Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 24, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 271(1)(c) - by showing a non existing liability as an existing liability, in the subject assessment year, the attempt was to escape offering of the ceased liability as income obliged to do under Section 41(1 - Levy of penalty confirmed - HC
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Sale of four flats constructed by the Society by utilising additional FSI available with it - treatment as business income - flats were allotted to members - receipt not taxable - HC
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Addition u/s 68 - increase in share capital - assessee has not only proved the creditworthiness of the said share holders but also proved the source of the source, for which though no onus lie on him - No addition - AT
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Reopening of assessment - notice issued u/s 148 reveals that the approval has been accorded by the Additional Commissioner of Income-tax, who is not competent authority referred to in the first proviso to Sec. 151(1) - Reassessment proceedings quashed - AT
Customs
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Recovery of demand through bank - current account was frozen - whether the bank is bound to keep the amount lying to the credit of the current account of the Plaintiff in a Fixed Deposit. - No interest is payable on a current account or an account in the nature of a current account - HC
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Revocation of CHA license - period of limitation - principle of natural justice - Failure on the part of CHA to perform its duties - The loss of more than ten years of business and livelihood for the appellant cannot be allowed to continue. - AT
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Classification - import of Rice Milling Rubber Roller and Paddy Dehsuking Rubber Roller - goods shall be classified under the CTH 40169990 - The switchover to 8 digit classification has no direct impact in applying the section notes. - AT
Service Tax
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Recovery of service tax from the FCI where service provider failed to deposit the amount with the service tax department - was there any due of Kailash Enterprise from FCI? - The answer is obviously in the negative. Section 87 of the Finance Act, 1997 was therefore wrongly invoked - HC
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Cenvat Credit - As the payment of service tax is not in disputed, in that circumstances, the cenvat credit cannot be denied to the appellant on account of excess service tax paid by the service provider - AT
Central Excise
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Refund - valuation - The liquidated damages have to be deducted from the assessable value given in the invoice in respect of payment of central excise duty - refund of excess duty paid allowed - AT
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Cenvat Credit - Job Work - assessee sent their grey man-made fabrics to the job worker for processing and return - Revenue took the view that these goods, being in the nature of finished products, cannot be cleared to the job worker under Rule 4(5)(a) read with Rule 12B of Central Excise Rules, 2002 - contention of the revenue is not correct - AT
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Cenvat Credit - Common inputs - emergence of exempted waste - though coke fines arise during the course of manufacture of the final products and are exempted, this cannot be considered as an exempted final product but are having the colour of process waste - Credit not required to be reversed - AT
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Cenvat Credit - common inputs - Scope of Rule 6(3) - Exempted goods versus non-excisable goods - credit cannot be availed where the products are not excisable - Rule 3 of CCR itself restrict the credit - Rule 6 does not come into operation - entire credit to be reversed - AT
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Claim of refund of amount of cenvat credit reversed - Compounded Levy Scheme opted - the credit of duty taken and utilized in respect of not only inputs in stock, but also contained in finished products as on the date of introducing, the Compounded Levy Scheme is not recoverable - refund allowed - AT
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Cenvat credit of Education Cess and Secondary and Higher Education Cess debited through DEPB credit - The denial of credit is unjustified - credit allowed - AT
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Cenvat Credit - Scope of Rule 6 - pay an amount @8% (6% w.e.f. 07/07/2009) or to reversal proportionate credit - Mere failure to exercise the option under Rule 6(3A) cannot take away the benefit available to assessee - The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option available to the assessee - AT
VAT
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Input Tax Credit - correct amount of input tax rebate - scope of inputs - manufacturing activity - various electrical or electronic goods including air conditioner, air cooler, fax machines - credit allowed - HC
Case Laws:
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Income Tax
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2016 (6) TMI 855
Reopening of assessment - Tribunal set aside the entire assessment proceedings only on the ground that reopening of the assessment was not permissible in law - Held that:- The conclusions of the Tribunal are completely opposed to the decision of Supreme Court in case of Assistant Commissioner of Income tax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007 (5) TMI 197 - SUPREME Court ) wherein held So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1). The sole ground on which the Tribunal quashed the reassessment, therefore, is not legally sustainable. The judgement of the Tribunal is therefore, set aside. Both the appeals are restored before the Tribunal for fresh consideration and disposal in accordance with law keeping all other contentions of both the sides open. By way of abundant caution, we clarify that it would be open for the assessee to challenge the validity of reopening on all grounds other than the one which we have found not sustainable. - Decided in favour of revenue
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2016 (6) TMI 854
Reopening of assessment - capital gain v/s business income - Held that:- Assessing Officer was acutely conscious of the nature of transactions, the assessee's contention that the income was in the nature of capital gain and not business income. It was in this context that the assessee had claimed such expenditure for earning such income. Assessing Officer disallowed such expenditure while not disturbing the source of income disclosed by the assessee. In fact, the Assessing Officer proceeded on the basis that the income was in the nature of capital gains and this is precisely why the Assessing Officer disallowed the expenditure. Any reassessment of the said issue, would permit the Assessing Officer a second innings which is not envisaged under the power of reassessment.- Decided in favour of assessee
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2016 (6) TMI 853
Eligibility of deduction under section 80IB - whether once the prescribed authority grants approval under subrule (2) of rule 18D of the Income Tax Rules, 1962, the revenue cannot deny deduction under section 80IB read with rules 18D and 18DA and thereby considering such grant of approval to be the sole requirement for granting deduction under section 80IB(8A)(ii) of the Act? - Held that:- Once the approval is granted by the prescribed authority and such approval is valid, it would no longer be open for the Assessing Officer to verify the satisfaction of the conditions prescribed under rule 18DA in order to refuse deduction under subsection( 8A) of section 80IB of the Act. This however, does not mean that other issues relevant to the claim of deduction by the assessee would be taken away from the jurisdiction of the Assessing Officer. We do not share the anxiety of the counsel for the Revenue that interpretation that we have adopted would divest the Assessing Officer from examining any claim of deduction under the said provisions and grant deduction mechanically without verifying the claim. For example, in this very case, the Assessing Officer had doubt about the sample storage income being part of the income from eligible business. After hearing the assessee, he disallowed the deduction holding that the same does not form part of the income of the assessee's business of scientific research and development. In the result, while answering the question in favour of the assessee, we clarify that the power of the Assessing Officer to verify the claim of deduction is not taken away. He can certainly verify the accounts and refuse deduction which does not form part of section 80IB( 8A) and the income which does not arise out of the eligible business. He however, cannot ignore the approval granted by the prescribed authority and hold that the prescribed conditions are not fulfilled by the assessee. - Decided against revenue
