Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 22, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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TDS u/s 195 - Taxability as royalty or FTS - the payment in question made was towards reimbursement or expenses and not reimbursement of service - HC
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Validity of assessment u/s 153C - The only mistake on the part of the AO is in mentioning section 153A instead of 153C. In the facts of the preset case, the provisions of section 292B clearly come into play - Notice cannot be invalidated.
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Addition on unexplained cash deposit - source of cash - where no books of accounts are maintained the peak theory is best method to assess the actual income earned from such transactions
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The assessee should not suffer for inaction of the revenue authorities. As now the Commissioner of Income Tax has approved the fund, the contribution made by the assessee towards group gratuity fund is allowable u/s. 36(1)(v) of the Act.
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Assessee is able to prove that the foreign agents having no PE in India - but there is no finding with regard to the foreign agents being tax residents of USA or, as the case may be, UK - ITAT directed the AO to delete the additions subject to verification
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Interest on refund of TDS - The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies
Customs
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Import of used offset printing machines along with standard accessories - The importers have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992. The goods are therefore liable for confiscation under Section 111 (d) of the Customs Act, 1962
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Import of restricted item - second hand tyres - the imported tyres are used tyres, capable of direct reuse, accordingly they will fall in the categories excluded one 3140, they cannot be then treated as hazardous waste and hence their import will not require MOEF permission
Service Tax
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Refund claim - export of services - various input services - When all the conditions of the Notification No. 27/2012-CE (NT) dated 18.06.2012 are satisfied, there appears to be no scope for disallowing CENVAT credit on selected services and holding its refund ineligible - refund allowed - AT
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Business Auxiliary Services - Joint venture - sharing of consideration - the service tax has already been paid by the co-venturer and it would amount to taxing the same transaction more than once under the different categories which is not the spirit of law
Central Excise
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Refund of concessionary rate of duty - cars registered as taxi - the claim of refund only comes under the notification No.3/2001 for the purpose of refund of the excise duty paid by the respondent assessee and it has to fulfil the conditions stipulated in the notification, failing which they are not entitled to the benefit of exemption, under such notification. - HC
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Classification of goods - body building for motor vehicles on chassis falling under CETH 8706 - Considering the nature of motor vehicle, which is for transport of goods, the same has to be classified under Heading 8704
Case Laws:
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Income Tax
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2017 (6) TMI 878
Reopening of assessment - Long term capital gain addition - Held that:- The assessee had in return itself offered the receipt to tax as capital gain. In the context of the assessee's further expectation that the same may not be taxed at all, issue was examined by the Assessing Officer. Thus, on the question of taxability of such receipt, there was a scrutiny by the Assessing Officer. May be at that time, the Assessing Officer had not noticed that the Collector had passed an order on 20.12.2008 terminating the lease. The reference to the order was very much in the document in the nature of panchnama dated 13.05.2009. According to the assessee, this was the date on which his right to use the land got extinguished. If the Assessing Officer held a different belief or desire to inquire into the effect of the order of the Collector, he could and should have done so during the course of assessment. Yet another reason on which we cannot permit reopening on the grounds stated in the reasons is that the assessee carried the issue in appeal before the Appellate Commissioner and canvassed that to tax the income as capital gain was wrong. The Commissioner having dismissed the appeal, the issue is pending before the Tribunal in assessee's appeal. Section 147 of the Act as is well known, empowers the Assessing Officer to reopen the assessment, subject to certain conditions. When the subject matter viz. the receipt of transfer of rights in land and the income relatable to such matter was the subject matter of appeal and thereafter second appeal, the principle of merger would apply. There cannot be two separate considerations to the same subject matter relatable to the income. One by the appellate authority or forum and another by the Assessing Officer in fresh assessment. Had material particulars concerning the income been withheld by the assessee, issue perhaps would stand on a different footing. Since such facts are not presented before us, we would not comment any further in this respect. While disposing of an appeal filed by an assessee against the order of assessment, the Commissioner after following the requirement of hearing provided in subsection (2) of section 251 may even enhance the assessment. The question of correct taxability of the receipt by the assessee was thus at large before the Commissioner (Appeals) and now is open before the Tribunal. At that stage, it would not be open for the Assessing Officer to reopen the assessment on this matter which is a subject matter of the appeals. - Decided in favour of assessee.
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2017 (6) TMI 877
Order passed by Income Tax Settlement Commission u/s 245D challenged - rejecting the petitioner’s application for settlement primarily on the ground that the petitioner had not made true and full disclosures of the unaccounted income - Held that:- Commission had taken into account the documents and evidence on record and rejected the petitioner’s theory of having entered into off market transactions in two different capacities. These findings of the Commission are based on consideration of relevant materials presented before the Commission by both sides. The findings cannot be stated to be perverse in any manner. The scope of judicial review against an order passed by the Settlement Commission has been discussed by various decisions of this Court as well as Supreme Court. The petitioner did produce the affidavits of four persons who claimed that they were the sub-brokers for whom the petitioner had acted as a broker in respect of certain entries made in the seized diary. However, this by itself cannot be clinching evidence, nor can the petitioner contend that such factor cannot be discarded without cross examination of the deponents. The affidavits of such persons would certainly be a relevant factor to be taken into account by the Commission but can neither be sole nor a conclusive factor. In the present case the Commission, as noted earlier, has taken into account all the relevant factors and given cogent reasons to hold that the petitioner’s theory that he had acted as a broker in certain transactions was not correct. We find the reasons are quite convincing. It was precisely to demonstrate this that we have taken note of various facts and circumstances taken into account by the Commission. For example, Commission noted that though Bharat Thakkar, according to the petitioner, was a sub-broker in majority of these transactions, the petitioner had not disclosed his identity in his statement under Section 132(4) recorded two months after the search and did so for the first time while filing settlement application nearly two years later. Petition dismissed.
