Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 29, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Customs
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25/2017 - dated
28-6-2017
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Cus
Seeks to appoint the 1st day of July, 2017 as the date on which all the provisions of the the Taxation Laws (Amendment) Act, 2017 shall come into force
DGFT
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12/2015-2020 - dated
27-6-2017
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FTP
Supply of essential commodities to the Republic of Maldives during 2017-18
GST
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13/2017 - dated
28-6-2017
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CGST
Rate of interest u/s 50(1), u/s 50(3), u/s 54 and u/s 56 of the CGST Act, 2017
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12/2017 - dated
28-6-2017
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CGST
Seeks to notify the number of HSN digits required on tax invoice
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11/2017 - dated
28-6-2017
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CGST
Seeks to amend Notification no 6/2017-Central Tax dt 19.06.2017
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10/2017 - dated
28-6-2017
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CGST
Central Goods and Services Tax (Second Amendment) Rules, 2017
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09/2017 - dated
28-6-2017
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CGST
Seeks to bring into force certain sections of the CGST Act, 2017 w.e.f 01.07.2017
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08/2017 - dated
27-6-2017
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CGST
Turnover limit for Composition Levy for CGST - Manufacturers of Certain Goods not eligible for benefit of Composition Scheme u/s 10(1)
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07/2017 - dated
27-6-2017
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CGST
Central Goods and Services Tax (Amendment) Rules, 2017
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03/2017 - dated
28-6-2017
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IGST
Seeks to bring into force certain sections of the IGST Act, 2017 w.e.f 01.07.2017
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07/2017 - dated
28-6-2017
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IGST Rate
Exemption from IGST supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers under section 6 (1)
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06/2017 - dated
28-6-2017
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IGST Rate
Prescribing refund of 50% of IGST on supplies to CSD u/s 20 of IGST Act, 2017
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05/2017 - dated
28-6-2017
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IGST Rate
Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed
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04/2017 - dated
28-6-2017
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IGST Rate
Reverse charge on certain specified supplies of goods under section 5 (3)
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02/2017 - dated
27-6-2017
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UTGST
Seeks to notify the turnover limit for Composition Levy for UTGST and Manufacturers of Certain Goods not eligible for benefit of Composition Scheme u/s 10(1)
GST - States
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F.3(10)/Fin(Rev-I)/2017-18/DS-VI/342 - dated
22-6-2017
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Delhi SGST
Delhi Goods and Services Tax (Composition and Registration) Rules, 2017
Income Tax
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55/2017 - dated
23-6-2017
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IT
Corrigendum - Notification No. 48/2017, dated the 8th June, 2017
SEZ
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S.O. 2012(E) - dated
21-6-2017
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SEZ
Central Government notifies the 2.63 hectares (6.5 acres) area at Puppalguda Village, Rajendra Nagar Mandal, Ranga Reddy District, in the State of Telangana and constitutes an Approval Committee
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S.O. 2007(E) - dated
19-6-2017
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SEZ
Central Government notifies the 3.46 hectares (8.55 acres) area at Puppalguda Village, Rajendra Nagar Mandal, Ranga Reddy District, in the State of Telangana and constitutes an Approval Committee
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S.O. 2006(E) - dated
19-6-2017
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SEZ
Central Government notifies the 1.78 hectares (4.40 acres) area at Gachibowli Village, Serilingampally Mandal, Ranga Reddy District, in the State of Telangana and constitutes an Approval Committee
Highlights / Catch Notes
GST
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IGST on certain inward supplies of goods/ lotteries shall be paid under Reverse Charge Method (RCM) by the recipient of such goods / lotteries
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The official date of introduction date of GST has been notified as 1.7.2017
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Turnover limit for Composition Levy under CGST and Restriction on some items as per the decision of the GST Council notified
Income Tax
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Addition on account of waiver of loan - assessee has never claimed a waiver of interest as expenditure in its books of accounts and return of income. Therefore, there is no question of considering it to cessation of liability or any benefit arises from the business.
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Genuineness of agriculture income - If the Assessing Officer was not satisfied with the veracity of Forms No. J, it was for him to make investigation and prove that such forms were fictitious or not genuinely obtained by the assessee.
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Allowing interest pertaining to earlier financial years as part of the cost of acquisition under the head capital gain - the assessee is certainly entitled to include the interest amount at the time of computing capital gains u/s 48
Customs
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Classification of imported goods - Bronopol - restriction on import - the contention of the appellant that the notification issued under Section 5 of the Foreign Trade Act, is a mere executive instructions and so the said notification would not apply to the appellant company cannot be accepted. - HC
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Confiscation of Gold Bars - Customs did not have jurisdiction within the SEZ area - since the seized goods were intercepted and taken possession at gate No.1 within the SEZ area the proceedings initiated by the Customs will not hold good for confiscation of goods and imposition of penalties
Service Tax
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Whether service tax have been rightly demanded from the appellant, who are manufacturer of Tractors on reverse charge basis, for alleged know-how received for manufacture of ‘3600 model tractors transmission’ - Held Yes
Central Excise
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Reversal of CENVAT credit - the definition of the term “export” under the SEZ Act shall prevail over the definition of term “export” under the Customs Act. Therefore, supplies made to SEZ from DTA units shall be treated as export, supplies made to SEZ are held to be “export” provisions of Rule 6 of CCR does not arise at all.
