 2017 (11) TMI 207 - ITAT AHMEDABAD] assessee is entitled for tax credit of federal as well as state taxes paid by him u/s 91. Section 91 are to be treated as general in application and these provisions can yield to the treaty provisions only to the extent the provisions of the treaty are beneficial to the assessee; that is not the case so far as question of tax credits in respect of state income taxes paid in USA are concerned. Accordingly, even though the assessee is covered by the scope of India US and India Canada tax treaties, so far as tax credits in respect of taxes paid in these countries are concerned, the provisions of Section 91, being beneficial to the assessee, hold the field. As Section 91 does not discriminate between state and federal taxes, and in effect provides for both these types of income taxes to be taken into account for the purpose of tax credits against Indian income tax liability, the assessee is, in principle, entitled to tax credits in respect of the same. Whether the assessee who is not a resident but resident and not ordinarily resident can also claim relief/ deduction u/s 91 of the act or not? - Provisions of section 91 (1) provides relief/deduction of taxes paid with respect to a person who is a resident in India. The provisions of section 91 (2) also deals with the person who is a resident in India. The provisions of section 91 (3) deals with the person who is a non-resident . The revenue contends that as the assessee is not a resident therefore he is not entitled to benefit of section 91 . The provisions of section 6 of the income tax act provides for qualification of the persons who are residents in India. The provisions of section 6 (6) carves out another category of person in Residents , who is said to be not ordinarily resident in India. However such persons are also resident . The category is also called a resident but not ordinarily resident in India. Therefore persons who are resident but not ordinarily resident in India are forming larger group of the persons who are resident in India. In view of this, we reject the contentions of the revenue that benefit of section 91 (1) of the act does not apply to a person who is not ordinarily resident in India. - ground of the assessee are allowed.
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2019 (5) TMI 1159
Validity of assessment / proceedings u/s 153A - non-est entite s cases - conversion from a corporate entity to a Limited Liability Partnership LLP - HELD THAT:- Impugned assessment / proceedings are not sustainable since framed in case of a non-est entity. Mr Agarwal quotes sec. 170 of the Act at this stage to make it clear that it is very well open for the AO to proceed against the successor entity. We therefore make it clear before parting that it shall be very well open for the Assessing Officer to proceed against the successor LLP as per law. See M/S PAWANSUT MANAGEMENT LTD. VERSUS I.T.O., WARD-58 (4) (TDS) [ 2018 (4) TMI 46 - ITAT KOLKATA] , M/S COMPUTER ENGINEERING SERVICES INDIA (P) LTD. (AMALGAMATED WITH ISTRONICS LTD) , M/S FORYU OVERSEAS (P) LTD AND OTHERS [ 2015 (6) TMI 601 - ITAT DELHI] , INTEL TECHNOLOGY INDIA (P.) LTD. [ 2015 (5) TMI 614 - KARNATAKA HIGH COURT] , RAZA TEXTILES LIMITED VERSUS INCOME-TAX OFFICER, RAMPUR [ 1972 (9) TMI 15 - SUPREME COURT] - The Revenue s appeal dismissed.
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2019 (5) TMI 1158
Revision u/s 263 - non-consideration of the allowability of the Global Trade Development (GTD) expenses after due verification - though the AO had denied the assessee s claim of exemption of income on account of principal of mutuality, he failed to give effect thereto in the computation of income - activity of NASSCOM - HELD THAT:- On a perusal of the objects of the society in the light of the nature of GTD Expenses and the nature and purpose of such expenses, it is difficult to say how allowance of such expenses was unsustainable. As submitted on behalf of the assessee that the assessee receives Government grant and subsidies and the unfunded amount have been carried forward to the subsequent years as could be seen from the paper book. It could be seen from the income and expenditure amount for the year ended March 31st, 2010, the GTD expenses were shown at ₹ 274,56,234/- was declared and it is so inconsonance with the practice for earlier years. CIT(A)(E) in this matter did not undertake the exercise of enquiry required to reach the conclusion that the assessment order was erroneous insofar as it is prejudicial to the interest of the revenue because firstly, there is no finding that the GTD activity expenses were not for furtherance of the aims and objects of the assessee society or that the assessment order is erroneous for any reasons to be recorded by the Ld. CIT(E). For want of an enquiry to reach such a conclusion we find it difficult to sustain the impugned order in so far as GTD expenses are concerned. Exemption on the principal of mutuality denied - violation of principles of natural justice - HELD THAT:- Coming to the aspect of the computation error adverted to by the CIT(E) in respect of the denial of exemption the contention of the assessee is that the assessee was not given an opportunity of being heard on this aspect and there was no such mention in the notice issued to the assessee u/s 263 of the Act. On a perusal of the copy, notice that Page No. 36 of the paper book, we find that there is no reference to this computational error and the record does not reveal that the CIT(E) had given any opportunity to the assessee to explain this aspect. Obligation to give an opportunity to the assessee of being heard on the point on the basis of which the Ld. Commissioner found the assessment order erroneous insofar as it is prejudicial to the interest of Revenue is definitely cast on the Commissioner as laid down by the Hon ble Apex Court in the case of Amitabh Banchchan [ 2016 (5) TMI 493 - SUPREME COURT] . It is, therefore, clear that for violation of principles of natural justice,the impugned order cannot be sustained in so far as the computation error is concerned. - Decided in favour of assessee.
