Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 18, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
GST
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Transitional Credit - carry forward of Credit - applicant was availing the benefit of composition scheme under the Uttarkhand VAT laws - if the applicant fulfills all the 5 conditions as enumerated within the provision of section 146(6), he will be eligible for ITC of transitional credit.
Income Tax
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Additions made on account of bogus purchase - question of rejecting the purchases simply because he did not receive any information, when notices were issued under section 133(6) of the Act, from parties, cannot be the sole reason to make the addition.
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Levy of penalty u/s 271(1)(c) - loss of mark of market transaction on foreign exchange hedging contract - where there are possible two views possible on an issue, penalty thereon cannot be levied.
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Disallowance u/s 36(1)(ii) for payment of commission - commission paid by the assessee company to Mr. Darayus A. Bathena for sale orders procured by him as a sales agent for the company - Qualification regulating the allowability of bonus or commission as an expense while computing the income of an assessee under Sec. 28, would only be applicable in a case where the same had been paid to an employee, and not otherwise - rider or the exception carved out in Sec. 36(1)(ii) would apply only to an employee who is also a shareholder in the company
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TDS u/s 194C - C&F transportation charges - the amount in question is a reimbursement on principal to principal basis as per assessee’s profit and loss account - No TDS liability - No additions can be made.
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Reassessment u/s 147 - notice issued against dead person - Proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs.
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Reopening of assessment u/s 147 - period of limitation - the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act.
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Claim of deduction u/s. 80IB(10) - Gram Panchayat competency for sanction of plans of housing project - approval granted by the Village Panchayat for the housing project to be as one granted by the ‘local authority' in accordance with the provisions of Section 80IB (10) - deduction allowed.
Customs
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Suspension of CHA License - it is not expected from the CHA to physically verify the goods - even though it is established that the goods attempted to be exported were prohibited goods but responsibility for such wrong doing lies with the exporter and not with the CHA - suspension of license not warranted.
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Duty Drawback - All Industry Rate (AIR) - Excise portion of AIR - Since the manufacturer has availed the benefit of CENVAT credit and the same is not in dispute, we are of the view that the appellant will not be entitled to the excise portion of AIR.
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Valuation of imported goods - NIDB data cannot be used to enhance the value of imported goods.
IBC
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Corporate insolvency process - Admission of winding up petition - Prior admission stage of pendency of winding up proceeding against corporate debtor under the Companies Act, 1956 cannot come in the way of the Code - respondent company has committed default in repayment of the outstanding amount - application admitted.
Service Tax
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Demand of service tax - obligation on the part of adjudicating authority to decide within one year from the date of SCN - validity of demand after repealing of service tax post GST - Petition dismissed
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Management Consultant Service - nature of receipt - the contention of the appellant that these are not consideration/charges received for the services rendered is not acceptable - demand of service tax with interest upheld.
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Business Auxiliary Services - Job Work - when the activity undertaken by the appellant amounts to manufacture, the demand raised alleging that the said activity is a Business Auxiliary Service cannot sustain.
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Classification of Services - Though they have been entrusted with the responsibility of receiving the goods at railway siding and storing the same in the godown as also loading of the same onto the truck, it cannot be said that the appellant has acted as agent of the principal–least of all as a C & F Agent of the principal - cannot be said to have acted as C & F Agent.
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CENVAT credit - tower and tower materials, which were used by the appellant for providing telecommunication service - During the relevant period the dispute was the subject matter of various contrary decisions which ultimately led the matter to be referred to the Larger Bench - demand beyond the normal period of limitation will be hit by bar of limitation.
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Valuation - inclusion of electricity and water charges collected - These are nothing but reimbursement expenses and cannot be included for demanding service tax under Management, Maintenance or Repair Service
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Erection, Commissioning and Installation Services - whether the appellant is liable to pay service tax on the activity of trenching and laying telephone cables? - Held No.
Central Excise
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Levy of personal penalty of CEO of the company - It is noticed that he had tried to fabricate and introduce a chart as evidence in the proceedings. It is obvious that he was fully aware of the issue and therefore, his liability to penalty cannot be set aside.
Case Laws:
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GST
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2018 (6) TMI 762
Transitional Credit - carry forward of Credit - Post-GST implementation situation - Uttarakhand VAT Act - Whether Credit of Uttarakhand VAT paid on Construction material such as Cement, sand, steel etc. held in closing as on 30-06-2017 is allowed to be carried forward as transitional credit as Uttarakhand GST under GST regime? - If yes, then whether it is allowed when the assessee had opted for composition scheme under Uttarakhand VAT laws? Held that:- Since the applicant was availing the benefit of composition scheme under the Uttarkhand VAT laws, the provisions of section 146(6) for availing transitional credit get attracted. Therefore, if the applicant fulfills all the 5 conditions as enumerated within the provision of section 146(6), he will be eligible for ITC of transitional credit.
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Income Tax
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2018 (6) TMI 761
Validity of order passed by the Settlement Commission u/s 245D - additional disclosure of income - as decided by HC [2017 (6) TMI 786 - GUJARAT HIGH COURT] initial disclosures themselves were untrue projecting the additional disclosures for all years the assessee had sought settlement, we find the Commission committed no error in accepting them and in proceeding to pass final order on such settlement applications - Held that:- We are not inclined to interfere with the matter. The special leave petition is dismissed. However, the question of law is left open.
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2018 (6) TMI 760
Reopening of assessment u/s 147 - notice issued against dead person - period of limitation - assessment against spouse after death of assessee - Held that:- On being intimated about the death, the Department sent the notice to the petitioner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. 31.3.2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. Proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application The language employed in Section 292B of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act. - Decided against revenue
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2018 (6) TMI 757
PE in India - Interest paid by Indian Branch to its foreign Head Office and other overseas Branches - withholding of tax - assessee is a non–resident Banking Company operating in India as Branch of DBS Bank Limited, Singapore - India–Singapore Tax Treaty - Held that:- The issue in dispute has been decided in favour of the assessee by the Tribunal in assessee's own case [2013 (10) TMI 1452 - ITAT MUMBAI] as held under the domestic law the interest paid by the Indian branch to the head office was not allowable as deduction as this was payment to self - interest payment was allowable as deduction while determining the profit attributable to the PE being the Indian branch under DTAA - The said interest cannot be taxed in the hands of the assessee bank in India under the domestic law as it was payment to self. There was no express provisions in the relevant tax treaty which was contrary to the domestic law. Therefore, interest payment was not taxable in the hands of the bank and thus there was no question of any tax deducted at source. - Decided in favour of assessee Allowing loss claimed on valuation of unmatured forward exchange contract - Held that:- As decided in assessee's own case [2013 (10) TMI 1452 - ITAT MUMBAI] adjustment on account of foreign exchange fluctuation can be made on each balance-sheet date in respect of any forward foreign exchange contract pending actual payment and any loss arising there from has to be allowed as an item of expenditure u/s 37(1). We, therefore, see no infirmity in the order of CIT(A) in allowing the claim of loss of the assessee. Disallowance of expenditure u/s 37 - amount was paid to CCIL on account of short position on security deal, hence, in the nature of penalty - Held that:- As rightly observed by the learned Commissioner (Appeals), the Assessing Officer has not established on record that the payment was on account of an offence or was prohibited by law. On the contrary, the payment made by the assessee appears to be compensatory in nature. As in assessee' own case [2011 (4) TMI 791 - ITAT, MUMBAI] has deleted the disallowance. In the aforesaid view of the matter, we uphold the decision of the learned Commissioner (Appeals) on this issue. Taxability of interest earned on investments made in Indian securities by DBS Bank Ltd., Singapore as Foreign Institutional Investor (FII) - Held that:- We direct the Assessing Officer to assess the interest income from Government Bonds on gross basis as per Article–11 of the India–Singapore Tax Treaty.
