Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 29, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Addition on accrual of income - deferred revenue - royalty - The rights of the TV Serial were to come back to the assessee after a period of 6 years - AS-9 allows deferment of royalty income - assessee had rightly offered the incomes in six AY.s - AT
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No disallowance could be made by applying section 40(a)(ia) of the Act in a case where tax was deducted at source under a wrong provision resulting in short deduction of tax. - AT
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Exemption u/s 54 - capital gains - acquiring substantial domain over the new flat within the specified period, the assessee could be said to have complied with requirement of section 54 and merely because possession of the Flat was not handed over to the assessee within the specified period the said benefit could not be denied. - AT
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TDS u/s 194C - non-deduction of tax on the payment of supply of printed packing material - transaction on account of supply of printed packing material to the assessee was in pursuance of a contract for a ‘sale’ and not a contract for ‘work’ as alleged - No TDS liability - AT
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Bogus purchases - Addition made on account of purchases from the hawala parties - addition is to be restricted by applying GP rate of 10% on the said purchases over and above the GP rate shown by the assessee. - AT
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Unexplained cash credit u/s 68 - AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee on record - No additions - AT
Customs
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Classification of Rubber Process Oil - whether hazardous goods or not? - Held No - the raw RPO imported by the Appellants would merit classification under chapter heading 2713.90 and would be liable to duty accordingly. - AT
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Penalty - confiscation - permission to re-export goods - import of baggage - Even though he has not made a correct declaration of the value of the imported goods by leaving the relevant column of the disembarkation card blank, the statement made to the intelligence officers may be considered as the declaration made by him in terms of Section 77 of the CA, 1962 - AT
Corporate Law
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Lien on shares - The amount which was due and payable by the Petitioner to the company have not been paid, due to which the company has rightly exercised its lien on the Petitioner's shares - Tri
Service Tax
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The appellants are liable to service tax on reverse charge basis in respect of commission paid to foreign agents. Such liability will be only w.e.f. 18/04/2006 and restricted to the normal period of demand - AT
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Liability of tax - The activity of foreign exchange broking liable to service tax under the provisions of Finance Act has been explained and the activities of the respondent will fall within the said section from 16.05.2008 - AT
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Penalty - supply of tangible goods service - reverse charge mechanism - during the course of investigation they were convinced and they have discharged the entire service tax liability along with interest - this is a fit case to waive all the penalties u/s 80 - AT
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Aviling CENVAT credit while availing the benefit of abatement under N/No. 1/2006-ST - The appellant have admittedly reversed the said amount of credit much before the issue of SCN and accordingly no SCN was required to be issued u/s 73 - AT
Central Excise
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Recovery of excess duty - Section 11D(2) of the CEA, 1944 - the appellant had cleared the inputs as such on payment of duty, adopting transaction value, instead of reversing the credit - recovery could be effected for three years from the date of issue of show cause notice. - AT
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CENVAT credit - removal of input as such by manufacturer after reversal of Cenvat credit cannot be treated as trading activity - AT
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Remission of duty - from the Fire Report, the reason of fire is evident, that the fire occurred due to short circuit of electricity, which is definitely beyond the control of the appellant-assessee and there is no foul play - remission allowed - AT
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Classification of Henna powder in unit containers - classifiable under CTH 3305 or under 1401 1019? - if Henna Powder is indicated to be used as hair dye then it would be classifiable under heading 33.05 CETA, 1988 - AT
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CENVAT credit - fake transaction - Once, it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the rules to cast an impossible or impractical burden on the assessee - credit allowed - AT
VAT
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Validity of re-assessment proceedings - UP VAT - It is only on the basis of the fact that the royalty amount has not been clarified in the invoices that a decision has been taken to reopen the assessment. This by itself is not sufficient and a good ground when the assessing authority was possessed with all material at the time of initial assessment and nothing material was concealed from him. - HC
Case Laws:
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Income Tax
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2017 (5) TMI 1273
Revision u/s 263 - taxability of capital gain - whether provisions of sec. 2(47)(v) would be applicable to the impugned transaction of development of a land held as stock in trade - Held that:- Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed, since we are of the view that there is merit in the contention of the assessee that the provisions of sec. 2(47)(v) will not apply to an asset held as “Stock in trade”, since the said provision very clearly states that it would apply only to “Capital assets”, i.e., the asset should have been held as Capital asset. Further it is the submission of the assessee that the possession of the asset has not been given to the developer, which is the main condition for applying the provisions of sec. 2(47)(v) of the Act. We notice that the Ld Principal CIT has failed disprove the said claim of the assessee. Hence, in our view, the AO has taken a possible view in this matter and further the Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed. Ld Principal CIT has assumed jurisdiction u/s 263 of the Act on this issue without properly complying with the mandate of the section, i.e., he has failed to show that the assessment order was erroneous on this issue causing prejudice to the revenue. Accordingly we set aside the order passed by Ld Principal CIT on this issue. - Decided in favour of assessee Weighted deduction u/s 35(1)(ii) - Held that:- The assessing officer has failed to examine the same at all. Further the Ld Principal CIT has also observed that the weighted deduction is allowed upon compliance of certain conditions, which require examination. Ld Principal CIT was justified in invoking revision provisions on this issue.- Decided against assessee
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2017 (5) TMI 1272
TDS u/s 195 - Remittances of Purchase of software not taxable in India - whether the amount paid was royalty payment u/s 9(1)(vi) and Article 12(3) of the Tax Treaty with Singapore requiring the assessee to deduct tax at source at the rate of 15%? - Held that:- The payment was not royalty and hence assessee was not liable to deduct tax at source.