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2017 (6) TMI 876
TDS u/s 195 - Taxability as royalty or FTS - outright purchase - payment made towards supply of design and drawings to a nonresident architect firm - DTAA - P.E. in India - Held that:- Payment has been made by assessee to M/s. Naimisha directly for supply of drawings and design as per clause / Article 4.3 of the agreement dated 5.6.2000 and different amounts were required to be paid / paid with respect to different designs and drawings for different components of the project viz. InfotowerI, Infotower II etc. It is required to be noted that even "Bob Snow & Associates is not signatory to the agreement dated 5.6.2000 and agreement / contract dated 5.6.2000 is between the assessee and M/s. Naimisha only. Under the circumstances, the payment made by the assessee towards supply of design and drawings to M/s. Naimisha and the payment made under the agreement dated 5.6.2000 is rightly held to be outright purchase and not as a Royalty taxable under Section 9(1) of the Income Tax Act on which, the TDS was required to be deducted. Decided in favour of the assessee Payment to non resident for marketing activity as a reimbursement expenses - expenses were part and parcel of technical service related to income earned in India - Held that:- From the agreement, it appears that there is no service rendered by CII to the assessee. The assessee has not received any service and therefore, the question of utilization of service does not arise. The assessee was only to reimbursement expenses incurred by the CII. Therefore, when CII has not rendered any service to the assessee there is no question of treating the concerned expenses as if it is for rendering service by CII to assessee. Therefore, learned Tribunal as such has not committed any error in not treating the same as if it is for providing service by CII to assessee. The provision of Section 9(1) (vi)(vii) shall not have any application as the amount paid is neither Royalty nor fees for technical service (FTS) but is a business income. Therefore, the provision of Section 9 of the Income Tax Act also shall not be applicable as no income arise in India to CII and / or income does not accrue or arise in India. Tribunal has not committed any error in holding that the payment was made towards reimbursement of expenses and not reimbursement of service. We see no reason to interfere with the view taken by the learned Tribunal while holding that the payment in question made was towards reimbursement or expenses and not reimbursement of service. - Decided in favour of assessee
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2017 (6) TMI 875
Deemed dividend addition U/s.2(22)(e) - as assessee company is not a registered shareholder of M/s. Cheran Spinners Ltd, whether there can be any assessment under deemed dividend U/s.2(22)(e) of the Act in respect of the sum received by the assessee? - Held that:- In view of the judgment of the Madras High Court in Ennore Cargo Container Terminal P. Ltd (2017 (4) TMI 615 - MADRAS HIGH COURT) this Tribunal is of the considered opinion that the assessment U/s.2(22)(e) of the Act, has to be made only in the hands of the registered shareholder. The assessee company admittedly is not a registered shareholder. There cannot be any assessment in the hands of the assessee, as rightly submitted by the assessee. At the best, it can be assessed only in the hands of the so called common shareholders of the assessee company. - Decided in favour of assessee.
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2017 (6) TMI 874
Validity of assessment u/s 153C - wrong section was mentioned in the assessment orders - Notice for assuming jurisdiction for framing assessment order was issued under wrong section i.e. 153A instead of 153C - Held that:- In the present case, undisputedly no search warrant was issued in the name of the respondentassessee but the respondent-assessee had responded to the notice issued u/s 153A by filing return of income, participated in the proceedings till the matter resulted in framing of the assessment order. During the course of assessment proceedings, the respondent-assessee was given due opportunity of meeting the case made against him and in the result there was no prejudice caused to the respondentassessee. Furthermore, it is not the case of the respondentassessee that his case even does not fall within the scope and ambit of the provisions of section 153C of the Act. The only mistake on the part of the AO is in mentioning section 153A instead of 153C. In the facts of the preset case, the provisions of section 292B clearly come into play. Under the provisions of section 292B, certain acts are not to be treated as invalid by reason of mistake or defect or omission either in the return of income, assessment, notice, summons or other proceedings. Notice cannot be invalidated by reason of any mistake such as one occurred in the present case i.e. mentioning section 153A instead of 153C. If this mistake is not allowed to be cured, the very purpose and object of enacting the provisions of section 292B is defeated. This notice, in substance and effect, is in conformity with or according to the intent and purpose of the Act. Having respondent, participated in the proceedings, respondent-assessee cannot be allowed to turn around or raise objections for the first time before the CIT(A) seeking invalidation of the proceedings initiated by issuing notice u/s 153A instead of 153C
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2017 (6) TMI 873
Existence of an international transaction involving AMP Expenses between the assessee and its AE - Held that:- Remanding the matter relating to the existence of international transaction to the TPO/AO. The TPO/AO is further directed that selling expenses should not be considered within the ambit of AMP. The Ld. AR’s contention in the tabulated form for Annexure 3 annexed to his submissions for all the years has to be considered by the TPO/AO. For Assessment Year 2007-08 & 2008-09 though the Hon’ble High Court in case of Sony Ericson Mobile Communication India Pvt. Ltd.[2015 (3) TMI 580 - DELHI HIGH COURT ] has decided the legal issue against the assessee, the factual aspect related to international transaction related to AMP in assessee’s case has to be dealt with by the TPO/AO. Matter remanded back to the TPO/A.O for deciding as per the directions given hereinabove.- Decided partly in favour of assessee for statistical purposes.
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2017 (6) TMI 872
Rejecting the application of the assessee for registration under Section 12A - proof of activities outside India - Held that:- While granting the registration u/s.12AA(1), the DIT(E) on receipt of the application for registration of the institution has to satisfy himself about genuineness of the activities of the Trust and making such inquiries as may deem necessary in this behalf after satisfying himself about the objects of the trust or institution on the genuineness of his activities. In this regard as mentioned the objects of the trust are there to carry out the activities outside India but no activity as such has been carried out, and therefore, no approval of the Board is required to be taken from the Board. There is no necessity to make the amendment of the main objects. Also none of the activities has been brought to our notice by the learned DR and no material placed before us to show that any expenditure outside India has been incurred by the assessee or any activity outside India has been carried out. Thus the learned DIT(E) is not justified in denying registration u/s.12AA r.w.s. 12A of the Act. - Decided in favour of assessee.
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2017 (6) TMI 871
Addition on unexplained cash deposit - source of cash - peak theory applicability - Held that:- We find that there are four bank accounts of the assessee viz : two are with BOB at Vidhisha , one is BOB Habibganj, and other one is with Axis Bank. It is noticed that the assessee has made withdrawal of cash from one bank account and same is claimed to have been deposited with other bank account in cash. The assessee has filed cash flow statement in respect by merging all four accounts therein which explains the cash deposits. The peak amount as per cash flow statement comes to NIL. However, if we considered the individual bank account and cash deposit therein , then there would be some amount on account of peak, therefore, in such a case where no books of accounts are maintained the peak theory is best method to assess the actual income earned from such transactions. We find it appropriate to send this issue back to the file of the AO to examine the cash flow statement in the light of explanation as offered in respect of each and every entry and peak theory. The will calculate the peaks of each bank accounts separately. Addition as investment in property - Held that:- We find that the assessee had withdrawn a sum of ₹ 1,50,000 as reflected as Paper Book Page No. 42 of cash flow statement. Out of this an amount of ₹ 35,000 was paid in cash on ₹ 49000 was paid in cash on towards purchase of property. Thus, the source of cash payment of ₹ 84,000 is explained. Hence, addition of ₹ 84,000 is deleted. This grounds of appeal is allowed.