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2018 (6) TMI 756
Initiation of penalty u/s 271(l)(c) - provision for bad and doubtful debts disallowed as assessee failed to provide the same in their accounts and only claimed the same in the computation of income - Held that:- Assessee cannot be held to have committed any contumacious conduct so as to warrant levy of penalty - there is no furnishing of inaccurate particulars of income nor there is any concealment - therefore we set aside the order's of authorities below and delete the levy of penalty - reliance is placed on decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] wherein it is held that a mere making claim which is not sustainable in law will not amount to furnishing inaccurate particulars regarding the income of the assessee – Decision in favor of assessee
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2018 (6) TMI 755
Initiation of penalty u/s. 271(1)(c) - Non specification of charge - Held that:- Following the decision of Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT [2017 (12) TMI 883 - ITAT, KOLKATA] where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.
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2018 (6) TMI 754
Disallowing the claim of deduction u/s. 80IB(10) - income derived from Development of housing project - Gram Panchayat was not the local authority competent for sanction of plans of housing project - Held that:- Following the judgement of High Court in case of PR. COMMISSIONER OF INCOME TAX, NAGPUR-1 VERSUS SWAPNASHILP DEVELOPERS [2016 (10) TMI 1031 - BOMBAY HIGH COURT] approval granted by the Village Panchayat for the housing project to be as one granted by the ‘local authority' in accordance with the provisions of Section 80IB (10) of the Act - the approval by the gram panchayat was in order and suffices the need of approval by the competent authority - Decided in favor of assessee.
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2018 (6) TMI 753
Deduction u/s 80P - denying the benefit of deduction was that the assessee were doing the business of banking - Held that:- As relying upon the judgement in case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] Tribunal held that the assessee is entitled to deduction u/s 80P(2) wherein it is held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Act - thus decided in favor of assessee.
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2018 (6) TMI 752
TDS u/s 194C - non deduction of tds on C&F transportation charges - addition u/s. 40(a)(ia) - Held that:- the amount in question is a reimbursement on principal to principal basis as per assessee’s profit and loss account - the same has also gone unrebutted from Revenue’s side during the course of hearing wherein it has failed to dispute that assessee had first paid the dealers concerned followed by its reimbursement from the concerned principal - thus revenue's ground is declined - Decided in favor of assessee. Section 40(a)(ia) disallowance pertaining to secondary freight charges - Held that:- Both learned representatives are very fair in informing us the issue is covered by our discussion in preceding assessment year upholding the CIT(A) similar findings. We thus reject Revenue’s instant latter appeal as well.
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2018 (6) TMI 751
TPA - International Transaction - Corporate guarantee provided by assessee company to it’s A.Es - Held that:- CIT(A) has relied upon the judgement in assessee’s own case DR. REDDY’S LABORATORIES LIMITED VERSUS ADDL. COMMISSIONER OF INCOME TAX, CIRCLE-1 (2) , HYDERABAD AND VICE-VERSA [2017 (5) TMI 529 - ITAT HYDERABAD] it is held that assessee having not incurred any costs in providing corporate guarantee it would not constitute “International Transaction” within the meaning of Section 92B of the Act and consequently, ALP adjustment is not warranted on this aspect - since assessee has not incurred any cost to provide such guarantee and therefore it will not have any impact on profits or costs of the assessee - hence the order of the Ld. CIT(A) does not call for any interference - thus the appeal of revenue is rejected. Expenditure incurred towards ESOPs - whether an ascertained liability and hence revenue expenditure? - Held that:- CIT(A) observed that identical issue was considered in the assessee’s own case for the earlier years (AYs 2006-07 to 2008-09) [2015 (3) TMI 983 - ITAT HYDERABAD ] wherein it was held that the difference between the price of shares and their issuance price should be treated as an expenditure in the hands of the assessee - thus it is an ascertained liability and therefore treated as revenue expenditure allowable u/s 37(1) - hence order passed by the Ld. CIT(A) does not call for any interference since - appeal of revenue is rejected. Determination of ALP in respect of loans given to its Associated Enterprises - Held that:- CIT(A) concluded that LIBOR provides the basis for price and interest rates of all kinds of financial products like interest swaps, interest futures, savings account and mortgages - thus he accordingly held that LIBOR should be taken as bench-mark for charging interest - Following the decision of the ITAT in the assessee’s own case, A.O. was directed to adopt the LIBOR rate applicable for the years under consideration + 200 basis points to arrive at the ALP - hence we uphold the order of the Ld. CIT(A) and reject the ground of assessee. Allowable deduction u/s 37 (1) - expenses incurred towards travel, stay etc., in the public conferences attended by the Doctors is to improve the knowledge of the Doctors on the latest developments - Held that:- view taken in the assessee’s own case in the earlier years, we hereby direct the Assessing Officer to verify the nature of expenditure and disallow only such expenditure which was not incurred for the purpose of business of the assessee. Deduction u/s 80-IC - Allocation of corporate overheads expenses - Held that:- The corporate overheads should be allocated amongst all the units based on turnover of respective units but while allocating the expenditure only net expenditure should be allocated on the basis of turnover. A.O. is directed to re-consider the matter in line with the view taken by us in the assessee’s own case for the earlier years. Tax Authorities were not justified in allocating R & D expenditure and ESOP cost against the profits of other eligible units wherein assessee claimed deduction u/s 80IC of the Act. See ZANDU PHARMACEUTICALS WORKS LIMITED VERSUS. THE COMMISSIONER OF INCOME TAX [2012 (9) TMI 620 - BOMBAY HIGH COURT]
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2018 (6) TMI 750
Disallowance u/s 40A(2)(b) - addition 30% of total commission and legal & professional fees paid to related parties - Held that:- Lower authorities had carried out the disallowance u/s 40A(2)(a) on an adhoc basis without placing on record any material which could prove to the hilt that the payments were excessive or unreasonable, having regard to the fair market value of the services or keeping in view the legitimate needs of the business of the assessee - hence we are of the considered view that in the absence of satisfaction of the basic condition for invoking of Sec. 40A(2)(a) by both of the lower authorities, the disallowance of 30% of the related party expenses made u/s 40A(2)(a) cannot be sustained - thus deleted. Levy of interest u/s 234B, 234C and 234D - Held that:- Levy of interest under the above statutory provisions would be rendered as consequential in nature and thus disposed off. Disallowance u/s 36(1)(ii) for payment of commission - whether the commission paid by the assessee company to Mr. Darayus A. Bathena for sale orders procured by him as a sales agent for the company was allowable as an expense under Sec.36(1)(ii)? - Held that:- As observed Sec. 36(1)(ii) which contemplates the allowance of an amount paid as bonus or a commission to an employee of a company disallowance carved out in the exception contemplated under Sec.36(1)(ii), would be invoked only in a situation where the payment of the bonus or commission had been made to an employee, and not otherwise. We thus, are of the considered view that the qualification regulating the allowability of bonus or commission as an expense while computing the income of an assessee under Sec. 28, would only be applicable in a case where the same had been paid to an employee, and not otherwise - Sec. 36(1)(ii) is intended to prevent an escape from taxation by describing a payment as bonus or commission, when in fact ordinarily it should have reached the shareholder as profit or dividend In the case of the assessee company before us, as Mr. Darayus A. Bathena during the year under consideration was not an employee of the assessee company, thus the qualification or the rider embodied in the latter part of Sec. 36(1)(ii) would not come into play in the case of the assessee, on the said count itself - the rider or the exception carved out in Sec. 36(1)(ii) would apply only to an employee who is also a shareholder in the company - Decided against revnue
