Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 1, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
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Roll out of e-Way Bill system for intra-State movement of goods in Chhattisgarh, Goa, Jammu & Kashmir, Mizoram, Odisha, Punjab, Tamil Nadu and West Bengal
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Government of India and World Bank signs $500 Million Additional Financing for Pradhan Mantri Gram Sadak Yojana Rural Roads Project
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TOR does not inhibit the Finance Commission in assigning appropriate weight to multiple variables for devolution in a combination of rewards and incentives, Balancing the compulsions of equity and efficiency necessary– N. K. Singh
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RBI Reference Rate for US $
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Excellence in Payments (Shri B. P. Kanungo, Deputy Governor, Reserve Bank of India- May 29, 2018-Keynote Address Delivered at NPCI National Payments Excellence Awards function, Mumbai)
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Health care services - GST Provisions - Applicant providing the services of diagnosis, pre & post counseling! therapy and prevention of diseases by providing tests that are sophisticated and relevant, hence they qualify to be health care services - AAR
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GST on Health care services - intra-state supply of Health care services attract NIL rate of central tax as per SL.No.74 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 - AAR
Income Tax
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Seeking compensation from the Income Tax Department - Loss of interest due to premature withdrawal of the FDRs and retention of money by the respondents - HC directed the department to consider and respond to the letters of the petitioner.
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Condoantion of delay in filing an application for Revision u/s 264 - there is a clear provision for condoning the delay - thus the right of revision could be avoided by allowing the petitioner to file additional statement explaining such delay - HC
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Validity of reopening of assessment - it used to take accommodation entires of the share capital/share premium etc., in various years from the various Kolkata based paper companies to convert its black money into white - report of Inspector and information received from the Investigation Wing, Kolkata were co-related to each other. - reassessment proceedings confirmed - HC
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Exemption u/s 11 - Contravention of Section 13(1)(d) - Since dividend income is exempt, no income remains taxable at Maximum Marginal rate - HC
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Reopening of assessment - Jurisdiction of AO - AO, Mumbai who has issued the notice u/s 148 was not having jurisdiction as only AO, Dehradun was having the jurisdiction as per Notification, even the notice issued by AO, Mumbai was never served upon the assessee - entire reopening proceedings and consequent reassessment is void ab initio - AT
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Deduction u/s 80P(2)(a)(i) - Interest income earned by the assessee from the short term deposits made with the State Bank of India is not eligible for deduction u/s 80P(2)(a)(i) - AT
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Business income - activities carried out by the assessee company by rendering technical handling services to the other airlines in India and has certainly connected with its activity of transportation by way of operating the aircraft - Covered by Article 8 of DTAA between India Netherlands DTAA - AT
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Determination of fair market value u/s 50C(2) - If the assessee has made a specific claim before the AO, then AO is under legal obligation to call for the valuation report failing which assessment order is not valid and justified. - AT
Service Tax
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Extended period of limitation - Non-payment of service tax - advertising services - the assessee has definitely suppressed the value of taxable services rendered and evaded paying service tax in full knowledge that their services are taxable - demand confirmed - AT
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Claim of benefit of Abatement while availing Cenvat Credit - restaurant and short term accommodation services - the appellant has followed the proportionate method for availment of credit on common input services - the reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST - AT
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CENVAT credit - service tax paid on hiring of Cranes, Hydra Cranes, Excavators etc. - denial of credit on the ground that these items are not capital goods as they are ‘Motor Vehicles’ - credit cannot be denied since the availment of Cenvat Credit based upon definition of input services under Rule 2(l) of CCR - AT
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CENVAT credit - invoking extended period for demand - different view of the second audit party could not claim suppression of facts for invoking extended period for demand. - AT
Central Excise
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Refund of unutilized CENVAT credit - accumulated CENVAT credit of service tax paid on input service used for manufacture and export of final products - export has not happened during the quarter for which the refund has been claim - Refund denied - AT