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2017 (6) TMI 870
Revision u/s 263 - no proper enquiry conducted by AO with respect to the documents found during the course of search at the premises of M/s ABL - lack of inquiry or inadequate inquiry - Held that:- A perusal of the documents on record reveal that the questionnaire was issued to the assessee during the course of assessment proceedings for the years 2005-06 to 2011-12. The first questionnaire was issued to the assessee by the Assessing Officer on 27.11.2012. The assessee gave detailed reply to the questionnaire on 11.12.2012 and 14.12.2012. The reply of the assessee is at page No. 6 to 10 of the paper book. A perusal of the reply reveals that questions were raised by the Assessing Officer with respect to document found/ impounded during the course of search at the premises of M/s ABL. Thereafter, another questionnaire was sent to the assessee by the Assessing Officer on 28.02.2013. The assessee vide communication dated 06.03.2013 gave detailed reply to the Assessing Officer answering the queries raised by the Assessing Officer. In the second questionnaire, the Assessing Officer had raised further queries with respect to the documents seized from the premises of M/s ABL. Thus, from the documents on record, it is evident that Assessing Officer had made enquiries during course of assessment proceedings with respect to the document seized/ impounded from the premises of M/s ABL. We find merit in the submissions of the ld. AR that it is not a case of ‘no enquiry’. Undisputedly, the present case is not the one which suffers from ‘lack of enquiry’. At the best the present case can be one of those where there was ‘inadequate enquiry’. Under such circumstances, the Commissioner of Income Tax cannot exercise his revisional jurisdiction. - Decided in favour of assessee.
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2017 (6) TMI 869
Valuation of closing stock - non-moving items in closing stock - Held that:- A perusal of the assessment orders placed on record shows that in the preceding assessment years and in the succeeding assessment years the Assessing Officer has not raised any objection in excluding the value of raw material which is more than 6 months old. Although, the assessee has been consistently following the same method of valuation of closing stock i.e. excluding the value of raw material which is more than 6 months old while determining the value of closing stock, the Commissioner of Income Tax (Appeals) has correctly restricted the addition to ₹ 3,64,990/- by following the ratio laid down in the case of Alfa Laval India Ltd. Vs. DCIT(2003 (9) TMI 43 - BOMBAY High Court) wherein approved the method of valuation of closing stock of obsolete item at 10% of the cost. Dissallowance of amount contributed by the assessee towards unapproved gratuity fund - Held that:- Vide rectification order dated 09-11-2015 passed u/s. 154 of the Act, the Commissioner of Income Tax (Appeals) rejected the claim of the assessee with respect to contribution towards unapproved gratuity fund. Thus, in view of the subsequent order passed u/s. 154 of the Act, ground have become infructuous. Disallowance of legal and professional charges - Held that:- The expenditure has been incurred by the assessee for the efficient conduct of its present business with more awareness of the competitors, new markets and the source of procurement of product in which the assessee is already dealing. The expenditure was not incurred for opening any new line of business hence, the expenditure incurred is not capital in nature. Disallowance of contribution made towards payments of premium of group gratuity fund with Life Insurance Corporation of India - Held that:- As in the case of Commissioner of Income Tax Vs. Jaipur Thar Gramin Bank (2016 (11) TMI 794 - RAJASTHAN HIGH COURT ) has held that once the assessee fulfills the condition laid down for approval after having created a trust with Life Insurance of India and the assessee has been regularly contributing towards the said fund, the claim of the assessee cannot be rejected on the ground that the Commissioner of Income Tax (Appeals) has not approved the fund. The assessee should not suffer for inaction of the revenue authorities. Thus, as now the Commissioner of Income Tax has approved the fund, the contribution made by the assessee towards group gratuity fund is allowable u/s. 36(1)(v) of the Act
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2017 (6) TMI 868
TDS u/s 195 - commission expenditure, allowed to non-resident agents - fee for technical services - DTAA - P.E. in India - nature of services - Held that:- The warehousing, logistic, inventory management, marketing and other support services being provided by the foreign agents cannot be described as ‘fee for included services’ or, as the case may be, ‘fee for technical services’, as defined under the relevant DTAAs, but only as business profits. We have also examined the impugned payments from the stand-point of the same qualifying as ‘royalty’, to find the same as not falling within the meaning of the term as defined under the relevant Articles. The foreign agents having no PE in India, the commission (remuneration) allowed to them for the said services, is not taxable in India. There is accordingly no liability to deduct tax at source u/s. 195 of the Act thereon. Section 40(a)(i) shall, therefore, not apply in respect of the impugned payments. There is no finding with regard to the foreign agents being tax residents of USA or, as the case may be, UK; the assessee not making it’s case with reference to the relevant DTAAs before the Revenue. Accordingly, subject to finding of it being so, we direct the deletion of the impugned disallowance. Disallowance of deduction u/s.10B - Held that:- he assessee’s undertaking ostensibly satisfies all the conditions of s. 10B, stands granted the approval by the Development Commissioner, to whom the power of approval has been delegated by the Board constituted u/s. 14 of the I(D&R) Act.We are thus not inclined to accept the reasons advanced by the ld. CIT(A) for not admitting the assessee’s evidence. So, however, to the extent that the matter would require being examined by the AO, we are in agreement with the ld. CIT(A). Accordingly, admitting the said letter, along with the other related documents, we restore the matter back to the file of the AO for necessary verification and adjudication afresh on merits. Deduction u/ss. 80G and 80-IB - Held that:- A ssessee’s income as per the returns filed is at a loss in fact endorses it’s stand of having not claimed the deductions in the absence of adequate GTI u/s. 80B(5) of the Act. Further, the particulars with regard to deductions stand furnished per the revised claim vide return dated 16.03.2011. We therefore find no reason for the Revenue for not entertaining the same. We may though clarify that our finding is limited to the right of the assessee in pressing its said claims. The AO shall consider the same on merits, deciding in accordance with the law. Computation of interest chargeable u/s. 234D - Held that:- The language of the section is unambiguously clear. The same refers to the amount of refund without breaking it into or defining it in terms of its’ elements. The interest chargeable there-under is compensatory in character, as in fact is the interest granted u/s. 244A. The Apex Court in CIT v. H.E.G. Ltd. [2009 (12) TMI 35 - SUPREME COURT] directed for grant of interest u/s. 244A for the period of delay in grant of interest u/s. 244A itself; having been not granted along with the grant of refund of tax, so that it had assumed the character of the principal. Thus no merit in the assessee’s claim of the interest u/s. 234D being restricted only to the tax component of the demand raised or the excess refund.
