Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 31, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Special Refund Fortnight from 31.05.2018 to 14.06.2018
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Clarifications on refund related issues – order to clarify these issues and with a view to ensure uniformity in the implementation of the provisions of the law across the field formations, CBIC issues clarification on various queries.
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Levy of GST on rent payable by a Hospital, catering life saving services - GST is leviable on the rent paid / payable for premises, taken on lease by the applicant. - AAR
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Classification of supply - supply of goods along-with supply of services - Composite Supply u/s 2(30) of the GST Act - supplies as that of the applicant’s should be construed as specifically mentioned under the GST Act as Composite Supply with supply of goods as the principal supply and services like transportation, in-transit insurance etc ancillary or incidental to the principal supply.
Income Tax
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Defective return - filing of belated return to seek refund - The returns filed by the assessee was wrongly declared by the Income tax Department as invalid return u/s 139(9) - since the time having been lapsed for scrutinizing the returns, HC directed the AO to scrutinize the returns - HC
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Revision u/s 263 - Special audit can be called for only with the prior approval of the concerned authority. It is certainly not an option or a choice which an assessee can exercise or insist upon. The Commissioner of Income Tax therefore gave undue importance to the assessee requesting for such special audit - We wonder what would the CIT have done had the assessee not made such request - HC
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Application of income of the Trust u/s 11 - Carry forward and set off of losses - if commercial principles are applied then adjustment of expenses incurred by the Trust in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust u/s 11 - AT
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Depreciation at higher rate on rolls @ 80% - calculation of WDV - As per section 43(6)(b), the WDV in case of assets acquired before the previous year is defined to mean the actual cost of the asset less all depreciation actually allowed to him - AT
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Claim of deduction u/s 35 - expenditure incurred on in-house R&D facility - The expenditure that is sought to be excluded u/s.43(4)(ii) of the Act is an expenditure which the assessee incurs in acquiring rights in or arising out of scientific research already done by somebody.
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Reopening of assessment - reopening is not permissible in the case of the assessee when the limitation was not available even on the date when the assessment order - AT
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Deemed registration u/s 12AA - If an order granting or rejecting registration has not been passed within six months from the end of the month in which application under section 12A of the Act was made then registration is deemed to be granted to the assessee trust.- AT
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Addition u/s 40A(2)(b) - unbalanced payment to doctors - payment to specified persons - No finding by the AO about as to what constitutes fair market price of the services rendered by the promoter directors - Remuneration of doctors must depend on their market worth, and determination of such market worth is uninfluenced by what other professionals in their area of expertise earn - AT
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Software expense - revenue or capital expenditure - fast changing technology, software has to be regularly updated so as to keep pace with the changing technology - the expense does not add to or expands the profit making apparatus of the assessee - thus revenue in nature - HC
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Penalty u/s 271(1)(c) - additional income filled in revised return - Everything depends upon the return of income filed, because return of income is the only document, where the assessee can furnish the particular of income - no Penalty - AT
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TDS u/s 194H - payment to retailers by the Mobile operators through the distributor/dealers/retailers - contra entries passed in the books of accounts - AO cannot made addition by looking one side of the transaction and overlooking the other side of no actual receipt by the assessee
Customs
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Clarification regarding legislative changes relating to Customs Act, 1962 and issuance of Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018
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Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems - CBIC prescribed the procedure to be followed.
DGFT
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Guidelines for filing/processing of MEIS applications in case of Project Exports.
Service Tax
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Applicability of service tax on ambulance services provided to government by private service providers under the National Health Mission (NHM)
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Valuation - interest free security deposit - the amounts cannot be included in the consideration as long as the same remains interest free advance to be returned to tenant at a subsequent date - AT
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Interest on delayed refund - Refund of pre-deposit alongwith Interest - assessee shall be entitled to refund of the amount deposited alongwith interest at prescribed rate from the date of making such deposit to the date of refund in terms of Section 35FF of the CEA 1944 or Section 129EE of the CA 1962 - AT
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Valuation - Maintenance or Repair Service - electricity charges recovered by the appellant as part of their maintenance charges - Reimbursement of amount towards electricity received from the Grid, not to be included - However, the amount charged towards electricity generated by them and supplied to the tenant is to be included - AT
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Refund of unutilized CENVAT credit - relevant date for the purposes of deciding the time limit for consideration of refund claim under Rule 5 of CENVAT Credit Rules may be taken as the end of the quarter in which the FIRCs are received in cases where refund claims are filed on a quarterly basis - AT
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Valuation - Cargo Handling Services - Inclusion of re-imbursable expenses into the value of consideration for payment of service tax not justified - AT
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Classification of services - construction work - composite works contract - category of works contract services or CICS? - Any charge to tax under the five heads in Section 65(105) would only be of service contracts simpliciter and not composite indivisible works contracts. - AT
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BAS - Helping the purchases of with the registration with the RTO cannot be considered as an activity under Business Auxiliary Service therefore, service tax cannot be demanded on the amount retained by the appellant in respect of RTO registration fee - AT
Central Excise
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Recovery of Cenvat credit - goods seized and confiscated are imported goods thus the provision of the Rules 25/26 of CER not applicable to the sized imported consignment - Penalty removed
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Reversal of CENVAT credit - manufacturing of exempted goods (cleared on payment of duty) - as the assessee was not seeking refund of duty and there was no need to reverse the credit of duty - AT
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Refund of pre-deposit - period of limitation - limitation period would start not from the date of deposit but from the date of the decision by Commissioner (Appeals) - AT
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Clandestine removal - allegations based on inquiries made in the third party’s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. - AT
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Valuation - inclusion of subsidy in assessable value - no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - AT
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Reversal of Cenvat Credit - electricity generated from by-products, i.e. bagass - neither excisable under Section 2 (b) of the Central Excise Act, nor exempted goods. Hence, Rule 6 is not applicable. - AT
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Benefit of exemption - scope of the term "site" - supply of PSC Slippers for Western Dedicated Freight Corridor (WDFC) Project - the expression “site” cannot be given a restrictive manner.
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Suo moto re-credit amount in PLA instead of claiming refund - refund is governed by Section 11B - Even in the case of suo moto re-credit though in principle, the appellant is entitled but subject to test of unjust enrichment. - AT
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Principles of Natural Justice - tribunal merely reproduces the order-in-original, without specifically and independently examining and dealing with diverse contentions - The impugned order suffers on this account - matter restored before the tribunal - HC
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Penalty u/s 11AC - entire payment of disputed tax was paid by the appellant on or before passing of the order-in-original - Payment of duty, whether made before or after issuing of SCN, is not determinative and a relevant factor for deciding whether or not penalty should be imposed under Section 11AC of the Excise Act - HC
VAT
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Suo motu revision of original assessment order - Chhattisgarh VAT - time limitation - limitation has to be calculated from the date of assessment and not from the date of reassessment order - HC
Case Laws:
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GST
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2018 (5) TMI 1704
Levy of GST on rent payable by a Hospital, catering life saving services - appellant have taken premises of one floor on rental basis from existing building of Mallige Hospital for heart Care Services only - Rental or leasing services involving own or leased non-residential property - purview /jurisdiction of authority under Section 97(2) (e) of the CGST Act 2017. Held that:- The Applicant has taken the premises on lease and running exclusive heart care centre & providing health care services on commercial basis - The impugned service of Rental or leasing services involving own or leased non-residential property is classified under the heading (SAC) 997212 and is taxable under GST. Further no specific exemption is available under any notification for the time being in force for the said service. Also there is no provision available in the Act which allows exemption on an input service if the output service provided by the taxable person is exempt. Ruling:- GST is leviable on the rent paid / payable for premises, taken on lease by the applicant.