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CENVAT credit - electricity produced in the factory premises and consumed for production of excisable goods, assessee is entitled to avail Cenvat credit on inputs used for generation of electricity or steam and not if surplus electricity is wheeled out - AT
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Reversal of Cenvat Credit - semi finished goods and intermediate goods destroyed during fire accident - demands raised of reversal of Cenvat Credit on the inputs confirmed - AT
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Service tax liability raised under reverse charges mechanism - discharge of service tax liability is done by transporters themselves thus again demanding the service tax from the appellant assessee seems to be totally wrong proposition of law - demand of service tax not sustainable. - AT
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Duty of excise on clearance of dutiable by-products - removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture - benefit of Notification 89/95-CE dated 18/02/1995 allowed - AT
VAT
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Attachment orders - Forcibly collection of post-dated cheques - without any order of assessment or without initiation of assessment proceedings - The Department cannot retain the cheques, seek realization thereof while still attaching the petitioner’s stock. - HC
Case Laws:
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GST
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2018 (5) TMI 1737
Levy of GST on Health care services - diagnosis, pre & post counseling therapy and prevention of diseases by providing sophisticated and relevant tests - N/N. 12/2017- Central Tax (Rate) dated 28th June, 2017 - Whether the Applicant qualifies as clinical establishment? - Whether the services provided by the applicant qualifies to be health care services? Clinical Establishment - Held that:- The applicant offers services/facilities requiring diagnosis such as patient counselling, suggesting the relevant test for the patient, collecting samples, obtaining the result of the test, sharing the test results and post counselling. The medical team of the applicant discusses with the oncologist/pathologist, takes samples of required tissues and send it for the tests to US/Germany, with regard to the oncology/auto immune deceases. They play the role of referral/physician and also advice doctors for line of treatment to the establishment. They provide the said services in “Allopathy” system, of medicines, recognised in India. Therefore they qualify to be a clinical establishment. Health Care Services - Held that:- The Applicant is involved in providing the services of diagnosis, pre & post counseling! therapy and prevention of diseases by providing tests that are sophisticated and relevant. The medical team of the applicant is involved in the complete cycle and hence they facilitate the diagnosis process and therefore the services provided by the applicant qualify to be health care services. Ruling:- The applicant qualifies to be a clinical establishment and the services offered/provided by the Applicant qualify to be Health Care Services - The intra-state supply of said services attract NIL rate of central tax as per SL.No.74 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017.
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2018 (5) TMI 1736
Release of detained goods - inaction on the part of the second respondent in completing the adjudication provided for under Section 129 of Kerala SGST Act in respect of the goods detained - Held that:- It is appropriate to dispose of the writ petition directing the second respondent to complete the adjudication in respect of the goods detained in terms of Ext.P5(a) order within two weeks from the date of production of a copy of this judgment - petition disposed off.
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Income Tax
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2018 (5) TMI 1735
Seeking compensation from the Income Tax Department - Loss of interest due to premature withdrawal of the FDRs and retention of money by the respondents - Writ petition u/s 226/227 - seeking directions to release of amount to the petitioner towards loss - Held that:- Without expressing any opinion on the merits of the case the petition is disposed after directing respondent No.1 to take a decision on the letter after giving an opportunity of hearing to the petitioner within a period of three months from the date of receipt of order.
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2018 (5) TMI 1734
Condoantion of delay in filing an application for Revision u/s 264 - no explanation of delay for filing such petition - period for filing application for revision - Held that:- As u/s 264(3) there is period of limitation of one year for filing application for revision before the Commissioner - in this case the delay is extremely small and there is a clear provision for condoning the delay - thus the right of revision could be avoided by allowing the petitioner to file additional statement explaining such delay - hence revision Petition is revived and placed back for fresh adjudication.
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2018 (5) TMI 1733
Penalty u/s 271(1)(c) - Deduction u/s 80IC - Non acceptance of revised return - Held that:- mere making of claim which is found to be not sustainable in law will not amount to furnishing inadequate particulars. Assessing Officer has rejected the revised return, wherein, part of the claim sought to be laid at the doorstep of Section 80IC was rejected and the order of the Assessing Officer has also become final; but that also may not suffice to impose penalty under Section 271(1)(c) as what the law contemplates is making of a false claim or a claim which is not bonafide. - Decided in favor of assessee.
