Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 29, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Customs
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47/2019 - dated
28-6-2019
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
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27/2019-Customs (N.T./CAA/DRI) - dated
27-6-2019
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Cus (NT)
Appointment of Common Adjudicating Authority by Pr. DGRI
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26/2019-Customs (N.T./CAA/DRI) - dated
27-6-2019
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Cus (NT)
Appointment of Common Adjudicating Authority by Pr. DGRI
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25/2019-Customs (N.T./CAA/DRI) - dated
27-6-2019
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Cus (NT)
Appointment of Common Adjudicating Authority by Pr. DGRI
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24/2019-Customs (N.T./CAA/DRI) - dated
27-6-2019
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Cus (NT)
Appointment of Common Adjudicating Authority by Pr. DGRI
GST
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Order No. 6/2019 - dated
28-6-2019
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CGST
Central Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019
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32/2019 - dated
28-6-2019
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CGST
Seeks to extend the due date for furnishing the declaration FORM GST ITC-04
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31/2019 - dated
28-6-2019
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CGST
Central Goods and Services Tax (Fourth Amendment) Rules, 2019.
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30/2019 - dated
28-6-2019
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CGST
Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services(“OIDAR services”).
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29/2019 - dated
28-6-2019
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CGST
Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September,2019.
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28/2019 - dated
28-6-2019
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CGST
Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September,2019
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27/2019 - dated
28-6-2019
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CGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September,2019.
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26/2019 - dated
28-6-2019
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CGST
Extend the due date of filing returns in FORM GSTR-7
SEBI
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SEBI/LAD-NRO/GN/2019/22 - dated
27-6-2019
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SEBI
SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (THIRD AMENDMENT) REGULATIONS, 2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST on supply - renting of residential house to commercial concern - irrespective of whether they are let out to individuals or a commercial entity. The Applicant’s service of renting/leasing out the dwelling units for residential purpose is, therefore, exempt under SI No. 12 of the Exemption Notification.
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Exemption from GST - pure service - activity to improves the navigability of the riverbed and channels - an activity toward development of irrigation and waterways. It is an activity in relation to the function listed under Sl No. 5 of the Eleventh Schedule, as entrusted to a Panchayat under Article 243G of the Constitution of India.
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Central Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019
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Seeks to extend the due date for furnishing the declaration FORM GST ITC-04
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Central Goods and Services Tax (Fourth Amendment) Rules, 2019.
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Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services(“OIDAR services”).
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Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September,2019.
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Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September,2019
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Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September,2019.
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Seeks to extend the due date of filing returns in FORM GSTR-7
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ITC of GST paid - expenses incurred towards promotional schemes(Shubh Labh trade loyalty program) or goods given as brand reminders - promotional products/ services to be distributed and are not inputs and hence, GST paid on such a purchase does not qualify to be an input tax for the purpose of Section 16(1) r.w.s. 2(62) of the CGST Act - if same are non-taxable u/s 9 r.w.s. 2(78) and treated as exempt supply u/s 2(47) then credit is not allowable u/s 17(2)
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Exemption from GST - vocational education courses in respect of the Informal Trades like Tailoring, Offset Printing, Electrician and Wiring etc. which are non-recognized courses, are not exempted under Sr.No. 66 of Notification No. 12/2017 CT (Rate) dated 28.06.2019
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Exemption from GST - the vocational education courses pertaining to (i) Diesel Mechanic, (ii) Computer Operator and Programming Assistance (COPA), (iii) Welder and (iv) Motor Mechanic are carried out by the applicant who are affiliated to the NCVT will attract NIL rate of tax
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Place of Supply of Services - Clinical Research services - outside India or not - applicant receives goods in India and the testing process is also carried out in India - since goods are physically made available by their sponsors in India, the place of supply of services is in India as per Section 13(3)(a) of the IGST Act - Since the place of supply is in taxable territory, same cannot be considered as Export of Services
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Classification of services - rate of tax - applicant leases out diesel-hydraulic shunting locomotive inter alia to M/s. Damodar Valley Corporation, Andal claimed taxable @ 5% - The Applicant’s service to the DVC, as as per their work order is classifiable as ‘railway pushing and towing service’ (SAC 996731) and taxable @ 18%
Income Tax
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Penalty u/s 271(1)(c) - disallowance of interest u/s 43B - assessee has made sufficient disclosures in the financial statements and furthermore it should not be penalized on account of the mistake committed by the CA - there was no immediate tax benefit to the assessee by not disallowing the interest expenses since there was loss - no penalty
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Unexplained cash credit u/s.68 - money received in the form of preference share capital through FDI route with the proper approval of FIPB and RBI by filing requisite statutory forms and complying with the requisite conditions - addition not sustainable without rebutting various documentary evidences available on record merely on ground that these are photocopies and Key management stationed overseas not appeared before AO
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Powers of the DRP u/s 144C(8) - Tribunal was not right in holding that the DRP exceeded its jurisdiction in passing the order. In any event, the order passed by the DRP was not impugned before the Tribunal rather what was impugned was the final assessment order passed u/s 144C(13) r.w.s. 143(3),Therefore, the Tribunal was required to consider on merits whether the said assessment order was justified or not - remanded to Tribunal
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Penalty u/s 271(1)(b) - non compliance of notice sent in the name of Alam Zafar in place of Zafar Alam - Penalty cannot be imposed on the basis of assumptions and presumptions - Revenue has to make out a categoric case that the assessee was served upon by proving on record acknowledgements to show that assessee has received the notice and has failed to comply by attending the proceedings - penalty deleted
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Revision u/s 263 - in original assessment AO estimated net profit @ 7% which was reduced by CIT(A) @ 5% - It is not in dispute that issue on which the remand order was passed in purported exercise of powers vested in the CIT u/s 263 i.e. unsecured loans/creditors, was not a subject matter of appeal - revision justified
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Penalty u/s 271(1)(c) - AO initiated penalty on one limb of section 271(1)(c) and had imposed penalty on another limb - Third Member has upheld the view of AM that the standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind by AO and penalty is not sustainable
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Addition u/s. 40A(2)(b) - payment made for getting sales lead from related party - neither furnish details of such sales leads nor details of business actually generated through those leads - onus was on the assessee to prove that these reimbursement of expenses to related party were wholly and exclusively incurred for the purposes of business, which he failed to discharge - addition confirmed
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Penalty u/s 271G - the basic requirement for penalty is that the assessee failed to submit the relevant information/document required u/s 992D(3) - the necessary information was given but was not acceptable by TPO so these facts nowhere entitled the TPO to levy the penalty
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Deduction u/s 80P(2)(i) - the assessee is not a recognized bank as per the provision of RBI and there is a difference between the Co-operative bank and in the Credit Co-operative Society - Assessee being a Credit Co-operative Society is not in the banking business, entitled for deduction u/s 80P
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Review Petition - writ was earlier rejected against order of Pr. CIT on application for waiver of interest u/s 220(2) - There is no error apparent on the face of the record - re-appreciation of evidence and rehearing of case is not permissible in light of provisions as contained u/s 114 and Order 47 Rule 1 of CPC -
Customs
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Maintainability of appeal - Jurisdiction - Valuation of imported goods - as per Notification importation of erca nuts was made free provided the CIF value was ₹ 110/- or more per kG otherwise duty, redemption, fine and penalty - question to how duty is payable if imported on less value is a valuation dispute between the parties - appeal not maintainable
SEBI
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SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (THIRD AMENDMENT) REGULATIONS, 2019
Service Tax
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Extended period of limitation - common input services used for trading activities - the issue was highly debatable and there were divergent views in the judicial forum - No justifiable reason being assigned by the department for invocation of the extended period of limitation.
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Levy of service tax - to state that the right to sell eatables and collect empty bottles is a statutory right is an absurd proposition, which cannot be accepted - ervice tax would be leviable as long as the activity undertaken falls within the scope of taxable service as defined.
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Levy of service tax - activity / privilege to sell eatables and collect empty liquor bottles - agency commission - assessee liable to pay service tax on 1% of the revenue retained by them as agency commission
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CENVAT credit - appellants have rightly taken the Cenvat credit as per Credit Rules - It is of no relevance as to whether the construction has been done through the contractors or not as long as service tax is paid, the appellant is entitled for Cenvat credit and subsequent utilisation thereof for payment of service tax.
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Refund of Service Tax based on decision of SC on other case - ST on materials supplied free of cost - Limitation u/s 11B(1) of the Act - A plain reading of the provision contained in Clause (ec) of Explanation (B) to Section 11B of the Act would show that the “judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court” mentioned therein shall be in a case between the same parties - refund bar by limitation
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Condonation of delay of 214 days - communication gap between the appellant and the consultant - appellant was under the impression that the consultant will take necessary steps to challenge the order where as consultant was under the impression that the appellant will make arrangements for filing the appeal through any Advocate practising in Bangalore - considering larger interest delay condoned with cost
Case Laws:
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GST
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2019 (6) TMI 1342
Taxability - contract for sectioning of Sunamuhin Drainage Channel (From Narsinghapatna Bridge to Brahmadeva Resort) and from pond near Harachandi mouth to outfall of Chilika in Orissa - Government Entity - clause 2 (zfa) of N/N. 9/2017 Integrated Tax (Rate) dated 28/06/2017 - applicability of Sl 3A vide Notification No. 2/2018-Integrated Tax (Rate) dated 25/01/2018 - whether the supply being made is a composite supply, where supply of goods constitutes not more than 25% of the value of the composite supply? - whether the recipient is government, local authority, governmental authority or a government entity? - whether the supply is in relation to any function entrusted to a Panchayat or a Municipality under the Constitution? HELD THAT:- The functions of a Panchayat under the Constitution needs to be discussed. Article 243G of the Constitution discusses the powers, authority and responsibilities of Panchayats. It states, Subject to the provisions of this Constitution the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government..subject to such conditions as may be specified therein, with respect to..the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule, . It appears from the description of the work that it improves the navigability of the riverbed and channels - an activity toward development of irrigation and waterways. It is, therefore, an activity in relation to the function listed under Sl No. 5 of the Eleventh Schedule, as entrusted to a Panchayat under Article 243G of the Constitution of India. Exemption under Sl No. 3A of the Exemption Notification is, therefore, applicable to the Applicant s supply of the above works contract service.
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2019 (6) TMI 1341
Taxability - contract for sectioning of Makara River (Right Drainage) and Garanimunha branch of Makara River (Part A, Makara Right Drainage) in Orissa - Government Entity - clause 2 (zfa) of N/N. 9/2017 Integrated Tax (Rate) dated 28/06/2017 - applicability of Sl 3A vide Notification No. 2/2018-Integrated Tax (Rate) dated 25/01/2018 - whether the supply being made is a composite supply, where supply of goods constitutes not more than 25% of the value of the composite supply? - whether the recipient is government, local authority, governmental authority or a government entity? - whether the supply is in relation to any function entrusted to a Panchayat or a Municipality under the Constitution? HELD THAT:- The functions of a Panchayat under the Constitution needs to be discussed. Article 243G of the Constitution discusses the powers, authority and responsibilities of Panchayats. It states, Subject to the provisions of this Constitution the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government..subject to such conditions as may be specified therein, with respect to..the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule, . It appears from the description of the work that it improves the navigability of the riverbed and channels - an activity toward development of irrigation and waterways. It is, therefore, an activity in relation to the function listed under Sl No. 5 of the Eleventh Schedule, as entrusted to a Panchayat under Article 243G of the Constitution of India. Exemption under Sl No. 3A of the Exemption Notification is, therefore, applicable to the Applicant s supply of the above works contract service.
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2019 (6) TMI 1340
Levy of GST on supply - supply even if the recipient is using the dwelling unit for residential purpose - Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 (corresponding state Notification No. 1136 - FT dated 28/06/2017) - HELD THAT:- It appears that the dwelling units rented to individuals, as described in the relevant contracts, are meant for residential accommodation. The dwelling unit rented to M/s. Larsen Toubro Ltd is a flat in the housing complex named South City. The South City Apartment Owners Association certifies that the Applicant owns the flat and it is a residential flat and cannot be used for any other purpose. The said association further confirms that an employee of M/s. Larsen Toubro Ltd is staying at the flat. The Applicant s service is classifiable as rental or leasing service involving own/leased residential property (SAC 997211). Applicability of Sl No. 12 of the Exemption Notification depends upon whether the dwelling unit is used as residence. It appears from the documents produced that all the above dwelling units are being used for residence, irrespective of whether they are let out to individuals or a commercial entity. The Applicant s service of renting/leasing out the dwelling units for residential purpose is, therefore, exempt under SI No. 12 of the Exemption Notification. The Applicant s service of renting/leasing out the dwelling units for residential purpose, as described in para no. 4.1, is exempt under Sl No. 12 of Notification No. 12/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017), as amended from time to time. The Applicant is, therefore, not liable to pay tax on supply of such service.