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2018 (5) TMI 1703
Release of seized goods - books of account not produced - order passed under Section 67(6) of the GST Act, 2017 - principles of Natural Justice - as submitted that the books of account were produced along with the reply submitted by the petitioner on 25.02.2018 and without taking into account, on surmises and conjuncture, the impugned order dated 04.05.2018 was passed - Held that:- Prima facie, issue requires scrutiny - the respondent-authorities are directed to release the goods which were seized on 25.04.2018 subject to deposit of ₹ 3 lakh being made by the petitioner and for the balance amount adequate security may be provided other than cash or bank guarantee.
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2018 (5) TMI 1702
Seizure of goods - penalty - E-Way bill - case of petitioner is that State E-Way bill though not required was still downloaded from the portal of the U.P.GST before the interception/seizure memo dated 24.2.2018 - Held that:- The matter is squarely covered by the judgment of this Court in the case of SATYENDRA GOODS TRANSPORT CORP. THRU. PROP. BHUWAN KOHLI & A VERSUS STATE OF U.P. THRU. PRIN. SECY. TAX & REGISTRATION & OTHERS [2018 (4) TMI 807 - ALLAHABAD HIGH COURT] where it was held that on the relevant date i.e. 17.12.2017 there was no requirement of carrying T.D.F. Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the C.G.S.T. Act 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is illegal. Seized goods directed to be released - penalty also not warranted - petition allowed.
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2018 (5) TMI 1701
Classification of supply - supply of goods along-with supply of services - Composite Supply u/s 2(30) of the GST Act - GTA Service - naturally bundled services - consideration payable under the Second Contract for inland/local transportation and ancillary services like in-transit insurance - Held that:- It is immediately apparent that the First Contract cannot be executed independent of the Second Contract. There cannot be any ‘supply of goods’ without a place of supply. As the goods to be supplied under the First Contract involve movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation. The First Contract is no contract at all unless tied up with the Second Contract. The two promises – supply of the goods and their transportation to the Contractee’s site are, therefore, not separately enforceable in the present context. The supplies of goods and services of transportation etc are, therefore, naturally bundled. Supply of goods, packed and transported with insurance, is a composite supply and supply of goods is the principal supply. The illustration being part of the Section, supplies as that of the applicant’s should be construed as specifically mentioned under the GST Act as Composite Supply with supply of goods as the principal supply and services like transportation, in-transit insurance etc ancillary or incidental to the principal supply. Ruling:- Services of transportation, in-transit insurance and loading/unloading, being ancillary to the principal supply of goods, shall be treated to taxation under Section 8 (a) of the GST Act, and the consideration receivable on that account be taxed accordingly.
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Income Tax
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2018 (5) TMI 1700
Disallowance of software expense treating it as capital expense - nature of expenditure - revenue or capital expenditure - Held that:- If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future - thus the test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly - fast changing technology, software has to be regularly updated so as to keep pace with the changing technology - view taken by the Tribunal that the expenditure is on Revenue account is an entirely possible view - Decided in favor of assessee. Whether the expenses towards consultancy fees, video shooting for training etc in respect of occupation, health and safety measure for the benefit of its employees are revenue in nature - Held that:- The test of one time payment of payment or not is not the sole test to determine the nature of expenditure - the expense does not add to or expands the profit making apparatus of the assessee - thus revenue in nature - Decided in favor of assessee. Appeal admitted on the substantial question of law at No. (3) - Whether on the facts and circumstances of the case and in law the Tribunal is justified in upholding the decision of CIT (A) in deleting the disallowance u/ s 40a(ia) of the Act ?
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2018 (5) TMI 1699
Defective return - filing of belated return to seek refund - Whether the return is invalid in terms of Section 139(9) - application u/s 119(2)(b) filed to condone the delay in filing the returns rejected by the third respondent without providing an opportunity of hearing to the petitioner - Held that:- The returns filed by the assessee was wrongly declared by the Income tax Department as invalid return u/s 139(9) - since the time having been lapsed for scrutinizing the returns, this Court deems it proper to direct respondent No.2 to scrutinize the returns and if the petitioner is entitled to a refund - thus respondent No.2 shall scrutinize the returns filed by the petitioner relating to the AY 2011-2012 within a period of eight weeks from the date of receipt of certified copy of this order and pass appropriate orders
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2018 (5) TMI 1698
Revision u/s 263 - authority of the Commissioner of Income Tax to entertain and dispose of the revision petition - unexplained cash credit - special audit demand - Held that:- The issues pertained to opening cash balance , Unsecured loans with respect to which, the assessee had not satisfactorily discharged the onus of establishing identity, capacity of the creditors or the genuineness of the transactions, as also clarification regarding sum found in the suspense account. If this was the opinion of the Commissioner, he could not have simply ignored such materials on record on the ground that addition of a sum of ₹ 20 crores being a serious matter, the same should be examined again. It is not the quantum of additions but the justification thereof which would be germane for deciding to exercise revisional powers. Special audit can be called for only with the prior approval of the concerned authority. It is certainly not an option or a choice which an assessee can exercise or insist upon. The Commissioner of Income Tax therefore gave undue importance to the assessee requesting for such special audit. In fact, he referred to such offer of the assessee as having 'thankfully requested'. We wonder what would the Commissioner have done had the assessee not made such request. Be that as it may, both the grounds for interfering with the order of assessment and to remand the proceedings for fresh assessment before the assessing authority after obtaining special audit report are unsustainable.
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2018 (5) TMI 1697
Deemed registration u/s 12AA - non granting of registration from original date of application for registration made u/s 12A - Held that:- Once the assessee has made an application under section 12A of the Act as on 25.03.2002 which have not been disposed off, would imply that deemed registration has been granted to the assessee from the year in which the application has been made - See CIT Kanpur Vs. Society for Promotion of Education(2016 (2) TMI 672 - SUPREME COURT) - as directed to register the trust w.e.f. the date of filing application 25.03.2002 and issue certificate in this regard - Decided in favor of assessee.