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2017 (5) TMI 1271
Reopening of assessment - addition on accrual of income - deferred revenue - Held that:- The agreement could be terminated within a period of 6 years and amount had to be refunded.The assessee had allowed licensee to use the rights and therefore, the payment received by it has to be treated as royalty. The assessee is following mercantile system of accounting and is entitled to recognise his revenue on accrual basis.The rights of the TV Serial were to come back to the assessee after a period of 6 years.Thus, it is not a case of sale. But receipt is directly related to royalty received by the assessee from the licensee. AS-9 allows deferment of royalty income. Thus, in our opinion the assessee had rightly offered the incomes in six AY.s proportionately. Therefore, reversing the order of the FAA and considering the peculiar facts and circumstances of the case, we decide the effective Ground of appeal in favour of the assessee. Addition on account of value added tax(VAT) - Held that:- There is no evidence to prove that same was not part of the payment received from Moser Bayer. The amount received by the assessee included VAT. Therefore,we hold that the order of the FAA cannot be endorsed - Decided in favour of the assessee.
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2017 (5) TMI 1270
Bogus accommodation entries - CIT-A allowed claim - Held that:- It is clear from the finding recorded by CIT(A) that assessee has satisfied all the three conditions of cash credit. As per the finding of CIT(A), assessee has not only established the identity of the loan creditors but also genuineness of the loan transaction as well as the credit worthiness of loan creditors. The detailed finding recorded by CIT(A) has not been controverted by department by bringing any positive material on record. Accordingly, do not find any reason to interfere in the order of CIT(A). - Decided in favour of assessee.
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2017 (5) TMI 1269
Expenditure on acquisition of Engineering Drawings etc - TDS liability - nature of expenditure - Held that:- At the time of hearing, the assessee, at the outset, submitted that he concedes the position that the expenditure in question was capital in nature and thus, the ground of appeal raised by the revenue deserves to be succeed. Thus allow the appeal of the revenue. The AO is further directed to allow depreciation as per rules with respect to the impugned capital expenditure. Short deduction of tds - payment made for hiring of crane services in terms - TDS u/s 194C or 194I - Held that:- The invoking the provisions of section 40(a) (ia) of the Act in a case of short deduction of tax is not justified, because of the phraseology of section 40(a)(ia) of the Act itself. A perusal of section 40(a) (ia) clearly suggests that it gets triggered only in a situation when a tax is deductible at source but the same has not been deducted. A similar situation has been addressed by the Hon’ble Kolkata High Court in the case of S K Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT ), wherein it has been held that no disallowance could be made by applying section 40(a)(ia) of the Act in a case where tax was deducted at source under a wrong provision resulting in short deduction of tax. Thus disallowance deleted - Decided in favour of assessee.
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2017 (5) TMI 1268
Deduction u/s 54 - long term capital gain - assessee had not complied with the condition stipulated in the section of purchase /construction of new house within the stipulated period of two and three years respectively - Held that:- It has been decided in number of cases that for the purpose of claiming exemption under section 54, investment of substantial amount in the new asset, is sufficient compliance. It has been held by various courts that in such circumstances the assessee is entitled to claim exemption despite the fact that the construction is not completed within three years. This issue was addressed by the Delhi High Court in the case of CIT Vs. R.L. Sood [1999 (9) TMI 27 - DELHI High Court] wherein held that the assessee having invested substantial amount in the purchase of a new asset, thus acquiring substantial domain over the new flat within the specified period, the assessee could be said to have complied with requirement of section 54 and merely because possession of the Flat was not handed over to the assessee within the specified period the said benefit could not be denied. Thus for the purpose of claiming exemption under section 54 the assessee is only required to invest the amount for the purpose of purchase or construction of a property without completing the same in the impugned year and all amount advanced for the said purpose would be treated as being utilized for the purpose of section 54. - Decided in favour of assessee.
