Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 17, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Works Contract for construction of Flats, Complex — Builders to pass on GST benefit to buyer otherwise anti-profiteering provisions of Section 171 of GST Act to apply - Circular
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List of Reduced Tax Liabilities under GST regime in comparison to present combined Indirect Tax rates - Circular
Income Tax
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Benefit of Section 80P - income of co-operative societies under Section 80P - providing credit facilities / financial business - its operation was not confined to its members but outsiders as well - deduction not allowed as barred u/s 80P(4) - SC
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The activity of the petitioner in supplying the audio of the back ground sound to the film already shot by the customers, amounts to manufacture within the meaning of Section 80-IB - HC
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Power of AO to withdraw the interest granted u/s 244 by way of rectification of mistake u/s 154 - Interest u/s. 244 could not be withdrawn in absence of clear cut provision in the section for the year under consideration.
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Revision u/s 263 - adherence to time limit prescribed by the provisions - limitation period - the issue was under revision was not part of assessment u/s 143(3) which was within 2 years - Revision order is not valid - set aside.
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If the object of the legislature is to tax the capital gains arising on transfer of a capital acquired under a gift or will by including the period for which the said asset was held by the previous owner, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee
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Validity of revised return u/s 139(5) - return was revised after issuance of intimation u/s 143(1) - claim of benefit of excess set off of losses and carry forward of the same as per the revised return filed by the assessee - Intimation u/s 143(1) is not assessment - claim allowed.
Customs
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Guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act, 1962 - reg. - Circular
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Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg - Notification
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The government hiked the import duty on crude palm oil from 7.5% to 15%, and on refined from 15% to 25% - The import duties on other crude edible oils like soya and sunflower have been raised from 12.5% to 17.5%.
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Classification - pellet mill and spare parts for shrimp feed machinery - whether part of pellet mill and spare parts of shrimp feed machinery can be classified under CTH 8436 or otherwise under 8438? - To be classified under 8438 of the tariff.
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Mutilation of Imported goods - No enquiries have been made overseas to find out the composition of the material. In that circumstances, the report of the chartered engineer is not acceptable, as he is not a metallurgical engineer, therefore, in the absence any evidence on record, the goods are to be cleared as scrap, therefore, there is no requirement of any mutilation.
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Valuation - the alleged import and further onward attempt to re-export to Russia by manipulating/ fabricating the import documents and the value is very much in contravention of the provisions of Customs Act, 1962.
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Import of old and used pipes with plastic material i.e. thermally insulated with polyurethane form - The plastic material is hazardous waste is based only on assumption and presumptions, therefore the goods are not liable for confiscation and no redemption fine can be imposed.
DGFT
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DUTY EXEMPTION / REMISSION SCHEMES - Export of gold jewellery, including partly processed jewellery, whether plain or studded, and articles, containing gold above 22 carats shall not be allowed (banned)
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EOU / EHTP / STP / BTP - Export of gold jewellery, including partly processed jewellery, whether plain or studded, and articles, containing gold above 22 carats shall not be allowed (banned)
Corporate Law
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Compounding of offence - in view of section 441(1) of the Companies Act, 2013, this Tribunal has got power to compound the violation of Section 177(1) of the Act, only in respect of the Company, but not to its Officers
State GST
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Issues related to Bond/Letter of Undertaking (LUT) for Export payment of Integrated Goods & Service Tax (IGST) - Delhi Govt prescribes procedure and manner for furnishing the application with Bond / LUT
Service Tax
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Refund of service tax - rejection on the ground of time limitation and unjust enrichment - The Circular is only clarificatory in nature. As such, there is no question of its prospective or retrospective operation. - HC
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Cenvat Credit - input services - As per the definition of input service at the relevant time, the service of setting up/ modernisation, renovation of the factory premises falls under the input service, therefore the construction service used by the appellants is admissible input service.
Case Laws:
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Income Tax
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2017 (8) TMI 537
Court fees for appeal against the orders passed by the Income Tax Appellate Tribunal - scope of amendment - Held that:- (i) Wherever assessee is in appeal in the High Court which is filed under Section 260A of the IT Act, if the date of assessment is prior to March 06, 2003, Section 52A of the 1959 Act shall not apply and the court fee payable shall be the one which was payable on the date of such assessment order. (ii) In those cases where the Department files appeal in the High Court under Section 260A of the IT Act, the date on which the appellate authority set aside the judgment of the Assessing Officer would be the relevant date for payment of court fee. If that happens to be before March 06, 2003, then the court fee shall not be payable as per Section 260A of the IT Act on such appeals.
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2017 (8) TMI 536
Benefit of Section 80P - income of co-operative societies under Section 80P - providing credit facilities / financial business - its operation was not confined to its members but outsiders as well - whether the appellant is barred from claiming deduction in view of Section 80P(4) - Held that:- The activities of the appellant are in violations of the provisions of the MACSA under which it is formed. The assessee had carved out another category of nominal members . These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. and, in fact, they are not members in real sense. Most of the business of the appellant was with this second category of persons who have been giving deposits which are kept in Fixed Deposits with a motive to earn maximum returns. A portion of these deposits is utilised to advance gold loans, etc. to the members of the first category. It is found, as a matter of fact, that he depositors and borrowers are quiet distinct. In reality, such activity of the appellant is that of finance business and cannot be termed as co-operative society. It is also found that the appellant is engaged in the activity of granting loans to general public as well. All this is done without any approval from the Registrar of the Societies. With indulgence in such kind of activity by the appellant, it is remarked by the Assessing Officer that the activity of the appellant is in violation of the Co-operative Societies Act. Moreover, it is a co-operative credit society which is not entitled to deduction under Section 80P(2)(a)(i) of the Act. The appellant cannot be treated as a co-operative society meant only for its members and providing credit facilities to its members. We are afraid such a society cannot claim the benefit of Section 80P of the Act. - Decided against assessee.
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2017 (8) TMI 535
Revision u/s 263 - claim of deduction for interest paid on Optionally Fully Convertible Debentures in terms of section 24(b) - debatable issue - Held that:- We find that the petitioner had issued debentures. The funds raised through such debentures were utilised for repayment of past loans. These loans were taken for the purpose of construction of building. This aspect, the petitioner pointed out to the Assessing Officer during the original assessment. Through the accounts the petitioner could establish the precise correlation between the debentures and repayment of past loans. This aspect, the Commissioner has not controverted in the notice for revision. The Assessing Officer after examining the issue accepted the assessee's claim for deduction under section 24(b) of the Act even with respect to interest paid on debentures which were utilised for repayment of past loans used for the purpose of construction of the building. The view of the Assessing Officer was certainly plausible, particularly, in view of clarification issued by the CBDT. It was therefore, not open for the Commissioner to take such order in revision. - Decided in favour of assessee.
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2017 (8) TMI 534
Reopening of assessment - Reasons for the belief that income has escaped assessment - claim of expenditure in course of trading of crude and refined edible oil on settlement basis as allowable business expenditure - AO held this not an allowable business expenditure but was a speculative loss and therefore not allowable under section 73 - Held that:- all these observations and formation of belief by the Assessing Officer are based on documents on record produced by the petitioner along with the return of income. In fact, this issue was examined by the Assessing Officer during the original assessment. Reopening notice set aside - Decided in favour of assessee.
