Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 23, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
TMI Short Notes
Articles
News
Notifications
GST
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11/2018 - dated
21-5-2018
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UTGST
Lakshadweep - E-way bill comes into effect w.e.f. 25-5-2018 - Central Government, rescinds the notification number G.S.R. 319(E), dated the 31st March, 2018
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10/2018 - dated
21-5-2018
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UTGST
Andaman and Nicobar Islands - E-way bill comes into effect w.e.f. 25-5-2018 - Central Government, rescinds the notification number G.S.R. 315(E), dated the 31st March, 2018
GST - States
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F-10-22/2018/CT/V (36) - dated
14-5-2018
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Chhattisgarh SGST
Waiving Late Fee for GSTR 3B Oct-2017 to April-2018
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F-10-21/2018/CT/V (33) - dated
18-4-2018
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Chhattisgarh SGST
Chhattisgarh Goods and Services Tax (Fourth Amendment) Rules, 2018
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CCT/26-2/2018-19/34 - dated
18-5-2018
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Goa SGST
Goa Govt. notifies 22 goods for intra-State e-way bill from June 01, 2018
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22/2018-State Tax - dated
14-5-2018
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Gujarat SGST
WAIVING LATE FEE FOR GSTR 3B OCT-2017 TO APRIL-2018
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21/2018-State Tax - dated
25-4-2018
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Gujarat SGST
Gujarat Goods and Services Tax (Fourth Amendment) Rules, 2018
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12-4/78-EXN-TAX - dated
1-5-2018
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Himachal Pradesh SGST
Himachal Pradesh Govt. notifies 17 goods for intra-State e-way bill from May 05, 2018
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12-4/78-EXN-TAX-PART/12438 - dated
17-4-2018
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Himachal Pradesh SGST
Supersession of Notification No. 12-4/78-EXN-Tax-Part-10090-120 dated 28th March, 2018
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3/2018 - State Tax - dated
14-5-2018
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Kerala SGST
Exemption from e-Way bill for transport of certain goods within State
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23/2018 –State Tax - dated
19-5-2018
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Maharashtra SGST
Extension of the due date for filing of GSTR-3B for the month of April, 2018 till 22.05.2018
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22/2018-State Tax - dated
15-5-2018
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Maharashtra SGST
Waiver of late fee payable for delayed filing of return in FORM GSTR-3B from October, 2017 to April, 2018 for the class of regi. persons whose declaration in FORM GST TRAN-1 was submitted but not filed on the common portal on or before the 27/12/2017
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MGST-1018/C.R.38/Taxation-1 - dated
10-5-2018
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Maharashtra SGST
Appellate Authoritity For GST Advance Ruling-Notification u/s 99 of MGST Act, 2017
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15D/2018-State Tax - dated
7-5-2018
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Maharashtra SGST
Amendments in Notification No. JC(HQ)-1/GST/2018/Noti/1/E-way Bill/ADM-8 (Notification No. 15A/2018) dated the 27th March 2018
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15C/2018–State Tax - dated
25-4-2018
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Maharashtra SGST
Amendments in Notification No. JC(HQ)- 1/GST/2018/Noti/1/E-way Bill/ADM-8 (Notification No. 15A/2018) dated the 27th March 2018
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6509/CT/POL-56/3/2018/Policy - dated
25-4-2018
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Orissa SGST
Registration of Drawing & Disbursing Officers as TDS Authority under the GST Act
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09/2018–C.T./GST - dated
18-5-2018
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West Bengal SGST
Extension of due date of filing of GSTR-3B for the month of April, 2018
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599-F.T. - dated
14-5-2018
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West Bengal SGST
Waiver of late fee payable by registered persons for failure to furnish the return in FORM GSTR-3B by the due date
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - liquidated damages - to be classified within the Heading 9997 - Liable to be taxed @18%. - time of supply will be, when the same is determined / established as per the agreement - AAR
Income Tax
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Penalty u/s.271(1)(c) - there is no provision in the Income Tax Act, 1961 for a draft penalty order u/s 271(1)(c) of the Act. - AT
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Penalty levied u/s 271D - capital contributed by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS - No penalty - AT
Customs
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Classification of imported goods - projectors - to be classified under CTH 85286100 as "Projectors solely or principally used with Automatic Data Processing Machines" or under 85286900 as they have some additional features - classification of the imported projectors under CTH 85286100 upheld - AT
Service Tax
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Quarterly refund claim - refund of cenvat credit - the relevant date for computing one year under Section 11B of the Central Excise Act, 1944 is to be determined by complying Rule 5 of CENVAT Credit Rules, 2004 and the assessee can file the refund claim for a quarter and the last day of the quarter has to be considered for determining the limitation in terms of Section 11B. - AT
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Construction services - liability of service tax - Construction of senior mess and junior hostel block building for panchsheel boys Inter College, NOIDA (undertaken on behalf of NOIDA authority) - not subjected to service tax. - AT
Central Excise
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Clandestine removal - The assessee-Appellants has committed a fraud with the Banks by raising the duplicate bills. For this financial irregularity, Department will be at liberty to initiate appropriate proceedings under the relevant law. But, in the instant case, the goods were not moved and there is no evidence pertaining to the clandestine removal of the goods - demand set aside - AT
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Method of Valuation - garments - if both the Rules i.e. Rule 4 and Rule 8 of the Valuation Rules are applicable, sequential application of various rules is the only reasonable way to read the rules. - AT
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Manufacture - cutting, grooving of the Aluminium sheet to make Aluminium composite panels amounts to manufacture of a distinct product commercially known as different. (ACP) - running sheets of ACPs are cut into smaller Sizes either of rectangular or square plates - with or without grooving - Held as manufacturing activity - AT
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Extended period of limitation - manufacture - Revenue had issued Service Tax registration to the appellant for the activity of galvanization and therefore the activity undertaken by the appellant was known to the department from the date of issue of said registration under Service Tax and that the show cause notice dated 02.04.2012 was issued for the period from 2007-08 - SCN is clearly hit by limitation - AT
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Reversal of CENVAT credit - removal of scrap generated and old capital goods - whether the appellant is required to pay duty by way of reversal under Rule 3(5) or 3(5)(A) of CCR, 2004 on removal of the scrap generated from used and old capital goods? - the show cause notice is presumptive and hence not maintainable. - AT
VAT
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Inter-state sales - exemption from tax - whether "old newspaper" would be covered within the term "newspaper" or not - Old Newspapers are also Newspapers - Entitled for Exemption from CST - HC
Case Laws:
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GST
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2018 (5) TMI 1332
Levy of GST - liquidated damages - applicant contends that these damages being towards deficiency of services and reduce the original consideration and will not be considered as separate service covered by the term 'Obligation to tolerate an act or a situation'. Whether GST is applicable on Liquidated Damages in case of: Type 1 i.e. Operation Maintenance activities; Type 2 i.e. Construction of new power plants or renovation of old plants; Or is applicable in both cases? Held that: - the contract price and the liquidated damages are two different aspects. Deduction of one from the other is a mere facilitation towards settlement of the accounts. This manner of giving effect to the obligations under the contract should not be deceptive of the actual intent. Presence of liquidation clause in the agreement:- Applicant has argued that it was never the intention of the company to get its supplies/project delayed nor the contractors want to make delay and thereby causing company to tolerate it. - If an agreement has such a clause and if the eventuality actually happens then the GST Act has provided for such an eventuality. The activity is falling within the scope of clause(e) of para 5 of the Schedule II of GST Act, which is read as, agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; In terms of the aforesaid agreement, GST would be applicable on the Liquidated Damages. Classification of service - It would fall within the Heading 9997 - Liable to be taxed @18%. Time of supply of services - Scope of agreement - In terms of the aforesaid agreement, the clauses reveal that the levy of liquidated damages is not when the delay is occurring but the liability of payment of these liquidated damages by the Contractor will be established once the delay in successful completion of trial operation is established on the part of the Contractor. This would define the time of supply. Where the part of liquidated damages pertains to per-GST, would GST be applicable - Held that:- The question is based on some incorrect presumption owing to which the applicant seems to have adopted some method of deduction of liquidated damages from the payments to be made to the contractor. We are afraid that no such strategy of deducting or of capping can be inferred from the agreement clauses. Eligibility of credit of GST on such LT in the hands of Contractor / vendor - Held that:- The above question is not answered as the proper person to ask the above question would be the contractor /Vendor and not applicant.