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2018 (5) TMI 1696
TDS u/s 194H - Disallowance u/s 40(a)(ia) of bogus expenses on account of commission/discount to retailers - payment to retailers by the Mobile operators through the distributor/dealers/retailers - contra entries passed in the books of accounts - Held that:- The payment was not made by the assessee and it was directly paid by the company and further the quantum and percentage of the said commission/discount was also in the full control of the company and not in the hands of the assessee - assessee only made necessary entries in his books - thus merely because the assessee has passed the contra entry would not bring the said transaction in the category of commission paid by the assessee so as to attract the provisions of u/s 194H - Decided in favor of assessee. Addition on account of bogus commission expenses - Held that:- Where the payments are directly made by the company to the retailers and the assessee is only showing the entries in the books for receipts as well as payments without actual receipt and payment of the said amount, then the AO cannot made addition by looking one side of the transaction - thus addition made by AO is not justified - Decided in favor of assessee
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2018 (5) TMI 1695
Additions on account of bogus purchases of diamonds - reopening of assessment - Held that:- Addition made on account of the alleged bogus purchase of diamonds is squarely covered in favour of the assessee inter alia by the decision M/s. M.B. Jewellers and Sons vs DCIT [2018 (3) TMI 1525 - ITAT KOLKATA] - assessee was maintaining proper books of accounts as per the tax audit report - assessee furnished the bills containing the name address as well as the sales tax numbers both Gujarat and Central sales tax together with the PAN of those parties from whom goods were purchased - payments were made to them by account payee cheques - thus the source for such purchases are explained - Decided in favor of assessee.
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2018 (5) TMI 1694
Validity of reopening of the assessment - assessee did not declare and disclose any business transactions of purchase or sale of properties - Held that:- Documents found by revealed the transactions of purchase and sale of the properties and the name of the assessee is found mentioned against the land dealing transactions - since these material were also not disclosed in the return of income of assessee which it certainly constitute a reason to believe that an income assessable to tax in the hands of the assessee has escaped assessment - thus there is no error or illegality in the reopening of the assessment - Decided against the assessee. Additions made by the AO based on the impounded material and statement of Shri Rajesh Tambi recorded u/s 131 - Held that:- In view of the decision of M/s Andaman Timber Industries vs CCE (2015 (10) TMI 442 - SUPREME COURT) it is held that since the assessee did not specifically demand the cross examination of Shri Rajesh Tambi (director of the company) during the assessment proceedings, therefore the matter is set aside to give an opportunity to the assessee to cross examine Shri Rajesh Tambi and then adjudicate the issue of addition made by the AO - allowed for statistical purposes
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2018 (5) TMI 1693
Application of income of the Trust u/s 11 - Carry forward and set off of losses - carry forward excess expenditure in the earlier year for setting off against the surplus of current year and all the subsequent years and considering the same as application of income for charitable purpose - Held that:- In assessee's own case [ 2017 (5) TMI 1564 - ITAT MUMBAI] as income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the Trust in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust u/s 11 - Decided in favor of assessee. Deletion of excess interest income already included in the gross receipts and was brought to the notice by filing the revised return - Held that:- Since the income was already shown in the gross receipts and thus resulting into double income - it would be in the interest of justice and fair play, the matter is restored back to the file of the AO - allowed for statistical purposes
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2018 (5) TMI 1692
Addition of trade receipts - nature of receipts - revenue receipts admissibility - business of automobile dealer and service centre - Held that:- Assessee's vehicles are kept with ARDs and SSPs for display, test drive, etc. trade deposits are received from them by the assessee by way of security deposits - when sales takes place through the ARDs and SSPs, assessee account for the sales proceeds in the books of accounts and refunds the corresponding deposits to the ARDs and SSPs - this method has been consistently followed over the years - assessee's own case [2016 (8) TMI 1354 - ITAT AHMEDABAD] to be followed. - Decided in favor of assessee.
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2018 (5) TMI 1691
Reopening of the assessment u/s 147 - suppression of sales - Held that:- Entire sale transaction cannot be taken as income - judgment of Hon’ble Gujarat High Court in the case of Asian Tiles Ltd. [2015 (7) TMI 1281 - GUJARAT HIGH COURT] is squarely applicable to the case on hand - respondent could not have issued impugned notice to the petitioner subject to suppressed sale transaction to income - thus the notice is inherently illegal and invalid - hence assessment order u/s 147 is quashed - Decided in favor of assessee.
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2018 (5) TMI 1690
Rejecting the registration u/s 12AA - charitable activities are yet to commence - Held that:- The application is made in accordance with the requirements of s. 12A r.w.r. 17A - from the trust deed we find that the objects of the trust are charitable in nature u/s 2(15) - This is not a case where exemption was denied for not complying with the conditions contained under section 12A - thus the order of the CIT rejecting the application was unjustified - in view of the case of [Self Employers Service Society vs. CIT (2000 (9) TMI 47 - KERALA HIGH COURT)] - Decided in favor of assessee.
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2018 (5) TMI 1689
Validity of reassessment proceedings u/s 147 - validity of notice u/s 148 - assessment barred by limitation - assessment in wrong hands - Held that:- The reopening is not permissible in the case of the assessee when the limitation was not available even on the date when the assessment order - the limitation is saved if the same was available on the date when the assessment order was passed in the wrong hands and, therefore, the subsequent time period consumed in the proceedings before the first appellate authority and thereafter will not affect the power of the AO for reopening of the assessment. - Decided in favor of assessee.
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2018 (5) TMI 1688
Penalty u/s 271(1)(c) - addition u/s 80D in revision of return filed u/s 153A - additional income offered suo moto - Held that:- The conditions under section 271(1)(c) must exist before the penalty is imposed - the assessee himself offered the additional income in revised return of income - Everything depends upon the return of income filed, because return of income is the only document, where the assessee can furnish the particular of income. When such particulars found to be inaccurate, the liability would arise. In the present case, the assessee offered additional income of ₹ 2,00,000/-, which was accepted by Assessing Officer. We have noted that the Assessing Officer has not recorded his satisfaction that return of income was found to be incorrect or erroneous or false - No penalty levied - Decided in favor of assessee. Imposition of penalty u/s 271(1)(c) for failure to file return of income - Held that:- There was no incorrect particular furnished by the assessee while filing revised return of income and there is no evasion of tax - failure to furnish return causes penalty u/s 271F - Decided in favor of assessee.