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2017 (5) TMI 1267
Levy of penalty u/s 271(1)(c) - proof of concealment of particulars of income or furnishing inaccurate particulars of income - Held that:- The department itself is not sure of the charge to be framed against the assessee u/s 271(1)(c). In this regard, it is now trite that the charge for levy of concealment penalty has to be specific, in the absence of which, no penalty u/s 271(1)(c) of the Act is leviable/sustainable. Reliance in this regard has correctly been placed on behalf of the assessee, on “CIT vs. Manjunatha Cotton And Ginning Factory” (2013 (7) TMI 620 - KARNATAKA HIGH COURT) wherein, it has been, inter alia, held that the assessee should know the grounds which he has to meet specifically, otherwise, the principles of natural justice are offended, else no penalty can be imposed on the assessee. It is, thus, settled that the charge as to whether the assessee is guilty of furnishing inaccurate particulars of income, or of concealment thereof, has to be specific, otherwise no penalty is leviable or sustainable u/s 271(1)(c) of the Act. - Decided in favour of assessee.
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2017 (5) TMI 1266
Revision u/s 263 - applicability provision of explanation to section 73 - Held that:- The only income and during the year under consideration was dividend on shares and mutual fund which it chargeable to tax under the head ‘income from other sources’. In reply to the applicability of explanation to section 73 of the act the assessee contended that section 73 is not applicable to the assessee company. The copies of reply of assessee dated 2 November 2011 and 5th November 2011 and the various details makes it clear that the assessing officer considered the factual matrix of the issue before passing the assessment order. Thus, from the record placed before us it cannot be said that the assessment was passed without application of mind and/or no question was raised by assessing officer regarding the loss shown by assessee. We may also not that the assessing officer has not referred his finding regarding the claim of loss, the manner in which it was substantiated by assessee in the assessment order. The revenue has not disputed the copies of replies placed before the assessing officer. Thus, from the contents of order of assessment we may conclude that order maybe erroneous as the same is not speaking order on a particular issue, however the order is not prejudicial to the interest of revenue. The assessing officer passed the order which is based on one of the possible view. We may further conclude that the order passed by learned Commissioner does not fulfill the twin condition as contemplated under section 263 of the Act. The order of learned Commissioner is based on change of opinion. - Decided in favour of assessee.
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2017 (5) TMI 1265
TDS u/s 194C - non-deduction of tax on the payment of supply of printed packing material - whether the fixed contract with the vendor in this case is a contract for work and not a contract for sale as envisioned u/s.194C? - Held that:- It is undisputed fact in the instant case that the supply of printed packing material is the responsibility and the supplier without involving any cross-supply of raw-material from the assessee. Such phraseology employed in the provision of the statue to include supply as per specification by using the material supplied by the assessee gives a resounding impression that supply of packing material albeit as per the requirement and specification of the customer but without seeking supply material from the customers stands excluded from the scope of expression “work” as provided in the aforesaid provision. Circular No.715 dated 08/08/1995 held that where a person had provided only specification for supply of printed material without supply of material do not fall within the ambit of section 194C. See Punjab Tractors Ltd. Versus Income-tax Officer (TDS-II), Chandigarh [2012 (10) TMI 287 - ITAT CHANDIGARH ] We also simultaneously note from the invoices raised by the supplier that the printed packing material so supplied to the assessee are subjected to various taxes viz. excise duty, VAT, and CST on the sale price. Ostensibly, it is the ownership of the printed packing material which is passed on to the assessee on delivery of the goods by the vendor by a sale contract. Thus, in the totality of the circumstances, we find it manifest that the transaction on account of supply of printed packing material to the assessee was in pursuance of a contract for a ‘sale’ and not a contract for ‘work’ as alleged. Consequently, provisions of section 194C do not get triggered in the facts of the case. Hence, section 40(a)(ia) has no application in the given facts. The disallowance made by the AO were thus unwarranted - Decided in favour of assessee.
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2017 (5) TMI 1264
Disallowance u/s.10A - Held that:- Respectfully following the judgment of Hon. Jurisdictional High Court in the case of Saurashtra Cement & Chemicals Indus. Ltd. (1979 (2) TMI 21 - GUJARAT High Court ) and the assessee favoring decision of the Co-ordinate Bench in previous Asst. Years and also in the light of the facts that assessee has fulfilled all the eligibility criteria for claiming exemption u/s 10A of the Act - Decided in favour of assessee.
