Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 24, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - interpretation of words 'unit container' as found in the schedule entries of the Notifications issued under the provisions of the IGST Act - the impugned packing would satisfy the requirement of the definition of "unit container" - AAR
Income Tax
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Penalty u/s 271(1)(c) - discretion to impose penalty - When the proceedings of assessment in which the additions in the hands of the assessee were made, the Tribunal could not have ignored such final conclusions by simply adopting the different mode or yardstick to judge the amount of tax sought to be evaded by the assessee. - HC
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Eligibility to scheme known as “Income Declaration Scheme, 2016” - since prosecution is going on against the petitioner for an offence which comes under Chapter XVII of the IPC, petitioner is not liable to be granted benefit of the said Scheme. - HC
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Reopening of assessment - reason to believe cannot be equated with finally established fact that the income chargeable to tax having escaped assessment additions will invariably be made and further, sufficiency of reasons enabling the Assessing Officer to form such a belief would not be gone into. - HC
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Addition on account of materials purchased - bogus purchases - It is a fact that the labours are paid by the assessee directly and not through contract or sub-contract. Therefore section 194C of the Act is not attracted. - AT
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NRI status of assessee - Income accrued in India - period of stay in India - Stay in India for 181 days - AO directed to recompute the stay of assessee in India for claim of exemption - AT
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Deemed dividend u/s 2(22)(e) - earnest money paid by the company on behalf of the directors - money was not returned after cancellation of sell agreement - the entire arrangement between the assessee and both the companies falls within the mischief of provisions contained u/s 2(22)(e) - AT
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TDS u/s 194C/194I - TDS liability on monthly maintenance charges paid to housing societies - in the instant case, it is merely reimbursement by the members to the society and, therefore, the payment in question is not liable for TDS - AT
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Validity of the order passed U/s 147 - There is no bar that the information received from the Investigation wing cannot be used as a basis for formation of belief and satisfaction by the AO that the income has escaped assessment. - AT
Customs
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Pilot implementation of paperless processing under SWIFT — Uploading of supporting documents regarding
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Mis-declaration of country of origin - import of areca nuts, commonly known as betel nuts - In the instant case the country of origin is Sri Lanka and there is no misdeclaration filed by the assessee-Appellants, especially when all the transactions were held through the banking channel. - AT
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High Seas Sale - mis-declaration of imported goods - if the goods booked for importation are heavy melting scrap and on receipt of goods, it is found that the some quantity of rerollable scrap is received then it does not amount to misdeclaration.
DGFT
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Actual Service Providers (and not Ports) are eligible for SFIS/SEIS benefit in respect of their share of earnings made by performing the notified services under SFIS/SEIS Scheme.
Service Tax
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Liability of service tax of Bureau of Indian Standards (BIS) - the “Hallmark” is worldwide recognised quality mark and not an Intellectual Property Right of appellant. BIS Act is for consumer protection, not dealing with Intellectual Property Right. - demand set aside - AT
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Levy of service tax - Non-refundable deposit, one time premium of Salami, which is not refundable - there is a separate charge for the rent, which alone is taxable, the onetime premium charges is nonrefundable deposit, it is called as one time premium and not part of rent. - demand set aside - AT
Central Excise
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CENVAT credit - input services - rent-a-cab service - the said service was provided by the appellant to its workers to reach the factory premises in time which has a direct bearing on the manufacturing activity/production which, otherwise, the employees would have claimed conveyance allowance - credit allowed - AT
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100% EOU - education cess - Aggregate of custom duties once worked out, question of arriving at quantum of excise duty by adding education cess again not arises. Education cess not payable for third time as contended by the department - AT
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Recovery of erroneous refund - periodically audit took place and refunds were sanctioned to the appellant - it cannot be said that the appellant has suppressed material fact from the department - the extended period is not invokable in the facts and circumstances of the case. - AT
VAT
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Liability of VAT - deemed sale - Whether the materials used in a contract to provide pest control treatment would amount to a deemed sale within the meaning of Article 366 (29A)(b) of the Constitution of India so as to make the same exigible to tax under the Gujarat Value Added Tax Act, 2003? - Held Yes - SC
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Input tax credit - penalty u/s 12(7) of GVAT Act - merely because a breach is established, it would not be compulsory for the Commissioner to impose the penalty - HC
Case Laws:
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GST
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2018 (5) TMI 1393
Levy of GST - animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags - Interpretation of statute - interpretation of words 'unit container' as found in the schedule entries of the Notifications issued under the provisions of the IGST Act - Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by applicant against tender shall qualify as product put up in "unit container"? Held that: - Each frozen carcass is put in LDPE Bag (Primary Packing) which is not sealed & no weight is mentioned on such LDPE Bag. Thereafter, generally two of such LDPE Bags are put in HDPE Bag (Secondary Packing) and manually weight of two carcass is mentioned by marker. For instance, if one of the carcass weights 7 Kg & other one weight 6.5 Kg, the HDPE Bag would bear the marking as "8 +7.5 -15.5 Kg" - the impugned packing would satisfy the requirement of the definition of "unit container" as found in the Notification No.1-Integrated Tax (Rate) and Notification No. 2/2017- Integrated Tax (Rate) issued under the provisions of the IGST Act. In view thereof, the bags being supplied to Army by the applicant against tender qualify as product put up in "unit container". Reliance on the case laws in the case of CCE v Simba Chips [1997 (7) TMI 330 - CEGAT, MUMBAI] and Surya Agro Oils Ltd. v. Commissioner of Central Excise, Indore [1999 (11) TMI 264 - CEGAT, NEW DELHI] would not be applicable herein as the definition under consideration in these cases is not similar to the one that we are dealing with herein. Classification - Applicability of Schedule entries - For the period from 14-11-2017 onwards - Held that: - the Schedule entry no.9 does not cover frozen meat of sheep or goats when put up in unit container and bearing a brand name - the Schedule entry no.1 covers frozen meat of sheep or goats when put up in unit container and bearing a brand name - the impugned product would be covered by the schedule entry 1 of the Notification No.1-Integrated Tax (Rate) from 14-11-2017 onwards. Ruling: - The bags being supplied to Army by the applicant against tender qualify as product put up in "unit container" - The impugned product would be covered by the schedule entry 4 of the Notification No. I-Integrated Tax (Rate) during the period 1-7-2017 TO 13-11-2017, the schedule entry 1 of the Notification No.1-Integrated Tax (Rate) from 14-11-2017 onwards.
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2018 (5) TMI 1392
Seizure of goods with vehicle - Section 129(1) of the U.P. GST Act, 2017 - the decision in the case of M/S VARDH PAPER PRODUCTS PVT. LTD. VERSUS COMMISSIONER OF COMMERCIAL TAX/GST, LUCKNOW AND ANOTHER [2018 (5) TMI 698 - ALLAHABAD HIGH COURT] contested - Held that: - We are not inclined to interfere with the impugned order passed by the High Court of Judicature at Allahabad, Lucknow Bench, Lucknow - it will be open to the petitioner to assail the final order passed in the proceedings u/s 130 - SLP dismissed.
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2018 (5) TMI 1391
Levy of GST on Supply of electricity meters for hire - Applicability of circular issued during the service tax regime, to the GST regime when the main activity is exempt under both the regime - Summons issued for calling for information and documents - Exemption from service tax - transmission and distribution of electricity by an electricity transmission or distribution utility. - Applicability of new clarification dated 1.3.2018 over clarification dated 7.12.2010 - Demand can be raised w.e.f 1.3.2018 or w.e.f. 1.7.2017. HC granted interim relief - Till further orders, the petitioners shall not have to reply to such summons dated 28.3.2018.
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2018 (5) TMI 1390
Transitional credit u/s 140 - Input tax credit - Case of the petitioner is that its case is covered under sub-rule [4] which lays down detailed procedure and conditions for claiming tax credit and making a declaration under sub-rule [1] of Rule 117 is not applicable - Such requirement is procedural or substantive? - Admitted fact is that the petitioner has not made a declaration referred to under sub-rule [1] of Rule 117 within the time permitted. Question is, can the petitioner still claim tax credit, as provided under sub-rule [4] of Rule 117 of the Rules read with Section 140 of the CSGT Act, 2017 - Notices issued.
