Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 18, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
DGFT
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25/2015-2020 - dated
17-8-2018
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FTP
Amendment of import policy condition of Petcoke.
GST - States
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CT/GST-14/2017/137 - dated
10-8-2018
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Assam SGST
Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July,2018 to March, 2019
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FTX.56/2017/Pt-I/116 - dated
9-8-2018
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Assam SGST
Assam Goods and Services Tax (Seventh Amendment) Rules, 2018
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S.O. 226 - dated
10-8-2018
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Bihar SGST
Change of Designation
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S.O. 225 - dated
10-8-2018
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Bihar SGST
Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July,2018 to March, 2019
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S.O. 224 - dated
10-8-2018
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Bihar SGST
Prescribe the due dates for furnishing the details of outward supply of goods or services or both for GSTR1 from July 2018 to march 2019
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S.O. 222 - dated
9-8-2018
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Bihar SGST
Bihar Goods and Services Tax (Seventh Amendment)Rules, 2018
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31/2018-State Tax - dated
8-8-2018
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Maharashtra SGST
To lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process before 31st December 2017.
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29/2018-State Tax - dated
8-8-2018
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Maharashtra SGST
The Maharashtra Goods and Services Tax (Seventh Amendment) Rules, 2018.
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22/2018-State Tax (Rate) - dated
8-8-2018
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Maharashtra SGST
To exempt payment of tax(RCM) under section 9(4) of the MGST Act, 2017 till 30.09.2019.
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G.O. Ms. No. 101 - dated
6-8-2018
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Tamil Nadu SGST
Exemption from payment of state tax on reverse charge upto to ₹ 5000 per day
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1143-F.T. - 33/2018-State Tax - dated
14-8-2018
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West Bengal SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore for the months of July, 2018 to March, 2019
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17/2018-C.T./GST - dated
10-8-2018
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West Bengal SGST
Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019
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16/2018–C.T./GST - dated
10-8-2018
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West Bengal SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore for the months of July, 2018 to March, 2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - Whether the money paid by the customer to the driver of the cab for the services of the trip is liable to GST and whether the applicant company is liable to pay GST on this amount? - Held Yes
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Levy of GST - Supply or not - The conversion of e-Units into diamonds would constitute a supply of diamonds liable to tax under the Goods and Services Tax Act.
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Levy of GST - diamonds - e-units - The derivative contracts in e-Units and settlement thereof would be treated as transactions in securities in case it involves only e-Units without any involvement of physical diamonds and thereby would remain out of the scope of levy under GST.
Income Tax
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Tax Audit Report u/s 44AB - Form 3CD - the proposed clause 30C and proposed clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2019 - Accordingly reporting of information regarding GAAR and GST deferred.
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Validity of notice issued u/s 148 - service of notice at an address obtained from bank account - when the Department had correct address of the assessee, sending notice at incorrect address and then presumption drawn of service of notice is wholly erroneous
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Levy of penalty u/s 271(1)(c) - appellant wrongly claimed loss by debiting it to P & L Account on account of loss on sale of assets whereas the same was capital loss and not business loss. - Levy of penalty deleted as there is no concealment of income
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It was permissible for the AO to reject the books of account u/s 145 and pass assessment order u/s 144 - Instead, the AO had disallowed the claim of expenditure on "Consumable Stores" only 10%. The assessee is not prejudiced in any manner in not resorting to the best judgment assessment by the AO.
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Assessment in the hands of representative / agent - Chief Financial officer (CFO) of the non-resident assessee - Merely because those shares related to the Indian company, that would not make the Indian company as agent qua deemed capital gain purportedly earned by the foreign company.
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Nature of sale of Hotel premises - the intention of the parties was to sell the hotel business as a going concern and the same is nothing but a slump sale - Liable to the taxed u/s 50B of the I.T.Act
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STCG or LTCG - determination of period of holding of property - The registration of the property which was done subsequently on 11-07-2008 was only a formality. And therefore the period of 36 months of holding of long term capital Assets should be reckoned from 24-04-2008 and not from 11-07-2008 as wrongly adopted by the LD AO
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Assessment u/s 153A - undisclosed income - addition based on statement of the assessee - when there is no difference in rate of tax for both the assessment years, i.e. AYs 2012-13 and 2013-14, there is no reason for the AO to make further addition of ₹ 50 lakhs in the current assessment year when the assessee has already disclosed undisclosed income for AY 2013-14.
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Levy of fee u/s 234E - Late of submission of TDS returns - all the intimations under section 200A of the Act were issued before June 1, 2015 - Levy of fee deleted
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Disallwance of long term capital loss - shares had been sold off market to a group company showing a loss - AO treated the said transactions as a colorable devise - AO is not correct in its observations - Claim of loss allowed.
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Assessee in Default u/s 201(1) - Failure to deduct tax at source (TDS u/s 192) - Exemption u/s 10(10AA) - The revenue’s case is KPTCL is not State Government but a statutory corporation and therefore its employees cannot be regarded as employees of State Government - Assessee cannot be treated as in default for a Bondafide belief.
Customs
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Sealing of petitioner's warehouse - confiscation of consignments - The godown was sealed on 25.10.2017. Eight months have passed, the authorities are directed to complete the investigation forthwith and pass orders. Desealing cannot be permitted till the finality of the proceedings initiated under Section 124 of the Customs Act.
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Applicability of exemption notifications - The impugned goods are ventilators which are used with Anesthesia Systems. The predominance of the ventilator/Anesthesia System is not the context of the Notification - Benefit of exemption allowed.
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Refund of the security deposit - It is only an amount paid by the appellant as a security for the dues that may arise in case of adjudication proceedings. Since the appellant has not opted to redeem the goods, the balance amount after adjusting the penalty has to be returned to the appellant.
Indian Laws
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Forfeiture of gratuity - the misconduct of the employee has caused any financial loss to the Bank - Forfeiture of gratuity is not automatic on dismissal from service; it is subject to sub-Sections (5) and (6) of Section 4 of The Payment of Gratuity Act, 1972.
Service Tax
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Levy of service tax - outstanding advances - the activity of the respondent is held to be in the nature of pure agent. As such, no service tax can be demanded on the amount of advance received and /or on the amount spent out of that advance for the purpose of the project.
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There is no hesitation in concluding that the exemption available to RBI in discharge of its functions should be available to the appellant working as the Agents of RBI in terms of the Agreement.
