TMI Tax Updates - e-Newsletter
June 26, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

Articles

1. OFFICERS OF ‘DRI’ HAVE NO POWER TO DEMAND AND COLLECT ANY AMOUNT FROM ASSESSEE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Incentive schemes for exporters to continue post GST: Com Secy

2. Deputy CM for implementation of GST in J&K

3. PFRDA conducts workshop on National Pension System (NPS) for Corporates in coordination with FICCI at Bhubaneswar today; More than 10.83 lacs subscribers are registered under NPS-Private Sector (all Citizen and Corporate);Overall number of NPS and APY subscribers have crossed 1.62 crore with overall Asset under Management (AUM) of more than 1,91,725 crore

Notifications

Income Tax

1. F. No. 225/157/2017/ITA.II - dated 23-6-2017 - IT

Issue of notices under section 143(2) of Income-tax Act, 1961 in revised format-regd.

Highlights / Catch Notes

Income Tax

• Tax Authorities Revise Section 143(2) Notice Format for Streamlined Scrutiny Assessments and Enhanced Efficiency.

  Notifications : Scrutiny assessment - Issue of notices u/s 143(2) of Income-tax Act, 1961 in revised format-regd. - Notification
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• Petitioner files timely revisions u/ss 154 and 264, complying with statutory limitation periods for correction and appeal.

  Case-Laws - HC : Revision u/s 264 - period of limitation - The petitioner had applied before the AO u/s 154 within four years of the order sought to be corrected. The petitioner did not delay in filing the petition u/s 264 beyond the prescribed of one year from the date of passing of the order u/s 154 by the AO - HC
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• Exemption u/s 54F: Eligibility Unaffected by Property Purchase Method If Acquired Within Specified Timeframe.

  Case-Laws - AT : Claim of exemption u/s 54F - It is enough that the assessee procures the new property within the stipulated time provided in section 54F to claim the exemption. How the property purchased by the assessee is irrelevant.
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Customs

• Mandatory Pre-Deposit for Duty Drawback Appeals Upheld as Constitutional to Streamline Litigation and Focus on Key Issues.

  Case-Laws - HC : Constitutional validity - mandatory pre-deposit for filing an appeal - duty drawback - The aim of the amended provision is also to curtail litigation which had assumed high proportions, leaving no time to the appellate authorities to devote the same to important issues - If such is the aim and insight behind the provision, it certainly cannot be held to be unreasonable, onerous, unfair or discriminatory for two fold reasons. - HC
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• Denial of Cross-Examination in Market Survey Case Breaches Natural Justice, Flawing Adjudicating Authority's Order.

  Case-Laws - AT : Valuation - The appellant has specifically asked for cross examination of Chartered Engineers and the persons to whom the market survey was conducted but the cross examination has not been granted by the adjudicating authority in casual manner - the impugned order is in gross violation of principle of natural justice.
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Service Tax

• CENVAT Credit Allowed for Car Advertising Services; Location Irrelevant to Eligibility, Service Provider Use Recognized.

  Case-Laws - AT : CENVAT credit - interpretation of definition of input service - advertising for sale of cars - That it was performed elsewhere does not alter the factum of usage of another service-provider for supplying a service - credit allowed
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Central Excise

• Appellant's CENVAT Credit Rule 6(3) compliance invalid for Notification No. 8/2003 conditions; rules not interchangeable.

  Case-Laws - AT : SSI exemption - availing cenvat credit - The appellant has made a feeble attempt to satisfy the condition of the notification by reversing an amount @ 10% of the value exempted goods, as provided in Rule 6(3) of the CENVAT Credit Rules 2004 - the prescription made in CENVAT Credit Rules cannot be imported into the conditions of N/N. 8/2003
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Case Laws:

• Income Tax

• 2017 (6) TMI 982
  Revision u/s 264 - AO failed to rectify the quantum of income against an application u/s 154 - petitioner did not apply for the two reliefs as claimed by the petitioner before him - Held that:- With respect, the Commissioner misunderstood the application dated March 24, 2010. Such application contains the prayer for both of the reliefs. Therefore, there is an error apparent on the face of the record so far as the impugned order is concerned. The finding that the application dated March 24, 2010 does not contain the reliefs as claimed by the petitioner is perverse. Application u/s 264 against an order passed by the assessing officer is maintainable or not- Held that:- Again, with respect, Section 264 of the Act of 1961 permits the Commissioner to revise all orders which are not under Section 263 of the Act of 1961. The order impugned before the Commissioner under Section 264 of the Act of 1961 was passed under Section 154 of the Act of 1961. The revisional application directed against the order passed under Section 154 of the Act of 1961 is revisable under Section 264 of 1961. The Commissioner, therefore, failed to exercise jurisdiction vested upon in law by rejecting the application made under Section 264 of the act of 1961 by holding that the application before him was not maintainable. Filing of rectification petition five years after passing an order of assessment is an exercise to bypass limitation made under Section 264 of filing of a petition - Held that:- Such ground is not available in the facts of the present case. The petitioner had applied before the assessing officer under Section 154 of the Act of 1961 within four years of the order sought to be corrected. The petitioner did not delay in filing the petition under Section 264 beyond the prescribed of one year from the date of passing of the order under Section 154 by the assessing officer. Consequently limitation is not available to defeat the petition under Section 264 of the Act of 1961. Thus the four orders passed under Section 264 of the Act of 1961 by the Commissioner in respect of the assessee for the assessment years 2004-05 to 2007-08 are set aside.

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• 2017 (6) TMI 981
  Denial of deduction under Section 80JJAA - Deduction in respect of employment of new workmen - Held that:- The limited issue in the remand proceedings before the Assessing Officer was only to verify whether any persons employed in the supervisory role was included in the list for the purpose of deduction under Section 80JJAA of the Act. The Assessing Officer while passing the order dt.20.12.2011 denied the claim without giving effect the directions of the Tribunal to verify the factual position. Subsequently, the CIT passed a revision order under Section 263 dt.16.1.2013 and directed the Assessing Officer to verify whether the condition stipulated for the grant of deduction under Section 80JJAA as directed by the Tribunal are satisfied in the case of the assessee. The Assessing Officer then passed the order dt.16.1.2014 in pursuant to the revision order under Section 263 and denied the claim by following the order of the earlier assessment year. We find that for the earlier assessment year, the issue of nature of employment whether it is supervisory or not has been decided in favour of the assessee. However, this issue is pending before the Hon'ble High Court for the Assessment Years 2001-02 and 2002-03. As regards the issue of satisfying the condition of not less than 300 days of employment during the previous year, we find that this issue does not germane from the order of this Tribunal in the first round of appeal as the limited aspect remitted to the Assessing Officer for verification was whether any person employed in the supervisory role was included in the list of workmen as claimed by the assessee. Therefore even if the Assessing Officer has made a reference about the employment of less than 300 days, this issue is not emanating from the proceedings as remanded by the Tribunal. Since this issue is still pending before the Hon'ble High Court therefore to keep this issue open as per the outcome of the proceedings pending before the Hon'ble High Court, we direct the Assessing Officer to take necessary step only after the decision of Hon'ble High Court.