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2018 (5) TMI 1732
Validity of reopening of assessment - whether the investments made by companies in the form of share capital or share premium are genuine? - Held that:- The Inspector made local inquires in the nearby area where the said company is working. He reported that it used to take accommodation entires of the share capital/share premium etc., in various years from the various Kolkata based paper companies to convert its black money into white. Hence, report of Inspector and information received from the Investigation Wing, Kolkata were co-related to each other. Consequently, above investment are not genuine. From the above discussion, it is proved that the assessee did not disclose fully and truly material facts to the Department which is necessary assessment. - Decided against assessee.
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2018 (5) TMI 1731
Penalty u/s 271E and 271D - loans and repayments had not been accounted for in the regular books of accounts - no business exigency or urgency established for accepting and repaying loans only in cash - books of accounts and supporting documents were impounded u/s 133A(3) - Held that:- There is no justifiable reasonable cause for repayment of loans in cash exceeding 20000/- and thus it is a clear violation of law for many years - assessee has not produced books of accounts to vouch for entering such details - hence there was no such reason for regular loan transactions so as to escape penal liability u/s 271E and 271D - ground raised by the Revenue stands allowed - Decided against the assessee.
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2018 (5) TMI 1730
Exemption u/s 11 - Contravention of Section 13(1)(d) - Dividend income - Tax at margin rate u/s 164 - trust received gift of TISCO Ltd. shares which were subsequently written off. - Whether tax at margin rate u/s 164(2) is to be levied on the income earned from non-exempt asset - whether holding of ineligible assets is sufficient to attract the provisions of Section 13(1)(d)(iii) - Held that:- When the shares are forming part of corpus after 1st June, 1973, question of accretion does not even arise thus the investment in right-issue cannot, by any stretch of imagination, by equated with the phrase accretion by way of bonus shares. Since dividend income is exempt, no income remains taxable at Maximum Marginal rate - Decision of tribunal [2014 (11) TMI 444 - ITAT JAIPUR] confirmed - Decided in favor of assessee.
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2018 (5) TMI 1729
Disallowance u/s 80P - Whether the income from interest earned on Bank FDRs is eligible for deduction u/s 80P - Held that:- The interest income earned by the assessee from its members on account of advance given to them is allowable for deduction u/s 80P(2)(a)(i) of the Act Interest income earned by the assessee from the short term deposits made with the State Bank of India is not eligible for deduction u/s 80P(2)(a)(i) as followed in the case of STATE BANK OF INDIA (SBI) VERSUS COMMISSIONER OF INCOME TAX [2016 (7) TMI 516 - GUJARAT HIGH COURT] - Assessee is entitled to claim the deduction of the expenditure incurred by it in connection with such interest income. Therefore, we direct the AO to take the net interest income for the purpose of disallowance of deduction u/s 80P(2)(a)(i) of the Act. Disallowance of interest on deposits made with other cooperative banks - Held that:- Assessee is eligible for such deduction u/s 80P(2)(d) - Decided in favor of assessee. Disallowance of income from other sources - Held that:- Assessee is not entitled for deduction in respect of such income in view of Judgment of MAFATLAL INDUSTRIES LTD'S EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD VERSUS THE INCOME TAX OFFICER [2014 (2) TMI 516 - ITAT AHMEDABAD] - Decided against the assessee
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2018 (5) TMI 1728
Penalty u/s 271(1)(c) - defective notice - non specification of charge - Held that:- AO has not explicitly specified in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or concealment of income - therefore, penalty order passed by the AO is liable to be cancelled - Decided in favor of assessee.
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2018 (5) TMI 1727
Assessment u/s 153C - addition u/s 68 - proof of documents found during search - Held that:- The documents neither suggest any undisclosed income of the assessee nor any nexus with the share capital declared by the assessee - thus the addition made on account of unexplained share capital stood deleted - relying on the decision of COMMISSIONER OF INCOME TAX (CENTRAL) -III VERSUS KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] there is no justification to the addition made against the assessee - Decided in favor of assessee.