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2018 (5) TMI 1687
Valuation of land u/s 50C - Sale of disputed property - disallowance of expenditure incurred towards land levelling, construction of wall and a room - Held that:- Assessee has sold the property with the disputes in the property - some disputes were unsettled at the time of sale, which is evident from the list of cases pending for which the court orders which were submitted subsequent to the date of sale - thus assessee is eligible to claim the adjustment in the valuation of land to the extent of 30% as per the guidelines for valuation of Immovable Properties, 2009 - Decided in favor of assessee Expenditure incurred towards advocate fee disallowed - self made vouchers - Held that:- Assessee has legal disputes with the parties, who are claiming to be the owners of the land - since the vouchers are self-made, the issue is remitted back to AO in order to give one more opportunity to assessee to file proper confirmation with details such as, address and PAN details - Decided in favour of assessee for statistical purpose Disallowing the expenditure incurred towards land levelling, construction of wall and a room - Held that:- Evidences are submitted before the authorities to show that there existed compound wall and room adjacent to the land - thus the matter is remitted back to AO to determine the value with the assistance from DVO with reasonableness and allow the same as cost incurred to build the compound wall and a room - Decided in favour of assessee for statistical purpose
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2018 (5) TMI 1686
Disallowance of entertainment expenditure since incurred for non-business purposes - Held that:- Assessee produced sufficient documentary evidences to prove the genuineness of the expenses - however, without properly examining the evidence brought on record, AO disallowed the expenditure on ad–hoc basis - thus disallowance made by the AO is deleted - Decided in favor of assessee. Disallowance u/s 40(a)(i) for payment towards global support service fees - Held that:- It has not been established on record that while rendering the services, EMCAP has made available technical knowledge, knowhow, skill, etc. - thus payment made by the assessee cannot be considered as fees for technical services as defined under Article 12(4)(b) of the India– Singapore tax treaty - in earlier AYs also assessee has not deducted TDS on payment of global support service fee and no disallowance was made - thus being no difference in facts in the impugned assessment year, considering that the payment was made under the same contract, even, applying the rule of consistency, no disallowance under section 40(a)(i) can be made - Decided in favor of assessee. Additions made on account of non-reconciliation of AIS payment of sales tax/professional tax - Held that:- AO has not brought on record sufficient evidence to prove that claim made by the assessee was factually incorrect - thus further investigation is required - matter is restored back to the file of AO for fresh adjudication. Transfer pricing adjustments - method of determination of Arm's Length Price - selection of comparables - Held that:- To determine the ALP of the IT's entered into by the assessee with its AE's, under the head BOSS, further verification is required - thus in the interest of justice, the issue is restored back to the file of the AO /TPO - also reasonable opportunity of hearing shall be given to the assessee - Decided partly in favor of assessee.
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2018 (5) TMI 1685
Depreciation at higher rate on rolls @ 80% - calculation of WDV - CIT(A) accepted the claim of depreciation on pro-rate basis - taking the written down value appearing in the depreciation schedule prepared for the purpose of Companies Act. - Held that:- CIT(A) is not justified to accept the written down value of rolls determined by the assessee on proportionate basis, in view of the provision of sub-section (6) of section 43. As per section 43(6)(b), the WDV in case of assets acquired before the previous year is defined to mean the actual cost of the asset less all depreciation actually allowed to him - thus WDV is required to be determined as per section 43(6)(b) - matter is restored to the file of AO for fresh adjudication giving the assessee an opportunity to determine the opening W.D.V. of rolls in accordance with section 43(6)(b) - Decided in favour of revenue for statistical purpose.
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2018 (5) TMI 1684
Disallowance made u/s 40A(2)(b) - unbalanced payment to doctors i.e. 84% of salaries being paid to four doctors, and 16% salaries being paid to the remaining seven doctors - whether the four doctors are specified persons - Held that:- No finding by the Assessing Officer about as to what constitutes fair market price of the services rendered by the promoter directors and that he has simply proceeded to make an adhoc disallowance @ 15% out of the payments made to these persons. Remuneration of doctors must depend on their market worth, and determination of such market worth is uninfluenced by what other professionals in their area of expertise earn - in view of the case CIT v. Ashok J. Patel (2013 (12) TMI 1480 - GUJARAT HIGH COURT)] adhoc disallowances u/s 40A(2) are not permissible - simply because a payment is ‘high’, it need not be ‘excessive’ too, but then the Assessing Officer has used the expressions ‘high’ and ‘excessive’ rather interchangeably. - Decided in favor of assessee.
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2018 (5) TMI 1683
Purchase of Research & Development Assets - Claim of deduction u/s 35 - expenditure incurred on in-house R&D facility - Expenditure on improvement and upgrading of products - Capital or Revenue - Held that:- The expenditure that is sought to be excluded u/s.43(4)(ii) of the Act is an expenditure which the assessee incurs in acquiring rights in or arising out of scientific research already done by somebody. - The objective behind the exclusion clause in section 43(4)(ii) of the Act appears to be that expenditure on scientific research should be on the research actually carried out by the assessee in-house and it should not merely spend money in acquiring rights in OR arising out of scientific research carried out by some other person. In any event, there is no distinction as to whether the expenditure incurred is capital or revenue, because while the provisions of section 35(1) of the Act allows deduction of revenue expenditure, the provisions of section 35(1)(iv) of the Act allows deduction in respect of capital expenditure. - thus respectfully following the decision of the Hon'ble Karnataka High Court in the case of CIT Vs.Talisma Corpn (P) Ltd. [2013 (12) TMI 1419 - KARNATAKA HIGH COURT] AO is directed to allow the deduction claimed by the assessee under Section 35(1)(iv) - Decided in favor of assessee. Disallowance of interest expenditure u/s 14A incurred on earning exempt income - Held that:- Taking into consideration the fact that the assessee had earned exempt dividend income of ₹ 7,13,70,554, the disallowance as computed under Rule 8D(2)(ii) at ₹ 52,53,500; which works out to approx. 7.36% thereof is reasonable in the facts and circumstances of the case in the year under consideration and is therefore upheld - thus AO is directed to delete disallowance under Rule 8D(2)(ii) sustained by the learned CIT(A) and uphold the disallowance made by the authorities below under Rule 8D(2)(iii) - partly allowed in favor of assessee.
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Customs
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2018 (5) TMI 1682
Levy of CVD - import of “Customised Software” - denial of benefit under Notification No. 6/2006-Central Excise dated 01.03.2006 to “Customised Software” produced by the appellant - difference between “Packaged” software and “Customised Software” Held that:- In all the “Packaged Software” no rights such as copyright, trade mark or any other intellectual property rights, patent copy right etc. are transferred to the buyer. Similarly source code is also not transferred. The right to use “Packaged Software” is also a nonexclusive right. However just existence of these factors do not make any software “Packaged Software”. Even in the “Customised Software” by virtue of contract between parties that all the rights can be retained by the supplier of the software. Conclusion reached on this ground is not proper. Non-exclusive right to use the software - Held that:- Even in “Packaged” software the rights transferred, if any, are nonexclusive right to use the said software. Even in “Customised Software” it is possible that parties may agree to the same conditions. It is to the contracting party to decide the manner in which the right are to be transferred. These issues do not determine the nature of ‘software’. The difference between “Packaged” software and “Customised Software” has not been examined with respect to exact nature of the software of imported. The importer is claiming the benefit of exemption N/N. 6/2006-Central Excise dated 01.03.2006 - the matter remanded to the original Adjudicating Authority to examination all the documents submitted by the appellant and give a clear finding on the “Customised” or “Packaged” nature of software depending of the features of software itself and other data submitted by the importer - appeal allowed by way of remand.