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• 2017 (6) TMI 980
  Addition as professional receipts - Held that:- As assessee has voluntarily offered to disclose the income due to deficiencies noted during the survey. Revenue authorities have agreed to stop the investigation further by accepting the voluntary disclosure of income. It is the duty of the assessee to disclose the income as agreed with the revenue authorities during survey. Assessee has not brought on record or clarified to the satisfaction of the revenue nor before us the reason for reducing the professional income. In our considered view, the revenue has accepted to drop the investigation proceeding only because assessee has agreed voluntarily to disclose the professional income. Therefore, assessee should have disclosed the income as promised to the revenue authorities, hence, ground raised by the assessee is dismissed. Rental income received - business income or house property - Held that:- AO has brought on record clearly that assessee has let out this residential property on rent. Assessee has not brought on record any material to substantiate its claim neither before the revenue authorities nor before us. Hence, the finding that the rental income received by the assessee from the property, which was given on rent is to be treated as income from house property is sustained and this ground is dismissed. Unexplained capital gain - sale of property - difference on sale consideration - Held that:- The assessee has sold the property under consideration for the value less than the value for which he entered into agreement to sell with another person. The reason for selling lesser value and reason for cancellation was not brought on record by the assessee. Citing the above reasons, the AO brought to tax the difference amount as unexplained income. We fail to understand the logic of bringing the difference amount as unexplained income. The addition is on the difference of amount in sale consideration. If at all, AO could have increased the sale consideration to tax and calculated capital gains. However, in our opinion, only provision in the income tax to bring the difference of sale consideration is section 50C. In the given case, the value of SRO and sale consideration are matching, there is no room for the AO to bring the presumed difference on sale consideration to tax. The AO should have brought some cogent material to substantiate his stance rather than presumption Claim u/s 54F - denial of claim on the ground that the consideration was not utilized for acquiring new asset/the assessee failed to utilize the amount of sale consideration received for purchasing new asset - AO found that the assessee purchased the house property by availing bank loan instead of applying the sale consideration for the above purpose - Held that:- We are not in a position to accept the views of the AO considering the fact that the assessee need not have to utilise the sale consideration in the new property. It is enough that the assessee procures the new property within the stipulated time provided in section 54F to claim the exemption. How the property purchased by the assessee is irrelevant.

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• 2017 (6) TMI 979
  Disallowance of interest on restricting the interest expense to the extent of interest income - Held that:- We find that the Tribunal has decided this issue by considering the various judgments including the decision of Hon’ble Apex Court in the case of CIT vs. Rajendra Prasad Modi [1978 (10) TMI 133 - SUPREME Court] whereby has verified and worked out the capital expenditure of the assessee and calculated interest bearing funds and non-interest bearing fund. We, respectfully following the same, are of the view that the assessee is entitled for part relief.

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• Customs

• 2017 (6) TMI 964
  Constitutional validity of Section 129E of the CA, 1962 - mandatory pre-deposit for filing an appeal - duty drawback - Held that: - As seen from a plain reading of the provision, Section 129E provides for deposit of certain percentage of duty demanded or penalty imposed or both, as a condition precedent for the appellate authority to entertain an appeal. Subclause (i) and (ii) of Section 129E mandates deposit of 7.5% of the duty demanded or penalty imposed or both, in case of an appeal before the Commissioner (Appeals) (Section 128A) and before the Tribunal (Section 129A) respectively. Clause (iii) of Section 129E provides for deposit of 10% of the duty demanded or penalty imposed or both in pursuance of the order appealed against. The first proviso provides that the amount which is required to be deposited under this section shall not exceed Rs. 10 crores. The aim of the amended provision is also to curtail litigation which had assumed high proportions, leaving no time to the appellate authorities to devote the same to important issues. Considering these hard realties and to have a expeditious disposal of the statutory appeals which undoubtedly is a necessary requirement of effective trade, commerce and business, the Parliament in its wisdom amended the provisions of Section 129E of providing deposit of 7.5% and 10% respectively as subclauses (i), (ii) and (iii) respectively provide. If such is the aim and insight behind the provision, it certainly cannot be held to be unreasonable, onerous, unfair or discriminatory for two fold reasons. Firstly, the object of a public policy sought to be achieved by the amendment, namely speedy disposal of the appeals before the appellate authorities is a laudable object and cannot be overlooked, so as to label the provision as unreasonable and onerous and violative of Article 14 of the Constitution. Secondly that the amount which is required to be deposited is not unreasonable from what the earlier (pre amended) regime provided. The Court considering the provisions of law and considering the decision of the Madras High Court in “M/s.Dream Castle Vs. Union of India & Ors.” [2016 (5) TMI 672 - MADRAS HIGH COURT] held that Section 35F of the Central Excise Act did not defeat or render the vested right of appeal illusory and that the condition of pre-deposit is a reasonable condition and such condition did not defeat the vested right of appeal. The Court accordingly confirmed the order of the Tribunal directing the appellants therein to deposit the sum mandated by Section 35F(1) of the Central Excise Act. Petition dismissed - decided against petitioner.