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2017 (8) TMI 533
Claim u/s 80-IB denied - proof of business activity as manufacture or production of articles or things - scope of activity undertaken by assessee - activity of supplying the audio of the back ground sound to the film already shot by the customers - Held that:- The activity of Video Software Generation has been recognized as Small Scale Industries by Government of India, Ministry of Industry vide order dated 04.03.1993, as well as 03.11.1993. It is also pertinent to mention the fact that by providing the Audio Software to the Video already shot makes an article fit for use which in turn amounts to manufacture, in view of the Law laid down by the Supreme Court in the case of Commissioner of Income Tax Vs. Oracle Software India Ltd (2010 (1) TMI 9 - SUPREME COURT OF INDIA ). The activity of the petitioner in supplying the audio of the back ground sound to the film already shot by the customers, amounts to manufacture within the meaning of Section 80-IB of the Income Tax Act and, therefore, the Tribunal erred in upholding the disallowance - Decided in favor of assessee.
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2017 (8) TMI 532
Agricultural or non agricultural land - ascertainment of nature of land - proof of agricultural operation - TDS u/s 194LA - TDS determined only on the basis of records furnished by assessee and no inquiry, investigation, physical verification is permissible/desirable at the end of assessing officer - Held that:- The assessee is the Urban Development Authroity which requires the amount for the purpose of paying compensation to the agriculturists. In view of the observations which are made by the Supreme Court in Sarifabibi (1993 (9) TMI 10 - SUPREME Court ) wherein it has been held that on facts, under the Local Act which is a subject matter, the permission was taken and on the date on which, the contract was entered between the parties that too under cooperative society, it was an agriculture land, therefore exemption which was granted was on agriculture land. In that view of the matter, while acquisition done by the local authority which is statutory authority when they are paying compensation of an agricultural land, we are of the considered opinion that the judgment of Sarifabibi will not apply in the facts of the present case. While interpreting the view, we have to look into that the local authority is acting in the interest of State as a whole or not. In the present case, for the purpose of taxation, if the interpretation which has been canvassed by the counsel is accepted, it will put loss to the authority and they have to pay higher compensation. In that view of the matter, while considering the payment of compensation, it should be on a lower side and in our considered opinion, the authority has not committed any wrong. They have acted in the interest of the State and it should be considered as an agriculture land as rightly considered by the authority. - Decided in favour of the assessee.
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2017 (8) TMI 531
Cancellation of registration of assessee trust invoking power u/s 12AA(3) - Director of Income Tax (Exemptions) jurisdiction invoking its powers under section 12AA(3) - Held that:- As decided in CIT vs. the Mumbai Metropolitan Regional Iron and Steel Market Committee [2017 (7) TMI 920 - BOMBAY HIGH COURT] Commissioner has invoked its powers under Section 12(AA)(3) of the Act. The said powers are circumscribed by the limitations imposed under Sub Section 3 of Section 12AA of the Act. The Commissioner, nowhere has given the finding that the activities of the Respondent institution are not genuine one or that the said activity carried out are not in consonance with the object of the institution. The Commissioner has merely relied on proviso to Sub-Section 2 of Section 15 of the Act, as it stood then. The said proviso has subsequently gone amendment. Even considering the proviso, as it stood then, the case has not been made out so as to invoke Section 12AA(3) of the Act. The Tribunal as rightly considered the said aspect - Decided against revenue.
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2017 (8) TMI 530
Revision u/s 263 - grant of benefit under Section 80 HHC - Held that:- It appears from the decision of the Apex Court in Max India Ltd. (2007 (11) TMI 12 - Supreme Court of India) that the Assessing Officer had taken one of the two views of the word "profit" as occurring in Section 80 HHC of the Act. Therefore, it was in that context that the Apex Court held that Section 263 of the Act would not be attracted particularly when the view of the Assessing Officer was found to be a view taken by various authorities under the Act. In passing we may point out that as recorded in the statement of case, the Tribunal held the exercise of powers under Section 263 of the Act by the Commissioner of Income Tax to be bad in law as the view of the Assessing Officer was in line with the decision of the Tribunal in Mysore Exports Ltd. (1995 (5) TMI 45 - ITAT BANGALORE). It is relevant to note that on the date when the Commissioner of Income Tax exercised his powers under Section 263 of the Act on 31.03.1995, the decision of the Tribunal in Mysore Exports Ltd. (1995 (5) TMI 45 - ITAT BANGALORE) was not available before him as it was rendered on 19.05.1995. Therefore, we are of the view that the Assessing Officer cannot abdicate his responsibility of examining the claim for deduction before allowing it. Absence of examination of the claim made by the assessee while passing an assessment order and allowing the claim made, would render the order of the Assessing Officer erroneous and coupled with the fact that in this case it is admitting prejudicial to the interest of the revenue, exercise of the revisional jurisdiction under Section 263 of the Act by the Commissioner of Income Tax proper and valid. Decided in favour of the appellant-revenue and against the respondent-assessee.
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2017 (8) TMI 529
Revision u/s 263 - adherence to time limit prescribed by the provisions - limitation period - the issue was under revision was not part of assessment u/s 143(3)/147 which was within 2 years - an addition was made u/s. 40A(3) on account of cash purchases from one of the three parties, that the assessment order also recorded the fact that there were no purchases from the other two parties - Held that:- the revisionary order of the CIT, was not passed within the time limit prescribed by the provisions of section 263 of the Act. The jurisdiction u/s. 263 could not be exercised on issues which were not subject matter of consideration while passing the order of reassessment u/s. 143(3) / 147 but a part of an assessment done earlier under the Act, that the contention that in the case of bogus bills and non-genuine purchases, i.e., where the State is being defrauded the limitation as provided u/s. 263 be ignored could not be accepted for the reason that neither the Tribunal nor in the appellate jurisdiction, could ignore the mandate of limitation provided under the Act. This was an issue which would fall within the domain of Parliament so as to make suitable amendment to the law after considering the various competing interests. - See CIT v/s M/s. Lark Chemicals Ltd.[2013 (9) TMI 959 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2017 (8) TMI 528
Addition found in entries found in a seized document - presumption placed on the seized documents u/s 132(4A) - cash found during the search - such cash belongs to assessee as personal cash or belongs to the company - Held that:- Some figures have been noted in a columnar form. It is not clear as to whether they pertained to “receipt” or “payment”. The AO also could not bring any material on record to understand the meaning and nature of entries. Hence, in the absence of any other corroborative material, we are of the view that the said document should only be construed as dumb document. We also find no reason for extrapolating the figures into lakhs. Hence the addition made by the AO has to be taken as an addition made on surmises and conjectures, which is liable to be deleted. The assessee has also given copy of cash ledger of M/s Flemingo Duty free shop. A careful perusal of the same would show that the same records cash transactions of all the shops located in various airports like Kolkatta, Chennai, Trichy etc., meaning thereby, it does not pertain to Bombay branch alone. Normally the director should be keeping the cash balance of Bombay branch only for safe custody purpose. The said cash book shows cash balance of ₹ 4.36 lakhs as on 31.10.2009, but the same represents cash balance available as at the close of business on that date. Hence it is not clear that the above said cash balance pertains to Bombay branch alone or it was a combined cash balance of all branches. Hence we are of the view that claim of the assessee that the entire cash balance of the business concern was available with him is hard to believe. Accordingly we are of the view that the credit for entire cash balance cannot be given. The possibility of keeping some portion of cash belonging to Bombay branch cannot be ruled out. Accordingly we are of the view that an adhoc sum of ₹ 1.00 lakh can be given credit and the same would meet the ends of justice. - Appeal of the assessee is partly allowed.