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2018 (5) TMI 1681
Confiscation of gold jewellery - gold jewellery was recovered in the DRI Office - smuggling activities - as per revenue passenger has failed to explain the possession of the smuggled goods and as such are liable for confiscation - Held that:- Gold is an item which is notified under Section 123 of the Customs Act, 1962 - It is seen that there is no foreign marking on the jewellery. Revenue has not placed any proof to substantiate that the jewellery was smuggled into India other than the statement of the passenger - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1680
Penalty u/s 114A - undervaluation of imported goods - used printing, cutting machines - submission of undervalued invoice to Customs for payment of duty - Held that:- Original authority has considered all the documents as well as the statements of the Proprietor and thereafter, re-determined the value of imported goods which has been accepted by the Proprietor and has paid the duty. As per the proviso to Section 114A of the Act, the lower appellate authority ought to have set aside the imposition of penalty under Section 112(a) of the Customs Act but instead of doing that the appellate authority has set aside the penalty under Section 114A of the Customs Act and has wrongly sustained the penalty imposed under Section 112(a) of the Customs Act - penalty on the appellant under Section 112(a) is set aside and penalty under Section 114A is sustained and upheld. Quantum of Redemption fine - Held that:- Keeping in view the valuation done by original authority on the basis of the documents and the basis of admission of the proprietor, the authorities have found that the goods are valued at ₹ 91,82,096/- being the transaction value for the purpose of assessment under Rule 3 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 - redemption fine upheld. Appeal allowed in part.
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Service Tax
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2018 (5) TMI 1679
Business Auxiliary Services - the amount as retained by the appellant on account of RTO handling charges - Held that:- The matter is no more res-integra as in the case of Arpanna Automotive Pvt. Ltd. vs. CC & CE [2016 (3) TMI 308 - CESTAT MUMBAI] has held that helping the purchases of with the registration with the RTO cannot be considered as an activity under Business Auxiliary Service and, therefore, service tax cannot be demanded on the amount retained by the appellant in respect of RTO registration fee. The charges received and retained by the applicant from the customers for facilitating RTO registration is not chargeable to service tax under business auxiliary service - appeal allowed - Decided in favor of appellant.
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2018 (5) TMI 1678
GTA Services - allegation in the Order-in-Appeal is that the appellant had incurred freight charges in relation to transportation of goods by road in the goods carriage - suppression of facts - Extended period of limitation - penalty - Held that:- The appellant never disputed that they had not paid the service tax in time. They have also paid interest on some of the services when pointed out by audit - there can be no dispute as the appellant is liable to pay interest as applicable on service tax. Extended period of limitation - Held that:- Suppression of fact is a sufficient ground for invoking the extended period of demand. Intent is essential when the allegation is of contravention of any other provisions of the chapter of Finance Act or rules made thereunder. Once suppression is established, it does not appear from the Act that intent to suppression also needs to be established - Appellant was already registered with the Service Tax Department for rendering these services and therefore is expected to disclose the full value of the services rendered which he has not done. Thus, he has suppressed the facts and the extended period of payment has clearly invokable. The appellant is liable to pay the full service tax for the extended period along with interest and is also liable for penalty under section 78 of the Finance Act, 1994 except service tax on Goods Transport Agency Services - Appeal allowed in part.
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2018 (5) TMI 1677
Interest on delayed refund - Refund of pre-deposit alongwith Interest - amount deposited under the proviso to Section 35F - Section 35FF of CEA - Held that:- It is a mandate that the amount of pre-deposit be refunded, consequent upon the order of the appellate authority, the interest as such for the time being fixed by the Central Government shall be paid on the ground of refund from the date of payment of amount till the date of refund of such amount - assessee shall be entitled to refund of the amount deposited alongwith interest at prescribed rate from the date of making such deposit to the date of refund in terms of Section 35FF of the CEA 1944 or Section 129EE of the CA 1962. Thus, there is no reason as to why the interest in the present case be withheld. The appellant is entitled to the interest on the refund of its pre-deposit under Section 35FF of the CEA - Appeal allowed.
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2018 (5) TMI 1676
Job work - Demand of service tax - Manufacturing activity or not - appellant are undertaking rubber backing and rubber edging of polypropylene carpets on job work basis - whether the activity carried out by the appellant amounts to manufacture as defined under Section 2(f) of the Central Excise Act, 1944? - Held that:- The appellant is undertaking the work of rubber backing and edging and also using the polypropylene sheet supplied by the principal-manufacturer which amounts to manufacture of rubber mats falling under Tariff Heading 4016 9100 - also, appellant is paying the VAT on the product. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1675
Business Auxiliary Services - contracts with the North Western Indian Railway, Jodhpur Division involving cleaning of bed rolls, towels, pillow covers and blankets - the appellant also entered into separate agreement with M/s.P.K. Shefi to work as their sub-contractor to carry out similar services - Held that:- From the wording of the contract and the activities carried out by the appellant, it is seen that the same are required to be considered as a composite service and it will not be proper to vivisect the services into the various components even though the contract specified the different components and separate charges for the same. The appellant is required to carry out the above services to the customers of Railways, who are passengers travelling in the AC compartments. Since it is the responsibility of the Railways to provide the services and the appellant has provide the services on behalf of the Railways, the services are rightly classifiable under Business Auxiliary Service . The classification of the service under Business Auxiliary Service upheld - Since the appellant has not even got registered their services for payment of service tax, penalty also upheld. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1674
Valuation - Cargo Handling Services - non inclusion of reimbursable expenses - demand differential service tax - Held that:- The issue regarding the inclusion of re-imbursable expenses into the value of consideration for payment of service tax was the subject matter in the case of Union of India Vs. M/s.International Consultants and Technocrafts Pvt. Ltd. [2018 (3) TMI 357 –Supreme Court of India], wherein held that the inclusion of such reimbursable expenditure was not justified and Rule 5 of the Service Tax Rules which was held to be un-constitutional and ultra virues of the provisions of Section 66 and 67 of the Finance Act, 1994 - Decided against Revenue.
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2018 (5) TMI 1673
Valuation - Maintenance or Repair Service - electricity received from the Grid - inclusion of charges recovered for the electricity generated by the appellant using generators and supplied to the tenants - Held that:- There can be no levy of service tax on the electricity charges which are reimbursed to appellant by the tenants - However, we are unable to come to the conclusion regarding the amount of electricity generated by the appellant and supplied to the tenants by using thereown generating sets. The payment for which is includible in the maintenance charges. Valuation - interest free maintenance advance and security deposit - whether adjustment of interest free maintenance advance and security deposit towards maintenance charges on month to month basis has been done or not? - demand of service tax - Held that - In respect of interest free maintenance advance, the appellant has admitted the liability for payment of service tax from the date such advance has been received. Such liability has also been paid with interest and we uphold the same. In respect of security deposit, the amounts cannot be included in the consideration as long as the same remains interest free advance to be returned to tenant at a subsequent date - the appellant directed to submit details to the adjudicating authority, duly certified by the Chartered Accountant, to the effect whether security deposit also stands adjusted towards maintenance charges during the disputed period - matter on remand. CENVAT credit - service tax paid on the various services claimed as input services - services procured by the appellant from sub-contractors - Held that:- If the sub-contractor services relate only to maintenance service, the restriction imposed by Rule 6(3) will not be applicable to the appellant - matter remanded to the adjudicating authority who will examine the claim of the appellant and pass denovo decision in this regard. Period of limitation - The adjudicating authority also to consider the plea of extended period. Appeal disposed off.