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2017 (5) TMI 1263
Bogus purchases - Addition made on account of purchases from the hawala parties - CIT(A) restricting the addition to 10% of total hawala purchases - GP addition - Held that:- Tribunal in assessee’s own case said where the assessee had sought copies of statements recorded or any other evidence in respect of such hawala parties, which were not supplied to the assessee, then no addition is warranted in the hands of assessee in respect of said purchases from the said parties. The Assessing Officer had failed to provide the statements or evidence in respect of purchases to the extent of ₹ 41,54,454/-. Accordingly, we hold that no addition is to be made in this regard. However, in respect of the impugned purchases to the extent of ₹ 14,59,082/-, where the copies of statements were provided to the assessee, then addition is to be restricted by applying GP rate of 10% on the said purchases over and above the GP rate shown by the assessee. Accordingly, appeal filed by the assessee is partly allowed
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2017 (5) TMI 1262
Disallowing the contribution made to the recognized Provident Fund - Held that:- The contribution made by the assessee is treated as contribution made to the recognized provident fund and accordingly deduction is allowable - Decided in favour of assessee. Disallowing cash loss - Held that:- There are no defects pointed out in the books of accounts and vouchers which were placed before the A.O and no addition on this account has been made in the past and also in the future years. In that view of the matter, the addition so made by the A.O is directed to be deleted - Decided in favour of assessee.
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2017 (5) TMI 1261
Reopening of assessment - Unexplained cash credit u/s 68 and unexplained expenditure u/s 69C - violation of natural justice - Held that:- As find from the record that the assessee filed during the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, bank statements of the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, and ITR etc. Moreover, the loan creditors also appeared before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. Thus we find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors. So much so that the loan creditors in response to the notice issued under section 133(6) appeared before the AO and confirmed the that they have given interest bearing loans to the assessee on which TDS have been deducted and paid and form no.16A issued to the loan creditors also filed before the AO. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee on record by contrary to the defense put up by the assessee during the course of appellant proceedings. No cross examination was allowed to the assessee and information was used against the assessee causing violation of natural justice. - Decided in favour of assessee.
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Customs
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2017 (5) TMI 1284
Maintainability of appeal - efficacious alternative remedy of appeal - Held that: - though different grounds for challenging the impugned order may have been raised, there is no challenge to the constitutional validity of any provision of law or notification etc. issued by the respondent authority. The petitioner has challenged the impugned order in original on various grounds, all of which can be urged before the appellate authority - petition is dismissed as not maintainable.
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2017 (5) TMI 1283
Suspension of CHA licence - misdeclaration - suspension on the ground that branded glass chatons were being imported under the guise of “artificial stones” or “imitation stones”, by misdeclaring the description as also the value of the imported items - penalty u/s 112 and 114AA of the CA, 1962 - Held that: - Power of suspension under Regulation 20(2) of the 2004 Regulations is to be exercised by the Commissioner of Customs within fifteen days from the date of receipt of report from the investigating authority. Power under Sub-Clause (3) of the same provision could be exercised in cases where suspension has been effected under the circumstances contemplated in Sub-Clause (2). As per Regulation 19(1) of the 2013 Regulations, however, the timeframe of 15 days has not been stipulated, within which emergency power for suspension is to be exercised. The authorities, however, shall be entitled to take a fresh decision on the question of suspension of the appellant’s licence or revocation of the same upon giving opportunity to hearing to the appellant on the limitation issue raised by the appellant. Appeal allowed by way of remand.
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2017 (5) TMI 1282
Maintainability of appeal - whether no appeal can be maintained under Clause 10 of Letters Patent against an order passed by the learned Single Judge in exercise of criminal jurisdiction? - release of the vehicle carrying smuggled gold - Held that: - the order under appeal passed by the learned Single Judge was made in the exercise of criminal jurisdiction. In fact, the appellant himself invoked the criminal law proceedings and the entire matter was looked into from the criminal law perspective. The present appeal under Clause 10 of the Letters Patent is not maintainable.