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Income Tax
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2018 (5) TMI 1389
Penalty u/s 271(1)(c) - discretion to impose penalty ranges between equivalent to amount of tax sought to be evaded to three times that much - Held that:- We may record our disapproval of the approach adopted by the Tribunal while reducing the penalty. In plain terms, statutory provisions contained in section 27 envisage penalty which would be 100% of the tax sought to be evaded and which may go up to 300% thereof. The Tribunal, however, found a way to bypass this minimum limit by suggesting that the profit element embedded in the cash deposits could be subjected to penalty. When the proceedings of assessment in which the additions in the hands of the assessee were made, the Tribunal could not have ignored such final conclusions by simply adopting the different mode or yardstick to judge the amount of tax sought to be evaded by the assessee.
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2018 (5) TMI 1388
Eligibility to scheme known as “Income Declaration Scheme, 2016” - charges framed by the Special Judge, Anti Corruption, CBI against the petitioner - Held that:- Admittedly Section 420 of IPC is an offence which comes under Chapter XVII of the IPC. The Scheme, of which the petitioner is seeking benefit, categorically stipulates that in case prosecution is going on against a person for any offence punishable under Chapter IX or Chapter XVII of the IPC, he is not liable to get benefit of the Scheme. Although the order dated 24.10.2016 does not refer to prosecution under Section 420 of IPC but of Corruption of Prevention Act, but since prosecution is going on against the petitioner for an offence which comes under Chapter XVII of the IPC, petitioner is not liable to be granted benefit of the said Scheme.
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2018 (5) TMI 1387
Reopening of assessment - original return filed by the assessee was accepted without scrutiny - Held that:- AO had analyzed the voluminous material collected by the Revenue during the search operations in connection with Venus Group. This material prima facie suggested huge cash transactions in connection with sale of lands against the total declared sale consideration of ₹ 8.21 Crores [rounded off]. The material prima facie suggests that the total cash transactions of ₹ 33.24 Crores had taken place. The Revenue argues that the entires in Summary-sheet and Vouchers carried dates which were deliberately put 10 years backward to disguise and the figures were recorded by deleting two zeroes from the actual to avoid detection and co-relation. We are concerned with re-opening of the assessment that too in a case where the original return filed by the assessee was accepted without scrutiny, the material at the command of the AO is sufficient to permit the process of reopening. As held by the Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Private Limited [2007 (5) TMI 197 - SUPREME COURT] and Raymond Woolen Mills Limited [1997 (12) TMI 12 - SUPREME COURT] reason to believe cannot be equated with finally established fact that the income chargeable to tax having escaped assessment additions will invariably be made and further, sufficiency of reasons enabling the Assessing Officer to form such a belief would not be gone into. Decided against the assessee.
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2018 (5) TMI 1386
Reopening of the assessment u/s 147 - as per AO income chargeable to tax had escaped the assessment - the assessee had already tabulated necessary details as were required by the Assessing Officer at the time of original assessment - there was no failure on the part of the assessee to disclose fully and truly any material facts which were necessary for assessment - Held that - reopening is not permissible after lapse of 4 years from the end of the relevant assessment year unless income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts - thus re-assessment proceedings being illegal and bad in law - Decided in favor of assessee
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2018 (5) TMI 1385
Validity of assessment order - absence of notice under section 143 (2) as alleged to have been not issued by Ld.AO.- Held that:- The notice issued by Ld.AO dated 08/10/10 amounts to be the notice issued under section 143 (2) of the Act. Assessee therefore cannot take the pretext of 143(2) notice being not issued by Ld.AO since the notice dated 08/10/10 makes it amply clear that the assessment proceedings have been initiated in the case of assessee for the relevant assessment year. We therefore do not find any infirmity in the observations of Ld. CIT (A) and the same is upheld. Addition u/s 69C - Held that:- Information sought by Ld.AO from M/s Virat Exim under section 133 (6) was not provided to assessee, which is the basis of addition in the hands of assessee. It is observed that neither Ld.AO nor Ld.CIT(A) conducted any enquiries/verification regarding the same. Neither Ld. CIT (A) not Ld.AO has verified the genuineness of the amount received from M/s Virat Exim. Most importantly it is observed that Ld.AO has made the addition in the hands of assessee under section 69C which is unexplained expenditure, however, from the submissions made by assessee before Ld.CIT (A) as well as observations of Ld.CIT (A) himself, it appears that it is an amount received by assessee from M/s Virat Exim, and therefore cannot be considered to be an expenditure in the hands of assessee. Under such circumstances we deem it fit and proper to set aside this issue back to the file of Ld.AO for proper verification as per law.
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2018 (5) TMI 1384
Addition on account of materials purchased - bogus purchases - Held that:-Details of these parties were properly provided before the AO and the existence of those parties cannot be questioned. The statement made by the AO in this regard that “the assessee did not furnish the evidence/bills and vouchers in respect of materials purchased” is not tenable. In fact when the details of the required documents were furnished the disallowance of 20% of the total expenses claimed by the assessee considering this as bogus expenses is not justified. - Decided in favour of assessee TDS u/s 194C - addition on account of labour charges for non TDS deduction - disallowance u/s 40(a)(ia) - Held that:- It appears from the register that the names and addresses of all 83 labourers are written serially in the register and all have received the money by putting thumb impression on the same. It is a fact that the labours are paid by the assessee directly and not through contract or sub-contract. Therefore section 194C of the Act is not attracted. We have also perused the profit and loss account for the year ended 31.03.2008 and the amount of works bill is of ₹ 1,37,60,588/- out of which labour charges are to the tune of ₹ 71,81,150/-. - Decided in favour of assessee Addition on account of sundry creditors - Held that:- AO was not justified in treating the concerned creditors as bogus without doubting the genuineness of the corresponding purchases made by the assessee from the said creditors. On the basis of all these findings of fact recorded by him, CIT(A) treated the concerned creditors as genuine and deleted the addition made by the AO by treating the same as bogus. After having considered all the facts of the case as found by the ld. CIT(A) and remained uncontroverted by the revenue, we find no justifiable reason to interfere with the impugned order of the ld. CIT(A) - Decided in favour of assessee
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2018 (5) TMI 1383
Validity of re-assessment proceedings - remuneration paid to the three members were disallowed - case reopened after the end of four years from the relevant assessment year - Held that:- There is no failure on the part of assessee in furnishing full and true disclosure of the information. The assessment U/s. 143(3) was completed after survey proceedings on the assessee’s business premises. In view of that, it cannot be stated that assessee has not disclosed any information. The remuneration to the members of the HUF were paid for the services rendered in the business which is allowable U/s. 37(1) and invoking the provisions of Section 184 and Section 40(b) does not arise on the facts of the case at all. In view of that, the action of AO in reopening assessment per se is bad in law. In view of that, we find no merit in Revenue grounds raised. - Decided in favour of assessee.
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2018 (5) TMI 1382
Computation of income - rejection of books of accounts - estimation of NP - Held that:- Department in its circular have emphasized time to time that the Income Tax Authorities should not try to extract the admission of the assessee and should bring some concrete material on record for the purpose of estimating the undisclosed income of the assessee. In these circumstances, particularly when contradictory order has been passed by the A.O. without reference to the books of account of the assessee and other material, we are of the view that the matter should go back to the A.O. for reconsideration of the entire matter. We, accordingly, set aside the orders of the authorities below on the issue of addition of ₹ 4.52 crores and restore to A.O. for fresh determination. Addition on confirmation called for in the case of Graphite India Ltd. -entry reversed in books of accounts - Held that:- Referring to reconciliation statement of Graphite India Ltd., with their ledger account in which it was explained that damaged goods of the amount in question have been reversed in the books of account which is supported by PB-64 which is a bill of the same amount of the goods so returned. Assessee, therefore, explained the discrepancy in the account of M/s. Graphite India Ltd. The addition is, therefore, not justified. We, accordingly, set aside the orders of the authorities below and delete the addition Addition u/s 41 - Held that:- Since the amount payable to the sundry creditors was not credited to the assessee’s P&L A/c. for the year and as the amount was still shown as outstanding at the end of the relevant year, the provisions of section 41(1) could not be attracted. Addition of bogus purchases - Held that:- It is well settled that though admission is a good evidence against the maker, but assessee is entitled to disprove the same through explanation and evidence on record. The above facts clearly show that the amount in question does not pertains to assessment year under appeal. Therefore, no addition could be made in assessment year under appeal. We, accordingly, set aside the orders of the authorities below and delete the addition.