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2018 (6) TMI 749
Levy of penalty u/s 271(1)(c) - additions made by the AO pertaining to patently wrong claims of the assessee relating to encashment of bank guarantee - Held that:- Penalty on the bank guarantee encashed and claimed as deduction is already allowed by the coordinate bench, hence, addition itself is deleted - therefore, on this sum penalty u/s 271(1)(c) cannot survive. Penalty levied on account of disallowance of loss on foreign exchange - in which AY such loss is allowable - Held that:- Assessee originally claimed such loss in AY 2009-10 and AO allowed it u/s 154 of the Act for AY 2008-09. Therefore, it cannot be said that the assessee was not under the bonafide belief about the allowability of loss in AY 2009-10 - thus we do not find any infirmity in deleting the penalty on disallowance of notional loss of ₹ 18.28 crores. Penalty levied on account of loss of mark of market transaction on foreign exchange hedging contract - Held that:- CBDT instruction dated 23.03.2010 was not available to the assessee at the time of filing of the return of income and became available on assessment proceedings - till the time of instruction, there were several cases where it has been allowed as deduction as accrued allowability and not as contingent allowability - thus where there are possible two views possible on an issue, penalty thereon cannot be levied - hence we not find any infirmity in the order of the ld CIT(A) in deleting the penalty u/s 271(1)(c) of the Act - appeal of the revenue is dismissed.
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2018 (6) TMI 748
Taxation of Inland Haulage Charges (IHC) u/s 44B - Taxability In India - India–France DTAA - Held that:- Assessee a tax resident of France is engaged in shipping business in international water - thus following the decision of the Co–ordinate Bench in assessee's own case we hold that IHC being part of the income derived from the operation of shipping in international traffic is exempt under Article–9 of India–France DTAA, hence, not taxable in India - Decided in favor of assessee. Taxation of service tax collected from customers u/s 44B - Held that:- following the identical identical issue in assessee’s own casefor assessment year 2012–13, we hold that service tax collected on IHC is not taxable in India as per Article–9 of India–France DTAA.
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2018 (6) TMI 745
Nature of maintenance charges received - property income or income from other sources - Held that:- Issue as squarely covered by the decision of Co-ordinate Bench of this Tribunal in assessee's own case [2013 (11) TMI 656 - MADRAS HIGH COURT] amenity charges cannot be assessed under the head ‘income from house property’ and the same has to be assessed under the head ‘Income from other sources’. Assessing Officer treated the entire income under single head i.e. ‘income from house property’ and restricted the expenses as per. sec.24 of the Act. The income has to be assessed under two heads as above and admissible deduction has to be given - the issue raised in this appeal is restored to the file of ld. Assessing Officer for re-adjudication after granting of opportunity of being heard - thus allowed for statistical purpose. Disallowance of depreciation on fighting and lift equipments - Held that:- following the decision of Co-ordinate Bench of this Tribunal in assessee's own case this issue is also restored to the file of ld. Assessing Officer for re-adjudication after granting of adequate opportunity of being heard - thus allowed for statistical purpose. Amount paid for breach of contract - capital or revenue expenditure - Held that:- The violation of the conditions of MOU has led to the cancellation of the joint venture and the assessee being held responsible for repayment of part of expenditure incurred as also damages - this is nothing, but loss of capital - thus AO was right in holding that the expenditure was in fact loss of capital and not revenue expenditure - Decided against the assessee.
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2018 (6) TMI 743
Disallowance u/s 14A while computing the book profit/income u/s. 115JB - MAT - Held that:- As in case of Arvind Ltd. vs. DCIT [2015 (7) TMI 118 - ITAT AHMEDABAD] as held that the AO was not entitled to tinker with book profits contemplated under S.115JB towards disallowance made under s. 14A of the Act - Decided in favor of assessee. Additions made u/s 145A on account of unutilized CENVAT/MODVAT credit - Held that:- CIT(A) has correctly concluded the issue in favour of the assessee also having regard to the fact that effect of provisions of Section 145A would be nil in the case of assessee. We find that the CIT(A) has analyzed the issue objectively - Decided in favor of assessee. Disallowance of commission expenses - Held that:- CIT(A) has objectively dealt with the issue and found that commission is relatable to the sales. It was claimed on behalf of the Assessee that the commission has been paid by account payee cheques. Similar commissions have been paid in the earlier year as well which has been duly accepted. The CIT(A) however has rejected the commission payment of ₹ 8.7 Lakhs on the ground that the liability is only provisional and not ascertained liability - we do not see any reason to interfere with order of CIT(A). Set off and carry forward of unabsorbed depreciation - Held that:- The case shall be dealt in accordance with the provisions of Section 32(2) of the Act as amended by the Finance Act, 2001 and not by the provisions of Section 32(2) of the Act as it stood before the said amendment - thus the issue is decided in favor of assessee following the judgement in case of GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] - appeal of revenue is dismissed. Additions made on account of reconciliation of interest as per data available in AIR - Held that:- We consider it expedient to set aside the issue back to the file of the AO for re-examination of facts. The assessee shall provide the reconciliation of difference in question and shall support its claim of taxability in one or the other year. The AO shall adjudicate the issue in accordance with law after proper opportunity given to the assessee in this regard - allowed for statistical purpose. Disallowance under s.14A read with Rule 8D - Held that:- There is no warrant for making disallowance in view of long line of judicial precedent. However, we do not see any merit for setting aside the disallowance towards administrative and general expenses pleaded on behalf of the assessee. The presence of administrative involvement qua the investment activity cannot be ruled out in view of the statutory presumption in this regard, under Rule 8D(2)(iii) of the IT Rules. While the assessee gets relief towards disallowance to the extent of ₹ 39,502/- attributable to interest expense, we decline to interfere with the balance disallowance of ₹ 5,68,828/- made under Rule 8D of the IT Rules. Addition towards under valuation of closing stock - Held that:- Having regard to the quantum of stock, the addition merely based on a stock statement filed with bank is not at all justified. Due to smallness of the difference, the bonafides of the assessee is rather implicit. Therefore, we cannot approve a narrow and pedantic approach of the Revenue in this regard. The addition on this score is therefore directed to be deleted.