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2017 (8) TMI 527
Power of AO to withdraw the interest granted u/s 244 by way of rectification of mistake u/s 154 - Held that:- Interest u/s. 244 could not be withdrawn in absence of clear cut provision in the section for the year under consideration. It is also a fact that the proceedings to withdraw the interest were initiated u/s. 244(1A) whereas vide rectification order dated 28/03/2014 the Assessing Officer had withdrawn the interest invoking provision of section 244(3) of the Act. Thus in our opinion the appeal of the assessee has to be allowed on Jurisdictional issue as well as on merits. - Decision in the case of Tata Power Company. Ltd.(2015 (8) TMI 87 - BOMBAY HIGH COURT) followed - Decided in favor of assessee.
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2017 (8) TMI 526
Validity of reopening of assessment u/s 147/143(3) - difference in the sales/receipt figures declared in the P&L account and sales as per Form 26 AS - Held that:- The pleadings of the ld AR are not supported by the facts of the case. The discrepancy was noted between the books of account and form 26 AS. On that basis, the additions have been made. Therefore, the contention of the ld AR that no addition was made on the basis on which the reopening based is completely unjustified. No legal discrepancy in initiating the proceedings U/s 148 of the Act by reopening the assessment. In view of these facts, uphold reopening as valid. Addition towards increase in valuation of work in progress of the closing stock - Held that:- The addition made on estimate basis, has been deleted by the ld. CIT(A). Further this addition has been made on specific basis of the fact that the amount of ₹ 17,50,000/- received by the assessee from the three parties was not disclosed as a receipt in the P&L account for the reasons that the work was not completed and no bills were issued. These receipts were not made part of the turnover. But there is no denial to the fact that part work was complete hence it should have been shown as work in progress. In view of this fact, ld. CIT(A) was justified in sustaining the addition of ₹ 5,78,500/- out of the total receipt of ₹ 17,50,000/- not declared in P&L account. These amounts should have been shown by the assessee in the work in progress, which shall form part of the closing stock. The income of the year shall increase by that amount. Therefore, find no infirmity in the order of the ld. CIT(A) and the same is hereby affirmed. Addition towards belated deposit of TDS U/s 40(a)(ia) - Held that:- Section 28 of the Act provide about which income shall be chargeable to income tax under the head profit and gain of business and profession. The provisions of Section 28 of the Act cannot be extended to encompass expenses other than mentioned in Section 30 to 38 of the Act, so that those expenses are not covered by Section 40(a)(ia) of the Act. Therefore, the ld A.R.’s pleadings were completely against the legal provisions of the Act. However, his alternate plea that the person to whom the payment was made has furnished the return of income U/s 139 of the Act and has included the same in their return of income and due taxes have been paid. This aspect needs verification at the level of the Assessing Officer, therefore, restore this issue to the file of the Assessing Officer. Appeal of the assessee is partly allowed for statistical purposes only.
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2017 (8) TMI 525
Grant of deduction u/sec. 80IB(10) on pro-rata basis - exceeding maximum area requirement - blocks which are of less 1500 square feet area - Held that:- The issue in controversy is covered by the decision of Viswas Promoters Ltd. vs. ACIT [2012 (11) TMI 1117 - MADRAS HIGH COURT] wherein the High Court has set aside this issue in favour of the assessee stating that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referred u/s 80IB(10) - the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft would not result in nullifying the claim of the assessee for the entire projects - Decided against revenue. Addition on account of donations which was neither claimed in A.Y. 2011-12 and nor in A.Y. 2008-09 - Held that:- We find that during the course of hearing the learned A.R. submitted the assessee has never claimed donation in its return of income in A.Y. 2011-12 or 2008-09. Therefore, when the assessee did not claim the donation there is no question of addition of ₹ 2,12,000/-. Therefore, we allow the same. Ground No. 1 is allowed. Disallowance of interest expenditure - proof of investments made out of own funds and borrowed funds were utilized for the purpose of business - Held that:- We find that the AO and the CIT(A) has not considered whether the assessee has given these advances towards purchase of property or loans have been given for the Bhoomi Acres project or not. Therefore, we restore this matter back to the file of the AO and the AO is directed to verify all the facts whether these loans are given for business purposes or not and decide the matter according to law.
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2017 (8) TMI 524
Re-computation of capital gains - inheritance of property - adopting year for the indexed cost of acquisition of the capital asset - reference to the year in which the previous owner first held the assessee and not the first year in which the asset was held by the assessee - Held that:- This issue is squarely covered in favor of the appellant by the decision of Bombay High Court in the case of Mainjula. J Shah (2011 (10) TMI 406 - BOMBAY HIGH COURT) held that the benefit of indexation shall be available from the year when previous owner first acquired it. If expression "held by assessee" interpreted differently to give benefit of indexation from the period when assessee acquired it, would defeat the purpose of statute. If the object of the legislature is to tax the gains arising on transfer of a capital acquired under a gift or will by including the period for which the said asset was held by the previous owner in determining the period for which the said asset was held by the assessee, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee. AO is directed to re-compute the capital gains by adopting year for the indexed cost of acquisition of the capital asset in question with reference to the year in which the previous owner first held the asset. In other words, in the formula for calculation of indexed cot of acquisition of the property, the denominator has to be taken as 100 i.e. cost inflation index of the year 1981-82 as against 480 considered by the Assessing Officer. Appeal filed by the Revenue is dismissed.
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2017 (8) TMI 523
Validity of revised return u/s 139(5) - return was revised after issuance of intimation u/s 143(1) - Whether the return filed by the assessee u/s 139(5) after processing of the return u/s 143(1) is a valid return? - claim of benefit of excess set off of losses and carry forward of the same as per the revised return filed by the assessee - Held that:- Similar issue has come in the case of Tarsem Kumar vs. Income Tax Officer [2013 (1) TMI 456 - PUNJAB AND HARYANA HIGH COURT] wherein held the expressions “intimation” and “assessment order” have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes “the computation of income”, sometimes “the determination of the amount of tax payable” and sometimes “the whole procedure laid down in the Act for imposing liability upon the tax payer”. In the scheme of things, the intimation u/s 143(1)(a) cannot be treated to be an order of assessment There was no regular assessment framed therefore, the assessee for A.Y. 2005- 06 could file the revised return after complying with the provisions of Sec. 139(5) up to 31.3.2007. The revised return filed on 26.9.2006 was thus validly filed within limitation. Consequently, the claim of the petitioner-assessee for the refund of the additional tax deposited is valid and justified – Decided in favour of assessee Applicability of provisions of Section 115JB - Assessee is an insurance company incorporated under the Insurance Act - Held that:- Provisions of Section 115JB are not applicable in the case of the assessee as the assessee is engaged in the business of general insurance. This ground of the assessee stands allowed.
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Customs
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2017 (8) TMI 510
Maintainability of appeal - Remittance of duty - section 23 of Customs Act, 1962 - Held that: - The dispute regarding short delivery of scrap was found to be involved any disputed question of facts which, in an opinion of the Court, cannot be gone into in a writ petition under Article 226 of the Constitution - appeal dismissed being not maintainable.