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2016 (6) TMI 852
Sale consideration of the shares - treated as income under the head 'Capital Gains' OR' Income from other sources' - Held that:- The receipt of consideration by the respondent assessee is only on account of the sale of its shares in M/s. Chaitra Realty Ltd. to M/s. Vishal Nirman (India) Ltd. This consequent to the offer letter received by it from the buyer i.e. M/s. Vishal Nirman (India) Ltd. which in fact is a concurrent finding by the CIT(A) and the Tribunal. This view taken on facts is a possible view and not shown to be perverse. This determination of fact viz. respondent assessees had sold its shares in M/s. Chaitra Realty Ltd. was determined on consideration of all the evidences led by the Revenue and does not involve the application of any principle of law to determine the same. Thus, the above determination is not a mixed question of fact and law as urged by the Revenue but a pure question of fact. In any event, the Revenue has made no attempt to show how the receipt of consideration by the respondent assessee is on revenue account to attract its classification as 'Income from other Sources'. - Decided against revenue
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2016 (6) TMI 851
Grant of absolute stay on the recovery proceedings pending disposal - whether the exercise of discretion on the part of the first respondent is proper and does the impugned order call for interference? - whether the petitioner is entitled for the grant of exemption under Section 10(21) of the Income Tax Act? - Held that:- It is true that this Court is not considering the correctness of the Assessment Order dated 31.03.2015. Therefore, this Court refrains from making any observation touching upon the merits of the Assessment order. Nevertheless, this Court is convinced that the petitioner has made out a good prima facie case supported by three orders passed by the Income Tax Appellate Tribunal for the earlier years and as of now, there is nothing on record to show that the decision of the Income Tax Appellate Tribunal has been either reversed or modified or stayed by this Court in an appeal filed by the Department before this Court. That apart, when this Court entertained the writ petition, has passed a speaking order on 23.06.2015, granting an order of interim stay. This Court is of the view that the recovery proceedings shall remain stayed till the appeals are heard and disposed of by the second respondent.
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2016 (6) TMI 850
Entitlement to deduction under Section 80 IA without setting off the losses/unabsorbed depreciation pertaining to the windmill - Held that:- Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.
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2016 (6) TMI 849
TDS u/s 194C - non deduction of tds on payment to contractors - Held that:- The persons engaged by the four mentioned persons were not sub-agents but they were working for the principal namely, the assessee in this case. The payment made to those persons through the hands of the aforesaid four persons is a payment made directly by the assessee to those persons because well settled principles of law is that when one acts through another, he acts himself. Except for the four letters there was no other evidence available. On the basis of the aforesaid four letters it was not possible to hold that the aforesaid four persons were sub-contractors nor was it possible to hold that the assessee had assigned the work entrusted with him to those four contractors. Unless these two facts were proved, the question of Section 194C(2) becoming applicable to the assessee could not arise. - Decided in favour of assessee
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2016 (6) TMI 848
Addition under Section 68 - Addition of a sum of was made on the basis that the assessee had allegedly taken loan from the corpus fund, which the assessee has denied - Held that:- C.I.T.(A) has correctly held that there is no knowledge as to what the corpus fund is. The C.I.T. also opined that there was no material on the basis of which the aforesaid addition could be made and on that basis the C.I.T. deleted the addition. The learned Tribunal correctly concurred with such finding of the C.I.T.(A). As regards other sum the addition was found altogether unmeritorious because “all these amounts are paid by cheque out of accounted fund in the regular books of accounts. A copy of the confirmation along with the bank statement in respect of the assessee’s accounts with Bharat Overseas Bank is filed, duly confirmed by Shri A E Medhora on behalf of M/s. Novrojee & Co. A copy of the bank account disclosed and the regular books of accounts were filed before the Ld.CIT(A) which were also made available before the AO. Based on these submissions, the ld.CIT(A) has correctly deleted the same also confirmed by ITAT - Decided against revenue.
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2016 (6) TMI 847
Penalty u/s 271(1)(c) - concealment of income with respect to the addition made u/s 41(1) of the Act on account cessation of liabilities - Held that:- In penalty proceedings all three authorities have concurrently arrived at a finding of fact that the claim made by the assessee with regard to its outstanding liabilities for subject assessment year was false. These findings of fact are not shown to be perverse in any manner. The legal claim made before us that once a liablility is shown in the balance sheet, it must follow that it is bonafide, is not understood. The liability shown in the balance sheet as existing is found to be false. The assessee has to show the reason why he believed at the time he filed his balance sheet, it was true. No such attempt was even made. It was next contended that no claim was made in the return of income and therefore imposition of penalty under Section 271(1)(c) of the Act cannot be sustained. We are unable to appreciate the above submission. The fact is that in terms of Section 139 of the Act a return of income under the Act has to be filed along with the balance sheet and profit and loss account. In its absence the return of income is defective. Thus, same are to be considered as a part of the return of income. Further by showing a non existing liability as an existing liability, in the subject assessment year, the attempt was to escape offering of the ceased liability as income obliged to do under Section 41(1) of the Act. Thus, not offering to tax, the above ceased liabilities would by itself amount to furnishing inaccurate particulars of income leading to escapement of income from tax. - Decided against assessee.
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2016 (6) TMI 846
Revenue receipt of society - collection by the assessee society as interest free loan from incoming members as a binding precondition for becoming a member - Held that:- The issue arising herein namely: loans taken from incoming members which have in fact been returned to the incoming members, cannot be treated as Income of the respondent assessee. This issue stands concluded against the Revenue and in favour of the respondent assessee by the decision of the Apex Court in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. Commissioner of IncomeTax, (2004 (9) TMI 6 - SUPREME Court ). Sale of four flats constructed by the Society by utilising additional FSI available with it - treatment as business income - Held that:- Tribunal on examination of the facts before it has came to the conclusion that the contribution of ₹ 1.10 Crores received by the Society was from its members (four new members) and the allotment of four new tenaments was also done only to the existing members. It is an undisputed position that the four new members were members of the Society prior to the allotment of the tenaments to them and also before making their contribution. It is not the case of the Revenue that there is absence of complete identity of the contributors and participants of the Society. So far the second test is concerned viz. that the actions of the Society must be in furtherance of the object of the Society. This is also satisfied. This is so as it is not the case of the Revenue that building tenaments and giving it to its members is not the object of the Society. Thirdly, there is no scope for profiteering in the present facts, as the members have not purchased the flat but have only got a right to occupy a tenament allotted by the Society. Thus, on facts, the Tribunal has so held without specifically referring to the three tests. Thus, on facts, the view taken by the impugned order stand covered in favour of the respondent Society.
