Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
News
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GST rate for Sanitary Napkins
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Gifts up to a value of ₹ 50,000/- per year by an employer to his employee are outside the ambit of GST. However, gifts of value more than ₹ 50,000/- made without consideration are subject to GST, when made in the course or furtherance of business
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THE INTEGRATED GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ORDINANCE, 2017
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THE CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ORDINANCE, 2017
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No GST on import of aircraft, its parts on lease
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Extension of NPS Fortnight from 11th July, 2017 to 21st July, 2017
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Auction for Sale (Re-issue) of ‘Government of India Floating Rate Bonds
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The Union Finance Minister Shri Arun Jaitley to be the Chief Guest on the occasion of 36th Foundation Day of NABARD dedicated to celebrate the Silver Jubilee of SHG Bank Linkage Programme; The Program had a catalytic effect in sourcing collateral free loans to the tune of ₹ 61,000 crore to the poor women from the mainstream banking system at the normal rates of interest
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FM launches a new tax payer service module ‘Aaykar Setu’ that compiles various tax tools, live chat facility, dynamic updates, and important links to various processes within the Income Tax Department in a single module; Says that this e-initiative would not only provide better taxpayer services but would also help in reducing the direct physical interface between assesses and tax assessing authorities
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RBI Reference Rate for US $
Notifications
Highlights / Catch Notes
Income Tax
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The assets transferred being the shares, which was never part of assessment of Stamp Duty Authority of the State Government. In such circumstances that cannot be no question of invoking the provisions of the section 50C of the Act as there is no direct transfer as enumerated in Sec.50C of the Act r.w.s 2(47) of the Act.
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Disallowance being donation made u/s.35AC - if there is a malpractice or discrepancies in the management of the Trust Account for which the assessee cannot be responsible so as to deny the benefit u/s.35AC of the Act.
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Eligibility for deduction u/s 54EC - investment in Bonds specified u/s 54EC after a period of six months from the date of transfer but before the due date specified u/s 139 - authorities below have rightly rejected the claim of deduction u/s 54EC.
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Addition u/s 68 - unexplained cash credits - mere recording of the statement and filing acknowledgement of ITR would not be sufficient to prove the creditworthiness of the creditors and genuineness of the transaction in the matter.
Corporate Law
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The revival of Company does not necessarily mean revival and restoring of the usual manufacturing or the business activity. It is a broader term including therein, the best utilization of its assets including the vacant land. - HC
Service Tax
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Reverse charge - section 66A of Finance Act, 1994 deems the recipient to the be the provider of service for fastening of tax liability. Such deeming provision is found to be enforceable only with delineation of the specific circumstances by which the services are determinable as imported
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Valuation - reimbursable expenses - It would not be possible to draw a distinction between the portion of the consideration that does not relate to these activities. In consequence, the tax liability crystallises on the gross value services subject to the various deductions permitted by the first appellate authority - demand with interest upheld.
Case Laws:
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Income Tax
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2017 (7) TMI 263
Claim for depreciation on Flameless Furnace - Held that:- No merit in this petition. The special leave petition is, accordingly, dismissed. HC Order confirmed [2017 (1) TMI 1156 - BOMBAY HIGH COURT] As per HC Assessee was not able to explain even the whereabouts of the Furnace which is alleged to be owned by it -claim for depreciation denied as the purchase and lease was as sham on the basis of a statement of the Director of the lessee u/s. 133 - Decided against assessee.
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2017 (7) TMI 262
Addition under the head capital gains on sale of land - nature of land sold - CIT-A delted the addition - invoking provision of 50C - transfer u/s 2(47) - Held that:- In the instant case, what was transferred by the assessee, even the shares in M/s.General Wood Industries (P) Ltd., and not the land and building or both. The assets transferred being the shares, which was never part of assessment of Stamp Duty Authority of the State Government. In such circumstances that cannot be no question of invoking the provisions of the section 50C of the Act as there is no direct transfer as enumerated in Sec.50C of the Act r.w.s 2(47) of the Act. Being so, Ld.CIT(A) had taken a correct view placing reliance case of Bhoruka Engineering Inds. Ltd. vs. DOT (2013 (7) TMI 543 - KARNATAKA HIGH COURT). Accordingly, we are inclined to uphold the order of Ld.CIT(A). Hence, the ground raised by the Revenue stands dismissed.
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2017 (7) TMI 261
Approval under section 80-G(5)(vi) - charitable purposes - Held that:- Trust is form in order to help cancer patients. In the past they have also donated medicines to the cancer patients. It is specifically mentioned in the object that in hospital they will also provide facility of blood bank or X-ray, Sonography, C.T. Scan, MRI to the patients. Same will be done on charitable basis. This is a fit case where approval under section 80-G(5)(vi) has to be granted to the assessee. - Decided in favour of assessee.