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2017 (8) TMI 504
Import of restricted item - Boric acid used for non-insecticidal purposes - restrictions brought about on import of Boric acid by Agriculture Ministry via notification dated 7.4.2006 amending the import policy by amending the Schedule - case of petitioner is that it is not within the power of the Government of India to impose such restriction - whether the Ministry of Agriculture has power to bring such restrictions on import of Boric Acid for non-insecticidal purposes? - Held that: - Section 27 gives powers to the Central Government or the State Government to impose immediate ban on sale, distribution or use of the insecticide or batch of it, where in the opinion of the Government use thereof is likely to involve such human risk or risk to animals as to render it expedient or necessary to impose such immediate ban pending such investigation. Offences have been prescribed under section 29 of the Act. Special Courts could be set up for speedy disposal of such cases - the legislation framed section 38 providing for exemptions. Under subsection( 1) nothing in the Act would apply to the use of any insecticide by any person for his own household purposes or for kitchen garden or in respect of any land under his cultivation. Under clause(b) nothing in the Act would apply to any substance specified or included in the Schedule or any preparation containing any one or more of them, if such substance or preparation is intended for purposes other than preventing, destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings. Under subsection( 2) of section 38, the Central Government is authorised to issue notification exempting all or any of the provisions of this Act in case of educational, scientific or research organization engaged in carrying out experiments with insecticides. Subsection( 1) of section 38 which is a general exemption is divided in two parts. Under clause(a), insecticides for household and kitchen purposes etc. are kept out of the purview of the Act. Under clause(b), insecticides intended for the purposes other than agricultural and incidental purposes are exempted such as preventing, destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings. Clause(b) of subsection( 1) exempts the use of insecticides for non insecticidal purposes from the purview of the Act. Subsection (2) of section 38 gives powers to the Central Government to grant exemption for use of insecticides for educational, scientific or research purposes. The Central Insecticide Board and Registration Committee under the Ministry of Agriculture is only assigned the task of processing applications by the prospective importers for granting the import permit. There is nothing either unreasonable in this Act or impermissible in the statute for the Government of India so to do. Under the Act of 1992, the Government of India has ample powers to regulate the import policy. While doing so, it is either open for the Government of India to prohibit or restrict import of a certain item or subject it to regulatory measures. In the present case, Government of India was of the opinion that looking to the toxic nature of the substance, it was necessary to regulate its import. It may be that such regulation is provided for import of the substance for non insecticidal purposes. However, the philosophy behind such regulatory measure cannot be faulted - the Insecticides Act, 1968 makes detailed provisions for regulation and control of any insecticides including boric acid for the purposes of insecticidal uses. Its manufacture, trade, storage etc, can be subject to control and supervision. Section 38 of the Act when exempts all uses of insecticides for non insecticidal purposes from the provisions of the Act, would still leave the residual power in the Ministry of Agriculture to ensure that use of the substance is actually being made for non insecticidal purposes and not for insecticidal purposes. The impugned notification issued by the Government of India does not lack the authority nor specifications of Central Insecticide Board and Registration Committee under the Ministry of Agriculture as the permitting authority, is impermissible under the law. The petitioners as well as the private respondents i.e. the local manufacturers of boric acid have presented different data of import permission sought and granted. These figures show a huge cleavage. The data produced by the petitioners would suggest permission was granted for a small proportion of the quantity demanded by the importer. Whereas the data produced by the respondents would suggest, much of the demand was met. Such data picked for a small period without anything further cannot establish mala fides nor lack of it. In any case, policy formation through subordinate legislation is entirely different from its implementation. The former may be perfectly valid whereas the later may be defective. Petition dismissed - decided against petitioner.
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2017 (8) TMI 503
Classification of imported goods - pellet mill and spare parts for shrimp feed machinery - whether part of pellet mill and spare parts of shrimp feed machinery can be classified under CTH 8436 as claimed by the appellant or otherwise under 8438 as per the stand of the department? - Held that: - The HSN notes for 8436 reads .The heading covers machinery, not falling in headings 84.32 to 84.35, which is of the type used on farms (including agricultural schools, co-operatives or testing stations), in forestry, market gardens, or poultry-keeping or bee-keeping farms or the like. However, it excludes machines clearly of a kind designed for industrial use - Notwithstanding the appellant's protestations that the impugned goods are parts of shrimp feed machinery for use in their own aqua farms, that does not come through from the facts on hand. Appellant has not adduced any proof to establish such a contention. On the other hand, the very name of the appellant, Laila Global Feed Pvt. Ltd., prima facie, appears to indicate that they are in the business of manufacture of shrimp feed. It is also not the case that appellant are only a shrimp farm and that they are importing the goods for use in production of shrimp feed in their own farm. As early as in 2002, the Hon'ble Supreme Court vide their judgment in Collector of Customs, Bombay Vs Business Farms Ltd. [2002 (1) TMI 68 - SUPREME COURT OF INDIA] relying upon their earlier decision in Collector Vs Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT OF INDIA] laid down that Explanatory Notes to HSN not only has persuasive value but entitled to the greater consideration in classifying the goods under Central Excise & Customs Tariff. Appeal dismissed - decided against appellant.
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2017 (8) TMI 502
Jurisdiction - power of DRI to issue SCN - Held that: - the Hon’ble High Court of Delhi in the case of BSNL Vs. UOI [2017 (6) TMI 688 - DELHI HIGH COURT] has dealt with the identical issue where the notice was also issued by DRI. The Hon’ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI [2016 (8) TMI 1181 - SUPREME COURT], which is stayed by the Hon’ble Supreme Court, where the petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd. - we set aside the impugned order and remand the matter to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex - appeal allowed by way of remand.
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2017 (8) TMI 501
Mutilation of Imported goods before provisional release - HMS/Re-Rollable scrap - Held that: - the report of Chartered Engineer is not supported by any market enquiry or has not assigned any reasons as to how he has held the same to be New CRGo Sheets and the material which possesses the properties of a electric insulation. If such a material does not poses such properties, it is scrap only. No expert opinion has been obtained from any laboratory to get tested the said goods by the respondent whether the material is prime in nature or not.The pre inspection certificate issued by the Agency certified by DGFT has not been rejected or objected to by the authorities below. No enquiries have been made overseas to find out the composition of the material. In that circumstances, the report of the chartered engineer is not acceptable, as he is not a metallurgical engineer, therefore, in the absence any evidence on record, the goods are to be cleared as scrap, therefore, there is no requirement of any mutilation. The goods are to be released immediately under section 110 of the Customs Act, 1962, on furnishing of Bond - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 500
DEPB Benefit - job-work - suppression of facts - N/N. 32/97 - Held that: - the DEPB scheme did not envisage grant of duty credit only on the value addition portion, in a situation where the import content did not suffer incidence of customs duty. Therefore goods imported with full customs duty exemption or goods with NIL rates of customs duty cannot then become eligible for DEPB credit when processed and resultant product reexported even if there is value addition in the export product. The appellant has imported goods with full exemption from customs duties under Notification No.32/1997-Cus, which is a specific exemption to goods imported for execution of an export order for jobbing. Amongst various conditionalities of that notification, there is a requirement that the imported goods are utilized only for the discharge of export obligation and that FOB value of the resultant products exported is at least 10% more than the CIF value of the goods imported. We therefore find that the Notification No.32/97 is a beneficial provision to facilitate such processes involving jobbing without creating the need for the job worker in India to suffer incidence of customs duties on the imported goods. Precisely due to the requirement that import content of export goods have to necessarily suffer incidence of customs duty for claiming DEPB credit, the said notification No.32/97-Cus also laid down that DEPB was not applicable to export of a commodity or product, interalia, manufactured and or exported by a 100% EOU or by an unit in a free trade zone or export processing zone etc. In fact, even in the case of export of goods of foreign origin, DEPB is made inapplicable, unless the goods have been manufactured or processed or on which similar operations have been carried out in India. CBEC in their Circular No.26/2002 dt. 16.5.2002, which unequivocally clarified that once the party has availed the benefit of Customs Notification No.32/97, then they become disentitled to DEPB benefit and that the facility available under N/N. 32/97 and 34/97 (DEPB scheme) are exclusive and independent of each other - Both these circulars have been issued based on complaints or detection of ineligible availments of both the N/N. 32/97 and N/N. 34/97 (DEPB/drawback) noted by CBEC. Hence these circulars will definitely have retrospective effect. Demand upheld - penalty reduced to ₹ 10,00,000/- - decided partly in favor of appellant.