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2019 (6) TMI 1339
Classification of supply - pure service or a composite supply? - Applicant supplies the organic manure and solid waste scrap if any to customers - whether the supply being made is pure service or a composite supply, where supply of goods does not exceed more than 25% of the value of the supply? - whether the recipient is government, local authority, governmental authority or a government entity? - whether the supply is being made in relation to any function entrusted to a panchayat or a municipality under the Constitution? - HELD THAT:- The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act. The Applicant is made responsible for collection, segregation, storing, transport and disposal of municipal solid waste from the municipal area of the BMC. They will organize a house-to-house collection of municipal solid waste, collect waste from slums, hotels, slaughterhouses etc. They will segregate the non-bio-degradable and inert waste and dump it at the Landfill within the Project premise. The Applicant may build a suitable Processing and Composting Plant. The Applicant shall bear the expenditure for maintenance of the collection equipment and pay rental on the equipment taken on lease from the BMC. The consideration to be paid measures the work done in terms of the quantity of the garbage lifted and removed. Based on the above document, it may, therefore, be concluded that the Applicant s supply to BMC is pure service. Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl.No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under Sl.No. 6 of the Twelfth Schedule - Applicant s service to BMC, therefore, is exempt under Sl No. 3 of the Exemption Notification. Section 51(1) of the Act provides that the Government may mandate inter-alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both. As the Applicant is making an exempt supply to the BMC, the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply - Supply of unbranded organic manure, unless packed in containers, is classifiable under HSN 3101. Municipal waste is classifiable under HSN 3825. Supplies of both of them are exempt under Sl Nos. 108 and 110 of the Exemption Notifications (Goods), respectively. If the Applicant s turnover consists entirely of exempt supplies, he is not liable to registration in terms of section 23(1)(a) of the GST Act.
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2019 (6) TMI 1338
Rectification of two entries in the purchase details already submitted by the petitioners - HELD THAT:- To test the reasonableness of the findings and the procedure followed by the respondents while rejecting the request, a few permutations and combinations are illustratively tested during and in the course of arguments. At the bottom of above effect a concrete solution warranting dismissal of writ petitions is not made out and so many questions now raised by the petitioners are remain unanswered. This Court keeping in view the stage at which the request is made namely that even before the initiation of penal proceedings is of the view that the issue decided in Ext.P2 requires re-consideration by the 1st respondent. This Court since is unable to accept the findings recorded by the 1st respondent and however at the same time does not want to record a finding by examine the merits of case now pleaded by the petitioners is of the view that after Ext.P2 order could be set aside the matter remitted to 1st respondent for consideration and disposal by keeping in mind the standard accountancy practices, the effect of proposed rectification and pass orders within four weeks from today - Petition allowed by way of remand.
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2019 (6) TMI 1337
Profiteering - Vitrified Tiles - benefit of reduction in the rate of tax not passed on - increase in the MRP of the product after the rate of tax was reduced - contravention of the provisions of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- It is revealed that the Central Govt. vide Notification No.41/2017-Central Tax (Rate) dated 14.11 2017 had reduced the rate of GST from 28% to 18% in respect of the tiles with effect from 15.11.2017, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017. It is revealed that the Respondent had increased the base price of the product from ₹ 750/- to ₹ 814/when the rate of tax was reduced from 28% to 18% with effect from 15.11.2017. Thus, by increasing the base price of the product, post-GST rate reduction, the benefit of reduction in tax rate was not passed on to the Applicant No. 1 by the Respondent. It is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering is determined as ₹ 54,67,149/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017 - The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients - The Respondent is also directed to deposit the profiteered amount of ₹ 54,67,149/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. The Respondent is further directed to refund an amount of ₹ 75/- (750* 1.28 = 960 -750*1.1.8 = 885) to Applicant No. 1. along with the interest @ 18% - Since rest of the recipients in this case are not identifiable, the Respondent is directed to deposit the amount of profiteering of ₹ 27,33,537/- in the Central Consumer Welfare Fund (CWF) and ₹ 27,33,537/- in the Uttar Pradesh State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. Penalty - HELD THAT:- The Respondent had issued incorrect invoices while selling the above product to his recipients as he had incorrectly shown the base prices and had also compelled them to pay additional GST on the increased prices through the incorrect tax invoices which would have otherwise resulted in further benefit to the recipients. It is also established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of CGST Act - penalty under Section 122 (1) (i) of CGST Act read with Rule 133 (3) (d) of the CGST Rules, 2017 upheld - Since he has not submitted his reply on the issue of penalty, therefore, in the interest of natural justice before imposition of penalty a notice is issued to him asking him to explain why penalty should not be imposed on him. Application disposed off.
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2019 (6) TMI 1308
Classification of services - rate of tax - applicant engaged in leasing out cranes and equipment and locomotives, provides diesel-hydraulic locomotives to several companies for placement/shunting of rakes/wagons/oil tankers from the siding or terminal of the Indian Railways to the factory premises of the company and vice versa - N/N. 11/2017-Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 - FT dated 28/06/2017), as amended from time to time. HELD THAT:- Transportation of coal from Andal Station to DSTPS Siding is, therefore, railway transport, and the service of moving empty or loaded wagons/rakes at DSTPS Siding is nothing but the supporting service of railway pushing and towing (SAC 996731). It describes the nature of the Applicant s service more specifically than leasing or rental services concerning transport equipment, including containers with or without operator (SAC 997311) - The communication from the East Central Railway referred to above, which deals with the GST applicable to different services that the Railways offer to the customer, is not relevant in the present context. The Applicant s service to the DVC, as described in para no. 4.1, is classifiable as railway pushing and towing service (SAC 996731) and taxable @ 18% under Sl No Il(ii) of Notification No. 11/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 - FT dated 28/06/2017), as amended from time to time.
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2019 (6) TMI 1307
Levy of CGST AND SGST or IGST - Clinical Research services proposed to be provided by them to entities located outside India - Place of supply of services - Export of services or not - section 2(6) of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- The Applicant will be providing Clinical Research (as mentioned in their application), in the form of comprehensive range of clinical research and support services to their clients (sponsors), by performing technical testing and analysis on the Drug/lnvestigational Product, provided by sponsors located outside India and submits final analyses report to such foreign sponsors. The Research (study) will be conducted on human subjects. Thus we find that the Research is for conducting a study of the effect of such Investigational Product/drug. Place of Supply of Services - outside India or not? - Section 13 of the IGST Act, 2017 - HELD THAT:- In this case, the applicant supplying the services is in India and the client/sponsor to whom the services are supplied is situated outside India - The applicant have themselves submitted that the services of research are rendered by them in respect of the subject Drug/product, which are made available to them in India. Only when these drugs are received then they administer the same to their subject under certain conditions and observed the effect of the drugs on such subject and finally make research reports which are then sent to their sponsors. The Applicant has submitted that they are engaged by the sponsors only for the report and not for merely administering the drug and recording the results alone. This contention is flawed inasmuch as it is natural that in such cases the sponsors would like to know the efficacy of their drugs on subject and for which the testing of the drugs themselves are important. The entire administration of the drugs has to take place under controlled conditions and results have to be meticulously taken down. The report is only a culmination of the entire process. As the applicant receives goods in India and the testing process is also carried out in India. The said goods are physically made available to them by their sponsors and therefore the place of supply of services is in India as per Section 13(3)(a) of the IGST Act. Since the place of supply is in taxable territory it is clear that the provisions of Section 2(6) of the IGST Act are not fulfilled in this case and therefore their supply cannot be considered as Export of Services as per the GST Law.
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2019 (6) TMI 1306
Exemption from GST - services provided under vocational training courses recognized by National Council for Vocational Training (NCVT) or Jan Shikshan Sansthan (JSS) - whether the service is exempt either under Entry No 64 of exemption list of Goods and Service Tax Act 2017 or under Educational Institution defined under Notification 22/Central Tax (Rate)? - HELD THAT:- Entry 64 of Notification 12/2017 CT (Rate) dated 28.06.2017 deals with services provided by the Central/State Government, Union Territory or local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Central/State Government, Union Territory or local authority' - The applicant is not a Central/ State Government, Union Territory or local authority and therefore Entry No. 64 is not applicable to them. Whether they are eligible under the entry at serial number 66 of the Notification 12/2017 CT (Rate) dated 28.06.2017? - HELD THAT:- The applicant has admitted that they do not fall under clause 2(y) (i) (ii) mentioned above but that they fall under Clause (iii). For their services to fall under clause (iii), they have to be seen providing education as a part of an approved vocational education course - From the documents submitted by the applicant, we find that they have been granted affiliation by the National Council for Vocational Training (NCVT) in respect of vocational skills pertaining to (i) Diesel Mechanic, (ii) Computer Operator and Programming Assistance (COPA), (iii) Welder and (iv) Motor Mechanic. These courses are vocational courses and are approved by NCVT. The vocational education courses pertaining to (i) Diesel Mechanic, (ii) Computer Operator and Programming Assistance (COPA), (iii) Welder and (iv) Motor Mechanic are carried out by the applicant who are affiliated to the NCVT and therefore such services provided by them are attracting NIL rate of tax under GST. (Sr.No. 66 of Notification No. 12/2017 CT (Rate) dated 28.06.2019. In respect of the Informal Trades like Tailoring, Offset Printing, Electrician and Wiring, the applicant have themselves submitted that these courses i.e. Offset Printing, Tailoring and Electrician Wiring are non-recognized courses and that they are inclined only to discuss recognized courses. Further, they also have vocational training for wheeler Mechanic, which they have submitted is a training course recognized by Jan Shikshan Sansthan (JSS) under the Ministry of Labour and Employment, Govt. of India. However they have not produced any evidence to support their submissions on this count.
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2019 (6) TMI 1305
Input Tax credit of GST paid - expenses incurred towards promotional schemes of Shubh Labh Loyalty Program - expenses incurred towards promotional schemes goods given as brand reminders - Scope of 'Gift' - HELD THAT:- The applicant, a registered person under GST ACT is engaged in business of sale of pharmaceutical goods and services through group entities during the course of which they incur various marketing and distribution expenses, with a view to promote their brand/ products and to enhance their sales under various schemes .The applicant distributes different type of products among its trade channels as promotional items or brand reminders. The applicant is mainly dealing and supplying of Pharmaceutical goods and services and in order to achieve sales and marketing objectives, they have launched various target based - sales incentive schemes for their distributors/ wholesalers to achieve a specified target and in turn helps the company to achieve their targets. The present subject application is in respect of a sales promotion scheme known as Shubh Labh Loyalty Program 2018 and promotional products which has been floated by them for their customers. In the first case, their distributors/ wholesaler Customers who purchased certain products over and above a certain quantity would be entitled to get reward points. In the second scenario, applicant is giving Brand reminder products like pens, notepad, key-chains to the distributors or Doctors, which serve as an advertisement tool. The brand reminders are distributed to the distributors or doctors with their name embossed on it to promote the brand for sales. Taking into account applicant s contention that the subject free supplies have been made in pursuance of their business, jurisdictional officer submit that the fact remains that the same have been made free of cost and therefore, the same are non-taxable under Section 9 read with Section 2(78) and merits to be treated as exempt supply under Section 2(47). Further, there are no provisions under Section 15 to include the cost of such free supplies in the value of taxable free samples. There cannot be any dispute that the said supplies are exempted, hence credit is not allowable in terms of Section 17(2). Further, gifts has to be disallowed in terms of Section 17(5)(h), notwithstanding the fact that the subject supply has been used in course of furtherance of business in terms of Section 16(1). The provisions of Section 17(5) (h) are applicable notwithstanding the provisions of Section 16(1). The applicant is not eligible for the ITC as the promotional products/ services to be distributed and are not inputs and hence, GST paid on such a purchase does not qualify to be an input tax for the purpose of Section 16(1) read with Section 2(62) of the CGST Act 2017. The provisions of ITC are governed by Sections 16 and 17 of the CGST Act, 2017. In order to avail ITC, two basic provisions need to be complied with, i.e. Section 16 and Section 17. As per Section 16, a taxpayer is entitled to take credit of input tax charged on any supply of goods or services to him which are used in the course or furtherance of his business. i.e. this section disallows ITC against input goods/ services used for non-business purposes. Section 17 (5) of the CGST Act deals with Blocked credits and begins with a non obstante clause, which means even if Section 16 (1) allows ITC, Section 17(5) shall block in respect of certain cases. Whether the different promotional products in the present case can be treated as a gift or not? - HELD THAT:- A contractual arrangement implies especially in view of the magnitude and area of the applicant s business that, it should also be agreed by the customer in writing to such scheme floated by the applicant. We find that they have not submitted any such contract/ agreement and in support of their contention, but they have only submitted a scheme of Shubh labh Loyalty is available on companies web site and interested customers can Login with details to avail the benefit of scheme from 2018 to Jan, 2019 - Hence we find that the promotional products are not given to their customers under any contractual obligation and are voluntarily given on certain conditions achieved by their customers. A gift is normally seen as an enticement to customers as in the subject case which would bear heavily on the customers in making purchase of particular quantities and above or in making payments of certain values and above. This act on behalf of the applicant if it is not excluded from the scope of being a supply, then the provisions of the Valuation Rules come into play. In other words if the giver of the gift does not pay output tax on the same then the compensation to the department would be the foregoing of the ITC on such gifts. ITC on gifts will not be available when no GST is being paid on their disposal. Just because the applicant submits that they have satisfied Section 16 (1) of the CGST Act 2017 does not mean that they are entitled to credit since Section 17(5) starts with Notwithstanding anything contained in sub-section (1) of Section 16..'' - The implication is that in the subject case even if it seems, as per the applicant, that Section 16 (1) is applicable in their case and allows them credit, Section 17(5) shall block such credits, The transaction is nothing but a gift - The Applicants should not be entitled to ITC on GST paid on expenses incurred towards promotional schemes of Shubh Labh Loyalty Programme and goods given as brand reminders.
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2019 (6) TMI 1304
Learned Single Judge had omitted to consider and adjudicate upon other grounds raised in the writ petition - Constitutional validity of Section 174 of the KSGST Act - time limitation - HELD THAT:- Issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT ] where it was held that The petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017. Remittance of the writ petition for fresh consideration and disposal on the grounds raised other than the validity of Section 174 of the KSGST Act, would serve the ends of justice - The writ petition is restored on the files of this Court.