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2019 (5) TMI 1157
Levy of penalty u/s. 271(1)(c) - Defective notice - non specification of charge - assessee has submitted that the notice issued by the Assessing Officer is not clear whether notice issued under section 274 r.w.s. 271(1)(c) is for concealment of income or furnished inaccurate particulars - HELD THAT:- Non-striking of the irrelevant column renders the notice issued u/s 271 as invalid. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an 'or' between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. See SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] , SMT. BAISETTY REVATHI [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and KONCHADA SREERAM VERSUS INCOME TAX OFFICER, WARD-1 (1) , VISAKHAPATNAM [ 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM] - Decided in favour of assessee.
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2019 (5) TMI 1156
Assessment u/s 153C - disallowance u/s 14A r.w.r. 8D - whether the AO could have made any addition de hors the material found during the course of the search in an assessment year which have not abated? - HELD THAT:- Thus, as per judgment in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] , the existence of the seized material found during search is a must for making addition in those assessment years which have not abated. Although the judgment of the Hon ble Delhi High Court was rendered in a case falling u/s 153A, but essentially the provisions of sections 153A and 153C are identical and pari materia and the ratio of the judgment of the Hon ble Delhi High Court will apply equally to a case u/s 153C also. In the present case, it is an admitted fact that on the date of the search i.e. on 19th November, 2010 the assessment for the year under consideration was not pending. It is also an admitted fact that nothing incriminating was found during the course of the search which could be related to the disallowance made by the AO u/s 14A. The Assessment Order does not make any reference to any incriminating material found and seized during the course of search which could establish some kind of nexus with the 14A disallowance. in absence of any incriminating material being found during the course of the search, AO will be without jurisdiction in making such an addition. It is the incriminating material found during search which gives jurisdiction to the AO to make additions in the assessment proceedings in respect of assessments which have not abated. In the absence of incriminating material in such cases, as held in the case of Kabul Chawla (supra)the completed assessment is not to be disturbed. - Decided in favour of assessee.
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2019 (5) TMI 1155
Exemption u/s 11 - Registration u/s.12AA denied - work of the assessee society is to promote Cricket - according to the Revenue, the assessee is engaged in activities of business, trade and commerce or is rendering services in relation to such business, trade or commerce and therefore, registration u/s.12AA of the Act was denied to the assessee - HELD THAT:- As decided in assessee's own case [ 2019 (5) TMI 1134 - ITAT RAIPUR ] the assessee is receiving money from BCCI as subsidy for providing services in the IPL matches, for conducting Cricket matches for hiring ground only to promote the Cricket and encouraging new talent in the field of Cricket and objects of all the other Cricket associations of any other state are similar in nature. Therefore, the assessee has not provided any services to any trade, commerce or industry as defined in the proviso to section 2(15) of the Act. In the case of the assessee, since it is for promotion of Cricket, it may not be benefiting the entire mankind but those being benefited are definitely identifiable and they are sections of public. The work of the assessee society is to promote Cricket so as to bring forth new talents and provide opportunity to the people for representing the State as well as the Country. Therefore, the object of the assessee is for charitable purpose and nothing else - Decided in favour of assessee.
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2019 (5) TMI 1154
Condonation of delay of 110 days - filing of rectification u/s.154 - HELD THAT:- ld A.R. has placed certain information on record to establish that the order of the CIT(A) is dated 31.8.2018 and the assessee filed a petition for modification and rectification of mistake before the CIT(A) invoking section 154 to consider the CBDT circular. The petition u/s.154 was disposed by the CIT(A) on 13.2.2019 received by the assessee on 22,.2.2019, and, therefore, as soon as the order was received, the appeal was filed before the Tribunal. Considering the reasons given in the condonation petition, I hereby condone the delay and admit this appeal for adjudication. Exemption 10(37) - rectification u/s.154 - exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfilment of certain conditions - CBDT circular No.36 of 2016 - Circular No.11011/30/2015-LA - compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made u/s 46 of RFCTLARR Act), is exempted from the levy of income tax - HELD THAT:- On consideration of the rival submissions, the department is duty bound to adhere to the instruction of the CBDT while disposing the proceedings before them. There is no dispute that both the circulars now referred by the assessee were not furnished before them. Therefore, they had no occasion to consider the same. Be that it may, looking to the facts and circumstances of the case, I consider it proper and justifiable that in order to render substantial justice, the matter needs to be restored back to the file of the AO to consider the CBDT Circular No.36 of 2016 and Circular No.11011/30/2015-LA before making denovo assessment. - Appeal filed by the assessee is allowed for statistical purposes.