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2017 (5) TMI 1281
Classification of imported goods - Rubber Process Oil - whether hazardous goods or not? - whether the goods are classifiable under chapter sub heading 2707 9900 as canvassed by the revenue or 2710 1960 as canvassed by the Appellants or under 2713 9000 as alternatively pleaded by the Appellants? - Held that: - Once the laboratory is accredited to such test and secondly they have tested the parameters as asked by the revenue, the objection raised by the revenue, which are even not sustainable in view of our observations, are not correct. - the goods being non hazardous and the PAH being in the accepted levels are eligible for importation. Regarding classification - The Chapter subheading 27.13 covers Petroleum Coke, petroleum bitumen and other residues of petroleum oils or of oils obtained from bituminous minerals. The imported goods RPO cannot be classified under chapter sub heading 27.07 as it is not applicable to residues of petroleum oils or of oils obtained from bituminous minerals. Further even as per the HSN Explanatory Notes to said chapter the correct classification would be under chapter sun heading 271390 00. The more specific tariff heading is ought to be assigned to the goods in case if two headings are equally applicable. We therefore hold that the raw RPO imported by the Appellants would merit classification under chapter heading 2713.90 and would be liable to duty accordingly. Extended period of limitation - Held that: - the issue involved is grave interpretation of Iaw that whether goods in question is hazardous or otherwise and also involved issue on classification. The outcome of the case is based on strict laboratory tests of various agencies, hence it can not be expected from the appellants that they know the nature of imported goods, accordingly, the impression of facts cannot be attributed to the appellants - extended period not invocable. The impugned goods be classifiable under chapter subheading 27139000 and the same shall be assessed accordingly - confiscation and demand set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1280
Penalty - confiscation - permission to re-export goods - import of large consignment of memory cards for mobile devices - failure to make the formal declaration of the contents of the baggage - Held that: - Section 80 of the CA enables the proper officer to permit re-export of goods imported in the baggage of a passenger even if such items are dutiable or the import of which is prohibited, subject to the condition that a true declaration of the same has been made u/s 77 - When we look at the quantum of memory cards imported by the passenger in his baggage, it is evident that the quantity is beyond what can be considered as a bona fide baggage. It is clearly in commercial quantities. However the fact remains that at the first available opportunity i.e. the passenger has declared the contents of the baggage to the intelligence officers. Even though he has not made a correct declaration of the value of the imported goods by leaving the relevant column of the disembarkation card blank, the statement made to the intelligence officers may be considered as the declaration made by him in terms of Section 77 of the CA, 1962. The conditions of Section 77 and 80 have been satisfied. Hence, the appellant may be permitted to re-export the goods - the penalty imposed u/s 112(a) is to be set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 1279
Penalty u/s 114 (i), of CA, 1962 on CHA - export of prohibited goods - the exporter as well as the appellant CHA, had attempted export sub standard rice of non-Basmati quality prohibited by DGFT, vide N/N. 38(RE-2007)/2004-2009 dated 15/10/2007 - Held that: - no serious allegation have been made against the appellant-CHA. He accepts that he has been callous and/or negligent - no particular clause of the Regulation 13 of the CHALR, 2004 which have been violated, has been pointed out in the SCN - penalty not sustainable - appeal allowed - decided in favor of appellant-CHA.
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2017 (5) TMI 1278
Jurisdiction of proper officers - powers of DRI officers - Held that: - the issue of DRI officers 'having proper jurisdiction to issue the SCN came up before the Hon'ble Delhi High Court in the case of Mangali Impex Vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], inter alia, laying down that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to adjudicate the SCN issued by them for the period prior to 8.4.2011. Thus the said order of the Hon'ble Delhi High Court is in favour of the assessee and against the Revenue - matters remanded to the original adjudicating authorities to first decide the issue of jurisdiction, after the availability of Supreme Court decision in the case of Mangali Impex - appeal allowed by way of remand.
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2017 (5) TMI 1260
Prohibition order - opportunity of being heard - Held that: - till the next date of hearing further steps in the proceedings qua the suspension of the Petitioner‟s licence shall remain stayed - petition disposed off.
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Corporate Laws
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2017 (5) TMI 1275
Refund of sale consideration deposited with the Bank with interest - auction purchaser in vacant possession of the property - sale of secured asset under the SARFAESI Act - Held that:- The representation that the property is free from encumbrance and that he would get vacant possession soon made the petitioner to take part in the auction and to submit his bid. Even according to the Bank, details of litigations were not disclosed in the auction notification in spite of clear knowledge. The petitioner with a fond hope that he would be in a position to enjoy the property made his offer which was accepted by the bank. The petitioner deposited the amount way back on 24.07.2008. The bank was expected to put the petitioner in vacant possession of the property within a reasonable time. Even after a period of nine years, the bank is not in a position to deliver vacant possession. The secured asset is now in the midst of civil litigations. There is also a criminal case in respect of the mortgage relating to the secured asset. The petitioner waited all these years. It was only when he was convinced that the chances of culmination of litigation is very remote, the petitioner made a request to the bank to refund the amount. The bank instead of admitting its mistake in not disclosing the encumbrances, and litigations, dragged the petitioner from pillar to post and finally prompted him to approach this court. In view of the background facts, the bank is liable to refund the sale consideration to the petitioner. The petitioner is entitled to interest which we fix at 12% per annum. We direct the bank to refund the sale consideration viz. ₹ 62,00,000/- (Rupees Sixty Two Lakhs only) to the petitioner with interest at the rate of 12 % per annum, calculated from 24.7.2008 within a period of four weeks from the date of receipt or production of a copy of this order. The bank is given liberty to cancel the sale certificate.
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2017 (5) TMI 1274
Lien on shares - Held that:- The Articles of Association is a constitutional document of the company and is also a binding instrument on the shareholders and the company has all the rights to take action against the shareholder as per the Articles of Association by exercising the lien on the shares of the Petitioner. The amount which was due and payable by the Petitioner to the company have not been paid, due to which the company has exercised its lien on the Petitioner's shares The company has rightly exercised its lien over the shares of the Petitioner. Therefore, the Petitioner is no longer share holder in the company w.e.f. 26.12.2013. Hence, the Petitioner cannot continue with this Petition after cancellation of his shares by R1 company. In view of the facts, circumstances and case law stated above, the Company Petition is hereby dismissed.