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Income Tax
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2019 (6) TMI 1303
Deduction u/s 10AA - alleged that assessee taking undue benefit of Section 10AA by not claiming interest on the capital and remuneration to partners which resulted into increase in the exempt profit - CIT(A) held that the clause H of the Partnership Deed specifically restricts payment of Interest to Partners on their Capital as well as Remuneration to Partners - HELD THAT:- It appears that the Appellate Tribunal, while dismissing the appeal preferred by the Revenue, placed strong reliance on a decision of this Court in the case of Pr. CIT v. Alidhra Taxspin Engineers and another [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] . where in it was held that on interpretation of the partnership agreement and considering the wish of the partners reflected in the partnership deed, not to pay/charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the AO with respect to the deduction claimed u/s 80IB. We are of the view that the issue is squarely covered by the aforesaid decision of this Court - Appeal fails and is hereby dismissed
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2019 (6) TMI 1302
Stay petition - recovery proceedings - pre-deposits - HELD TAT:- The very fact that four equal installments are granted by the 2nd respondent indicates consideration of all relevant circumstances including the hardship which was brought to the notice of the 2nd respondent. The case does not warrant interference against the discretion exercised by the 2nd respondent in Ext.P5. He prays for dismissing the writ petition. He alternatively submits that the petitioner since has established a few bona fides by depositing ₹ 98,44,201/- (Rupees Ninety eight lakh forty four thousand two hundred and one only) the four equal installments granted in Ext.P5 can be extended reasonably by this Court. After perusing the Ext.P5, we are satisfied that the condition imposed cannot be treated as arbitrary or unreasonably in the facts and circumstances of the case. The 2nd respondent has granted four equal installments. In all the circumstances granting four equal installments amounts to granting sufficient time for complying with the condition imposed by the appellate authority. But keeping in mind the hardship now pleaded by the counsel appearing for the petitioner as an exceptional case and the exercise of the jurisdiction of the this Court under Article 226 of the Constitution of India, the installments are extended from four to six installments.
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2019 (6) TMI 1301
Review Petition - Interest u/s 220(2) levied - applicant came up with a case that levy of interest was on the higher side and it was causing great hardship - writ was earlier rejected against order of Pr. CIT application for waiver of interest u/s 220(2) - HELD THAT:- As decided in HARIDAS DAS VERSUS SMT. USHA RANI BANIK ORS [ 2006 (3) TMI 686 - SUPREME COURT] rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason. In the present case, there is no error apparent on the face of the record and the petitioner infact under the guise of review is challenging the order passed by this Court, which is under review. In the present case the petitioner has not been able to point out any error apparent on the face of the record . See INDERCHAND JAIN (D) TH. LRS. VERSUS MOTILAL (D) TH. LRS. [ 2009 (7) TMI 1029 - SUPREME COURT] dealing with the scope of review has held that re-appreciation of evidence and rehearing of case without there being any error apparent on the face of the record is not permissible in light of provisions as contained u/s 114 and Order 47 Rule 1 of Code of Civil Procedure, 1908. Thus this court does not find any reason to review the order.
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2019 (6) TMI 1300
Powers of the DRP u/s 144C(8) - authority either to direct the AO or TPO to make further enquiry and decide the matter - DRP has reduced the variation than what was granted to the assessee in the draft assessment order - Tribunal was right in not deciding the grounds raised by the Revenue in their grounds of appeal touching upon the merits of the assessment order? - HELD THAT:- The order dated 24.11.2015 passed by the DRP is an order reducing the variation proposed in the draft assessment order dated 25.02.2015. Thus, in our considered view, the Tribunal was not right in holding that the DRP exceeded its jurisdiction in passing the order. In any event, the order passed by the DRP was not impugned before the Tribunal rather what was impugned was the assessment order dated 28.12.2015 passed under Section 144C(13) r/w Section 143(3) of the Act. Therefore, the Tribunal was required to consider on merits whether the said assessment order was justified or not. The Revenue was clear in their mind in the challenge before the Tribunal which was an final order of assessment passed under Section 144C(13) and therefore, on facts we found that the DRP has granted relief to the assessee and the correctness of relief granted to the assessee which has translated into a final assessment order which was questioned by the Revenue before the Tribunal on merits. Therefore, on facts we have held as above. We hold that the Tribunal should decide the matter rather than allowing the appeal filed by the Revenue in its entirety. Appeal is allowed and the substantial questions of law are answered in favour of the assessee, consequently, the order passed by the Tribunal is set aside and the matter is remanded back to the Tribunal to decide the appeal filed by the Revenue on merits, on the grounds raised by it in the appeal memorandum as referred above and such other grounds that may be adduced at the time of hearing.
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2019 (6) TMI 1299
Expenditure on replacement of old machinery by purchase and installation of new machinery - revenue expenditure as current repairs or capital expenditure - HELD THAT:- As decided in SARAVANA SPINNING MILLS P. LTD. [ 2007 (8) TMI 16 - SUPREME COURT] there are several machines and perform different functions. Therefore, when each of the department/division perform different functions, repair/ substitution of an old machine will not come within the definition of the word current repairs and deduction cannot be claimed thereunder. In this view of the matter, we are of the considered opinion that the impugned judgement and order passed by the Gujarat High Court as also the orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax Appeals on this issue cannot be sustained and are thereby set aside. It is held that the respondent is not entitled for any deduction under the head current repairs as claimed and allowed by the two authorities. - Decided in favour of revenue
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2019 (6) TMI 1298
Revision u/s 263 - in original assessment AO estimated net profit @ 7% which was reduced by CIT(A) @ 5% - subject matter of appeal - HELD THAT:- We are in no confusion to hold that there was no infirmity in the exercise done by the Commissioner, Income Tax II purportedly u/s 263 because the provisions of Section 263(c) suitably empowers the Commissioner to pass such order even if any appeal is pending but with a caveat, that the order passed under Section 263 shall govern only such matters which was neither a subject matter nor decided in appeal. It is not in dispute that issue on which the remand order was passed in purported exercise of powers vested in the CIT u/s 263 i.e. unsecured loans/creditors, was not a subject matter of appeal and obviously could not have because this issue had been decided by the statutory authority in favour of assessee. No infirmity in the exercise and since the order has been acted upon to result in the fresh assessment order, we leave it open for the assessee to question the same in accordance with law but finding no issues which are in the nature of substantial question of law we refuse to grant indulgence, to dispose in this appeal. Be noted that we have not expressed any opinion on the inter-party merits and the appellant shall be at liberty to raise all issues as he chooses to raise, to question the order passed on remand of the matter u/s 263.
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2019 (6) TMI 1297
Penalty u/s 271(1)(c) - invalid notice issued u/s 274 - HELD THAT:- Whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or for furnished inaccurate particulars. Therefore, the notice issued by the AO is a vague notice and is liable to be quashed in the light of the decision of Telangana A.P. in the case of Smt. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and also the decision of the Hon'ble Supreme Court in the case of SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER]. The coordinate bench of the Visakhapatnam tribunal in the case of Konchada Sreeram Vs. ITO [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] has considered the validity of notice by following the above referred to judgments and held that notice issued by the Assessing Officer is not a valid notice and accordingly quashed. - Decided in favour of assessee.
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2019 (6) TMI 1296
Revision u/s 263 - assessment order passed u/s 147 r.w.s. 143 (3) is erroneous and prejudicial to the interest of the revenue - unexplained cash credit - HELD THAT:- Identical issue has been decided by the coordinate bench in ITA number 6905/del/2017 for assessment year 2007 08 along with 4 other assessees having similar facts , where in the order passed by the learned Pr. CIT u/s 263 of the income tax act was upheld. The case of the assessee is also falling into the similar factual matrix including the name of the accommodation entry provider and the similar seized material. The coordinate bench vide para number 10 and 11 has considered the two decisions of the coordinate benches for upholding the order passed by the CIT u/s 263 of the income tax act. Further the factual matrix is also identical to the decision of the honourable Calcutta High Court in case of Raj mandir Estates private limited vs CIT [ 2016 (5) TMI 801 - CALCUTTA HIGH COURT] where the action of the learned CIT-A invoking jurisdiction u/s 263 of the income tax act was upheld. We do not find any reason to not to uphold the order of the learned Pr. CIT u/s 263 of the income tax act as the order passed by the learned assessing officer u/s 147 read with section 143 (3) of the income tax act is erroneous and prejudicial to the interest of the revenue. Accordingly, all the grounds raised by the assessee in this appeal are dismissed.
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2019 (6) TMI 1295
Disallowance of payment of excess price of sugarcane - deduction for payment of excessive price for purchase of sugarcane - HELD THAT:- The issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. . [ 2019 (3) TMI 321 - SUPREME COURT] to extent of the component of profit which will be a part of the final determination of SAP and/or the final price/additional purchase price fixed under Clause 5A would certainly be and/or said to be an appropriation of profit. We set-aside the impugned orders on this score and remit the matter to the file of the AO, He would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. It is further made clear that the assessee will be at liberty to raise any other argument concerning the issue before the AO. Addition understatement of sale - HELD THAT:- Assessee admittedly sold sugar to JJSD at a concessional rate of ₹ 1,080/- per bag on the understanding that the same was meant for export by the latter. JJSD did not export the sugar. Rather, they sold the sugar obtained from the assessee under quota in the domestic market at the prevailing market prices. It has been brought to our notice that the assessee took up civil proceedings against JJSD and some arbitration award was also passed. AR submitted that the Hon ble Bombay High Court has cancelled the award directing the payment of some compensation to the assessee. Be that as it may, in our considered opinion, compensation, if any, which the assessee eventually receives from JJSD will be subjected to tax in its hand when it acquires the right to receive the same. In sofaras the year under consideration is concerned, the assessee has neither recovered excess over quota price from JJSD nor acquired right to receive any compensation. We, therefore, hold that the ld. CIT(A) was justified in deleting the addition. Deduction of expenditure claimed on salaries and wages - HELD THAT:- CIT(A) has not granted any relief in respect of the expenditure claimed. He simply directed the AO to verify the assessee s claim and then allow relief. In other words, if on verification, the AO finds that the relief is not due, he will deny the same and vice versa . The mere fact of restoring the matter to the file of AO, in our considered opinion, does not constitute any cause of grievance to the Revenue in asmuch as the ball has again come back to the court of the AO, who can decide the issue as per law. We are, therefore, not inclined to disturb the impugned order on this score. Addition towards sale of sugar at concessional rate - HELD THAT:- Following the precedent MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. VERSUS ACIT, SHRI CHHATRAPATI SHAHU, DCIT, ITO [ 2019 (3) TMI 906 - ITAT PUNE] we set-aside the impugned order to this extent and remit the matter to the file of AO for its fresh determination in accordance with law.
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2019 (6) TMI 1294
Deduction u/s. 80IB(4) in respect of Unit - II - assessee had obtained factory licence on 22.04.2004 i.e. after 31.03.2004 and hence the conditions prescribed for claiming deduction were not fulfilled by the assessee - HELD THAT:- The claim of the exemption of the assessee u/s 80IB has been accepted in A.Y. 2004-05, therefore, in the said circumstances, the exemption is not liable to be declined in subsequent year and in this regard we also find support in law settled in CIT Vs. Wester Outdoor Interactive (P) Ltd. [ 2012 (8) TMI 709 - BOMBAY HIGH COURT] CIT Vs. Paul Brothers [ 1992 (10) TMI 5 - BOMBAY HIGH COURT] Claim of the assessee was also declined on account of this fact that the factory licence was taken on 22.04.2004 but it cannot ground to deny the exemption u/s 80IB and in this regard, we also find support in the decision of Bombay High Court in the case of M/s. Jolly Polymers Vs. CIT [ 2015 (6) TMI 610 - BOMBAY HIGH COURT] - Thus the finding of the CIT(A) on the issues is quite correct which is not liable to be interfere with at this appellate stage. - Decided against revenue Addition u/s 14A - CIT(A) restricted the expenditure to earn the exempt income to the extent of 10% dividend income - HELD THAT:- It is not in dispute that the provisions of Section 14A r.w. Rule 8D of the Act is applicable subsequent to the A.Y. 2008-09. The present case is in connection with the A.Y. 2006-07. The assessee earned the exempt income in sum of ₹ 3,93,753/-. CIT(A) has restricted the expenditure to earn the exempt income to the extent of 10% dividend income which nowhere seems unjustifiable. Earlier to the period 2008-09 it was justifiable to earn the exempt income on reasonable basis unless satisfaction has been recorded by AO in the order. We also find support of law settled in case titled as CIT Vs. Essar Technology Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] Godrej Boyce [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided against revenue Delayed payment of employee s provident fund - disallowance u/s 36(1)(va) - assessee deposited the said amount before filing the return of income - HELD THAT:- AO has noticed that the assessee has not made the payment earlier to filing the return of income, therefore, the said amount was added to the income of the assessee. It is also not in dispute that the assessee deposited the said amount before filing the return of income. In this regard, the law has now been settled in CIT Vs. Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] . If the assessee deposit employee s contribution funds before due date of filing the return, therefore, in the said circumstances, the claim of the assessee is not liable to be disallowed. - Decided in favour of the assessee against the revenue. Addition u/s 14A r.w. Rule 8D(2) - own fund more than investment - HELD THAT:- The presumption lies in favour of the assessee if the assessee have own fund more than investment than the assessee s investment would be treated from his own fund to earn the exempt income. The CIT(A) has also relied upon the decision in the case of Reliance Industries [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] therefore, we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfere with at this appellate stage. Accordingly, these issues are decided in favour of the assessee against the revenue.