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2017 (7) TMI 260
Disallowance made u/s 14A - Held that:- It has been demonstrated before us that there was enough own funds available with the assessee to make the impugned investments. The Balance Sheet of the assessee demonstrates that the investments had shown an increase from ₹ 478.77 crores to 571.67 crores i.e. an increase of ₹ 92.90 crores approximately, while a perusal of the Profit & Loss A/c for the year shows that the profit for the year earned by the assessee in itself was 342.98 crores, which was more than sufficient to make the investments during the year of ₹ 92.90 crores. Thus with respect to disallowance made u/s 8D(2)(ii) of the Act, pertaining to interest, the decision rendered by the I.T.A.T., Chandigarh Bench in the case of the assessee for assessment year 2008-09 squarely applies following which addition made on account of disallowance of interest u/s 14A is deleted. Disallowance of administrative expenses as per rule 8D(2)(iii)- we find that the assessee suo moto had made more disallowance on account of administrative expenses u/s 14A r.w.r. 8D(2)(iii) than what was directed by the Ld. CIT (Appeals), there is no reason for making any further disallowance and disallowance made is, therefore, deleted. Disallowance of interest made on account of difference of interest charged from Hero Motors on loan - Held that:- assessee had enough and sufficient own funds to give the impugned loan and following the decision of the I.T.A.T. in assessee’s case for assessment year 2009 10 it can be safely presumed that the loan had been given out of the own funds of the assessee and, therefore, called for no disallowance to be made on account of interest. Further has held by the I.T.A.T. in assessment year 2009 10, the Assessing Officer cannot sit in the arm chair of the assessee and decide the rate of interest at which the loan ought to have been given and moreover the Hon'ble Supreme Court has also deleted the addition made on account of notional interest earned in assessee’s case. Thus disallowance deleted Capitalization of interest on investment under the head “Capital Work in Progress”-Building under Construction - Held that:- The investments made in capital work-in-progress in the impugned year amounted to ₹ 6,06,85,936/-. The profits earned by the assessee during the impugned year amounted to ₹ 342.98 crores. Thus the assessee had sufficient funds for the purpose of making investment in the capital work-in-progress and the decision rendered in assessee’s case for assessment year 2009-10 will, therefore, squarely apply in the present case also following which we hold that no disallowance of interest on account of investment made in capital work-in progress is warranted and disallowance made to the extent of ₹ 2,78,564/- is, therefore, directed to be deleted. Disallowance of excessive commission expenses paid - assessee failed to explain the genuineness - addition u/s 40A(2)- Held that:- No infirmity in the order of the Ld. CIT (Appeals) holding that the payment of commission was not excessive since it was approved by the Ministry of Corporate Affairs and by the Board Resolution and even accepted by the Revenue in the past years and had been paid at the same rate since 1962. The fact that Munjal Sales Corporation had been paying tax at the same rate as the assessee, the transaction was revenue neutral transaction and since Munjal Sales Corporation was not related person as per section 40(A)(2) of the Act, there was no case for making any disallowance at all, as held by the Hon'ble Apex Court in the case of Glaxo Smithkline Asia (P) Ltd. (2010 (10) TMI 21 - Supreme Court of India). Thus disallowance deleted Disallowance made u/s 36(1)(iii) - Held that:- Since the assessee was making consistent sale and purchase from these two concerns, any debit balance remaining in the accounts of these concerns cannot be presumed to be in the nature of loans and advances and, therefore, deletion of disallowance made u/s 36(1)(iii) confirmed. The appeal of the Revenue is dismissed.
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2017 (7) TMI 259
Levy of penalty u/s 271(1)(c) - addition on account of unexplained cash credit u/s 68 - Held that:- Since the issues have either been set aside to the file of the Assessing officer for reconsideration or deleted, the additions no longer remains in existence and therefore, there is no cause or basis for levy of penalty. The penalty levied is, therefore, directed to the deleted and the appeal of the assessee is therefore, allowed.
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2017 (7) TMI 258
Addition made towards “retention money deducted from sales” - Held that:- As bringing all the retention monies received from the customers in S. No. 1 to 7 to arrive at the taxable income in the financial year 2005-06 is not correct. Accordingly, we direct the Assessing Officer to verify and include such receipts of retention money received in the particular financial year alone to arrive at the taxable income of financial year and if the assessee has not recognized as its income in the particular financial year, the same cannot be included. The above directions should be followed in all other assessment years since the Assessing Officer has simply followed earlier assessment order and made the disallowance in other assessment years. TDS u/s 194I - Disallowance under section 40(a)(ia) made on payments to clearing and forwarding charges - Held that:- On perusal of reconciliation statement for the assessment year 2006-07 filed by the assessee in paper page No. 114 to 121, it is evident at page 121 that M/s. Medore Equipments received the amount of ₹.1,43,500/- towards customs duty and the assessee has not paid the amount to the agent. Further, with regard to car rent paid to two different person did not exceed ₹.1,20,000/- individually as per proviso to sub-section (b) to section 194I of the Act. Thus, we find no infirmity in the order of the ld. CIT(A) on this issue and therefore, the ground raised by the Revenue is dismissed. Disallowance under section 14A - restricted addition to 5% of the exempt income earned - Held that:- When Rule 8D was not exist during the assessment year 2007-08, there is no question of its application retrospectively since Rule 8D was notified on 24.03.2008 and applicable with effect from the assessment year 2008-09 onwards only. Therefore, there is no question of applying the provisions of Rule 8D for determining the expenditure for earning dividend income. Since application of provisions of section 14A of the Act is ‘constitutionally valid’, the Assessing Officer is duty bound to determine expenditure by adopting a reasonable basis or method. But, in this case, the Assessing Officer has estimated the expenditure over and above the dividend income earned by the assessee. By following the order of the Tribunal in the case of ACIT v. Celebrity Fashions Ltd. (2012 (4) TMI 602 - ITAT CHENNAI), the ld. CIT(A) has restricted the disallowance to the extent of 5% of gross dividend income, which was not accepted by the assessee. Hence, we find no infirmity in the order of the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. Disallowance in respect of short payment of TDS on royalty