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Commercial Training Centre - It is trite law that exemption notifications have prospective effect unless it is explicitly provided that it is retrospective and the legislature provides for such retrospective operation - the appellant are liable to pay service tax for the period 1.7.2004 to 9.9.2004
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Classification of services - appellants were performing certain tasks in the factory of TATA mainly in processing of coffee beans - The service rendered by the appellants are not in the nature of “Manpower Recruitment of Supply Agency Service‟
Central Excise
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Refund claim - even if it had paid excess excise duty, the return or refund of such excess sum cannot be effected through the route of exemption notification - The refund claimed under the notification may be treated as refund claimed under Section 11B of the Central Excise Act, 1944.
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Refund claim - deemed exports - The specific inclusion of clause (1A) in Rule 5 bid clearly shows the legislative intent to allow refund facility to actual physical exports. As the right to refund for exports other than physical exports did not accrue under law, which in the impugned period is permitted for physical exports only, there is no conflict between Rule 3, 4 and 5 of Cenvat Credit Rules. - Refund not allowed.
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SSI Exemption - clubbing of clearances - dummy units - admittedly the notice does not stands issued to the other four units, whose clearances sought to be clubbed in the clearances of M/s D. P. Garg & Co. - demand set aside.
VAT
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Branch transfers or stock transfers - The stipulations made in the declaration form ‘F’ are nothing but giving particulars of the relevant document in support of branch transfers or stock transfers made by the assessee from one branch to another or from its one unit to another. Such transactions obviously do not attract sales tax liability under the provisions of CST Act, 1956.
Case Laws:
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GST
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2018 (8) TMI 933
Levy of GST - electronic commerce operator or not - Whether the money paid by the customer to the driver of the cab for the services of the trip is liable to GST and whether the applicant company is liable to pay GST on this amount? - Held that:- It is clear that the electronic commerce operator shall be liable to pay tax on the services provided by a motor cab or maxi cab or motor cycle or radio-taxi, by way of transportation of passengers, if such services are supplied through it and it shall be deemed that the electronic commerce operator is deemed to be supplier in such cases - There is no doubt that the services of transportation of passengers is supplied to the consumers through the applicant and by virtue of this provision, it shall be deemed that the applicant would be deemed to be the supplier liable to pay tax in relation to the supply of such service by the taxi operator. Ruling:- The applicant is liable to tax on the amounts billed by him on behalf of the taxi operators for the service provided in the nature of transportation of passengers through it, in accordance with the provisions of sub-section (5) of section 9 of the Central Goods and Services Tax Act 2017.
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2018 (8) TMI 932
Levy of GST - Supply or not - mere deposit of diamond with safe vaults acknowledged by Electronic Vault Receipts (EVR) - conversion of EVR (representing receipt for diamonds deposited) into e-Units (securities) - e-Units - derivative contracts in e-Unit and settlement thereof - conversion of e-Units into diamonds. Whether mere deposit of diamond with safe vaults acknowledged by Electronic Vault Receipts (EVR) would be treated as supply for the purpose of levy of GST? - Held that:- There is only a transfer of possession of diamonds and the Safe Vault holds the diamonds as a bailee of the depositor, i.e the applicant and is under the obligation to return the same back to the depositor on submitting the EVR. Further, there is no consideration involved in this transaction and hence this transaction does not amount to supply of goods, i.e. diamonds. Whether conversion of EVR (representing receipt for diamonds deposited) into e-Units (securities) would be treated as supply liable to GST? - Held that:- The EVRs being documents to the title of goods represent the diamonds in possession of the bailee and any transfer of EVRs amounts to transfer of the title to the goods, i.e. diamonds. Hence there is a supply of diamonds. The consideration need not be in the form of cash, but in the form of securities - this transaction amounts to supply of diamonds as per Section 7 of the Central Goods and Services Act and is liable to tax as per Notification No. 1/2017 –Central Tax (Rate) dated 27.06.2017. Whether e-Units would be treated as securities and thereby transaction in e-Units would remain out of scope of the levy under GST? - Held that:- The transactions of e-Units are in the form of derivatives as they are done on an online – M/s ICEX is approved by SEBI to act as a commodity exchange and it has been permitted by launch Diamond futures. It has also received approval from SEBI permitting the exchange to recommence live trading operations and it has all the necessary infrastructure to handle deposits, grading and sealing, vaulting and deliveries of diamonds as part of its preparation to launch the diamond contracts - The e-Units are securities under the clause (101) of section 2 of the Central Goods and Services Tax Act and hence transactions in e-Units would remain out of the scope of levy of tax under Goods and Services Tax Act. Whether the derivative contracts in e-Unit and settlement thereof would be treated as transaction in securities and thereby would remain out of scope of the levy under GST? - Held that:- Any e-Units which have diamonds as underlying goods shall have to be treated as securities as per the definition of “securities” under the clause (101) of section 2 of the Central Goods and Services Act, 2017 and consequently, any transaction in securities are not covered under the GST Acts for taxation as they are neither covered under the definition of goods or services. Hence transactions of e-units are not taxable under Goods and Services Tax Acts. Whether conversion of e-Units into diamonds would be treated as supply liable to GST? - Held that:- When the e-Units are surrendered to obtain the diamonds, there is a supply of diamonds by the Exchange to the applicant for a consideration in the form of e-Units surrendered and this constitute a supply under the provisions of section 7(1) of the CGST Act. Ruling:- The mere deposit of diamond with safe vaults acknowledged by Electronic Vault Receipts (EVR) does not constitute of supply of diamonds for the purpose of levy of GST. The conversion of Electronic Vault Receipts representing the diamonds held in the Vaults to e-Units would constitute a supply of diamonds liable to tax under the Goods and Service Tax Act. The e-Units are securities under the clause (101) of section 2 of the Central Goods and Services Tax Act and hence transactions in e-Units would remain out of the scope of levy of tax under Goods and Services Tax Act. The derivative contracts in e-Units and settlement thereof would be treated as transactions in securities in case it involves only e-Units without any involvement of physical diamonds and thereby would remain out of the scope of levy under GST. The conversion of e-Units into diamonds would constitute a supply of diamonds liable to tax under the Goods and Services Tax Act.