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2017 (6) TMI 867
Addition u/s 68- ingenue gift receipts - creditworthiness of the donors not proved - Held that:- The documents produced by the assessee to prove the creditworthiness of the donors itself showed that they did not have capacity to make the gifts, their respective capital and income earned during the year, as reflected in their balance sheet showing insufficient funds. Even the explanation of the assessee that they had liquidated their entire advances given to others to make the impugned gifts does not appear to be credible considering that no prudent person would liquidate his entire assets to gift it to somebody when there was no occasion to do so either and also considering the fact that the donors were ill and required treatment in hospitals and on medication. Addition made is warranted since after the assessee discharged its onus of proving the genuineness of the transaction by filing relevant documents, the Assessing Officer pointed out from the very same documents that the creditworthiness of the donors was not established, which we find the assessee has not been able to displace since no credible explanation was offered nor were the donors produced for cross examination when asked by the Assessing Officer to do so.- Decided against assessee. Addition on Long term Capital Gain by applying the section 50C - Held that:- In the case of the assessee transfer had taken place by virtue of agreement to sell only. Therefore, in the said case since no value has been assessed by the stamp duty value, therefore, provisions of section 50C of the Act would not apply in the case of the assessee. The word ‘assessable’ inserted u/s 50C of the Act w.e.f. 1.10.2009 would not apply to the assessment year under appeal i.e. assessment year 2009-10. Thus we are of the view that section 50C is not applicable in the present case and the addition made by the Assessing Officer by applying such provisions is, therefore, deleted. - Decided in favour of assessee.
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2017 (6) TMI 866
Non granting of interest on the tax deducted at source u/s 244A(a) - assessee contented in the proceedings U/s.154 interest should be granted right from first April 2004 till the date of passing the order - whether no claim of exemption U/s.10(10C)in the original return of income? - Held that:- As in the case of Tata Chemical Limited 2014 [2014 (3) TMI 610 - SUPREME COURT] held that. “Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest." In View of the above it is settled that if a resident deductor is entitled for the refund of tax deposited under Section 195, then it has to be refunded with interest under section 244A of the Act. from the date of payment of such tax.
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2017 (6) TMI 865
Validity of assessment u/s. 143(3) - assessee’s case was reopened on the basis of AIR information - Held that:- The notice under reference having been issued only on the basis of AIR information, it is clearly a AIR case. Sure, the assessee is not a party to the transaction in his personal capacity, but it needs to be appreciated that at the time of issue of notice it is the information received through the AIR return/s that is relevant, and there is no scope either for its verification or vetting or explanation at that stage. The ‘jurisdictional’ fact of the notice being in respect of an AIR case stands established, and its legality therefore cannot be questioned. The next question if the assessee having furnished the PAN of his brother, clarifying his role to be no more than his representative, the party of the first part in the sale deed, which is the subject matter of AIR information, ought the AO to have dropped the proceedings we find no legal mandate for the same. Rather, s. 119(1)(a) clearly places a restriction on the power of the Board to issue any orders, instructions or directions requiring any income tax authority to make a particular assessment or to dispose of a particular case in a particular manner. Finding the assessee’s return as inconsistent with the law, i.e., given the undisputed, admitted facts, he made adjustments to the returned income, to which in fact the ld. AR also conceded as valid in law and, in any case, are not disputed. The assessee’s challenge accordingly fails.
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2017 (6) TMI 864
Disallowance u/s 14A r.w.r 8D - Held that:- DR did not controvert the claim of the assessee that no exempt income was earned by the assessee, which does not form part of the total income, thus, we find force in the argument of the ld. counsel for the assessee and the conclusion of the Ld. Commissioner of Income Tax (Appeal), as in the present case, the assessee has not earned any tax free income, hence the provision of section 14A of the Act, will not be applicable. For Assessment Year 2009-10 we find that the assessee has not claimed any administrative expenses, as deduction, in its computation of income and the expenses of ₹ 69,70,878/- were met out from the group companies, which were recovered from them and showed as other income. The assessee has not claimed any expenses as deduction, thus, there is no question of any disallowance u/s 14A of the Act. It is also noted that, as claimed by the assessee, in respect of investment in group companies, the assessee has not received any dividend income and these investments were made in earlier Financial Years out of owned funds and thus the assessee has not incurred any expenditure in relation to the investment in group companies.
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Customs
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2017 (6) TMI 843
Valuation of imported goods - used offset printing machine along with standard accessories - enhancement of value of the imported goods in terms of local Chartered Engineer opinion - Held that: - local Chartered Engineer was not in possession of any additional information to decide the valuation. Virtually, he has not given any reference to the technical manual or information based on which value of the machines have been reassessed. In fact, the local Chartered Engineer has indicated the year of manufacture as 1984 as against 1975 by the Chartered Engineer at load port. Admittedly, the imported goods are more than 10 years old in terms of Import Trade Control Regulations in EXIM 2002-07 read with para 3.3 of the Handbook of Procedures of Vol-I. The importers have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992. The goods are therefore liable for confiscation under Section 111 (d) of the Customs Act, 1962 - redemption fine reduced to ₹ 60,000/- - penalty u/s 112 (a) upheld. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 842
Valuation of imported goods - used offset printing machines along with standard accessories - enhancement of value of the imported goods in terms of local Chartered Engineer opinion - Held that: - local Chartered Engineer was not in possession of any additional information to decide the valuation. Virtually, he has not given any reference to the technical manual or information based on which value of the machines have been reassessed. In fact, the local Chartered Engineer has indicated the year of manufacture as 1984 as against 1975 by the Chartered Engineer at load port. Admittedly, the imported goods are more than 10 years old in terms of Import Trade Control Regulations in EXIM 2002-07 read with para 3.3 of the Handbook of Procedures of Vol-I. The importers have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992. The goods are therefore liable for confiscation under Section 111 (d) of the Customs Act, 1962 - redemption fine reduced to ₹ 1,00,000/- - penalty u/s 112 (a) reduced to ₹ 50,000/-. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 841
Valuation of imported goods - used offset press - enhancement of value of the imported goods in terms of local Chartered Engineer opinion - Held that: - local Chartered Engineer was not in possession of any additional information to decide the valuation. Virtually, he has not given any reference to the technical manual or information based on which value of the machines have been reassessed. In fact, the local Chartered Engineer has indicated the year of manufacture as 1984 as against 1975 by the Chartered Engineer at load port. Admittedly, the imported goods are more than 10 years old in terms of Import Trade Control Regulations in EXIM 2002-07 read with para 3.3 of the Handbook of Procedures of Vol-I. The importers have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992. The goods are therefore liable for confiscation under Section 111 (d) of the Customs Act, 1962 - redemption fine reduced to ₹ 60,000/- - penalty u/s 112 (a) reduced to ₹ 30,000/-. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 840
Import of restricted item - second hand tyres - requirement of valid licence issued by DGFT for import - confiscation - redemption fine - penalty - Held that: - It is not in dispute that all second hand goods except second hand capital goods are restricted for imports in terms of para 2.17 of the Foreign Trade Policy, 2009-2014 - the Government of India vide Notification dt. 07.04.2006 had included used tyres as a restricted item - This being so, the appellant would require a specific licence for the import of such used tyres which has not been produced. The authorities have held that the goods have been imported in violation of condition that tyres must have a BIS certification except for tyres imported by Original Equipment Manufacturer (OEM) - We, however, find that this requirement is restricted only to newly manufactured tyres and are not applicable to used tyres. Hazardous waste nature of the imported goods - Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 - Held that: - there is no doubt that waste pneumatic tyres has been listed as a hazardous waste which can be imported only with the permission of MOEF. At the same time, the said entry excludes such waste pneumatic tyres which do not lead to resource recovery, recycling, reclamation or direct reuse - impugned goods will surely have to be considered as those capable of direct reuse, hence excluded from the purview of Entry B 3140 and consequently, falling in the category, which do not require permission of MOEF for importation - the imported tyres are used tyres, capable of direct reuse, accordingly they will fall in the categories excluded one 3140, they cannot be then treated as hazardous waste and hence their import will not require MOEF permission. Confiscability and imposition of penalty - Held that: - The goods being restricted and there being no specific licence for the import, the goods were rightly confiscated and penalty imposed in the impugned order - However, as we have found that imported goods cannot be treated as "hazardous waste", redemption fine under Section 125 of the Act but only for the purpose of re-export will not sustain. They can very well be permitted clearance for home consumption on imposition of redemption fine under Section 125 ibid. Also, considering that the goods were imported in April 2011 and have been lying in the customs custody ever since with demurrage and other charges mounting up, not to mention the deterioration in quality of the goods, toned down suitably. We therefore order that redemption fine under Section 125 ibid will be limited to 15% (fifteen percent) of the penalty under Section 112 ibid to 10% (ten percent) of the redetermined value. Appeal allowed - decided partly in favor of appellant.