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CENVAT credit - supplementary invoices issued by contractors - scope of the term ‘invoice’ - during the period of dispute, with regard to service tax payment, the Rule 9 (1) did not make any distinction between ‘invoice’ and ‘supplementary invoice’.
Case Laws:
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Income Tax
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2017 (6) TMI 1088
MAT - Advance payment of Tax - Tax liability arising due to MAT provisions u/s 115JA - Levy of interest u/s 234B - Held that:- The issue under reference is concluded by the judgment of the Apex Court in the case "Joint Commissioner of Income Tax Vs. Rolta India Ltd [2011 (1) TMI 5 - SUPREME COURT OF INDIA] as held that Section 115JB is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act. Interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT has no application.
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2017 (6) TMI 1087
Determining the Arm's Length interest - considering the LIBOR (London Inter Bank Operative Rate) plus 2% on the monthly closing balance of the advances - Held that:- It is not disputed that advances were made to the company situated abroad. The LIBOR rate naturally will be considered to determine the Arms Length interest, the same would be reasonable and proper in applying the commercial principle. The Tribunal has directed the appropriate rate would be LIBOR plus 2% instead of LIBOR plus 3% applied by the TPO. No substantial question of law arises for consideration
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2017 (6) TMI 1086
Disallowance of loss on foreign exchange forward contract loss - whether the said loss was a notional loss and hence cannot be allowed? - Held that:- The issue in the present matter is covered by the judgment of the Division Bench of this Court in "Commissioner of Income Tax Vs. D.Chetan & Co." (2016 (10) TMI 629 - BOMBAY HIGH COURT). It is also pointed that the loss depicted to profit and loss account is on account of actual cancellation of forward contract during the year under consideration. No substantial question of law.
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2017 (6) TMI 1085
Disallowance of bad debts in respect of write off of investment / stock - Held that:- CIT(A) and the Tribunal had concurrently appreciated the accounting system. The CIT(A) has observed that the Assessing Officer has accepted that the assessee is following lower of cost or market value of closing stock. It is evident that the whole of the investment has turned bad and it does not and cannot have any market or intangible value. As such, the assessee has taken its market value as NIL in the books of account. Apex Court in the case of United Commercial Bank (1999 (9) TMI 4 - SUPREME Court) has observed that in income tax return, the valuation made at cost or market value, which ever was lower, is a valid method to be followed and the same is accepted by the Income Tax Department.
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2017 (6) TMI 1084
TPA - selection of comparable - Held that:- Assessee is a company engaged in the business of marketing, manufacturing, sales and services of weighing equipments. It has carried out international transaction with its associate enterprises for purchase of goods, import of finished goods and other services. The assessee had selected one company namely Avery India Ltd. as a comparable company to benchmark its international transaction by applying TNMM as most appropriate method. Respondent has computed the profit margin of the comparable by using profit level index at 5.45%. The Assessing officer had considered the operating margin at 9.60% and addition of ₹ 58,57,133/were made to the purchase made by the assessee. The assessee had calculated its operating margin at 6.18 %. Even the operating margin calculated by the TPO is considered as 9.60%, the same comes within the ambit and purview of arm's length. The Commissioner of Income Tax (Appeals) and the Tribunal has considered the said aspect in a plausible manner.Naturally this appeal has to be considered on the substantial questions of law. The grounds which were never agitated before the Commissioner of Income Tax (Appeals) and the Tribunal and those grounds based on the facts, cannot be agitated in the present appeal. No substantial question of law
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2017 (6) TMI 1083
Unapproved purchases - cash payments - addition merely a statement made by the Company that the money was utilized by the head office that was not backed by any evidence or proof - Held that:- The Tribunal has observed in the order that the assessee has incurred total subcontract payment of ₹ 2,19,02,968/out of which ₹ 2,06,96,216/was paid by cheques and whatever payment was made by cash, TDS was deducted. The payment details submitted from pages 33 to 40 of the paper book shows that 95% payments were made by cheques. The Tribunal has also observed that as far as the cash payment of ₹ 50.00 Lacs is concerned, it is not a payment made by the assessee to the parties on account of subcontact payments but the said amount represents the remittance of various amounts made by the assessee to it's branch office at Chennai for the purpose of work carried out at various sites. The Tribunal has referred to the details given at pages 10 and 11 of the paper book. No substantial questions of law.
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2017 (6) TMI 1082
Addition on account of waiver of loan - Held that:- It is not in dispute that assessee had taken loan from the bank at the interest of 9.5% per annum. Since assessee was incurring losses and some payments were not made to the bank on time therefore the banks started debiting higher rate of interest in their books of accounts. However, the assessee continued to provide interest in its books of accounts as were provided on the sanctioned loan. The assessee filed complete details to show that when the matter was settled with the bank and lumpsum payment of ₹ 2.50 crore was paid to the bank, there was a waiver of interest. The assessee therefore rightly contended that merely because bank was making a claim of higher amount of interest, it would not become waiver to the assessee. It is also admitted fact that assessee has never claimed a waiver of interest as expenditure in its books of accounts and return of income. Therefore, there is no question of considering it to cessation of liability or any benefit arises from the business. Ld. CIT(A), therefore, on proper appreciation of facts and material on record rightly deleted the impugned addition. - Decided against revenue.