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Income Tax
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2018 (8) TMI 931
Reopening of assessment - allowability of interest income u/s 80IA - power of AO to examine the issue which was not part of reason recorded for reopening of assessment - Held that:- SLP is dismissed on the ground of low tax effect.
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2018 (8) TMI 930
Condonation of delay in filing an appeal before the HC - delay due to pendency of an application u/s 254(2) of rectifying 'mistakes apparent from the record' - Held that:- SLP dismissed.
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2018 (8) TMI 929
Deductible / Exempted income u/s 10(29) - depreciation to be excluded from the income or not - Held that:- SLP is dismissed on the ground of delay as well as on merits.
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2018 (8) TMI 928
Commencement of business - whether in case of an assessee, whose main object is to construct dam, canal, etc., the business commences only when the entire project for construction of dam, canal, etc. is complete, and not when the first brick was put up at the construction site? - Allowability of interest expenditure u/s.57 against the interest income. Held that:- SLP dismissed on the ground of low tax effect.
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2018 (8) TMI 927
Validity of notice issued u/s 148 - reopening of an assessment - notice was served at a wrong address - presumption related to address - address collected by the department from the bank, whereas known address was available with the department on Saral Form-5 of the petitioner - The assessee took the specific plea that he had filed his return of income for the year under consideration i. e. 1999-2000 on the changed address i.e. 2, Rishi Marg, Shahganj, Agra. In support thereof, the assessee filed a photocopy of the return filed in Saral form on 31st March, 2000 before Ward 2(2), Agra. He further said that no change of the address was made in the bank account as no correspondence was required to be made with the bank as the assessee was holding a Saving Account. Held that:- when the Department had correct address of the assessee, sending notice at incorrect address and then presumption drawn of service of notice is wholly erroneous. We find that the presumption drawn by the Tribunal on the ground that since notice was not received back unserved, it would be deemed to be service of notice, cannot be sustained. - Decided in favor of assessee.
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2018 (8) TMI 926
Levy of penalty u/s 271(1)(c) - appellant wrongly claimed loss by debiting it to P & L Account on account of loss on sale of assets whereas the same was capital loss and not business loss. - The Tribunal had held that the claim of the assessee to treat loss on sale of assets as business loss was not a bona-fide mistake and, therefore, the penalty under Section 271(1)(c) of the Act was imposable. Held that:- In order to attract the provision of Section 271(1)(c) of the Act, the assessee must be found to have failed to prove that explanation offered is not only bona-fide but all the facts relating to the same and material to the computation of his income have been disclosed by him. If the assessee has disclosed all facts and material in computation of his income, it cannot be said that he has furnished inaccurate particulars of his income. In the present case, it is clear that the assessee has disclosed particulars of the loss in sale of assets which was not in dispute. Instead of treating that loss as capital loss the assessee had treated the same as business loss. Thus, the assessee cannot as such be said to have not disclosed all the material to the computation of his income. - This was a wrong belief of the assessee that loss in sale of assets could be treated as business loss and not the capital loss. Levy of penalty deleted as there is no concealment of income - Decided in favor of assessee.
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2018 (8) TMI 925
Partial disallowance on ad-hoc basis without rejecting books of accounts - disallowance to consumable stores - ad-hoc disallowance solely by taking percentage basis of consumption stores consumed in succeeding year - Held that:- the issues raised in the appeal are only questions of fact and no question of law is involved. All three authorities have concurrently held after examining the facts, evidence and material on record that the assessee was unable to substantiate its claim for exponentially increase in the expenditure on consumables. It was permissible for the AO to reject the books of account under Section 145 of the Act and pass assessment order under Section 144 of the Act. Instead, the AO had disallowed the claim of expenditure on "Consumable Stores" only 10%. The assessee is not prejudiced in any manner in not resorting to the best judgment assessment by the AO. Disallowance sustained - Decided against the assessee.
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2018 (8) TMI 924
Reopening of assessment u/s 147 - claim of deprecation u/s 32 while claiming exemption u/s 11 - double claim of deduction / eemption - Held that:- this writ petition is allowed and the impugned proceedings are set aside, since the impugned reopening was made only on the ground that depreciation claimed by the petitioner was not allowable, while the said question was answered against the Revenue in the above said ruling of the Supreme Court [2017 (12) TMI 1067 - SUPREME COURT] in respect of the Assessment Years prior to 2015-16. - Decided in favor of assessee.
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2018 (8) TMI 923
Assessment in the hands of representative / agent - Chief Financial officer (CFO) of the non-resident assessee - According to the appellant, the Chief Financial Officer was questioned about transfer of shares of the appellant by Clayton Dewandre to WABCO, Singapore, even though the Chief Financial Officer was not employed with the appellant during the Financial Year 2013-14 and had no knowledge of the transaction. Whether the writ petition ought to have been dismissed on the sole ground that the appellant had a right of reply to the show cause notice. The answer to the aforesaid question has to be in the negative, for the reasons discussed hereinbelow. Held that:- The Division Bench held that no case was made out by the Department that in respect of transfer of share to a third party, that too outside India, the Indian company could be taxed when the Indian company had no role in the transfer. Merely because those shares related to the Indian company, that would not make the Indian company as agent qua deemed capital gain purportedly earned by the foreign company. The writ petition was held to be maintainable and was allowed. We are in full agreement with the judgment of the Division Bench of Delhi High Court in General Electric Co. [2011 (8) TMI 344 - DELHI HIGH COURT ] and another, supra. May be, there is an appeal from the aforesaid judgment, as contended on behalf of the Revenue, but the fact remains that the judgment has not yet been interfered with. The issues in this writ appeal are covered by the aforesaid judgment of the Delhi High Court, with which we are in full agreement. The judgment and order under appeal is set aside and consequently, the impugned show cause notice is also set aside. - Decided in favor of assessee.
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2018 (8) TMI 922
Disallowance made u/s. 14A - maintaining mix funds - claim for deduction u/s. 80IA - Held that:- it is required to be noted that in the earlier years also more particularly, even in the Assessment Year : 2004-2005, the assessee was also having mixed funds and still considering the fact that the assessee was already having sufficient surplus interest free funds, the Division Bench of this Court has held that the disallowance under Section 14A of the Act is not permissible - revenue appeal dismissed on this ground. Appeal admitted for making decision on the following ground" Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee’s claim for deduction u/s. 80IA of the Income Tax Act, 1961 for generating power for captive consumption, when the assessee had adopted rate on which the GEB supplied power to its consumers ignoring the rate on which power generating company supplied its power to GEB?”