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Corporate Laws
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2017 (6) TMI 837
Winding up the Company voluntarily - Held that:- Upon perusal of the Books of Accounts nothing objectionable has been noticed. No public interest elements have been involved. The Income Tax Department was also requested by the official liquidator to issue no due certificate. No reply has been received from the Income Tax Department. The Directors of the Company however, have filed affidavits duly notarized on 14.10.2015 declaring that there are no dues to the Government department or other authorities against the Company and no prosecution is pending. They also have agreed to indemnify in case any dues are found in future against the Company. The Registrar of Companies have also issued a letter of no objection against such winding up. From the facts above, it transpires that all necessary formalities have been completed and it is found that there is no objection to winding up the Company voluntarily and therefore, it is hereby directed that the Company shall stand dissolved from the date of this order. The Voluntary Liquidator shall preserve the books of accounts of the Company for the period of 5 years from today. He shall also ensure that the Official Liquidator is paid cost of ₹ 5,000/. The Official Liquidator's Report is disposed of accordingly
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Insolvency & Bankruptcy
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2017 (6) TMI 836
Corporate insolvency resolution process seeked by operational creditor - Insolvency and Bankruptcy Code, 2016 - maintainability of petition - petitioner having already taken recourse to the provisions of Section 9 of the Code against SEUPPTCL and filed a petition before the Allahabad Bench of NCLT? - Held that:- Petition is liable to be rejected. The petitioner himself has stated against column No. I of part IV of Form 5 at serial number (d) that the Corporate Debtor had fraudulently induced the applicant to enter into a Final Settlement and Consultancy Agreement dated 15.03.2016, without having intention to honour the obligation. If the petitioner himself has raised the issue of fraud and inducement and there is also a counter defence by the respondent with regard to the fraud and coercion, it would be the fittest case to categorically hold that there is a 'dispute' between the parties, which would disentitle the petitioner for an order of admission. It is pertinent to mention that the Final Settlement Agreement does not provide that in case SEUPPTCL fails to make the payment of ₹ 38 crores, the petitioner would be entitled to fall back upon the original agreement of the year 2010. That cannot be permissible, especially when the petitioner has already taken recourse to the proceedings under the Code against SEUPPTCL in Allahabad Bench of NCLT. Respondent has rightly referred to the term of the Final Settlement agreement dated 15.03.2016, which states that the parties now wish to enter into this Agreement by renegotiating the original sum payable to the petitioner as per clause 3 of the original agreement and have reached at an understanding to close the said service agreement to be replaced fully with this agreement. If this is the term of the Final Settlement Agreement, how could the petitioner file the insolvency resolution process against the respondent. It is stipulated that the amount agreed and understood between the parties shall be paid to the petitioner by SEUPPTCL agreeing further that the project stands completed.
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Service Tax
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2017 (6) TMI 863
Manpower Recruitment and Supply Agency Service - Erection, Commissioning and Installation service - reverse charge mechanism - Held that: - parent Company is a Manpower Recruitment and Supply Agency. Prima-facie, the demand of service tax under Manpower Recruitment and Supply Agency Service is not sustainable against the applicant - waiver of pre-deposit on account of demand under Manpower Recruitment and Supply Agency Service is granted. The demand has been confirmed against the applicant under the category of Erection, Commissioning and Installation service. The supplier of plant and machinery is not engaged in the activity of ‘Erection, Commissioning and Installation Services’ of plant and machinery. In fact, the said work has been done by an independent agency and the supplier has only supervised the work - the applicant is not liable to pay service tax on the activities of supervision of Erection, Commissioning and Installation of plant and machinery. Waiver of pre-deposit of entire amount of service tax, interest and penalty are granted - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 862
Refund claim - various input services - air travel services - Business Support services - Insurance Auxiliary services - Interior Designing consultancy services - Management, maintenance of repair services - Online data Retrieval and Access services - renting of immovable property services - rejection on the ground that the services cannot be considered as input services as per the definition of Rule 2 (l) of CCR 2004 - Held that: - there is no dispute as to the fact that the respondent is engaged in export of services for which he is availing the benefit of services provided by service provider and availed CENVAT credit of the service tax paid by such service provider - When all the conditions of the Notification No. 27/2012-CE (NT) dated 18.06.2012 are satisfied, there appears to be no scope for disallowing CENVAT credit on selected services and holding its refund ineligible - refund allowed - appeal dismissed - decided against Revenue.
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2017 (6) TMI 861
Good Transport Operator Service - Effect of retrospective validation of service tax on GTA services for the period prior to 1-6-1998 - reverse charge mechanism - The appellant has already deposited the entire amount of tax - recovery of interest and penalties - Held that: - The Hon’ble Supreme Court n the case of Commissioner of Central Excise, Baroda Vs. Gujrat Carbon & Industries Ltd. [2008 (8) TMI 4 - SUPREME COURT] held that the liability to file return is cast on the assessee only under Section 71A which was introduced in the Finance Bill, 2003 - Thus, during the period in question no notice could have been issued under Section 73 for non filing or the return under Section 70 as there was no requirement for filing of return by the service Recover. Hence, demand of interest and penalty cannot be sustained - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 860
Recovery proceedings against a dead person - penalty u/s 78 - Held that: - the appellant was a sole proprietorship concern and Shri William D Souza was the sole proprietor who died on 30.12.2011 when the appeal was pending before the Commissioner (Appeals) - reliance was placed in the case of Shabina Abraham Vs. Collector of CE & Customs [2015 (7) TMI 1036 - SUPREME COURT], where it was held that no recovery proceedings can be initiated against the dead person - present appeal abates.