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2018 (6) TMI 740
Additions made on account of bogus purchase - it was confirmed by the seller party no transaction were made during the relevant financial year - Held that:- question of rejecting the purchases simply because he did not receive any information, when notices were issued under section 133(6) of the Act, from parties, cannot be the sole reason to make the addition. It is to be kept in mind that the amount of sales by itself cannot represent the income of the assessee. With regard to the purchase made from the two parties i.e. M/s IRIS Computers Ltd & M/s lndia Cyber Learning (P) Ltd. It was submitted before us that the invoices were raised to Government of Bihar on the last day of FY 2009-10 - but in the subsequent year neither purchase has been booked nor sale has been booked - ledgers of sundry creditors along with purchase details for F.Y 2009-10 is filed and placed on record and from the documentary evidence, we note that from the list of sundry creditors as on 31.03.2011 i.e. the subsequent year, the above two companies do not figure in the list. Same is the case with the list of Sundry Debtor as on 31.01.2011 wherein the two companies do not figure - while looking from another angle, we do not find that there is any loss for the Revenue because in any case the purchases and sales in respect of computers have to be allowed in the subsequent Assessment Year and the rate of tax being the same, it will be tax neutral so there is no prejudice to revenue - hence the issue is hereby upheld and the ground raised by the Revenue is dismissed.
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2018 (6) TMI 739
Rectification of mistakes - mistake apparent from record within the meaning of section 254(2) - Held that:- The order which can be rectified must be one which has been passed by the Tribunal in an appeal filed u/s 253 - thus relying on the judgment of the Special Bench of Delhi in the case of Shri Padam Prakash (HUF) VERSUS ITO [2011 (1) TMI 226 - ITAT, NEWDELHI] order which can be rectified must be one which has been passed by the Tribunal in an appeal filed u/s 253. Thus, we hold that an order rejecting an application for rectification u/s 254(2) cannot be again rectified u/s 254(2) of the Act - Dismiss the Miscellaneous Application of the Revenue - decided against the revenue.
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2018 (6) TMI 736
Estimation of the net profit in retail of wines - Held that:- We find that this Tribunal, in the case of Secunderabad Wines (2016 (7) TMI 1449 - ITAT HYDERABAD) have held 3% of the cost of goods put to sale to be reasonable estimation of income.
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2018 (6) TMI 729
Unexplained stock lying at the business premises - 20957 boxes of apples (15 Kg each) lying in the business premises of the assessee were not under his ownership - non maintaining identity of customers - Held that:- We find that in the absence of any rebuttal on the specific trade practice relied upon by the CIT-A which has not been upset in the present proceedings it cannot be faulted that on the receipt of the rent the goods are handed over to the person who has brought these for storage and the identification is based on a “ nishan” / “mark” accepted by both the parties. We find that though the Ld. Sr. DR has relied upon the assessment order however nothing has been placed on record to rebut this argument of the assessee namely that there was no legal requirement or mandate for a cold storage facility to accept perishable goods for storage only from people who had PAN card identification proofs etc or after satisfying itself completely about the real identity of the persons storing his goods Considering the fact that the assessee has consistently been following the same method of recording details of goods stored in its cold storage facility from which rental income has been shown wherein the assessee has made available before the tax authorities copies of fruit receipt books, fruit gate pass book, stock register of fruit in the remand proceedings before the AO also wherein no discrepancy has been found or brought to our notice, we thus find no merit in the appeal of the Revenue. CIT-A while arriving at a conclusion has specifically referred to the view taken by the assessing officer in the case of the assessee itself in the immediately subsequent year wherein on similar set of facts and circumstances the assessing officer has accepted similar method of maintaining books of records and accounts of the assessee. - Decided against revenue
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Customs
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2018 (6) TMI 759
Principle of merger - interim order merging with final order - Release of seized Gold - Held that:- It is well settled that an interim order passed, merges with the disposal of the main case - In South Eastern Coalfields Ltd v. State of MP and Others [2003 (10) TMI 638 - SUPREME COURT OF INDIA], where it was held that The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going against the party successful at the interim stage - nothing survives in the writ appeal for adjudication - appeal dismissed.