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2018 (5) TMI 1381
TPA - Exclusion of foreign exchange fluctuation loss from the operating expenses - Held that:- We find that the foreign exchange fluctuation loss is not abnormal only to the assessee. Such fluctuation would affect the margins of the comparable companies as well as long as the transactions are in the same currency. In a number of cases, we have already held that the foreign exchange fluctuation profit or loss is also part of the operating revenue. Tribunal had directed the AO to make necessary adjustments. The distinction of the currency in the international transaction of the assessee and the comparable companies and also the abnormal fluctuation in foreign currency in the case before us has not been brought out by the assessee. - decided against assessee. Comparables adopted or rejected by the TPO - Held that:- Assessee is into providing software services primarily to its Associate Enterprises and is also an authorized distributor of Cordys Products in India., entered into international transactions of providing software development services, distribution of software products and reimbursement of costs by AE during the relevant financial year, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (5) TMI 1380
Income accrued in India - period of stay in India - Stay in India for 181 days - NRI status of assessee - rectification application - salary income was wrongly offered in the return of income - Held that:- Assessee is a NRI, worked as a crew member of foreign ships during the previous year relevant to the assessment year 2011-2012 and was not disputed by the AO and CIT(A). In the rectification proceedings the assessee as required by the AO has produced original copy of passport, Acknowledgement of ITR-1 for the assessment year 2011-2012, the wages statement and original TDS certificate and also explained that the assessee stayed for 181 days in India in the previous year and pursuant to section 6(1) of the Act if an individual is resident in India for more than 182 days or more during a financial year, he is considered as resident of India for tax purposes and the entire income earned in or outside India would be taxable in India. AR referred to the computation of income filed by the assessee wherein it was mentioned that the assessee received salary for 184 days outside India and claimed exemption u/s.5(1)(c) of the Act, we are of the substantive opinion that the matter requires further examination and verification of facts by the AO. Accordingly, we restore the disputed issue to the file of AO and we direct the assessee to substantiate its stay in India for claim of exemption and the assessee shall cooperate in submitting the details for early disposal of the case. - Decided in favour of assessee for statistical purposes.
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2018 (5) TMI 1379
Rejection of books of accounts - estimation of income - rejection of trading results - Held that:- The trading result declared in previous years based on the accounts maintained in the same fashion, has been accepted by the department either under section 143(3) or 143(1) of the Income Tax Act. Moreover, once the account books were rejected under section 145 of the Act, no show cause notice was issued to the assessee to make the best judgment assessment as per provisions of section 144 of the Act on estimation. In presence of these facts we are of the considered opinion that the ld. CIT(A) has rightly discarded the findings reached by the Assessing Officer in the assessment order. AO has rejected the trading results of the assessee by adopting various methods of calculating the profit margins - method based on consumption of fabric per unit worked out by AO - Held that:- The assessee vide letter dated 15.09.2010 had explained the wastage totaling to 3,26,116 mtrs. and it was contended that if this wastage is considered, the profit margin would tally with that declared by the assessee. A reconciliation statement of fabrics purchased and consumed during the year was filed by the assessee before the revenue authorities, which stands un- rebutted on behalf of the department. The assessee further objected that the AO did not take into account the consumables worth ₹ 1,74,67,046/- which were consumed during the year. The assessee has further pointed out major discrepancies in the calculation of fabric consumption per piece, which too doesn’t stand countered on behalf of the revenue. Therefore, in our opinion, the conclusions made by the Assessing Officer cannot be supported at all. The next method based on stock balances given to the bank, in our opinion, is also not tenable. While adopting this method the Assessing Officer appears to have dissected the trading account from 1.04.2007 to 31.08.2007 and worked out the gross profit @ 33.9% for the whole year. On this the assessee objected that the trading account has been re-casted till the month of August, 2007 and the AO has taken the duty drawback at ₹ 1,27,71,073/- whereas the assessee has shown the duty drawback of ₹ 96,75,401/- for the whole year and the amount was receivable till August, 2007 of ₹ 38,97,073/-. Even after this objection, it has not been made clear as to from where the AO lifted the above figure of duty draw back. The ld. DR could also not make it clear before us. - Decided against revenue
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2018 (5) TMI 1378
Deemed dividend u/s 2(22)(e) - earnest money paid by the company on behalf of the directors - money was not returned after cancellation of sell agreement - collateral security given by the Director of the company in individual capacity - Held that:- Perusal of the correspondence between assessee and Director of M/s. Alpex Exports Pvt. Ltd. & M/s. Karishma Machine Tools apparently shows that the huge amount of ₹ 1,28,52,217/- alleged to have been taken as earnest money by the assessee has been demanded by the Directors of the companies and paid by the assessee leisurely in installments at will under the garb of Agreement to Sell which has been rightly treated as sham and collusive transaction between the assessee and both the companies by the AO. The contention of the assessee that the property in question was being sold to the companies by the assessee as the bank was insisting upon that the same be transferred in the name of the company as it was given as a collateral security at the time of taking loan for running the business of the companies is prima facie not sustainable because when the property in question was already pledged with the bank as collateral security by the Director in her individual capacity, there is no legal ground with the bank to insist upon for transferring the property in the name of the companies. Rather collateral security given by the Director of the company in individual capacity is a potent security with the bank than the properly in the name of the company. So, this plea also is an after-thought and as such, the entire arrangement between the assessee and both the companies falls within the mischief of provisions contained u/s 2(22)(e) of the Act. - Decided in favour of revenue Notice u/s 143 validity - AO jurisdiction to pass the assessment order for want of issuance of valid notice u/s 143 (2) - whether mere proving of dispatch is not enough to prove the service of notice on the assessee which is a mandatory requirement - Held that:- No doubt, the ACIT, Circle 46 (1) who has issued the notice u/s 143 (2) dated 12.08.2009 has no jurisdiction and subsequently, the case was transferred to ACIT, Circle 1 (1), New Delhi before whom the assessee continued to attend the proceedings and get the assessment completed without raising any objections. So, in view of the judgment in case of Mega Corporation Ltd. (2017 (2) TMI 1253 - DELHI HIGH COURT), we are of the considered view that now the assessee is not entitled to question the jurisdictional issue. - Decided against assessee.
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2018 (5) TMI 1377
Disallowance of various expenses like, conveyance, travelling, foreign travelling, telephone and electricity etc. - Held that:- Disallowance has been made on ad-hoc basis without pointing out any defects in the books of accounts or vouchers maintained for these expenses, thus, addition to be deleted - Decided in favour of assessee. TDS u/s 194C/194I - non-reduction of TDS on monthly maintenance charges paid to housing societies - Held that:- For applicability of section 194C there should exist a contract between the parties for carrying out the ‘work’ as defined under that section. The Ld. CIT(A) has noted that the cooperative societies works on the principle of mutuality and on the principle of ‘no profit no loss’ and, therefore, reimbursement of the expenses by the members of the society, is in the nature of merely transfer of money from one hand to another and, thus, not falling under the payments mentioned in section 194C - Similarly, the CIT(A) has held for the purpose of section 194I that the payment in the hand of the recipient should be in the character of income, whereas in the instant case, it is merely reimbursement by the members to the society and, therefore, the payment in question is not liable for TDS.- Decided in favour of assessee Disallowance under section 14A - CIT-A restricted addition - Held that:- As in the instant case, the decision of the learned CIT(A) that dissatisfaction of the learned AO is not discernible, need a re-look and thus the issue needs to be reexamined by the learned CIT(A) and accordingly, we restore the issue to the file of the CIT(A) for deciding afresh in view of the decision in the case of India Bulls Financial Services Pvt. Ltd. (2016 (11) TMI 1369 - DELHI HIGH COURT). CIT(A) first may adjudicate the issue of requirement of satisfaction as to incorrectness of the claim of the assessee of having incurred no expenses towards exempt income. If he finds that the prerequisite of satisfaction is cleared, then he may decide qualification of disallowance under three parts of Rule 8D(2) in accordance with law.