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2018 (8) TMI 921
Valuation of stock - addition made on account of opening stock - disallowance in respect of provisions of interest liability of central excise refund - disallowance of interest being on funds utilized for giving interest free loans to sister concerns - disallowance of expenditure on issue of non-convertible and fully convertible debenture - ITAT deleted all the additions made by the AO - Held that:- No substantial question of law arises. - The decision ITAT confirmed - Decided against the revenue.
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2018 (8) TMI 920
Deemed dividend u/s 2(22)(e) - ITAT refused to decide the issue with regard to the claim of the appellants for deemed dividend because it was raised at the appellate stage - Held that:- After considering the entire facts of the case, we are of the opinion that legal issue can be raised at any point of time - Order of the ITAT quashed and set aside - Matter restored before ITAT - Decided in favor of assessee.
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2018 (8) TMI 919
Nature of sale of Hotel premises - whether the sale of land and building of hotel is to be treated as ‘slump sale’ or not - Scope of section 50B - Held that:- The mistake committed in the return of income cannot be the basis of assessment of non-taxable receipt as income. In order to understand whether the sale was a slump sale or sale of independent items of assets, necessary we have to examine the intention of the parties to the sale agreement. It is clear from reading of the entire clause of the sale deed that the assets of the assessee, including the license for boarding, lodging, bar etc. were also transferred to the purchaser along with land and building as a going concern. The entire business was sold for a total consideration of ₹ 20 crore consisting of land and building which includes furniture, equipments, kitchen equipments, telephone instruments, television, computer, etc. The building and other amenities are valued as a whole, without assigning value to any item of the assets. As mentioned earlier, consequent to the sale of the hotel premises, the business of assessee was closed down. Therefore, it is clear from the sale deed executed, the intention of the parties was to sell the hotel business as a going concern and the same is nothing but a slump sale. The sale of hotel premises by the assessee was a slump sale, liable to the taxed u/s 50B of the I.T.Act. It is ordered accordingly. - Decided in favor of Revenue.
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2018 (8) TMI 918
Short term or long term capital gain - determination of period of holding of property - the assessee has purchased the long term capital assest being godown as per agreement dt. 24-04-2008 - assessee has paid the Stamp Duty on the said agreement dt 20/04/2008 - part payment was made at the time of agreement - substantial and remaining payment was made as on 11-07-2008 and property got registered with the registrar. Held that:- In the instant case it is crystal clear that by virtue of agreement for sale dt. 24-04-2008, and making a part payment, the assessee has acquired irrevocable tight, title and interest including possession in the house property in the form of Godown. The registration of the property which was done subsequently on 11-07-2008 was only a formality. And therefore the period of 36 months of holding of long term capital Assets should be reckoned from 24-04-2008 and not from 11-07-2008 as wrongly adopted by the LD AO. - to be taxed as LTCG - benefit of exemption u/s 54 allowed - Decided in favor of assessee.
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2018 (8) TMI 917
Assessment u/s 153A - undisclosed income - addition based on statement of the assessee during search which was not retracted - incriminating material - Although, the assessee has admitted undisclosed income for AY 2012-13, failed to disclose such income in the return of income; however, disclosed the same in the assessment year 2013-14. According to the assessee, it has admitted undisclosed income for AY 2012-13 by mistaken understanding of facts, whereas the said income, in fact, pertains to AY 2013-14. Held that:- The disclosure of undisclosed income for AY 2013-14 has not been disputed by the AO. The AO has made addition only on the basis of declaration in the statement recorded u/s 132(4). Except this, the AO has not given any reasons for not accepting return filed by the assessee for AY 2013-14 admitting undisclosed income of ₹ 50 lakhs. No doubt, the assessee has not filed any retraction not to admit undisclosed income for AY 2012-13, but that by itself would not be a ground for the AO to make addition towards undisclosed income in the current assessment year, when he has not disputed the fact that the assesee has disclosed undisclosed income in the assessment year 2013-14. Therefore, we are of the considered view that when there is no difference in rate of tax for both the assessment years, i.e. AYs 2012-13 and 2013-14, there is no reason for the AO to make further addition of ₹ 50 lakhs in the current assessment year when the assessee has already disclosed undisclosed income for AY 2013-14. AO directed to verify the facts - Decided in favor of assessee.
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2018 (8) TMI 916
Revision of assessment order u/s 263 - an order which is erroneous or detrimental to the interest of the revenue - invoking the provisions of section 36(1)(ii) - Commission paid to directors for services rendered - performance bonus paid to directors for services rendered to the company in terms of the board resolution. - Payment to avoid payment of dividend distribution tax (DDT) - Held that:- The AO has called for necessary enquiries during the course of assessment proceedings in respect of payment of performance bonus for which the assessee has filed a detailed reply alongwith Board Resolution authorizing payment of performance bonus, reasons for payment of such bonus to Shri Dilip Raghavan. These facts were not disputed by the AO as the same are part of discussion in the body of the assessment order. The AO has discussed the issue of payment of performance bonus to the director in his assessment order and applied the provisions of section 40A(2) to disallow excess amount of ₹ 4,57,020. The PCIT is only on the point that the enquiries conducted by the AO is inadequate and he applied wrong provisions of the Act, which caused prejudice to the interest of the revenue. In the opinion of the PCIT, the enquiries conducted by the AO may be inadequate, but that by itself, would not be a ground for the PCIT to revise assessment order passed by the AO unless the PCIT specifically points out that the AO has grossly overlooked the issue during assessment proceedings. In this case, on perusal of details filed by the assessee, we find that the AO has caused necessary enquiries and the assessee has filed all details to justify payment of performance bonus, therefore, we are of the considered view that the PCIT was incorrect in terming the assessment order passed by the AO as erroneous and prejudicial to the interest of the revenue. The PCIT was totally incorrect in coming to the conclusion that payment of performance bonus is a colorable device for evading payment of dividend distribution tax. The PCIT was in correct in setting aside the assessment order passed by the AO u/s 263 of the Income-tax Act, 1961 - Revision order set aside - Decided in favor of assessee.