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2019 (6) TMI 1293
Deduction u/s 80P(2)(i) - assessee is not a recognized bank in view of the provision of the Reserve Bank of India (RBI) - HELD THAT:- Assessee nowhere fall within the definition of the Co-operative Bank. The assessee is not a recognized bank in view of the provision of the Reserve Bank of India (RBI). There is a difference between the Co-operative bank and in the Credit Co-operative Society. If the Assessee is not in the banking business then in the said circumstances, no doubt the assessee is entitled to raise the claim of deduction u/s 80P of the Act. . The facts are not distinguishable at this stage also. The assessee is not doing the banking business. The CIT(A) has relied upon the decision of Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd. Vs. ACIT [ 2015 (6) TMI 573 - BOMBAY HIGH COURT] . No law contrary to the law relied by the Ld. CIT(A) in his order has been produced before us. - Decided in favour of the assessee against the revenue.
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2019 (6) TMI 1292
Penalty u/s 271G - alleged that assessee had clearly failed in maintaining the documentation as required u/s 92D(3) - assessment of the assessee was finalized u/s 92CA(3) - HELD THAT:- CIT(A) has passed the order on the basis of this fact that the assessee has furnished the relevant documents u/s 92D(3) r.w.r. 10D of the Act. The penalty is not laviable specifically on the facts and circumstances when the assessee submitted all the necessary/relevant information to the TPO which was not acceptable if any by TPO. CIT(A) has also relied upon the decision in the case of Annapurna Business Solution Vs. ACIT Circle 6(1) [ 2011 (12) TMI 224 - ITAT HYDERABAD] The facts are not distinguishable at this stage also. The basic requirement of Section 271G of the Act is that the assessee failed to submit the relevant information/document required u/s 992D(3) of the Act. But in the instant case, the necessary information was given but was not acceptable by TPO so these facts nowhere entitled the TPO to levy the penalty. No law contrary to the law relied upon the CIT(A) if any has not been produced before us. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. - Decided against revenue.
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2019 (6) TMI 1291
Eligibility for deduction u/s 80P(2)(e) - CIT-A allowed claim - HELD THAT:- CIT(A) allowed the assessee s claim u/s 80P(2)(e) noting that the Hon'ble Jurisdictional High Court in the case of assessee itself [ 2011 (3) TMI 615 - PUNJAB AND HARYANA HIGH COURT] had held that the deduction u/s 80P(2)(d) of the Act was allowable on rental income earned from outsiders. It was on appreciating this legal proposition that the I.T.A.T. in the first round has restored the matter back to the CIT(A) to adjudicate the issue of allowance of claim u/s 80P(2)(e) after verifying the evidences filed by the assessee. CIT(A) has gone through all the evidences filed by the assessee and found the claim of the assessee to be in accordance with law. DR has been unable to controvert this factual finding of the CIT(A). In view of the same, we find no reason to interfere in the order of the CIT(A). Disallowance of interest expenditure u/s 14A calculated as per Rule 8D(2)(ii) - HELD THAT:- where sufficient own interest free funds are available, no disallowance of interest is warranted. The CIT(A) has given a factual finding that sufficient interest free funds were available with the assessee. DR was unable to distinguish the decision of the I.T.A.T. relied upon by the Ld.CIT(A) and was also unable to controvert the factual finding of the CIT(A) vis- -vis the deletion of interest expenses as per Rule 8D(2)(ii) of the Rules. As far the directions of the CIT(A) to calculate the disallowance of administrative expenses as per Rule 8D(2)(iii) of the Rules by taking into consideration only those investments which had earned interest and dividend income, we find that the CIT(A) had relied upon the decision of the I.T.A.T. in the case of the assessee itself for assessment year 2013-14 on identical issue. DR was unable to distinguish the same. In view of the same, we do not find any reason to interfere in the order of the CIT(A) in this regard also.
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2019 (6) TMI 1290
Unexplained cash credit u/s.68 - money received in the form of preference share capital has come through FDI route - original documents were not submitted before the AO - HELD THAT:- We find that money received in the form of preference share capital has come through FDI route with the proper approval of FIPB and RBI by filing requisite statutory forms and complying with the requisite conditions prescribed thereon. There is no question of doubting the genuineness of the said transactions. The assessee has received preference share capital from Aanya Properties (I) Ltd. which is holding 31% equity in the assessee company which means the preference share capital is received from the existing share holder of the assessee company. The assessee has given various documentary evidences pertaining to the investor company i.e. Aanya Properties (I) Ltd. proving the identity and creditworthiness thereon. Hence the three necessary ingredients of Section 68 have been duly complied with by the assessee in the instant case. Merely because the original documents were not submitted before the AO, the photo copy of the said documents cannot be summarily brushed aside and ignored in order to draw the adverse inference against the assessee company. Key management personnel of Aanya Properties (I) Ltd. is stationed at Mauritius and merely because of his non-appearance before the AO, no adverse inference could be drawn against the receipt of preference share capital by doubting the veracity of the same, without rebutting various documentary evidences that are already available on record. Since this is more of a factual issue, we do not deem it fit to adjudicate the various decisions relied upon by the ld. AR before us. There is no need for setting aside of this appeal to the file of the AO as prayed by the ld. DR as it would only tantamount to giving second innings to the AO, which in our considered opinion, would not serve any purpose, as no second view is possible in the instant case and as these details were already before the AO. No infirmity in the order of the CIT(A) who had appreciated the entire facts and documentary evidences available on record, granting relief to the assessee. - Decided against revenue
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2019 (6) TMI 1289
Addition u/s. 40A(2)(b) - payment made for getting sales lead from related party - neither furnish details of such sales leads nor details of business actually generated through those leads - HELD THAT:- Thus, in nut shell the assessee could not prove that these payments made to its related party were actually incurred wholly and exclusively for the purposes of business of the assessee. The assessee has also not filed any paper book even before tribunal containing evidences to prove that these expenses were incurred wholly and exclusively for the purposes of business of the assessee. The onus is on the assessee to prove that these reimbursement of expenses to related party were wholly and exclusively incurred for the purposes of business of the assessee , which the assessee in the instant case failed to discharge. There is no material on record to prove that these expenses were incurred for business of the assessee, we are inclined to confirm additions as were upheld by CIT(A) and hence we are not inclined to interfere with well reasoned appellate order passed by CIT(A). - Decided against assessee Purchase of gold coins - allowable business expenses u/s 37(1) - HELD THAT:- Assessee has purchased gold coins to the tune of ₹ 4,16,333/- which it claimed to have given as gift for business purposes . The assessee although had given the list of the persons to whom gold coins were gifted but the nexus of gift of gold coin to business of the assessee could not be proved. The assessee could not prove that these expenses were incurred wholly exclusively for the purpose of business of assessee and that the assessee did infact generated business from the persons to whom gift of gold coins were given. The onus is on the assessee to prove that it satisfied mandate of Section 37(1) that these expenses were incurred wholly and exclusively for the purposes of the business of the assessee and these expenses were neither personal expenses nor capital expenses, which the assessee had failed to discharge in the instant case. - Decided against assessee.
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2019 (6) TMI 1288
Disallowance u/s.14A r.w.r. 8D - investment in partnership firms as its capital contribution - HELD THAT:- Not only the CIT (A) has properly examined the utilization of interest bearing funds for the assessee which was purely for the purpose of business but also from the bare perusal of the balance sheet, it is seen that the interest free funds available with the assessee in the form of reserves and surplus far exceeds the total investment made in shares/partnership firms including the investment made in the shares of M/s. Edward Keventor P. Ltd. which has been stated to be strategic investment. If that is so, then no disallowance u/s.14A can be made. This proposition has now been confirmed in the case of CIT vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] wherein upheld the proposition that if assessee has interest free funds available sufficient to meet its investment, then it can be presumed that the investment have been made from interest free fund available with the assessee and not from the borrowed funds. Thus, no disallowance of interest can be made. Disallowance made under Rule 8D(2)(iii) as relying on ACB India Ltd vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] we direct AO only to include those investments while computing the average investments which have yielded exempt income, i.e., investment made in the partnership firm and mutual fund only, because investment made on unquoted shares have not yielded any exempt income. The calculation of average investment in partnership firm and mutual fund has been given by the learned counsel as has been incorporated above and accordingly we direct the AO to verify the same and work out the disallowance of 0.5%. Accordingly, appeal of the assessee is partly allowed. TDS u/s 194C - Disallowance u/s.40(a)(ia) for non-deduction of TDS on payment to Petron Civil Engineering Ltd - HELD THAT:- As decided in ISLAMIC INVESTMENT CO. VERSUS UNION OF INDIA AND ANOTHER. [ 2002 (3) TMI 3 - BOMBAY HIGH COURT] Interest paid in pursuance of decree of the Court which has to be discharged under the said decree, then it assumes the character of the judgment debt and hence judgment debtor is not liable to deduct tax at source on the interest component of the decree - award given by the Arbitral Tribunal cannot be reckoned as payment made in pursuance of a contract but payment in pursuance of a judgment decree and is part of a judgment debt, and therefore, in such a case, assessee was not liable to deduct TDS either u/s.194C or u/s.194A. Thus no obligation to deduct TDS on the payment made to M/s. Petron Engineering P. Ltd. in accordance with arbitration award. Accordingly, this issue is allowed in favour of the assessee. Notional rent where security deposits were received but no rental was shown - HELD THAT:- The addition has been made on the ground that assessee despite being owner of the Kiosks has not disclosed rental income in its books and the same has been transferred to M/s. DLF Services Ltd. by over riding title. M/s. DLF Services Ltd is providing maintenance and upkeep services of the mall including Kiosks. In return for consideration for these services, the appellant vide authority letter dated 12/12/2005 has granted M/s DLF Services Ltd., right to recover the rental receipts from the third parties using said Kiosks. Assessee has not claimed any expenditure in the name of M/s DLF Services Ltd. in connection with maintenance services of the mall. In view of above arrangement, M/s. DLF Services Ltd. is showing the receipts from the Kiosk as a part of its income which is duly subjected to tax in its hands and accordingly there is no loss to the revenue - As relying on assessee s own case [ 2017 (11) TMI 381 - ITAT DELHI] , we decide this issue in favour of the assessee. Addition on account of capitalization and processing fees on loan taken for purchase of windmills - HELD THAT:- We find that the issue is with regard to the capitalisation on account of interest paid on loan for windmill project and ₹ 96 lacs on account of loan processing charges. AO has capitalized proportionate claim of interest and processing charges after allowing depreciation @ 40% based on proviso to Section 36(1)(iii) r.w. Explanation 8 to Section 43(1). In so far as capitalisation of interest expenditure is concerned, the same is definitely part of acquisition of the capital asset which needs to be capitalized. The loan processing charges is also part of the same loan agreement, and therefore, it cannot be given a different treatment as it also a charge for acquisition of an asset and same too has to capitalization only. Accordingly, we agree with the contention raised by the ld. Special Counsel that this cannot be allowed separately u/s.37. Accordingly, ground raised by the assessee is dismissed. Addition on account of interest on late deposit of TDS - HELD THAT:- As decided in NARAYANI ISPAT PVT. LTD. [ 2017 (10) TMI 67 - ITAT KOLKATA] TDS amount is in the nature of tax of the deductee, i.e., other party and not that of the assessee and as such the interest on late deposit of TDS is allowable expenses u/s.37 of the Act. Disallowance of prior period expenses - HELD THAT:- Similar issue has arisen in assessee s own case for assessment year 2006-07 wherein the Tribunal has allowed the same nature of expenditures, after observing case of MODIPON LTD. (NO. 1) [ 2010 (12) TMI 836 - DELHI HIGH COURT] Disallowance of SEZ deduction u/s 80IAB - ownership of land on which SEZ has been developed is in dispute in view of decision of Hon'ble Punjab and Haryana High Court, and therefore, such a claim is inadmissible - HELD THAT:- The case of assessee has been that the land has been given on lease for a period of 30 years and lease rentals per annum are being received over a period of lease term on annual basis and not up-front for all the years under the lease. The disclaimer condition mentioned in clause 3(xvii) of the approval letter dated 01.06.2009 does not give any additional power to the AO to examine the taxability of the transaction of hand over and transfer of bare shells but has to be restricted only to examine the transaction of lease of Land, as expressly clarified by the Ministry of Commerce in the clarification dated 18.01.2011 so that the transactions of sale of land in the guise of long term lease by receiving premium/down payments etc. do not escape the scrutiny under the Income Tax Act as there is an express prohibition on sale of Land in the SEZ. Under these facts and circumstances, we do not find the reasoning given by the AO to disallow the claim is justified. Once assessee has been notified as developer under the SEZ Act and his activity has been approved by BOA and the SEZ in which the assessee has carried out its business activity has been notified under the SEZ Act, 2005 then profits derived from business of development, operation and maintenance of a SEZ has to be taken from such activity and consequently is entitled for claim of deduction u/s.80IAB. AO was not justified in denying the benefit of deduction u/s.80IAB arising from sale of bare shell building to co-developer. Deduction u/s 80IAB - isolated transaction of sale of building is assessable under the head income from capital gain - HELD THAT:- When the books of account of the assessee were subjected to Special Audit u/s 142(2A) and the Special Auditor has accepted the treatment of income from sale of bare shell building as part of business profits, then such an income arising from sale of bare shell building would fall in the nature of business income eligible for deduction u/s 80IAB of the Act. Apart from that, it is noted that assessee-company was formed with the object of real estate development and has been engaged in this activity since inception - the assessee moved an application for setting up of SEZ project which was duly approved as Developer by BOA. The cost incurred on development of bare shell building was disclosed as stock and revenue was recognized as per POCM. The income from sale of building is purely in the nature of business income. The assessee is engaged in organized activity of development of infrastructure facility in SEZ and as such operations ostensibly are in the nature of business in terms of section 2(13). Thus, re-characterising the income as short-term capital gain by the AO is rejected. Disallowance of proportionate deduction - alternative finding AO that, since the land has