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2018 (5) TMI 1376
Reopening of assessment - reopening on basis of objections by the revenue audit party - Difference in credited interest income and gross interest as reflected from TDS certificates furnished by the assessee - Held that:- As we observed from the record that the assessee had already filed the TDS certificates in the original assessment proceedings before the AO and the AO has mentioned in para 4 that the details of TDS was called for and in para 5 its clearly mentioned that after verification of computation of income the assessment is framed. We noted that in the statement of total income, the assessee has claimed the TDS on interest and the details of the same were filed with the AO at the time of assessment proceedings. We are of the view that the case of the assessee has wrongly been re-opened, which is beyond jurisdiction and not permissible as the same was done on the basis of same materials as was before the AO in the original assessment proceedings. - Decided in favour of assessee.
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2018 (5) TMI 1375
Validity of the order passed U/s 147 - accommodation entries taken by the assessee company - receipt of specific information from Investigation Wing, Delhi regarding accommodation entries taken by the assessee company - Held that:- The belief formed by the AO after due examination of the material on record that the income of the assessee chargeable to tax during the relevant assessment year has escaped assessment cannot be said to be arbitrary or irrational. Therefore, it is not a case of borrowed satisfaction as contended by the ld AR. There is no bar that the information received from the Investigation wing cannot be used as a basis for formation of belief and satisfaction by the AO that the income has escaped assessment. In view of the above discussions and in the entirety of facts and circumstances of the case, we are of the considered view that there is no illegality in action of the AO in assuming jurisdiction and passing the order under section 147 - Decided against assessee Addition u/s 68 - Held that:- As being the reassessment proceedings, where the AO is ceased of certain information and documents, it is incumbent upon him to confront the same to the assessee and allow the latter to file its objections and rebuttal. The additions made, merely relying on these information and documentation, without confronting the assessee cannot be accepted. Besides furnishing the reasons for reopening the assessment to the assessee company, there is nothing on record that such information/documentation was confronted to the assessee. Further, the AO has relied upon the statement of third parties namely, shri S.K. Jain, shri V.K. Jain, shri Assem Kumar Gupta and shri Rajesh Agarwal, the assessee again deserves an opportunity to cross examine such persons which was not provided. No nexus has been established by the Revenue and the suspicion however strong cannot be basis for making the addition. Therefore, no presumption can be drawn without establishing the necessary nexus that share application money received is assessee’s own undisclosed money. We don't find any basis for making addition under section 68 of the Act and the findings of the CIT(A) are hereby confirmed. - Decided in favour of assessee.
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2018 (5) TMI 1374
Transfer pricing adjustment - transaction of import of raw materials - Held that:- We find merit in the plea of assessee in this regard that the DRP should have admitted the additional evidence, consider the same and then decide the issue. The DRP having failed to do so, the action of DRP in this regard is not justified in view of the provisions of the Act. Accordingly, we remit this issue back to the file of DRP, who shall admit, consider and adjudicate the additional evidence and decide the issue, in accordance with law. It may be pointed out herein itself that further plea of assessee in this regard was that no adjustment on this count was made in any of the earlier years. The said submission of assessee needs verification and in case an approach has been adopted from year to year, the same may not be disturbed unless and until there is change in facts and circumstances. Reasonable opportunity of hearing shall be provided to the assessee by DRP in this regard. Further, the assessee is directed to comply with the notices issued and submit information and clarification before the DRP for adjudicating the issue. The issue raised vide grounds of appeal No.2 and 3 is allowed for statistical purposes. Transaction of import of finished goods - Held that:- Re-sale Price Method is the most appropriate method to be applied in such circumstances since the assessee is purchasing finishing goods from its associated enterprise at a price, which in turn, re-sells to the unrelated enterprises. The Assessing Officer / TPO is thus, directed to apply RPM method and determine the margins of assessee and of the comparables. The assessee has filed the working of assessee’s margins and the margins of comparables which may be verified and in case the same is within +/- 5% range, no transfer pricing adjustment needs to be made in the hands of assessee. Reasonable opportunity of hearing shall be given to the assessee. The ground of appeal No.4 is allowed as indicated above. Transfer pricing adjustment made in respect of transaction of export of packing materials - transaction of export of spools to associated enterprise - Held that:- The assessee had exported packing material in the shape of spool to its associated enterprise, on which tyre cord or the hose wire was wound to send the same to the customers. The assessee charged associated enterprise actual cost of calculation of spools with margin of 10%. The TPO was of the view that indirect cost also needs to be considered for undertaking transaction of export of spools to associated enterprise. Transfer pricing adjustment made in respect of transaction of export of packing materials - Held that:- We reverse the order of Assessing Officer/TPO/DRP and hold that no adjustment has to be made in the transaction of export of packing material to the associated enterprise, wherein the assessee had charged cost of calculation of spools with markup of 10% i.e. on account of direct cost to its associated enterprise, such a transaction is at arm's length and no adjustment in this regard needs to be made. Hence, the ground of appeal No.5 is allowed.
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2018 (5) TMI 1373
Levy of penalty U/s 271(1)(c) - NP rate estimation initited by AO - Reduction of rate % - Held that:- Undisputedly, the turnover declared by the assessee in his return of income filed much prior to survey has been accepted by the Assessing Officer and thereafter the Assessing Officer has estimated the NP rate @ 20%. Subsequently, during the appellate proceedings, the NP rate has been reduced by the ld. CIT(A) to 12%. There is no finding recorded by either of the authorities regarding linkage and estimation of net profit rate with findings, if any during the course of survey proceedings. It is, therefore, a case where the NP rate has been estimated by both the authorities and the additions have been made in the hands of the assessee. Referring to case of COMMISSIONER OF INCOME-TAX VERSUS KRISHI TYRE RETREADING AND RUBBER INDUSTRIES [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] as held that on such guess work or estimation, no penalty under section 271(1)(c) of the Act is leviable - For imposing penalty under section 271(1)(c) of the Act, the Assessing Officer has to clearly prove the conduct of the assessee - The assessee offered an explanation, which could not be termed as not bona fide - In the absence of any corroborative evidence, it cannot be said that there was concealment of income - Thus the levy of penalty u/s 271(1)(c) is hereby deleted - Decided in favour of assessee.
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2018 (5) TMI 1369
Reopening of assessement - case of petitioner is that Since amalgamation, the company had no legal existence - also, it was claimed that M/s. Dharmanath Share & Services Private Limited was subjected to assessment under Section 153 [C] of the Act in which entire transactions; including the commission amount, have been taxed. The same cannot now be taxed in the hands of assessee - Held that: - Division Bench of this Court in case of Khurana Engineering Limited v. Deputy Commissioner of Income Tax, [2013 (2) TMI 128 - GUJARAT HIGH COURT] had held that once the assessee company had amalgamated with the transferee company, its independent existence did not survive, and therefore, would no longer be amenable to assessment proceedings - the notices in the present case would also be invalid - petition allowed.