charges paid - Held that:- Assessing Officer has not disputed over the residential status of the party to whom the royalty was paid by the assessee. Therefore, at this stage, the department cannot dispute over the residential status of the party. After examining the facts, the ld. CIT(A) deleted the disallowance made on the ground that Assessing Officer has wrongly taken the rate of TDS @ 20%. In view of the above, we find no infirmity in the order of the ld. CIT(A) on this issue. Disallowance u/s 36(1)(va) - payments towards PF and ESI made before the due date of filing of return, but after a few days of grace period - Held that:- As the assessee had remitted the employees’ contribution to PF and ESI beyond the due date for payment, but within the due date for filing the return of income. Hence, we find no reason to differ with the findings of the ld. CIT(A) in allowing the claim and thus, the ground raised by the Revenue is dismissed. Disallowance of provision for leave encashment - Held that:- No details were available on record. Before the ld. CIT(A), the assessee has submitted that the entire amount of ₹.19,67,943/- does not belong to the year under consideration as ₹.9,71,066/- was the opening balance and ₹.9,96,787/- along was debited under the year. In view of the above, the Assessing Officer is directed to examine and decide the issue afresh in accordance with law. Assessee is not eligible to claim deduction of provisions for leave encashment. Accordingly, we sustain the addition to the extent it pertains to the assessment year under consideration against the disallowance of ₹.19,67,943/-, if the entire disallowance is not pertaining to the assessment year under consideration. Thus, the ground raised by the Revenue is allowed for statistical purposes.
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2017 (7) TMI 257
Addition made towards long term capital gains - assessee has not filed return of income u/s 139 - assessee filed return of income in response to notice u/s 148 - Held that:- AO was not justified in basically taking the purchase document value at ₹.3,80,000/- ++, which was purchased in 1993. Neither the assessee has produced any valuation of Registered Valuer for adopting the purchase cost at ₹.23,50,000/- for acquisition of land nor similar instance in the surroundings or even the Assessing Officer has obtained the opinion of the DVO for estimating the cost of acquisition of land. AO has not justified saying that there was no appreciation on the value of land acquired in the year 1993 and sold in the year 2009. Either in the village or in the city, there would be some appreciation on the value of the property or especially from the year 2006 onwards, there was appreciation more than double the value of the cost of the property. For assessing the value of furniture as well as other expenses such as brokerage, etc. also AO has estimated the value without any basis. Thus to assess the cost of acquisition of land, the Assessing Officer should refer the matter to the Valuation Cell to assess the market value of the property and after giving an opportunity of hearing to the assessee, the issue may be decided in accordance with law. - Decided in favour of assessee for statistical purposes.
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2017 (7) TMI 256
Deduction of eligible profits under the provisions of section 80IB - Held that:- Identical addition relating to scaling down of deduction claimed under section 80IB of the Act by the Assessing Officer passed in block assessment and survey conducted on assessee s premises was considered. The Tribunal, we find upheld the order of the CIT (Appeals) whereby the action of the Assessing Officer was set aside, relying upon the order of the Tribunal in the appeal relating to block assessment proceedings for the period 1.4.1996 to 5.2.2003. Thus we uphold the order of the CIT (Appeals) in deleting the addition made on account of restricting the deduction claimed under section 80IB to 75% as against 100% claimed by the assessee. As a result ground raised by the Revenue is dismissed. Disallowance of interest on non business interest free advances u/s 36(1)(iii) - Held that:- Section 36(1)(iii) have laid down the proposition that where there are sufficient interest free funds available, the presumption in such cases would be that the advances have been made out of the same and hence there can be no occasion for making disallowance of any interest on account of the interest free advances made. We are in complete agreement with the Ld.Counsel of the assessee in this regard. Moreover we find that the LD CIT(A)has given a factual finding in this regard stating that the amount advanced interest free is far less than the share capital and free reserves of the assessee company. No infirmity in the order of the Ld.CIT(A) deleting the disallowance made on account of interest u/s 36(1)(iii) - Decided against revenue Disallowance u/s 14A - non recording of satisfaction - Held that:- Assessing Officer made disallowance by stating that, had the advance not been adjusted against share capital, the same would have been returned to banks reducing liability to interest of the company. Thus, we find that there was no satisfaction of the AO that the assessee had incurred any interest expenditure while making the impugned investments and least of all based on any credible evidence in this regard. The AO, we find, did not establish any nexus between interest bearing funds and the investments made. In the absence of satisfaction of the Assessing Officer with respect to incurrence of expenses for earning exempt income which is a sine qua non for invoking section 14A of the Act no disallowance under section 14A of the Act could be made - Decided against revenue
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2017 (7) TMI 255
Disallowance being donation made u/s.35AC - Held that:- In view of the binding order of the co-ordinate Bench of this Tribunal in case of M/s. Mangal Tech Park Pvt. Ltd [2016 (7) TMI 839 - ITAT CHENNAI] we are inclined to remit the issue in dispute to the file of the Assessing Officer to reexamine the issue on a similar direction and also the claim of assessee has to be considered as valid, if it has transferred the funds to the Bank account opened in the name of an institution which was duly registered u/s 35AC of the Act on the said dates of transfer of funds. Further, if there is a malpractice or discrepancies in the management of the Trust Account for which the assessee cannot be responsible so as to deny the benefit u/s.35AC of the Act. This ground of the appeal is partly allowed for statistical purposes. Disallowance of depreciation on intangible assets - Held that:- The asset is a license obtained towards carrying on business which gives right to access marketing rights in European countries. As seen from the facts of the case, in our opinion, this is a business or commercial right which gives a right to access carrying of business in European countries and it is the license or akin to license in terms of Sec.32(1)(ii) of the Act. Therefore, depreciation is allowable on the cost of the intangible assets. See Techno Shares And Stocks Ltd. [2010 (9) TMI 6 - SUPREME COURT OF INDIA]. Decide the issue in favour of the assessee.