been leased for 49 years, therefore, the income from sale of bare shell building should also be bifurcated and proportionate recognized over a period of 49 years - CIT (A) has discussed this issue in detail and has held that the lease is only in respect of land and same cannot be applied on transfer of building. In any case, the recognition of revenue relating to real estate projects is governed by AS-7 and the assessee has been consistently following POCM which has accepted by the Tribunal in assessee s own case for AY 2006-07. Hence, such a reasoning of the AO to disallow proportionate deduction cannot be sustained. Disallowance of Revenue recognition as per percentage of completion method (POCM) - HELD THAT:- This issue stands covered in favour of the assessee by the Tribunal in assessee s own case for the Assessment Year 2006-07 . Disallowance of interest pertaining to loan for M/s. Edward Keventer Project by capitalizing the same - HELD THAT:- As decided in assessee s own case for Assessment Year 2006-07 the principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. Therefore, we are of the view that presumption is to be assumed in favour of the assessee and not against assessee. Hence, we reject the formulae adopted by CIT (A) of working out proportionate disallowance by adopting artificial formulae - order of the CIT (A) confirming the disallowance of expenditure and direct the AO to allow this interest expenditure u/s 36(1) (iii) Disallowance of capitalization of interest - AO on the basis of Special Auditor s comment observed that interest capitalization is also required on interest paid on loan taken for M/s. Edward Keventer Project, and therefore, net interest eligible for capitalization is to be bifurcated into interest capitalization on Keventer loan and interest capitalization on project under execution - HELD THAT:- Issue decided in decided in favour of the assessee by the Tribunal in assessee s own case for Assessment Year 2006-07 Expenditure towards brokerage and commission paid to brokers for booking and sale of certain properties is allowable firstly in view f the facts that assessee s treatment of such expenditure has been decided in favour of the assessee and revenue has not challenged it and secondly such expenditure are allowable. In view of the above facts and following the decision of coordinate Bench as facts are not distinguished by revenue, we confirm the order of CIT (A) in deleting the addition. Disallowance of brokerage and commission - HELD THAT:- This issue has been decided in favour of the assessee by the Tribunal in assessee s own case for Assessment Year 2006-07. - decided in favour of the assessee Addition on account of late construction charges - as per AO receipt of late construction charges is income on the basis of such late construction charges were collected during the year - HELD THAT:- As decided in favour of assessee Assessee as following a prudent and consistent accounting policy which was necessitated by the order of Honourable Punjab And Haryana High court. The assessee offered the entire amount as its income on settlement of disputes by the Honourable Supreme Court. Therefore, we hold that the assessee was acting on prudent and consistent accounting policy. Accounting standard 9 issued by ICAI on revenue Recognition also satisfies the accounting policy of the company that when the revenue is saddled with uncertainties same should not be recognised till the uncertainties are resolved. Therefore following the decision of coordinate bench as well as the accounting standard 9 of ICAI we are of the view that assessee has correctly recognised revenue in the year the issue attained certainty. Therefore on perusal of the decision of CIT (A) we are of the view that there is no infirmity in the order. Addition on account of net contingency deposit received - HELD THAT:- As decided in assessee's own case these are the security deposits which would be utilised in performance of the contractual obligation of the assessee towards those buyers. Anyway, it is not the case of the AO that these receipts have been received during the year, it is also not the case that the payers or the depositors are unidentified and it is not the case of the AO that these amounts have been paid by the buyers without any obligation on the assessee to perform by providing the services. In view of this, we confirm the order of CIT (A) in deleting the addition Net interest fee security deposits receipt - revenue or capital receipt - HELD THAT:- a separate account is maintained and as and when the buildings or the complex is handed over to the resident association or condominium association such deposits are handed over to them for maintaining the building and payment of insurance premium of building out of interest received from such deposits. Such deposits are not forming part of sale proceeds, therefore, the same cannot be treated as trading receipts in the hands of the appellant. There is a regular movement of funds for utilization of the same for maintenance and payment of insurance premium from this account. Hence, the addition made by the AO on account of interest free deposits is deleted. Addition on account of net registration charges - HELD THAT:- The total receipt of registration charges is identified with respect to each of the buyer and there are movement in respective accounts. In fact, it is a past through cost collected by the assessee from the buyer to be incurred by assessee on behalf of the buyer. These receipts cannot partake character of the revenue in the hands of the assessee. It is also not the case of the AO that the depositors are not identified and despite the conveyance deed executed by the assessee, the amount has not been incurred. In absence of this finding, it is not possible to confirm the disallowance. Therefore, we confirm the order of the CIT (A) in deleting the addition being credit balance of registration charges received from the customers Addition on account of closing credit balances in indirect taxes account - HELD THAT:- This issue is fully covered in favour of the assessee by the order of the ld. CIT(A) in assessee s case for AY2006-07 and Department has not preferred any second appeal in ITAT. Otherwise also, we are of the view that, the indirect tax collected from the customer on behalf of the Revenue authorities, which the assessee is liable to pay to the government, then such an action of the Assessing Officer in treating the indirect taxes as income of the assessee is highly misconceived and unjustified. In any case, this amount has been subsequently paid and therefore, it cannot be treated as income in this year. Accordingly, the order of the ld. CIT (A) is affirmed. Disallowance /capitalization of preoperative expenses (on SEZ projects not commenced) - HELD THAT:- As decided in assessee own case the assessee has incurred this expenditure on proportionate and feasibility of various construction projects in which business the assessee is engaged into. Before embarking on to any of the projects, it is a common practice to obtain a feasibility and economic viability of construction projects at different geographical location. These expenses are for facilitating the existing business of the assessee. It is not the case of the revenue that it is altogether a new line of the business or unrelated to the business of the assessee. Therefore, in our view, this expenditure are wholly and exclusively incurred for the purposes of the business of the assessee. Hence, we confirm the order of CIT (A) and delete this ground of revenue s appeal Disallowance of expenses on projects not commenced - HELD THAT:- The assessee has incurred this expenditure on proportionate and feasibility of various construction projects in which business the assessee is engaged into. Before embarking on to any of the projects, it is a common practice to obtain a feasibility and economic viability of construction projects at different geographical location. These expenses are for facilitating the existing business of the assessee. It is not the case of the revenue that it is altogether a new line of the business or unrelated to the business of the assessee. Therefore, in our view, this expenditure are wholly and exclusively incurred for the purposes of the business of the assessee. Disallowance of expenditure u/s.40(a)(ia) for non deduction of TDS on payment to two trusts - HELD THAT:- CIT(A) after taking into consideration certificate issued by ITO, TDS Ward-49(4), New Delhi and as such there is no default on the part of the assessee in not deducting TDS on such payment. The order of the CIT (A) is based on proper appreciation of facts and there is thus no justification for any interference and this ground of revenue is dismissed Addition on account of reconciliation of rental income as per TDS certificates and withdrawal of TDS credit - HELD THAT:- Rental income has been assessed under the head income from other sources and since the TDS relates to the very same income, the credit for the said TDS cannot be logically denied. Therefore, the AO is directed to allow credit of TDS Reclassification of income from house property to income from business and profession - HELD THAT:- As relying on case of assessee for AY 2005-06, we confirm the order of CIT(A) in taxing the rental income as income from house property Disallowance of notional rent/additional annual letting value in respect of the vacant property - HELD THAT:- The bonafide lease agreement between the appellant and third parties cannot be disregarded without having any adverse information in this regard and based on conjectures and surmises. Hence, the addition made by the Assessing Officer on this issued is deleted. Depreciation claimed on DLF Centre Building - HELD THAT:- CIT(A) has observed that this very issue arose in the preceding year and relief allowed at the first appellate stage was accepted by the revenue as no appeal was filed against the same before ITAT. In the light of above position and as per the decision of Hon ble Supreme Court in the case of CIT v. J K Charitable Trust 2008 (11) TMI 8 - SUPREME COURT] the revenue could not be permitted to agitate the very same issue in the year under reference Disallowance of expenses where bills are not in the name of the company - HELD THAT:- The bulk of expenses are in the nature of electricity and water expenses for which the name of erstwhile tenant has been mentioned. Similar issue was involved in the earlier year also, therefore, respectfully following the precedence this issue is decided in favour of the assessee and against the Revenue. Accordingly, the Revenue s grounds are dismissed.
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2019 (6) TMI 1287
Disallowance of provision of leave encashment u/s 43B - HELD THAT:- AO/assessee shall follow the directions issued by the Hon ble Supreme Court in the case of M/s.Exide Industries Ltd. Anr. Vs. Union of India Ors. [ 2009 (5) TMI 894 - SC ORDER] . When the question of law in the case of M/s.Exide Industries Ltd. Anr. Vs. Union of India Ors. becomes final, the AO shall amend the impugned orders conformably to such decisions as per Sec.158A of the Income Tax Act, 1961. - Appeals filed by the assessee are treated as partly allowed for statistical purposes. MAT computation - provision for gratuity and leave encashment should be added to book profits while computing the book profit u/s 115JB - HELD THAT:- Though the actual payment of gratuity may be made at a later point of time upon periodical release of the employees from service, it is provision having been made on actuarial basis, it cannot be stated to be an unascertained liability so as to add it back in terms of Clause (c) to Explanation 1 to Section 115JB It is not emanating from the assessment order as to whether the assessee has furnished the actuarial calculations of the ascertained liability for exclusion from adding the same to its book profit. The assessee is required to furnish before AO the actuarial calculations of the ascertained liabilities and after verification of the same; the AO may allow the assessee to exclude the same from the computation of book profit u/s 115JB. If the assessee chose not file the valuations, then the addition made by the AO stands sustained. Appeal filed by the assessee is allowed for statistical purposes. .
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2019 (6) TMI 1286
Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - disallowance of interest expenses u/s 43B - HELD THAT:- The assessee during the assessment proceedings admitted the fact that it not eligible for deduction on account of such interest expense by virtue of the provision of section 43B of the Act. On perusal of the financial statements of the assessee, we note that there was a disclosure regarding the default committed by the assessee for non-payment of interest to the bank. CA also filed a letter issued admitting the mistake committed by him for not making the disallowance in its tax audit report on account of non-payment of interest to the bank We are of the opinion that the assessee has made sufficient disclosures in the financial statements and furthermore it should not be penalized on account of the mistake committed by the chartered accountants as discussed above. Therefore we are reluctant to confirm the penalty levied by the authorities below. There was no deliberate intention/ act on the part of the assessee to furnish the inaccurate particulars of income. We also find strength from the fact that there was no immediate tax benefit to the assessee by not disallowing the interest expenses in the given facts and circumstances since there was loss in the return of income filed by the assessee. Thus we reverse the order of the authorities below and direct the AO to delete the penalty imposed - Decided in favour of assessee.
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2019 (6) TMI 1285
Addition u/s 68 - unexplained cash credit on the basis of information received from the office of Additional Directors of Income Tax - notices issued u/s. 133(6) to the parties were returned unserved - HELD THAT:- The assessee has received unsecured loan from different parties in both the assessment years. Due information has been received and the enquiry by the Assessing Officer duly proved that these are accommodation entries. AO duly issued notices and assessee has not at all been able to prove the identity of the parties. Elaborate enquiry by the AO duly proved that assessee is recipient of bogus accommodation entry in the garb of unsecured loan. The view of the authorities below is duly supported by the decision in the case of Pr.CIT Vs. NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] wherein it was duly expounded that by merely producing documentary evidence assessee is not relieved of its onus to prove that it is not a party to the receipt of accommodation entries, if Assessing Officer's enquiry duly prove the bogus nature of transaction. Accordingly, we don't find any infirmity in the well reasoned orders of the authorities below. Accordingly, we confirm the same. - Appeals filed by the assessee is dismissed.
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2019 (6) TMI 1284
Addition of peak value of investment as Unexplained income - income estimated of profit by applying the provisions of section 44AF of the Act @ 5% of total turnover - HELD THAT:- Estimating the profit @ 5% to the tune of ₹ 2,12,550/- u/s 44AF as unexplained income by CIT (A) is concerned, AR for the assessee has accepted the same and has not pressed Ground no.1 to that extent. So, we confirm the findings of ld. CIT (A) as to estimating the profit @ 5% of the total turnover of ₹ 42,50,993/-. We are inclined to agree with the contention raised by the ld. AR because when profit @ 5% on the total turnover has been estimated by the CIT (A) then peak value of the investment cannot be treated as unexplained income which would otherwise amount to double addition which is not permissible under the Act. So, we order to delete the addition made by the CIT (A) by making the peak value of the investment. Penalty u/s 271(1)(b) - Reopening of assessment u/s 148 - non compliance of notice sent in the name of Alam Zafar in place of Zafar Alam - no proof of service - HELD THAT:- CIT (A) has confirmed the penalty on the basis of assumptions and presumptions that when the notice to the assessee was issued in the name of Alam Zafar in penalty proceedings and he attended the penalty proceedings then he must have been served in the quantum proceedings also. Penalty cannot be imposed on the basis of assumptions and presumptions rather to levy the penalty the Revenue has to make out a categoric case that the assessee was served upon by proving on record acknowledgements to show that assessee has received the notice and has failed to comply with the same by attending the proceedings. We are of the considered view that when the Revenue has failed to prove the service of notice upon the assessee, question of levying the penalty u/s 271(1)(b) does not arise, hence penalty levied u/s 271(1)(b) is ordered to be deleted. - Decided in favour of assessee.