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2018 (5) TMI 1330
Conditional order of stay - claim of petitioner is that the reason for condition imposed is not stated by 2nd respondent - Held that: - In Ext.P4 order, the 2nd respondent does not state reasons as to why the petitioner was required to deposit the amounts as a condition for the grant of stay - This Court has held in Archana Agencies v Commercial Tax Officer [2014 (5) TMI 1024 - KERALA HIGH COURT] that an authority considering a stay petition is bound to give reasons even while granting conditional stay - the 2nd respondent is directed to pass fresh orders on the stay application preferred by the petitioner, after hearing the petitioner - petition disposed off.
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2018 (5) TMI 1329
Detention of goods - Section 129(3) of the CGST/SGST Act, 2017 - vehicle details was not updated in the e-way bill - Held that: - the goods detained under a detention notice issued in terms of the CGST/SGST Act cannot be released unless a security equal to the amount demanded is insisted from the assessee - the 1st respondent is directed to release the goods and the vehicle to the petitioner on the petitioner furnishing a bank guarantee for the security amount demanded - petition disposed off.
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Income Tax
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2018 (5) TMI 1327
Reopening of assessment - objections filed by the petitioner pursuant to the notice issued u/s 148 not been disposed of by the respondent-Authority - non passing a speaking order - Held that:- Passing of the assessment order sans disposing of the objections raised subsequent to issuance of the notice under Section 148 of the Act is untenable and accordingly, the impugned assessment order as well as the demand notice are set-aside. See M/S. DEEPAK EXTRUSIONS PVT. LTD. VERSUS DCIT [2017 (3) TMI 1257 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2018 (5) TMI 1326
Reopening of assessment - approval u/s 151(1) in the case on hand has been granted by the ACIT Range – 7 and not by the CIT as mandated under the Act - Held that:- The Hon’ble Delhi High Court in the case of Pr. CIT vs N.C. Cables [2017 (1) TMI 1036 - DELHI HIGH COURT] held that approval under section 151 is to be made after application of mind. It is not so in this case as mechanical approval is given by an officer who is not authorised to do so in law. Thus on this count also we hold that the reopening is bad in law. Further a perusal of the reasons recorded shows non-application of mind by the AO. Directions have been given by the DDIT (Inv.) Unit-2(1), Kolkata, vide communication cited. The reasons recorded are only based on such directions. The reopening was done in compliance in such directions. - Decided in favour of assessee.
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2018 (5) TMI 1325
Reopening of assessment - existence of reasons to believe - Held that:- We have to necessarily hold that the reopening is bad in law, as in this case on hand, there is no whisper, much less an allegation that there is failure on the part of the assessee to disclose fully and truly all material facts, necessary for assessment. Hence the mandatory requirements of the proviso to section 147 has not been fulfilled in this case. We hold that the reopening is bad in law as the reasons recorded are without independent application of mind. - Decided in favour of assessee
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2018 (5) TMI 1324
Taxability as long term capital gain - provisions of section 50C applicability - Held that:- As we have held that what was sold, was stock-in-trade and hence assessable under the head business income, the provisions of section 50C will not apply for the impugned assessment years. Hence this finding of the Ld. CIT(A) is also upheld. Thus the ground of revenue in these appeals for the assessment year 2008-09 is dismissed. “Speculation loss” as trading loss of the assessee - Held that:- This grounds taken by the revenue on the deletion of disallowance of loss incurred on future trading of foreign exchange by the CIT(A) is hereby dismissed. See Nand Nandan Agrawal vs DCIT [2018 (2) TMI 253 - ITAT AGRA].
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2018 (5) TMI 1323
Undisclosed income from purchase of bitumen from Shri K.K.Kedia - Held that:- When it is proved that charges against the assessee are not correct no addition based on such allegations can be sustained. The ld. CIT(A) also records that the assessee has filed documents to counter the allegations of the AO and to prove actual delivery of bitumen etc and also to prove that there was no misappropriation. The ld. DR could not controvert the factual finding of the ld. CIT(A) nor he produced any material before this Bench to controvert the submissions of the assessee. Addition in block assessment made u/s 158BC - The findings of the First Appellate Authority that, there is no material found or seized during the course of search and hence no addition can be made in the block assessment made u/s 158BC could not be controverted by the DR. CIT(A) further held that the addition is not correct in law as it was based on a presumption that 55% of the expenses booked are bogus expenditure. As the facts was not controverted, we uphold this finding of the ld. First Appellate Authority and dismiss this ground of the assessee. Revenue’s appeal dismissed on the issue of addition.
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2018 (5) TMI 1322
Assessment u/s 153A - addition to income - Held that:- The Co-ordinate Benches in the case of Y.V. Anjaneyulu Vs. DCIT, Vijayawada [2017 (6) TMI 547 - ITAT VISAKHAPATNAM) held that assessments U/s. 153A could not be made on the basis of income returned by assessee or on the basis of books of account of assessee where no incriminating material had been found from possession of assessee. CIT(A) inspite of written submissions made before him and contentions raised, did not consider the above principles laid down by the judicial authorities. Instead the issue discussed by the AO whether the proceedings U/s. 153A are mandatory or not have been upheld, when there is no dispute with reference to initiation of proceedings. The dispute is only with reference to additions made which assessee contends that they are not based on any incriminating material found in the course of search. This aspect has not been examined by the Ld.CIT(A) at all. Once the legal issue is examined, it is incumbent on the CIT(A) to decide the merits of the addition also. If he finds that this issue was already decided in earlier round of appeals, then, he should follow the same rather than dismissing the grounds raised. For these reasons, we are not in a position to upheld the orders of the CIT(A). Since the AO has already considered (wrongly) the directions of ITAT, we do not find it necessary to set aside again to the file of AO. Therefore the issue is set aside to the file of CIT(A) to examine the additions in the light of the principles laid down by the higher judicial authorities and give clear findings whether any proceedings are pending on the date of search or whether any proceedings have been abated, whether any incriminating material was found for making additions in each of the assessment years and on each of the additions made.