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2017 (8) TMI 499
Valuation - Import and re-export of garments (night wear) - It appeared that the importer had made an attempt to import goods of inferior quality, of Indian origin, into India and re-export the same to Russia in contravention of the provisions of the Customs Act, 1962 - hawala transactions - Held that: - Every country including India, consistently encourages exports. With the intention of export promotion, Government has put in place various incentives to exporters like drawback, rebate, DEPB etc. But by no stretch of imagination can it be considered that the Government, or for that matter the legislature, would facilitate or support exports of inferior quality goods at highly over inflated values. Perpetrators of such modus operandi have dubious intentions behind their actions, namely, to fraudulently claim ineligible drawback or other export incentives or even for the purpose of money laundering or hawala transactions. There can be no doubt that such attempts to defraud should be meted out with the adverse legal consequences that have been put in place. It has been proved beyond doubt that the alleged import and further onward attempt to re-export to Russia by manipulating/ fabricating the import documents and the value is very much in contravention of the provisions of Customs Act, 1962. This being the case, we are unable to find any infirmity with the decision of the adjudicating authority interalia, that of ordering re-fixing of the declared assessable value to ₹ 15,31,994/-, ordering confiscation of the goods, allowing redemption on payment of fine of ₹ 3,82,000/- after payment of appropriate duty along with interest thereon, as also imposition of penalties under various provisions of the Customs Act, 1962. Appeal dismissed - decided against appellant.
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2017 (8) TMI 498
Valuation of imported goods - Sartorius brand of Electronic Balances - undervaluation - NIDB data of contemporaneous imports - main case of appellant is that Revenue has not procured any evidence to show that appellant has paid more than the declared price i.e. the appellant has paid any amount over and above the transaction value to their supplier - authenticity of documents produced by SMIPL through Shri N. Ramesh, on which the case of Revenue is based upon - confiscation - redemption fine - penalty - Held that: - It is apparent from cross examination of Shri N. Ramesh, that he does not know the real source of these documents. He has just been handed over the documents to be given to Customs. He was handed over these documents by Sh Mohan Bhatt GM sales and marketing. Sh Mohan Bhatt has not been examined in this regard. The documents are not issued in his office and he has no knowledge about their authenticity. He has simply received the said documents from another person in his organization. While they have handed over photocopies of the said invoices they are not in possession of the originals. It is not in doubt that they are competitor of the appellants in the market. The cross examination shows the contradictions as at one point he says he does not know who handed over the invoices at another point he seems to be sure who gave it to him - The documents produced in these circumstances cannot be straight away relied upon as true and correct. If revenue wished to rely on these documents they needed to corroborate it from the source of the documents. They should have conducted suitable enquiries directly from the office of Sartorius Germany. Reliance placed upon the manufacturers pricelists which were provided by M/s. SMIPL - Held that: - These pricelists for 2002 and 2006 are only zerox and unsigned copies and they are not certified by the parent company or by their officer. They are on plain paper and not on the letterhead of the Sartorius Germany. They do not bear any signature and logo of the parent company. The pricelists for the year 2003, 2005 and 2007 produced by SMIPL cannot be relied as their source has not been verified and as same are not authenticated or certified by the parent company. The Revenue has not verified genuineness of the pricelists or the invoices relied upon from the principal manufacturer in Germany. These unsigned and unauthenticated documents, which are not on the letterhead of foreign principal cannot be relied to sustain the charge of undervaluation. Moreover merely pricelists of the foreign supplier/manufacturer cannot be considered as a proof of transaction value. NIDB data of contemporaneous imports - The appellants have contended that these imports cannot be compared with the imports made by them for the reason that they are bulk importers while the imports listed in NIDB data are retail /one off imports - Held that: - A perusal of the NIDB data shows that the imports are indeed retail imports apparently by actual users. The appellants are undoubtedly traders and bulk importers and thus the two are not at same commercial level. Moreover their claim of importing goods without facility of after sales service and stock lots has not been disputed. While the price difference is very high and gives rise to suspicion, it cannot be said with reasonable certainty that the appellants have done undervaluation. Result of market inquiries conducted by revenue - Held that: - The market enquiries show that the appellants are selling the goods at higher prices and are recovering some amount in cash. The market enquiries just show that the product can be sold at much higher price as compared to the price at which it has been imported. It does not by any stretch of imagination prove that the goods have been undervalued at the time of import. Local sale price of the imported goods can at best be a corroborative evidence, but it cannot be considered as primary evidence of undervaluation unless the transaction value is discarded in terms of rule 3. In the instant case no evidence for rejection of transaction value has been brought about. Neither any evidence of any money being transferred over and above the declared price been brought out. There is no evidence brought on record by the Revenue that appellant has paid any amount over and above invoice price shown at the time of clearance of the impugned goods - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 496
Confiscation - import of old and used pipes with plastic material i.e. thermally insulated with polyurethane form - Hazardous waste - Held that: - In the reports submitted by the Chartered Engineer as well as CRCL, nowhere it has been concluded that the plastic material which has been imported by the appellant is hazardous waste. Moreover, no expert opinion has been obtained by the Revenue to substantiate the allegation that the said goods are hazardous in nature. Therefore, the observations made by the authorities below are based on the assumption and presumptions - there is no undertaking given by the appellant that they want to re-export the goods at their own. In fact there was no material to be accepted by the appellant at that stage that imported goods are hazardous goods, there is no question of undertaking by the appellant. The plastic material is hazardous waste is based only on assumption and presumptions, therefore the goods are not liable for confiscation and no redemption fine can be imposed on the appellant - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 495
Quantum of Redemption fine - penalty - import of restricted item - photocopier machine - Held that: - the imposition of fine and penalty in the present case is not exorbitant because the imported photocopier during the relevant time was not permissible to import under Foreign Trade Policy without a license as it was restricted item, therefore the appellant has violated the Foreign Trade Policy and therefore, both the authorities have imposed fine and penalty which in my opinion is not exorbitant - appeal dismissed - decided against appellant.