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• 2017 (6) TMI 963
  Jurisdiction - power of DRI/SIIB to issue SCN - Held that: - similar issue has come up before this Tribunal on many earlier occasions also. The Tribunal remanded the cases to the original adjudicating authority - appeal allowed by way of remand.

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• 2017 (6) TMI 962
  Valuation - import of old/defective/Cold Rolled Grain Oriented Silicon Steel (CRGO) Sheets/Strips - rejection of declared value - rejection transaction value and re-determination of the sustainable value on the basis of report of Chartered Engineer and market survey to enhance the value of the imported goods which was mis-declared and mis-classified by the appellant - natural justice - Held that: - the Revenue has heavily relied on the examination report of the Chartered Engineer and market survey. The appellant has specifically asked for cross examination of Chartered Engineers and the persons to whom the market survey was conducted but the cross examination has not been granted by the adjudicating authority in casual manner - the impugned order is in gross violation of principle of natural justice. As there is gross violation of principle of natural justice, the matter is remanded back to the adjudicating authority to pass the order after following the principle of natural justice and as per the provisions of Section 138 (1)(b) of the CA, 1962 - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (6) TMI 958
  Maintainability of the Petition on the ground that the Petitioner was not holding a single share on the date when the Petition was filed in the year 2013 - Held that:- On examining of the facts along with the case laws it is evident that the Petitioner has not proved to the hilt the ownership or the possession on the requisite number of shareholding on the date of filing of the impugned Petition. The law is unambiguous that if the Petitioner had failed to demonstrate the requisite number of shareholding as prescribed under the law then debarred by operation of law to pursue such Petition. Elders of the family have taken a decision way back in the year 1990/1991 for the welfare of the members, hence the heir-successors are duty bound to honour the decision of the elders. In the present case hereby hold that in the absence of undisputedly establishing the holding of shares of R-1 Company with the Petitioner on the date when the Petition was filed, he is not entitled to pursue the Petition in question being not maintainable on account of non-fulfilment of condition precedent.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 959
  Corporate Insolvency Resolution Process - Application under Insolvency & Bankruptcy Code, 2016 - Whether a notice is required to be given to the Corporate Debtor for initiation of Corporate Insolvency Resolution Process under I&B Code, 2016 and if so, at what stage and for what purpose? - whether a Corporate Debtor who is enjoying the benefit of MRV Act, can be subjected to I&B Code 2016? Held that:- Adjudicating Authority is bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of existence of default based on material submitted by the corporate debtor and to find out whether the application is complete and or there is any other defect required to be removed. Adherence to Principles of natural justice would not mean that in every situation the adjudicating authority is required to afford reasonable opportunity of hearing to the Corporate debtor before passing its order. In the present case though no notice was given to the Appellant before admission of the case but we find that the Appellant intervened before the admission of the case and all the objections raised by appellant has been noticed, discussed and considered by the 'adjudicating authority' while passing the impugned order dated 17th January 2017. Thereby, merely on the ground that the Appellant was not given any notice before admission of the case cannot render the impugned order illegal as the Appellant has already been heard. If the impugned order is set aside and the case is remitted back to the adjudicating authority, it would be 'useless formality' and would be futile to order its observance as the result would not be different. Therefore, order to follow the principles of natural justice in the present case does not arise. In some of the cases initiation of Insolvency Resolution Process may have adverse consequences on the welfare of the Company. Therefore, it will be imperative for the “adjudicating authority” to adopt a cautious approach in admitting Insolvency Application by ensuring adherence to the principle of natural justice. Benefit under MRU Act, 1956 - Held that:- The two enactments operate in entirely different fields. This is further made clear by the fact that the MRU Act is enacted under Entry 23 of List III while the Code has been enacted under Entry 9 of the List III. There is no repugnancy between I&B Code, 2016 and the MRU Act as they both operate in different fields. The Parliament has expressly stated that the provisions of the I&B Code, 2016 (which is a later enactment to the MRU Act) shall have effect notwithstanding the provisions of any other law for the time being in force. This stipulation does not mean that the provisions of MRU Act or for that matter any other law are repugnant to the provisions of the Code. Appellant is not entitled to derive any advantage from MRU Act, 1956 to stall the insolvency resolution process under Section 7 of the Insolvency & Bankruptcy Code, 2016 Once it is satisfied it is required to admit the case but in case the application is incomplete application, the financial creditor is to be granted seven days' time to complete the application. However, in a case where there is no default or defects cannot be rectified, or the record enclosed is misleading, the application has to be rejected. The 'adjudicating authority' is not required to look into any other factor, including the question whether permission or consent has been obtained from one or other authority, including the JLF. Therefore, the contention of the petition that the Respondent has not obtained permission or consent of JLF to the present proceeding which will be adversely affect loan of other members cannot be accepted and fit to be rejected. In the aforesaid circumstances the 'adjudicating authority' having satisfied on all counts, including default and that the application is complete and that there is no disciplinary proceeding pending against the Insolvency Resolution Professional, no interference is called for against the impugned judgment.