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2018 (5) TMI 1321
Eligible for deduction u/s 80IA - allocation of proportionate expenses in respect of employees cost and administrative expenses incurred at head office and at various unit offices - Held that:- There is nothing available on record in terms of working of eligible profits and accounting of expenses in relation to eligible projects. Following the decision of the Coordinate Bench referred supra, the matter is remanded back to the file of the AO to examine the above said contentions of the ld AR and to see whether the assessee has made proper allocation of expenses. In the result, the ground is allowed for statistical purposes.
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2018 (5) TMI 1320
Addition taking the annual letting value of the property at 8% of the value of the properties as recorded in the balance sheet - Held that:- No merit in the contention of the assessee that where the property is used for the business purpose through the private limited companies promoted by him has to be construed as the assessee is carrying on business for the reason that companies as promoted by the assessee are separate legal entities and assessee can not be said to have carried on business through these entities. However, alternative contention of the assessee has merit that in absence of any rent receipt by the assessee the ALV can not be assessed by applying 8% on the investment value but has to be assessed on the basis of Annual Rateable Value by MC. Considering all we restore the issue to the file of AO to decide that ALV on the basis of Annual Rateable Value by MC. The ground is allowed for statistical purposes. Disallowance u/s 14A - apportionment of expenditure - Held that:- In this case, the AO has made disallowance by applying the provision of rule 8D(iii) towards administration expenses which is not correct and has to be deleted as assessee has not incurred any expenses. The case of the assessee is squarely covered by the decision of the co-ordinate bench of the Tribunal in the case of Justice Sam P. Bharucha vs. ACIT (2012 (12) TMI 409 - ITAT MUMBAI) wherein it has been held that the apportionment of expenditure is only applicable where the assessee has incurred composite/indivisible expenses in respect of taxable and non taxable income and where it is not possible to determine the actual expenditure in relation to the exempt income or when no expenditure has been incurred in relation to exempt income, then principle of apportionment embedded in section 14A has no application. - Decided in favour of assessee.
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2018 (5) TMI 1319
Unexplained expenditure - GP determination - identity of the suppliers - Held that:- We are not in agreement with the findings of the Ld. CIT(A) on this issue as the AO has made the addition only on the basis of replies received under section 133(6). Even if we consider these purchases as bogus/inflated purchases as has been observed by the authorities below even then the entire disallowance is unwarranted and uncalled for. In our opinion, a reasonable disallowance based upon the GP should be made to bring these purchases to tax. Accordingly, we direct the AO to apply a percentage of GP on the said difference in the purchases. Since the assessee has shown a GP rate of 3.75% during the year, we also direct the AO to apply a GP of 4% on these purchases of ₹ 66,09,022/-.
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2018 (5) TMI 1318
Consideration received on account of sale on software - Whether royalty within the meaning of Article 13 of the Indian UK DTAA? - business income - Held that:- The license granted by the Infrasoft is limited to those necessary to enable the licensee to operate the program. The rights transferred are specific to the nature of computer programs. Copying the program onto the computer’s hard drive or random access memory or making archival copy is an essential step in utilizing program. Therefore, rights in relation to these acts of copying, where they do no more than enable the effective operation of the program by the user, should be disregarded in analyzing the character of the transaction for tax purposes. Payments in these types of transactions would be dealt with as business income in accordance with Article 7 of India-UK DTAA. Thus, the issue relating to the consideration received by the assessee from various entities on account of sale of software is not royalty within the meaning of Article 13 of the India UK DTAA, the effect of Article 3(2) of DTAA clearly set out the definition of royalty as per the distributor agreement and the end user license agreement which was produced before the Assessing Officer as well as before the CIT(A). The DRP has not taken into account the correct and true meaning of the royalty and the services do not come under the purview of royalty. As in case of Principal CIT Vs. M. Tech India Pvt. Ltd. [2016 (1) TMI 812 - DELHI HIGH COURT] has held that payment made by reseller for the purchase of software for sale in Indian market could not be considered as royalty - Decided in favour of assessee.
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2018 (5) TMI 1317
Disallowance of interest - revenue or capital expenditure - Depreciation on account expenditure treated as capital expenditure - Held that:- It is for the assessee to demonstrate through verifiable evidence that the purpose of loan and its utilization is not for the purposes of the building construction which it has failed to do so and nothing has been brought on record to controvert the findings of the AO. Given that by assessee’s own treatment of capitalizing the interest expenditure in the previous assessment year 2012-13, where the assessee now claims that the expenditure is not capital but revenue, there is greater onus on the assessee which it has again failed to discharge in the present case. No infirmity in action of AO in disallowing the interest expenses till the new building was put to use in September, 2012. 455436 At the same time given that the AO has capitalized the said interest paid for the period April 2012 to August, 2012 in the building account, the assessee become eligible to claim depreciation @ 10% on the said interest being capitalized. We therefore, allow the alternative claim of the assessee regarding depreciation on the said interest being capitalized by the Assessing Officer. In the result, ground no. 1 of the assessee’s appeal is dismissed and ground no. 2 is allowed. Disallowance 10% of the expenditure in the nature of telephone, travelling, conveyance and depreciation on cars - Held that:- The expenditure has been disallowed on the basis that the personal use of the telephone facility cannot be ruled out and during the course of hearing, the ld AR has stated that the personal usage by the Partners is minimal though the quantum of disallowance is on a higher side. Given that no basis or allocation has been brought on record, we find that the AO is reasonable to disallow 10% of telephone expense and the same is upheld. Travel expenditure allowability, AR has submitted that expenditure is fully vouched and no specific instance has been brought on record by the Assessing officer determining the personal travel expenditure being claimed as part of official travel expenditure. We agree with the contentions of the ld AR and disallowance made regarding travel expenditure is deleted. Disallowance of conveyance expenditure, no specific arguments have been taken and the disallowance is hereby confirmed. Depreciation on cars, once it is not disputed by the Revenue that the vehicles are owned by the firm, the depreciation being a statutory allowance deserves to be allowed. At the same time, where it is established that the vehicle has been used for personal purposes, in such a scenario, the Revenue is well within its right to tax the vehicle running expenditure as perquisite in hands of the employees/directors. In the result, the ground of appeal is partly allowed. Disallowance 10% of entertainment and staff refreshment expenses - addition holding that these expenses were not fully supported by the proper bills due to which these expenses could not be verified completely - Held that:- The nature of the expenditure is explained as refreshments in forms of tea/coffee offered to customers and employees. Given the nature of the assessee’s business and its reported turnover, we find the nature and quantum of expenditure to be reasonable and the addition so made by the AO is hereby deleted.
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2018 (5) TMI 1316
Penalty u/s.271(1)(c) - notice does not specify the limb of section 271(1)(c) for which penalty proceedings were initiated i.e. whether for ‘concealment of income’ or ‘furnishing of inaccurate particulars of such income’ - Held that:- In the instant case, the AO vide his order u/s 143(3) dated 28.12.2011 has initiated the penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income or concealment of income. In the draft penalty order u/s 271(1)(c) dated 24.03.2014, the AO has imposed penalty of ₹ 46,59,047/- for concealment of income. Also we find that there is no provision in the Income Tax Act, 1961 for a draft penalty order u/s 271(1)(c) of the Act. See Dilip N. Shroff case [2007 (5) TMI 198 - SUPREME COURT] - Decided in favour of assessee.