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2019 (5) TMI 1153
Unexplained investment u/s. 69 - valuation of work-in-progress by the Assistant Commissioner of Commercial Taxes (ACCT) at the time of inspection in the business premises of the assessee - ACCT estimated the valuation of WIP without mentioning the quantity or rate of the individual item. It was a rough estimate - AO arrived at the difference between the valuation of WIP done by the ACCT and what was accounted in the books of accounts - HELD THAT:- To estimate this difference, first of all the AO has to reject the books of account of the assessee. Without rejecting the books of account, it is not proper to make addition towards unexplained investment u/s. 69 . ACCT has not at all pointed out the method of valuation of work-in-progress. Without determining the method of valuation of work-in-progress, it is not possible to sustain the addition. AO has to reject the books of account of the assessee and thereafter, he has to estimate the unexplained investment in work-in-progress in the relevant assessment year by following the market price or cost which was lower which the AO has failed to do so. Being so, we are inclined to delete the addition made u/s. 69 - Decided in favour of assessee.
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Customs
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2019 (5) TMI 1152
Valuation of imported goods - rejection of declared value - recording in writing the grounds for doubting the truth or accuracy of the value declared and intimation to the importer under Rule 12 (2) - aluminium scrap - inclusion of value of commission, brokerage, engineering, design work, cost of transportation, etc. in declared value - scope of 'reason to believe' - provisional assessment of duty - HELD THAT:- Section 18 provides for provisional assessment of duty in cases specified in sub-section (1) of the Section. Clause (c) of sub-section (1) deals with cases where importer or exporter has produced necessary documents and furnished full information for assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty. However, Clause (d) is wider and would apply when the importer or exporter does not produce necessary documents or furnish information. In all cases covered under Clauses (a) to (d), the proper officer may direct provisional assessment of the duty leviable on the imported goods. Where duty is assessed provisionally, the importer or exporter has to furnish security as the proper officer deems fit for payment of deficiency, if any, between the duty provisionally paid and the duty finally assessed. On interpreting Section 18 of the Act, it is held that when there is a dispute between the customs authorities and the importer as regards the valuation of the imported goods, on satisfaction of the conditions enumerated in sub-section (1), the authorities should make provisional assessment of customs duty under Section 18 of the Act. As per sub Rule (2) of Rule 12, the proper officer when required must intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared. The said mandate of sub-Rule (2) of Rule 12 cannot be ignored or waived. Formation of opinion regarding reasonable doubt as to the truth or accuracy of the valuation and communication of the said grounds to the importer is mandatory, subterfuge to by-pass and circumvent the statutory mandate is unacceptable. Formation of belief and recording of reasons as to reasonable doubt and communication of the reasons when required is the only way and manner in which the proper officer in terms of Rule 12 can proceed to make assessment under Rules 4 to 9 after rejecting the transaction value as declared. The adjudication order in original is flawed and contrary to law for it does not give cogent and good reason in terms of Section 14(1) and Rule 12 for rejection of the transaction value as declared in the bill of entry. The order in original is not in accordance with Section 14 and Rules 3 and 12 as the mandate of these provisions has been ignored. The Assistant Collector has rejected the transaction value as declared in the bill of entry which, as noticed above, is clearly and fundamentally erroneous besides being contradictory. Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc., to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identical or similar and certain reasons exists and justifies detailed investigation. - Appeal allowed - decided in favor of appellant. Applicability of decision prospective - HELD THAT:- The mandate to record reasons at the second stage of enquiry is not expressly stipulated, albeit it has been read by us by implication in Rule 12. Being conscious that this mandate if applied to past cases would possibly lead to complications and difficulties, we would invoke the doctrine of prospective application with the direction that the past cases will be decided on a case to case basis, depending upon the factual matrix and considerations like whether the importer has asked for certain reasons , whether the reasons were not communicated, whether certain reasons can be deciphered from the assessment/valuation order, whether misdescription or false declaration was apparent, etc.