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2018 (5) TMI 1726
Business income - Receipt for rendering services like technical handling - Whether the ground handling and the technical handling services are part of the business of the assessee? - India and Netherlands DTAA - Held that:- By following the decisions rendered by Hon ble High Court in assessee s own case [2017 (2) TMI 157 - DELHI HIGH COURT] held that Article 8 of DTAA between India and Netherlands is categoric enough in its meaning of expression profit from the operation of ship or aircraft in international traffic which includes the activities carried out by the assessee company by rendering technical handling services to the other airlines in India and has certainly connected with its activity of transportation by way of operating the aircraft - Decided in favor of assessee.
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2018 (5) TMI 1725
Penalty u/s 271(1)(c) - undisclosed source of income - survey proceedings - Held that:- Assessee has deposited the tax raised by the AO during the survey conducted u/s 133A - thus in order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provisions cannot be invoked - the decision is followed of Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] - thus where the assessee has paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it cannot be inferred that the said addition is on account of concealment - Decided in favor of assessee.
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2018 (5) TMI 1724
Disallowance of commission paid for sales - whether the expenses are bogus claim without rendering any service? - Held that:- Since the commission paid to Smt. Kavita Agarwal is without any service rendered by her and so it is disallowed - remaining of service and claim of commission to 6 persons is not free from the bogus claim and thus 50% of the commission paid is disallowed - Decided against the assessee. Disallowance of lift maintenance expenses for non deduction of TDS u/s 40a(ia) - provisions of Section 40(a)(ia) of the Act applicability only on payable expenses and not on amount already paid - Held that:- Since the said issue of paid or payable U/s 40(a)(ia) of the Act has been finally settled in case of M/s Palam Gas Service vs. CIT [2017 (5) TMI 242 - SUPREME COURT] has relied upon by the ld. DR therefore, to that extent, we do not find any error or illegality in the order of the ld. CIT(A). Now before the Tribunal the assessee has raised a fresh plea and placed reliance on various decisions, therefore the issue being purely legal in nature, the same is set aside to the record of the ld. CIT(A) to adjudicate as per the provisions of law - Decided in favour of assessee for statistical purpose.
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2018 (5) TMI 1723
Determination of fair market value u/s 50C(2) - capital gain computation - obligation to refer the matter to the Valuation Officer to ascertain the fair market value of the property - Held that:- If the assessee has made a specific claim before the AO to get the fair market value ascertain from the valuation authority, then AO is under legal obligation to call for the valuation report failing which assessment order is not valid and justified. See ITO vs. M/s Aditya Narian Verma (HUF) [2017 (6) TMI 542 - ITAT DELHI]- Decided in favor of assessee.
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2018 (5) TMI 1722
Reopening of assessment - Validity of notice u/s 148 to make a reassessment u/s 147 - Jurisdiction of AO - Held that:- Assessee is a Korean citizen working with Hyundai Heavy Industries Co. Ltd. - no notice u/s 148 along with reasons for reopening was ever served upon the assessee; that the AO, Mumbai who has issued the notice u/s 148 was not having jurisdiction as only AO, Dehradun was having the jurisdiction as per Notification, even the notice issued by AO, Mumbai was never served upon the assessee - thus entire reopening proceedings and consequent reassessment is void ab initio - Decided in favor of assessee.
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2018 (5) TMI 1721
Rejection of the books of account - disallowance of interest expenditure - Held that:- As now the assessee is in possessions of regular Books of Accounts, therefore, in the interest of justice we restore the matter back to the file of the AO to verify the relevant Books of Account and for deciding the issue afresh as per law. Disallowance of interest expenditure is primarily due to lack of documentary evidences - thus the matter is restored back to the file of AO to consider it again after giving reasonable opportunity of being heard to the assessee - Assessee's appeal allowed for statistical purposes.