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2018 (5) TMI 1315
N.P. determination - estimation of income - estimated rate to be applied on entire sale or differential sale amount as detected - suppressed sales - assessee were a liquor contractor dealing in country liquor, Indian made foreign liquor (IMFL) and Beer - Held that:- AO is directed to apply N.P. rate of 2.7% on the estimated sales after deducting interest and salary to partners subject to the minimum return income.
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2018 (5) TMI 1314
TPA - ALP determination - aggregation approach adopted by the assessee for benchmarking its manufacturing activities rejection - Held that:- Benchmarking the international transactions of assessee, wherein the assessee was engaged in manufacturing activities, then we hold that various activities are to be aggregated for determining the arm's length price of its international transactions. Direct the Assessing Officer that while determining the PLI to adopt net profit to sales in order to benchmark the international transactions Benefit of range of +/-5% is available if the variation does not exceed the said tolerance margin. The ground of appeal is thus, allowed. International transactions of procurement support services provided to associated enterprises are to be aggregated and benchmarked along with international transactions under the manufacturing activities. Deduction under section 80IB computation - Held that:- The said issue is covered against the assessee by the earlier order of Tribunal and wherein, the Tribunal following the same parity of reasoning as in assessment years 2007-08 and 2008-09 had upheld the orders of authorities below in allocating head office expenses, Director s salary, etc to Daman unit and upheld the re-computation of deduction under section 80IB of the Act. - Decided against assessee Claim of deduction under section 35(2AB) - expenditure incurred on Research Development activity - whether where the facility has been recognized and necessary certification is issued by the prescribed authority, the assessee can avail the deduction in respect of expenditure incurred on in-house R D facility? - Held that:- The amendment brought in by the IT (Tenth Amendment) Rules w.e.f. 01.07.2016, wherein separate part has been inserted for certifying the amount of expenditure from year to year and the amended form No.3CL thus, lays down the procedure to be followed by the prescribed authority. Prior to the aforesaid amendment in 2016, no such procedure / methodology was prescribed. In the absence of the same, there is no merit in the order of Assessing Officer in curtailing the expenditure and consequent weighted deduction claim under section 35(2AB) on the surmise that prescribed authority has only approved part of expenditure in form No.3CL. We find no merit in the said order of authorities below. The Courts have held that for deduction under section 35(2AB) first step was the recognition of facility by the prescribed authority and entering an agreement between the facility and the prescribed authority. Once such an agreement has been executed, under which recognition has been given to the facility, then thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R D facility as weighted deduction under section 35(2AB) of the Act. Accordingly, we hold so. Thus, we reverse the order of Assessing Officer in curtailing the deduction claimed under section 35(2AB)
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2018 (5) TMI 1313
Penalty levied u/s 271D - receipt of capital contribution from the partner by the assessee firm - assessee had received an amount of ₹ 12,00,000/- on various dates from its partner towards capital contribution made by the said partner in the assessee firm - violation of section 269SS - Held that:- We find that the capital contributed by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Act and accordingly we do not find any infirmity in the order of the ld. CIT(A) cancelling the penalty levied thereon - Decided in favour of assessee.
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2018 (5) TMI 1312
TDS u/s 194H - assessee in default - commission or discount - relation between the assessee and distributor was that of Principal and Agent - deduction of tax u/s 194H of the Act on commission payments to various distributors. Held that:- The issue arising before us is similar to the issue before the Pune Bench of Tribunal in assessee’s own case in earlier years. Even the Assessing Officer while raising demand in the hands of assessee had relied on earlier orders passed in the case of assessee starting from assessment year 2006-07, which is consequent to survey operation carried out at the premises of assessee to check evasion of payment of TDS under section 194H of the Act. Since the issue is squarely covered by the order of Tribunal in assessee’s own case and also by the Hon’ble High Court of Rajasthan again in assessee’s own case and in Bharti Airtel Vs. DCIT (2014 (12) TMI 642 - KARNATAKA HIGH COURT), we find merit in the plea of assessee in this regard.
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2018 (5) TMI 1311
Addition u/s 41 - addition as bogus sundry creditors - Held that:- The assessee before us had not written back the sundry creditors in the sum of ₹ 1,08,65,202/- to its profit and loss account and had continued to show the same in its balance sheet. Thus we have no hesitation in directing the AO to delete the addition made u/s 41(1) - Decided in favour of assessee Disallowance u/s 40(a)(ia) - short deduction of tax at source on labour and fabrication charges paid to Adhir Kumar Mondal - CIT-A held that since the return was filed belatedly u/s 139(4) of the Act by the payee the conditions prescribed in proviso to section 201(1) were not satisfied and accordingly the assessee is to be treated as assessee in default - Held that:- We find that the ld CITA had taken cognizance of this CA certificate but had not given weightage of the same due to his interpretation that section 139 referred to in the proviso to section 201(1) need to be construed only as section 139(1) and not otherwise. In these facts and circumstances, we hold that the assessee had furnished requisite evidences to prove that the payee had duly considered the subject mentioned receipt in his return of income and hence no disallowance u/s 40(a)(ia) of the Act could be inflicted on the same in the hands of the assessee payer Whether the provisions of section 40(a)(ia) of the Act could be invoked for short deduction of tax at source - Held that:- We find that this issue has been held in favour of the assessee by the co-ordinate bench decision of this tribunal in the case of DCIT vs S K Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT) wherein it was held that in the case of short deduction of tax at source, no disallowance u/s 40(a)(ia) of the Act could be made in the hands of the assessee and the assessee could be proceeded against only under section 201 of the Act in such cases - Decided in favour of assessee
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2018 (5) TMI 1310
Disallowance u/s 11(2) - amount accumulated set apart for application to charitable or other purposes to the extent the said income did not exceed 15% of the income under Section 11(1)(a) - Held that:- All the details pertaining to the said claim of ₹ 98,57,10,000/- u/s 11(1)(a) and ₹ 10,21,26,000/- u/s 11(2) were duly mentioned in Form No. 10 B and Form No. 10 BB which is apparent from page no. 129 and 132 of the assessee’s paper book. In the present case, it is noticed the learned CIT(A) had not considered the contention raised by the assessee in right perspective and dismissed the appeal. Considering the totality of the facts deem it appropriate to remand this issue back to the file of the AO for adjudication in accordance with law, after proper verification from the material available on the record. We also direct to verify the amount of TDS which was claimed to be at ₹ 4,52,54,823/- while the amount considered was at ₹ 4,51,95,563/-. The AO shall provide a due and reasonable opportunity of being heard to the assessee.
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2018 (5) TMI 1309
Stay of recovery of the demand - it was submitted that assessee presently is in severe financial crunch and if further amount is realized by the Department by way of coercive means, it will severely affect the business of the assessee and assessee will not be able to stand in the market - Held that:- We deem it fit to stay the recovery of remaining amount subject to the deposit by the assessee of 50% of the total demand raised, which means that the assessee would another pay to the Department about 18.5% of the total outstanding demand. The Department will be entitled for encashment of three cheques towards the realization of demand but subject to the limit of 50% of the total outstanding demand. If there will be a shortfall despite encashment of cheques, the assessee will be liable to pay the remaining amount so as to make it 50% of the total demand within 15 days from today.