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2019 (5) TMI 1151
Monetary amount involved in the appeal - Instructions dated 11-07-2018 issued by the C.B.E. C - HELD THAT:- The Instructions dated 11-07-2018 issued by the C.B.E. C. in exercise of the powers conferred by Section 35R of the Central Excise Act, 1944 fixing monetary limits below which appeal shall not be filed in the Tribunal. The monetary limit has been enhanced to ₹ 20 lakhs through the said Instructions. Further, the said Instruction clarified that the said instructions will apply to all pending cases. The Hon ble High Courts of Madras, Karnataka and Gujarat have held that the litigation policy containing monetary limit for filing appeals will apply to pending appeals also. Appeal filed by the Revenue under litigation policy for the respondent dismissed.
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2019 (5) TMI 1150
Monetary amount involved in the appeal - HELD THAT:- In each appeal, amount involved is less than ₹ 10 lakhs. In terms of Board s circular on Government s litigation policy instruction F.No. 390/Misc/163/2010-JC dated 17.12.2015, as amended, Revenue is not supposed to file appeal where the amount involved is not exceeding ₹ 10 lakhs. The appeals are dismissed on the ground of Government s litigation policy without going into the merit of appeal.
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2019 (5) TMI 1149
Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - refund rejected on the ground that the tax invoices did not contain the endorsement to the effect that no credit of additional duty of Customs levied under sub-Section 5 of Section 3 of Customs Tariff Act, 1975 shall be admissible - HELD THAT:- Since such endorsement is a mandatory requirement for compliance as per Notification No.102/2007, in absence of such compliance, rejection of refund application by the authorities below, in our considered view, cannot be interfered with at this juncture - refund cannot be allowed - appeal dismissed - decided against appellant.
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2019 (5) TMI 1142
Imposition of safeguard duty - vires of N/N. 30.7.2018 as also Instruction No.14/2018-Customs dated 13.9.2018 - increased imports of Solar Cells - scope of domestic industry as defined under section 8B(6)(b) of the Customs Tariff Act, 1975 - HELD THAT:- The Director General after considering the material on record has recorded a categorical finding that the two applicant units meet with the requirement of major share of Indian industry. At this stage of considering the question of confirmation or vacation of the interim relief, the issue need not be gone into in detail. However, having regard to the above findings recorded by the Director General, prima facie, at this stage, without a detailed inquiry, it cannot be said that the applicants before the Director General do not meet with the requirements of domestic industry as contemplated under section 8B(6)(b) of the Customs Tariff Act. While it is true that from the record, it emerges that the capacity utilisation has increased from 48% in 2014-15 to 85% in 2017- 18, and the domestic sales have also increased from 115 MW in 2014-15 to 314 in 2017-18 and the production of the domestic industry has increased from 141 MW in 2014-15 to 318 in 2017-18 (annualized), it is equally true that the volume of the imports has grown from 1275 MW in 2014-15 to 9833 in 2017-18 (annualized) that is an increase of 671% in comparison to the production of the domestic industry which has increased by 126% during the same period. Moreover, though the total sales of the domestic industry have increased, the percentage of sales has decreased from 8% to 3%. Though the capacity utilisation has increased, the Director General has recorded that when compared with the growth in demand which increased to 10618 MW in 2017-18, the domestic industry's total capacity should have got utilised. The capacity remaining below 100% even in such enhanced demand indicates a clear preference for the imported product under consideration. The Director General (Safeguard) has examined all the relevant parameters and has given his findings thereon. The Director General has found that domestic industry suffered serious injury during the POI and that there is threat of serious injury in future to the domestic industry. The importers are duly protected from the increase in the change in domestic duties, levies, cess and taxes imposed by the Central Government, State Government or the Union Territories. Besides, if the petitioner ultimately succeeds it would be entitled to the refund of the safeguard duty paid by it, whereas if the applicant (original respondent No.8) succeeds in the petition, it would not be possible to reverse the injury done to it if the ad interim relief granted earlier is continued. Under the circumstances, the balance of convenience lies in favour of the domestic industry. Having regard to the findings recorded by the Director General in the final findings, the court is further of the view that the domestic industry would suffer irreparable injury if the ad interim relief granted earlier is permitted to continue. Application allowed - The ad interim relief granted vide order dated 28.12.2018 is hereby vacated.
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Insolvency & Bankruptcy
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2019 (5) TMI 1141
Initiation of Corporate Insolvency Resolution Process (CIRP) against the Debtor - Section 7 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- For there being no defence from the Debtor side, since this Bench having found the material furnishing the existence of debt and default against the Debtor, we are of the view that this petition is fit for admission, therefore, for the Creditor have filed Consent Form of the proposed Resolution Professional, we admit this petition - Moratorium declared.