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2017 (7) TMI 254
Reopening of assessment - whether a claim of a new deduction can be allowed during the course of reassessment proceedings consequent to the notice under section 148? - claim of exemption under section 54F - Held that:- A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as ‘escaped income’. In this case the assessee has claimed deduction of exemption under section 54F of the Act for investment made in the residential house property out of sale consideration of agricultural land, which was found to be escaped assessment, and no new claim of deduction has made during the course of reassessment proceedings. SEE Sun Engineering Works (P) Ltd. v. CIT [1992 (9) TMI 1 - SUPREME Court] Thus we set aside the orders of authorities below and held that the assessee has rightly claimed deduction of exemption under section 54F of the Act during the course of reassessment proceedings. - Decided in favour of assessee. Entitlement to benefit under section 54F - investment in house property made in the names of the assessee’s minor daughters - Held that:- In the present case, the new house property was purchased by the assessee in the name of his daughters, legal heir & dependents and not in the name of any stranger or somebody, who is unconnected with the assessee. Therefore, we are of the considered opinion that the assessee is eligible to claim deduction of exemption under section 54 of the Act.- Decided in favour of assessee. Investment in 40% undivided share in the house property by way of Deed of Mortgage by Conditional Sale - Held that:- In the present case, the arrangement between the assessee (mortgagee) and vendor (mortgagor) to transfer the house property through a 'Deed of Mortgage by Conditional Sale' grossly falls within the definition of transfer under section 2(47)(vi) of the Income Tax Act, therefore the said transaction is a purchase made by the assessee on entering the 'Deed of Mortgage by Conditional Sale'. The agreed consideration of ₹.21,00,000/- was paid by the assessee on 19.09.2005, which is the day on which the 'Deed of Conditional Sale' through mortgage has been executed and registered. Since, the assessee has also taken the possession of the property on the said date, the transaction has become a deemed transfer even under section 53A of the Transfer of Property Act, 1882. Thus we are of the opinion that the assessee is legally eligible to claim deduction under section 54F of the Act. - Decided in favour of assessee. Eligibility for deduction u/s 54EC - investment in Bonds specified under section 54EC after a period of six months from the date of transfer but before the due date specified under section 139 - Held that:- If the assessee has invested in the NABARD bonds by end of February, 2005, then he can very well claim the exemption, but, he has invested in the bonds only on 10.06.2005 i.e., fourth month after lapse of six months period provided in the statute. Therefore, we are of the considered opinion that the authorities below have rightly rejected the claim of deduction under section 54EC of the Act. Thus, the ground raised by the assessee is dismissed.
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2017 (7) TMI 253
Addition u/s 68 - unexplained cash credits - AIR information received by the Revenue - proof of creditworthiness of the creditors and genuineness of the transaction - Held that:- Out of the creditors, though 7 creditors were produced before Assessing Officer and their statements have been recorded under section 131 of the Act, but the creditors were having only meagre income and have failed to produce any cogent and reliable evidence of source of their income. None of the creditors were maintaining any bank account, therefore, mere recording of the statement and filing acknowledgement of ITR would not be sufficient to prove the creditworthiness of the creditors and genuineness of the transaction in the matter. The evidence and material produced on record are not sufficient to discharge the onus upon assessee to prove creditworthiness of the creditors and genuineness of the transaction in the matter. The learned Accountant Member was, therefore, right in this approach in confirming all the additions made by the Assessing Officer. Learned Accountant Member was, therefore, justified in reversing the order of the Id. CIT (Appeals) and confirming order of the Assessing Officer - Decided against assessee.