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2016 (6) TMI 845
Levy of penalty under Section 271(1)(c) - disallowance on account of capitalization of interest related to capital work in progress under Section 36(i)(iii) - ITAT deleted penalty - Held that:- Tribunal held that the disallowance on account of capitalization of interest related to capital work in progress under Section 36(1)(iii) of the Act, the Distillery Division of the assessee had already started functioning and since the details of funds utilized for individual projects were not reconcilable, the assessee had agreed for disallowance of proportionate interest for which the assessee cannot be held liable for either concealing particulars of income or furnishing inaccurate particulars of income. Similarly, though the issue of disallowance of proportionate interest under Section 14A of the Act was not agitated before the Tribunal due to smallness of amount of ₹ 27,562/- but due to the factum that interpretation of this provision had not been settled finally, therefore, no penalty under Section 271(1)(c) of the Act was exigible. Equally the disallowance on account of repair and maintenance under Section 40(a)(ia) of the Act was made on estimate basis and finally the disallowance had been restricted by the Tribunal at ₹ 1 lac during quantum proceedings. Regarding deletion of penalty by the CIT(A) on addition made on account of deferred tax computed on book profits under Section 115JB of the Act, the Tribunal had observed that clause (viii) was inserted to Explanation 1 below Section 115JB(1) by Finance Act, 2008 but was made retrospective. Since the present case pertained to the assessment year 2007-08, the assessee would not know that retrospective amendment was likely to come later. No illegality or perversity could be demonstrated by learned counsel for the revenue that the findings of the CIT(A) and the Tribunal were erroneous or perverse in any manner. In CIT v. Reliance Petroproducts (P) Limited (2010 (3) TMI 80 - SUPREME COURT) the Apex Court had held that under Section 271(1)(c) of the Act, there has to be concealment of income of the assessee or the assessee must have furnished inaccurate particulars of his income. In the present case, the claim made by the assessee has not been shown to be suffering from any of these conditions. In the absence of any finding recorded by the CIT(A) or the Tribunal with regard to the claim of the assessee that it was malafide, there is no error in cancelling the penalty imposed by the Assessing Officer. - Decided in favour of assessee
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2016 (6) TMI 844
Fringe benefits - addition of sales promotion/lodging expenses - Held that:- The impugned expenditure of ₹ 84,42,880/- has been incurred for the members against membership fees taken from time to time and the Instructions of CBDT Circular No.8, dated 29.8.2005 shall not apply on the assessee as no benefit has been passed on by the employer to its employees and, therefore, deeming provisions of section 115WB(2) of the Act cannot be invoked mechanically in respect of every item of expenditure unless and until it co-relates to the benefit of employees. We therefore, find no reason to interfere with the order of ld. CIT(A) on this issue in deleting the addition - decided against revenue Addition on account of FBT being 20% of telephone expenses and 50% of Gift expenses - Held that:- From going through the observation of ld. CIT(A) and also respectfully following the decision of Co-ordinate bench in the case of Joshi Technologies International Inc. vs. ADIT (Int’s Tax) (2013 (5) TMI 713 - ITAT AHMEDABAD ) and also looking to the fact that ld. Assessing Officer has not disputed about the incurring of expenditure on lease line telephone expenditure and towards gifts/prizes, we are inclined to accept the contention that there is no element of benefit to the employees in the expenditure and therefore, no interference is called for in the order of ld. CIT(A) on this issue in deleting the addition - Decided against revenue
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2016 (6) TMI 843
Revision u/s 263 - default FBT computation - as per CIT(A) no query was raised with respect to an amount for medical reimbursement expenses by AO - Held that:- In light of the clarification issued by the CBDT on 29.8.2005, the AO was required to examine the details of medical reimbursement to employees, whether the expenditure is incurred for the medical treatment in unapproved hospital and it exceeds ₹ 15,000 or not. If it does not exceed ₹ 15,000, the entire reimbursement of expenditure would be fringe benefit in the hands of the employer and subjected to FBT. Since the AO has not applied his mind to reimbursement of medical expenses to the employees, his order is erroneous and prejudicial to the interests of revenue and we therefore do not find any infirmity in the order of the CIT in exercising his jurisdiction u/s. 263 of the Act. Dealer training expenditure AO should have examined the nature of expenditure incurred on dealers training, but he did not make any query from the assessee in this regard. Therefore, the AO has not at all applied his mind to the expenditure incurred on dealers training and non-application of mind to a particular issue which results into loss to the revenue makes the assessment order to be erroneous and prejudicial to the interests of revenue. We are of the view that where as per the provisions of the Act and clarification issued by the CBDT through Instruction No.8/2005, the dealers training expenses would be the fringe benefits and subjected to tax in the hands of the assessee, the AO is required to at least examine the nature of dealers training expenditure. Since he did not examine this aspect, we have no hesitation to hold that the assessment order is erroneous and prejudicial to the interests of revenue in this regard. Conference expenses AO has not examined this aspect also either in the assessment order or by raising a specific query in this regard; whereas as per Q.No.55 & 56 of the Instruction No.8/2005, it has been clarified by the Board that the expenditure in the nature of fee for participation by the employees in any conference is not liable to FBT, but if the participation fee includes any expenditure of the nature referred to in clauses (A), (B) and (D) to (P) of sub-section (2) of section 115WB, such expenditure will be liable to FBT. The expenditure incurred for the purposes of agents or dealers or development advisors is liable to FBT. When the Board has clarified that certain conference expenses are subject to FBT, the AO ought to have examined the nature of conference expenses. But, he did not raise any query in this regard, what to say about the discussion in the assessment order. For similar reasons as discussed in the foregoing paragraphs, we are of the view that the assessment order is also erroneous and prejudicial to the interests of revenue for non-consideration of the issue of conference expenses by the AO. Sales promotion expenses and business promotion expenses We find that a specific query was raised by the AO in this regard and the assessee has filed a detailed reply in response thereto. Not only in the course of assessment proceedings, the AO has also examined this issue in the assessment order in para Nos. 2 to 3, after making a detailed discussion with respect to the relevant provision and the nature of this expenditure. Out of a total claim of ₹ 2,66,50,000, a sum of ₹ 1,58,9,000 was charged to FBT. On a careful perusal of the assessment order, we find that the AO has examined this issue and assessed to FBT an amount of ₹ 1,58,95,000 out of total claim of ₹ 2,66,50,000. Though the CIT may not agree with the conclusions and the findings of AO, but in any case, the AO has applied his mind to the issue and the CIT cannot thrust upon his opinion upon the AO. Therefore, in this regard, we are of the view that since the AO has applied his mind and examined the issue, the CIT has no jurisdiction to revise the order u/s. 263 of the Act Appeal decided partly in favour of assessee.