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2017 (6) TMI 859
Business Auxiliary Services - Joint venture - sharing of consideration - Held that: - the appellants are not at all liable to pay service tax because as per the agreement between the appellant and their co-venturer GIT, the service has already been taxed and the service tax has already been paid by the co-venturer and it would amount to taxing the same transaction more than once under the different categories which is not the spirit of law - demand set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (6) TMI 858
Maintainability of appeal - monetary limit for filing appeal - monetary limit now fixed to ₹ 20,00,000/- - Sec. 35G of the Central Excise Act, 1944 r/w CENVAT Credit Rules - reduction of litigation - Held that: - such appeal shall not be filed in case where the tax effect does not exceed the monetary limits so given - We are concerned with the appeals by the respective departments before the High Court, monetary limit of which is fixed now to ₹ 20,00,000/-. Reliance placed in the case of Commissioner of Customs And Central Excise Versus Sesa Goa Limited [2017 (3) TMI 1493 - BOMBAY HIGH COURT], where it was held that once the appeals are disposed off in view of the above circumstances, based upon such circulars / instructions it shall not preclude such Commissioner of customs from filing any appeal, application, revision or reference in any other case involving the same or similar issues or questions of law. Appeal maintained as within monetary limits - application allowed.
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2017 (6) TMI 857
Refund of concessionary rate of duty - cars registered as taxi - N/N. 3/2001 dated 01.03.2001, issued under Section 5A(1) of the Central Excise Act - denial on the ground of time limitation - period of limitation under Section 11B - Whether N/N. 3/2001 dated 01.03.2001 (Sl.No.225 read with condition 40) is a special provision for a specific purpose comprising a self contained code governing the procedure and conditions for grant of refund in respect of vehicles registered as taxis and ambulances? - maintainability of appeal raised by respondent-assessee - Held that: - the claim of refund only comes under the notification No.3/2001 for the purpose of refund of the excise duty paid by the respondent assessee and it has to fulfil the conditions stipulated in the notification, failing which they are not entitled to the benefit of exemption, under such notification. Therefore, the contention of the respondent assessee that the instant case relates to the determination of rate of duty of excise and so the appeal will not lie within the jurisdiction of this court, cannot be accepted. The respondent assessee has claimed refund of excise duty by accepting the conditions prescribed in the N/N. 3/2001 dated 01.03.2001. Without challenging the said notification, the respondent assessee cannot have any right to claim the refund under Section 11B of the Act. Whether the time limit of six months under the notification is only a procedural condition or is it mandatory? - Held that: - All the conditions in the notification have been complied with, by the respondent assessee, except Clause 40(b). Therefore, non compliance of the same, is only a procedural lapse and it can be relaxed - reliance was placed in the case of Commissioner of Central Excise vs. Exide Industries Ltd. [2008 (11) TMI 268 - HIGH COURT AT CALCUTTA], where it was held that when the substantive conditions have been fulfilled, the procedural conditions can be relaxed - the refund claims filed by the respondent assessee, are within the time limit specified under Section 11B of the CEA, 1944. The notification under dispute provides partial exemption of excise duty, on fulfilment of conditions. Condition No.40(b) of the notification provides that the claim for refund of duty has to be filed before the expiry of six months, from the date of payment of excise duty on the said motor vehicle. Condition 40(c) states that the certificate issued by the State Transport Authority has to be filed within three months or in the extended period of further three months, from the date of clearance of the said motor vehicle from the factory. Condition 40(d) provides that when the excise duty has been collected from the customers in excess, of the exemption notification then the same has to be returned to the customers and the evidence has to be submitted to the Deputy Commissioner or Assistant Commissioner of Central Excise, to the effect that the said amount has been duly returned to the buyer - the above procedure clearly shows that the notification is a complete code by itself and operates on its own. Section 5A authorises the issuance of such notification with such conditions and the source of granting absolute or partial exemption and the way of giving the exemption, by way of refund on fulfilment of post condition of removal and subject to the proof that excess excise duty is returned to the customer makes the notification as a complete code, by the powers exercised under Section 5A of the Act. The concept of unjust enrichment is also taken care in this notification and on fulfilment of return of excess excise duty only, the benefit is given to the manufacturers. Therefore, Section 11B of the Act would have no role to play in the instant case. Section 11B would not govern the provisions of a Special Scheme and therefore there is no scope for invoking Section 11B of the Central Excise Act. The Hon'ble Supreme Court in the case of Sarabhai M.Chemicals [2004 (12) TMI 89 - SUPREME COURT OF INDIA], has held that the conditions prescribed in the exemption notification have to be strictly construed. Therefore, the notified time limit has to be strictly construed and there is no scope for liberty in implementation of the condition. The condition prescribed in the N/N. 3/2001 dated 01.03.2001 has been strictly complied with and the respondent assessee has claimed for exemption of excise duty. The said notification is issued by exercising the powers under Section 5A of the Central Excise Act, 1944. Therefore, the said provision is an independent one and Section 11B of the said Act would not apply to the notification issued under the powers vested. Appeal allowed - decided in favor of appellant-Revenue.
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2017 (6) TMI 856
100% EOU - shortage of stock - polished granite slabs - the appellants being 100% EOU having goods stored in bonded premises for the intended purpose and having undertaken to export the goods produced within the 100% EOU, have not accounted for the said goods, duly. The shortage of polished granite slabs is due to unaccounted disposal of the same, as no explanation was offered by the appellant for such shortage - Held that: - the appellant being EOU are having bonded premises in which they undertake approved operations and the products arising out of such operation are to be exported. In case the same are to be cleared on Domestic Tariff Area (DTA), required procedure is to be followed. Admittedly, no such procedure has been followed by the appellant and the shortage of produced goods has not been explained. We note that the appellants are put to duty liability in terms of Section 3 (1) proviso. The said proviso stipulates the method of arriving at the quantum of duty of excise which shall be levied and collected at any excisable goods which are produced or manufactured by 100% EOU. Regarding the correctness of stock taking, the stock taking has been conducted in the presence of independent witnesses and the authorized representative of the appellant. The authorized representative in his statement dated 06/10/2000 clearly stated that physical stock verification was conducted in his presence and he was satisfied in the manner of stock taking. The shortage noticed in the present case is more than 600 sq. mtr. of polished granite slab. Appeal dismissed - decided against appellant.