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2017 (6) TMI 1081
Addition on the basis of report of Valuation Officer - Held that:- No reason for sustaining any addition in the year under consideration as the DVO’s report is dated July, 2013 and the DVO has recorded that the assessee has declared investment of ₹ 4.92 lac against his estimate of cost of construction at ₹ 5.15 lac for the year, which is less than 10%. The Hon'ble J & K High Court in Honest Group of Hotel (P) Ltd. vs. CIT (2001 (11) TMI 1016 - HIGH COURT OF JAMMU & KASHMIR) has held that difference upto 10% in the DVO’s report and the amount shown by the assessee is liable to be ignored. In the facts of the instant case, it is seen that the overall difference between the investment declared by the assessee at ₹ 3.65 crore and as estimated by the DVO at ₹ 3.97 crore is less than 10% of the DVO’s estimate. As such, no addition is called for. Thus order for the deletion of addition. - Decided in favour of assessee. Addition being investment made in some agricultural land - Held that:- AO has simply rejected the assessee’s claim of having earned agricultural income of ₹ 8.18 lac, which was duly backed by evidence in the form of Forms No. J. Rejecting the veracity of Forms No. J, the Assessing Officer proceeded to estimate agricultural income in a whimsical manner at ₹ 3,29,250/-. No effort whatsoever was made to examine the commission agents, who issued Form Nos. J. Under such circumstances, the view point canvassed by the Assessing Officer in not admitting the agricultural income at the stated level, duly backed by uncontroverted Forms No. J, cannot be countenanced. If the Assessing Officer was not satisfied with the veracity of Forms No. J, it was for him to make investigation and prove that such forms were fictitious or not genuinely obtained by the assessee. In the absence of any exercise having been done, cannot uphold the sustenance of addition made by the ld. CIT(A) on such unfounded basis.- Decided in favour of assessee.
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2017 (6) TMI 1080
Computation of long-term capital gain on sale of flat - Whether transfer of the said flat was not complete? - assessee argued that the assessee sold a residential flat during the year under reference and earned profit, however, on account of default by purchases the sale remains incomplete - Held that:- The assessee has not disputed the execution of transfer deed. Even before the High Court while filing a petition or in the Arbitration the assessee not sought relief for rescinding the contract of sale/ transfer deed. The only dispute before the High Court and in Arbitration is related with description of money. Further, no dispute that assessee sold his residential flat during the year under consideration. The High Court with the consent of the Counsel of parties referred the dispute and differences between the parties to Mr. Markand Gandhi Sole Arbitrator. We have further seen the arbitration petition wherein the assessee has claimed interest due to delay in payment of agreed amount and the refund of reimbursement of credit received by purchaser from the Housing Society only, where the flat is situated. All these facts were duly considered by learned Commissioner (Appeals) before passing the impugned order. Hence, we do not find any reason to interfere with the findings of learned Commissioner (Appeals). Disallowance of cost of improvement in respect of flat under reference while determining the long-term gain - Held that:- Considering the remand report of assessing officer and the fact that the flat in question is very old and certainly some renovation must have been taken place in between the year 1985 when the property was acquired and in the year 2007 when the property was sold. Commissioner (Appeals) allowed only ₹ 1.00/- lakh out of the total claim of ₹ 5,76,000/-, on account of improvement. We have seen that the learned Commissioner (Appeals) granted partial relief after considering the facts with regard to cost of improvement and the cost of interiors. The estimation of ld Commissioner (Appeals) is at lower side. Considering the facts that property was acquired in the year 1985 and was transferred in the year 2007, we allowed ₹ 2,50,000/- as cost of improvement and interior. The AO is directed accordingly. Appeal of the assessee is partly allowed.