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2018 (8) TMI 915
Levy of fee u/s 234E - Late of submission of TDS returns - all the intimations under section 200A of the Act were issued before June 1, 2015 - Held that:- When the intimations were issued before June 1, 2015, this Tribunal is of the considered opinion that the Assessing Officer has no jurisdiction to levy fee under section 234E of the Act. - this Tribunal is of the considered opinion that before June 1, 2015, the Assessing Officer cannot levy fee while issuing intimation under section 200A of the Act - Levy of fee deleted - Decided in favor of assessee.
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2018 (8) TMI 914
Disallowing the expenses u/s 37(1) - After obtaining the Certificate of Commencement, the assessee company had taken several steps in connection with the setting up of a five star hotel - taxability of interest income derived from Fixed Deposits (FDs) and mutual funds under the head of ‘other sources’ Held that:- we find more merit in the assessee’s alternative plea for netting off the interest income against pre-operative expenses. On this alternative plea, we hold that the AO should have netted off the interest income against pre-operative expenses incurred by the assessee in connection with its setting up of the hotel project and the AO is directed to re-compute the assessee’s total income accordingly. Since we have allowed the assessee’s appeal on the alternate plea raised in the course of appeal, we do not express our opinion on the question as to whether the assessee’s business was set-up or not and whether expenses incurred during the relevant year were permissible to be deducted as revenue expenditure. Decided in favor of assessee.
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2018 (8) TMI 913
Disallowance made under section 14A on account of interest - assessee suo moto disallowed a certain sum - AO observed that, claim of the assessee of having earned the substantial income by way of dividend by incurring a nominal expenditure was not correct. - Held that:- for the purpose of applying Rule 8D(2)(ii) prior to its amendment with effect from 02.06.2016, what would be considered as amount of expenditure by way of interest would be the interest paid by the assessee on the borrowings minus the interest income earned during the financial year. The benefit of netting of interest thus has been allowed by the Hon’ble Gujarat High Court without emphasising on the need of having any inextricable link between the interest earned and interest paid. - Decided against the revenue. Disallwance of long term capital loss - shares had been sold off market to a group company showing a loss - AO treated the said transactions as a colorable devise mainly because it resulted in a substantial long term capital loss on the ground that the said transactions were entered into by the assessee company with its group companies off market. - Held that:- In the present case, the transactions of sale of shares were duly supported by the required documentary evidence and the fact that delivery instructions were also issued by the assessee company to the depository participant on the date of sale itself clearly shows that the same were followed by actual delivery of shares. Moreover, the relevant share transactions were affected at the same price as was quoted on the stock exchange on the same date. Ld. CIT(A) was fully justified in deleting the disallowance made by the AO on account of assessee’s claim for long term capital loss by relying on the said decision [2010 (4) TMI 293 - PUNJAB & HARYANA HIGH COURT] - Decided against the revenue.
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2018 (8) TMI 912
Ad hoc disallowance of expenses on estimated basis - telephone expenses, deepawali expenses, rent, miscellaneous expenses and travelling expenses - whether expenses were incurred wholly and exclusively for the purpose of business - Held that:- Assessing Officer has verified all the vouchers with the ledger account of these expenses but he could not be able to pinpoint any defect in such bills and vouchers maintained by the assessee, except expressing with his view that these expenses were not wholly and exclusively made for the purpose of business. Considering the nature of such expenses like freight, telephone expenses deepawali expenses, rent miscellaneous expenses and travelling expenses and in the absence of corroborative documentary evidence, we do not find such contention taken by the lower authorities as justified for ad hoc disallowances. Additions so made deleted - Decided in favor of assessee.
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2018 (8) TMI 911
Income received from undivided share in I.T.Park - income from business or house property - Held that:- the assessee may not have constructed the I.T.Park he is a developer of the I.T.Park. From the Memorandum of Association of the assessee company he has found that the main object of the assessee company “is to carry on all or any of the business as estate builders of residential, office or any other type of accommodation and for that purpose to buy, hold and sell or otherwise deal in lands, sites and other immovable and movable properties”. In fact, the Assessing Officer himself has accepted the fact that the assessee owns number of properties and has leased them out. In the preceding assessment years the Assessing Officer has accepted the income derived from the leasing out of properties as ‘Business Income’ of the assessee. Though principle of res judicata is not strictly applicable to income tax proceedings, each assessment year being an independent unit, however, rule of consistency cannot also be ignored. Once both the parties have accepted certain position relating to a particular issue over a period of time, the same cannot be disturbed in a subsequent year unless there are material differences in fact. - Taxable as business income - Decided in favor of assessee. Additions u/s 40A(2)(b) - excessive payment of salary to the directors - AO found that no such remuneration was paid in the earlier assessment years. He, therefore, called upon the assessee to justify the reasonableness of payment made to them. - Held that:- The CIT(A) after considering the submissions of the assessee allowed assessee’s claim on the reasoning that the leasing out of I.T Park and other properties were a business activity of the assessee and the Directors had undertaken all the activities themselves and the remuneration paid to them was commensurate with their inputs. He further observed that the disallowance at the hands of the company would amount to double taxation as Directors have offered the amount received by them as income in the return of income filed by them. - No disallowance - Decided against the revenue. Genuineness of payment made as commission towards providing services to the company - reasonable amount - Held that:- It is also found that the assessee has duly deducted tax at source u/s. 194J of the Act on the payment made to the said party. Thus, from the material on record, it is established that the payment made by the assessee to the concerned party was against services actually rendered. That being the case, the disallowance made by the Assessing Officer cannot be sustained. - Decided against the revenue.
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2018 (8) TMI 910
Assessee in Default u/s 201(1) - Failure to deduct tax at source (TDS u/s 192) - The assessee (KPTCL) paid cash equivalent to its employees at the time of their retirement - Exemption u/s 10(10AA) in respect of payment in lieu of leave period not availed by the employee - Sec.10(10AA) does not define as to who is to be regarded as employee of Central or a State Government. The revenue’s case is KPTCL is not State Government but a statutory corporation and therefore its employees cannot be regarded as employees of State Government. Held that:- There is no reason for them to think that its estimate of employee’s income under the head “Salaries” was incorrect as the belief it entertained was that its employees were to be regarded as employees of State Government and that its employees are entitled to exemption of the entire sum of unutilized leave encashment u/s.10(10AA)(i) of the Act. KPTCL has discharged its obligation u/s.192 and hence proceedings u/s.201(1) & 201(1A) of the Act deserves to be quashed and are hereby quashed. - Decided in favor of assessee.