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2018 (5) TMI 1720
Whether Corporate Social Responsibility expenses incurred by the assessee is an allowable expenditure or not? - Held that:- these expenditure has to be examined from the basis that whether it have been expended wholly and exclusively for the purposes of its business or not - since explanation (2) to section 37 (1) is introduced by the finance No. 2 of 2014 and thus cannot be applied in present case for AY 2010-11 - hence the issue is set aside to the file of AO to determine the nature of these expenditure - and its allowance u/s 37(1) - thus allowed for statistical purposes.
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2018 (5) TMI 1719
Disallowance of job-work and cost of repairs - Held that:- Assessee is engaged in the business of repair and services of the vehicles - after considering the nature of business of the assessee and total volume of business conducted by assessee and income so declared, facts and circumstances of the case in the light of it being a old case of A.Y. 2001-2002 and only small disallowance is under consideration, addition should be deleted - Decided in favor of assessee.
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Customs
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2018 (5) TMI 1718
Demands of duty foregone on the capital goods - 100% EOU - non-fulfilment of export obligation - imported goods installed in the unit, but after some time unit was closed, due to which export obligation could not be fulfilled - demand of duty - Confiscation - penalty - Held that:- Importer or an assessee who has committed to an export obligation is duty bound to do so, needs to discharge the duty demanded by the department, while allowing the capital goods to be imported duty free for 100% EOU. Upholding that the Adjudicating Authority was correct in confirming the demands of duty foregone on the capital goods, we hold that the duty liability on the capital goods needs to be re-worked out as it is undisputed said capital goods were installed in the 100% EOU and they had achieved little export obligation. LENS MASTER INTERNATIONAL VERSUS COMMR. OF CUS. & C. EX., HYDERABAD-II [2009 (1) TMI 235 - CESTAT, BANGALORE] followed. Confiscation of capital goods - Held that:- Appellant having not fulfilled condition of export obligation, the said capital goods are liable to be confiscated and such confiscation is upheld - the ends of the justice would be met, if the redemption fine imposed on such capital goods is fixed at ₹ 50.000/-, subject to such notification order to confiscate capital goods and imposition of redemption fine in lieu of such confiscation is upheld. Penalty imposed - Held that:- We do find that due to market conditions there was failure on the part of appellant for fulfilment export obligation, following the ratio in the case of Jaswal Neco Ltd. [2015 (8) TMI 243 - SUPREME COURT] we set aside penalty by the Adjudicating Authority.
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2018 (5) TMI 1717
Re-classification of products - no SCN issued - duty was charged at transaction value - Assessment of Bill of Entries - differential duty demand - import of goods - Crude Palm Olein or not Palm Oil - Held that:- Revenue authorities are seeking to re-classify the products which could not be done so without issuance the Show Cause Notice, is correctly recorded by the first appellate authority - the impugned order is correct and legal and does not require any interference - appeal dismissed - decided against Revenue.
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Service Tax
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2018 (5) TMI 1716
Extended period of limitation - Non-payment of service tax - advertising services - appellant case is that they did not pay the service tax as they were under the impression that service tax was not payable on these services - U.O. Note No. 13643/CT.II(1)/2004-3, dated 24.02.2005 issued by Special Chief Secretary, Government of Andhra Pradesh - demand with interest and penalties by invoking extended period. Held that:- After the UO note was issued, the appellant had no excuse not to add the value of services rendered to the Government departments in their returns and pay service tax on the services rendered by them to the Government departments. They cannot plead ignorance after the UO note is issued - The demand of duty is clearly recoverable under the proviso to Section 73 (1), from 24.02.2005, the assessee has definitely suppressed the value of taxable services rendered and evaded paying service tax in full knowledge that their services are taxable - The demand is sustained and the extended period of demand is invokable from 24.02.2005 till the date of show cause notice Penalty u/s 76 and 78 - Held that:- Since it is now well established fact that no penalty can be imposed under section 76 of Finance Act, even before amendment to this Section w.e.f. 14.05.2015 or prior to it, the penalty imposed under section 76 is, therefore, set aside - penalty u/s 78 to be modified. Appeal allowed in part.