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Customs
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2018 (5) TMI 1307
Valuation of imported goods - television sets - rejection of declared value - enhancement of value - rule 9 of Customs Valuation (Determination Of Value of Imported Goods) Rules, 2007 - non-compliance with the compulsory registration scheme - absolute confiscation - penalties. Whether the television sets are liable to confiscation under section 111 of Customs Act, 1962 for non-compliance with the compulsory registration scheme of the Bureau of Indian Standards? - Held that: - It is not in dispute that SONY Sony television sets have been procured from facilities which supply the same to M/s Sony India Ltd, and the registration for import by M/s Sony India Ltd being approved, compliance with the registration scheme is beyond question. The confiscation of SONY television sets under section 111(d) is not tenable - Insofar as SAMSUNG sets are concerned, there is no evidence of registration which warrants confiscation under section 111(d) as a natural consequence and, in view of the lack of registration, clearance into the domestic market on payment of redemption fine would run counter to the objectives of the Foreign Trade Policy in prescribing such registration as a pre-requisite for import. The quality of the goods and safety to the consumer is assured only with such registration - confiscation of SAMSUNG sets is valid. Valuation - Held that: - In the absence of any evidence of contemporaneous imports to support the enhancement, and the failure to taken into consideration factors that may had the effect of abating the value at which imports were made by M/s Sony India Ltd, we are unable to assent to the finding of misdeclaration. Consequently, the confiscation of SONY television sets under section 111(m) of Customs Act, 1962 for misdeclaration of value is not correct in law - As the SAMSUNG television sets are required to be re-exported without being cleared on payment of duty, valuation is not relevant. The Rules exist to detect and destroy counterfeits. Counterfeits can be detected only though the prescribed procedure. That does not appear to have occurred and, hence, the goods are not counterfeits. Section 11 and, consequently section 111, is not liable to be invoked. The confiscation being without authority of law is set aside as is the penalty. The confiscation of the SONY television sets and SONY panels set aside and the enhancement of assessable value of both - The confiscation of SAMSUNG television sets is upheld with the redemption fine, subject to re-export, being reduced to ₹ 5,00,000/- - appeal allowed in part.
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2018 (5) TMI 1306
Classification of imported goods - projectors - appellants claimed classification under CTH 85286100 as "Projectors solely or principally used with Automatic Data Processing Machines" while Department was of the view that the imported goods merit classification under 85286900 as they have some additional features - benefit of N/N. 24/2005 Cus. dated 01.03.2005 as well as successor Notifications 69/2004-cus. dated 09.07.2004 and 28/2007-cus. dated 01.03.2007. Held that: - In the case of Casio India Co. Pvt. Ltd. [2016 (12) TMI 379 - CESTAT NEW DELHI] the Delhi Bench of the Tribunal has considered the various features of the projectors similar to the ones imported by the appellant - it is settled in many other cases also that the classification of the goods are to be made under 85286100 as claimed by the appellant - classification of the imported projectors under CTH 85286100 as claimed by appellant with the benefit of Notification No. 24/2005 CUS and successor Notifications upheld. Payment of CVD - In the case of supply of goods meant for Educational Institutions, the Department has taken the view that the goods even in such cases are required to be charged with CVD on the basis of MRP - Held that: - the projectors imported are meant to be used as warranty replacements and are not sold. Hence there will be no requirement of either affixing the MRP or payment of CVD under Section 4A of the Central Excise Act. Appeal allowed.
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Corporate Laws
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2018 (5) TMI 1308
Shareholders right to sell shares - Interim order dated 28-04-2016 passed by Hon’ble Company Law Board questioned - change of shareholding pattern - Held that:- The case on hand, Vadodara Stock Exchange Limited is a public limited company although it is not a listed company, Therefore, shareholders of Vadodara Stock Exchange Limited have got every right to sell their shares. The main objection of the original petitioner and respondent No. 7 is that the applicants in collusion with Ms. Sonal Parikh filed this petition and Ms. Sonal Parikh wants to gain majority in the General Body Meeting by purchasing the shares of other shareholders. Even if it is true, it is not a ground to restrain shareholders of Vadodara Stock Exchange Limited from selling their shares if there is a good offer of money for their shares. For that matter, even the original petitioner can purchase shares of other shareholders also. So long as there is no change in the shareholding pattern i.e. authorised and paid up share capital of company, there cannot be any grievance either to the original petitioner or to any of the original respondents, if some of the shareholders sell their shares for a good value of money. In that view of the matter it is just and proper to permit the applicants in IA 291, 293, 295 to 297, 299, 300, 302 to 311 of 2017 to sell their shares subject to approval, if any, required from the Regulatory Authorities. However, there shall not be any change in the share holding pattern of Vadodara Stock Exchange Ltd. The interim order dated 28-04-2016 passed by Hon’ble Company Law Board is only in respect of shareholding pattern and capital of the second respondent company herein i.e. only respect of authorised share capital and paid up share capital. This order is applicable to the applicants who approached this Tribunal but not for other shareholders of Vadodara Stock Exchange Ltd. Thus permitting the applicants to sell their shares in Vadodara Stock Exchange Ltd. to any person of their choice, subject to approval, if any, required from other Regulatory Authorities. But, there shall not be any change in the shareholding pattern of Vadodara Stock Exchange Limited. i.e. authorised share capital and paid up share capital.
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Insolvency & Bankruptcy
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2018 (5) TMI 1331
Corporate insolvency process - financial debt existence - Held that:- The claim of assured return till 2018 prima facia is not payable being in violation of the agreement. The ‘Assured Return’ was only payable till completion and licensing of the premises. There is no denial of completion of the premises and licensing of the same. Even possession of the premises has been handed over to the licensee long since May 2016. Therefore, the present claim of assured return till 2018 much after the completion and possession of the licensee, prima facia is not tenable. Applicants simultaneously cannot take contractual advantage of both owner as well as investor. As per the agreed terms the liability of the developers shall cease after the premises has been licensed. The present claim made after possession of licensee will naturally face the resistance of contractual obligations. The claim/debt in question cannot be termed as a simplicitor claim of ‘Assured Return’ so as to come within the scope of ‘financial debt’. As per the provisions of the agreement after the license and handing over possession, there cannot be any claim for payment towards assured return till 2018. Therefore neither the present claim can be termed to be a ‘financial debt’ nor does the applicants come within the meaning of ‘financial creditor’. Once the applicants do not come within the meaning of ‘financial creditor’, they become ineligible to file the application under Section 7 of the Code. This petition fails and the same stands dismissed as not maintainable.