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2019 (5) TMI 1140
Reduction of claim - 'existence of dispute' between the 'Corporate Debtor' and the 'Operational Creditor' with regard to supply of coal - HELD THAT:- This Applicant was directed to produce the invoices against the claim mentioned in the Original Company Petition but whereas this Applicant produced the invoices dated 04.11.2013 and 01.02.2014 which are not part of the Original Company Petition. It is also pertinent to mention that this Applicant also filed an appeal over the order passed by this Bench and that was dismissed, therefore it goes without saying that the order dated 18.09.2018 has attained finality. Since that order attained finality, the duty is cast upon this Applicant to place the invoices before the RP as against the dates and invoices mentioned in the Original Company Petition. This Bench therefore cannot go back as to what was said in the admission order dated 15.11.2017 or in the clarificatory order 18.09.2018 because once an order passed is pronounced by this Bench, it will become functus officio as to the adjudication already given, therefore, if at all this applicant being aggrieved of the order dated 18.09.2018, the applicant should have raised it's grievances before the Hon'ble Appellate Authority, that has not been done. As long as the order dated 18.09.2018 is not reversed, this Bench cannot go back to say that as to which invoice is correct or which collection memo is incorrect, whose version is correct or whose version is incorrect because it is not open to this Bench reopen the order dated 18.09.2018 for two reasons - one, the impugned order is based on the statement made by the applicant before the Honourable NCLAT and two, the invoices the applicant produced before the RP are not the invoices as detailed in the original petition. This fact is not even rebutted by the applicant. In any event the Resolution Plan in this case was already approved by this Bench and it is in implementation. Application dismissed.
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Service Tax
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2019 (5) TMI 1148
Condonation of delay in filing appeal - appeal was filed beyond the maximum time limit stipulated under the statute even after the condonable extent of delay - power to condone such delay - scope of Section 85(3A) of the Act, 1994 - scope of interference by this Court in exercise of the discretionary/extraordinary jurisdiction under Article 226 of the Constitution of India - HELD THAT:- There is no dispute to the fact that the appeal came to be filed before the appellate authority only after 253 days beyond the stipulated period of 'two months' and hence, it was sought to be condoned by filing an application. The maximum condonable limit as per the statute is only 'one month', after the prescribed period of two months. This being the position, whether it could have been condoned by the statutory authority and if not possible, could it have been dealt with granting relief by this Court in exercise of the jurisdiction under Article 226 of the Constitution, is the only question. Referring to Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT ], it was held that the Apex Court was considering the scope and ambit of sufficient cause found in the various statutes and thereby to consider to give effect to the statutory provision made for limitation. It was further observed that the question as to whether the provisions of Section 35 of the Central Excise Act, 1944 affects the jurisdiction of the High Court under Article 226 of the Constitution of India for exercise of the constitutional power or not was not considered by the Apex Court. It is true that some of the High Courts, including this Court, at times, have considered the question with reference to the 'extraordinary circumstances', to condone the delay beyond the statutory limit as mentioned above. The learned Single Judge specifically noted that the reason for the delay of 253 days in filing the appeal offered by the writ petitioner was that after passing of the assessment order, the Appellant/Petitioner was engaged in personal tragedy as his daughter was facing marital dispute and hence, the appeal could not be filed within the time. When the Appellant contends that he was otherwise engaged in connection with the demise of his mother, even if it is acceptable, it cannot cover the inordinate delay of 253 days during which period, the Appellant did not find it necessary to compromise with the business activities and other commercial transactions. It has to be reasonably presumed that this plea under this head was never argued before the learned Single Judge; which otherwise would have found a place in the judgment, dealing with the same in appropriate manner - If the Appellant has got a case that it was argued, but omitted to be considered, the redressal of the grievance could only be by way of filing a review petition and nothing else. But since we are holding that the inordinate delay of 253 days cannot be covered by the said incidence/incident, during which period the Appellant was admittedly carrying on the commercial activities/business, it does not constitute any 'extraordinary circumstance' to have interfered by this Court, invoking the discretionary power under Article 226 of the Constitution of India. Thus, Once the period of limitation is specifically prescribed in a statute and stipulates the maximum period/extent of delay which can be condoned, it cannot be condoned by the Apex Court even in exercise of the power under Article 142 of the Constitution of India - Having said so, the Appellants cannot be heard to say that the High Court is still having power to condone the delay beyond the prescribed extent under the statute, by invoking the power under Article 226 of the Constitution, which in fact will be amounting to re-writing the law and contrary to the verdict passed by the Apex Court in Oil and Natural Gas Corporation Ltd. v. Gujarat Energy Transmission Corporation Limited Others ; [ 2017 (3) TMI 1628 - SUPREME COURT ] , which is having a binding effect all over India in view of Article 141 of the Constitution of India. Interference is declined - appeal dismissed.