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Service Tax
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2017 (5) TMI 1303
Business Auxiliary Service - commission paid to the overseas agents as a consideration for providing marketing services - reverse charge mechanism - Held that: - a purported revenue neutral situation cannot, by any means, mitigate a tax liability of an assessee, which is otherwise payable in view of clear legal position of charging section and the tax entry, found correctly applicable to the assessee. The whole scheme of CENVAT credit as envisaged by the Cenvat Credit Rules, 2004 will become redundant if the proposition of revenue neutrality is invoked for non-payment of service tax or duty on inputs/input services. Such interpretation of law will be against the very basis of value added taxation and leaves the discharge of tax liability to the discretion of the assessee. Extended period of limitation - Held that: - the tax liability under reverse charge basis itself is a new concept and was subjected to various litigations and clarifications. In such situation, there is no scope for invoking extended period for demand of service tax. There is no case for fraud, collusion, willful mis-statement or suppression of facts with intent to evade service tax in these cases. Accordingly, we hold the service tax liability should be restricted to the normal period available u/s 73 (1) of the FA, 1994. The Hon’ble Supreme Court in Thirumalai Chemicals Ltd. vs. Union of India [2011 (4) TMI 489 - SUPREME COURT OF INDIA] held that law of limitation is generally regarded as procedural and its object is not to create any right but to prescribe periods within which legal proceedings be instituted for enforcement of rights which exist under substantive law. The appellants are liable to service tax on reverse charge basis in respect of commission paid to foreign agents. Such liability will be only w.e.f. 18/04/2006 and restricted to the normal period of demand - penalty set aside - appeal disposed off - decided partly in favor of assessee.
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2017 (5) TMI 1302
Liability of tax - money changing service - It was alleged that the said activities of the Respondent are in the nature of foreign exchange broking service - whether the activity undertaken by the respondent will be covered within foreign exchange broking or money changing? - Held that: - There were doubts in the field formations whether the services of foreign exchange broker will also include the activity of money changer who is an authorized dealer of foreign exchange. The CBEC vide their circular dated 06.10.2005 clarified that the services provided by money changers in relation to foreign exchange is covered within the services under section 65 (12). The activity cannot be brought within the nature of foreign exchange broking. It is more in the nature of money changer who purchases foreign exchange and sells the same at prevailing rates. The amount charged by the respondent from customers for issuing letter of credit, demand draft traveler’s cheque etc. is not earned by the activity of foreign exchange broking. In terms of the CBEC circular clarifying the issue dated 12.05.2007 such activity which falls within the nature of money changing, cannot be charged to service tax under section 65(12) read with 65 (105)(zm) for the period upto 15.05.2008. Consequently, the demand of service tax in this case is not sustainable and there is no infirmity in the impugned order dropping the service tax. The activity of foreign exchange broking liable to service tax under the provisions of FA has been explained and the activities of the respondent will fall within the said section from 16.05.2008 - appeal rejected - decided against Revenue.
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2017 (5) TMI 1301
Penalty - supply of tangible goods service - reverse charge mechanism - The Only point on which the Revenue is aggrieved is that the adjudicating authority has refrained from imposing any penalty under various sections of FA, 1994, even though the demand itself has been confirmed on the basis of SCN issued invoking the proviso to section 73(1) - Held that: - The supply of tangible goods service was introduced w.e.f. 16.5.2008. We note that the demand for service tax in this case has arisen for the periods immediately after the introduction of this service when the activities covered under these services were being debated and settled by various judicial forum - the respondent has disputed the classification of their activity under the supply of tangible goods service. However, during the course of investigation they were convinced and they have discharged the entire service tax liability along with interest - this is a fit case to waive all the penalties under the provisions of section 80 - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1300
CENVAT credit - scope of input service - content development services - business promotion and marketing services including business support services - Held that: - the period involved is prior to 01/04/2011. The definition of input services during the period had wide ambit as it included the words activities relating to business. The credit is eligible on the said services if the same are used for providing output services - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1299
Aviling CENVAT credit while availing the benefit of abatement under N/No. 1/2006-ST - Commercial or Industrial Construction Service - sub-contract - whether appellant have rightly availed CENVAT credit on the Bills of their Sub-contractors for service received under the “Commercial or Industrial Construction Service (CICS)” wherein they have approved the Bill of their Sub-contractor and paid the major part of it by retaining 10 per cent of the same towards security deposits/retention money? Held that: - there is no dispute that the Sub-contractor of the appellant have paid the Service tax. The appellant have admittedly reversed the said amount of credit much before the issue of SCN and accordingly no SCN was required to be issued under the provisions of Section 73 of the Finance Act, 1994 - the appellant is entitled to abatement under the provisions of N/N. 1/2006-ST - appellant is entitled to take CENVAT credit of the amount of ₹ 1,07,28,250/-. Under the facts and circumstances, so far as the interest on ₹ 18,60,166/- is concerned, we hold that the same is not chargeable. The penalty is also set aside. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1298
Pure agent - taxability - inclusion of Provident Fund - Bonus - case of appellant is that as the amount of Provident Fund & Bonus are the liability of the principal employer and they have received the same as pure agent and passed on the same to the workers, they are not liable to Service tax on the same - Held that: - the appellant had paid the due taxes and also filed the returns from time to time and as such there is no suppression etc. on their part - As the appellant is not contesting the demand of Service tax, the appellant is entitled to cum-tax benefit for calculation of Service tax - matter remanded back to the Adjudicating Authority who shall recalculate the tax payable on cum-tax basis - penalties imposed u/s 77 and 78 set aside - appeal allowed by way of remand.