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2018 (5) TMI 1672
Classification of services - construction work - composite works contract - whether appellant’s case is covered under the category of works contract services or CICS? - refund claim - Held that:- There is no dispute as to the fact that for the period September, 2004 to July, 2006, appellant had executed project of Madikheda Hydel project for the Government of Madhya Pradesh. It is also undisputed these projects were executed under composite contract, which has been always claimed by the appellant. The issue is no more res integra, the Apex Court in the case of Larsen & Toubro Ltd., [2015 (8) TMI 749 - SUPREME COURT] was considering a similar issue, as to whether Revenue Authorities can vivisect a composite contract and levy tax under other various services head prior to 01.06.2006 or otherwise, where it was held that any charge to tax under the five heads in Section 65(105) would only be of service contracts simpliciter and not composite indivisible works contracts. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1671
Refund of unutilized CENVAT credit - Time Limitation - Section 11B of the Central Excise Act as made applicable to Finance Act, 1994 - Held that:- Larger Bench in the case of CCE & CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], has unanimously held that the relevant date for the purposes of deciding the time limit for consideration of refund claim under Rule 5 of CENVAT Credit Rules may be taken as the end of the quarter in which the FIRCs are received in cases where refund claims are filed on a quarterly basis - the appeal needs to be remanded back to the original authority to dispose of the refund claim as per the decision of the Larger Bench - appeal allowed by way of remand.
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Central Excise
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2018 (5) TMI 1670
Principles of Natural Justice denied - Non independent application of mind - various contentions raised were not dealt with - retracted statements - clandestine manufacture and removal of tobacco/gutkha without payment of central excise duty and education cess - Whether the appellant is right that the order passed by the CESTAT is contrary to law as it does not examine and discuss the contentions and issues of facts and law as raised and had arisen for consideration? - Whether the findings recorded by the Customs, Excise and Service Tax Appellate Tribunal are perverse as they do not meet the mandate and requirement of law? Held that: - The Tribunal is the final fact finding authority under the Act i.e. the Central Excise Act, 1940. As a final fact finding authority and the first appellate authority against the order-in-original in the present case, the Tribunal was required to examine the statements, documentary evidence, consider the effect of retraction with reference to the legal position and thereupon arrive at definitive and considered decision. No doubt, as the final fact finding authority, the Tribunal can rely upon the reasoning, findings or inferences given in the order-in- original there has to be also fresh and independent application of mind and not a mere reproduction and repetition even if the final conclusion is one of affirmation. In the present case, the impugned order on all aspects and contentions merely reproduces the order-in-original, without specifically and independently examining and dealing with diverse contentions. Reference and independent and exhaustive elucidation of the factual contentions raised by the appellants and consideration of legal issues based upon the said contentions is conspicuously lacking and missing. The impugned order suffers on this account. The impugned order fails to independently and specifically deal with and examine the contentions raised by the appellants. The aforesaid substantial questions of law are answered in favour of the appellants and against the respondent with an order of remand to the Tribunal for fresh decision.
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2018 (5) TMI 1669
Penalty u/s 11AC - entire payment of disputed tax was paid by the appellant on or before passing of the order-in-original - Held that:- It is accepted and admitted that the appellant herein did not pay the penalty imposed u/s 11AC of the Central Excise Act. Mere payment of differential duty, i.e. duty on the goods S.S. ingots found short by 4510 kg and S.S. flats found in the premises of M/s Shree Shyam Cutter and M/s Shree Ganesh Cutter would not matter once the conditions for imposition of penalty under Section 11AC was satisfied - the payment of duty, whether made before or after issuing of SCN, is not determinative and a relevant factor for deciding whether or not penalty should be imposed under Section 11AC of the Excise Act. This issue is to be decided having regard to the satisfaction or non-satisfaction of the conditions stipulated in Section 11AC of the Act. The appellant does not dispute and does not challenge the conditions mentioned in Section 11AC of the Act were satisfied as the appellant does not contest and submit that fraud, misrepresentation or suppression of facts in contravention of provisions of the Act or the Rules were missing and absent - also, appellant had not paid 25% of the penalty within the stipulated time of 30 days. Therefore, 100% penalty has to be paid by the appellant. Appeal dismissed - Decided against appellant-assessee.
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2018 (5) TMI 1668
Clandestine removal - excesses and shortage of stock - fabric was manufactured and clandestinely removed, without payment of duty - Held that:- A prudent man will not conclude that the fabric was manufactured and clandestinely removed, without payment of duty in the absence of corroborative evidence - The fact that during cross examination, the labour contractor himself said that he gets paid twice for the fabric, once at the grey stage and once at finished stage further dilutes the evidence to substantiate the allegation of clandestine removal of fabric. The Officers have verified the stocks of the man made fabrics i.e. textiles and raw material and compared them with Form IV respectively and found differences. I agree with the department that the Commissioner should not have ignored the mahazar which was drawn on the spot and instead relying on a passing remark made in the original O-I-O drop the entire demand while ignoring the recorded evidence - there were shortages in one stage and excesses at another. When the stocks were taken on the same day, at same time, it would be reasonable to assume that there was some inaccuracy in recording by the assessee with some stock being shown as issued for processing and not actually being put in the process resulting in excess stock in one stage and a shortage in the other - demand on this count dropped. Goods found in excess in the vehicle - vehicle was intercepted by the officers based on the information they received and the documents they recovered with the distributors - Held that:- While the Commissioner had questioned the evidence provided by the department and examined it minutely, the vague and baseless statement by the respondent that 5 metres sarees should be taken as 4.2 metres only so that their figures match was accepted by the Commissioner without any basis whatsoever. Therefore, find that the duty of ₹ 3,995/- is payable on this excess goods found in the truck and this along with recovery of duty, confiscation and redemption fine thereon be imposed. The quantity of excess fabric cleared without payment of duty is also liable to be confiscated. As find a redemption fine of ₹ 5,000/- is reasonable for the purpose. Confiscation of excess goods found in the factory premises - Held that:- The mahazar being a document drawn up at the time should be accepted along with the contention of the respondent that the excess and shortages of the fabrics need to be set off against each other in view of the fact that grey products supposed to have been issued for production were still lying in stock - the excess quantities of fabric as recorded above are liable for confiscation. Appeal allowed in part.