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• FEMA

• 2017 (6) TMI 957
  Non release and repatriate to India any foreign exchange which is due or accrued - Whether the company had failed to take all reasonable steps within the prescribed period, to release and repatriate to India, any foreign exchange which is due or accrued to it and in failure to do so, the department shall proceed, as per Section 8 of the Act, read with Regulation 3 of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations 2000 ? Held that:- The company should take all reasonable steps to release and repatriate to India, the entire amount due in US dollars within such period and in such manner as stated by the Reserve Bank of India. In the case on hand, the department states that the company had obtained no permission from the Reserve Bank of India, under Section 42 of FEMA. Therefore, any violation to section 42 of the Act, the provisions of FEMA would attract against the company. No material has been produced before this Court as to what steps have been taken to realise the amount, within the stipulated period. The company was not able to place any material to show the reason for the failure to realise the said amount within the stipulated period, or any permission for extension of period has been obtained from the Reserve Bank of India, as contemplated under Section 42 of the FEMA. In the absence of any such orders from the Reserve Bank of India, the contention of the company cannot be accepted. Therefore, as the company has not complied with the provisions of FEMA, the action initiated by the department, for violation of FEMA is in consonance with the provisions of law. In view of the above, the Tribunal has lost its sign to consider the above said provisions of law, in allowing the appeals. Therefore, we have no hesitation to interfere with the orders passed by the Tribunal and hence the same is liable to be set aside.