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2017 (6) TMI 1079
Addition on account of deemed rental income - Held that:- Considering the decision of Tribunal in assessee’s own case for AY 2009-10, when the facts for the year under consideration are also similar wherein held that once the assessee had produced the bills of repairs and renovation of the flats and the AO had treated the said expenditure as capital expenditure, there was no justification for making any addition under the head house property income. Both the authorities have not proved that the flats were rented out during the year under Appeal. As per the settled principles of taxation if any sum has to be taxed the AO has to bring on record the necessary facts for taxing the same. In our opinion, the AO has not discharged the onus in that regard. Therefore, keeping in view the principal of consistency this ground of appeal is allow in favour of assessee Addition under Section 14A read with Rule 8D - Held that:- Considering the findings of the Tribunal in Assessee’s own case for assessment year 2009-10 that the assessee had not incurred any expenditure nor had it claimed any expenditure with regard to the tax-free income during the year under consideration. Therefore, there was no justification of any kind to make any disallowance invoking the provisions of Section 14A of the Act, we find that the ground of appeal raised by assessee in the present appeal is squarely covered in favour of assessee as the facts of this year are also not at variance, hence this ground of appeal is allow in favour of the assessee. Addition on account of payment to Traffic Police for Police arrangements (Bandobast) - Held that:- The contention of assessee are vague even during the submission of the Ld. AR of the assessee could not substantiate under which provision the said expenses were paid to the traffic police. It is not the contention of Ld. AR of the assessee that the said expenses were deposited with the account of traffic police for making the necessary arrangements at the Water Park or the payment was made as statutory expanses. The assessee has failed to substantiate its contention that the expenses were paid wholly and exclusively for the purpose of business. The Hon’ble Karnataka High Court in CIT Vs Neelavathi & others (2010 (2) TMI 176 - KARNATAKA HIGH COURT ) held that payments made to police or rowdies to keep away from the business premises is not allowable as business expenses. Thus, we did not find any illegality or infirmity in the order of Ld. CIT(A) hence, this ground of appeal is dismissed. Non-deduction of TDS on interest paid on car loan - Held that:- We have seen that similar disallowance was made against the assessee for assessment year 2009-10 and on appeal before Tribunal the identical ground was restored to the file of Assessing Officer for making verification, that the recipient of the income had paid tax on the disputed amount. The assessee would produce relevant documents before the Assessing Officer. Disallowance u/s 40A(3)for purchase of diesel in cash - Held that:- We have seen that though none of the receipt is exceeded ₹ 20,000/- at one time, yet the assessee made aggregate purchases of more than ₹ 20,000/- in cash in a day, on four occasions which is prohibited by Section 40A(3) of the Act. Though, the identity and the payments made to the party are not in dispute. After the amendment in section 40A(3) w.e.f. 01.04.2009, such expenses are allowable only if covered by the exception otherwise provided under Rule 6DD of Income Tax Rule 1962. The assessee has not pleaded any of the exceptions provided under Rule 6DD. On careful reading of Rule 6DD we do not find any exception which may come in rescue of the assessee. Thus, this ground of appeal raised by assessee is dismissed. Disallowance for business promotion expenses - Held that:- Considering the decision of earlier year in the assessee own case stating that in case of corporate assessee disallowance on account of personal element can be made only if the expenditure incurred was for the personal use of any of the directors / employee and that expenditure did not have any relation with the carrying out of the business. We don’t find that AO / FAA had carried out any such exercise. If the AO had any doubt, it was his duty to make further investigation and pinpoint the actual expenditure not incurred for the business of the assessee. In the circumstances, we are of the opinion that making and upholding the disallowance was not justifiable. Thus, respectfully following the decision of coordinate bench in earlier year this ground of appeal is allowed in favour of assessee.
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2017 (6) TMI 1078
Addition as peak credit - Held that:- Neither the AO nor the Ld. CIT(A) made any attempt to find out the veracity of the statement given by the assessee that he was only a name lender doing accommodation entry for the beneficiaries. It was the bounden duty casted upon the AO/CIT(A) in case they do not believe the statement to have made enquiry and found out as to whether the modus operandi as suggested by the assessee is false or incorrect. If the claim of assessee is correct it was the duty of the AO to bring out the truth and find out the beneficiary and bring to tax the real income undisclosed in the hands of the beneficiary. The assessee’s ground of appeal against the peak addition made on the basis of peak credit is allowed for all the assessment years.
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2017 (6) TMI 1077
Sustaining the deduction made by A.O. on account of Back ended Capital Investment Subsidy out of the cost of Plant and Machinery and cold storage building - Held that:- The Hon’ble Rajasthan High Court in assessee’s own case for A.Y. 2005-06 has approved the findings of the Coordinate Bench that the AO was not justified in reducing the amount of subsidy from the costs of the assets from AY 1999-2000 but such subsidy is liable to be reduced in AY 2007-08 and in fact has been adjusted in AY 2007-08. Respectfully following the jurisdictional Hon’ble Rajasthan High Court decision as referred supra, the ground taken by the assessee are dismissed. Classification of cold storage building and resultant rate of depreciation - Held that:- The same issue is covered in favour of the assessee by the decision of Coordinate Bench for A.Y. 2005-06 wherein cold storage building have been held as “plant” for the purposes of claiming depreciation. Hence the depreciation @ 15% on cold storage building as claimed by the assessee is sustained.
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2017 (6) TMI 1076
Treatment to capital gain - long term capital gain OR short term capital gain - period of holding of the capital assets - AO has taken the date of purchase which was in the purchase deed - CIT(A) has taken the date of purchase which is based on the allotment letter issued by the West Bengal Housing Board - Held that:- In the instant case letter of allotment is on 28.09.2000 and accordingly the right was acquired on that date. The assessee sold the property which was acquired by way of letter of allotment dated on 11.05.2005. Accordingly, the period of holding exceeds 36 months in the present case. So the period of holding in the instant case exceeds 36 months and income arising on the sale of said property will be treated as LTCG. No reason to interfere with the findings arrived by the Ld. CIT(A). Under the circumstances, this issue of Revenue’s appeal is dismissed. Value determined by the ld CIT(A) under the provisions of section 50C - Held that:- In the instant case, we find that both the lower authorities have taken a different deemed sale consideration as provided under section 50C of the Act. None of the lower authorities has confirmed the same by issuing a notice u/s 133(6) of the Act to Stamp Valuation Authorities to determine the actual stamp valuation. In the absence of any confirmation from the Stamp Valuation Authorities, we are inclined to restore this issue to the file of AO for fresh adjudication in accordance with law and in the light of above stated discussion. Hence, this ground of Revenue’s appeal is allowed for statistical purposes. Allowing interest pertaining to earlier financial years as part of the cost of acquisition under the head capital gain - Held that:- There is no doubt that the interest in question is indeed a expenditure in acquiring the asset. Therefore, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains u/s 48 of the Act. Therefore, the Ld CIT(A) has rightly accepted the assessee's contention and deleted the addition made by the AO. Hence, qua this ground, we uphold the order of the Ld. CIT(A).