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Service Tax
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2018 (5) TMI 1305
Refund claim - time limitation - section 11B of CEA - Held that: - reliance placed upon the decision in the case of CCE, Coimbatore vs. GTN Engineering India Ltd. [2011 (8) TMI 960 - MADRAS HIGH COURT] wherein it has been held that the relevant date for computing one year under Section 11B of the Central Excise Act, 1944 is to be determined by complying Rule 5 of CENVAT Credit Rules, 2004 and the assessee can file the refund claim for a quarter and the last day of the quarter has to be considered for determining the limitation in terms of Section 11B. There is no infirmity in the impugned order whereby the Commissioner (A) has only remanded the case back to the original adjudicating authority for a fresh adjudication keeping in view the law laid down by various appellate authorities - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1304
Penalty u/s 77 and 78 - Manpower Recruitment or supply Agency services - Security Agency Services - reverse charge mechanism - service tax with interest paid before issuance of SCN - Held that: - when the appellant has paid the service tax along with interest before the issue of SCN, the authority should not have issued the SCN and the case of the appellant is covered by the provisions of Section 73(3) of the Finance Act - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1303
CENVAT credit - demand of 6% of the value of the exempted service - assessee reversed the proportionate CENVAT credit - Held that: - the appellant has reversed the proportionate CENVAT credit on 22/02/2016 before the adjudication order was passed - Though the appellant has submitted that he has submitted the detailed worksheet relating to his trading activity and has also disclosed everything in their return, but the authorities have not considered this aspect at all. This case needs to be remanded back to the original authority for the purpose of verification whether the appellant has reversed the proportionate credit as per Rule 6(3) of the CCR, 2004 - appeal allowed by way of remand.
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2018 (5) TMI 1302
CENVAT credit - Renting of Immovable Property services - inputs - cement, glass and steels - input services - architect service and Works Contract Services - capital goods - Held that: - the identical issue has come up in the case of M/s Galaxy Mercantile Ltd. V/s Commissioner [2018 (4) TMI 1042 - CESTAT ALLAHABAD], where it was held that unless excluded, all goods used in relation to manufacture of final product and for any other purpose used by a provider of taxable service for providing an output service are eligible for Cenvat Credit - credit on input and put services allowed. Capital goods - Held that: - the appellant is entitled for availing Cenvat Credit as per the provisions of the provisions of Section 2 (1) of the Cenvat Credit Rules, 2004 - credit on capital goods allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1301
Construction services - liability of service tax - Construction of senior mess and junior hostel block building for panchsheel boys Inter College, NOIDA (undertaken on behalf of NOIDA authority) - Construction of auditorium for Panchsheel Boys Inters College, NOIDA (undertaken on behalf of NOIDA authority) - Food Court building in Dr. Ambedkar district school campus, sector 30 NOIDA (undertaken on behalf of NOIDA authority) - Construction 254 EWS Flat under Manyawar Sh. Kanshiram Sahari Gareeb Awas Yojna in Sector 45 NOIDA (undertaken on behalf of NOIDA authority) - Construction of Guru Teg Bahadur School - Services provided to NKG Infrastructure. Held that: - Tribunal in the case of NCR Builders Pvt. Ltd. vs. CCE & ST, Ghaziabad [2016 (11) TMI 1555 - CESTAT ALLAHABAD] has observed that flats construction under the Manyawar Sh. Kanshiram Sahari Gareeb Awas Yojna is not taxable - in the case of M/s. Jatan Construction P Ltd. vs. CCE, Jaipur II [2018 (1) TMI 374 - CESTAT NEW DELHI], Tribunal observed that construction of PG Hostel and SBNIT and ESIC Hospital are not subjected to service tax. Services provided to NKG Infrastructure for the Armed Forces - Held that: - the issue has came up before the Tribunal in the case of Commissioner of Central Excise, Raipur vs. P D Agrawal, [2016 (10) TMI 745 - CESTAT NEW DELHI] where the project of Ministry of Defence was exempted from service tax. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1292
Refund of credit reversed in excess erroneously - credit reversed at the instance of Audit party - credit of service tax paid on courier services - rejection on the ground that the appellant has voluntarily paid the said amount without protest. Held that: - Since the appellant has filed the refund claim within the period of limitation as prescribed u/s 11B of the CEA 1944 and therefore the rejection of the refund claim is not sustainable in law and therefore the appellants are entitled for refund of the excess amount paid on courier services along with interest which the appellant has paid towards that service. For the purpose of verification of the record regarding the payment of service tax and interest, the matter is remanded to the original authority - appeal allowed by way of refund.
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Central Excise
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2018 (5) TMI 1300
Penalty u/r 209A of the Central Excise Rules - Clandestine removal - Cigarettes - demand of duty on on all duplicate bills and entries made - absence or proper evidences - Held that: - during the period February, 1989 to March, 1992, all the franchisee units were under the strict physical control and supervision of the Excise Department who also maintained their own record. The impugned order or the show cause notice is silent on this aspect. The assessee-Appellants had repeatedly requested for production of diary XT-I which was never produced - the Department has not verified suppliers bills or the purchasers bills. No evidence was collected to adjudicate the clandestine removal of the goods which were transported and sold. The bank officers accepted that the bills were discounted without any physical verification of the goods - all the transactions of the bill discounting were duly recorded in the books of account of both the parties. The assessee-Appellants has committed a fraud with the Banks by raising the duplicate bills. For this financial irregularity, Department will be at liberty to initiate appropriate proceedings under the relevant law. But, in the instant case, the goods were not moved and there is no evidence pertaining to the clandestine removal of the goods - For clandestine removal, which is a serious charge, the strict evidence is required like supply of the raw-material, consumption of extra-electricity, transportation of the confiscated goods and sale of the finished goods. Unfortunately, no evidence has been collected by the Department pertaining to these aspects. When there is no clandestine removal, then no penalty can be imposed under Rule 209A of the Rules - penalty set aside - appeal allowed - decided in favor of appellant-assessee.
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2018 (5) TMI 1299
Abatement - manufacture of Pan Masala - appellant obtained registration with effect from 27th May, 2013 and started production with effect from 28th May, 2013 for the first time. The factory remained operative from 28th May, 2013 to 31st May, 2013 (four days) - whether the appellant is entitled to abatement of duty for the period 1st June to 7th June, 2013 under the ‘Pan Masala Packing Machine’ (Collection of Duty and Determination of Capacity) Rules, 2008 read with Section 3A of the Act? Held that: - the facts herein are squarely covered by the ruling of the Division Bench of this Tribunal in Shree Pouches versus CCE, Jaipur-I [2017 (11) TMI 701 - CESTAT NEW DELHI], where it was held that as per the composite scheme, when there is no production due to sealing of the machine, the factory cannot be considered closed completely as one machine was continuously working. So Rule 10 is not applicable. The impugned order, so far it have rejected the refund of ₹ 14,93,334/- for the period 01/06/2013 to 07/06/2013, being the period of closure, is set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1298
Liability of Interest u/s 11AB of the Central Excise Act, 1944 - Penalty u/r 15(3) of CCR 2004 read with Rule 25 of CER 2002 - appellant have wrongly availed cenvat credit twice on the same invoice in the month of April 2007 - Held that: - as per Rule 14, the wordings are if the credit has wrongly been taken or utilize the interest is chargeable therefore even though the credit was not utilized only on cenvat taken, the interest is chargeable - Hon’ble Supreme Court in the case of Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - SUPREME COURT] interpreting Rule 14 held that interest is chargeable from the date of taking credit - the appellant is liable to pay the interest on wrongly availed credit from the date of taking credit till the reversal thereof. Penalty - Held that: - the appellant has no malafide intention. The wrong credit availment twice on the same invoice is due to inadvertence. This cannot be taken as intention to evade duty - More over the appellant is a Public Sector Undertaking and paying the huge revenue therefore it cannot be expected from the appellant that they had any malafide intention to avail wrong credit - penalty not warranted. Appeal allowed in part.