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2017 (7) TMI 252
Assessment under section 153A - deemed dividend addition u/s 2(22)(e) - incriminating material concerning such additions was found during the course of search - Held that:- Since the facts in the present case are identical to that in the case of M/s Mala Builders Pvt. Ltd. (2016 (11) TMI 1046 - ITAT CHANDIGARH) with assessment having been framed under section 153A of the Act making addition on account of deemed dividend under section 2(22)(e) of the Act, admittedly, in the absence of any incriminating material found during the course of search and the assessment in all the above cases having been completed under section 143(1) of the Act, the aforestated decision of the Chandigarh Bench in the case of M/s Mala Builders Pvt. Ltd. (supra) squarely applies to the present case also, following which we hold that the Assessing Officer had no jurisdiction to make the impugned addition in the present case. - Decided in favour of assessee.
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Customs
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2017 (7) TMI 234
Jurisdiction of the DRI Officers - power to issue SCN - whether DRI officers were proper officers in terms of section 2(34) of the CA, 1962? - Held that: - this issue has been considered by the Tribunal in the case of M/s Alumeco India Extrusion Ltd. Versus CCE, Customs & ST, Hyderabad [2017 (4) TMI 980 - CESTAT HYDERABAD], in the case the Bench being presided over by the Hon’ble President, CESTAT wherein the matters were remanded back to the adjudicating authority - the present appeals are also allowed by way of remand.
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2017 (7) TMI 233
Refund claim - duty paid under protest - Held that: - In the absence of any documentary evidence to show that they were infact contesting the matter of leviability of cess on the prawns and shrimps, we find that both the lower authorities were correct in rejecting the claim of the appellants for the refund of the amounts of cess paid - The lower authorities were correct in rejecting the claim on the limitation as it is on the record that appellant had paid the amount in 2001 and 2002 and filed refund claims on 12.09.2005 - appeal dismissed - decided against appellant.
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2017 (7) TMI 232
Refund claim - rejection on the ground of time limitation - Section 27 of the CA, 1962 - Held that: - In the case of Surya Roshini Ltd., [1999 (1) TMI 168 - CEGAT, MUMBAI], the Hon'ble tribunal has clearly held that provisional payment of duty on court orders, is different from the provisional assessments under Section 18, as it was not ordered for any of the reasons specified in that section, and this observation squarely applies to the present case - it is prayed to remand the matter to the original adjudicating authority to re-adjudicate the case - appeal allowed by way of remand.
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2017 (7) TMI 231
Penalty u/s 112(a) of CA - appellant herein is a Sepoy of Central Excise - smuggling of HSD/Crude Oil - Held that: - section 112 can be invoked only when there is an abetment or omission to render the goods liable for confiscation - There are no findings in the impugned order as to the omission or commission on the part of appellant to invoke provision of Section 112 (a) of the Customs Act, 1962 - adjudicating authority has accepted that there are no corroborative evidence against the appellant - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 230
Validity of confiscation proceedings - seizure of cash - Valuation - It is alleged that the respondent arranged for the sale of cloves and other spices to various Indian importers with an arrangement to issue substituted invoices indicating prices to be much lower than the actual transaction value - Held that: - adjudicating authority has failed to examine the facts arising from the various statements and has failed to test the conclusions derivable therefrom for validity and reliability. Without such ascertainment of smuggling of goods, of disposal of smuggled goods, of knowledge that the goods are smuggled, and of the currency having been received from the buyers of smuggled goods, a decision to drop proceedings or to confiscate would lack the authority of law - it is necessary that this notice be brought to its logical conclusion by a fresh adjudication - appeal allowed by way of remand.
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2017 (7) TMI 229
Liability of interest - Refund of excess duty paid - finalisation of provisionally assessed bill of entry - Held that: - the adjudicating authority cannot again assess the said Shipping Bills, as there are no provisions to do so - the Order-in-Original dated 24.07.2014 is not in consonance with law, as there was no requirement of finalising are already finalised the Shipping Bills. The appellant is entitled for interest as per the provisions of Section 18 of the Customs Act, 1962 from the date of finalisation of the Shipping Bills by the First Order-in-Appeal dated 17.04.2013 - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (7) TMI 226
Call of the Winding Up order - Held that:- There is no prohibition or restraint on the Company Court to recall the winding up order if the facts and circumstances requiring such a recall are established by any of the applicants, be it Official Liquidator or a Creditor or a contributory or a share holder. Here, the applicant is the majority share holder, viz. the State of Karnataka itself and this Court is not only satisfied but records its happiness for a Government Company seeking to come out of the process of winding up by this Court and for removing the impediment on the user of the assets of the Company, the big chunk of land for public purposes and for that purpose seeking its revival. The revival of Company does not necessarily mean revival and restoring of the usual manufacturing or the business activity. It is a broader term including therein, the best utilization of its assets including the vacant land. This Court is conscious of the fact that a big chunk of Government land which is presently in the custodia legis of the Official Liquidator if not properly safeguarded and utilized for the pressing public needs on the other hand may lead to even encroachments by unauthorized people on such public land, further engulfing the Government and the public authorities in a chain of litigations. Therefore, it is always appropriate and suitable if the idle immovable property of the Government Company like big chunk of land, as is available in the present case, is best utilized for the larger public interest and therefore this Court does not see any impediment or valid objection against such revival of the Company and restoring the assets of the Company to its Management under the provisions of the Companies Act, while staying the winding up process permanently at this stage subject to the compliance of the solemn Undertaking given by the State before this Court. As far as a few of the workmen are concerned, the learned counsel for the workmen also fairly submitted that such workmen whose dues have so far not been settled because of litigation by them or otherwise, they should be given an opportunity to place their claim before the concerned Nodal Agency viz. KSIIDC or the Management of the Company itself when a proper Board of Directors is reconstituted by this Company or the State of Karnataka. The learned senior counsel appearing for the Applicant State of Karnataka has fairly agreed to this submission and accordingly the remaining workmen whose claims are still pending, along with their relevant evidence, can approach either the said Nodal Agency, KSIIDC or upon transfer of assets to the Management of the Company by the Official Liquidator to the duly constituted Board of Directors, whenever such assets and Management are handed over back to the Board of Directors of the Company. The aforesaid undertaking of the learned Senior counsel for the Applicant - State of Karnataka to utilize the land of 119.665 acres only for public purposes in the form of infrastructure development etc. only would include the following and therefore this Court also directs and enjoins upon the State to undertake thick afforestation and Tree Plantation work on the said land which will maintain the ecological balance and provide additional lung capacity and fresh air to the otherwise dying Garden City of Bengaluru. In view of the aforesaid, Company Application is allowed and the winding up order dated 03/08/2004 passed by a co-ordinate bench of this Court is stayed or sisted and kept in suspension sine-die and the recommendation of the BIFR dated 02/08/2002 forwarded to this Court for winding up of the Company is also stayed permanently subject to the further orders of this Court. The Official Liquidator may now take steps to handover the assets and records of the Company with the Status Report as soon as he is informed about the constitution of the Board of Directors by the Applicant - State of Karnataka, with the approval of this Court.