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Corporate Laws
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2017 (8) TMI 508
Compounding of offence - Compounding of the violation of Section 177(1) of the Companies Act, 2013 - Held that:- In the case on hand, the punishment provided for the Petitioner Company under section 178(8) is fine only, which shall not be less than one lakh rupees but which may extend to five lakh rupees. In the case of officers of the Company, i.e., Petitioner Nos. 2 and 3, Section 178(8) provides, ‘imprisonment for a term which may extend to one year or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or with both. Therefore, in view of section 441(1) of the Act, this Tribunal has got power to compound the violation of Section 177(1) of the Act, only in respect of the Company, but not to its Officers, i.e., Petitioner Nos. 2 and 3. The Petitioner Company has constituted an Audit Committee and therefore the requirement is complied with after the due date. It is stated in the Report of the Registrar of Companies that the Company is not included in the list of vanishing companies and no similar offence under Section 177(1) of the Act was compounded by the Company during the last three years. Considering the minimum amount of fine provided, this Tribunal is of the considered view that the first Petitioner can be permitted to compound the violation under Section 177(1) of the Act by paying a compounding fee of ₹ 1,00,000 (One Lakh). This Tribunal further order, that it has no power to compound the offence under section 177(1) of the Act punishable under section 178(8) of the Act in respect of Petitioner No. 2 and Petitioner No. 3. Petitioner No. 1 Company is directed to deposit the sum of ₹ 1,00,000/- [One Lakh] by way of Demand Draft drawn on Nationalised Bank in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, Mumbai, within three weeks from the date of this order and file the original Demand Draft before the Registry of this Tribunal on or before 5th May, 2017.
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Insolvency & Bankruptcy
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2017 (8) TMI 509
Initiation of Corporate Insolvency process - Insolvency and Bankruptcy Code, 2016 - unpaid operational debt as claimed by operational creditor - Held that:- The framer of the Code have also defined the expression 'Financial Debt' in section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However, the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the 'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and Government dues. In the present case, the debt has not arisen out of the provisions of goods or services. The debt has also not arisen out of employment or the dues which are payable under the statute to the Centre/State Government or local body. Therefore, the present claim of investments cannot be considered as an 'operational debt' under the Code. The provisions and scope of Section 9 including the applicable rules, forms and procedure are totally distinct and separate from that of Section 7 of the code. There is no provision in the code to convert a Section 9 application into a Section 7 application as prayed. On the contrary the Code provides that applications filed under section 7, 9 or 10, as the case may be should either be admitted or rejected in accordance with respective provisions. When the language of the code is clear and explicit the adjudicating authority has to give effect to it by adhering to the statutory requirements in toto. The provisions must be strictly followed substantially as well as procedurally. As made clear that in the present application filed under Section 9 of the Code neither there is any scope nor we have examined as to whether the applicant falls within the ambit of 'Financial Creditor'. Accordingly, leave is granted to the applicant to move under appropriate provisions of the Code, if so advised. In view of the discussions made above, once it is held that the applicant is not an 'Operational Creditor' and the debt in question not being 'operational debt', the present petition filed under Section 9 of the Code for initiation of corporate insolvency resolution Process is not maintainable and therefore rejected.
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2017 (8) TMI 507
Corporate Insolvency Resolution Process - outstanding dues - Held that:- The Corporate Debtor has disclosed that 20 Financial Creditors have filed cases before Debt Recovery Tribunal, Mumbai for recovery of the amount due to them. The Corporate Debtor has enclosed the audited financial statements for the year ended 31.03.2016 & 31.03.2017 and the provisional financial statement up to 17.05.2017. A list of assets and liabilities of the Corporate Debtor as on 17.05.2017 is also enclosed with the application. The Corporate Debtor also enclosed the list of Financial Creditors and Operational Creditors as on 17.05.2017. The Corporate Debtor has disclosed the particulars of debt owed by the Corporate Debtor to or by persons connected with it, the name and the address of the members of the Corporate Debtor with the details of their shareholdings, details of personal guarantees and the affidavit in support of the petition. On reading the petition and the supporting documents annexed with the petition, this Bench is of the view that the corporate debtor has committed default and the petition contains the particulars as required u/s 10 of the Code. Hence, this Bench hereby admits this petition, declaring moratorium with consequential directions.
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2017 (8) TMI 493
Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - pending winding up petition - Held that:- Taking into consideration the order passed by the Hon'ble High Court of Delhi as well as the Notification issued by the Central Government and as extracted above it is clear that the provisions of Companies Act, 1956 will govern in relation to the proceedings pending before the Hon'ble High Court of Delhi and not the Companies Act, 2013 as contended by the counsel for the applicant. If that be so, no suit or other legal proceeding shall be proceeded with, against the company, except by leave of the Court which is seized of the winding up proceedings. In the present instance no leave has been obtained by the applicant to proceed with present proceedings initiated by the applicant company before this Tribunal and obviously this Tribunal is therefore handicapped in proceeding further in relation to the above company petition. It is to be borne in mind that both winding up proceedings under the erstwhile Companies Act of 1956 as well as the Insolvency Resolution Process is initiated for the benefit of the general body of creditors and is a representative action and not for the recovery of money of the individual creditor for which necessarily claims are required to be submitted to the Official Liquidator or the Interim Resolution Professional as the case may be. In the instant case in view of the matter pending before the Hon'ble High Court of Delhi which has also thought it fit to appoint the Official Liquidator as the Provisional Liquidator of the respondent company, the Interim Resolution Professional, if appointed will again be put on a collusive course with the Official Liquidator even in accepting the claims as may be filed as envisaged under section 21 of IBC. Taking into consideration the above aspects and legal position we are not inclined to accept the submissions put forth by the Counsel for the Applicant and we are constrained to reject the application. Before parting we make it clear that any observations made in this order shall not be construed as an expression of opinion on the merit of controversy as we have refrained from entertaining the application at the initial stage itself. Therefore the right of the applicants before any other forum shall not be prejudiced on account of dismissal of instant application.
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2017 (8) TMI 492
Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- Operational Creditor did not comply with sub-section (4) of section 9 of the Code, the Petition cannot be rejected. This Adjudicating Authority shall follow the procedure laid down under sub-section (3) of Section 16 of the Code, and the Insolvency and Bankruptcy Board of India shall follow sub-section (4) of Section 16 of the Code. This Adjudicating Authority, by this order passed under sub-section (5) of Section 9 of the Code, is admitting this Petition. This Adjudicating Authority is also of the view that it is necessary to make a Reference to the Insolvency and Bankruptcy Board of India established under the Code to recommend the name of an Insolvency Professional, against whom no disciplinary proceedings are pending, to this Adjudicating Authority, within ten (10) days from the date of receipt of the Reference. No record of dispute is made available to this Adjudicating Authority. The Applicant has placed on record the Ledger Account of Applicant in the account books of Corporate Debtor. Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under section 15 of the Code. Sub-section (2) of section 13 says that public announcement shall be made immediately after the appointment of Interim Resolution Professional. In the case on hand, simultaneous with the admission order, this Adjudicating Authority is not going to appoint Interim Resolution Professional because the Applicant did not propose the name of Interim Resolution Professional. But, this Adjudicating Authority will appoint Interim Resolution Professional after the same is recommended by the Insolvency and Bankruptcy Board of India under section 16(4) of the Code. (a) In view of the above discussion, the Petition is admitted. (b) This Adjudicating Authority hereby order reference to Insolvency and Bankruptcy Board of India to recommend the name of Insolvency Professional against whom no disciplinary proceedings are pending to this Authority within 10 (Ten) days from the date of receipt of reference. (c) This Adjudicating Authority hereby declares moratorium under section 13(l)(a) prohibiting the following as laid down in section 14 of the Code; (i) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (iii) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (iv) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (d) However, the supply of goods and essential services to the corporate debtor shall not be terminated or suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central Government. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of section 14. This Adjudicating Authority shall give separate order for public announcement at the time of appointment of an Interim Resolution Professional after the proposal is received from the Insolvency and Bankruptcy Board of India.