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2017 (6) TMI 1075
Addition on undisclosed receivable amount on account of transportation charges - Held that:- The transportation charges received during the period 31st March, 2010 and incurred during that period and has been debited to the profit and loss account at ₹ 3,76,174/- would not form part of receivable transportation charges. Besides, the transport rebate for A.Y 2008-09 shown by the assessee in profit and loss account would not be added because assesse has already shown as receipt in the profit and loss account. In addition to this, the AO forgot to add transport rebate reimbursable at ₹ 1,09,148.40. Therefore, reconciliation made by the AO to work out the transportation charges receivable is entirely wrong and does not base on accounting principles. Therefore, addition made by the AO and confirmed by the ld. CIT(A) needs to be deleted. Appeal filed by the assessee is allowed.
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Customs
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2017 (6) TMI 1061
Cancellation of CHA licence - though an order dated 30.05.2017 was passed renewing the license of the petitioner, they were not however permitted to operate as a custom house agent - Held that: - Since the license of the petitioner is renewed through proceedings dated 30.05.2017 and they were also directed to appear before the first respondent for passing further orders, it is for the petitioner to appear so as to enable the respondents to issue further orders - petition disposed off.
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2017 (6) TMI 1060
Revocation of CHA licence - time limit under Regulation 22 of the CHALR for issuance of an SCN - Held that: - Regulation 20 provides for suspension or revocation of license and Regulation 22 deals with the procedure therefor. At the time when the Court passed its order dated 25th February, 2015 an SCN had already been issued for the revocation of the Appellant’s license. Therefore, this fact was present in the minds of both the counsel for the Appellant as well as the Respondent and naturally of the Court as well. The only thing that remained to be done was to complete the enquiry pursuant to such SCN. The direction issued obviously related to the enquiry that was required to be undertaken for revocation of the Appellant’s license. It is for that purpose that the Court then granted more time. When it used the words ‘final orders’, it obviously meant the final revocation order. There can be no manner of doubt, therefore, that in para-2 of the order dated 25th February, 2015, the Court contemplated completion of the enquiry proceedings pursuant to the SCN issued for revocation of the Appellant’s license and nothing else. If the Appellant was aggrieved by the order of this Court granting extension of time for completion of the enquiry and passing of the revocation order, the Appellant could have further challenged the said order. That, however, was not done by the Appellant. In these circumstances, the CESTAT was right in holding that the Appellant could not thereafter contend that the time limits under Regulation 22 of the CHALR having been breached. Appeal dismissed - decided against appellant.
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2017 (6) TMI 1059
Classification of imported goods - Bronopol - The subject goods were not released by the authorities, for the reason that the appellant has to put up technical literature with respect to the goods and its classification adopted in CTH 2930 9099, besides submitting the other import documents, already furnished - The appellant contended before the concerned authority that the requirement of production of CIB Registration certificate for the said goods does not arise, as the goods under import has not been classified under EXIM code 3808 of Chapter 38 in ITC (HS) 2012-Schedule-I (Import policy) - N/N. 106/RE-2013/2009-2014 dated 01.01.2015. Is the 2nd respondent Tribunal right in holding that the subject import of the appellant is governed by the restriction, issued under DGFT Notification No.106 (RE-2013)/2009-2014 dated 01.01.2015, which mandates obtainment of import permit from Registration Committee Central Insecticide Board? - Held that: - the aforesaid notification issued by the Director General of Foreign Trade is a law and not an executive instruction and the import and export is governed under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - the contention of the appellant that the notification issued under Section 5 of the Foreign Trade Act, is a mere executive instructions and so the said notification would not apply to the appellant company cannot be accepted. Has the 2nd respondent Tribunal erred materially in not even referring are going into the provisions of Section 38 of the Insecticide Act, which exempts, the provisions of the Act including licensing/ obtaining import permit from the Central Insecticide Board under Section 9 of the said Act, when the goods under import are admittedly for non-insecticidal use? - Held that: - imports are governed by other Acts also and the contention of the appellant that Insecticides Act alone applicable, is not correct - The appellant, merely submitting a declaration to the end use that the Bronopol will be used for non-insecticidal purpose is not sufficient and therefore exemption under Section 38(1)(b) of the Insecticides Act cannot be applied automatically, to the appellant. The appellant has failed to produce evidence before the authority to establish that the Bronopol will be used for non-insecticidal purpose. In the absence of such evidence, it cannot be construed that the said Bronopol will be used only for non-insecticidal purpose - The notification dated 01.01.2015 issued by the Director General of Foreign Trade, clearly states that as per the policy decision even if the import is for non-insecticidal use, permission is necessary from the Registration Committee under the Department of Agriculture and Co-operation and that import cannot be allowed in the absence of the said permit. Hence, the Tribunal has rightly concluded that the appellant company is not entitled to the benefit of Section 38(1)(b) of the Insecticides Act, 1968. Appeal dismissed - decided against appellant company.