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2018 (5) TMI 1297
SSI Exemption - use of Brand Name - it was alleged that the respondent M/s. Braco Sales Corporation are using the brand name BRACO which does not belong to them is owned by M/s. BRACO Electricals - Held that: - In the SCN and the original adjudicating proceedings a lot of reliance has been placed on the statement of some buyer that the brand name Braco belongs to M/s. Braco Electricals. There is no doubt that M/s. Braco Electricals were manufacturing goods with the brand name Braco , same is the case of M/s. Braco Sales Corporation. In the market the products of both the manufacturers would be known by the said brand name. Thus mere statement of customers cannot be a reasonable basis to reach of a conclusion that the brand name is owned by M/s. Braco Electricals or M/s. Braco Sales Corporation. The Revenue has failed to substantiate the allegation that the brand name Braco belongs to M/s. Braco Electricals and has also not countered the Affidavit and the evidence produced by the respondent in this regard - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1296
Method of Valuation - garments - Department took the view that assessable value in respect of clearances made from the depot to their sister concern (Unit-II) should be determined under Rule 8 of the Valuation Rules - whether valuation to be done u/s 4 or u/s 8 of Valuation Rules? - Held that: - Rule 8 of Central Excise (Valuation) Rules, 2000 will apply only where the entire production of the particular commodity is captively consumed - if both the Rules i.e. Rule 4 and Rule 8 of the Valuation Rules are applicable, sequential application of various rules is the only reasonable way to read the rules. Hence Rule 4 in any case would be preferred. It is also not disputed that impugned goods have been sold by the assessee to individual buyers. This being the case, price at which the goods have been sold to unrelated buyers will have to be taken as the basis for valuation and not as per the provisions of Rule 8. Appeal allowed - decided in favor of assessee.
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2018 (5) TMI 1295
Supply of goods to M/s Bharat Earth Movers Ltd under claim of exemption - N/N. 63/95-CE dated 16.03.1995 - Revenue entertained a view that since the appellant was not one of the units specified in terms of the said N/N. 63/95-CE dated 16.03.1995, the benefit of the Notification, which exempted goods supplied to the Ministry of Defence, cannot be extended to them - Held that: - the issue in the present case is squarely covered by the decision of this Tribunal in the appellant’s own case in Macas Brakes Automotive Pvt Ltd. [2017 (10) TMI 1175 - CESTAT CHANDIGARH], where reliance placed in the case of Commissioner Versus Vulcan Gears [2011 (2) TMI 1347 - Supreme Court of India], where it was held that notification exempts the goods when they are supplied directly to the Ministry of Defence by the companies named therein and in the notification, the appellant’s name was not included in the names of the companies - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1294
Maintainability of appeal - Jurisdiction - process amounting to manufacture or not? - cutting, grooving of the Aluminium sheet to make Aluminium composite panels amounts to manufacture of a distinct product commercially known as different. (ACP) - running sheets of ACPs are cut into smaller Sizes either of rectangular or square plates - with or without grooving. Held that: - the Hon'ble High Court in the case of COMMISSIONER OF C. EX., BANGALORE-I VERSUS PUSHPADEEP ENTERPRISES [2010 (4) TMI 842 - KARNATAKA HIGH COURT], has allowed the appeal of the Revenue and held that cutting, grooving of the Aluminium sheet to make Aluminium composite panels amounts to manufacture of a distinct product commercially known as different. order of the Tribunal is set aside and the orders of the Addl. Commissioner of Central Excise (Appeals) is restored by answering the substantial question of law in favor of the revenue and against the assessee. Further, the decision of the Karnataka High Court has been challenged by the appellant and the appeal is also pending before the Hon'ble Apex Court but stay has been rejected. Therefore in the absence of any stay in favour of the appellant, the decision of the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us - appeal dismissed - decided against appellant.
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2018 (5) TMI 1293
CENVAT credit - whether the credit availed on inputs viz., lubricants and explosives and capital goods/spares used in the mines can be allowed or not? - Held that: - the Hon’ble Supreme Court in the case of Vikram Cement vs. CCE, Indore [2006 (2) TMI 1 - SUPREME COURT] has held that if the mines are not captive mines but they supply to various other cement companies of different assessees, Modvat/Cenvat credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate Modvat/Cenvat Rules - In the present case, it is not in dispute that the mines are captive mines - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1291
CENVAT credit - duty paying documents - Rule 9 of CCR - it was alleged that the invoices issued to the appellant by M/S. PSPL were not proper documents as envisaged under Rule 9 of the Rules. Held that: - the assessee in the present case has rightly taken the CENVAT credit because the dispute relating to the manufacturer cannot be reopened at the recipient end and hence the duty paid nature is not disputed and received under a valid document, the appellant cannot be expected to examine the legal disputes of the supplier - Tribunal in the case of Advance Diesel Engines Ltd. as well as CCE Vs. Deepthi Formulations Pvt. Ltd. [2013 (3) TMI 547 - CESTAT BANGALORE] wherein it has been held that when the supplier of inputs paid duty thereon and issued a valid invoice and the inputs so received in assessee's factory were used in the manufacture of final products, then the assessee is entitled to take credit of the duty paid on inputs and the question whether inputs had arisen out of process of manufacturer is irrelevant - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1290
CENVAT credit - various input services - Event Management services - Credit Card Charges for MD - Repair and Maintenance of Vehicle - miscellaneous services - Medi-claim insurance - membership of club - survey conducted for projects of land - Security at residence of CMD/JMD - Outdoor Catering Service - Execution of work at the factory - denial on account of nexus. Event Management services - Credit Card Charges for MD - Repair and Maintenance of Vehicle - miscellaneous services - Held that: - Event Management, Credit Card Charges for MD, Repair and Maintenance of Vehicle and miscellaneous services have already been held to be 'input service' in many cases and therefore these services are 'input services' - credit allowed. Medi-claim insurance - membership of club - survey conducted for projects of land - Held that: - they fall in the definition of 'input service' in view of the various decisions - reliance placed in the case of M/s. Murugappa Morgan Thermal Ceramics Ltd. Versus Commissioner of Central Excise, Chennai-III [2016 (4) TMI 370 - CESTAT CHENNAI] - credit allowed. Security at residence of CMD/JMD - Held that: - the same do not fall in the definition of 'input service' and therefore, the cenvat credit on security at residence of CMD/JMD rejected - credit not allowed. Outdoor Catering Service - Held that: - it is post 01.04.2011 and as per the Larger Bench decision in the case of Wipro Ltd. [2018 (4) TMI 149 - CESTAT BANGALORE], Larger Bench has held that Outdoor Catering Service is not eligible for cenvat credit post amendment dated 01.04.2011 vide Notification No. 3/2011 dated 01.03.2011 - the cenvat credit on Outdoor Catering post 01.04.2011 not allowed. Execution of work at the factory - Held that: - there is no allegation in the show-cause notice proposing to deny the cenvat credit on this service, the amount with regard to this service is merely included in the computation amount. Further, there is no finding by the original authority on this service. Therefore, the finding by the Commissioner is beyond the show-cause notice and the Order-in-Original and therefore not sustainable in law - credit allowed. Appeal allowed in part.