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• Service Tax

• 2017 (6) TMI 977
  Penalty u/s 77 and 78 - demand of tax with interest and penalty u/s 76 is already paid before issuance of SCN - Held that: - the authorities below have erred in imposing and maintaining penalty under Section 77 for non maintenance and non assessing the service tax liability because till 09.05.2008 the provisions of said Section 77, covered only imposition of penalty for such contraventions for which there was no provision for imposing penalty - penalty u/s 77 and 78 set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 976
  Non-payment of service tax - mode of payment - contravention of Section 68 of the FA, 1994 and Rule 6(2) of the STR, 1944 read with CBEC Circular No. 33/01/2001 dt. 29.01.2001 - It is because of the mode of payment, which was permissible earlier and which was not permissible from 01.11.2000, that the Commissioner has taken the stand that Service Tax has not been paid - Held that: - reliance was placed in the case of COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD Versus BSNL [2011 (11) TMI 517 - CESTAT, NEW DELHI], where it was held that if there is non-compliance by BSNL, the proper course was to intimate C.B.E. & C. and not to demand the tax again with interest and to impose penalties - the order of the Commissioner holding that amount already paid by BSNL is tantamount to non-payment of Service Tax and confirming the demand of Service Tax and interest thereon and imposing equivalent penalty is not a reasonable order and cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 975
  CENVAT credit - interpretation of definition of input service - advertising for sale of cars - denial of credit on the ground that the vehicle gets totally serviced at the other service station and no further servicing was being done at the appellants' premises - Held that: - the issue is squarely covered in favour of the appellant in the case of M/s My Car (Pune) Pvt. Ltd. Versus CCE, Pune-I [2016 (1) TMI 1155 - CESTAT MUMBAI], where it was held that it is quite probable that the servicing may be delegated to another dealer. That it was performed elsewhere does not alter the factum of usage of another service-provider for supplying a service contracted to be provided to a recipient in which the recipient of service is not obliged to meet the costs. Such costs met by appellant are expenditure towards service procured to provide an output service - credit allowed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (6) TMI 974
  Valuation - parts and components stock transferred - components manufactured at Chennai factory and cleared to Jaipur unit - includibility - CBEC Circular No.692/8/2003-CX dt. 13.2.2003 - goods manufactured on sub-contract basis from job-workers - Held that: - We note that differential duty has been demanded by Revenue by confirming the value differently from that adopted by the appellant. However, any differential duty payable at the stage of Chennai unit will be available as cenvat credit/modvat credit to the Jaipur unit. Consequently, it leads to a situation of revenue-neutrality between the two units of the same company - similar issue decided in the case of COMMR. OF C. EX. & CUS., VADODARA-II Versus INDEOS ABS LIMITED [2010 (3) TMI 656 - GUJARAT HIGH COURT], where it was held that Absence of any substantial question of law, appeal is dismissed - appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 973
  CENVAT credit - duty paying invoices - godown address given by him at the time of registration as a dealer was subsequently vacated and the said dealer was not actually dealing in the goods in question as such, the Revenue entertained a view that such dealer was issuing only invoices without the corresponding supply of goods - whether the appellant is entitled to avail the credit on the basis of invoices issued by Sidh Balak Enterprises, who according to the Revenue was not actually supplying the goods? - Held that: - in terms of provisions of Rule 7 of CCR, the assessee is required to ensure the genuineness of the supplier of the inputs by taking reasonable steps. Explanations attached to the said Rule is to the effect that manufacturer shall be deemed to have taken the reasonable steps, if he can satisfy himself about the identity and address supplied on certificate issued by the Superintendent of Central Excise. When a dealer is registered with the department and is issued cenvat credit invoices, duly incorporating the excise registration number. It has to be held that manufacturer has duly complied with the requirement of verifying the identify and address of the supplier - Subsequent investigations relied upon by the Revenue revealed that godown address were subsequently changed by M/s Sidh Balak Enterprises. This shows that during the relevant period it was rightly registered at the address given at the time of registration. It is not also disputed that the invoices were actually issued by M/s Sidh Balak Enterprises, on the basis of which the appellants have availed the credit and the same were being duly reflected by them in their RG 23A Part I and credit was reflected in their RG 23A Part II registration. Such registers were being annexed by them in the quarterly return filed with the department and no objection was ever taken by the department. Reliance was placed in the case of Shakti Steel Rolling Mills [2014 (2) TMI 452 - CESTAT NEW DELHI]. CENVAT credit cannot be denied to the appellant and admittedly the appellant have followed the procedure of under Rule 7 of the CCR 2004, while procuring the input - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 972
  Clandestine manufacture and removal - abnormal variation in electricity consumption - Held that: - The sole basis of demand is given in para 3 of the said notice. It is mentioned that the norms of electricity consumption per M.T. should be 70-80 units. No basis or reason with background or technical analysis has been given regarding the norms of electricity usage - When audit of accounts were conducted, the officers made certain calculation of possible normal consumption of power. Based on purported excess consumption, the whole case has been made. There is no legal sanction for such course of action - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 971
  SSI exemption - N/N. 8/2003-CE dt. 01/03/2003 - CENVAT credit - Department took the view that the appellant will not be eligible for the benefit of SSI Notification in view of the fact that CENVAT credit on inputs stand availed by the appellant - whether the appellant will be entitled to avail the benefit of SSI exemption under N/N. 08/2003 in the circumstances in which they have availed CENVAT Credit on inputs but have reversed the amount at the rate of 10% in terms of Rule 6(3)(b) of the CCR 2004? - Held that: - In terms of the N/N. 8/2003, the SSI benefit will be eligible only if no CENVAT credit is availed - the CENVAT credit on inputs stand availed for those which are used commonly for branded and other goods. The appellant has made a feeble attempt to satisfy the condition of the notification by reversing an amount @ 10% of the value exempted goods, as provided in Rule 6(3) of the CENVAT Credit Rules 2004 - the prescription made in CENVAT Credit Rules cannot be imported into the conditions of N/N. 8/2003 - the appellant has failed to satisfy the conditions specifically prescribed in para 2(iii) of the N/N. 8/2003 - Appeal dismissed - decided against appellant.