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2019 (6) TMI 1283
Penalty u/s 271(1)(c) - AO initiated penalty on one limb of section 271(1)(c) and had imposed penalty on another limb - diversified views of Accountant Member and Judicial Member Ld. Accountant Member held that when the AO proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. He followed decisions in the cases of M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] , M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] , CIT v. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] and Pr. CIT VERSUS SMT. BAISETTY REVATHI [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT]. Ld. Judicial Member has held that simply not striking off of the inappropriate portions in the notice does not vitiate the u/s 271(1)(c) as invalid. Further, simply by issuing a proceedings for one limb of section 271(1)(c), does not take away the power of the Assessing Officer to pass an order on other limb of the section, the entire provisions cannot be quashed simply on the technical lapses until and unless the same have resulted into failure of justice and denial of the principles of natural justice. He relied on KP MADHUSUDANAN VERSUS CIT [ 2001 (8) TMI 8 - SUPREME COURT] , CIT VERSUS CHANDULAL [ 1984 (7) TMI 58 - ANDHRA PRADESH HIGH COURT]. THIRD MEMBER HELD THAT :- In the light of the accepted facts considering the specific questions referred to by the learned Members I am of the considered view that in terms of the judicial precedent available(supra relied by AM) I find that there is no scope of ambiguity. Amongst all these decisions available on the legal issue in favour of the assessee, the sole contrary view referred to by the Revenue is the decision of the hon'ble Andhra Pradesh High Court in the case of CIT v. Chandulal (supra) in favour of the Revenue. I concur with the view expressed by the learned Accountant Member. When the position of law as held by the apex court in Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] is considered, it is clear that the decision rendered in the case of CIT v. Chandulal (supra) is no longer good law. Further, It is seen that the decision of the apex court in K. P. Madhusudhanan (supra) has been considered at considerable length and in detail by the latest decision of hon'ble Teleangana and Andhra Pradesh High Court in the case of Pr. CIT v. Smt. Baisetty Revathi ( supra) and decided issue in favour of assessee. Accordingly, ALL questions referred by AM JM are answered in favour of the assessee.
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Customs
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2019 (6) TMI 1336
Maintainability of appeal - waiver of pre-deposit stipulated in Section 129E of the Customs Act, 1962 - grievance of the Petitioner is that the order of the Additional Commissioner dated 6th September, 2018 contains error apparent on record, which has lead to imposition of a penalty much higher then what, according to the Petitioner, can be imposed in law - HELD THAT:- It is a settled position that a right of appeal is a statute given right and in the absence of statute providing for the same, there is no natural or fundamental right to file an appeal before the Appellate Authorities under the Act. This right of appeal can always be bestowed subject to such conditions, as are thought fit by the legislature. The Act provides that any party aggrieved by an order of Officer of the Customs below the rank of Commissioner of Customs, is entitled to file appeal under Section 128 of the Act to the Commissioner of Customs (Appeals). However, this right of appeal is not unconditional. It is circumscribed by the requirement of the party, seeking to appeal making necessary pre-deposit of 7.5% of the duty and penalty which has been confirmed by the lower authority. This deposit has to be made under Section 129E of the Act. The dismissal of this Petition will not preclude the Petitioner from adopting any other remedy available to it under the Act, if permissible, such as rectification application in terms of Section 154 of the Act - petition dismissed.
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2019 (6) TMI 1335
Attachment of Bank Accounts - It is the case of the Petitioner that in the course of purported investigation communication dated 11th July, 2018 came to be addressed to the aforesaid two banks restraining the said two banks from allowing the Petitioner to undertake Debit operations in their respective accounts - HELD THAT:- The impugned communications came to be issued by the Respondents purporting to allow Debit operation subject to maintenance of minimum balance as aforesaid in the two accounts. It is the case of the Petitioners that in fact this amounts to freezing of bank account at least to the extent of maintenance of minimum balance amount. The Petitioner addressed yet another letter dated 22nd January, 2019 demanding the withdrawal of the impugned communications. However, despite this demand for justice, the Respondents failed to withdraw the impugned communication, the Petitioner have instituted the present Petition. In the present case we were considering imposition of costs against the Respondents because despite the decision of this Court in virtually identical circumstances, the Respondents persist in ordering Debit freezing without issuing of any show cause notice or completing investigations within the reasonable period. However, on this occasion, we refrain from imposition of any costs by expressing the hope that at least in future the Respondents will abide by the decision of this Court in such matters.
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2019 (6) TMI 1282
Maintainability of appeal - Jurisdiction - Valuation of imported goods - demand of differential amount - HELD THAT:- This is clearly a valuation dispute between the parties - This Court has no jurisdiction over the matter. However, we feel that the appellants have proceeded bonafide in a Court not having jurisdiction which may be taken into account for the purpose of limitation under Section 14 of the Limitation Act.
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Corporate Laws
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2019 (6) TMI 1334
Offence alleged under Sections 454(5) and 454(5A) of the Companies Act, 1956 - Framing of charge - maintainability of petition - HELD THAT:- Hon ble Supreme Court in SUBRAMANIUM SETHURAMAN VERSUS STATE OF MAHARASHTRA ANR. [ 2004 (9) TMI 605 - SUPREME COURT ] was not directly considering the scope of Section 251 of the Cr.P.C. in the context of a summons case, and this conclusion would explain the observation in paragraph-20 of the judgment that in an appropriate case, the Court would discharge the accused as per Section 239 of the Code. The petition for discharge is not maintainable also under Section 245(2) of the Cr.P.C., which falls under Chapter XIX thereof and deals with trial of warrant cases - petition dismissed.
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Insolvency & Bankruptcy
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2019 (6) TMI 1333
Admissibility of petition - time limitation - Section 7 of the I. B. Code - HELD THAT:- Indisputably, neither the National Company Law Tribunal nor the National Company Law Appellate Tribunal, in the present case, has examined the said contention. Indeed, according to the respondent, the plea of claim being barred by limitation is unstatable and, to buttress this argument, the respondent has relied upon the entries in the books of account of the appellant and other related documents. However, that is a matter which ought to be agitated before the National Company Law Appellate Tribunal in the first place. Accordingly, we relegate the parties before the National Company Law Appellate Tribunal for fresh consideration of the objection raised by the appellant that the claim of the respondent is barred by limitation. The appellant is granted liberty to file additional affidavit in the remanded appeal, giving the factual matrix on the basis of which the ground of limitation is founded, so that the respondent can meet that case appropriately. The impugned order is set aside and the parties are relegated before the National Company Law Appellate Tribunal by remanding the stated appeal for deciding the issue of limitation as aforementioned - Appeal allowed.
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2019 (6) TMI 1332
Admissibility of petition - Set Off under Insolvency Proceedings - Section 10 of IBC application - scope of Moratorium - Application is filed for a direction to the Resolution Professional (RP) to honour the legal and equitable right of 'Airtel entities' to apply set off on account of mutual dealings for an amount of approximately INR 112 Crores during the Corporate Insolvency Resolution Process - HELD THAT:- The basic principles of set-off as per prevalent accounting principles are discussed and noticed that the Hon'ble Courts have almost unanimously taken a view that in mutual dealings among the same parties it is fair and reasonable to allow for netting off or set-off of the mutual debts and credits with each other so as to arrive at a net figure for settlement of accounts. In the light of this background it is now pertinent to examine the provisions of Insolvency Code to determine whether an embargo has been imposed under The Code. If there is no restriction or prohibition in the statute, then a fair and reasonable approach is always is to be adopted. There is no specific bar or barrier in the Insolvency Code that up to CIRP process only gross amount/claims are to be taken into account and the netting is permissible only in case of start of Liquidation. In the absence of any such restriction this Bench obviously has a liberty to take an independent view which is not at variance with the provisions of The Code, rather remove the ambiguity between a gross claim or net claim, that too at what stage. This Bench is of the view that the applicant is legally entitled under the insolvency code to set off the amount of ₹ 112 Crores while making a payment of the amount retained out of the total consideration settled as per Spectrum Trading Agreement - application allowed.
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2019 (6) TMI 1331
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 20 of the I B Code deals with Management of operations of corporate debtor as going concern . As per sub-section (2) therein, the Interim Resolution Professional has the authority to raise interim finance provided that no security interest shall be created over any encumbered property of the Corporate Debtor without the prior consent of the creditors whose debt is secured over such encumbered property. However, no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt. During the Moratorium period, the assignee also cannot deduct any amount from the assets of the Corporate Debtor . The Explanation below Section 18 does not include the assets generated from the rent paid by the lessee (tenants) . As the premises belongs to the Corporate Debtor , the lessee pays rent in favour of the Corporate Debtor , though as per the agreement, the right of LICHFL is only that of an assignee which cannot recover or deduct any amount during the period of Moratorium . Application dismissed.
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PMLA
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2019 (6) TMI 1330
Validity of lookout circular issued by the second respondent - return of appellant passport - challenge to the LOC is primarily on the ground that the appellant has been cooperating with the on going investigation done by the respondents and there is absolutely no cause for issuance of LOC - correctness of the order passed by the learned Writ Court rejecting the challenge to the LOC issued against the appellant - HELD THAT:- The Writ Court, in our considered view, rightly noted that Section 41A of the Code of Criminal Procedure gives inherent power to the Investigating Authority to take necessary steps to see that the accused in the case do not leave the jurisdiction and cooperate with the investigation. The Writ Court pointed out that the recourse to LOC is taken by the Investigating Agency in cognizable offences under IPC or other penal laws, where the accused deliberately evaded arrest or did not appear before the authority and there is a likelihood of the accused moving out of the country to evade arrest on trial. The Investigation which is being done by the second respondent revolves around an organisation, which has been declared as unlawful organisation by the proceedings of the Government of India and persons suspected to be associated with the organisation are being investigated with regard to the alleged commission of offences under PMLA and other statute. We find the denial to be vague and not specific. In any event, we cannot comment upon the allegations or counter allegations at this juncture, as the case is under investigation. The learned Writ Court after considering the entire facts, held that the LOC was issued with statutory sanction and the respondents had jurisdiction to issue the same. We concur with the view taken by the learned Writ Court. The appellant has not made out any ground to quash the LOC - appeal dismissed.
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Service Tax
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2019 (6) TMI 1329
Scope of University - production of details with respect to the affiliation - coverage of University under Chapter V of the Finance Act 1994 - HELD THAT:- The respondents have also not through Ext.P9, finally concluded on the service tax liability of the petitioner University and interested in investigating or enquiring into the nature of activities of petitioner university by referring to the accounts, statements, other evidence the university intends to produce and thereafter the issue is determined. At the cost of repetition this Court refers to the stand of respondents that the chargeability of service tax is not finally decided by respondents and the petitioner avails the opportunity now afforded through Exts.P13 and P14 or this Court directs the Deputy Director, Kozhikode to enquire into the matter and proceed thereafter.The statement of the counsel for both sides is to the same effect and hence the writ petition is disposed of by this judgment. The petitioner University is directed to appear on 17.7.2019 before the Deputy Director, Directorate General of GST Intelligence, Kozhikode Regional Unit, Mahe House, Panicker Road, Nadakkavu P.O, Kozhikode-673011, Kerala with the records/statements it is advised to produce and participate in the enquiry - petition disposed off.
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2019 (6) TMI 1328
Levy of service tax - activity / privilege to sell eatables and collect empty liquor bottles - agency commission - Grant of Privilege to Run the Bar - payments made by Bar Contractors - devolution of sovereign rights of the State through the appellant - HELD THAT:- Rule 9A of the Retail Vending Rules deals with grant of privilege to run the bar. It states that the privilege of running bar may be granted to private parties by tender, that the Board of the appellant may decide the upset price and other terms and conditions from time to time with the prior approval of the Commissioner of Prohibition and Excise, that the appellant, as agency, shall collect the tender amount from the successful tenderers and remit the same to the Government on or before 25th of the following month and that the appellant may retain 1% of the amount so collected as agency commission - though the said Rule states that it has a privilege of running bars, the appellant has not authorized private parties to vend liquor in the shops, which are annexed to the retail vending shops. It is no doubt true that the Retail Vending Rules empower the appellant to vend liquor not only in the shops established by them, but also in the bars. But, the factual scenario in the State of Tamil Nadu is that in the retail vending shops, vending alone is permissible and in the bars attached to the retail vending shops, a facility is provided for consumption of liquor thereby the liquor purchased in the retail vending shops is taken by the customer to be consumed inside the premises and this is with a view to prevent the customer to consume liquor in the open area causing nuisance to the general public. The use of the expression 'running bars' in Rule 9A of the Retail Vending Rules, in our considered view, is a misnomer. This is so because the Retail Vending Rules also permit the licences to be used by certain categories of establishments where they are permitted to vend liquor and allow the persons to consume the liquor within the same premises. Some examples are certain categories of hotels, resorts, etc. Therefore, the grant of privilege in the instant case, which we are presently dealing, is for the purpose of selling eatables and collecting empty bottles and cartons in the bars, which are adjacent or annexed to the retail vending shops. Whether such a right or privilege to sell eatables and collect empty bottles can be treated as a statutory right or a devolution of a statutory right? - HELD THAT:- The answer to the question should be in the negative - The statutory right conferred on the appellant under the provisions of the Tamil Nadu Prohibition Act, 1937 read with the Retail Vending Rules is on account of a policy decision taken by the Government whereby the State of Tamil Nadu enacted the Tamil Nadu Prohibition Act, 1937 and framed various Rules. Therefore, there is no vested right granted to any private individual to trade in alcohol in the State of Tamil Nadu and already, the privilege has been vested with the appellant, which is a State Owned Corporation - to state that the right to sell eatables and collect empty bottles is a statutory right is an absurd proposition, which cannot be accepted. Tribunal was right in concluding that the activities assigned and performed for the period in dispute can never be treated as a sovereign function or a statutory right or an activity performed by a Public Authority under the authority of law. The Tribunal also took note of the circulars issued by the Central Board of Excise and Customs dated 23.8.2007 and 18.12.2006, which clarified that if a Sovereign/Public Authority provides a service, which is not in the nature of a statutory activity and if the same is undertaken for a consideration, which is not a statutory fee, then, in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of taxable service as defined. Even when a Governmental Authority performs a service, which is not in the nature of a statutory activity, the same has to be held leviable to service tax. Whether this benefit, which was granted by the Tribunal, should be extended in favour of the appellant for the period covering July 2012 to March 2013? -HELD THAT:- To term that Rule 9A is clarificatory in nature is an argument, which is stated to be rejected and we do not agree with the submission made by the learned counsel for the appellant that the benefit granted by the Tribunal for the period from April 2013 to till date by making the appellant/assessee liable to pay service tax on 1% of the revenue retained by them as agency commission can be extended for the period from July 2012 to March 2013 - the third substantial question of law is answered against the assessee. Appeal dismissed - decided against appellant.