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Customs
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2018 (8) TMI 909
Sealing of petitioner's warehouse - confiscation of consignments - case of Revenue is that the appellant is involved in the removal of goods based on forged documents and he is using his godown for keeping smuggled goods - whether Section 110 would within these scope to include the power to seal a godown from where goods are seized? - Held that:- A perusal of Section 110 of the Customs Act 1962, shows that there is no prohibition for sealing any godown, in which goods which have been illegally removed from CFS, using forged documents. Customs Authorities can seal the godown, alongwith the goods inside or seize of the goods and seal the godown, as a preventive measure to restrain the godown owner from using the godown keeping illegally removed goods, atleast till such time, the proceedings of confiscation, regarding the goods, being adjudicated upon. According to the respondents, the prayer for desealing the godown, cannot be granted, at this stage. Whether the respondent is bound to return the goods to the appellant since no notice under Section 124 of the Customs Act has been issued? - Held that:- The godown was sealed on 25.10.2017. Eight months have passed, the authorities are directed to complete the investigation forthwith and pass orders. Desealing cannot be permitted till the finality of the proceedings initiated under Section 124 of the Customs Act. Appeal dismissed - decided against appellant.
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2018 (8) TMI 908
Applicability of exemption notifications - N/N. 21/2002-Cus. dated 1.3.2002 and N/N. 6/2006-CE dated 1.3.2006 - Anesthesia Ventilatory System i.e., Aestiva /5-7100; Avance/5; Aestiva/5-7900; S/5-Aespire and Aisys - appellants have classified the goods under CTH 9019 2090 and claimed concessional rate of duty as per Sl. No.363 (A), List 37 of Notification No.21/2002-Cus. dated 1.3.2002 and Item No.3 under Central Excise Notification No.6/2006 dated 1.3.2006 - benefit of notifications denied. Held that:- The impugned equipment is composite equipment. Whereas the department sees the equipment to be an anesthesia machine having an accessory in the form of ventilator, the appellants have presented the same as a ventilator used with anesthesia machine. On perusal of the brochure for AestivaTM /5 Compact mentions that bags or vent switch turns mechanical ventilator on or off without additional controls. The literature available appears to show that the impugned equipment is basically an anesthesia equipment with a ventilator which increases the capacity of the machines to cater to the requirements of the patients as and when such a need arises. The ventilatory system appears to be part of the design of the machines; therefore, it has to be held that the ventilator is part of the anesthesia systems imported by the appellants - exemption Notification is clear that the exemption is available for the ventilatory system used with anesthesia operators while there is no doubt in our minds that exemption is available for the ventilatory systems, used with the anesthesia systems. The impugned goods are ventilators which are used with Anesthesia Systems. The predominance of the ventilator/Anesthesia System is not the context of the Notification. As long as, they are ventilators and used with Anesthesia Systems, exemption should be available - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 907
Refund of the security deposit - denial of refund on the ground that the appellant has not preferred appeal against the imposition of redemption fine and penalty. Held that:- The adjudicating authority has correctly imposed redemption fine as well as penalty. Only after passing the order, the appellant can chose to redeem the goods or waive the option to redeem the goods. In such circumstances, after passing the order, the appellant has chosen not to redeem the goods and filed refund claim for balance security deposit. The security deposit is not in the nature of duty or interest. It is only an amount paid by the appellant as a security for the dues that may arise in case of adjudication proceedings. Since the appellant has not opted to redeem the goods, the balance amount after adjusting the penalty has to be returned to the appellant. Rejection of refund not justified - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (8) TMI 906
Demand of service tax under BAS and GTA - Held that:- The present appeal not entertained and are accordingly dismissed.
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2018 (8) TMI 905
Maintainability of appeal - Taxability - Held that:- Section 35L(2) of the Central Excise Act, 1944, which clearly provides that determination of any question having relation with the rate of duty shall include determination of taxability of goods for the purpose of assessment, for decision of which exclusive jurisdiction is with Hon'ble the Supreme Court - appeal is dismissed being not maintainable.
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2018 (8) TMI 904
Condonation of delay in filing appeal - CENVAT Credit - duty paying invoices - improper documents - Held that:- The facts are that the BSNL did not challenge the Order in Original for nearly three years on the grounds which even otherwise do not inspire confidence. The period of limitation prescribed for filing appeals under Section 85 of the Finance Act, 1994 is three months - As per the provisions of sub-section (3) of Section 85, such period could be extended by the appellate Commissioner on sufficient cause being shown by a further period of three months. The delay is inordinate. The explanation for such long delay is in any case not sufficient - petition dismissed.
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2018 (8) TMI 903
CENVAT Credit - manufacture of taxable as well as exempt goods - non maintenance of separate records - whether the appellant was required to pay 6% of amount of value of exempted goods cleared by them as they did not maintain separate record for input services? - Held that:- Admittedly the Appellant have not maintained the separate accounts. But Rule 6(3) of Cenvat Credit Rules, 2004 permits the manufacturer or provider of output services, who opted not to maintain separate records, to choose any one of the options provided under the said sub-rule. In this case prima facie it appears that the appellant has opted for option given under Rule 6(3)(ii) of the Cenvat Credit Rules, 2004 and had given the intimation to the department vide communication dated 2.4.2012 and the said letter, which has been produced by the appellant before the adjudicating authority. The preliminary issue raised by the Appellant is very relevant and has a bearing on the matter since the entire case of the department is revolving around not communicating the option by the Appellant to the department as per Rule 6 of Cenvat Credit Rules, 2004 and therefore in the peculiar facts of this case, I allow the Appeal filed by the Appellant by way of remand to the First Appellate Authority with direction to decide the issue, without being influenced by any observation made in this order - appeal allowed by way of remand.