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2017 (7) TMI 225
Issue duplicate shares in respect of the 5000 equity shares - seeking release of all benefits like bonus shares, etc. and to pass appropriate orders under Sections 58 and 59 of the Companies Act, 2013 and Rule 70 of the National Company Law Tribunal Rules, 2016 - Held that:- There is a dispute whether the shares of the petitioner were, in fact, transferred by the petitioner in the year 1998 or not. On the basis of a transfer form, the shares were already transferred to Mr. Rajgopal BV. Therefore, the issue involved in this case is a disputed question of facts. Moreover, in this case, investigation by SEBI is also pending relating to certain suspicious share transactions that were undertaken by the third respondent and the transfer of shares of the petitioner is one such case. Therefore, pending investigation by SEBI also, it is not proper for this Tribunal to decide the issue. The petitioner did not choose to disclose in the petition that he has already approached SEBI for issuance of duplicate shares and the matter is pending there. It amounts to suppression of material fact since the order, if any, passed may be or may not be in consonance with the order, if any, passed by this Tribunal in this proceeding. Therefore, it is a fit case where the petitioner can approach the civil court. Further, the petitioner did not choose to implead the transferee of shares by name, Mr. Rajgopal BV, as a party to this petition. Any order of rectification of the register passed in this proceeding would have a direct effect on the interest of Mr. Rajgopal BV. Therefore, Mr. Rajgopal BV is not only a proper party, but also a necessary party to this proceeding. But, such person has not been impleaded as a party in this petition. In view of the above the petitioner is not entitled to any relief in this petition. This petition is dismissed.
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Service Tax
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2017 (7) TMI 251
Sub-contract - time limitation - whether sub-contractor is required to pay service tax on the construction services when the main contractor for whom they are providing the services is discharging the service tax on the total value of the contract? - Held that: - the Commissioner (Appeals) held that the extended period of limitation was unwarranted. From the ground of appeal, we find that the Revenue has not challenged by making any ground on the limitation, the appeal filed only on the merit. Therefore, the findings of the Commissioner (Appeals) on limitation which was not challenged, demand is not sustainable being time barred - we are of the view that the demand for the same period, how in once case is time barred and how in other case it is not time barred. The Commissioner (Appeals) has given a contrary view as regards the time bar. We, therefore, remand the matter (Appeal No.ST/86291/13) filed by the party to the Commissioner (Appeals) for re-consideration of the issue on limitation - appeal allowed by way of remand.
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2017 (7) TMI 250
Works Contract Service - the entire contract is with railways and the entire work under contract was provided along with goods - Held that: - The work contract tax was also deducted by the railways from the contract value and the appellants have also paid the works contract tax, in such a situation, service is prima facie covered under works contract service, which became taxable with effect from 01/06/2007 and prior to that it was not taxable - However, the fact whether the contract is provided along with goods and works contract tax deducted by the service recipient/paid by the appellants has not been considered by the adjudicating authority - matter on remand. Transportation of goods by road services - demand - Held that: - the appellant forcefully submitted that major value of services is related to the freight expenses which is below ₹ 750/- per trip. If it is so, it is clearly covered by the Notification No.34/2004-ST. However, this factual position has not been properly considered by the adjudicating authority - matter requires reconsideration. Construction service - demand - Held that: - the appellants were given reconciliation statements according to which there will be no demand exist on construction service. However, reconciliation was not dealt with in proper perspective by the adjudicating authority. As per our above discussion, the entire matter needs reconsideration. Appeal allowed by way of remand.