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Customs
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2018 (5) TMI 1372
Mis-declaration of country of origin - import of areca nuts, commonly known as betel nuts from Sri Lankan origin - Concessional rate of duty under N/N. 26/2000-Cus dated 01.03.2000 - the main allegation of the Department is that, a few gunny bags were found having the marks ‘Produce of Indonesia’. Held that: - Shri Peter Fernandez, Branch Manager, Trans Asian Shipping Services Pvt. Ltd., Cochin, the line agent for the vessel, stated in his statement that the documents were genuine pertaining to the bills of lading as per his record. Further, all import documents were routed through the supplier’s bank at Colombo and his bank, UCO Bank, Parliament Street Branch (Mid Corporate Branch), New Delhi - M/s National Bureau of Plant Genetic Resources, New Delhi, vide their report dated 20.03.2015 stated that there was no evidence to prove that the samples were of Indonesian origin. In the instant case the country of origin is Sri Lanka and there is no misdeclaration filed by the assessee-Appellants, especially when all the transactions were held through the banking channel. Appeal allowed - decided in favor of appellant-assessee.
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2018 (5) TMI 1371
Refund claim - vide N/N. 77/2008-Cus dt. 13.6.2008 the export duty on the said goods was withdrawn and consequently respondent filed refund claim of the same - refund claim was rejected on the ground that the N/N. 77/2008-Cus., exempting these goods from export duty was effective from midnight of 13.6.2008 and was not applicable to goods exported on or before 13.6.2008 - Held that: - so far as the eligibility of exemption is concerned the matter stands decided by Tribunal decision in the case of Jindal Saw Ltd. [2011 (9) TMI 302 - CESTAT, MUMBAI] wherein it has been held that the Let Export Order has been given on 13.6.2008 and therefore the benefit of N/N. 77/08 dated 13.6.2008 shall apply to the exports made by the appellant and hence they are rightly entitled for the refund of export duties wrongly paid by them - the goods exported on 13.6.2008 would be eligible for the exemption under N/N. 77/2008-Cus. Failure of the respondent to challenge the assessment of the shipping bills - Held that: - the said ground regarding failure to challenge the assessment of shipping bill has been raised for the first time before Tribunal. It is settled law that Revenue cannot raise fresh grounds at the second appellate stage. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1370
High Seas Sale - mis-declaration of imported goods - Heavy Melting Scrap - confiscation - penalty - Whether in the facts and circumstances of the case, the goods which were purchased on high sea sale basis and were declared as heavy melting scrap in the documents of high seal seller, are not mis-declared and hence not liable to confiscation and no penalty is imposable, as held by Member (J)? - Difference of opinion - majority order. Held that: - Tribunal in the case of Kuber Casting Pvt.Ltd. [2016 (2) TMI 981 - CESTAT CHANDIGARH], in similar circumstances, has held that if the goods booked for importation are heavy melting scrap and on receipt of goods, it is found that the some quantity of rerollable scrap is received then it does not amount to misdeclaration - confiscation and penalty not warranted. In view of the majority order, all the three impugned orders are set aside and all the three appeals are allowed.
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Service Tax
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2018 (5) TMI 1367
Renting of immovable property service - whether “service tax” under Section 65(105)(zzzz) of the Finance Act, 1994 on renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance of, business or commerce is within the legislative competence of the Union Parliament? Held that: - The question is directly relatable to the scope and ambit of Entry 49 of List II of the Seventh Schedule to the Constitution of India dealing with “Taxes on lands and buildings”. If the impost/levy is directly relatable to the lands/buildings contemplated in Entry 49 of List II of the Seventh Schedule to the Constitution of India we would have had no hesitation in saying that the Union Parliament would lack legislative competence to enact the particular provision in the Finance Act, 1994. These matters should await the decision of the nine judges Bench in the case of MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA & ORS [2011 (3) TMI 1554 - SUPREME COURT], whereafter the hearing of these matters will be taken up once again in the course of which it will be open for the parties to urge such additional points as may be considered relevant - The matter is accordingly deferred until disposal of the issues pending before the nine judges Bench.
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2018 (5) TMI 1366
Refund claim - Relevant time - rejection on the ground that they have been filed beyond “one” year from the “let export” date as mandated under N/N. 17/2009-ST - Held that: - the relevant date will have to be adjudged as per the provisions of Section 11B of the Central Excise Act, 1944. In particular portion (A)(i) of the Explanation to Section 11B ibid, namely the date on which the ship in which the goods are loaded leaves India. Matter remanded to the adjudicating authority for the limited purpose of ascertaining whether the refund claims in these two shipping bills have indeed been filed within a period of one year from the date on which the concerned ship left India - appeal allowed by way of remand.
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2018 (5) TMI 1365
Liability of service tax of Bureau of Indian Standards (BIS) - Technical Testing and Analysis Services - excess charges received by the appellant - It appeared to the department that the amounts have been received by appellants from the customers which are in the nature of advances and the appellant is liable to pay service tax on the same - Held that: - whenever any amount is received at the first instance from any client, appellant discharges the tax liability on that amount on cum tax basis. There is no allegation that higher amount than what is charged to customer in respect of marking charges has been collected - the issue of credit notes is therefore only an accounting transaction to recognize the liability of the appellant towards their customer to know the excess payment lying with them. It has to be kept in mind that BIS is set by the Government of India with the Governing Council and Members consisting of Ministers and Members of Parliament and Secretaries of concerned Departments. There is also no allegation that BIS have not discharged tax liability on the initial amount received by the clients - demand set aside. Demand on tax in respect of royalty charges - Held that: - the matter has already been decided by this Bench in respect of very same assessee BUREAU OF INDIAN STANDARDS VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2018 (4) TMI 1106 - CESTAT CHENNAI], where it was held that the “Hallmark” is worldwide recognised quality mark and not an Intellectual Property Right of appellant. BIS Act is for consumer protection, not dealing with Intellectual Property Right. The appellant is not permitting anybody to use “Hallmark”, in the manner trade marks are assigned/permitted for use - demand do not sustain. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1364
Refund of unutilized CENVAT credit - Rule 5 of the CCR 2004 read with N/N. 5/2006-CE (NT) dt. 14.03.2006 - Held that: - The lower appellate authority has analyzed each of the issues one by one and has come to a reasoned finding. The Commissioner (Appeals) has also directed the assessee to file separate refund claims - On the issue of eligibility of various input services which the Revenue has found fault, the matter is now well settled in a number of decisions that the impugned credits related to the inputs services / inputs are very much eligible. The controversy concerning ‘relevant date’ to be reckoned for calculating the period prescribed for filing refund claim is also settled in favor of the respondents - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1363
Non-refundable deposit, one time premium of Salami, which is not refundable - whether the said deposit is liable for Service Tax under the head of renting of immovable property? - Held that: - there is a separate charge for the rent, which alone is taxable, the onetime premium charges is nonrefundable deposit, it is called as one time premium and not part of rent. Therefore, the same is not taxable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1362
Business Support Services - the appellant had supplied RMC from their plant to the site of the customer through Transit Mixer Vehicle and the RMC is poured out by pumping from the special purpose vehicle and delivered at the desired location in the site - As the appellant had not discharged service tax on the service provided by them to clients in respect of RMC supplied to other manufacturers, the department was of the view that the said activity falling under Business Support Service is liable to service tax. Held that: - After analyzing the entire documents as well as submissions of the appellant, the Commissioner has held that there is no proof that the appellants have collected pumping and mobilization charges relating to RMC batched by others. In such circumstances, the confirmation of demand of service tax cannot sustain, being beyond the scope of the show cause notice - Admittedly, the appellant have discharged VAT on the entire amount received by them for supply of RMC which includes charges collected for mobilization, pouring and pumping. The activity of pumping and pouring would not fall under BSS. Apart from these, the appellants has been paying excise duty on RMC manufactured by them @ 1% with effect from May 2011 - Since the demand in the show cause notice confines to the pouring and pumping charges in respect of RMC manufactured by others and as there is a categorical finding on facts by the Commissioner that the appellant has not collected any such charges in respect of RMC batched by other manufacturers, we hold that the demand is without any legal or factual basis and not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1361
Refund claim - refund filed on the premise that on their activity of construction, they are not liable to pay service, therefore, amount paid by them is to be refunded - time limitation - unjust enrichment - Held that: - it cannot be held that the appellant has filed refund claim with a delay. As in a case where is a dispute whether there is a liability of the assessee or not and the same has been settled by the higher forum, in that circumstances, the assessee’s entitled to file refund claim within one year from the date when the dispute has been settled by the higher forum - the refund claims filed by the appellant are within time. Unjust enrichment - Held that: - as there is no finding given by the authorities below, in that circumstances, the matter is remanded back to the adjudicating authority to decide the issue of unjust enrichment within 30 days of passing of this order and the appellant is also directed to produce the required documents in relation to their claim of refund within 15 days from today. Appeal allowed by way of remand.