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2018 (6) TMI 742
100% EOU - Goods consumed within EOU - levy of additional duty on the clearance of High Speed Diesel - N/N. 52/2003 dt. 31.03.2003 - Held that:- The duty demand is not sustainable as the goods were not cleared outside EOU. The Goods are consumed within the EOU and hence there is no reason to demand duty. Reliance placed in the case of STI INDIA LTD. VERSUS COMMISSIONER OF C. EX., INDORE [2007 (10) TMI 482 - CESTAT, NEW DELHI], where it was held that N/N. 59/99, dated 11-5-1999 exempts high speed diesel oil, falling under Heading No. 27.10 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1976), when imported into India, from so much of the additional duty leviable thereon under sub-section (1) of Section 3 of the said Customs Tariff Act, as is equivalent to the additional duty of excise leviable on high speed diesel oil under Section 133 read with Second Schedule of the Finance Act, 1999 (27 of 1999). Also, Section 116 (3) of Finance Act, 1999 not only provides exemption under Customs Act, 1975 but is also applicable in respect of additional duty levied under Section 116. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 741
Suspension of CHA License - penalty u/s 114(i) of the CA 1962 - The allegation on the appellant is that they have not advised their client (exporter) regarding the prohibition of the goods, therefore they have violated the provision of CHALR, 2004 - Held that:- No proceedings were carried out under CHALR 2004 for revocation of licence during the last 8 years. Even though this Tribunal has stayed the suspension of the licence ordered by the impugned order but nothing prevented Commissioner to proceed under CHALR, 2004 therefore commissioner has chosen not to proceed against the CHA. On this basis itself impugned order does not sustain - Also, it is not expected from the CHA to physically verify the goods. There is no other charge on the CHA that they were knowingly involved in the export of prohibited goods therefore even though it is established that the goods attempted to be exported were prohibited goods but responsibility for such wrong doing lies with the exporter and not with the CHA - suspension of license not warranted. Penalty was imposed with reference to the suspension of the licence, however there is no provision under CHALR, 2004 to impose penalty under Section 114(i) of customs Act, 1962. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 737
Project Import - Concessional rate of duty - Regulation 7 of Project Import Regulations, 1986 - Held that:- The installation of goods is of prime importance as the goods should be used for the intended project. In the present case the same has not been disputed by the revenue. Further the reconciliation statement gives all the details of the documents/ Bill of Entry even though the same was not submitted - The reconciliation statement, installation certificate towards installation of goods which is of prime importance and the certificate of Chartered Accountant certifying the remittance of consideration of imported goods are ample proof of compliance with the Project import Regulations. Hon’ble High Court of Andhra Pradesh in the case of CCE. & C., HYDERABAD VERSUS CREATIVE INDUS. (RAJAHMUNDRY) P. LTD. [2012 (10) TMI 646 - ANDHRA PRADESH HIGH COURT] has granted the benefit of concessional rate of duty in somewhat similar circumstances. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 735
Exemption from BCD - N/N. 26/2000-Cus. dated 1.3.2000 - BCD paid under protest - The department has denied the concessional rate of duty on the ground that the respondent has not complied with the condition that they have not availed credit on inputs and capital goods - whether the respondents are eligible for the concessional rate of duty? Held that:- Issue decided in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL), NEW DELHI [2015 (4) TMI 561 - SUPREME COURT], where CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise - appeal dismissed - decided against Revenue.
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2018 (6) TMI 727
Duty Drawback - All Industry Rate (AIR) - Excise portion of AIR - FIBCs exported by the appellants - CENVAT credit used - whether the appellants will be entitled to AIR only for the customs component (in case Cenvat credit was used) or for the higher rate including the excise as well as customs components? - Held that:- The circular has clarified the payment of drawback in respect of the goods which are purchased by merchant exporters from traders in the local market. There is a presumption that the goods available in the market are deemed to be duty paid - But in the facts of the present case, it is evident that the appellant has not procured the export goods from any trader in the market but directly from the manufacturer who has paid the central excise duty on such goods by availing Cenvat credit. The term "Cenvat credit has not been availed" has been explained to mean that no Cenvat facility has been availed for any of the inputs or input services used in the manufacture of the export products - Since the manufacturer has availed the benefit of CENVAT credit and the same is not in dispute, we are of the view that the appellant will not be entitled to the excise portion of AIR. Appeal dismissed - decided against appellant.
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2018 (6) TMI 720
Suspension and Revocation of CHA License - time limitation - case of appellant is that the Commissioner of Customs has not completed the proceedings within the period prescribed in Regulation 20 of Customs Brokers Licensing Regulation, 2013 - Held that:- Regulation 20(1) requires issuance of the show-cause notice within 90 days from the date of receipt of the offence report - The offence report was forwarded by DRI on 02.12.2016 and as per the Revenue, it was received on 23.12.2016. The show-cause notice was issued on 06.04.2017, with a delay of 108 days. The law is very clear and it stands held that the time-limit prescribed under the Customs Brokers Licensing are sacrosanct and are required to be adhered to. Admittedly in the present case, the time prescribed under the Customs Brokers Licensing Regulations has not been followed, failure to do so will result in setting aside the order arising out of such provisions - the order of revocation and restore the licence is set aside - appeal allowed.
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2018 (6) TMI 715
Valuation of imported goods - knitted fabric (100% knitted polyester) - knitted fabric (97% Rayon and 3% Spandex) - enhancement of value based on contemporaneous NIDB data - Held that:- It is well settled that NIDB data cannot be used to enhance the value of imported goods in number of decisions - reliance placed in the case of M/S. SARDA ENERGY AND MINERALS LTD. VERSUS CCE, RAIPUR [2017 (9) TMI 1142 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 706
Advance Authorization - benefit of Authorization Scheme to imported copper concentrate - Held that:- DGFT vide their letter dt. 23.11.2010 have issued a clarification as averred by him. This being so, the very basis of the dispute, does not exist any further and the copper concentrate can be very well be adjusted against fulfilment of export obligation of SION C-1503 as clarified by the DGFT - matter remanded to the original authority only for the limited purpose of applying the clarification given by the DGFT in their letter dt. 23.11.2010 in respect of impugned goods - appeal allowed by way of remand.
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Corporate Laws
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2018 (6) TMI 732
Oppression and mismanagement - application filed for waiver - application for 'waiver' subject to the question whether (proposed) application under Section 241 relates to 'oppression and mismanagement' - Held that:- Except for appellants 2 and 3 none of the other shareholders can maintain an application of oppression and mismanagement. As per the judgment of Cyrus [2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] other minority stake holders cannot be asked or directed to form a group of 10% of the members. This is an exceptional factor and we find substance in the arguments of the learned counsel for Respondent no.1 that the Respondent no.1 (original applicant) has 6.62 per cent shareholding and the appellants 2 to 4 have purposely left a minuscule 0.038 per cent in the hands of others and kept rest of the shares with themselves. The argument is that the number of Members has been increased by transferring 15 shares to employees so that Section 244 could not be satisfied. Going through the application which was filed for waiver by the Respondent no.1 we find that the application pertains to ‘oppression and mismanagement’. We keep in view the pleadings of alleged oppression and mismanagement. There is no dispute that the original applicant/ respondent no.1 is member of the company. It cannot be said that the application is frivolous. It is not a case that similar allegations of ‘oppression and mismanagement’ were earlier made and stood decided or concluded - When any member of the company complaints of ‘oppression and mismanagement’ in the company, in view of the Companies Act, the issue has to be decided by NCLT. Thus only because the Respondent no. 1 filed suit in the High Court would not be a Bar to present application as the question of oppression and mismanagement has to be decided by NCLT. No doubt in the impugned order NCLT, reading the proviso below section 244 as it is, discussed whether prima facie case is made out and observed that the respondents had not shown certain factors, but we are ignoring those observations in view of judgment in the matter of Cyrus. However we on our analysis of the matter find that it is a fit case for grant of waiver. In reply to arguments of the Ld. Counsel for respondent no.1 (original appellant) it is argued by Appellants (see brief written submissions on behalf of the appellants filed on 19.03.2018) that appellant no.5 is not a shareholder of the 1st appellant company, nor is it involved in its management; and that appellant no.5 is only the transferee under a Business Transfer Agreement signed by the 1st appellant company; and that “It is a bona fide third party purchaser of the 1st appellant’s assets at a fail value”. We find that when it is shown that substratum itself of the company has been transferred, it is an exception circumstance, and waiver as sought should be granted.