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2017 (7) TMI 249
Tax liability - reimbursable expenditure towards the water and electricity charges and diesel charges - Held that: - it is admitted facts in the impugned order that these are towards the reimbursement of expenditure incurred by the appellant and it is noticed from the impugned order that the adjudicating authority has relied upon the provisions of Rule 5(1) of Service Tax Valuation Rules for taxing this amount. The said provisions of Rule 5(1) of the Service Tax Valuation Rules amended for inclusion of reimbursable expenses for arriving at gross value - demand not sustainable - waiver of pre-deposit of amounts involved on this issue also needs to be stayed. CENVAT credit - input services - Renting of Immovable Properties Service - Held that: - there is no dispute as to the fact these services were received by the appellant for construction of property which is used by the appellant for rendering Renting of Immovable Property Services on which appropriate service tax is discharged - tax liability does not arise. Application for waiver of pre-deposit of the amounts involved is allowed - recovery thereof stayed till the disposal of the appeal.
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2017 (7) TMI 248
Reverse charge - Management or business consultant service - payments made to the overseas collaborator - taxability - Held that: - section 66A of Finance Act, 1994 deems the recipient to the be the provider of service for fastening of tax liability. Such deeming provision is found to be enforceable only with delineation of the specific circumstances by which the services are determinable as imported. The Rules framed for the purpose owe parentage to the exemption powers under section 93 of Finance Act, 1994. Consequently, there is an implied exemption to such activities as are not specifically enumerated in the Rules or, if enumerated, are circumscribed - matter remanded to the original authority to pass a fresh order after hearing the assessee - appeal allowed by way of remand.
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2017 (7) TMI 247
Management, maintenance or repair service - the appellant renders a service to the owners of the units for which amounts collected is the consideration - whether the appellant is provider of service or recipient of service? - Held that: - there is no finding in the impugned order that the appellant renders ‘management/maintenance or repair service.’ Even if the appellant has collected lump-sum amounts from the owners of the units the service of providing ‘management/maintenance or repair service’ is procured by the appellant from organisations that possess the necessary proficiency. In these circumstances, the appellant is a recipient of the service provided by ‘management, maintenance or repair’ service providers. It, therefore, does not appear to be logical for the appellant to be taxed as a provider of the service on collection from the owners and, hence, liability to tax under section 66 of Finance Act, 1994 is not sustainable. Health and fitness service - it is alleged, that the tax has not been paid despite these being consideration for providing ‘health and fitness service’ - Held that: - The appellant has been paying tax as provider of ‘club or associates service’ ever since that was included as a taxable entry in section 65 (105) of Finance Act, 1994. No evidence has been placed on record by Revenue that the services so provided are not in the latter category but in the former. Accordingly, the service provided is not one of ‘health and fitness service’. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 246
Valuation - reimbursable expenses - statutory expenses - rent of office, salary to staff, charges toward electricity, stationery, courier, travel and uniforms expenses - includibility - Held that: - It would not be possible to draw a distinction between the portion of the consideration that does not relate to these activities. In consequence, the tax liability crystallises on the gross value services subject to the various deductions permitted by the first appellate authority - demand with interest upheld - penalty set aside by invoking section 80 - appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 245
Refund claim - Reverse charge - services procured from overseas providers - Held that: - There was no appeal by Revenue against the implied findings of eligibility for sanction of refund. In the light of approval of the claim by the original authority, it is inconceivable that the first appellate authority had sufficient material to determine ineligibility for refund at the threshold. The impugned order has not examined the merit of the claim either. It would, therefore, appear that the first appellate authority has travelled beyond jurisdiction to reject the claim for refund. As the fundamental issue of limitation and eligibility have not been considered by the original authority, the matter needs to be remanded - appeal allowed by way of remand.
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Central Excise
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2017 (7) TMI 244
SSI Exemption - Clubbing of the value of clearances - the decision in the case of Parag Fans and Cooling Systems Ltd. Versus Commissioner Customs Central Excise & Service Tax Indore [2014 (10) TMI 875 - MADHYA PRADESH HIGH COURT] contested, where it was held that Revenue clearly proves its case establishing total concern, control, nexus and inseparable link between the assessee and its other proprietary concern viz., Parag Industries - Held that: - the decision in the abovementioned case upheld - petition dismissed - decided against petitioner.
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2017 (7) TMI 243
Non compliance of provisions of Section 35F of the CEA, 1944 - Held that: - right of appeal is a statutory right. Considering the reasons given, we deem it appropriate to grant one more opportunity to the Appellant to contest the matter on merits and more particularly as he has also shown his bona fide by agreeing to deposit 25% of the amount of duty - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 242
Unjust enrichment - Whether the order of Tribunal can be sustained in as much as it has not met with the contentions of the Appellant, no material facts are discussed and has not considered the aspect of presumption as envisaged under Section 12B of the Central Excise Act? - Held that: - The reasons are short to hold that the burden has been discharged by the Assessee. The rates in the commercial invoice and the excise invoice have not been discussed. The difference in the said rates has not been considered in the judgment. Such a decision can not been sustained - matter remanded back to tribunal.