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2018 (5) TMI 1715
Claim of benefit of Abatement while availing Cenvat Credit - restaurant and short term accommodation services - Held that:- The appellant does not deny the fact that they have availed the credit on input services. A part of the input services is exclusively used for provision of taxable services for which service tax is payable at full rate. Since such cenvat credit has been used only for payment of service tax on taxable service at full rate, there can be no objection to allow the same - the appellant has followed the proportionate method for availment of credit on common input services. It cannot be said that the appellant has availed any credit on input services used in providing exempted service - Further, the reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST ibid. The procedure prescribed in Rule 6(3A) of the Credit Rules is only to make the provisions of Rule 3 workable. By means of proportionate reversal the requirement of Rule 6(3) has been substantially satisfied. This is also provided in Rule 6(3D) of the Cenvat Credit Rules which was introduced at a later date - benefit of abatement cannot be denied. Demand of service tax - open restaurant (without air conditioning) in the Hotel - Department was of the view that service tax was liable to be paid for the service carried out in the open air restaurant, since the facility of air conditioning was available in certain other parts of the hotel establishment - Held that:- It is undisputed that the open air restaurant does not have the facility of airconditioner. Hence, such restaurant cannot be said to be covered within the definition of the service - the CBEC Circular No. 139/8/2011-TRU dated 10.05.2011 clarifies that within the same entity, if there are more than one restaurants, which are clearly demarcated the one with A/C alone will be liable to service tax - there is no justification to demand service tax on the income from open air restaurant. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1714
CENVAT credit - service tax paid on hiring of Cranes, Hydra Cranes, Excavators etc. - denial of credit on the ground that these items are not capital goods as they are ‘Motor Vehicles’ - applicability of provisions of provisions of rule 2(l) on input services definition and Rule 2(a) of Cenvat Credit Rules, 2004 - Revenue is aggrieved by the impugned order only for the period between dated 01.04.2011 to 31.03.2012 - capital goods or input services - Held that:- The Adjudicating Authority after considering the provisions of rule 2(l) on input services definition and Rule 2(a) of Cenvat Credit Rules, 2004 came to conclusion that the said provisions which is dropped eligible to avail Cenvat Credit is not applicable in the respondent case and needs to be upheld. The Adjudicating Authority has held that the allegation in the SCN that since ‘Cranes, Hydra Cranes, Excavators’ are motor vehicles the same are not eligible capital goods is not acceptable since the eligibility under capital goods to be decided based on the definitions available in the CCR, 2004 read with Central Excise Tariff Act, 1985 - Further it was found from the Rule 2(B) of CCR, 2004 which is referred in the SCN that the said rule does not exclude any goods but only including certain motor vehicles as eligible capital goods, in addition to the goods mentioned at clause (A) of said rule - once the said goods are eligible as capital goods under Rule 2 (a) (A) (i) of CCR, 2004, the clause (B) of said rule has no bearing on their eligibility. Hence, ‘Cranes, Hydra Cranes, Excavators’ in relation to which the assessee had availed cenvat credit are under Capital goods - The law of availment of Cenvat Credit based upon definition of input services under Rule 2(l) of the Cenvat Credit Rules, 2004, has been correctly appreciated by the Adjudicating Authority and the said findings do not require any interference. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1713
CENVAT credit - invoking extended period for demand - common inputs consumed in exempted goods and reversal of credit attributable to inputs consumed in exempted goods - Rule 6(3A) of Cenvat Credit Rules, 2004 - Different view of second audit party - Held that:- It is on record and undisputed that records of appellant were checked by audit party - the audit of the appellant’s units, was under taken regularly and no contravention was noticed, hence different view of the second audit party could not claim suppression of facts for invoking extended period for demand. The judgement of Hon’ble High Court of Karnataka in the MTR Foods Limited [2012 (10) TMI 165 - KARNATAKA HIGH COURT], is squarely applicable to the facts of the case, where it was held that in the returns it is clearly mentioned that they availed credit under the aforesaid rules. The audit partly accepted the same. It is only in the second audit that they noticed the mistake and initiated proceedings. In the light of the aforesaid facts none of the other conditions prescribed in the Proviso exists in this case to extend the period of limitation of 5 years The SCN dated 28.03.2016, is wrongly invoking extended period for demand hence, impugned order is liable to be set aside on limitation - Appeal allowed on limitation.