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2017 (8) TMI 491
Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- On examination of the balance sheet (provisional) it transpires that there is a contrast between the assets disclosed and the corresponding liabilities shown. The provision for realization of debt appears to be significantly insufficient comparing the assets (whether tangible or intangible) of the Company. The Insolvency Professional can iron out all these creases. It is of the view that by the assistance of an expert such discrepancy can be resolved. For this reason as well the "Admission" is hereby approved. Nevertheless, the decision on "Admission" as pronounced hereinabove is subject to a qualification. Referring to verbatim the provisions of Section 14 of the Code is that on the commencement of the Insolvency process the 'Moratorium' shall be declared for prohibiting any action to recover or enforce any security interest created by the Corporate Debtor in respect of "its" property. Relevant section which needs in-depth examination is section 14(1)(c) of The Code. The outcome of this discussion is that the Moratorium shall prohibit the action against the properties reflected in the Balance Sheet of the Corporate Debtor. The Moratorium has no application on the properties beyond the ownership of the Corporate Debtor. For the sake of completeness it is worth to refer that the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (the SARFAESI Act) may be having different criteria for enforcement of recovery of outstanding debt, which is not the subject matter of this Bench. Before I part with it is necessary to clarify my humble view that The SARFAESI Act may come within the ambits of Moratorium if an action is to foreclose or to recover or to create any interest in respect of the property belonged to or owned by a Corporate Debtor, otherwise not. To conclude the Application under Section 10 of The Code is hereby "Admitted" subject to the exception as carved out supra. The consequential directions shall be that the provisions of Section 14 of The Code i.e. "Moratorium" shall come into operation.
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Service Tax
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2017 (8) TMI 522
Refund claim - works contract - Section 11B of the Central Excise Act, 1944 - Held that: - reliance placed in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT], where it was held that “works contract” cannot be vivisected into various components. It cannot be taxed under different Acts - The work contract service involved in the present case, the Erection, Commissioning and Installation, would not be leviable to service tax as demand was made prior to 1 June 2007. Hence, the Appeal deserves to be allowed - decided in favor of appellant.
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2017 (8) TMI 521
Refund of service tax - rejection on the ground of time limitation and unjust enrichment - Circular dated 23rd March 2004 - The appellant is relying upon the Circular dated 23rd March 2004 to suggest that pursuant to the said Circular, he got the knowledge that the appellant is no liable to pay service tax and still that service tax was being paid by the appellant - Held that: - similar issue decided in the case of HINDUSTAN COCOA PRODUCTS Versus UNION OF INDIA [1994 (6) TMI 18 - HIGH COURT OF JUDICATURE AT BOMBAY], where it was held that in case the claim for refund would have been filed after lapse of one year of the issuance of the Circular. The Circular is only clarificatory in nature. As such, there is no question of its prospective or retrospective operation. Unjust enrichment - Held that: - The rejection of the claim on the ground of unjust enrichment is without reason. It is expected of the Authority to probe into the matter and give reasons. The order rejecting the claim on the ground of unjust enrichment is bereft of any reason, only on the ground that there is an agreement wherein it is contended that consideration is inclusive of all taxes, the said presumption is drawn - matter on remand. Appeal allowed in part and part matter on remand.
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2017 (8) TMI 520
Works Contract Service - jurisdiction to adjudicate SCN - unregistered assessee - Held that: - at the time of the execution of work, the appellant was not registered with the Central Excise/Service tax department. In that circumstance, the jurisdiction falls where the appellant has executed the work. Admittedly, in this case, the work has been executed at Chandigarh, therefore, the cause of action arose at Chandigarh and the Commissioner of Central Excise, Chandigarh-II has no jurisdiction for the work executed at Chandigarh. In that circumstance, the adjudicating authority has no jurisdiction to adjudicate the impugned SCN. Therefore, the impugned order is not sustainable in the eyes of law. Demand u/s 73 and section 73A of the Act - Held that: - The provisions of section 73A of the Act are applicable where the amount of service tax has been collected and retained by the assessee - As no separate amount has been collected by the appellant, no service tax is payable under section 73A of the Act by appellant. Therefore, section 73A of the Act is not invokable. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 519
Construction of residential complex - demand for the period 16.6.2005 to 31.7.2007 - Held that: - major part of the period for which demand is raised is prior to 1.6.2007 - the works contract service are not subject to levy to service tax prior to 1.6.2007 - the demand for the period prior to 1.6.2007 in respect of demand made for construction of residential complex service is not sustainable. With regard to the period after 1.6.2007 to 31.7.2007, the services were not covered by section 65(105)(zzzh) during the period prior to 1.7.2010. The appellant has produced sample copy of the agreement which shows that the possession of the constructed residential unit was handed over after completion of construction and completion of the payment. Therefore, the demand for the period 1.6.2007 to 31.7.2007 is also unsustainable. Maintenance and repair services on the corpus fund collected by the appellants - case of appellant is that this is only a deposit and not received as charges for any services rendered - Held that: - the corpus fund, even according to the department is not collected for rendering any service of maintenance. It is in the form of a deposit. We, therefore, are of the opinion that the demand of service tax on such deposit under the category of Management, Maintenance and Repair Service is unsustainable. However, this fact needs verification as to how the corpus fund has been put into use - matter requires verification. Appeal allowed in part and part matter on remand.
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2017 (8) TMI 518
Commercial and Industrial Construction Service - whether construction activity done for APMC and for CWC are taxable under Commercial and Industrial Construction Service? - CWC Warehouse located in Railway side - CBEC Circular No.157/8/2012-ST dt. 27.4.2012 and Circular No. 80/10/2004-ST dt. 17.9.2004 - Held that: - following the CBEC Circular, we can reach to the conclusion that the activities of APMC in respect of these contracts are not commercial in nature. Thus these contracts are not covered under the purview of commercial and industrial construction service. Warehouses are specifically covered under the term Railways and they need not necessarily belong to railways. In these circumstances, it is immaterial if the said warehouses are used commercial or otherwise, as the same are not covered within the purview of commercial and industrial construction service. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 517
Short payment of Service Tax - payment of tax with interest before issuance of SCN - invocation of Section 73(3) and 73(4) - Held that: - Section 73(3) can be invoked only in a case where there is no suppression of fact on the part of the appellants. Otherwise in terms of sub-section (4) immunity under Section 73(3) is not available - the appellants knowingly that there is a short payment of service tax did not discharge the same. Therefore this is a clear case of suppression of fact on the part of the appellants. Accordingly, in terms of sub-section (4) of section 73, the immunity under 73(3) cannot be extended to the appellants - appeal dismissed - decided against appellant.