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2016 (6) TMI 842
Penalty u/s.271C - liability to deduct tax at source u/s 194A(1) of the Income Tax Act, 1961 on payments made to non-banking financial institutions as the payments include component of interest - Held that:- We find that the assessee made payments towards hire purchase installments and not made separate payments towards interest. Therefore, the financial charges on hire purchase are not in the nature of interest. The payment made by the assessee on account of hire purchase transaction and payment of finance charges/hire charges cannot be construed as interest so as to deduct TDS u/s 194A of the IT Act. Accordingly, to that extent,section 40(a)(ia) is not applicable. Thus we do not find any infirmity in the order of the CIT(A) in cancelling the penalty levied by the AO u/s 271C and therefore, the same is hereby upheld dismissing the grounds raised by the revenue on this issue. See Commissioner of Income-tax Versus MG. Brothers Finance Ltd [2014 (1) TMI 1590 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee
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2016 (6) TMI 841
Undisclosed expenditure incurred for earning commission - Held that:- All the expenditure were claimed under different heads for earning different incomes for manufacturing dealing and commission, along with salary and other expenses were debited to the profit & loss account. There was nothing brought on record by the AO to establish that any expenditure was separately incurred by the assessee in relation to commission income. In order to attract provision U/Sec 69C of the Act, the onus is on the AO to show that the assessee has actually incurred expenditure and that has remained unexplained. In the present case, we find that the AO added such amount on mere presumption without any basis and it is not permissible under law, therefore, we find no infirmity in the order of CIT-A in delting the addition - Decided in favour of assessee Disallowance of subscriptions, fess & taxes - Held that:- We find that the A.O added an amount of ₹ 32,300/- as the assessee failed to furnish evidence in support of the expenses claimed. The CIT-A found that all the details were available before the AO and incurred such amount of ₹ 32300/- constituted fees towards the renewal of mining license, consent fees to WBPCB, sampling and analysis charges paid to WBPCB Fees paid to West Bengal Directorate Employees Associations & fees paid for liasoning. In view of the same, We agree with the finding of CIT-A that all the payments were incurred for fees & subscription made to the Government for the purposes of assessee’s business - Decided in favour of assessee Addition u/s 40(a)(ia) on disallowance for non deduction of TDS on expenditure claimed as carriage inwards - Held that:- We find that the goods were purchased on F.O.R. basis are evident from the purchase bills of raw materials placed in the paper book and copies of bills which were produced before the A.O and CIT-A having examined such copies of bills showing the value of goods and relying on such evidence, the CIT-A opined that the contention of the assessee was correct and question of deducting TDS does not arise - Decided in favour of assessee Addition u/s 41 (1) - Held that:- The trading liability was not ceased and payments were made thereafter as the CIT-A examined the liability was recorded in books of accounts for capital goods and it was not written off in the books of account and confirmations of the said creditors filed and subsequently the entire amount was paid. In view of the same the application of section 41 (1) of the Act was not justified - Decided in favour of assessee Addition on account of undisclosed purchase of raw material and undisclosed production of finished goods - Held that:- he CIT-A has opined that the percentage of production with respect to consumption of raw materials varies from month to month and the consumption of electricity per metric ton also varied from month to month. In this regard, he relied on the on a decision in the case of Hans Castings Pvt. Ltd. vs Collector of C. Excise, Kanpur [1998 (3) TMI 298 - CEGAT, NEW DELHI] where it held that the production can not be estimated on the basis of consumption of electricity. We find no justification in the order of AO in making addition on the basis of electric consumption in calculating the production on such estimation.- Decided in favour of assessee Disallowance of excess depreciation - Held that:- AO acknowledged the details of addition of fixed assets were before him and asked the assessee to explain the justification of claiming depreciation and referring to further bills as not produced by the assessee is only an assumption and the addition made thereon does not have any support to stand for legal scrutiny as it was made on presumption. Therefore, the order of the CIT-A stands confirmed in deleting the addition - Decided in favour of assessee
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2016 (6) TMI 840
Allowability of freight expenses - whether business expenditure in reference to re-export of equipment? - Held that:- Expenses had been incurred in reference to re-export of equipment used by the assessee in its business and hence these were in the nature of business expenditure. Nothing has been brought on record by the department to controvert these findings - Decided against revenue Nature of deductible expenses - whether the assessee was correct in not classifying this sum as work-in-progress for the reason that the assessee was not to recover anything from the client? - Held that:- As the impugned amounts were clearly in the nature of business expenses. The AO had primarily disallowed these expenses because the assessee was not earning any receipt from the project. It is well settled law that it is not necessary that for allowability of expenses, there should be receipt also for justifying the assessee’s claim regarding expenses. - Decided against revenue
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2016 (6) TMI 839
Reopening of assessment - accommodation entry received - information received from the DIT (Inv.) - Held that:- Notice u/s 148 has been issued in a mechanical manner on the basis of vague information from Directorate of Inspection (Inv.). The AO did not dwell upon the veracity and the basis of information received. He has not mentioned any material which has led him to believe that the amount deposited in the bank account represented accommodation entry which has escaped assessment. He has simply filled up a proforma mentioning the information received. Therefore, the notice u/s. 148 is patently illegal Reasons do not satisfy the requirements of s. 147 of the Act. The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement. Further, it is apparent that the AO did not apply his own mind to the information and examine the basis and material of the information. The AO accepted the plea on the basis of vague information in a mechanical manner. The reasons recorded reflect that the AO did not independently apply his mind to the information received from the DIT (Inv.) and arrive at a belief whether or not any income had escaped assessment. - Decided in favour of assessee
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2016 (6) TMI 838
Penalty u/s 271(1)(c) - validity of show cause notice - Held that:- The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) we hold that the orders imposing penalty in the assessment year under consideration has to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee
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2016 (6) TMI 837