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2018 (5) TMI 1709
Service tax liability raised under reverse charges mechanism - GTA has himself discharged the tax liability instead of assessee - inward freight charges - GTA service provider - Held that:- The issue is nonstarter, as the liability of service tax was with the transporters, but a deeming fiction was created during the relevant period wherein one of the person required to discharge the service tax liability under the category goods transport agency the service tax liability was fastened on recipient of GTA services, and in the case in hand said discharge of service tax liability is done by transporters themselves, seems to have been accepted by the revenue authorities as nothing is on record to show that any Show Cause Notice is issued to transporters, if that be so, again demanding the service tax from the appellant assessee seems to be totally wrong proposition of law - demand of service tax on the appellant assessee is not sustainable. Cenvat Credit - service tax paid by the transporters - inward freight - Held that:- Adjudicating authority has correctly appreciated the law to hold that the assessee in this case is eligible to avail Cenvat Credit of the service tax so paid by the transporters. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (5) TMI 1712
Recovery of CENVAT credit - goods received after being returned by their customers for reprocessing under rule 16(1) of the CER 2002 - the allegation is that the appellants have not shown in their RG23 Part- I Register that the goods were returned by their customers and were accounted for - Held that:- There is no dispute that the appellants have maintained a separate register of the returned goods and have taken credit of CENVAT under Rule 16 without following the requirement of entering the details in RG 23A Part-I. However they have entered the details of the credit in RG 23 A Part-II - It is a well settled principle that the substantive benefit of CENVAT cannot be denied for procedural lapses - Credit of duty paid on the returned goods under Rule 16 allowed. Penalty u/s 11AC - element of fraud, collusion, wilful misstatement etc. not present in the SCN - Held that:- in para 6 of the SCN not only is there an allegation of irregularity but there is also an allegation of evasion of duty of excise on all the four counts - penalty not imposable. CENVAT credit - inputs found short - case of appellant is that there was some process loss - Held that:- Appellant relied upon the case laws of the Tribunal HINDUSTAN COPPER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [2012 (9) TMI 858 - CESTAT MUMBAI]. These case laws pertain to cases where there was a presumption by the department that goods have been manufactured and removed or inputs have been removed using the fixed formula without accounting for the process loss. The decision was that process loss must be reckoned. Such is not the case here and the ratio does not apply to this case because allegation here is that whatever stock of raw-material was shown in the register by the appellant was not found in stock when physically verified - When the department checked the stock and found that 35.525 MTs of raw-material was not available physically but was available in their RG23A Part-I register, the appellant is liable to reverse the credit or pay duty equivalent to this amount. Appeal allowed in part.