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2017 (6) TMI 855
Classification of goods - body building for motor vehicles on chassis falling under CETH 8706 - N/N. 6/2006-CE and 12/2012-CE - Revenue entertained a view that the appellants are engaged only in building or fabricating bodies on the chassis and they do not manufacture motor vehicle but only bodies of motor vehicle - whether such goods cleared by the appellant are classifiable under Heading 8704 as “motor vehicles for transport of goods” or under Heading 8707 as “bodies (including caps) for the motor vehicle of Headings 8701 to 8705”? - Held that: - the appellants were building bodies on the chassis classified under Heading 8706. Such activity is deemed to be manufacture of a motor vehicle in terms of the above chapter note. A plain reading of the chapter note alongwith the relevant tariff headings makes it clear that the product cleared by the appellant after body building activity is a “manufactured” motor vehicle. Considering the nature of motor vehicle, which is for transport of goods, the same has to be classified under Heading 8704 - the claim of refund under Rule 5 of CCR, 2004 in Automobile Corporation of Goa Ltd. vs. CCE, Goa [2011 (9) TMI 399 - CESTAT, MUMBAI] held that the independent body builders are manufacturers of body on their own account and, hence, are to be considered as manufacturers of motor vehicle. CENVAT credit - availment of credit on inputs used by the appellants, appellant have reversed credit attributable to inputs used in manufacture of exempted goods - Held that: - it is a settled position that reversal of credit amounts to non-availment - reliance placed in the case of Commissioner of Central Excise, Mumbai- I Versus M/s Bombay Dyeing & Mfg. Co. Ltd [2007 (8) TMI 2 - Supreme Court], where it was held that Reversal of Cenvat Credit would amount to non taking credit. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 854
SSI exemption - CENVAT credit - denial on the ground that the appellant has availed credit in violation of sub rule (2) of Rule 11 of CCR, 2004 - Held that: - the Commissioner (A) have reached to the conclusion that After crossing the SSI exemption limit in 2005-06, the appellant cleared their goods on payment of duty and did not avail the CENVAT credit of the inputs in their lying stock of finished goods at that point of time. In the following year 2006-07, they again opted for the SSI exemption making them ineligible to avail of the credit in balance. Thus, the CENAT credit of ₹ 2,16,445/- availed and utilised by the appellant in 2007-08 is not bound by law and is liable to be demanded and the interest demanded and penalty imposed are also in order - demand upheld - appeal dismissed - decided against appellant.
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2017 (6) TMI 853
Natural justice - denial of cross-examination - CENVAT credit - fake invoices - it was alleged that only on the basis of input invoices without receiving goods mentioned against those invoices in their factory premises - Held that: - the adjudicating authority ought to have allowed cross-examination of these witnesses - it has been held in a series of cases including in the case of Andaman Timber Industries Vs. C.C.E., Kolkata II [2015 (10) TMI 442 - SUPREME COURT] that the statement of the persons relied upon in confirming the demand be allowed to be cross-examined - appeals are allowed by way of remand to the adjudicating authority for deciding the issue afresh after allowing cross-examination witnesses - appeal allowed by way of remand.
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2017 (6) TMI 852
Natural justice - denial of cross-examination - CENVAT credit - fake invoices - it was alleged that only on the basis of input invoices without receiving goods mentioned against those invoices in their factory premises - Held that: - the adjudicating authority ought to have allowed cross-examination of these witnesses - it has been held in a series of cases including in the case of Andaman Timber Industries Vs. C.C.E., Kolkata II [2015 (10) TMI 442 - SUPREME COURT] that the statement of the persons relied upon in confirming the demand be allowed to be cross-examined - appeals are allowed by way of remand to the adjudicating authority for deciding the issue afresh after allowing cross-examination witnesses - appeal allowed by way of remand.
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2017 (6) TMI 851
Benefit of N/N. 14/2002- CE dated 01.03.2002 - denial on the ground that documents evidencing payment of duty were not produced - Held that: - as per explanation to the exemption notifications creates a legal fiction, specifying that for the purpose of conditions of this notification, textile yarn or fabrics shall be deemed to have been duty paid even in the absence of production of documents evidencing payment of duty thereon, as no duty is payable on Textile Fabric. Therefore, the appellant is not required to produce duty paying documents - benefit of N/N. 14/2002-CE is available to the appellants - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 850
Area based exemption - N/N. 56/2002-CE dated 14.11.2002 - denial on the ground that the factory is not located in the notified area covering by the notification, as they have mentioned that the factory is located in village Narwal Pain - Held that: - the unit is situated at Khasra No.239/152, Tehsil Jammu and the original Bandobasti Khasra No.152 of village Narwal Pain, Jammu - Khasra No.152 is mentioned at Sr. No.2(l)(A)(2) against name of Industrial Area as Jammu Cantonment. The appellant’s unit situated at Khasra No. 152 is eligible for exemption under N/N. 56/2002-CE dated 14.11.2002, as amended, as it falls under specified area as shown against Sr. No. 2(I) (A) (2). Consequently, the appellants are eligible for the refund claims. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 849
Rectification of mistake - It is the case of revenue in this ROM that appeal number as mentioned in the above reproduced portion of final order is erroneous as the impugned order in this appeal is numbered as '51/2014 (V-1) CE, dt. 28.11.2014' - Held that: - the bench has inadvertently mentioned the Order in Appeal as 11/2013 whereas the impugned order specifically indicates that it is the appeal number 11/2013 filed by appellant before Commissioner of Appeals and Order in Appeal mentioned in the order is "51/2014(V-1 )CE, dt. 28.11.2014" - the final order No. A/31450/2016, dt 19.12.2016 the first sentence is to be read as: The above appeal arising out of Order-in-Appeal No. 51/2014(V-1) CE, dated 28.11.2014 - ROM application allowed.
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2017 (6) TMI 848
CENVAT credit - design and development charges for the 3-Wheeler project - Revenue felt that the design and development charges for the 3-Wheeler project after 6 months of sale of goods do not fall within the definition of ‘manufacture’ under section 2(f) of the Central Excise Act, 1944 and the credit of ₹ 6,10,580/- taken by them was therefore, not admissible - Held that: - the Ld. Commissioner (Appeals) has not given any findings on some of the substantive grounds raised by the appellant and summarised in Para 3 (2), 3(3), 3(4) and Para 3(7) of impugned order. The first appellate should have given his findings on the averments in these paragraphs and whether that has any impact on the case of the appellant. Besides, no finding has been given on the case laws relied upon by the appellants in their support. In view of the above, the matter needs to be examined afresh by the Ld. Commissioner (Appeals) - appeal allowed by way of remand.