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Central Excise
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2017 (5) TMI 1297
Recovery of excess duty - Section 11D(2) of the CEA, 1944 - the appellant had cleared the inputs as such on payment of duty, adopting transaction value, instead of reversing the credit availed on such inputs at the time of its receipt in the factory - Held that: - the Gujarat Hon’ble High Court after considering the relevant provision in similar facts and circumstances in Inductortherm (I) Pvt. Ltd.'s case [2012 (12) TMI 856 - GUJARAT HIGH COURT], observed that the excess amount collected from the customers is required to be deposited u/s 11D of the CEA, 1944 - the amount collected from the customers in excess as duty is required to be deposited u/s 11D of CEA,1944 with the department. Whether the demand for the period March 2003 to February 2007 can be enforced when the demand notice was issued on 14.9.2007? - Held that: - in absence of time limit prescribed for recovery, a reasonable period, be applied for recovery of the amount - Pratibha Syntex Ltd. vs. UOI [2013 (3) TMI 480 - GUJARAT HIGH COURT] observed that judging the period of limitation from the armchair of a reasonable person under no circumstance more than three years period could be considered as a reasonable period for effecting recovery of the amount. Therefore, recovery could be effected for three years from the date of issue of show cause notice. The matter is remanded to the adjudicating authority for calculation of the demand afresh - appeal allowed by way of remand.
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2017 (5) TMI 1296
CENVAT credit - duty paying documents - Rule 9(1)(f) of CCR, 2004 - Held that: - Rule 9(i)(f) deals with the document and accounts required for availing CENVAT credit, and this rule was not brought to the notice of the Tribunal - the benefit of discharging 25% of the penalty on fulfillment of necessary condition as laid down under the said provision is extended to the appellant - appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 1295
Entitlement to interest - Refund claim - rejection/transfer to Consumer Welfare Fund on the ground of unjust enrichment - Held that: - the appellant cannot be deprived the right to claim interest even though the amount was transferred to Consumer Welfare Fund for no fault of theirs - the appellants are accordingly entitled to interest on the refund amount after expiry of three months from the date of application i.e. from 5.1.2007 till the amount was sanctioned to the appellant - appeal allowed - decided against appellant.
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2017 (5) TMI 1294
CENVAT credit - GTA service in respect of outward transportation - transportation beyond the place of removal - Held that: - the issue herein have been considered in detail by Hon’ble Gujarat High Court in the case of Commissioner of Central Excise Vs Philips Carbon Black Ltd. [2016 (2) TMI 20 - GUJARAT HIGH COURT], where it was held that outward transport service used by the manufactures for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of “input service” provided in rule 2(l) of the Cenvat Credit Rules, 2004 - credit allowed - decided in favor of assessee.
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2017 (5) TMI 1293
CENVAT credit - revenue has taken a view that the removal of inputs as such was to be treated as trading activity - N/N. 03/2011-CE (NT) dated 01.03.2011 - Held that: - the learned Commissioner has nowere established that the value on which amount under Rule 6 (3) was being demanded, was the value of activity other than the activity of clearance of inputs as such after reversal of Cenvat credit as provided under Sub-rule 5 of Rule 3 of CCR, 2004 - removal of input as such by manufacturer after reversal of Cenvat credit cannot be treated as trading activity - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1292
CENVAT credit - inputs - molasses - credit is sought to be denied alleging that the documents on which credit is availed is not proper - Held that: - the defects in the document on which credit is availed by appellant can be concluded to be a procedural irregularity and substantial benefit of CENVAT credit cannot be denied on account of this. Extended period of limitation - Held that: - The appellant having availed credit on the duty paid and also having disclosed the nature of the credit availed in the ER1 returns, they cannot be saddled with suppression of facts with intent to evade payment of duty - the appellants succeed on the ground of limitation also. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1291
Clandestine manufacture and removal - sponge iron - MS ingot - shortages and excesses in stock of finished goods and input respectively - Held that: - the appellant have produced evidence before the Revenue that the recorded stock of sugar and molasses have been subsequently cleared on payment of appropriate Excise duty. So far the allegation of clandestine manufacture and removal of MS Ingots is concerned, the SCN is vague as it relies on a vague report based on vague Data, based on further presumptions and assumptions. The allegation of clandestine manufacture and removal are vague and have got no legs to stand - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1290
CENVAT credit - Held that: - Commissioner should have considered the value forwarded by the appellant in the statutory records particularly when statutory records were not challenged by Revenue and further there is no law which prohibits the availment of Cenvat credit - matter remanded back to the Original Authority with direction that for the period from April, 2009 to November, 2009 value of clearances reflected in ER-1 returns should be taken into consideration for duty demandable and for the period for which duty is to be recovered from the appellant Cenvat credit on capital goods and inputs should be allowed - appeal allowed by way of remand.