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2018 (5) TMI 1360
Demand of service tax after rejection of declaration under the Voluntary Compliance Entitlement Scheme (VCES) of the ground of limitation - validity of show cause notice - extended period of limitation - Held that: - appellant provided business/service during the period April, 2008 to December, 2012 and filed declaration and VCES Scheme 2013 on 19.2.2014. Thereafter, the show cause notice has been issued on 17.02.2015 by without invoking extended period of limitation and without alleging any suppression fraud or collusion on the part of the appellant - Admittedly, the show cause notice has been issued beyond the period of limitation, in that circumstances, the show cause notice is barred by the limitation. The demands pertaining to extended period of limitation are not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1359
Valuation - completion and finishing services - abatement - As per the Revenue, value of the material used by appellant is not separately indicated in various invoices and service tax was charged on the invoice value, after availing abatement of 67% to which the appellant are not entitled for abatement of 67% - Held that: - it is not disputed that appellant is executing the works of finishing assigned to them along with material - in terms of the decision of Hon'ble Apex Court in Larsen & Toubro Limited [2015 (8) TMI 749 - SUPREME COURT] merits classification of the services rendered by the appellant under Works Contract services for prior period or the subsequent period. As the services of Works Contract became taxable with effect from 01.06.2007, therefore, the demands pertaining to prior to 01.06.2007 are not sustainable. For the period post 01.06.2007, as it is been held that services merit classification under Works Contract services and it is not disputed that appellant is providing services along with material, in that circumstance, the appellant is entitled for abatement of 67% of the value of taxable services and for remaining 33% value of the service, the appellant is paying service tax. Therefore, on the gross value of services provided by the appellant, are not taxable. Extended period of limitation - Held that: - As on the same issue, earlier also the show cause notice was issued to the appellant for the prior period, in that circumstance, the SCN is barred by limitation. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (5) TMI 1358
Dutiability - Spent Sulphuric Acid being generated as a by-product during the manufacture of Acid Slurry - N/N. 89 of 1995 dated 18.05.1995 - area based exemption - maintainability of appeal - Held that: - the question, which may arise, is a question which relates to the entitlement of the respondent under N/N. 89 of 1995, which is issued under Section 5A and, therefore, is an exemption Notification - appeal dismissed as not maintainable.
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2018 (5) TMI 1357
CENVAT credit - input services - rent-a-cab service - Department was of the view that these services were neither used directly nor indirectly nor in relation to the manufacture and therefore the said services do not qualify as input services for availing Cenvat credit of service tax paid on the said services - whether the appellants are eligible for Cenvat credit on ‘Rent-a-Cab service? - Held that: - the Hon’ble Supreme court in the case of M/s. Maruti Suzuki Ltd. Vs. CCE, Delhi [2009 (8) TMI 14 - SUPREME COURT] has held that crucial requirement for availment of input credit of all goods is ‘used in or in relation to the manufacture of final products’ - In the case on hand, admittedly, the Revenue has not negatived the plea of the appellant that the service availed of Rent-a-cab service had been used for official purposes by the employees of the appellant, for or during the business. There is also no dispute with regard to the period involved in the present case that it was prior to 01.04.2011. The Revenue has lost sight of the fact that the said service was provided by the appellant to its workers to reach the factory premises in time which has a direct bearing on the manufacturing activity/production which, otherwise, the employees would have claimed conveyance allowance - the appellant is eligible to avail Cenvat credit of rent-a-cab service up to 01.04.2011. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1356
100% EOU - demand of education cess and higher education cess on the duty of excise leviable under the aforesaid proviso for the third time - Held that: - the issue of leviability of education cess and higher education cess for third time on the duty of excise under proviso to Section 3(1) of the Act in respect of the clearance of goods in DTA made by 100% EOU is no longer res integra and has been decided in the favor of the assessee by this Tribunal in the case of Sarla Performance Fibers Ltd. [2010 (2) TMI 335 - CESTAT, AHMEDABAD], where it was held that Aggregate of custom duties once worked out, question of arriving at quantum of excise duty by adding education cess again not arises. Education cess not payable for third time as contended by the department - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1355
CENVAT credit - fake invoices - it is alleged that appellants have not received the duty paid inputs in their factory, but wrongly availed the credit of the duty paid against respective input invoices - whether the appellants had correctly availed the CENVAT credit of ₹ 45,66,544/-, against the input invoices issued by two registered dealers namely, M/s Goodluck Empire and M/s Jenil Empire during the relevant period i.e. 2006-07 and 2007-08? Held that: - In the present case, there is no dispute about the first condition of eligibility of payment of specified duty shown on the invoices, whereas the dispute centres round the second condition of eligibility i.e. receipt and use in the manufacture of finished goods. The Revenue has discharged its burden when it claimed that goods had not been received in the factory by pointing out the discrepancy in the input invoice, that is, wrong entry of vehicle number, now it is the turn of the Appellant to explain the discrepancy to establish the fact that the quantity of inputs mentioned in the invoices have been received in the factory and utilized in the manufacture of finished goods by adducing positive evidence - in the present circumstance a prudent inference that could be arrived at is that the quantity of inputs mentioned in the 12 invoices involving a total credit of ₹ 5,89,667/- had not been received in the factory and the credit was availed only on the input invoices. The allegation of the department is that even though the vehicles mentioned in the respective invoices were not Auto Rickshaws, Chakdas etc., but in the statements of respective owners of the vehicles, it has been stated that they had never visited the route used for transferring/transporting the inputs from the premises of the dealers to the factory or the vehicles were not in good condition - Except few statements of vehicle owners/representatives, the competence of the said persons to furnish such statement also being in dispute, and in absence of other corroborative evidence placed by the Revenue, to substantiate the allegation that the quantity of inputs mentioned in the invoices, where the capability of the vehicle mentioned in these invoices are not disputed, it is difficult to sustain the allegation of non receipt of the inputs against these set of input invoices. Also, the vehicles mentioned in the respective invoices are capable of carrying the quantity of goods and there is no other corroborative evidence on record produced by the Revenue to establish that the goods have not been received except the contradictory oral evidence of the proprietor of the weigh Bridge. Consequently, the demand on this count cannot also be sustained. Penalty u/r 26(2) of Central Excise Rules, 2002 - Held that: - appellant have actively participated/involved in the issuance of invoices, without movement of inputs, and some of the period involved is also after 01.3.2007, accordingly, liable for penalty under Rule 26(2) of Central Excise Rules, 2002. Appeal disposed off.
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2018 (5) TMI 1354
Interest on delayed refund - whether the appellant is entitled to claim interest after three months from the date of filling the refund claim till its realization or not? - Held that: - Admittedly, the refund claim has been sanctioned to the appellant with a delay i.e. three months after filing the refund claim i.e. 22.01.2014. In that circumstances, the appellant is entitled to claim interest for the intervening period till the refund claim has been sanctioned - reliance placed in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT OF INDIA]. As the part of the interest has already been sanctioned to the appellant, the same is to be deducted from the interest payable to the appellant and remaining interest is to be paid to the appellant within 30 days of this order. Appeal allowed.