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2018 (5) TMI 1711
Duty of excise on clearance of dutiable by-products - by-products/waste products/residue products such as soap stock (gum), sludge, fatty acid oil, spent earth etc. arising on manufacture of refined edible oils from the mustard seeds - whether products arising as waste or by-product during the manufacture of refined edible oil are entitled for the benefit of Notification 89/95-CE dated 18/02/1995. - Held that:- This issue is no longer res-integra as decided in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [2018 (2) TMI 1395 - CESTAT NEW DELHI], where it was held that the removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture of these gums, waxes and fatty acid with odour - items in question cannot be called as manufactured excisable goods. These incidental products are nothing but waste arising during the course of refining of rice brain oil - benefit of notification allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1710
Refund of unutilized CENVAT credit - accumulated CENVAT credit of service tax paid on input service said to have been used for manufacture and export of final products - rejection of refund on the ground that there was no export of final products during the given period and thereby the eligibility for refund of input service credit was 'zero' - Held that:- Since in the present case it is an admitted fact that the export has not happened during the quarter for which the refund has been claimed, in view of the Board clarification dt. 19/01/2010, the appellant has not complied with the conditions of the said N/N. 5/2006 dt. 14/03/2006 - refund not allowed. Refund claim - input services - renting of immovable property service - adjudicating authority has also observed that the refund claims for the earlier period have already been made and hence the claim is more than once for any quarters - Held that:- Renting of immovable property is an input service in view of the decision in the case of Indian Additives Ltd. Vs. CCE [2016 (7) TMI 1220 - CESTAT CHENNAI] - also, there is no bar for the appellant to file refund claim for more than one quarter - the rejection of the refund claim by the impugned order on the ground that there was no export during the quarter for which the refund is claimed is sustainable and the same is upheld - refund not allowed. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1708
Reversal of Cenvat Credit - credit attributable to the inputs contained in the goods - semi finished goods and intermediate goods destroyed during fire accident - Remission of duty - Held that:- Revenue authorities were in fact seeking details of the stage at which the goods which were destroyed in fire accident. Appellant had not responded to the said communications from the authorities to show that goods which were destroyed were semi finished goods, intermediate goods, adding to the confusion they applied for remission of duty on such goods which were destroyed by the fire accident. When an application for remission of duty is made, it is an acceptance of the fact that goods which were destroyed had reached a stage which can be considered as finished goods - having accepted the fact that the goods which were destroyed in fire are liable to duty, hence remission of duty was sought, the impugned order confirming the demands raised of reversal of Cenvat Credit on the inputs seems to be correct. We uphold the impugned order that confirms demand along with interest. Penalty - Held that:- Penalty imposed by the adjudicating authority is unwarranted as the issue was in knowledge of light of the authorities, and also the issue involved interpretation - saddling appellant with penalty is uncalled for more so, when they have utilised the inputs for manufacturing process but due unfortunate incident of fire there was destruction of the semi finished goods. Appeal allowed in part.
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2018 (5) TMI 1707
CENVAT credit - electricity produced in the factory premises and consumed for production of excisable goods - common input for excisable and exempt goods - captive consumption of electricity - non-maintenance of separate records - Held that: - It is now settled law that electricity produced in the factory premises and consumed for production of excisable goods, assessee is entitled to avail Cenvat credit on inputs used for generation of electricity or steam and that if any surplus electricity is wheeled out, to that extent assessee is not entitled to avail Cenvat Credit in respect of inputs utilized for generation of electricity which is not used within factory premises. Appellant having reversed the entire Cenvat Credit attributable to the common inputs used in production of electricity is sufficient compliance of law and hence provision of Rule 6(3) are not attracted in the case in hand. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 1706
Attachment orders - Forcibly collection of post-dated cheques by the Department at the time of search - Held that: - The question of forcibly collecting cheques from dealers at the time of search operation has occupied the minds of this Court as well as other Courts on multiple occasions. The Courts have deprecated the practice of coercive recoveries, without any order of assessment or without initiation of assessment proceedings. There may be a given situation where, in order to avoid the unpleasant consequence of stock attachment, the dealer may have volunteered to deposit some amount. The Department cannot retain the cheques, seek realization thereof while still attaching the petitioner’s stock. Such action on the part of Department is quashed - Department shall return the cheques of the petitioner - petition disposed off.
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Wealth tax
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2018 (5) TMI 1705
Assessment of wealth tax - assessee claims that Thiruvanmiyur property can be taken as self-occupied and the Kodaikanal property can be assessed for wealth-tax - Held that:- When the assessee resided at Thiruvanmiyur house and used the premises for his medical profession, it has to be construed as if the property was residential one and self-occupied. Therefore, the Thiruvanmiyur property is exempted from wealth-tax. Coming to the Kodaikanal property, the Ld. Sr. counsel very fairly submitted that it can be subject matter of wealth-tax assessment. Therefore, the Assessing Officer may assess the value of Kodaikanal property for wealth-tax, after valuing the property as per the procedure prescribed in Wealth-tax Act as on the valuation date.
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