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2018 (5) TMI 1667
Inadmissible Cenvat credit without receiving any input - No proper documentation - Penalty invoked - invocation of rule 37 of CEA - imported goods further used in the manufacture of finished goods in India - Held that:- It is undisputed fact that goods seized by the department happened to be imported goods, which were not accounted for in the books of the account of the appellant. After perusal of rule 25 and of the Central Excise Rule, 2002 and 2 (d) of the Central Excise Act, 1944 it is clear that the provisions contained therein are applicable only to the excisable goods. In other words these provisions cannot be extended to imported goods without mentioning the charge in the SCN about the provisions of Customs Act made applicable to Central Excise matters vide Notification, which is not the case here - It is on record that the goods seized and confiscated are imported goods, and therefore, the provision of these Rules, 25/26 is not applicable to the sized imported consignment in the case of hand. Penalty on the Sh. Ajay Mehra - Held that:- As no contravention of any provisions of Central Excise Act and Rule have been found in the case of seized goods, there is no question of imposition of any penalty on the Sh. Ajay Mehra under the provisions of Central Excise Act, Central Excise Rule and Cenvat credit Rules. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1666
CENVAT credit - input services - security services - mandap keeper services - Public Relations Management Services - Held that:- When the appellant has to give security or safety to the image of its products, this also would fall within the security services as the appellant has engaged various agencies to conduct raid in the premises of manufacturers who are engaged in manufacture of duplicate products which are cleared using the brandname of the appellant - security services are eligible for credit - credit allowed. Mandap Keeper Services - Held that:- Mandap Keeper Services have been availed to conduct AGMs of the appellant-company. The said meetings being an indispensable programme of the company as laid down in the Companies Act, the disallowance of credit on this count is unjustified - credit allowed. Public Relations Management Services - Held that:- The intention of such market research and analyzing the potentiality of advertisement of each region so as to give region specific advertisement is necessary to augment manufacture - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1665
Reversal of Cenvat Credit - electricity generated from by-products, i.e. bagass - electricity generated is partly used for the manufacturing process within the factory and partly sold out to Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) - The case of the department is that the electricity sold out to the electricity company is liable to payment of 6% amount in terms of Rule 6 (3) (i) of CCR 2004. Held that:- Though electricity can be considered as exempted goods as non-excisable but the facts of the present case is that the electricity is generated from by-products, i.e. bagass, which is neither a dutiable goods nor liable for payment of 6% in terms of Hon’ble Supreme Court judgement in the case of DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT]. Rule 6 (3) (i) is applicable only when a common input, on which cannot availed is used in the manufacture of exempted and dutiable goods - For the generation of electricity, except the use of bagasee no any cenvatable input is used. Therefore, the Rule 6 does not come into play. The electrical energy is neither excisable under Section 2 (b) of the Central Excise Act, nor exempted goods. Hence, Rule 6 is not applicable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1664
Suo moto re-credit amount in PLA instead of claiming refund - whether the appellant taken suo moto credit in their PLA against cash payment towards the proforma credit? - unjust enrichment - Held that:- It is the amount of proforma credit which otherwise duty paid by the appellant, it cannot be said it is a pre-deposit. For the reason that for filing appeal in the Supreme Court no need of any pre-deposit, therefore, the amount paid by the appellant cannot be considered as predeposit. In the absence of statutory provisions, a person cannot claim or retain undue benefit. In the present case the refund is governed by Section 11B, therefore, the provisions of unjust enrichment is clearly applicable. Even in the case of suo moto re-credit though in principle, the appellant is entitled but subject to test of unjust enrichment. In the interest of justice an opportunity can be given to the appellant to establish their case that incidence of duty has not been passed on to any other person - appeal allowed by way of remand.
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2018 (5) TMI 1663
Interest on delayed refund - section 11BB of CEA - as per Department refund has been claimed by the appellant vide their application dated 01.02.2017 and the same has been paid within a period of three months - Held that:- As per Section 11BB, the interest becomes due if the refund is not granted within three months from the date of receipt of refund application. In the present case, though the appellant became entitled, to refund as a result of the order dated 05.11.2009, it is seen that the claim for refund under Section 11BB has been filed on 01.02.2017 and the refund has been paid on 27.04.2017 - Since refund has been paid within three months from the date of refund application, no interest is liable to be paid in the present case. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1662
Valuation - inclusion of subsidy in assessable value - differential duty demand - appellants received certain subsidies upon payment of commercial tax/ sales tax/ CST. - Revenue was of the view that the subsidy amounts are required to be included in the assessable value for payment of Central Excise duty - Held that:- Similar case has come up before the Tribunal in the case of M/s Pioneer Engineer Industries V/s CCE, Indore [2018 (3) TMI 1229 - CESTAT, NEW DELHI], where relying on the case of M/s. Pioneer Engineer Industries vs. CCE, Indore [2018 (2) TMI 9 - CESTAT NEW DELHI] where it was held that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1661
CENVAT credit - inputs/capital goods - structural items like steel angles, coils, channels, MS plates falling under Chapter 72 and 73 of Central Excise Tariff Act - Appellant has given the details of invoices and the items and the usage of that items in a table in the grounds of appeal and submitted that if the matter is remanded back to the authority, then the appellant will be able to establish with each item and its usage Held that:- This case needs to be remanded back to the original authority for verification of the various items and its usage in the factory and thereafter, the original authority will pass fresh order after considering the documents which may be produced by the appellant in support of their claim - appeal allowed by way of remand.