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2019 (5) TMI 1147
CENVAT Credit - service tax paid on Business Support Service - denial on the ground that cost of rent paid for residence of employee is not taxable for which credit is not admissible - HELD THAT:- As found from the order-in-original, denial of CENVAT credit on rent paid for residential accommodation was justified by the adjudicating authority on the ground that Service Tax was not payable to the owner of the property for rending the residential accommodation to Dr. Puri. It was not known if such Service Tax collected on such rent has been paid to the property owner who, in tern, had paid the same to the department. Liability of discharge of tax in the said case does not fall on the house owner as service provider ABMCPL, who collected the Service Tax, is duty bound to pay the same to the Government. In the instant case, there is no dispute concerning such payment being not paid to the Government by ABMCPL. Even in such a situation the liability is supposed to be fixed on the person who collected the same and it can never be fixed on the person from whom it is collected. When service tax was collected by service provider even on providing for residential accommodation which is admissibly not subjected to service tax, there is no point in denying benefits of availment of CENVAT credit to the appellant when legality of such collection at the receivers end was not questioned. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1146
Demand of service tax - brokerage received on IPO related service - demand set aside on the ground that the appellant is not covered by the definition as shares will become goods only if allotment was made - Scope of 'Business Auxiliary Services' as per Section 65(19) of the Finance Act, 1994 - scope of SCN - HELD THAT:- The appellant s activity is not covered by subsection (i) as they are not promoting or marketing or selling any goods. It is only an initial / offer and until the rights are issued to the subscribers such as share certificate do not assume the character of goods. Therefore, as rightly held by the lower authority, the services of the appellant to their client are beyond the scope of sub-section (i) - Coming to the sub-section (ii), service rendered by the appellant to their clients would be chargeable to tax only if it is rendered in relation to promotion or marketing of service rendered by the clients. IPO is only an offer to the prospective buyers and therefore, it cannot be held to be a service by the company offering IPO. Therefore, we find that in either condition, the appellants are not covered by the definition under Section 65(19) of the Finance Act, 1994. The Review Order goes beyond the scope of show-cause notice and therefore, is not maintainable under law as held by Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS CARRIER AIRCON LTD. [ 2005 (5) TMI 69 - SUPREME COURT]. The appeals survive both on merits as well as on the fact that the Revisionary Authority has traveled beyond the grounds raised in the first show-cause notice - the demand itself is not sustainable and we are not going in to the issue of limitation. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1145
Imposition of penalty u/s 76 and 78 of FA - revision of order - differential service tax and interest demanded were paid well before the issuance of show-cause notice - Classification of services - Rent-a-Cab Scheme Operator service or Tour Operator service? - HELD THAT:- We find that service tax has been paid along with interest before issuance of show-cause notice. The original adjudicating authority has gone into the facts of the case and in exercise of his discretion imposed penalty under Section 77 of the Finance Act, 1994 and refrained from imposing penalty under Sections 76 and 78 of the Finance Act, 1994. We find that Tribunal in the case of REMAC MARKETING (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [ 2008 (10) TMI 88 - CESTAT, KOLKATA ] has taken a view that when duty and interest have been paid before the issuance of show-cause notice, penalty need not be imposed. The learned Commissioner in the capacity of the Revisionary Authority had no reason to review the original order seeking imposition of penalty under Sections 76 and 78 of the Finance Act, 1994 - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1139
Business Auxiliary Service - charges recovered by the Appellants as Commission for sale of goods of associated group of companies abroad - Export of Services - reimbursements made by the associated group companies to the appellants - reverse charge mechanism - time limitation - penalty. Whether the charges recovered by the Appellants as Commission for sale of goods of associated group of companies abroad are leviable to service Tax under category of Business Auxiliary Service provided in India or the same are in respect of Export of Services as defined from time to time and thus exempt from payment of Service Tax? - HELD THAT:- The services provided by the appellants were provided for the sale of goods of the associated group companies in India and were thus used in India. According for the period prior to 27.02.2010 the benefit of export of services as claimed by the appellant in respect of commission received by them for sale of goods in India from associated group companies cannot be extended to them. From 27.02.2010, the condition of use outside India has been removed by way of omission of clause a of sub-rule (2) of Rule 3 of Export Of Service Rules, 2005. When the said condition has been omitted the only conditions to be satisfied for considering the service to qualify as export of service are in respect of the location of service recipient and the receipt of consideration in convertible foreign exchange . Admittedly in the present case the service recipient is located outside India and the payments toward considerations for providing the service are received in convertible foreign exchange. In our view the benefit of export of services cannot be denied to the Appellant from 27.02.2010 onwards till 30.06.2012 - From 01.07.2012 onwards the Place of Provision of Service Rules, 2012 were introduced. Rule 2 (f) of the said Rules define intermediary . Commissioner has in his order held that appellant was providing the intermediary services in relation to sale of goods by the associated group companies and hence by application of the rule 9 ibid, the place of provision of service is the location of service provider. While it is true that intermediary includes intermediary in respect of sale of goods, but legislature has while framing these rules deemed it fit to exclude the intermediaries in respect of sale of goods from the definition of intermediary. Hence we cannot sustain the view expressed by the Commissioner, contrary to the express definition of intermediary provided by the Place of Provision of Service Rules, 2012 - Hence, the services provided by the appellant in respect of the sale of goods of associated group companies cannot be said to be services provided by intermediary as defined by said Rules ibid. Since Rule 9 is applicable to specified services and the services provided in this case being not the intermediary services, this Rule will not be applicable for determination of place of provision of service. Since in respect of the services provided by the appellant for sale of goods of the associated group companies satisfy the all the conditions as laid down by the said Rule 6A to treat it as export of service are satisfied we are bound to hold that the commission received towards sale of goods of associated group companies abroad are in relation to export of services. Whether Service Tax is leviable in respect of reimbursements made by the associated group companies to the appellants towards expenses actually incurred by them? - HELD THAT:- Rule 5 is ultra vires the Section 67 of The Finance Act, 1994 during the material period and noting that Commissioner has not given any other reason for including these charges in value of taxable service, these charges cannot be added to the value of taxable services provided by the appellants. However we make it clear that since these charges cannot be added to value of taxable services provided, appellants could not have claimed any CENVAT Credit in respect of the input services received for providing these reimbursable services to their associate group companies. Subject to verification of the fact of non availment of CENVAT Credit in respect of these input services we agree with the contentions of the appellants in this respect. Whether in respect of Foreign Exchange remittances made by the appellants to their associated group companies abroad for reimbursement of various expenses incurred by them could be levied to service tax on reverse charge basis treating the services provided as import of services? - HELD THAT:- The payments made in the Foreign Currency are for provision of various services to the appellant or its employees by the overseas group associate companies. These charges are not reimbursement but payments towards the specific service provided by the overseas group associate company and are not reimbursements - Admittedly in present case the service provider the associated group companies are not having any office or presence in India. Thus the recipient of service has to pay the service tax on reverse charge basis. Whether the demand is hit by limitation as extended period of limitation as per Section 73 of The Finance Act, 1994 is not invokable in the present case? - HELD THAT:- The facts about the commission being received by the appellants from their overseas associate group companies for sale of their goods in India was never brought to the knowledge of department. Neither the commission received were reflected in the ST-3 return filed by the appellants. Though appellant had taken registration for providing business auxiliary services, and they do not dispute the fact that the services provided by them to the overseas associated group companies are appropriately classifiable under the said category they should have reflected the commission received from the overseas associated group companies in the ST-3 return. Having not done so they have clearly suppressed the relevant information with the intention to evade payment of service tax - the charges of suppression with intent to evade payment of duty for invoking extended period of limitation as provided by Section 73 of Finance Act, 1994 is upheld. Whether demand for interest under Section 75 and penalties imposed under Section 77 and Section of Finance Act, 1994 can be sustained? - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Since we have held that extended period of limitation has been rightly invoked in the present case, the provisions of section 78 will get attracted automatically - imposition of penalty under Section 78 is upheld, however the same needs to be re-quantified as indicated earlier in the order - Penalties under Section 77, is for the reason of contraventions of various provisions and acts of omission to perform the task as required to be performed under the provisions of the act. Such penalties are in nature of Civil Liabilities and do not require any contumacious conduct on the behalf of the defaulter - the penalties imposed under the provisions of Section 77 of the Finance Act, 1994 is upheld. Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Matter remanded back to adjudicating authority for re-computation of demand, interest and penalties - appeal allowed by way of remand.