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Insolvency & Bankruptcy
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2018 (6) TMI 763
Corporate insolvency procedure - ‘Moratorium’ period - Held that:- Order of ‘Moratorium’ will be applicable only to the proceedings against the ‘Corporate Debtor’ and the ‘Personal Guarantor’, if pending before any court of law/Tribunal or authority but the will not be applicable for filing application for triggering ‘Corporate Insolvency Resolution Process’ under Sections 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) against the ‘Guarantor’ or the ‘Personal Guarantor’ under Section 60(2). As noticed that Part-III of ‘I&B Code’ has not been given effect but Part-II Section 60(2) having come into force, if ‘Corporate Insolvency Resolution Process’ has been initiated against the ‘Corporate Debtor’, the Insolvency and Bankruptcy Resolution Process against the ‘Personal Guarantor’ can be filed under section 60(2) before the same Adjudicating Authority (National Company Law Tribunal) and not before the Debt Recovery Tribunal (DRT).
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2018 (6) TMI 734
Corporate Insolvency Resolution Process - Resolution Plan already been approved - Held that:- The order of Moratorium will be applicable to the proceedings against the ‘Corporate Debtor’ and the ‘Guarantor’, if pending before any court. However, such order of Moratorium will not be applicable for triggering ‘Corporate Insolvency Resolution Process’ under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 against the ‘Guarantor’ or the ‘Personal Guarantor’. Resolution Plan having approved subsequently on 12th February, 2018 will not affect the rights of Appellant- Financial Creditor, who filed the application under Section 7 much prior to approval of the Resolution Plan. Infact the impugned order was passed on 15th December, 2017 i.e. much prior to the approval of Resolution Plan. The case is remitted to the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata for admission of the application, if the application is complete, after notice to the parties. If there is any defect, the Adjudicating Authority will allow the Appellant to remove the defects within a reasonable time
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2018 (6) TMI 731
Initiating of insolvency resolution process - Held that:- The application filed by the operational creditor is complete in all respects and the defects pointed out have been removed. Learned counsel for the respondent submits that the corporate debtor is not to raise any objections. The petitioner has also filed with this petition copies of all the invoices of sales. The petitioner has also complied with the requirements of Section 9(3)(b) and 9(3)(c) of the Code. As per sub-section (4) of Section 9 and Section 16 of the code it is optional for the operational creditor to propose the name of Resolution Professional to be appointed as the Interim Resolution Professional. In the instant case the petitioner has filed the written communication Annexure A-3 in Form No. 2 furnished by Mr. Vikas Garg, registered with Insolvency and Bankruptcy Board of India. His registration number is IBBI/IPA002/IP-N00189/2017-18/10506. The Resolution Professional has furnished all the required information giving his consent disclosing that he is not serving as Interim Resolution Professional, Resolution Professional or Liquidator in any case so far. It is also certified that there are no disciplinary proceedings pending against him with the Board or ICSI Insolvency Professional Agency (ICSI IPA). - In view of the above the instant petition deserves to be admitted.
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2018 (6) TMI 730
Corporate insolvency process - Default in repayment of the outstanding amount - Admission of winding up petition - Held that:- Prior admission stage of pendency of winding up proceeding against corporate debtor under the Companies Act, 1956 cannot come in the way of the Code. In the present case the applicant vide affidavit dated 01.03.2018 has affirmed that till date no order of liquidation or admission of winding up petition has been passed by Hon’ble High Court of Rajasthan in the pending winding up petition and that no provisional liquidator or official liquidator has been appointed. In that view of the position there is no bar for initiation of Corporate Insolvency Resolution Process against the respondent corporate debtor under the provisions of the Code. There is no dispute that the respondent company has committed default in repayment of the outstanding amount. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt - in terms of Section 7 (5) (a) of the Code, the present application is admitted.
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Service Tax
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2018 (6) TMI 758
Demand of service tax - obligation on the part of adjudicating authority to decide within one year from the date of SCN - validity of demand after repealing of service tax post GST - derailing of adjudication process - time limitation - Section 73(4B)(b) of the Finance Act, 1994 - Held that:- This Court finds that the arguments advanced by learned Counsel for the petitioner, are based on hyper technicalities which, in the considered view of this Court, are not of a nature so as to derail the adjudication process. This Court is satisfied that the statutory provisions relied upon by Ld. ASG to take care of the contingencies sought to be exploited by the petitioner/assessee company for filibustering the adjudication. In the backdrop of the recorded discussion surrounding the pure legal issues raised by the parties, affidavits are not invited. Allegations made are therefore deemed to be denied. Petition dismissed - decided against petitioner.
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2018 (6) TMI 747
CENVAT credit - tower and tower materials, which were used by the appellant for providing telecommunication service - time limitation - Held that:- The issue was considered by the Larger Bench of the Tribunal in the case of Tower Vision India Pvt. Ltd [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)], in which it was held that as the the provision of towers and shelters as infrastructure used in the rendition of an output service is common to both passive and active infrastructure providers, whether of "BAS" or "BSS" in one case and "telecom service" in the other, the towers and shelters and parts are decided to be immovable property - credit not allowed. Time Limitation - Held that:- whether the demand for recovery of Cenvat Credit availed on such inadmissible Cenvat Credit is barred by limitation or otherwise? - Held that:- During the relevant period the dispute was the subject matter of various contrary decisions which ultimately led the matter to be referred to the Larger Bench - demand beyond the normal period of limitation will be hit by bar of limitation. Since the entire demand falls outside the scope of normal period of limitation, the impugned order is set aside. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 746
Classification of Services - receipt of the goods dispatched by the principal from their factory, warehousing the same and arranging to dispatch the goods as per the directions of the principal, along with invoicing the same to the ultimate customers - Clearing and Forwarding Agent Service or not? - CBEC vide Circular dated 10/07/1997 - Held that:- The appellant has not acted as an agent of M/s Oswal. Though they have been entrusted with the responsibility of receiving the goods at railway siding and storing the same in the godown as also loading of the same onto the truck, it cannot be said that the appellant has acted as agent of the principal–least of all as a C & F Agent of the principal - the appellant cannot be said to have acted as C & F Agent of M/s Oswal, as appearing from the agreements on record - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 726
Levy of service tax - recharge coupons - Department was of the view that the appellants are liable to discharge service tax on the recharge vouchers supplied to the customers by the appellant - Held that:- reliance placed in the case of GR. MOVERS AND MARTEND FOOD AND DEHYDRATES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LUCKNOW [2013 (6) TMI 339 - CESTAT NEW DELHI], where it was held that the levy of service tax cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 725