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2017 (6) TMI 1058
Jurisdiction - power of Directorate of Revenue Intelligence (DRI) 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 1057
Jurisdiction of Directorate of Revenue Intelligence (DRI) - power to issue SCN - Held that: - sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.09.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had come up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28(11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. Matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.
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2017 (6) TMI 1056
Validity of proceedings initiated u/s 28 of the CA, 1962 - N/N. 21/2012-Cus. dated 17.03.2012 - Held that: - Section 28 ibid deals with recovery of duties not levied or short levied or erroneously refunded. On perusal of the said statutory provisions, it reveals that in order to invoke the said statutory provisions, two things must be satisfied, i.e. non-levy of duty or short levy of duty - In the present case, since the assessment is provisional, the duty liability has not been determined by the Department, hence, there is no question of short levy or non-levy. Thus, proceedings initiation u/s 28, which culminated in the impugned order dated 5th March 2014 in our opinion is not sustainable and will not stand for judicial scrutiny - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1055
Absolute confiscation - penalty - memory cards - The allegation against the appellant is that these goods of commercial nature were attempted to be removed from the customs area in the guise of personal baggage - Held that: - The appellant has, all along stated and, claimed that the goods were handed over to him by its owner for clearance. Admittedly, the goods do not belong to the appellant and he is not put to any detriment, financially or otherwise, by the absolute confiscation. On the contrary, it would render him liable to discharge the duties liability thereon. For this reason, the plea that he be granted the option to redeem the goods does not appear to be tenable. The goods being rendered liable for confiscation, it necessarily follows that penalty under section 112 of Customs Act, 1962 is liable to be imposed - appeal dismissed - decided against appellant.
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2017 (6) TMI 1054
Confiscation of Gold Bars - penalty - jurisdiction within the SEZ area to initiate the proceedings under the Customs Act, 1962 - Held that: - in the case of Meenakshi International [2016 (11) TMI 851 - CESTAT NEW DELHI], the Tribunal has allowed the appeal in favor of the appellant with consequential benefits, holding that the Customs did not have jurisdiction within the SEZ area established under SEZ Scheme by Ministry of Commerce, Government of India and accordingly, proceedings cannot be initiated for confirmation of the adjudged demand - in the present case, since the seized goods were intercepted and taken possession at gate No.1 within the SEZ area, on this ground also, the proceedings initiated by the Customs will not hold good for confiscation of goods and imposition of penalties. - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2017 (6) TMI 1052
Insolvency and Bankruptcy proceedings - appointment of an Interim Resolution Professional - Held that:- On the ground that Operational Creditor did not comply with sub-section (4) of Section 9 of the Code, the Petition cannot be rejected. This Adjudicating Authority shall follow the procedure laid down under sub-section (3) of Section 16 of the Code, and the Insolvency and Bankruptcy Board of India shall follow sub-section (4) of Section 16 of the Code. Therefore, this Adjudicating Authority, by this order passed under sub-section (5) of Section 9 of the Code, is admitting this Petition. This Adjudicating Authority is also of the view that it is necessary to make a Reference to the Insolvency and Bankruptcy Board of India established under the Code to recommend the name of an Insolvency Professional, against whom no disciplinary proceedings are pending, to this Adjudicating Authority, within ten (10) days from the date of receipt of the Reference. In the case on hand, simultaneous with the admission order, this Adjudicating Authority is not going to appoint Interim Resolution Professional because the Applicant did not propose the name of Interim Resolution Professional. But, this Adjudicating Authority is going to appoint Interim Resolution Professional after the same is recommended by the Insolvency and Bankruptcy Board of India under Section 16(4) of the Code. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14.
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2017 (6) TMI 1051
Insolvency Resolution Process - admission of this Petition and appointment of the Interim Resolution Professional - order of moratorium - Held that:- In view of the commencement of the Insolvency Resolution Process with the admission of this Petition and appointment of the Interim Resolution Professional, this Adjudicating Authority hereby passes the order declaring moratorium under Section 13(l)(a) prohibiting the following as laid down in Section 14 of the Code; (i) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (iii) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (iv) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (a) However, the supply of goods and essential services to the corporate debtor shall not be terminated or suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central Government. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14.