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• 2017 (6) TMI 970
  Waste - Bagasse - CENVAT credit - Rule 6(3)(a) of CCR 2002/2004 - Held that: - reliance placed in the case of Union of India Versus DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT], where it was held that Bagasse is only an agriculture waste and residue and also that Bagasse is not covered in the definition of manufacture - provisions of Rule 6(3)(a) of CCR 2002/2004 do not apply on the removal of Bagasse or utilization of Bagasse - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 969
  Misdeclaration of goods - the respondents were clearing Calcium Carbonate manufactured/ cleared in the garb of Hydrated Lime/ Calcite Powder - validity of SCN - whether the Original Authority has correctly dropped the proceedings? - Held that: - the Adjudicating Authority has properly examined all the relevant aspects as per the remand directions of the Commissioner (Appeals) and arrived at a well reasoned and speaking order and only thereafter dropped the proceedings against the respondents - Revenue has once again raised the same grounds for filing appeals before this Tribunal. We find that the said grounds of appeal have already been rejected by Commissioner (Appeals) and therefore, we do not find any merit in the appeals filed by Revenue - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 968
  Quantum of penalty - Rule 173Q(1) of the CER, 1944 - Clandestine removal - clearances of power loom spares in the guise of rough castings - Held that: - Tribunal vide various decisions have held that penalty cannot be enhanced in de novo proceedings. The appellant cannot be placed in a precarious position than they were in before filing the appeals - reliance was placed in the case of M/s. Tata Iron & Steel Co. Ltd. Versus Commissioner of Central Excise, Jamshedpur [2016 (4) TMI 625 - CESTAT KOLKATA] - penalty reduced to Rs. 28,586/- - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 967
  MODVAT/CENVAT credit - duty paying documents - whether Modvat/Cenvat credit can be taken on inputs which are received on the strength of bills/ Challan of Sugar division? - Held that: - credit cannot be denied only on the ground that invoice was in the name of self - credit allowed. CENVAT credit - loss in transit - whether the Cenvat credit is admissible on the inputs (Molasses, lost in transit) not received in the factory, not finally utilized for the manufacturing of final products, which are stated to be transit or handling loss? - Held that: - the quantum of Molasses lost in this case, being admittedly less than 1%, is a normal loss and no Cenvat credit relating to the same can be disallowed, as the inputs lost in normal course of business and transport-transit are held to be utilized for manufacture of taxable output/ goods - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 966
  CENVAT credit - structural items - Held that: - learned Commissioner(Appeals) has wrongly presumed that all these items have been used for civil structure which is not the fact in this case. All these items have been used as spares, components and accessories for the capital goods and hence covered under Rule 2(a)(A)(iii) and Rule 3 of CCR, 2004 and therefore all these items are rightly falling in the purview of CENVAT credit claimed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 965
  Validity of SCN in terms of Section 11A(1)(b) - duty alongwith interest was paid before issuance of SCN - wrong availment of CENVAT credit - Held that: - in reply to the SCN, the appellant filed a detailed reply clearly stating that the appellants are entitled to CENVAT credit on plastic crates and they are also entitled to credit on Security Services as well as Contract Labour Services but there is no finding by the original authority as well as by the appellate authority on the claim of the appellant - Both the authorities have not gone into the merits of the claim of the appellant since the appellants have reversed the cenvat credit along with interest before the issue of SCN. Further both the authorities have not considered the amendment in Rule 15(2) which was brought on 27.02.2010 - this case needs to be remanded back to the original authority with a direction to consider the claim of the appellant - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2017 (6) TMI 961
  Natural justice - validity of assessment order - Non-deduction of TDS - the contention of the petitioner that an assessment being one made under Section 5 of the TNVAT Act, r/w Rules 8(5)(d) Rules made thereunder, they are liable to pay 70% of the tax, at the rate of 5% leaving remaining 30% towards the labour charges - natural justice - Held that: - If an opportunity of personal hearing was given to the petitioner, though they would have been in a position to satisfy the Assessing Officer as to how they are justified in making such contention. In this case, the Assessing Officer has not given such opportunity. Therefore, considering all these aspects and considering the very fact that the imposition of penalty was passed in violation of principles of natural justice, the Assessing Officer has to re-do the assessment in respect of all the three assessment years, after giving an opportunity of personal hearing to the petitioner - appeal allowed by way of remand.