Addition u/s 68 - increase in share capital - Held that:- The technical objections raised by the AO regarding the difference in the date of agreements is satisfactorily explained by the Ld. AR. It is worthwhile to note from the assessment record, that one of the shareholder namely M/s Wisdom Publishing Pvt. Ltd has even confirmed the allotment of shares to them directly to AO in SWAP arrangement to the extent of ₹ 2,50,00,000/-. In view of the above, there is no question for making addition of this amount. Thus the Assessee has satisfactorily discharged the onus lying on him by proving the identity of each and every new shareholder. Further, presuming that the assessee is required to prove the other two requirements of section 68, i.e., creditworthiness of the share holders and genuineness of transactions. Assessee has proved beyond any iota of doubt that all the share holders were creditworthy and all the transactions were genuine. It is so evident from the documents filed during the assessment proceedings. To explain the credit entries in the said bank accounts, the bank accounts of the third parties in the chain were also filed by the assessee. Thus the assessee has not only proved the creditworthiness of the said share holders but also proved the source of the source, for which though no onus lie on him. The Assessee has also furnished the copies of agreements in respect of swapping the shares with the other three companies. Swapping of shares is a recognized standard commercial practice and cannot be treated as any tax evasion technique. The technical objections raised by the AO regarding the difference in the date of agreement is satisfactorily explained by the Ld. AR before the Ld. CIT(A). It is pertinent to mention here that the said swapping transactions have been accepted as genuine by the Assessing Officers having jurisdiction over the other companies with whom the shares were swapped. Therefore, having filed above evidences establishing the identity of the shareholders, genuineness of the transactions and capacity of the shareholder, there remains nothing more for the assessee to prove and onus is discharged and thus action of A.O. in treating the entire increase in share capital as undisclosed income of the assessee is unjustified and therefore Ld. CIT(A) has rightly deleted the addition - Decided in favour of assessee
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2016 (6) TMI 836
Reopening of assessment - competent authority to issue notice - the assessment year involved is 2006-07 and the original assessment u/s 143(3) was completed on 31.12.2008. i.e. notice u/s 148 is dated 17.9.2012 which is beyond the period of 4 years from the end of the relevant assessment year - Held that:- The instant fact-situation is covered by sub-section (1) of section 151 of the Act read with the proviso, which prescribes that where assessment has been made u/s 143(3) of the Act and the notice u/s 148 is to be issued after the expiry of 4 years from the end of the relevant assessment year, no such notice shall be issued unless the ‘Principal Chief Commissioner’ or ‘Chief Commissioner’ or ‘Principal Commissioner’ or ‘Commissioner’ is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for issue of such notice. Ostensibly, in the present case the notice issued u/s 148 of the Act, reveals that the approval has been accorded by the Additional Commissioner of Income-tax, who is not competent authority referred to in the first proviso to Sec. 151(1) of the Act. At the time of hearing, even the records produced by the Department reveal that the ‘Form for recording the reasons for initiating proceeding u/s 148 of the Act’ depicts the satisfaction of the Additional Commissioner of Income-tax and not by any of the authorities specified in the proviso to Sec. 151(1) of the Act which is squarely attracted in the present case. Therefore, the initiation of proceeding by issuance of such notice u/s 148 of the Act suffers from an illegal infirmity, and is liable to be set-aside, and we do so. As a consequence, the subsequent assessment order passed by the Assessing Officer dated 31.12.2013 is bad in the eyes of law and is hereby quashed. - Decided in favour of assessee
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Customs
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2016 (6) TMI 865
Recovery of demand through bank - current account was frozen - whether the bank is bound to keep the amount lying to the credit of the current account of the Plaintiff in a Fixed Deposit. - certain sum retained by the Defendant bank by freezing the Plaintiff's account on instructions of the customs department of Government of India. - The Plaintiff claims to have issued a mandate to the Defendant bank to keep the said sum in fixed deposit whilst the account was frozen. The Plaintiff's case is that despite such mandate, the amount was kept in a suspense account which did not earn any interest. - Held that:- There is no form filled in by the Plaintiff for keeping any fixed deposit with the Defendant Bank. There is no indication of any particular duration of the purported deposit or its kind, whether cumulative or requiring periodical interest payments, or otherwise. There no mandate for further renewals. Besides, the bank was obliged not to honour any payment instructions from the Plaintiff due to the requisition of the Collector of Customs and also instructions received by it from the remitting bank. In the premises, the Defendant was not liable to act on the letter of 7 July 1998, unilaterally issued by the Plaintiff, and hold the amount in a fixed deposit. Any contract of Fixed Deposit with a bank is a bilateral matter involving both the bank and the constituent. There is no dispute between the parties that amounts lying in the current account or sundry creditors account do not bear any interest. No interest is payable on a current account or an account in the nature of a current account. - Decided against the plaintiff.
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2016 (6) TMI 864
Revocation of CHA license - period of limitation - principle of natural justice - Failure on the part of CHA to perform its duties - the allegation is that the appellant failed to obtain authorization from his clients to deal with Customs, failed to advise his clients for proper compliance of Customs Act and failed to exercise due diligence to ascertain the correctness of information required to handle the work as a CHA - Held that:- The notice which resulted in the impugned order was dated 08.06.2006 and inquiry report was dated 06.10.2006. It is clear that reliance placed by the original authority on the investigation and adjudication (under Customs Act, 1962) done in 2009-10 is legally untenable. Clearly, the adjudicating authority considered developments/purported evidences that arose three years after the proceedings were initiated and inquiry completed. This is in clear violation of principle of natural justice. The loss of more than ten years of business and livelihood for the appellant cannot be allowed to continue. Applying the doctrine of proportionality as well as the fact that the impugned order travelled beyond the notice, we hold that both the grounds as agitated by the appellant are tenable to set aside the impugned order. - Decided in favor of CHA
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2016 (6) TMI 863
Classification - import of Rice Milling Rubber Roller and Paddy Dehsuking Rubber Roller - While Revenue says that the goods shall be classified under the CTH 40169990, assessee's claim is that the goods shall fall under CTH 84379020 - Section note 1 (a) of chapter Section XVI. - Held that:- The peculiar character of the goods was recognised by the Hon'ble Supreme Court in the case of Kohinoor Rubber Mills Vs. CCE, Chandigarh [1997 (2) TMI 125 - SUPREME COURT OF INDIA] while determining classification thereof under CTH 40169990. - The switchover to 8 digit classification has no direct impact in applying the section notes. - Decided in favor of revenue.