Project management services - The department was of the view that the appellant is liable to pay service tax on the basis of debit entry/book adjustments received from the associated enterprises - Held that:- With effect from 10.5.2008, an amendment was brought out whereby the appellant has to discharge service tax on the basis of book adjustments in the case of associated enterprises - The decision in the case of KELLY SERVICES INDIA PVT. LTD. VERSUS C.C.E., & S.T., GURGAON-II [2015 (10) TMI 2228 - CESTAT NEW DELHI], have settled the position of law with the amendment brought forth with effect from 10.5.2008 as being prospective in nature. Thus, the demand for the period prior to 10.5.2008 cannot sustain and requires to be set aside - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 723
Business Auxiliary Service - activity of booking space for cargo transportation in airlines/ship - demand is made alleging that the appellant had received consideration for pre-booking of space in airlines/shipping lines - Held that:- The issue is decided in the case of GREENWICH MERIDIAN LOGISTICS (INDIA) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [2016 (4) TMI 547 - CESTAT MUMBAI], where it was held that The notional surplus earned thereby arises from purchases and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) ibid will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 722
Management, Maintenance or Repair Service - the period involved is the same i.e. 16.6.2005 to 26.7.2009 - Held that:- The service tax on management, maintenance or repair of roads for the period 16.6.2005 to 26.7.2009 has been exempted retrospectively - by Finance Act, 2012 (23 of 2012) dated 28.5.2012, a special provision Section 97 was introduced whereby exemption was granted for services relating to management, etc. of roads. Sub-clause (3) of section 97 by its non-obstinate clause provided that no service tax shall be levied or collected in respect of management, maintenance or repair of roads during the period from 16.6.2005 to 26.7.2009 (both days inclusive) - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 719
Business Auxiliary Services - non-payment of service tax - Demand has been raised alleging that the job work done by the appellants in the nature of bending, cutting, shearing and punching of goods fabricated and supplied to customers would fall within the definition of "Business Auxiliary Services" - Held that:- Hon Apex Court in the case of Orissa Bridge & Construction Corpn- Ltd, vs. Commissioner of C.Ex., Bhubaneswar [2008 (8) TMI 585 - SUPREME COURT OF INDIA] has held that the activity of fabrication, cutting edge, Plain Shuttering Plates, Well Steening, Shuttering Plates etc from steel angles, MS Plates, MS Sheets amount to manufacture - when the activity undertaken by the appellant amounts to manufacture, the demand raised alleging that the said activity is a Business Auxiliary Service cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 718
Erection, Commissioning and Installation Services - whether the appellant is liable to pay service tax on the activity of trenching and laying telephone cables? - Board's Circular No. 123/5/2010-TRU dated 24.5.2010 - Held that:- The issue stands covered by the clarification issued vide Board's Circular No. 123/5/2010-TRU dated 24.5.2010 which clarified that laying cables under or alongside roads is not a taxable service. In Commissioner of Central Excise, Chandigarh Vs. Rajeev Electrical Works [2010 (5) TMI 162 - PUNJAB & HARYANA HIGH COURT], the Hon'ble High Court has held that laying the pipes in wall/roof/floor for crossing of wires, fixing the junction box, fixing the cables trays to lay the cables, digging the earth to lay the cables and digging the earth pits for earthing etc. would not amount to installation of plant, commissioning and is not leviable to service tax under Erection, Commissioning and Installation Services. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 716
Valuation - inclusion of electricity and water charges collected by the respondent - demand of service tax - Held that:- These are nothing but reimbursement expenses and cannot be included for demanding service tax under Management, Maintenance or Repair Service - reliance placed in the case of M/S. PLAZA MAINTENANCE AND SERVICES LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI AND VICE-VERSA [2017 (9) TMI 162 - CESTAT CHENNAI], where it was held that assessees are not liable to pay service tax on the actuals that is electricity / water and insurance charges collected and paid to the respective authorities - demand set aside - appeal dismissed - decided against Revenue.
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2018 (6) TMI 714
Validity of SCN - case of appellant is that the very basis of the allegation in SCN is not correct, as the demand has been raised on the profit and loss account instead of the actual amount received as per invoices - Held that:- The authorities below have not accepted the explanation observing that the appellant has not produced enough documents. The Ld.Counsel has requested for further chance to establish the case of the appellant - it is appropriate to remand the matter to the adjudicating authority to reconsider the issue after giving opportunity to the appellant for personal hearing - appeal allowed by way of remand.
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2018 (6) TMI 713
Management Consultant Service - non-discharge of service tax - penalty - Held that:- Though the appellant argues that this amount is not received towards consideration and the amount is only towards ticket charges, no documentary proof has been placed by the appellants. Therefore, the contention of the appellant that these are not consideration/charges received for the services rendered is not acceptable - demand of tax with interest upheld. Penalty u/s 78 - Held that:- As the appellant has declared the amount in their accounts from where the department has come to know about the receipt of the same, penalty imposed is unwarranted. Appeal allowed in part.
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2018 (6) TMI 712
Management, Maintenance and Repair Service - benefit of N/N. 12/2003 ST dt.20.6.2003 denied - denial on the ground that the assessee has not produced any documentary proof indicating the value of the materials - Held that:- The notification provides that the service provider has to produce documentary proof indicating the value of goods and materials sold. In the contract, the rate has been fixed including the cost of materials/labour charges and service charges. On such score, the appellant is definitely eligible for exemption of the value of the materials sold to the service recipient/client while undertaking the maintenance or repair service - the matter requires to be remanded for verification and extending the benefit of N/N. 12/2003. Benefit of cum tax - Held that:- Even in the SCN, it is stated that the appellant has not collected service tax. Therefore it is clear that the assessee has been raising invoices without charging service tax - the Commissioner (Appeals) has rightly allowed the benefit of cum-tax to the assessee. Time Limitation - Held that:- The assessee was not aware of the liability to pay service tax and that there was no intention to evade payment of tax, as the entire demand was made from the figures/documents produced by the assessee - extended period not invocable. Appeal allowed in part and part matter on remand.
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2018 (6) TMI 711
Franchise Service - the Commissioner (Appeals) has relied upon the decision in the case of Fast Arithmetic Vs. ACCE, ST & EOU [2009 (5) TMI 70 - CESTAT, BANGALORE], where it was held that abacus training programme imparted by the appellant is mainly to create interest in children for mathematics and also to enhance their thinking capacity. The entire thing is done by employing methods of play so as to make the whole thing interesting. By no means, this activity can be compared with the activities undertaken by commercial coaching or training centre - Held that:- Taking note of the fact that the Commissioner (Appeals) has erred in applying the decision of Fast Arithmetic without considering whether the demand under franchise service is sustainable or not, we are of the considered opinion that the matter requires to be remanded to the Commissioner (Appeals) for fresh consideration of the same. Time Limitation - Held that:- Since the matter is remanded, all the issues are kept open. Appeal allowed by way of remand.