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2017 (7) TMI 241
Penalty u/s 11AC - CENVAT credit was taken, which was not permissible and after the same was realized in audit, thereafter it was reversed - Held that: - if before utilization, the entry has been reversed it amounts to not taking credit - reliance placed in the case of Steelco Gujarat Ltd. v/s. Union of India [2012 (8) TMI 175 - BOMBAY HIGH COURT] wherein the Court observed that if the credit taken on inputs used in the manufacture of the goods cleared under N/N. 14/2002 C.E. or N/N. 30/2004 C.E. is reversed before utilization, it would amount to credit not having been taken - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (7) TMI 240
Validity of order of Settlement Commission - Held that: - the writ appeal is dismissed as withdrawn, with liberty to approach the Settlement Commission, with regard to the outstanding issues, albeit, in accordance with law - decided against appellant.
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2017 (7) TMI 239
Refund claim - Section 11B - evidence - unjust enrichment - Held that: - review petition filed by the assessee is dismissed - appeal dismissed - decided against assessee.
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2017 (7) TMI 238
Clandestine manufacture and removal - confiscation - redemption fine - penalties u/r 25/26 of CER, 2002 - Held that: - from the identity of the goods it cannot be established that the said goods were cleared without payment of duty by Ravi Raj Processors as the goods did not bear any marking indicating any relationship with Ravi Raj Processors. There is no inculpatory statement of any of the person of the appellant admitting the charge of the department that the goods were supplied by Ravi Raj Processors - Revenue could not establish beyond doubt that the goods seized in the premises of the present appellants were cleared Ravi Raj Processors without payment of duty. In the absence of any such evidence the goods were not liable for confiscation and consequentially no redemption fine and penalty was warranted - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 237
Refund claim of the duty already paid during the disputed period - unjust enrichment - Held that: - in the absence of evidence merely on the basis of credit notes, it cannot be established that incidence of duty paid by the appellants have not been passed on to any other person. In the interest of justice, one opportunity can be given to the appellants to substantiate their claims in respect of unjust enrichment by submitting all other documents, like, parties ledger, balance sheets, etc. to prove that of credit note has been rightly accounted for and the amount of credit notes has been paid to the customers or the credit notes adjusted in the customers ledger and the same is reflecting in the balance sheet - appeal allowed by way of remand.
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2017 (7) TMI 236
Classification of goods - boiler drums - chimney shells - ducts - fired heaters - radiation/convection coils - Held that: - the first appellate authority has recorded finding that the description of the goods states that they are parts of the Boilers. Therefore, I find that they are rightly classified under Chapter Heading 84.02 by the original authority - appeal dismissed - decided against appellant.
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2017 (7) TMI 235
Intermediate product namely sugar syrup - demand on the ground that N/N. 67/95-CE dated 16.03.1995 is not applicable when the final product is exempted from payment of excise duty - whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuit is chargeable to central excise duty under sub-heading 17029090? - Held that: - CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical - the decision in the case of Rishi Beckery vs. CCE Kerala [2015 (4) TMI 893 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (7) TMI 228
Liability of interest - U.P. Tax on Entry of Goods Into Local Areas Act, 2007 - whether the petitioner is liable to pay interest for the delay in making the payment of entry tax even though no such direction is contained in the assessment order and the bonafides of the petitioner are lit large? - Held that: - the matter of levy and collection of tax, the admitted tax or the tax due is to be paid on or by the date if any specified under the statute. The assessment order is only supposed to determine the taxable income/turnover and the amount of the tax payable thereon and that no particular direction for payment of any interest is necessary when the statute itself obliges for payment of interest at the specified rate in case of non payment of tax within the stipulated period or for the delay in its payment - the liability to pay tax runs from the date stipulated for the payment of tax as per the statute irrespective of the date of assessment order and the liability to interest on delay in depositing tax is automatic for which neither any assessment order is required nor any notice of demand. In view of provision of Section 33 of the U.P. Value Added Tax Act which are mutatis mutandis applicable to entry tax, the petitioner is liable for payment of interest on such delayed payment of entry tax for the above period of 15 months irrespective of the fact whether such a direction for payment of interest is contained in the assessment order or not. Petition dismissed - decided against petitioner.
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2017 (7) TMI 227
Levy of tax - unbranded sweets - Section 7(1)(a) of the Act - 14.5% or 2%? - penalty - natural justice - the Assessing Officer was largely guided by the proposal of the Enforcement Wing and the stand taken by the petitioner before the Enforcement Officials as the pre-revision notices itself were a sequel to the report of the enforcement group, dated 29.04.2016 - Held that: - It is well settled legal proposition that the Assessing Officer is an independent authority and quasi- judicial authority, who is required to complete the assessment based on the materials placed before it and not to be guided or act on the dictates of its superiors. If it is so done, it would amount to a clear case of abdication of the duties and responsibilities of the Assessing Officer. The various dates on which replies and representations were made by the petitioner would clearly indicate that there was a clear attempt on the part of the petitioner to drag the matter. A perusal of the impugned Assessment Orders, more particularly from Paragraph No.3, clearly indicates that the Assessing Officer found fault with the petitioner for failure to produce documents before the Enforcement Wing or before her. Thus, considering the facts and circumstances of the case and the issue as to whether the product sold by the petitioner is to be taxed at 14.5% or 2% is required to be decided, we are of the view that the matter can be remanded to the Assessing Officer for fresh consideration subject to stringent conditions - appeal allowed by way of remand.
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