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2018 (5) TMI 1353
CENVAT credit - denied on the ground that the appellant has not received the input goods - Held that: - the charge that goods have been diverted by the appellant to M/s I.J. International is not sustainable as M/s I.J. International is job worker of the appellant, therefore, Cenvat credit cannot be denied to the appellant - the appellant has correctly taken the Cenvat credit on the inputs in question - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1352
Entitlement of interest - relevant date - interest for the intervening period i.e after 3 months from the application of filing the refund claim till its realization - Held that: - the issue of payment of interest has been travelled upto the Hon’ble Apex Court in the case of Ranbaxy Laboratories Ltd. [2011 (10) TMI 16 - SUPREME COURT OF INDIA], wherein the Hon’ble Apex court has examined the issue and after reliance of various circulars issued by the Revenue hold that the assessees entitled to claim interest on delay refunds after three months from the date of filing the refund claim till its realization. Admittedly, in this case initially refund claim was filed by the appellant on 31.12.2007 and the same has been sanctioned on 11.08.2014. In that circumstances, the appellant is entitled to claim interest after three months from 31.12.2007 till 11.08.2014. Appeal allowed.
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2018 (5) TMI 1351
Refund/ self-credit of education cess/ higher education cess paid - rejection on the ground that the appellants are not entitled to self credit/ refund of education/ higher education cess paid by them in terms of N/N. 56/2002-CE dated 14.11.2002 - Held that: - Hon'ble Apex Court in the case of M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], has held that education cess/ higher education cess is continuation of duty paid by the assessee. If the assessee is entitled to refund of duty paid through PLA, then for the education cess/ higher education cess also, the assessee is entitled to claim refund/ self-credit - the appellants are entitled to claim refund/ self-credit of education cess/ higher education paid by them through PLA - in favor of assessee. In terms of N/N. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008, whether the appellants are entitled to claim refund/self-credit as restricted by these notifications or not? - Held that: - in terms of Notification No. 56/2002- CE dated 14.11.2002, the appellants are entitled to claim refund/ self-credit of duty paid through PLA, relying on the decision of this Tribunal in the case of M/s. Biostadt India Limited & others [2018 (4) TMI 1154 - CESTAT CHANDIGARH] - in favor of assessee. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1350
Area Based Exemption - N/N. 56/2002- CE dated 14.11.2002 as amended by N/N. 11/2004-CE dated 29.01.2004 - Substantial expansion - increase of more than 25% employment in the factory - Held that: - on the basis of certificate issued by General Manager, District Industries Centre, Jammu, it is clearly mentioned that the respondent has increased more than 25% of regular employment which qualifies the condition of the Notification for availing exemption - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1349
Clandestine removal - Demand on the basis of income surrendered before the Income Tax Authorities - Held that: - the Revenue has not come forward with any evidence that income surrendered to the Income Tax authorities pertain to clandestine manufacture and clearance of the goods. In that circumstance, the SCN was issued to demand duty on assumptions and presumptions is not sustainable in the eyes of law - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1348
Refund of education cess/ higher education cess - N/N. 56/2002-CE dated 14.11.2002 - Whether the appellant can utilise basic excise duty for payment of education cess/higher education cess or not? - Held that: - Hon’ble High Court of Gauhati in the case of Union of India Vs. Kamakhya Cosmetics & Pharmaceutical Pvt. Ltd. [2012 (7) TMI 902 - GAUHATI HIGH COURT] has held that basic excise duty can be utilised for payment of education cess/ higher education cess - decided in favor of appellant. Whether the appellant is entitled to claim refund of education cess/higher education cess paid in cash? - Held that: - Hon’ble Apex Court in the case of SRD Nutrients Pvt. Ltd. vs CCE, Guwahati, [2017 (11) TMI 655 - SUPREME COURT OF INDIA], has held that the education cess/higher education cess arises on account of payment of duty, therefore, the refund claim is admissible of education cess/ higher education cess in terms of Notification No. 56/2002-CE dated 14.11.2002 - decided in favor of appellant. Whether the interest for the intervening period can be demanded/adjusted or recovered from the appellant without issuance of the SCN? - Held that: - for demand of interest a SCN is required to be issued and the same has not been issued to the appellant - the interest cannot be recovered from the appellant without issuance of the SCN - decided in favor of appellant. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1347
Finalization of provisional assessment - no order has been passed allowing the appellant to opt for provisional assessment, in that circumstances provisional assessment cannot be finalised - Held that: - Appellant also executed bond and bank guarantee for provisional assessment and applied for finalisation of provisional assessment as appellant has acted with due diligence in opting for provisional assessment, merely a formal order for allowing provisional assessment has not been passed, cannot be a reason to hold that appellant was not allowed to clear goods on the basis of provisional assessment. Also, there was no demand notice was issued to the appellant to demand duty. In that circumstance, Commissioner (Appeals) fell in error in confirming the demand against the appellant. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1346
Recovery of excess refund allowed - Section 11A of Central Excise Act - Held that: - without challenging the said refund claim in appeal, show cause notice cannot be issued under Section 11A of the Act - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE [2011 (3) TMI 11 - GAUHATI HIGH COURT] - demand against assessee not sustainable - appeal allowed - decided in favor of assessee.
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2018 (5) TMI 1345
Benefit of N/N. 214/86-CE - job-work - denial of benefit on the ground that appellant is manufacturer of parts of tractors and the activity undertaken by the appellant amounts to manufacture and the final product (tractor) is exempt from payment of duty - Held that: - if the principal manufacturer has filed written undertaking, the proceedings are not required to be initiated against the appellant as the said undertaking has been accepted by the Revenue and the appellant is entitled to clear the goods without payment of duty in terms of N/N. 214/86-CE - demand not sustainable. Extended period of limitation - Held that: - as the activity undertaken by the appellant were known to the Revenue and option was claimed in terms of N/N. 214/86-CE on the strength of undertaking filed by the principal manufacturer, in that circumstance, the extended period limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1344
Undervaluation - on reasonable belief that the appellant was engaged in the production of SS ingots or purchase of SS scrap which was not recorded in their records, the proceedings were initiated against the appellant for the period January to November, 2007 - Held that: - The question of MS scrap found in the factory is not disputed, therefore, the SCN were issued to the appellants on assumptions and presumptions without any corroborative evident on record - the proceedings against the appellants are not sustainable merely on suspicion - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1343
Recovery of erroneous refund - Gibberillic acid - appellant had claimed refund on the ground that benefit of N/N. 56/02-CE dated 14.11.2002 has been erroneously allowed to them - recovery u/s 11A of the Central Excise Act, 1944 - extended period of limitation - Held that: - the process and the product manufactured by the appellant were known to the department by way of periodical returns filed by the appellant wherein the process of manufacture was shown and the product was shown. Moreover, periodically audit also took place and refunds were sanctioned to the appellant. Therefore, it cannot be said that the appellant has suppressed material fact from the department - the extended period is not invokable in the facts and circumstances of the case. The refunds sanctioned to the appellant have already attained finality as the same have not been challenged - in the light of the decision of the Hon’ble Apex Court in the case of Priya Blue Industries [2004 (9) TMI 105 - SUPREME COURT OF INDIA], when the Hon’ble Apex Court has observed that The words "in pursuance of an Order of Assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an Order of Assessment to claim refund. These words do not lead to the conclusion that without the Order of Assessment having been modified in Appeal or reviewed a claim for refund can be maintained. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1342
Method of Valuation - packages were packed in bigger boxes of 15-20 packs - Revenue entertained a view that the appellant is required to assess the goods under Section 4 and has availed excess refund which is illegal - Held that: - the appellant packed pouches of insecticides of less than or 10 gms/10 ml and these pouches but in bigger pack on which MRP is printed. MRP is printed on the pouches and these goods are made for retail sale and the appellant is required to affix MRP in terms of Standards of Weights and Measures (Packaged Commodities), Rules, 1977. These facts are not disputed. The appellant have made packages for retail sale, they are legally bound to affix MRP of the said goods - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1341
Area Based Exemption - N/N. 50/2003-CE dated 10.6.2003 - manufacturer of the combo back in terms of section 2 (f) of Central Excise Act, 1944 and Note 6 of Chapter 34 of Central Excise Act - extended period of limitation - Held that: - the SCN has been issued on 8.12.2010 by invoking the extended period of limitation for the period June, 2007 to April, 2009 whereas the appellant was paying service tax to the department for their activity. In that circumstance, the extended period of limitation is not invokable - the respondent has filed declaration to the department on 20.4.2009 and thereafter the Revenue did not take any steps to initiate proceedings against the respondent. In that circumstance, the extended period of limitation is not invokable - appeal dismissed - decided against appellant-Revenue.