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• 2017 (6) TMI 960
  Rectification under Section 84 of TNVAT Act - Held that: - perusal of the order under challenge, especially, paragraph No.14, only leads to the inference that the Assessing Authority has misconstrued that this Court, in W.P. Nos. 2595 to 2598 of 2017 permitted the appellant to agitate their grievance in respect of defect Nos. 1 and 10 alone, while, in fact, the appellant had been permitted to include issues with regard to other defects as well. Such an understanding of the order of this Court by the respondent could only be termed as improper. At the same time, the intimation letter of the respondent dated 10.03.2017 cannot be allowed to stand - the respondent is directed to consider the issues raised in the rectification petitions filed by the appellant - appeal allowed by way of remand.

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• Wealth tax

• 2017 (6) TMI 978
  Assessment to wealth tax of amalgamated company - whether Tribunal is right in law in not considering the issue of the valuation of the properties which are under challenge in appeals? - Held that:- The present case relates to the period prior to the date of amalgamation. Returns were also filed prior to the amalgamation and the notices were issued before the date of amalgamation when the assessee existed during the assessment. Amalgamation was done with effect from 1.4.1995 before the date of completion of assessment. As per the scheme, all actions and legal proceedings pending on the completion of procedures date shall be continued to enforce transfer as held by the Commissioner of Income Tax. The existing liability has to be discharged by M/s.Balaji Industries Ltd., as continued. Therefore, the contention of the appellant would not be valid and cannot be accepted. On examination of the Balance Sheet for the relevant assessment year, the property has been held as fixed asset and not stock in trade. Therefore, the assessee is liable to be assessed to the wealth tax. Insofar as the lands at Nellore is concerned, the same was purchased to establish Aqua Farm. As the water on the lands was not suitable for breeding fishes, the project had been given up. Therefore, the land is amenable to wealth tax. The aforesaid contention was decided by the appellate authority as well as the Tribunal on facts. Therefore, the liability of M/s.Balaji Industries Limited would continue against the M/s.Balajai Hotels and Enterprises Ltd. Learned counsel for the appellant would not raise any of the grounds which has already been discussed by the appellate Tribunal and in accordance with clause 9 and 10 of the scheme. Therefore, we are of the opinion that the said fact was considered by relying upon the relevant clause of the amalgamation scheme which was approved by the High Court of Andhra Pradesh. Therefore, no interference is required insofar as the aforesaid question of law raised by the appellant. We confirm the factual findings of the lower authorities.

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