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Service Tax
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2017 (6) TMI 1074
Works contract service - Maintenance and repair service - it was observed by the department that appellant has provided ‘maintenance and repair service’ to them for which no service tax appeared to have been paid - Held that: - since the maintenance work involved supply of goods for replacement of faulty ones as well as rendering of service, the activity carried out is in the nature of Works Contract Service, even for the period prior to 1.6.2007. The department has not brought any evidence on record to show that the activity carried out prior to 1.6.2007 was different - the demand for Service Tax for the period prior to 1.6.2007 cannot be sustained - appeal allowed - decided in favor of appellant
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2017 (6) TMI 1073
Renting of Immovable property service - appellant had let out housing quarters and other premises on rent to its contractors and other persons - whether the service provided by the appellant comes within the scope of taxable service? - Held that: - Renting of premises for residential purposes is not included within the scope and preview of such taxable service, for the reason that such renting is not in connection with business or commerce. However, a deeming fiction has been created in the explanation-2 appended to the said definition, providing that use of immovable property partly for business or commerce and partly for residential or any other purposes should be construed as immovable property for use in course or furtherance of business or commerce. The housing quarters are located at a different place, than the other premises was not considered by the authorities below - the submission of the appellant that for the purpose of computation of threshold exemption limit, the service tax paid on the GTA Services in the capacity of recipient of service should not be considered, has not been taken into consideration by the authorities below - the present matter should also go back to the original authority for passing the reasoned and speaking order on the basis of documents to be produced by appellant - appeal allowed by way of remand.
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2017 (6) TMI 1072
Rectification of mistake - power of Tribunal to review its own order - case of Revenue is that the said final order cannot be varied at this stage to give a different ruling on reappraisal of evidence - Held that: - the final finding of the Tribunal regarding limitation was based on the facts as recorded by the Original Authority. The Original Authority having not considered all the developments, in correct prospective, held against the appellant on the question of limitation. Here, we note that the case has been remanded back to the Original Authority by the Tribunal. The finding with reference to extended period which is made based on findings of the Original Authority can be considered as an error apparent on record. Since, the Original Authority himself has not given a detailed finding, we find it fit and proper that in the denovo adjudication, as directed by the final order of the Tribunal, the issue of limitation is to be examined afresh without any restrictive direction. In other words, the Original Authority should examine afresh the question of limitation also and give his findings on the submissions of various correspondences. The reference made in para 9 of the final order of the Tribunal, to penalty under Section 76 has no relevance. The proceedings before Original Authority did not result in imposition of any penalty under Section 76 and, hence, the reference to such penalty is an error apparent on record. As such, we hold para 9 of the final order is to be deleted. In the final order of the Tribunal. In para 7 of the order reference was made to Custom Department , we note that the same should be read as Department . The word Custom has to be deleted. ROM application allowed - necessary corrections to be made.
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2017 (6) TMI 1071
CENVAT credit - dumpers / tippers falling under Chapter 87 - The department was of the view that dumpers /tippers were classifiable under Chapter 87 as motor vehicles and were not falling within the category of capital goods - The department further alleges that such cenvat credits were availed on the basis of deficient and improper invoices during the period 2005-2006 to 2008-2009 - Held that: - Dumpers/Tippers are vehicles which are specially designed for earth moving purposes and are meant to be used in the mining area - Consequently, the appellant would be eligible for cenvat credit on dumpers / tippers as inputs which are used for providing the output service. However, the controversy stand resolved with effect from 22.6.2010 with issue of N/N. 25/2010-CE which has amended the Cenvat Credit Rules to allow cenvat credit for dumpers / tippers registered in the name of service provider for providing taxable service for providing site formation etc. The Cenvat credit has also been disallowed on the ground that the credit has been availed on the basis of deficient and improper invoices. Further, the appellant is also said to be not in possession of the original /duplicate invoices based on which the such credit can be availed. We are of the view that issue needs to be re-examined by the original adjudicating authority. Appeal allowed by way of remand.