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2016 (6) TMI 862
Rectification of mistake in the order - Held that:- On careful consideration of the arguments of both sides and perusal of records, we find that contention of the Ld AR that the shipping bills are not finally assessed would require this Tribunal to re-examine records and re-appreciate evidences. This would amount to review of its own order which is not sanctioned by law. Another mistake that the Tribunal disposes of the appeals pertaining to two OIOs viz., OIO No KDL/COMMR/PVRR/24/2014-15 dt 31.3.2015 and OIO No KDL/COMMR/ PVRR/27/2014-15 dt 31.3.2015. However, only one order is mentioned on the title page of the said order of the Tribunal. - order rectified to that extent.
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Corporate Laws
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2016 (6) TMI 857
Scheme of amalgamation - Held that:- This court is of the view that based on the material on record it can be concluded that the present scheme of arrangement is in the interest of the shareholders and creditors of both the companies as well as in the public interest, therefore, the same deserves to be sanctioned and the same is hereby sanctioned.
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2016 (6) TMI 856
Scheme of Amalgamation is in the interest of its Shareholders and Creditors as well as in the public interest and the same deserves to be sanctioned.
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Service Tax
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2016 (6) TMI 878
Recovery of service tax from the FCI where service provider failed to deposit the amount with the service tax department - Deposit of amount u/s 73A collected in the name of Service Tax - Can the Central Government seek direct recovery from FCI with the aid of the section 87 of the Finance Act of 1994? - Case of the petitioner is that cargo service relating to agriculture produce provided by Kailash Enterprise was exempt from payment of service tax, despite which, under mistaken belief, FCI was made to pay service tax of ₹ 5.37 crores which Kailash Enterprise recovered from FCI. However, Kailash Enterprise had not deposited such service tax with the service tax authorities. Held that:- Perusal of this provision would show that the powers vested with the Central Government are in the nature of garnishee enabling Central Government to recover unpaid dues of a person liable to pay the sum to the Government from any other person or requiring any other person from whom money is due or may become due to such defaulting person. The fundamental question is when the Government of India wrote letters to the FCI in the year 2015 and onwards, did FCI was there any due of Kailash Enterprise from FCI ? The answer is obviously in the negative. Section 87 of the Finance Act, 1997 was therefore wrongly invoked. - Decided in favor of petitioner.
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2016 (6) TMI 877
Refund - Validity of order of tribunal remanding the matter back to adjudicating officer - Tribunal did not examine the aspects as to the output services - Held that:- the Tribunal has relegated the matter for finding/ascertaining the nexus between input service and the output services which would be required to be examined by the authorities. When the Tribunal was satisfied that the matter deserves further examination on facts for finding out the nexus, by exercise of discretion, it cannot be said such exercise of discretion is perverse. - No substantial questions of law would arise for consideration. - Decided against the assessee.
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2016 (6) TMI 876
Maintainability of appeal before High Court - Classification of taxable service - Section 65A(2)(b) of Finance Act, 1994 - composite services bearing the essential characters of taxable service of Maintenance and Repair, Business Auxillary Services, Management Consultancy, Consulting Engineering Services and C & F Agents - Held that:- While adverting to the contentious issues raised and answered and testing the same with reference to the statutory provisions, viz., 35-G and 35-L of the Central Excise Act, 1944, we are in agreement with the submissions advanced by the learned counsel for the respondent that the revenue has to file an appeal directly to the Hon'ble Supreme Court, under Section 35-L of the Central Excise Act, 1944. - Appeal dismissed - Decided against the revenue.
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2016 (6) TMI 875
Cenvat Credit - Denial of credit of excess Service Tax was paid by the input service provider - The construction companies instead of paying service tax on 33% of the gross value, paid service tax on 67% of the value of the service provided to the appellant - Held that:- as per Rule3 of the Cenvat Credit Rules, 2004, an assessee entitled to avail cenvet credit of the service tax paid by them. As the payment of service tax is not in disputed, in that circumstances, the cenvat credit cannot be denied to the appellant on account of excess service tax paid by the service provider - Decided in favor of assessee.
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Central Excise
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2016 (6) TMI 874
Demand of duty - maintainability of writ petition - alternative appellate remedy - request to permit the appellant/petitioner to cross examine the Chemical Examiner, whose report has been relied on in the order confirming the demand - Chemical Examiner had given the report stating that the subject product is not fertilizer. - Held that:- When there is an exclusion of the Chemical Examiner's report, by an order, which was one of the factors taken into consideration for arriving at the conclusion as to whether the subject product is fertilizer or not, in normal circumstances, one would have expected the department to challenge the order made in W.P.No.30771 of 2015 dated 15.03.2016. To ascertain as to whether the department would be seriously prejudiced over the exclusion of the Chemical Examiner's report in the matter of adjudication by the appellate authority, Mr.A.P.Srinivas, learned senior standing counsel appearing for the respondent reiterated that the impugned order in original dated 01.09.2015, passed by the Commissioner of Central Excise, Chennai II Commissionerate, Chennai, could still be sustained, without relying on the Chemical Examiner's report. Such being the position, we are of the view that the appellant/petitioner has not made out a case for interference. Statute provides for an appeal remedy. As per Section 35-B of the Central Excise Act, a statutory appeal ought to have been filed within three months from the date on which the order sought to be appealed against is communicated to the Commissioner of Central Excise , or, as the case may be, the other party preferring the appeal. - Decided against the appellant.
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2016 (6) TMI 873
Refund - valuation - duty paid in excess on account of Liquidated Damages which was deducted from the invoice price - Held that:- The liquidated damages have to be deducted from the assessable value given in the invoice in respect of payment of central excise duty. When the duty has been paid in excess on account of not allowing the reduction for the liquidated damages, the same is liable to be refunded to the assessee. - Decided in favor of assesssee.