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2019 (5) TMI 1138
CENVAT Credit - Stock Broker and Banking Other Financial Services - input services used in setting up of their office premises - the new office taken on Leave and License basis - HELD THAT:- The Appellant, after taking possession of the office premises against leave and licence agreement with India Bulls Real Estate Co. Pvt. Ltd, carried out certain civil construction/repair work. Also, they have carried out renovation of the premises as advised by the architecture so as to make optimum use of the space and other necessaries like air conditioners, Fire fighting equipment etc. useful for the employees and as per their requirement. The only contention of the Revenue is that after 1.4.2011 since the expression setting up has been deleted from the definition of input service as prescribed u/R 2(l) of CENVAT Credit Rules 2004, the various services received cannot be called as input service. Some of the services undertaken by the Appellant though are in the nature of civil works, but considering with other works it is definitely relate to repair/renovation, modernization of the existing office premises and eligible to CENVAT Credit. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1137
CENVAT credit - recovery of wrongly availed CENVAT Credit - input services - rent-a-cab service - vehicle insurance - group insurance medi-claim service - staff welfare - travel expenses - period of dispute is prior to 1.4.2011 as well as after - HELD THAT:- The definition of input service prior to 1.4.2011 had a wide ambit and it included the words activities relating to business . There are several decisions of the High Courts as well as Tribunal which have consistently held that almost all the services narrated above are eligible for credit as it is availed for the business of manufacture / for providing output service - the credit availed in respect of the services prior to 1.4.2011 would be eligible. Period post 1.4.2011 - HELD THAT:- The definition of input services was amended so as to include certain exclusion clauses. As per clause (B) for definition of input services, the services provided way of renting of motor vehicle would be eligible only if the vehicle is capital goods for the service provider - In the present case, there is no evidence adduced by the appellant that the renting of motor vehicle was capital goods for the service provider - the credit availed on rent-a-cab service is not eligible. Vehicle insurance - maintenance and repair of motor vehicle - HELD THAT:- Clause (BA) of the definition of input services excludes general insurance service as well as repair and maintenance of motor vehicles. Therefore, as per the exclusion clause the credit availed on vehicle insurance as well as maintenance and repair of vehicle is not eligible. Health insurance / medi-claim benefit given to the employees - HELD THAT:- As per the exclusion clause (C) all the services availed primarily for personal use or personal consumption of an employee is not eligible for credit - In the present case, the insurance policies are not taken under any statutory mandate. It is an incentive given to the employees. The primary and most direct beneficiary of such insurance policy is the employee and not the company or the employer whereas in the case of workmen s compensation policy or any other policy which is required to be taken under statutory mandate, the primary beneficiary is the company or the employer and not the employee - In the present case, the insurance policy is not availed under any statutory obligation and it is for the personal consumption of the employee and therefore not eligible for credit. Therefore, the credit availed on all the services after 1.4.2011 are not eligible. Penalty - HELD THAT:- It can be seen that the issue whether credit is eligible on these services were under litigation for long time and interpretational one - Penalty not warranted and is required to be set aside. Appeal allowed in part.
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2019 (5) TMI 1136
Recovery of Service tax - Business Auxiliary Services - appellant received certain commissions and paid commission to agents outside India - applicability of N/N. 25/2004 dated 10.09.2004-ST and N/N. 6/2005-ST dated 1.3.2005 - HELD THAT:- The appellants have rendered services to their clients in relation to procurement of goods or services which are inputs for the clients. Their clients are manufacturers. Therefore, the exemption contained in N/N. 25/2004 is applicable to them - Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (5) TMI 1144
Condonation of delay of 1 day in filing appeal - Power of Commissioner (Appeals) or the Tribunal to condone delay - Whether the learned Commissioner (Appeals) should have condoned the delay of 1 day when the appeals were filed beyond the statutory limit of 60 days and condonable period of 30 days? - HELD THAT:- The issue is now no more res-integra and covered by the decision of Hon ble Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] where it was held that When a period of limitation is prescribed for filing of an appeal and the extent of the power to condone the delay is also prescribed by the statute, the exercise of the writ jurisdiction under Article 226 of the Constitution would clearly be not warranted to direct the adjudicatory or appellate authority to breach the provision for limitation. There should not be an iota of doubt about the power/jurisdiction vested either with the Commissioner (Appeals) or with the Tribunal in condoning the delay beyond the condonable period of 30 days in addition to the statutory limit of 60 days prescribed under Section 35 in filing the appeal before the Commissioner (Appeals). Appeal dismissed - decided against Appellant.
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2019 (5) TMI 1143
Clandestine removal - Bags and Soft Luggage items - Penalty imposed u/s 26 of CER - Demand based on statements of Directors - HELD THAT:- When the officers of DGCEI visited the premises of the factory, they found 1806 Nos of bags which were not accounted for with intent to clear without payment of duty. Further, these bags were not seized from outside the factory premises or during transit and that were seized from the factory premises. Therefore, In view of Rule 4 of Central Excise Rules, duty is payable only at the time of clearance of goods from the factory and in this case, there was no clearance of the said goods from the factory addressing presumptions that they were not accounted with intent to clear without payment of duty is not tenable in law. With regard to the demand of ₹ 1,73,625/- on 1479 Nos of bags, the appellant during the pendency of this appeal had paid the duty of ₹ 1,73,625/- along with interest of ₹ 1,01,423/-. In view of the said payment of duty, I hold that the appellant could not prove by cogent and convincing evidence that they were not clandestinely removing the said goods therefore the duty on 1479 Nos of bags amounting to ₹ 1,73,625/- is confirmed. Penalty on Directors - HELD THAT:- Penalty under Rule 26 of the Central Excise Rules is imposable on any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or the Rules but there is no evidence in the present case that the Directors in their individual capacity were guilty of any omissions and commissions mentioned in the Rule - Essentially, in the present case unintended lapses were there and hence the imposition of personal penalty on the Directors is not justified. Appeal allowed in part.
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9911796707