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2017 (5) TMI 1289
CENVAT credit - Rule 6(3) of CCR, 2004 - whether trading is an exempt service? - N/N. 3/2011 C.E. N.T. dated 01.03.2011 - Held that: - statute did not have the definition of trading as service for the period before 01.04.2011. Therefore, the definition of trading as service was not applicable to the period upto 31.03.2011. The period covered in the said SCN is upto 31.03.2011, therefore the demand is not sustainable - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1288
Refund claim - Held that: - the amount which was deposited on 20/01/2009 was not deposited in compliance to any confirmed demand. The same was deposited on insistence of the Department, and that even today that amount has not been confirmed through any process of adjudication. Therefore, the appellant is entitled for refund of the same along with interest as per the provisions of law - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1287
Remission of duty - rejection on the ground that the loss due to fire accident was a result of negligence on the part of the appellant-assessee - Held that: - the ld. Commissioner have erred in rejecting the claim due to misappreciation of facts of record, in view of the consent given by the Fire Department dated 19/02/2006, wherein the Fire Department has found everything is in satisfactory condition during test. Thus, there is no case of negligence attributable to the appellant. Further, from the Fire Report, the reason of fire is evident, that the fire occurred due to short circuit of electricity, which is definitely beyond the control of the appellant-assessee and there is no foul play - remission allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1286
Classification of goods - Henna powder in unit containers - classifiable under CTH 3305 or under 1401 1019? - Held that: - reliance placed in the case of Henna Export Corporation Vs. Collector of Central Excise [1993 (2) TMI 185 - CEGAT, NEW DELHI] where it has been held that Henna Powder in bulk will be appropriately classifiable under 14.01 CETA, 1985 and it was further held that for hair dye manufactured by Henna Export Corporation where there is an indication for its use as a hair dye, was classifiable under heading 33.05 and it clearly indicated that if Henna Powder is indicated to be used as hair dye then it would be classifiable under heading 33.05 CETA, 1988 - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1285
CENVAT credit - fake transaction - denial of credit on the ground that such dealers on enquiry, was found had not purchased any duty paid goods for trading and then in their statement to the Revenue, have admitted the fact - Held that: - it is not the case of the Revenue that the appellant have not complied with the provisions of Rule 9(3) of CCR or have been negligent on their part - the alert circulars were issued much after the transaction had taken place - the appellant have discharged their onus under the scheme of the Act and the Rules and have taken credit on receipt of inputs along with duty paying documents. Once, it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the rules to cast an impossible or impractical burden on the assessee - credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (5) TMI 1277
Interim relief - recovery of dues - Inter-state sale - Section 3 of the Central Sales Tax Act - Specific bar contained in Section 7 of the U.P. VAT Act - Held that: - merely on account of pendency of a revision against it before this Court at the behest of the State the said aspect has been ignored and a contrary view has been taken giving protection only to the extent of 80% of the due amount. This in the view of this Court is not correct approach, consistency in such matters especially when the Bench in respect of the same assessee granted the relief in respect of an earlier assessment year on merits should have been maintained, if not, cogent reasons should have been given which do not exist in this case. Revision allowed - decided in favor of assessee.
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2017 (5) TMI 1276
Validity of re-assessment proceedings - permission u/s 29(7) of the U.P. VAT Act, 2008 - Held that: - neither in the notice nor in the impugned order any material or fresh material has been referred to for the formation of the opinion with regard to the reason to believe that the matter requires reassessment. It is only on the basis of the fact that the royalty amount has not been clarified in the invoices that a decision has been taken to reopen the assessment. This by itself is not sufficient and a good ground when the assessing authority was possessed with all material at the time of initial assessment and nothing material was concealed from him. There was no material or any reason to believe on part of the respondent no. 2 for granting permission u/s 29(7) of 'the Act' for reassessing the petitioner for the assessment year 2009-10 - petition allowed - decided in favor of petitioner.
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