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2016 (6) TMI 872
Cenvat Credit - Job Work - assessee sent their grey man-made fabrics to the job worker for processing and return - Revenue took the view that these goods, being in the nature of finished products, cannot be cleared to the job worker under Rule 4(5)(a) read with Rule 12B of Central Excise Rules, 2002 - Held that:- It is not in dispute that the ultimate products which has been cleared by the appellant-assessee are processed fabrics and the appropriate duty has been paid at that stage by them. Keeping this in view, we have no hesitation in categorising the grey fabrics as input/ intermediate products. Rule 4(5)(a) of the Cenvat Credit Rules as also Rule 12B permits such goods to be sent to the job worker for further processing and after processing by the appellant assessee on payment of appropriate duty. Under the circumstances, we find that the view taken by the Commissioner to consider these goods as finished goods is totally erroneous and the demand of duty itself is without the sanction of law. - No demand - Decided against the revenue.
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2016 (6) TMI 871
Cenvat Credit - Common inputs - emergence of exempted waste - Commissioner took the view that they are required to pay an amount at the rate of 10% / 5% of the value of exempted goods (coke fines) under Rule 6(3)(b) of the Cenvat Credit Rules 2004. - For carrying on the manufacturing operations, they manufactured “coking coal” as an intermediate product which is used to heat up blast furnace in their factory. Since coke so manufactured comes into existence in bigger sizes, they put it through a coke cutter, to reduce the size to that which is suitable for use in the blast furnace. During this process, coke fines (Coke dust) gets generated which are cleared from the factory without payment of excise duty following exemption notification no. 4/2006-CE dated 01.03.2006. Held that:- though coke fines arise during the course of manufacture of the final products and are exempted, this cannot be considered as an exempted final product but are having the colour of process waste. In the light of the discussions above, when inputs are contained in waste it will not attract the mischief of Rule 6(3)(b) of Cenvat Credit and there will be no requirement of paying 10% / 5% of the value of the exempted product. - Decided in favor of assessee.
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2016 (6) TMI 870
Cenvat Credit - common inputs - Scope of Rule 6(3) - Exempted goods versus non-excisable goods - Levy of penalty - manufacture of dutiable final products as also in the manufacture of H B wires which emerged as a result of drawing of wire and galvanized wire, which has been held to be non-manufacturing activity - Appellant were paying 8% of the value of the same in terms of provisions of Rule 6(3)(b) of Cenvat Credit Rules. - Revenue entertained a view that inasmuch as the appellants' final product i.e. galvanized wire and the other wires which emerges by the process of wire drawing are not excisable goods, the provisions of Rule 6(3) (b) of Cenvat Credit Rules is not applicable to them. Held that:- Exempted goods are excisable goods, which stand exempted from payment of duty of excise leviable thereon. If no duty of excise is leviable on account of non-manufacture, the question of exemption of same does not arise. As such, goods cannot held to be exempted goods, thus making the applicability of Rule 6(3)(b) as nil. Rule 3 of Central Credit Rules allows a manufacturer or producer of final product, to avail the credit of duty paid on the inputs, which are to be used by them in the manufacture of final product. If there is no manufacturing activity involved, the said Rule debars the availment of credit at the ab initio stage itself. Inasmuch as no manufacturing activity was involved in the present case as neither the wire drawing process nor the galvanization process involved any manufacturing activity, the credit itself was not available to the appellants under the said Rules so as to be further neutralized in terms of Rule 6(3)(b) of the Rules. Appellant is following said procedure after duly intimating the Revenue and seeking their permission, there is no scope for imposition of penalty upon them. - Decided partly in favor of assessee.
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2016 (6) TMI 869
Claim of refund of amount of cenvat credit reversed - W.e.f. 1/5/2006 appellant opted for payment of duty as per the Compounded Levy Scheme in terms of notification No. 34/2001-CE dated 28/06/2001 - At the time of opting for the benefit of this notification, there was stock of inputs, work in progress, components inputs, as well as finished goods, containing inputs on which CENVAT Credit was availed. The appellant paid the amount of ₹ 733739/- (CENVAT duty) and ₹ 14675/- (Education Cess) towards reversal of the CENVAT Credit taken on the inputs as on the date of opting for the notification. Subsequently, the appellant claimed refund of such amounts paid which was rejected by the Original Authority. Held that:- for availing the Compounded Levy Scheme, no credit of duty paid on raw materials, components parts etc. is allowed to be taken. However, the Revenue expanded the scope by interpreting that the credit of duty on the inputs, contained in work in progress and the finished products lying in the stock on the date of opting for the notification needs to be reversed as condition precedent to avail the benefit of the notification. - the credit of duty taken and utilized in respect of not only inputs in stock, but also contained in finished products as on the date of introducing, the Compounded Levy Scheme is not recoverable. - Refund allowed - Decided in favor of assessee.
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2016 (6) TMI 868
Cenvat credit of Education Cess and Secondary and Higher Education Cess debited through DEPB credit - Held that:- The payment of additional duty of excise (CVD) is governed by sub-section (1) of Section 3 of Customs Tariff Act, 1975 and the exemption from this duty in import of goods is contained under Notification No.89/2005. The main contention of Revenue is that in Notification No.89/2005-Cus. dt. 04/10/2005, though credit on CVD is allowed, it does not mention anything about Education Cess payable as part of CVD. The rate of CVD applicable on the imported goods is the rate of total duties of excise which is inclusive of Education Cess and Secondary and Higher Education Cess payable on the aggregate of the other duties of excise. Therefore the contention of the appellants that Education Cess and Secondary & Higher Education Cess payable on that part of CVD which is equal to the basic excise duty is a part of CVD itself is not without substance. Appellants have succeeded in establishing a case in their favour. The denial of credit is unjustified. In the result, the impugned order is set aside. - Credit allowed - Decided in favor of assessee.