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2017 (8) TMI 513
Refund claim of construction/ repair and maintenance service - input services - rejection on the ground that from the records it is not clear that the construction service was provided in the same premises of the appellants - Held that: - The adjudicating authority has applied the amended definition of input service, which did not exist at the relevant time. Therefore in my view, the rejection of refund claim by the adjudicating authority on the ground that the construction service being in exclusion category is absolutely wrong - As per the definition of input service at the relevant time, the service of setting up/ modernisation, renovation of the factory premises falls under the input service, therefore the construction service used by the appellants is admissible input service. Therefore they are eligible for refund of the CENVAT credit availed on construction service - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 497
Refund claim - input services - denial on account of nexus - business support service - scientific and consulting service - maintenance or repair service - renting of immovable property - Held that: - the Scientific and Technical Consultancy service is also an input service as the software of the company is required to be tested. Similarly, the service tax paid on the premises, which is hired for providing the output service also fall in the definition of input service - all the impugned services viz., BSS, Scientific and Technical Consultancy service and renting of immovable property are directly or indirectly concerned with the business of the appellant as a service provider - appeal allowed subject to verification of the invoices by the adjudicating authority.
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2017 (8) TMI 494
100% EOU - Refund of unutilised CENVAT credit - advertisement service - professional/consultancy service - postage and courier service - catering service - listing charges - denial on the ground of nexus - Held that: - catering service provided in canteen within the factory premise exclusively for workers is an activity in relation to the business of the assessee - Similarly, listing charges are specifically included in the definition of ‘input service’ as the same are incurred for listing the shares in the stock exchange - postage and courier service and advertisement services have been held to be input service in the case of Metro Shoes Pvt Ltd Vs. CCE, Mumbai [2008 (1) TMI 155 - CESTAT, MUMBAI] - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (8) TMI 516
Education cess - excess and short payments - levy of Education Cess on Paper Cess - Rule 8 (3A) of Central Excise Rules, 2002 - whether the appellant had paid Education Cess of ₹ 7,478/- in excess of their due from April, 2006 to July, 2006 and whether that will establish that for the month of July, 2006 they had not short paid Education Cess by ₹ 5000/-? - Held that: - Education Cess is not levied on Paper Cess - from April, 2006 to July, 2006 exchequer had ₹ 7,478/- paid by the appellant towards Education Cess in excess of their due. Therefore, for the month of July. 2006 it doesn’t establish that the appellant had short paid Education Cess to the tune of ₹ 5000/-. Once it is clear that there was no short payment of Education Cess the question of invocation of provisions of Rule 8 (3A) of Central Excise Rules, 2002 does not arise - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 515
SSI exemption - N/N. 8/2003 dated 1.3.2003 - CENVAT credit - department observed that during the month of August 2005, they have taken credit of duty received and used in the manufacture of final products during the year 2004-05 with a remark that these credit were not taken at the relevant period - Rule 11 (2) of the CCR - Held that: - the credit pertaining to year 2004-05 cannot be taken in year 2005-06 as the same lapses in the event of appellant's option to avail SSI exemption from the very beginning. During 2005-06 also once the appellants crosses exemption limit they can only take credit of inputs lying in stock or in process or contained in final product lying in stock on the date they started paying duty. In the present case, related inputs were admittedly received and used during 2004-05 itself. It is not the appellant's case that inputs were still lying in stock one way or the other when they graduated to payment of duty during 2005-06. The appellants have also argued that there is no time limit for taking CENVAT credit. I find that this right of the appellants can be allowed to be exercised to the extent such exercise is not inconsistent with provisions of Rule 11(2) and 3(2) of CENVAT Credit Rules, 2004. In the present situation, availment of credit as claimed by the appellants shall infringe on the operation of Rule 11(2) as well as Rule 3(2). Appeal dismissed - decided against appellant.
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2017 (8) TMI 514
Condonation of delay - power of the Commissioner (A) to condone delay - maintainability of appeal - Held that: - there is a delay of 91 days after the 60 days period provided for filing the appeal and the Commissioner (A) has power to condone maximum 30 days delay on being satisfied that the appellant is prevented by sufficient cause in not filing the appeal within the period of 60 days - delay not condonable - appeal rightly dismissed and not maintainable.
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2017 (8) TMI 512
100% EOU - option to choose when two notifications available - the appellant had manufactured and cleared cotton yarn out of indigenous raw material to DTA on payment of duty at the rate of 8% BED by availing N/N. 55/91 instead of following the procedure laid down in N/N. 8/97 Central Excise date 1.3.1997 as amended by N/N. 11/2000 Central Excise dated 1.3.2000 wherein the duty payable is the aggregate of the duties of excise liable under Section 3 of Central Excise Act, 1985 - Held that: - Board had issued a circular No.384/17/98 dated 23.3.1998 wherein it has clarified that an assessee would be eligible to claim exemption either under N/N. 8/97-CE dated 1.3.1997 or N/N. 55/1991-CE - when there are two Notifications available, it is the option of the assessee to follow any one of them which is more beneficial to him - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 511
Valuation - includibility - stand of the department is that certain deductions like trade discount, extra trade discount and additional trade discount claimed from the wholesale price is not permissible in respect of retail sale clearances - Held that: - the issue in the present case is no more res integra and has been settled by the Hon'ble Supreme Court in the case of Metal Box Ltd. Vs. Collector of Central Excise, Madras [1995 (1) TMI 380 - SUPREME COURT], where it was held that Tribunal was in error in taking the view that as trade discount was uniformly not given to all its customers by the assessee, it was not a permissible deduction and it had to be reloaded in the price of the excisable goods - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2017 (8) TMI 506
Indulgence of this Court for one more chance to the appellant for purging the contempt - Held that: - the appellant to present himself before the High Court with a DD drawn in the name of Commercial Tax Officer concerned of an amount of ₹ 42,08,818/- and two DDs for a total sum of ₹ 2,00,000/- and also present himself before the High Court with a written apology and also make an apology in the open court on Thursday, the 17th August, 2017 - petition allowed.
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2017 (8) TMI 505
Penalty - Section 61 (1) (aaa) and C (i) of the Act of 1914 - principles of Natural Justice - request of the representative of the petitioners for an adjournment was rejected - Smuggling - Held that: - Section 61 (1) (aaa) and C (i) of the Act of 1914 stipulates that import, export, transport or possession of liquor in contravention of the Act, rules or licence would invite penalty of not less than ₹ 50 and not more than ₹ 500 per bottle of 750 mili litres or part thereof. Thus minimum penalty of ₹ 50 per bottle can be imposed for minor violation while in cases of grave or serious nature the penalty upto ₹ 500 per bottle can be levied. Request for adjournment was sought on the ground of the Accounts Manager being on leave. We do not find that such a request at the very first instance is such which would merit outright rejection. It is possible that the petitioners were merely buying time and wanted to delay the matter. However, it is equally possible that they wanted to prepare adequate defence after examining the accounts. It would thus be difficult to conclude with absolute certainty as to whether the request was bona fide or a ruse to delay the proceedings. We are nevertheless of the view that some time should have been granted if the request for adjournment had been made. It was the first request and granting some time even of a few days would not have affected the proceedings. Declining the request on the first date itself would not be in consonance with the principles of natural justice. This is more so when the maximum penalty of ₹ 500/- per bottle has been imposed upon the petitioners. The oral statements of the driver and others and various documents are being relied upon by the authorities without any reply thereto which has certainly prejudiced the petitioners. The case is remanded to the Collector to decide afresh within three months after granting opportunity to petitioners to file reply - appeal allowed by way of remand.
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