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2018 (8) TMI 902
Levy of service tax - outstanding advances along with interest - Consulting Engineer Services - Pure agent services - Held that:- The respondent has provided only Consulting Engineer Services , on which they have discharged the service tax liability. The work order issued by the Government Department is in the nature of cost plus contract, wherein the respondent has been appointed as the implementing agency on behalf of the Government Department and the money has been received as a trustee. Further, the respondent is liable to account for every single rupee spent for on behalf of the Government. They are not entitled to appropriate a single rupee more than the agreed 7% as agency charge or administrative charges. Further, the activity of the respondent is held to be in the nature of pure agent. As such, no service tax can be demanded on the amount of advance received and /or on the amount spent out of that advance for the purpose of the project. Extended period of limitation - Held that:- There is absence of the condition precedent for invocation of the extended period of limitation - the show cause notices is not maintainable for invocation of the extended period of limitation. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 901
Levy of Service Tax - painting charges - Works Contract - case of appellant is that they are paying work contract tax to the state government; hence, the same activity cannot be subjected to another tax, namely, service tax - Held that:- The Ld. Commissioner (Appeals) has taken the view that mere payment of work contract tax by itself will not lead to exemption from service tax. Further, it is not disputed that the said activity was in the nature of the work contract. The Ld. Commissioner (Appeals) did not have the benefit of the judgment of Hon’ble Supreme Court in the case of CCE, Kerala vs. Larsen and Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] while analyzing the issues in the impugned order. It would therefore be appropriate to set aside the order and to remand back the matter to the first appellate authority for fresh determination in the light of the judgment of Hon’ble Supreme Court in the case of CCE, Kerala vs. Larsen and Toubro Ltd. - Appeal allowed by way of remand.
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2018 (8) TMI 900
Banking and other Financial Services - appellant, is a banking company and a body corporate, conducting their operations in India - It was alleged that the services provided by the appellant to the RBI amounted to providing a taxable service under the Banking and other Financial Services which was taxable from 10.09.2004 - Held that:- There is no ambiguity with reference to the Notification; therefore, the submission of the departmental representative for strict interpretation is not warranted. There is no doubt that the exemption is given vide N/N. 22/2006-ST dated 31.5.2006 is applicable to RBI. In terms of Section 65(7) of the Finance Act, 1994, Assessee means a person liable to pay the service tax and includes his agent . Under Section 45 of the RBI Act, it provides that RBI can nominate other banks as its agent at all places or at any place in India for such purpose as the Bank may specify. Therefore, reading the Notification and Section 65(7) of Finance Act, 1994 and the powers vested with RBI to appoint their agents, there is no hesitation in concluding that the exemption available to RBI in discharge of its functions should be available to the appellant working as the Agents of RBI in terms of the Agreement. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 899
Commercial Training Centre - training to persons who aspire to take up employment in fire protection, lift technology and dental technology - non-payment of service tax on the amounts received by them from the persons undertaking training - demand for the period from 1.7.2004 to 9.9.2004 - Held that:- If it was the intention of the government to exempt the activity during this period, it would have done so in an express manner, which is not the case - the Notification No. 24/2004-ST dt. 10.09.2004 makes it clear that it is effective from 10.09.2004 and not before. It is trite law that exemption notifications have prospective effect unless it is explicitly provided that it is retrospective and the legislature provides for such retrospective operation - the appellant are liable to pay service tax for the period 1.7.2004 to 9.9.2004 and accordingly uphold the order of the adjudicating authority for demand of service tax and interest on this issue. Study material for vocational courses - Held that:- We are unable to agree with the findings of the learned Commissioner that the study material for vocational courses are in the nature of Intellectual property service - the demand of service tax, interest and penalty in relation to this issue of Intellectual Property Service is set aside. Penalty u/s 78 - Held that:- The appellant has been filing nil returns regularly and it was within knowledge of the Department that the appellant had not paid service tax for the period when the exemption was not available. Hence, the penalty under Section 78 of the Act Commercial Training or Coaching is not justified and the same is set aside. Appeal allowed in part.
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2018 (8) TMI 898
Classification of services - appellants were performing certain tasks in the factory of TATA mainly in processing of coffee beans - Department took the view that appellants were providing ‘Manpower Recruitment or Supply Agency Service’ falling within the scope of Section 65 (68) of the Finance Act, 1994 and the taxable service thereof defined in Section 65 (105) (k) - time limitation. Held that:- In the facts of appeal at hand, it is clear from the agreements and communication between the appellants and its service recipient that although there was indeed use of manpower, however that was only for the purpose of actualizing the work contracted to the appellant. This manpower was at all times under the control and superintendence of the appellants. The consideration for the work contracted was dependent upon the extent of work completed or executed and not on the basis of number of manpower supplied. It was surmised that the activity related to “maintenance service” rendered by them. There is no allegation whatsoever of appellants having rendered manpower recruitment or supply of agency service. The audit notes further suggest examination as to whether appellants are within the threshold exemption limit allowed to small service providers etc. It is also seen from records that at the instance of the department, TATA vide their letter dt. 30.5.2008 to the Superintendent of Central Excise, Theni Range submitted copies of statement of accounts for 2005-06, 2006-07 and 2007-08. The service rendered by the appellants are not in the nature of “Manpower Recruitment of Supply Agency Service‟ - Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 897
Extended period of limitation - Renting of Immovable Property Service - Held that:- Hon’ble High Court of Delhi in the case of Home Solutions Retails (India) Limited [2009 (4) TMI 14 - DELHI HIGH COURT] held that renting of immovable property is not a taxable service, therefore, the extended period of limitation is not invokable in the facts and circumstances of the case. The demand pertains to extended period of limitation is set-aside, consequently, no penalty is imposable on the appellant - appellant is directed to pay the amount of service tax along with interest for normal period - appeal allowed in part.
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Central Excise
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2018 (8) TMI 896
Maintainability of appeal - Held that:- The finding on point of revenue neutrality has been correctly arrived at by the learned Tribunal - there is nothing to entertain the present appeal - appeal dismissed.
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2018 (8) TMI 895
Principles of Natural Justice - Clandestine manufacture and removal - MS Ingots - the petitioner/ appellant had imported MS Scrap for the purpose of using it in production in its own smelter unit and for conversion as ingots - Held that:- The Settlement Commission has considered the entire facts and has come to the conclusion that the petitioner/ appellant has not made a true and full disclosure in order to enable the petitioner/ appellant to invoke the process of settlement - the jurisdiction of the Writ Court is restricted to testing the validity of the order of the Settlement Commission on the touch stone of the procedure adopted by the Settlement Commission and the Writ Court cannot go into the question of fact and consider whether the Settlement Commission was right on facts or not. The Settlement Commission had after giving opportunity to the appellant/ petitioner reached the conclusion that the appellant/ petitioner is not entitled to the benefits of the process of settlement and the learned Single Judge has rightly held that the appellant had not made out a case for interference with the conclusions of the Settlement Commission inasmuch as there was no violation of principles of natural justice, on the part of the Settlement Commission - Petition dismissed. Process of re-assessment pursuant to the orders of the Settlement Commission - Held that:- The Writ Petition cannot be entertained in view of the fact that there is an efficacious alternative remedy available in the form of an appeal to the CESTAT. The Writ Petition is therefore dismissed on the ground of availability of alternative remedy and in view of the fact that the Writ Petition had been pending. Petition disposed off.