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2017 (6) TMI 847
Clearance of capital goods without payment of duty - demand of duty with interest and penalty - Held that: - capital goods was acquired a long back by the appellant. No depreciation has been allowed to the appellant when the capital goods have been cleared after used. Therefore, the demand against the appellant on this account is not sustainable - the contention of the appellant is that they have not taken the Cenvat Credit on these capital goods. The said fact remained un-verified at the end of the Adjudicating Authority, in that circumstances, benefit of doubt goes in the favor of the appellant - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 846
CENVAT credit - M.S. Channels, Angles, Beams etc. - duty paying invoices - input services - transfer of electricity from outside to the factory grid by using cables and other capital goods - Held that: - in bringing power from the outside to the factory premises by laying down cables to be used in or in relation to the manufactured of final product, covered by the decision of this Tribunal in Shri Shyam Iron Udyog Pvt. Ltd's case [2009 (8) TMI 593 - CESTAT, KOLKATA], where it was held that the credit had been disallowed on the ground that the cable was used outside the factory but the appellant relied on the various cases in which credit was allowed thus the matter is to be reconsidered afresh, and credit was allowed subject to verification - credit allowed. CENVAT credit on M.S. Angles, Channels, Beams etc, - Held that: - issue is covered by the judgement of the Principal Bench of this Tribunal in Singhal Enterprises Pvt Ltd's case [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - credit allowed. CENVAT credit on input services used for erection of transmission lines, towers, etc., for bringing electricity from outside the factory premises - Held that: - the issue is covered by the Larger Bench decision of Tribunal in Parry Engineering & Electronics Pvt. Ltd's case [2016 (1) TMI 546 - CESTAT AHMEDABAD], where Hon’ble Bombay High Court in the case of Endurance Technologies Pvt. Ltd. [2015 (6) TMI 82 - BOMBAY HIGH COURT] held that Cenvat credit is eligible on maintenance or repair services of Windmills, located away from the factory - credit allowed. Credit availed on invoices, issued by their sales office - denial on the ground that sales office is not registered as the input service distributor during the relevant period - Held that: - the issue is covered by the judgment of the Hon’ble Gujarat High Court in Dashion Ltd's case [2016 (2) TMI 183 - GUJARAT HIGH COURT], where it was held that when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not dis-entitle the assessee from the entire Cenvat credit availed for payment of duty - the mistake is only procedural and credit is allowed. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 845
100% EOU - refund claim of accumulated CENVAT credit - rejection on the ground of non-availability of evidence for accumulation of credit in Form E-2 and also on account of time limitation - Held that: - It is settled law that procedural infraction of notification/circular should be condoned if exports have really taken place - in the case of Mangalore Chemicals & Fertilizers Ltd. V. Deputy Commissioner [1991 (8) TMI 83 - SUPREME COURT OF INDIA] while drawing distinction between the procedure condition which is technical in nature and a substantive condition, it was held that procedural lapse of technical nature can be condoned so that substantive benefit is not denied - in this case there was only a procedural lapse and therefore the impugned order is liable to be set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 844
100% EOU - CENVAT credit - input services - catering services - outward freight services - event management services - house keeping services - cab hiring services - consultancy on construction service - denial on account of nexus - Held that: - the credit availed on out-door catering prior to 1.4.2011 is allowed as input service and appellant has not claimed any CENVAT Credit after 1.4.2011 in the present case - credit allowed. Outward freight - Held that: - the appellant has claimed credit till 31.3.2011 and also after 1.4.2011 but has not produced sufficient proof by way of documents and with regard to this input service, the matter will be examined by the original authority - matter on remand. Event management relating to annual day - house keeping services - Held that: - the credit availed till 31.3.2011 is permissible - Similarly the input service relating to house keeping is allowed till 31.3.2011 and also after 1.4.2011 - credit allowed. Input service of cab hiring as well as consultancy service relating to construction - Held that: - the credit availed is after 1.4.2011 which is not permissible as per the amended definition of input service defined in Rule 2(l). After the amendment, in the input service definition, these two input services have been specifically excluded. Therefore, the appellant is not entitled to CENVAT credit on these two services - credit denied. Appeal disposed off - part credit allowed, part credit denied and part matter on remand.
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CST, VAT & Sales Tax
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2017 (6) TMI 839
Works contractor - furnace oil and hytherm oil purchased by JTP against Form XVII - concessional rate of tax - The Tribunal found that JTP had processed yarn and cloth, which was supplied to its buyers/customers and therefore, in terms of Section 3(3) of the 1959 Act, it was not entitled to the concessional rate of tax. Based on this reasoning, the Tribunal came to the conclusion that there was a clear violation of Section 45(2)(e) of the 1959 Act and thus, penalty under Section 23 of the very same Act, was warranted. Whether penalty under Section 23 of the Tamil Nadu General Sales Tax Act is imposable when the ingredients of Section 45(2)(e) of the Tamil Nadu General Sales Tax Act, more particularly the words fails without reasonable excuse to make use of the goods for the declared purpose, has not been satisfied? - Whether in the given facts and circumstances of the case, under Section 23 of the 1959 Act, the Assessing Officer could have straight away impose penalty on the Assessee at the maximum rate of 150%? Held that: - A perusal of Section 3(3) of the 1959 Act, would show that an Assessee can avail of the concessional rate of tax of 3%, only, if the consumable, in this case, furnace oil and hytherm oil, is used in the manufacture of goods, which are sold by him - while in the present case, the findings of fact recorded by the Adjudicating Authority, which have been affirmed by the Tribunal, to the effect, that JTP had processed cotton fabric, albeit, on a job work basis, we have no difficulty in accepting the submission of Ms.Hemalatha, that, job work would fall within the scope and ambit of the expression manufacture , Having said so, what we are not able to agree with, is that, manufacture, in this case, processing, can be done in respect of a third party's property - thus, the concessional rate of tax of 3% was not available to JTP. The JTP, was thus, as found by the Adjudicating Authority, required to pay tax at the usual and normal rate, which at the relevant time was 12%. Penalty - quantum of penalty - Held that: - A mere perusal of Section 23 would show that, if it is found that a person is guilty of any offence under clause (e) of subsection (2) of Section 45 of the 1959 Act, the Assessing Officer "may" after giving a reasonable opportunity of being heard to the Assessee, impose by way of penalty, a sum, not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods, at a rate, which is equal to the rate prescribed in the First Schedule to the said Act, less the concessional rate i.e., 3% - The incorporation of the word may in Section 23 gives discretion to the Assessing Officer to levy penalty up to a maximum rate of 150% - Similarly, Section 45 (2) (e) of the 1959 Act, mandates that penalty can be levied, if the Assessee fails to make use of the goods, without reasonable excuse for the declared purpose. The matter is remanded to the Adjudicating Authority for the limited purpose of de novo quantification of the penalty. Part matter decided in favor of Revenue and part matter on remand - revision application disposed off.
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2017 (6) TMI 838
Interpretation of statute - Denial of deferral scheme - Revenue case is that the guidelines issued by the Government, vide G.O.Ms.No.119 of Commercial Taxes and Religious Endowments Department, dated 13.04.1994, states that the Company has to achieve its production volume and base sales volume in order to avail itself of the interest free sales tax deferral facilities - Held that: - due to divergent views taken by the High Court and Supreme Court in the matter, in the case of India Cements Limited, the impugned order has to be set aside and the matter requires fresh consideration - petition allowed by way of remand.
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