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2016 (6) TMI 867
Demand if duty of excise on clandestine removal on best judgement method - Bonafide mistake - extended period of limitation - It was contended that, the appellant is a maker of sweets/biscuits/pastries. Sweets, though excisable are exempted from duty. Biscuits/pastries are dutiable and attract duty on MRP basis. The appellant was not aware of this and therefore did not pay duty on these goods. Held that:- The appellants were manufacturing both excisable and dutiable goods but they are not maintaining any separate accounts in respect of manufacture of dutiable and exempted goods. It is stated that appellant did not mention description of goods on the sale bills and that there was huge variations between the total turnover declared by the appellant for the purpose of VAT payment and printouts taken by the Central Excise Officers for report of previous period. This difference is, explained in the statement given by Sri Vikram, a Software professional, who created the Software of print-out for the appellants. He deposed that there is technical problem in the Software in regard to generating report of print outs. Thus the figures of sales in the print outs could not be relied, for calculating the demand. The adjudicating authority has arrived at the duty demand, basing on the VAT returns, as there was no reliable records and details furnished from the appellant side. - Thus, though the adjudicating authority has used the words best judgment method for calculation of the duty demand in effect, he has placed reliance on the VAT returns and other documents available. When there was no data to arrive at the actual clearances made, the department has adopted the method best possible which may include a little guess work. Therefore, I cannot accept the argument of the learned counsel for appellant that the charges are merely based on theoretical working. - Demand confirmed - Decided against the assessee.
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2016 (6) TMI 866
Cenvat Credit - Scope of Rule 6 - pay an amount @8% (6% w.e.f. 07/07/2009) or to reversal proportionate credit - failure to exercise the option under Rule 6(3A) - Supply of tower and tower parts to M/s. RRB Energy Ltd. Which are used as parts of Wind Operated Electricity Generator (WOEG) - Exemption under Sl.No.84 of the Notification No.6/2006-CE dt. 01/03/2006 - Held that:- The contention of the department is that when the appellant has not intimated his option in writing then the appellant is bound to pay the duty amount calculated under the first option. I am afraid I cannot endorse this contention. The said rule does not say that on failure to intimate, the manufacturer / service provider would lose his choice to avail second option of reversing the proportionate credit. Rule 6(3A), as seen expressly stated is nothing but a procedure contemplated for application of Rule 6(3). Therefore, the argument of the Revenue that the requirement to intimate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5% / 10% of sale price of exempted goods / value of exempted services is not acceptable or convincing. - The Rule does not lay down any such restriction. The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option available to the assessee. In any case, at no stretch of imagination can it be said that on failure to intimate the department, Rule 6(3)(i) would automatically come into application. The demand raised is not legal and proper - Decided in favor of assessee.
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CST, VAT & Sales Tax
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2016 (6) TMI 861
Refund - grant of refund merely accepting the returns without verifying the records and documents - Karnataka Value Added Tax, 2003 (KVAT) - sale of undivided share in land in flats sold - Held that:- the Tribunal has clearly exceeded the jurisdiction in setting aside the order by the first appellate authority and further whether to sustain the proceedings of the assessing authority/PA was also not the subject matter of the appeal before the Tribunal but rather the subject matter of the appeal before the Tribunal was as to whether the petitioner-appellant was entitled to any relief or not. - Matter remanded back to tribunal.
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2016 (6) TMI 860
Power of the tribunal to adjudicate upon the said order of the revisional authority - Karnataka Value Added Tax Act, 2003 (KVAT) - Input tax Credit benefit - Levy of interest and penalty - Held that:- subject to the outcome of the proceedings against the order of the revisional authority dated 24.03.2010, it can be said that the order passed by the Tribunal in any case on merits cannot be sustained more particularly, when the Tribunal did not touch at all the subject matter of levy of interest and the penalty for which the appeals were preferred by the petitioner before the Tribunal. All appeals being STA Nos.809-820/2009 shall stand restored to the file of the Tribunal. The Tribunal is directed to await final conclusion of the aforesaid litigation against the order dated 24.03.2010 passed by the Addl. Commissioner of Commercial Taxes in revisional jurisdiction against the order dated 10.09.2008. After the conclusion of the aforesaid matter, the Tribunal shall pass appropriate orders in accordance with law, after giving an opportunity of hearing to both the sides - Decided partly in favor of assessee.
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2016 (6) TMI 859
Input Tax Credit - correct amount of input tax rebate - scope of inputs - manufacturing activity - It was submitted that if there is failure on the part of the Assessee to get the specified formula through the Commissioner, the input tax credit is not permissible and has been rightly denied as per Rule 131[3] of the Karnataka Value Added Tax Rules, 2005. Held that:- all electrical and electronic goods including air conditioners, air coolers, telephones, fax machines etc., used would fall in the category of the goods for which the input tax credit would be inadmissible for the purpose of input tax credit unless the goods are for resale or for manufacturing of any other goods for sale. To put it in other words, if the goods specified in Fifth Schedule are purchased and put to use for the purpose of resale or for manufacture or for the process of other goods for sale, the input tax credit would be available. Any input used for generation of electricity or steam, provided such electricity or steam is used within the factory for the manufacturing activity of the final product, the same would stand covered. - Decision in the case of MARUTI SUZUKI LIMITED [2009 (8) TMI 14 - SUPREME COURT] It is also true that in the decision of the Apex Court, the matter was pertaining to consumable item, namely, ‘naphtha’ and ‘diesel’ for generation of electricity. But, in our view, once the goods are purchased in furtherance to or for aiding the manufacturing process, the same will have a direct nexus to the manufacturing activity and there is no reason why the same could be treated as an independent capital goods disentitling the benefit. As such, the matter cannot be segregated just on a mere ground that it would be capital goods. If the various items mentioned at Sl. No.3 in the description of goods are considered, it does include air conditioner, air cooler, fax machines which can be broadly considered as capital goods. Further, the language for all electrical or electronic goods is inclusive and not exhaustive. Therefore, when the other goods specified can also be considered as capital goods, but to be used in the manufacturing activity, there would not be any justifiable ground if the speeder system is purchased and used to back up the electricity in the manufacturing process to treat it differently for the purpose of input tax credit. - Decided in favor of assessee.
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2016 (6) TMI 858
Levy of penalty - vehicle was not carrying declaration Form ST-18A - violation of 78(2) read with Rule 53 of the Rajasthan Sales Tax Act, 1994. - Held that:- non carrying of declaration Form ST-18A and non filing of material particulars and it has also come to the conclusion that mens rea is not essential in such proceedings. - In the light of above non carrying of declaration form is a serious infirmity and also when it was not produced despite specific notice, - Levy of penalty confirmed.
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