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2019 (6) TMI 1327
CENVAT Credit - common input services used for trading activities - non-maintenance of separate records - period 2008-09 to 2010-11 - whether the trading activities can be categorized as exempted service for the purpose of a decision regarding availment of Cenvat credit on the input services specified in sub-rule (5) of Rule 6 ibid? - No suppression of facts - extended period of limitation - HELD THAT:- The phrase exempted services has been defined in Rule 2(e) ibid to mean taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under Section 66 of the Finance Act . The said definition was effective up to 31.03.2011. The Central Government vide Notification No. 3/2011-C.E. (N.T.) dated 01.03.2011 has made the Cenvat Credit (Amendment) Rules, 2011, effective from 01.04.2011. The effect of amendment, relevant for the present case, is that an explanation clause was appended to such definition, clarifying that for the removal of doubts, exempted services includes trading. The law is well settled that an amendment can be considered to be declaratory and clarificatory, only if, the statute itself expressly and unequivocally states so; on the contrary, if there is no such clear statement in the statute itself, the amendment shall not be considered to be merely declaratory or clarificatory and cannot operate with retrospective effect - the legislature had never intended to give effect to the notification dated 01.03.2011 with retrospective effect inasmuch as, in such an eventuality, the amending notification/Rules, 2011 would have made effective either from the date of publication of the said notification in the official gazette or from the date of enactment of the Cenvat Rules in 2004. Whether, such amendment in the statutory provisions is to be construed as retrospective in effect or prospective, in order to be given effect to? - HELD THAT:- The law is amply clear that if a substantive law is introduced, the date of effect of the instrument through which the decision of legislation was conveyed should be considered as the relevant date, when the same was issued or published in the official gazette for the knowledge of the general public - thus the amendment to Rule 2(e) by Notification No. 3/2011-C.E.(N.T.) dated 01.03.2011 will have the prospective effect and cannot be applied retrospectively. Extended period of limitation - the department had issued the show cause notice on 23.10.2013, seeking for recovery of the irregularly availed Cenvat credit by the appellant during the period 2008-09 to 2010-11 - HELD THAT:- In the proviso clause appended to Section 73(1) ibid, it has been mandated that where any service tax has not been levied or paid or has been short levied or short paid by reason of fraud; or collusion; or wilful misstatement; or suppression of facts; or contravention of the provisions of Chapter V or the rules made there under with intent to evade payment of service tax, instead of the period of one year, the show cause notice shall be issued within the period of five years - Admittedly, in this case, the show cause proceedings were initiated against the appellant beyond the normal period of limitation of one year. Thus, under such circumstances, it has to be ascertained whether the ingredients contained in the proviso clause are satisfied, justifying invocation of the extended period of limitation. It cannot be said that the appellant had suppressed the facts regarding availment of irregular credit, with the intent to defraud the Government revenue. Further, the issue with regard to interpretation of the amending definition of exempted service under the Cenvat statute, whether to be applicable prospectively or retrospectively, was highly debatable and there were divergent views in the judicial forum - In this case, on perusal of both the show cause notice and the impugned order, we do not find any justifiable reason being assigned by the department for invocation of the extended period of limitation. The appeal is allowed on the ground of limitation only.
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2019 (6) TMI 1326
CENVAT credit - inputs/capital goods/input services which had been consumed in the construction of malls - whether the appellants are eligible to avail the Cenvat credit on the services supplied to them by their job workers/contractors for which raw materials have been supplied by them? - period prior to the amendment of the provisions of input services under the Credit Rules i.e. prior to 2011 and also subsequent to that period - HELD THAT:- The issue is no longer res integra in view of the decision of Hon ble Andhra Pradesh High Court in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] which was subsequently followed in various other cases. In all these cases, the issue was similar and identical and it was held by various Tribunals/High Court that in such a situation, the appellant would be entitled for the benefit of Cenvat credit prior to amendment. The learned AR has placed reliance that the services were not directly provided by the appellant, but was through their contractors. It is argued that these contractors were employed by the appellant, who were provided raw materials to them. Also these contractors have paid the service tax and recovered that from the appellant. Hence, we find that the appellants have rightly taken the Cenvat credit as per Credit Rules - It is of no relevance as to whether the construction has been done through the contractors or not as long as service tax is paid, the appellant is entitled for Cenvat credit and subsequent utilisation thereof for payment of service tax. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1325
Refund of accumulated CENVAT Credit - input services - event related services - legal consultancy services - rejection of refund on the ground of nexus - HELD THAT:- Going by the definition of input service available in Rule 2(l) of CENVAT Credit Rules, 2004, legal services are included in the said definition and hence denial of legal service expenses made by the appellant to defend the company or its managements is improper - going by the Order-in-Appeal, tax paid on event management service was held as inadmissible credit despite the fact that the learned Commissioner (Appeals) noted the contention of the appellant in his order that such services were received for organising investment conference at Trident Hotel and appellant had duly explained the reason for holding of such conference that comes within the purview of the decided case laws referred in respect of admissibility of such credits - both those credits are admissible credits for which refund was to be granted as appellant had rightly justified the nexus, which according to the policy/circular was also not required to be established in case of export of services - Refund allowed. Refund claim - rejection also on the ground that Billing address is different in invoice and ST-2 return - HELD THAT:- Learned Counsel for the appellant submitted that billing address, as found in the invoice was covered in the ST-2 return of the appellant during the relevant time and without looking at valid ST-2 form for the disputed period, the said credit was denied though subsequent to such bill of 2014, Chartered Accountant had taken a new premises in 2015 with new registration. He enclosed ST-2 form in Annexure-G to justify that no variation exists between the invoices of the return filed. Even without accepting the said annexure as admissible piece of additional evidence as objected by the respondent-department, it can be said that the ground is too technical to deny refund since name of the service provider remain unchanged, for which the said credit and consequential refund is held to be admissible - refund allwoed. Refund claim - rejection of refund also on the ground of non description of services - HELD THAT:- Learned Counsel for the appellant submitted that such services were availed from Aptech Ltd. to provide training on computers to identified employees of the appellant to enhance their management and negotiation skills. But, no evidence is forthcoming that such stand was taken before the lower authorities for which appellant is required to justify the stand before the Commissioner (Appeals) - matter requires reconsideration. Refund claim - Rejection also on the ground of non-submission of invoices - HELD THAT:- Appellant had submitted that challan is a valid document under Rule 9 of CENVAT Credit Rules, 2004 to avail CENVAT credit and in cases where service tax was paid under reverse charge mechanism, the same should have been allowed on the strength of valid challans produced by the appellant. However, he conceded that in respect of other services, invoices could not be produced at the time of hearing, for which he produced sample invoices before this Tribunal during the hearing to arrive a right decision - Without verification of those invoices which would amount to mini trail, and without acceptance of those invoices as additional piece of evidence, since those are not in conformity to Rule 23 of the CESTAT Procedure Rules, it is considered proper to remand the matter to the Commissioner (Appeals) for re-examination of the entitlement of the appellant only in respect of denial of refunds on those CENVAT credit against which valid invoices were not produced before him - matter on remand. The appeals are allowed in-part by way of limited remand to the Commissioner (Appeals) - part appeal allowed in favor of assessee.
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2019 (6) TMI 1324
Valuation - clearing and forwarding Agency s services - inclusion of certain reimbursement expenses such as freight, stationary, printing charges, telephone charges, asset hire, courier, insurance and other taxes while providing C F agency service - deduction of amounts as reimbursement expenses from computation of gross amount charged under Section 67 of Finance Act - SCN dated 22/23/10/2007 - HELD THAT:- The issue is regarding non-includeability of reimbursement expenses for computation of service tax under Section 67 of the Finance Act. This issue is squarely covered in favour of the appellant by the Supreme Court Judgment in case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1323
Refund of service tax - unjust enrichment - HELD THAT:- Since the Commissioner (Appeals) s order is unsustainable in law despite his endorsement in order that appeal was filed on 30-1-2017, the same is admittedly a misstatement made by another quasi-judicial appellate authority as in the appeal memo endorsement of the Commissioner bears 17-1-2017 as date of filing and it was sent to the appellant on 12-1-2018 i.e., almost after one year. Furthermore show cause notice to the Appellant issued on 7-2-2017 making duty demand holding adjudication order of refund as erroneous which is silent about such filing of appeal in an hypothecated date mentioned by the Commissioner (Appeals) cannot be taken as the date of filing of appeal before him. Commissioner (Appeal) s order, which is assailed in this appeal, is passed without authority of law - Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1322
Jurisdiction - prayer for impleadment of Principal Commissioner/Commissioner, Central Goods and Service Tax, Mumbai as a respondent by taking resort to the provisions Rule 12(1) and Rule 17 of the Customs, Excise, Service Tax Appellate Tribunal (Procedure Rules), 1982 - HELD THAT:- The Additional Director General has been invested with the power of the Commissioner to be exercised throughout the territory of India. It is for this reason that the Corrigendum dated 20 July 2016 to the show cause notice was issued investing the powers of the adjudicating authority to the Additional Director General and it is the Additional Director General who has passed the impugned order. It cannot, therefore be urged that the Additional Director General has wrongly been impleaded as a respondent in the appeals. One practical difficulty has, however, been expressed by the learned Representative of the Department namely, that the Additional Director General may not have enough resources or manpower to contest the appeals - This in our opinion is not a good ground for impleading either one or all the 27 jurisdictional Commissioners who prior to the issue of the notification were vested with the power to adjudicate. There is, therefore, no necessity of impleading the Principal Commissioner, CGST, Mumbai as a respondent in the appeal. Application dismissed.
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2019 (6) TMI 1321
Classification of services - Courier Service or GTA Services - argument is that courier service is the door-to-door transportation of time sensitive documents but in the instant case the appellants were receiving certain machinery/components for repair or delivery and return of such machinery/components after the repair at the respective centre as per the direction of their client - period November 1996 to September 1998 - HELD THAT:- The appellant has carried goods/parts/components for the service receiver - the service has been rightly classified under the courier agency service - Appeal dismissed - decided against appellant.
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2019 (6) TMI 1320
Refund of service tax paid which the appellant is not liable to pay - rejection on the ground of time limitation - period April 2006 to February 2008 - SCN issued on 12.01.2010 - whether the time limit prescribed under Section 11B of the Central Excise Act, 1944 is applicable in a case where tax is not payable by the appellant or not? - HELD THAT:- The said issue has been examined by the Hon ble High Court of Delhi in the case of NATIONAL INSTITUTE OF PUBLIC FINANCE AND POLICY VERSUS COMMISSIONER OF SERVICE TAX [ 2018 (8) TMI 1524 - DELHI HIGH COURT ] - the appellant were not liable to pay service tax, therefore, the time limit prescribed under Section 11B of the Central Excise Act, 1944 for filing the refund claim is not applicable to the facts of this case. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1319
Scope of service tax - work undertaken by the respondent was in respect of growing of grass for preparing the Rugby field for Commonwealth Games-2010 - activity of Horticulture - Horticulture, a branch of agriculture - HELD THAT:- The revenue did not raise any new ground in the grounds of appeal and all the issues raised by revenue in the ground of appeal are repetition of show cause notice which has already been adjudicated upon by learned Commissioner (Appeals) and held the same to be not tenable - there is no ground raised by revenue to challenge the finding of learned Commissioner (Appeals). Appeal dismissed - decided against Revenue.
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2019 (6) TMI 1318
Import of services - reverse charge - Reversal of cenvat credit - manufacturing and trading activity - Principles of natural justice - principles of estoppel - Non speaking order passed by the tribunal - time limitation - HELD THAT:- It is clear that the manner in which the impugned order of the Tribunal has dealt with the appellant's appeal leaves much to be desired. The Tribunal is an authority under the Act to decide the disputes between the State and the assessee. Therefore, it is expected to deal with the contentions raised before it by the parties and give reasons in coming to the conclusion whether the contention raised by the parties before it are to be accepted or not. It is not expected of the Tribunal to ignore the submissions of the parties as raised in the written statement which are taken on record as evident from the order and proceed to decide the issue as if no submissions and / or case law in support of the appellant's case was made before it. The impugned order of the Tribunal is a nonspeaking order in as much as it does not consider the contentions of the appellant as supported by case law. It is of cardinal importance that the Tribunal passes orders with reasons - Appeal restored to the Tribunal for fresh disposal in accordance with law - appeal disposed off.