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2018 (5) TMI 1289
Extended period of limitation - manufacture - process of hot deep galvanization of MS fabricated items - case of appellant is that the issue of galvanization was within the knowledge of department and they had obtained Service Tax registration from the department, and thus the demand is barred by limitation - Held that: - the issue of job-work being undertaken by the appellant was within the knowledge of the department as can be seen from the relied upon documents for issue of show cause notice dated 02.04.2012 - Revenue had issued Service Tax registration to the appellant for the activity of galvanization and therefore the activity undertaken by the appellant was known to the department from the date of issue of said registration under Service Tax and that the show cause notice dated 02.04.2012 was issued for the period from 2007-08 - SCN is clearly hit by limitation - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1288
Scope of SCN - CENVAT credit - inputs/capital goods - MS Angles, MS Bars, Channels, etc. which were used to build structural items for equipments like bunkers, conveyors, Kiln etc. treating them as capital goods - Held that: - the impugned order has traveled beyond the SCN because in the SCN, the only allegation is that the MS Angles, MS Bars, Channels which have been used in the fabrication of various equipments are embedded to earth so as to form immovable property and hence cannot be considered as 'capital goods', whereas in the impugned order, the Commissioner has accepted that credit cannot be denied on the ground of immovability but still he has denied the credit by invoking the user test which was not an allegation in the SCN - appeal allowed - decided in favor of assessee.
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2018 (5) TMI 1287
Valuation - transfer of goods to depots /showrooms - price on the basis of Comparable goods - Time Bar - Held that: - the CBEC vide its clarification dated 01.07.2002 had clarified that the duty is to be paid in terms of Rule 8 of the Valuation Rules. However the same has been subsequently revised vide circular dated 25.04.2005 in which it has been specified that the valuation of samples can be done in terms of Rule 4. The issue of time-bar has also been discussed by the authorities below. In the impugned order it has been recorded that the appellant after shifting the unit to the present jurisdiction has failed to give information regarding goods cleared for replacement by adoption of value as per Rule 8 of the Valuation Rules. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1286
Reversal of CENVAT credit - removal of scrap generated and old capital goods - whether the appellant is required to pay duty by way of reversal under Rule 3(5) or 3(5)(A) of CCR, 2004 on removal of the scrap generated from used and old capital goods? Held that: - it is not the case of Revenue that either the appellant have not maintained proper records as required under the scheme of the Act and the Rules or they failed to furnish any information as called from them - the affidavit submitted by the competent person of the appellant was not found to be wrong and have been rejected without any reason for doing so - the show cause notice is presumptive and hence not maintainable. It appears that the plant was definitely more than 10 years old which have been removed. Thus the depreciated value also becomes nil in course of time calling for no reversal of Cenvat credit (as per amended rules). Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 1328
Validity of recovery proceedings - pending stay applications - Held that: - the petitioner can be given some respite from the rigor of recovery, at least until such time as his stay petition is considered by the Appellate Tribunal. The Kerala Value Added Tax Appellate Tribunal directed to take up, consider and pass orders on Exts.P4, P4(a), P4(b), P4(c) and P4(d) stay petitions preferred by the petitioner, within a period of one month from the date of receipt of a copy of this judgment. Until such time as the Appellate Tribunal passes an order on the stay petition, and communicates the same to the petitioner, all steps for recovery pursuant to Ext.P5 demand notice for recovery of amounts against the petitioner, shall be kept in abeyance.
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2018 (5) TMI 1285
Principles of Natural Justice - non-service of additional proposals on the petitioner - deprivation of an opportunity to file an objection with regard to the same - Held that: - Imposing tax on uncommunicated proposals certainly would amount to violation of principles of natural justice. While confirming proposals, the second respondent has also confirmed additional proposals and levied tax to the tune of ₹ 8,55,299/-. In the counter affidavit also, it is categorically stated that a notice of hearing was given referring to the issuance of evasion of tax. But, specific proposals have not been served on the petitioner before confirming the additional proposals. The second respondent is directed to issue fresh notice incorporating all the proposals along with materials relied on by him and call for objections from the petitioner - appeal allowed by way of remand.
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2018 (5) TMI 1284
Penalty u/s 12 (5) (iii) of TNGST Act - Whether Tribunal erred in law, in taking the view that since the appellant has recorded the turnover in his books of accounts, no penalty could be levied under Section 12 (5) (iii)? - Held that: - In Appollo Saline Pharmaceuticals (P) Ltd., Vs. Commercial Tax Officer (FAC) and Others [2001 (10) TMI 1100 - MADRAS HIGH COURT], it was held that The levy of penalty without considering the bona fides of the petitioner cannot be sustained. 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. Tax Case Revision Petition is dismissed.
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2018 (5) TMI 1283
Inter-state sales - exemption from tax - whether "old newspaper" would be covered within the term "newspaper" or not - levy of tax at 10% instead of 4% - Whether in the facts and circumstances of the case, the Tribunal is legally correct in having held that sale of old newspaper would be covered by the Entry 54 of List II and entry 92 of List of the Seventh Schedule to the Constitution of India even when old newspapers were sold as waste paper and not with reference to their news content or for the purpose of reading? Held that: - In Indian Express (P) Ltd. vs. State of Tamilnadu [1986 (4) TMI 321 - SUPREME COURT OF INDIA], the issue before the Hon ble Supreme Court was whether the sale of Old Newspapers is exempt from payment of tax. It was argued that when surplus copies of the news papers were sold, they possessed the character of newspaper and were exempt from sales tax - it was held by the Supreme Court that when newspapers are sold to the reading public, they are sold as medium containing information regarded as news. They are purchased by members of public to acquaint themselves with the current news. Information is news when it is fresh and new. So when newspaper becomes old, it loses its characteristic as newspaper. When unsold surplus copies of newspapers are disposed of by weight, their sale cannot be regarded as the sale of newspapers. However in the case of Sait Rikhaji Furtarnal v. State of Andhra Pradesh [1990 (8) TMI 344 - SUPREME COURT OF INDIA], it was held that, old newspapers would be covered by the word newspapers in entry 54 of list II and entry 92 of list I of the Seventh Schedule to the Constitution of India and it is, therefore, beyond the competence of the State Legislature to impose Sales Tax on the sale of old newspapers. In case of conflict between earlier and later decisions of Supreme Court, each consisting of equal number of Judges, later decision prevails. - Govindanaik G.Kalaghatigi v. West Patent Press Company Ltd and Anr. [1979 (2) TMI 202 - KARNATAKA HIGH COURT] (Five Judge Bench) There are no manifest illegality, warranting reversal of the order of the Tribunal - Tax Case (Revision) is dismissed. - Decided against the revenue.
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