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2018 (5) TMI 1660
Clandestine removal - removal of sponge iron without the cover of Central Excise invoices - allegations based on inquiries made in the third party’s documents - Held that:- The Tribunal in the case of CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. [2015 (11) TMI 455 - CESTAT NEW DELHI] held that the allegations based on inquiries made in the third party’s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. In the present case, the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. Pankaj Ispat Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant - the impugned orders confirming the demands and imposing penalties are unsustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1659
Clandestine removal - demand based on documents recovered from M/s Monu Steels, who is a commission agent - allegations based on inquiries made in the third party’s documents - Held that:- The Tribunal in the case of CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. [2015 (11) TMI 455 - CESTAT NEW DELHI] held that the allegations based on inquiries made in the third party’s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. In the present case, the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. Monu Steels read with the statement of their Director and by ignoring the statement of the Director of the present appellant - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1658
Refund of pre-deposit - period of limitation - Forfeiture of right to pay duty by utilizing the Cenvat credit - recovery of the erroneously granted refund - Appellant did not pay the entire amount from their PLA account - Held that:- The entire grievance and the basis of the Revenue for recovery of the erroneously granted refund, which was the Tribunal’s order, stand set aside by the Hon’ble Rajasthan High Court in the case of MAN STRUCTURALS PVT. LTD. VERSUS CESTAT, NEW DELHI [2018 (4) TMI 1497 - RAJASTHAN HIGH COURT], where it was held that the limitation period would start not from the date of deposit but from the date of the decision by Commissioner (Appeals) which was decided on 21-4-2006 (Annexure-3). As a consequence, the Commissioner (Appeals) order holding the refund to be within the limitation period stands and the order of the Assistant Commissioner sanctioning the refund claim in terms of the order of Commissioner (Appeals), cannot be found to be erroneous - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1657
Clandestine removal - sent ingots to the present manufacturing unit and received TMT bars from there, without payment of duty - evidences based on third party records and statements - Held that:- The appellate authority having held the third party evidence as insufficient for confirming the demand on TMT bars, should have held the same evidence to be insufficient for confirming the demand in respect of ingots - the issue i.e whether third party records can be held to be sufficient for clandestine removal is the subject matter of various decisions of the Tribunal and it has been repeatedly held that the third party records cannot be considered sufficient for upholding the charges of clandestine removal. Inasmuch as the Revenue’s entire case is based upon the documents recovered from the premises of M/s Pankaj Ispat, without there being any corroborative evidence, the impugned orders are not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1656
Recovery of CENVAT credit - Remission of duty - inputs contained in finished goods, semifinished goods and returned defective goods which was destroyed in fire - Held that:- This Tribunal in the case of UNIMERS INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [2018 (1) TMI 357 - CESTAT MUMBAI] whereby the order of the Commissioner directing the appellant to reverse the credit stand modified - the appellant was not required to reverse the Cenvat Credit. Also see JOY FOAM PVT. LTD case [2015 (7) TMI 386 - MADRAS HIGH COURT] Demand of the Cenvat Credit does not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1655
Clandestine removal - shortage of raw material and finished goods - the sole basis for demanding the duty is the diary and loose paper sheets from Shri Mohammed Nazirooddin Sheikh - Held that:- The fact remains that he was working for the appellant for supervising the production as well as supplying the labour. Shri Mohammed Nazirooddin Sheikh was also having other clients for providing similar services. In the loose papers and diary the names of other clients were mentioned. Except this evidence no other corroborative documents have been collected by the Department. Neither the suppliers of the raw material nor any buyer of the finished goods were found or examined by the Department. Clandestine removal is a very serious charge which has not been proved by the Department and no corroborative evidence was there except the loose papers which are still ambiguous as the names of the other clients were mentioned in the papers. No shortage was found pertaining to the raw material or finished goods - demand cannot sustain - Decided in favour of assessee.
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2018 (5) TMI 1654
Benefit of exemption - scope of the term "site" - supply of PSC Slippers for Western Dedicated Freight Corridor (WDFC) Project - benefit of exemption applicable to goods manufactured at the site of construction - Benefit of N/N. 12/2012-CE dated 17.03.2012 - Interpretation of statute - Held that:- CBEC vide Circular dated 06.07.2016 clarified the scope of word “site” appearing in the N/N. 12/2012-CE. It is revealed from the said Circular dated 06.07.2016 that the representation have been made from the trade regarding the difficulties being faced in availing of benefit of exemption applicable to goods manufactured at the site of construction, for use in construction work at such site, vide Serial No. 186 of N/N. 12/2012-CE - The Board Circular was issued particularly for Project, which runs long distance such as construction of road, laying of pipeline, laying of railway track etc. The Board has clarified that the expression “site” cannot be given a restrictive manner and the benefit of the exemption under Serial No. 186 of the said Notification would be allowed, subject to fulfillment of condition, as laid down in the said circular. It is apparent on the face of record that the department directed the appellant to take registration and to pay the duty and also refused to grant exemption benefit. In this event, the findings of the Commissioner that the appellant was entitled to avail the benefit of exemption is not tenable, as it is altogether against evidence. The Order made in conscious violation of pleadings and law is a perverse Order, which is exactly happened in the present case and thus, such order cannot be sustained in the eye of law. Reversal of CENVAT credit - manufacturing of exempted goods - contravention of Rule 6(1) and 6(4) of Rules 2004 - Held that:- the issue was academic as the assessee was not seeking refund of duty and there was no need to reverse the credit of duty. Apart from that, the department once accepted the duty, it cannot deny the Cenvat Credit utilized for clearance of the said duty paid finished products. - When the department entertained the view during the relevant period that the appellant is not entitled to get the exemption benefit, Rule 6(1) and Rule 6 (4) of the Rules, 2004 cannot be invoked - Apart from that, the department once accepted the duty, it cannot deny the Cenvat Credit utilized for clearance of the said duty paid finished products. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 1653
Validity of SCN - time limitation - initiation of the proceeding by issuance of show cause notice - suo motu revision of original assessment order - whether the notices dated 14-7-2015 seeking to revise the original assessment orders dated 1-5-2009, 1-5-2010 and 22-1-2008, respectively was within the prescribed time period or not? - Held that:- In the proviso (a) to sub-section (3) of Section 49 of the VAT Act an embargo has been created for the purpose that no proceeding initiating suo motu revision under Section 49 (3) shall be initiated after the expiry of three calendar years from the date of the order sought to be revised. Since the orders sought to be revised, as stated in the show cause notices, were passed on 1-5-2009, 1-5-2010 and 22-1-2008, they were clearly beyond the prescribed time period of three years. When once the period of limitation expires, the mandate against being subject to suo motu revision sets in and the right to embark upon and invoke Section 49 (3) get extinguished. The limitation has to be calculated from the date of assessment and not from the date of reassessment order, as the subject matter of show cause notices dated 14-7-2015 invoking suo motu revisional power under the VAT Act read with Section 13 of the Entry Tax Act, refers to the original order of assessment. The show cause notices dated 14-7-2015 for the provincial tax and entry tax for suo motu revision of original assessment order(s) passed on 1-5-2009, 1-5-2010 and 22-1-2008 were barred by limitation, as the same were issued after three calendar years, and is quashed - petition allowed.
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2018 (5) TMI 1652
Revision of assessment - reversal of ITC - suppression of facts - Application of mind by AO - Held that:- It is very rare feature that an assessing officer applies the mind to the judicial pronouncements and takes a proper decision, even at the pre-revision stage. This needs to be appreciated. However, in respect of the remaining defects, which were pointed out, the assessing officer has confirmed the proposal. If a little more effective exercise had been done by the assessing officer, there are chances that few of the other proposals could have been modified or deleted. Since the petitioner has relied upon a decision in support of the contention regarding commission received, and with regard to repairs and replacement charges, the petitioner has referred to the service tax remitted, and with regard to difference as per balance sheet and Form WW, the petitioner has furnished certain figures and stated that there is no discrepancies. The assessing officer would state in this regard that, the assessee did not produce corroborating records. If a notice had been issued to the assessee to produce corroborating documents, they could have produce the records or upon failure, adverse inference could have been drawn. Therefore, with regard to these issues, this Court is of the view that the matter can be remitted to the officer for fresh consideration. Writ petitions are disposed of by directing the petitioner to submit their objections to the impugned assessment orders by treating the same as show cause notices under the heads: - Commission received; Repairs and replacement charges; and Sales suppression on sales turnover difference as per balance sheet and Form WW. Petition disposed off.
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