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2018 (5) TMI 1340
CENVAT credit - input services - Outdoor Catering Service - penalty - Held that: - The appellants is not entitled to cenvat credit on Outdoor Catering Services. Penalty - Held that: - in view of the conflicting decisions during the relevant time and since the issue was relating to interpretation of Rule 2(I) of Cenvat Credit Rules, the penalty is not imposable. Appeal allowed in part.
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2018 (5) TMI 1339
Demand of interest - default in the payment of duty beyond thirty days from the due date - utilization of CENVAT credit in payment of duty - Held that: - the payment of excise duty by utilizing the cenvat credit is not violative of Rule 8(3A) of the Central Excise Rules, 2002 - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1338
100% EOU - Refund claim - time limitation - the claim was filed beyond the period of one year from the date of export - Held that: - in the case of export of goods the relevant date for calculating the limitation period is one year from the date on which the goods were exported - refund claim filed is not within time limitation - appeal dismissed - decided against appellant.
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2018 (5) TMI 1337
CENVAT credit - capital goods - it was noticed that the appellant had availed simultaneously cenvat credit on capital goods and had also claimed depreciation on gross block value inclusive of excise duty under Section 32 of the Income Tax Act 1961 - Held that: - initially the appellants have wrongly availed the cenvat credit as well as depreciation under the Income Tax Act and on being pointed out they have realized their mistake and filed a revise income tax return rectifying the defect. Appellant has also produced the original as well as revised return rectifying the defect pertaining to claiming depreciation on the said plant and machinery. Denial of CENVAT credit not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1336
Area Based Exemption - N/N. 50/2003-CX dated 10/06/2003 - case of Revenue is that the options dated 29/03/2010 and 31/03/2010 have been received in this office on 06/04/2010 i.e. after 31/03/2003 which was the last date for exercising the said option, the benefit under the said Notifications is not admissible to the goods - Held that: - intimation is required to be given to the AC/DC as well as to Superintendent - In the present case intimation to the Superintendent had admittedly been given before the due date i.e. 31/03/2010 - the receipt of intimation in the Range Office is sufficient to claim the exemption from the payment of duty on goods mentioned in the intimation dated 31/03/2010 - benefit of exemption allowed. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1335
Clandestine removal - SS flats - Revenue entertained a view that the assessee had availed the cenvat credit of duty paid on various raw materials received from M/S. HSAL on the basis of the invoices only, without actually receiving the inputs - Whether in view of the gross violation of principles of natural justice and lack of adherence to the procedure under Section 9D, the matter be remanded back to the adjudicating authority for de no adjudication, as held by member (Technical)? - Difference of opinion - majority order. Held that: - Reliance placed in the case of Ambika International Vs. Union of India and Another's [2016 (6) TMI 919 - PUNJAB AND HARYANA HIGH COURT], where Hon’ble High Court has clearly ruled that if the person whose statement has already been recorded is to be examined before the adjudicating authority and if the adjudicating authority arrives at a conclusion that the statement deserve to be admitted in evidence then the question of offering the witnesses to the assessee for cross-examination arise. The witnesses whose statement were recorded were not examined by the adjudicating authority - such examination-in chief was not conducted by the original authority and therefore, the question of cross-examination does not arise. Therefore, no purpose shall be achieved by remanding the matter back to the original authority for denovo adjudicating. Further, the allegation against M/s.BSPL were that they did not receive inputs but availed the cenvat credit only on the strength of invoices without receipt of inputs. The admitted facts are that the appellant, M/s. BSPL had manufactured the goods and paid Central Excise duty on the same and there are no investigation as to from where the inputs were procured by M/s. BSPL for manufactured of goods, if they had received only the invoices and no inputs from M/s.BSPL is established in proceedings - The appeal filed by the assessee is to be allowed. In view of the majority order, the appeal filed by M/s Bhupendra Steel Pvt. Ltd. is allowed and the appeal filed by the Revenue is rejected.
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CST, VAT & Sales Tax
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2018 (5) TMI 1334
Liability of VAT - deemed sale - Whether the materials used in a contract to provide pest control treatment would amount to a deemed sale within the meaning of Article 366 (29A)(b) of the Constitution of India so as to make the same exigible to tax under the Gujarat Value Added Tax Act, 2003? Held that: - A Constitution Bench of this Court in Kone Elevator India Private Limited vs. State of Tamil Nadu [2014 (5) TMI 265 - SUPREME COURT], while considering the correctness of its earlier view with regard to dominant nature of the contract test, had, apart from holding that the dominant nature test would no longer be determinative - the view taken by the High Court that there is no deemed sale of the goods used in the contract executed by the respondent-contractor cannot have our approval - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1333
Input tax credit - penalty u/s 12(7) of GVAT Act - the assessee had deliberately claimed excess tax credit, which exhibited the malafide intentions on the part of the assessee - assessee was of the opinion that it was discretionary upon the assessing authority whether to levy penalty or not and if he desired to levy penalty, then at a rate not exceeding 200% of the wrongly claimed tax credit - Held that: - merely because a breach is established, it would not be compulsory for the Commissioner to impose the penalty. After giving an opportunity to the dealer of being heard, if the Commissioner is satisfied that it is not a fit case for imposition of penalty, then he may express such an opinion in his order by citing reasons. The discretion of the Commissioner in the matter of imposing penalty would extend even on the choice of the penalty to be imposed, of course, up to a maximum of twice the value of the wrongly claimed tax credit. The Statute has neither made it compulsory for the Commissioner to impose penalty once the breach is established nor has made the quantum of penalty mandatory. As is well-known, various fiscal penal statutes, either prescribe a range of penalty from which the competent authority may chose or may provide a minimum penalty below which the competent authority cannot travel. Petition dismissed.
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Indian Laws
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2018 (5) TMI 1368
Partition and separate possession of suit properties - concept of ancestral property - whether the appellants were entitled to claim partition in ancestral property in view of the amendment in the Hindu Succession Act, 1956 by adding Section 29-A vide Chapter II-A under the heading of Succession by Survivorship? - Held that: - On a plain reading of the newly added provision i.e., Section 29-A of the Act, it is evident that, inter-alia, daughter of a coparcener ought not to have been married at the time of commencement of the amendment of 1989 - In the instant case, it is admitted position that both the appellants, namely, Mangammal, got married in the year 1981 and Indira, got married in or about 1984 i.e., prior to the commencement of the 1989 amendment. Therefore, in view of clause (iv) of the Section 29-A of the Hindu Succession (Tamil Nadu Amendment) Act, 1989, appellants could not institute the suit for partition and separate possession at first instance as they were not the coparceners. Moreover, under Section 29-A of the Act, legislature has used the word “the daughter of a coparcener”. Here, the implication of such wordings mean both the coparcener as well as daughter should be alive to reap the benefits of this provision at the time of commencement of the Amendment of 1989 - the appellants were not the coparceners in the Hindu Joint Family Property in view of the 1989 amendment, hence, they had not been entitled to claim partition and separate possession at the very first instance. At the most, they could claim maintenance and marriage expenses if situation warranted. Division of property - Held that: - the appellants are not entitled to any share in coparcenary property since they were not the coparceners in view of 1989 amendment. However, on the death of their father and mother, appellants would get their property through succession in their respective shares. Appeal allowed in part.
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