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2019 (6) TMI 1281
Condonation of delay of 214 days occurred in filing the above appeal - appellant that the delay was occurred only because of some communication gap between the appellant and the consultant, who was handling the case earlier - principles of natural justice - HELD THAT:- The Tribunal had failed in considering the question with a liberal approach. The Tribunal had failed in applying the settled legal principle of law in the matter of granting condonation of delay. The Tribunal had also failed in considering the question of condoning the delay by compensating the respondent in terms of cost. Taking note of the larger interest involved and on the basis of the settled legal principle we are of the considered opinion that the delay caused ought to have been condoned by compensating the respondent in terms of cost - COD application allowed.
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2019 (6) TMI 1280
Refund of Service Tax - service tax paid during the period between 27.08.2012 and 06.03.2013 - applicability of Section 11B(1) of the Act - Time Limitation - whether the application for refund of the amount filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act? - HELD THAT:- Section 11B of the Act makes it clear that an application for refund of duty of excise (service tax in the case at hand) has to be made in the prescribed form before the expiry of one year from the relevant date. Explanation (B) to Section 11B of the Act states what is meant by relevant date. As per Clause (ec) of Explanation (B) to Section 11B, in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date is the date of such judgment, decree, order or direction. As per Clause (f) of Explanation (B) to Section 11B, in any case other than provided under clauses (a) to (ec), the relevant date is the date of payment of duty. There is no dispute with regard to the fact the service tax payable by the appellant would come within the ambit of duty of excise mentioned in Section 11B(1) of the Act. However, the contention of the appellant is that the amount paid by it was actually not due from it as service tax because the value of the materials supplied free of cost by the service recipients cannot be included in computing the taxable value of the services - There is no basis for the contention raised by the learned counsel for the appellant that the amount was paid by the appellant on account of coercion and threat made by the authorities. There is no material produced in support of this contention. In the instant case, as noticed earlier, when the amount was levied from the appellant, the demand for levy was legal. The amount was paid by the appellant as service tax. The amount paid lost the colour of tax only when the issue was finally decided by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] to the effect that value of materials supplied free of cost by service recipient is not exigible to service tax - Applying the dictum laid down by the Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] it is held that the claim for refund of amount made by the appellant comes within the purview of Section 11B(1) of the Act - decided against assessee. The amount was paid by the appellant on different dates during the period between 27.08.2012 and 06.03.2013. The last date of payment was 06.03.2013. It was on 23.10.2014 the appellant filed an application dated 14.10.2014 in the prescribed form for refund of the amount. The application for refund in the prescribed form was filed beyond the period of one year from the last date of payment of duty - whether the appellant can take advantage of the decision of the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] to contend that the application for refund of amount filed by him in the prescribed form was within the time stipulated under Section 11B(1) of the Act? Clause (ec) of Explanation (B) to Section 11B of the Act states that in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date from which the period of limitation is to be computed, is the date of such judgment, decree, order or direction - The proceedings pending before the Tribunal, at the time when the Supreme Court rendered the decision in Bhayana Builders , were not proceedings against assessment of service tax on the value of materials supplied free of cost by the service recipients. The appeal pending before the Tribunal was against the order passed by the authorities rejecting the application for refund of amount. In other words, levy of service tax from the appellant for the relevant period had attained finality by the time the Supreme Court rendered the decision in Bhayana Builders . In such circumstances, the appellant cannot take advantage of the decision in Bhayana Builders to contend that the application for refund filed by it was within the prescribed time. Thus Tribunal was correct in finding that the application for refund filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act - decided against assessee. Appeal dismissed - decided against assessee.
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Central Excise
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2019 (6) TMI 1317
Clandestine removal - shortage of finished goods and excess in the stock of raw material - sale of flats as such - the contentions of appellant have not been considered properly - principles of natural justice - HELD THAT:- Since the appellant company is willing to pay the Central Excise duty demandable from them, their contentions about violation of principles of natural justice etc. are not being considered - One of the main contention of the appellant company is that the suppliers of goods had collected Central Excise duty from it while supplying the goods without invoices, and some of the suppliers had already deposited the said duty with the Department and considerable amount of duty has been confirmed against other suppliers. The appellant company has submitted that since the duty has been deposited by / demanded from its suppliers, their duty liability should be reduced by the said amount as they had already paid duty amount to its suppliers - It is observed that though the appellant company has taken this stand since the beginning, even during the course of investigation, the Revenue has not controverted these facts. The documents resumed by the Revenue and relied upon in show cause notice, also supports this fact - Thus where the amount of duty has been deposited by the suppliers, the duty liability of the appellant company is ordered to be reduced by the said amount. Sale of M.S. Flats as such - HELD THAT:- The records resumed by the officers and relied upon in show cause notice and the impugned order clearly show purchase of M.S. Flats by the appellant company. This is evident from the profit loss account of the appellant company scanned in the show cause notice itself. Once the Revenue has placed reliance on resumed documents and data retrieved from laptop, it cannot claim that M.S. Flats were not purchased and sold as such. The documents have to be believed in toto and not in part only. Further, the Revenue has not brought any material to show that the purchased M.S. flat were used in or in relation to manufacture of any other product - thus duty of excise is not demandable from the appellant company, on the quantity of M.S. flats purchased and sold as such - Similarly, the duty of excise cannot be demanded on the quantity of Miss Rolls sold as such by the appellant company. Penalty - HELD THAT:- Penalty on the appellant company is imposable under Section 11AC of the Central Excise Act, as the finished goods have been removed without payment of duty. However, we agree with the learned Advocate that separate penalties are not imposable on Directors and former Director once the penalty under Section 11AC has been imposed on the company - Further, penalty is not imposable on Ankit Keriwal, as he was a mere employee bound to follow the directions of the company management. Moreover, there is no material to show that Ankit Keriwal has gained anything personally. We, therefore, set aside the penalties imposed on all directors/ former Director and Manager (Ankit Keriwal). The learned Commissioner is directed to compute the duty amount payable by the appellant company as modified in this order, and communicate the same to the appellant company - appeal allowed by way of remand.
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2019 (6) TMI 1316
Clandestine removal - binding wire and H.B. wire - the whole case of Revenue is based on hand written pencil ledger, seized in the premises of M/s Deepak Industries, Raipur, one of the suppliers of raw material to the appellant - HELD THAT:- This Tribunal in the case of M/S DEEPAK INDUSTRIES VERSUS CC ST, RAIPUR [ 2019 (1) TMI 315 - CESTAT NEW DELHI] , have held that the said hand written pencil ledger were not legible and the details were prepared on computer and relying upon the same, computerised chart was prepared and relied upon for raising the demand against the said M/s Deepak Industries. The demand on this appellant is also based on the same computerised extract prepared from the illegible hand written pencil ledger (RUD-4), in the show cause notice of M/s Deepak Industries. Further, the statement given by Mr. Ravinder Singh, Prop. of M/s Deepak Industries has also been found to be not admissible under Section 9D of the Act. Thus, the demand raised against this appellant also stand vitiated in view of the finding in the appeal of M/s Deepak Industries. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (6) TMI 1315
Deemed assessment - grant of one more opportunity to the writ petitioner to produce books of accounts as well as purchase and sales details - TNVAT Act - alternate remedy of appeal - HELD THAT:- It is not in dispute that the writ petitioner has an alternate remedy by way of an appeal under Section 51 of TNVAT Act. There is no disputation or disagreement before this Court that this appeal i.e., alternate remedy, lies to the Appellate Deputy Commissioner of Commercial Taxes (East). In other words, it lies to the jurisdictional Deputy Commissioner of Commercial Taxes - With regard to alternate remedy, there are a long line of authorities rendered by Hon'ble Supreme Court. In the instant case, it is also brought to the notice of this Court that the statutory appeal i.e., alternate remedy, has to be preferred within 30 days from the date of receipt of the impugned order. It is submitted that the impugned order dated 30.04.2019 was received by the writ petitioner on 09.05.2019. Be that as it may, it is brought to the notice of this Court that under Section 51 of TNVAT Act, there is a provision for Appellate Authority to condone delay albeit subject to a cap of 30 days. In other words, there is a cap of 30 days. The writ petitioner is well within this 30 days. This Court is not interfering with the impugned order in the light of alternate remedy or in other words by applying the rule of alternate remedy - It is open to the writ petitioner to prefer an appeal to the aforesaid Appellate Authority i.e, Appellate Deputy Commissioner of Commercial Taxes (East) - petition disposed off.
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2019 (6) TMI 1314
Principles of natural justice - It is the specific case of the writ petitioner that the respondent should have sent a response rescheduling/refixing the personal hearing - HELD THAT:- In the light of paragraph 3(a)(i) of the aforesaid circular, which is admittedly binding on the respondent, this Court is unable to accept this submission as it is imperative that the respondent should have responded to the request for adjournment, which was made well within the 15 days stipulated in Paragraph 3(a)(i) of the circular. Therefore, the inevitable sequitur that follows is that there was no personal hearing, which is a prescribed procedure and therefore, there is violation of NJP. The impugned orders set aside solely on the ground of violation of NJP i.e., personal hearing, which is a prescribed procedure, not being given - petition disposed off.
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2019 (6) TMI 1313
Validity of assessment order - TNVAT Act - Audit Report in Form WW - Section 63-A of TNVAT Act, 2006 - financial year 2016-2017 - HELD THAT:- The entire issue covered in the case of TVL. NITHRA FURNITURE P. LTD., VERSUS THE ASSISTANT COMMISSIONER (CT) , CHENNAI [2015 (8) TMI 1467 - MADRAS HIGH COURT] where it was held that Once the original defect, if at all it was a defect, was cured by the assessee, by filing Form WW, the respondent cannot simply throw the form out on the ground that it was filed beyond the period of limitation. This is especially so when best of judgment assessment orders have been passed by him. The impugned order is set aside only to facilitate assessment to be done afresh in the light of Audit Report in Form WW, which has since been filed along with penalty - Now that the Audit Report in Form WW has been filed with the respondent, the respondent shall make the assessment afresh, taking into account the Audit Report in Form WW and pass assessment order afresh, within a period of four weeks from the date of receipt of a copy of this order - petition disposed off.
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2019 (6) TMI 1312
Deemed assessment - initiation of proceedings for making assessment on best judgment method - Section 22(4) of TNVAT Act - reassessment under Section 22(6) of TNVAT Act - HELD THAT:- Leaving this question as to whether personal hearing is imperative for a revision under Section 22(6) of TNVAT Act open, considering the peculiar facts and circumstances of this case, this Court held that impugned assessment order dated 27.02.2017 as well as the order passed in the revision being order dated 29.04.2019 are set aside - petition disposed off.
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2019 (6) TMI 1311
Stay of recovery proceedings - grievance of the Petitioner before us is that the issue arising before the Tribunal was a pure question of law, thus the order passed by the lower authority ought to have been stayed on a deposit of 10% as offered by the Petitioner - HELD THAT:- Its trite law that the scope of examination of the appeal at the final hearing and an application for stay of an order, challenged in appeal, pending disposal of the appeal, is entirely different. At the final hearing, the appeal is considered in depth and all the facets of the case are considered. On the other hand, while hearing an application for stay of the order in challenge before the Tribunal, a prima facie view of the strength of the case before it is considered. Therefore, where the issue is concluded by a decision of the superior forum or on decision of the authority hearing the stay application, then it would be a factor warranting a stay. In the present facts, we note that the submission of the Petitioner were duly considered and a prima facie view was taken after consideration of facts and the prevailing law. The challenge to the impugned order before us by the Petitioner is entitlement of lower tax on bunker fuel in view of Schedule 'C' to the Act. This on the ground that the bunker fuel is supplied to foreign going vessels. We note this submission was considered by the Tribunal and rejected at the prima faice stage, as the Petitioner had conceded the position that the bunker fuels are supplied to vessels which are not foreign going vessels. Petition dismissed.
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2019 (6) TMI 1310
Conditions imposed for grant of stay - Telangana VAT Act - At the time of filing of appeals, the petitioner has paid 12.5% of the disputed tax and disputed penalty. It is stated that even subsequently, they have paid some amounts - HELD THAT:- We are of the view that directing the petitioner to pay 25% of the disputed tax and 25% of the disputed penalty, for the grant of stay, pending first appeals, would meet the ends of justice. This is for the reason, that the petitioner has another tier of remedy in the form of second appeal to the Tribunal and that at that time, he may be asked to pay more amounts. The writ petitions are disposed of granting interim stay of collection of disputed tax and disputed penalty subject to the petitioner paying, a sum equivalent to 25% of the disputed penalty and 25% of the disputed tax within a period of six (6) weeks from the date of receipt of a copy of this order.
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Indian Laws
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2019 (6) TMI 1309
Violation of Human Rights - Corruption - alleged irregularities committed in allotting LPG Distributorship by officers of Indian Oil Corporation Ltd. at Kishangarh Renwal, Tehsil Sambhar, Jaipur - HELD THAT:- Commission observes that the reliance placed by CPIO on the earlier decisions of the coordinate benches to substantiate the view that CBI is only obliged to provide information relating to allegation of corruption against its own employees does not hold good. Appellant s contention in the Second Appeal that the subject matter concerns allegations of corruption, Commission does not find any substantive material on record in support of his claim. Moreover, Appellant has also not availed the opportunity of hearing to plead his case and mere claim of corruption or human rights violation is not adequate to attract the proviso to Section 24(1) of RTI Act. Appeal disposed off.
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