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2018 (6) TMI 710
Abatement in terms of Notification No.1/2006 - Tour operator service - delay in reversal of credit - interest not paid - whether the appellant is eligible for the abatement under Notification No.1/2006 when they have reversed the credit and has not paid the interest for the delayed reversal of credit? - Held that:- The Hon'ble jurisdictional High Court in the case of Stretegic Engineering P. Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] has held that no interest is liable to be paid when the credit is reversed before utilization - the disallowance of abatement under the Notification is unjustified - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 709
Penalty u/s 77 and 78 of FA - activities undertaken for construction of site - service tax with interest paid before issuance of SCN - appellant had failed to discharge the service tax only due to the bonafide belief that their services would not fall under “Site Formation and clearance, Evocation and Earth Moving and Demolition Service” - Held that:- It is clear from the records that the assessee was under a bonafide belief that since the contract was for commercial construction and the site preparation was only a part of that activity, the activities would fall completely under “Commercial and Industrial Construction Service” and they are eligible for abatement - penalty u/s 78 set aside by invoking provisions of section 80. The demand, interest and the penalty imposed under Section 77 of the Act upheld. Appeal allowed in part.
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2018 (6) TMI 708
Stock Broking Service - demand of service tax on “transaction charges” levied by stock exchanges on each and every transaction carried out by the appellant - reimbursable expenses or not? - Held that:- This Bench, following the earlier decision of the Tribunal in the case of First Securities Pvt. Ltd. Vs. CST, Bangalore [2007 (6) TMI 33 - CESTAT, BANGALORE] has held that handling charges and transaction charges as not part of the taxable value as additional brokerage for service tax purpose - demand set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (6) TMI 744
Clandestine removal - purchasing excisable items from the manufacture, without payment of duty - Imposition of penalty and demand based on documents recovered - Held that:- It is seen that based upon the same set of evidences i.e. pen drive recovered from the premises of M/s Amit Steels and based upon the same set of investigations and more or less identical statements recorded by the officers during the course of investigations, proceedings were initiated against many other manufacturers of identical items. Such proceedings reached Tribunal and the impugned orders passed by the authorities below were set aside - thus following the Tribunal’s decision in the case of B.K. Rolling Mills Pvt. Ltd. and Others Vs. CCE & ST, Raipur 2018 (2) TMI 1557 - CESTAT NEW DELHI where it stated that in absence of any corroborative evidence produced by the Department the charges cannot be levelled against the appellants for confirmation of the duty demand and for imposition of penalties - hence following the precedent decisions, the impugned orders are set aside.
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2018 (6) TMI 738
Rectification of Mistake - remand proceedings - case of applicant is that this Tribunal remanded the matter to arrive at the correct classification under Chapter 54 and 55 - Held that:- Tribunal after considering all the records, found that the issue in dispute can be resolved only after arriving at correct classification. The adjudicating authority classified the goods under Chapter 59.07 which was not agreed upon by this Tribunal, therefore adjudicating authority was directed to decide correct classification. The applicant cannot say now that remand for reconsideration of classification is wrong. ROM application dismissed.
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2018 (6) TMI 733
CENVAT credit - whether the MS angles, MS channels, HR coils etc. used for support structures and fabrication of worn out molasses tank, operational platform is eligible for credit? - Held that:- The respondent is engaged in manufacturer of final products and there is very close nexus with the inputs (MS channels etc.) as they were used for fabrication of support structures for the reason that without such support structures the manufacturing activity cannot be carried out as they become integral part of the machineries after fabrication - In the case of Thiru Arooran Sugars [2017 (7) TMI 524 - MADRAS HIGH COURT], the Hon’ble High Court has considered the very same issue and held that credit is eligible - appeal dismissed - decided against Revenue.
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2018 (6) TMI 728
Rejected goods - CENVAT credit - Rule 16 of Cenvat Credit Rules - material rejected by their buyers which was brought back into the factory - Whether the said goods were disposed of in terms of Rule 16 or not? - Held that:- The appellants were receiving goods rejected by their buyer and they were availing credit. The appellants have not maintained any record to show that the goods were processed and cleared on payment of duty after repairs. After the case was booked, the appellants have created a table on the basis of the memory as dictated by the CEO. The same cannot be admitted as any evidence - it would appear that the appellants have not been able to establish that the goods on which credit was taken were processed and cleared on payment of duty. In these circumstances, the appeal cannot succeed and is dismissed. Penalty on Biravu Navin Rai - Held that:- It is noticed that he had tried to fabricate and introduce a chart as evidence in the proceedings. It is obvious that he was fully aware of the issue and therefore, his liability to penalty cannot be set aside. Appeal dismissed - decided against appellant.
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2018 (6) TMI 724
CENVAT credit - reversal of credit attributable to the portion of electricity wheeled out - Whether assessee is eligible for cenvat credit on inputs/input services used for generation of electricity wheeled to TNEB and then drawn by their sister units? - Held that:- The issue decided by this Bench in the appellant's own case M/S. INDIA CEMENTS LTD. VERSUS CCE & ST, TIRUNELVELI [2018 (3) TMI 180 - CESTAT CHENNAI], where the Tribunal held that the assesse is not eligible for credit - credit not allowed. The issue of eligibility of credit being decided against the assesse the claim for refund of the credit reversed by them cannot sustain - appellants are liable to reverse/pay the wrongly availed credit. Appeal dismissed - decided against appellant.
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2018 (6) TMI 721
CENVAT credit - inputs - iron and steel articles used by the appellants in their factory for fabrication of the capital goods, which in turn were being used by them in their factory itself - Held that:- The Larger Bench decision of the Tribunal in M/s. Vandana Global, in any case, does not stand approved by the Hon'ble Gujarat High Court in the case of M/s. Mundra Ports & Special Economic Zone Ltd Vs Commissioner of Central Excise & Customs [2015 (5) TMI 663 - GUJARAT HIGH COURT] - matter remanded to the original adjudicating authority for fresh consideration in the light of the latest decisions of various High Courts - appeal allowed by way of remand.
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2018 (6) TMI 717
N/N. 9/2003-CE date 01.03.2003 - Effect of later notification - whether have retrospective or prospective effect - Held that:- The amendment caused in N/N. 9/2003-CE by way of N/N. 67/2003-CE will have to be treated as retrospective and clarificatory amendment, hence the appellants would be very much eligible for exemption under N/N. 9/2003 w.e.f. 01.04.2003 even during the period 01.04.2005 to 10.08.2005 - Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 707
Valuation - inclusion of free supply of materials - whether the free issue materials supplied by their customer M/s. Saint Gobain is to be included in the value of wooden crates/finished products by the appellant? - Held that:- The Hon'ble Supreme Court in the case of International Auto Ltd. Vs. Commissioner of Central Excise, Bihar [2005 (3) TMI 132 - SUPREME COURT OF INDIA] had analyzed a similar issue and held that while clearing the goods to their principal, the cost of free issue need not be included in the assessable value - demand do not sustain - appeal allowed - decided in favor of appellant.
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