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2017 (6) TMI 1070
Whether service tax have been rightly demanded from the appellant, who are manufacturer of Tractors on reverse charge basis, for alleged know-how received for manufacture of ‘3600 model tractors transmission’ from M/s Hema Traktor Sanayi, Turkey during the period 2006-07 - Held that: - it was observed from their balance-sheet for the year ended 31st March, 2007 that they have paid an amount of ₹ 20,77,705/- to M/s Hema Traktor Sanayi, Turkey for obtaining Technology, Patent, Design, which appeared to revenue comes under the ‘intellectual property right service’ and accordingly it appeared that they are liable to pay service tax on reverse charge basis. Whether the SCN dated 12/09/2008, issued invoking the extended period of limitation is sustainable? - Held that: - there is no element of suppression or contumacious conduct on the part of the appellant. The transaction was found duly recorded, in the books of accounts maintained in the ordinary course of business. In this view of the matter, the SCN for the extended period of limitation is not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1069
Penalty u/s 78 of FA - purchase commission paid to the overseas agent - reverse charge mechanism - Held that: - before initiation of show cause proceedings, the appellant had deposited the Service Tax along with interest attributable to services received by it from the overseas service provider - The issue as to whether service tax was liable on the recipient of service was contentious one - it cannot be said that appellant was involved in the activities concerning fraud, collusion, suppression etc., with intent to evade payment of service tax. Therefore, imposition of penalty u/s 78 ibid can be set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (6) TMI 1068
Valuation - design and development charges - includibility - Held that: - Since the design and development charges has no connection with the sale price of the goods to independent buyers, the same, by any stretch of imagination cannot be included in the assessable value of the welding machine - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1067
CENVAT credit - AST Car Tyre and SV Car Ring Rims - imported capital goods - Held that: - the subject item is essential tool/accessory for conducting technical testing on the tyres which are manufactured by the appellant. Unless this testing is done, quality of the tyre on the related parameter cannot be certified and the item cannot be sold in the market - the Hon’ble Supreme Court in the case of Flex Engineering Ltd. Vs CCE, UP [2012 (1) TMI 17 - Supreme Court of India] has observed that items which are used directly or indirectly in relation to manufacturing final product would be entitled to Modvat credit under Rule 57(A) of erstwhile C.Ex Rules, 1944, predecessor to CENVAT Credit Rules - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1066
Reversal of CENVAT credit - Rule 6(3) (b) of CENVAT Credit Rules 2004 - demand on the premise that in terms of Section 2(m) of SEZ Act clearance of goods or providing service from DTA to SEZ unit or SEZ developer constitutes "export" and the appellants had not reversed an amount equal to 10% of value of the finished goods from the cenvat account, at the time of clearance from the factory in respect of the goods cleared to SEZ Developers and SEZ Co-Developers - whether supplies made to SEZ developer is export and consequently whether the appellant is liable to pay 10% value of the goods supplied to SEZ developer? Held that: - much water was flown on the issue and it was consistently held that the supplies made to SEZ developer is indeed 'export', consequently no payment is required i.e. equal to 10% value of the goods in terms of Rule 6(3) (b) of CENVAT Credit Rules - reliance was placed in the case of SUJANA METAL PRODUCTS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD [2011 (9) TMI 724 - CESTAT, BANGALORE], where it was held that the definition of the term “export” under the SEZ Act shall prevail over the definition of term “export” under the Customs Act. Therefore, supplies made to SEZ from DTA units shall be treated as export, supplies made to SEZ are held to be “export” provisions of Rule 6 of CCR does not arise at all. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1065
Clandestine removal - Clearance of scrap of machinery and machinery parts without payment of duty - case of the department is that the removal of scrap capital goods is liable for payment of duty in terms of Rule 3(4) of the CCR, 2002 - Held that: - the same issue, in the appellant’s own case, [2017 (1) TMI 161 - CESTAT MUMBAI], has been decided by this Tribunal, where it was held that From the plain reading of the above Rule 3(4), it is clear that the duty is required to be paid only if the capital goods is removed as such - In the present case, it is undisputed that the worn out parts of the capital goods were cleared, therefore in case of used parts/capital goods Rule 3(4) is not applicable - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1064
CENVAT credit - supplementary invoices issued by contractors - rule 9(1)(b) of CCR, 2004 - Held that: - Undoubtedly, the availment of credit against invoices, primary or supplementary, is not permitted if the duty is discharged consequence of proceedings initiated for recovery in circumstances of fraud, collusion, wilful misstatement, suppression of facts or contravention of provisions of the taxing statute. However, at the same time, it is seen that while there is specific restriction on utilisation of supplementary invoices pertaining to supply of goods the enumeration of documents relating to services does not envisage a separate treatment of supplementary invoices. Similar issue decided in the case of M/s Delphi Automotive Systems (P) Limited Versus CCE, Noida [2013 (12) TMI 156 - CESTAT NEW DELHI], where it was held that the term ‘invoice’ mentioned in Clause (f) and (g) of Rule 9 (1) of Cenvat Credit Rules, 2004 has to be treated including supplementary invoice, as during the period of dispute, with regard to service tax payment, the Rule 9 (1) did not make any distinction between ‘invoice’ and ‘supplementary invoice’. Appeal dismissed - decided against Revenue.
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2017 (6) TMI 1063
Valuation - Annual Capacity of production - Gutkha - pan masala packing machines - scope of SCN - Held that: - the SCN is vague and contradictory. There is no allegation in the SCN that the declaration dated 10/07/2008 was found to be mis-declared or more number of packing machines were found to be in operation in contrast to the declaration. Further, as alleged in the SCN is that there was an inspection and verification in the factory on 16/07/2008 of the appellant, is also without any basis, as no such document have been brought on record, as the relied upon document - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 1062
Valuation - charges incurred for assembly of tanks - Held that: - When the appellant agreed that the term of contract was to execute a composite supply, it was not a split up case of supply and provision of service - the appellant is directed to submit all details as directed by the Tribunal in its order dated 7.7.2006 for objective examination of the case by learned Adjudicating Authority and pass appropriate order - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (6) TMI 1053
Refund of excess payment of tax - Section 42(5) of the TNVAT Act, 2006 - further evidence sought for refund - Held that: - it is evident from the orders of assessment and notice enclosed in Form P, that the Assessing Officer has already concluded that the petitioner has made the excess payment. It is seen that the said conclusion has become final and binding on the parties. Therefore, there is no necessity for the petitioner to produce any further evidence for seeking refund of the amount so paid by the petitioner in excess - the respondent is directed to refund the excess payment made by the petitioner - petition allowed - decided in favor of petitioner.
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