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2018 (8) TMI 894
Anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973 - CENVAT Credit - bogus firms - dummy parties for fraudulent transactions - case of petitioner is that there was no move initiated to put the respondent under arrest and, therefore, the exercise of jurisdiction by the Sessions court under Section 438 Cr. PC was bad in law. Held that:- Such non-serious pursuit of the matter cannot take the petitioner anywhere. The impugned order was passed by the court of Sessions after taking into account the available material. The petition cannot continue to hang like a democle’s sword over the head of the respondent indefinitely. The petitioner would have the liberty to oppose the grant of regular bail to the respondent in the event of a case being presented upon conclusion of the investigation for cognizance thereupon to be taken up by the competent court it leading to issuance of the process against the respondents. Petition dismissed.
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2018 (8) TMI 893
Refund claim - determination of value of the goods for the purpose of levy of excise duty - N/N. 32/99-C.E. dated 08.07.1999 - Stand of the Central Excise authority, however, is that for the purpose of valuation of goods, freight and insurance charges ought to have had been excluded and refund was to be made without computing therein the aforesaid charges. Held that:- The duty of excise or additional duty of excise, as the case may be, would be leviable in respect of goods manufactured within the notified area. The expression ‘leviable’ is the determinant factor for the purpose of deciding what would be the claim for refund - Thus, the appellant would be entitled to refund of such sum as paid as excise duty as was leviable and thus, even if it had paid excess excise duty, the return or refund of such excess sum cannot be effected through the route of exemption notification. The refund claimed under the notification may be treated as refund claimed under Section 11B of the Central Excise Act, 1944 - Appeal disposed off.
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2018 (8) TMI 892
CENVAT Credit - two notification available - N/N. 02/2008 dated 01.03.2008 and N/N. 05/2006 - Whether CESTAT was right in concluding that Revenue intends to compel assessee to avail the Notification No.05/2006-CE when the fact is that it was assessee’s decision to avail Notification No.05/2006 - CE? Held that:- No substantial question of law arises in the present case requiring our consideration. It is not disputed before us that the Notification No.02/2008 dated 01.03.2008 was also applicable to the assessee in the present case for the period 07.07.2009 to 26.02.2010 in question. The Show Cause Notice of the assessing authority dated 16.03.2011 and the order (Original) Annexure-‘A’ dated 24.07.2013 clearly admits this position vide aforesaid quoted paragraph Nos.13 and 14 from the Order-in-Original. The assessee has not claimed CENVAT credit during the aforesaid relevant period in violation of condition No.7. It has started to claim the said CENVAT credit only after 01.03.2010, after the anomalous position between the two Notifications No.05/2006 with the condition against availment of CENVAT credit and Notification No.02/2008 without any such condition, was removed by the Central Government on 27.02.2010. Therefore, no malafide can be attributed to the respondent-assessee in claiming such CENVAT credit after removal of the anomaly by the Central Government itself. The claim of CENVAT credit in the eye of law by the assessee in the present case appears to be perfectly in consonance with the Notification No.02/2008 dated 01.03.2008. Merely because the assessee in the said period filed its returns in form No.ER-1 indicating the payment of said 8% excise duty under Notification No.15/2009-C.E. dated 07.07.2009, which amended the original Notification No.05/2006-C.E. dated 01.03.2006 and did not mention anything about Notification No.02/2008 dated 01.03.2008, though the said later Notification also equally applies for the said period, the respondent-assessee cannot be bound down to abide by the condition No.7 of the said Notification No.05/2006-C.E. dated 01.03.2006. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 891
Retrospective effect of Amendment of Rule 6(6)(i) of Cenvat Credit Rules, 2004 - goods cleared to a “developer” of a Special Economic Zone for their authorized operation - Held that:- The Chennai Bench of the Tribunal in the case of S.P. Fabricators Pvt. Ltd. Vs. Commissioner of Customs, Chennai-II [2015 (3) TMI 955 - CESTAT CHENNAI] has held that the goods supplied to SEZ Developers are to be treated as ‘exports’ under Section 2(m) of SEZ Act and that the amendment introduced in Rule 6(6) on 31.12.2008 is retrospective in nature. The controversy involved in the present case is covered by the decision of the cognate bench of this Court - no Substantial Question of Law arises for consideration and the appeal is liable to be dismissed - appeal dismissed.
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2018 (8) TMI 890
Refund claim - deemed exports - goods supplied to Mega Power Project under International Competitive Bidding, which is deemed export in terms of Foreign Trade Policy - Rule 5 of Cenvat Credit Rules, 2004. Whether the goods supplied to a Mega Power Project, treated as deemed export in terms of Foreign Trade Policy, are eligible for refund under the provisions of Rule 5 of Cenvat Credit Rules, 2004 for the period from March, 2015 to June, 2015? Held that:- The refund of unutilized credit on inputs is governed by rules made or any notification issued under Central Excise Act, 1944. Accordingly, Rules 5,5A and 5B of CCR, which are the only rules made for such refunds are in complete harmony with Section 11B (2) (c) of the Act since CCR, 2004 have been made under Section 37 of Central Excise Act, 1944. Thus, there is no contradiction or conflict between Section 11B and Rule 5 of Cenvat Credit Rules. As a result, the contention that Rule 5 is supplanting the Section 11B is patently fallacious. It is therefore clear that Section 11B allows refunds in accordance with Rule 5 of CCR and Notifications issued under the Act and any restrictions made by legislature in this Rule on any category of exports etc. are not contrary to the said Section. In the instant case there is no conflict between the primary statute and the delegated provisions as the primary statute has made the provision of allowing the refunds as per Rule 5 of CCR and Notification issued under the Act and any restriction made in the said Rules on any category of exports imposed by legislature is in consonance with the Section 11B of the Act. The specific inclusion of clause (1A) in Rule 5 bid clearly shows the legislative intent to allow refund facility to actual physical exports. As the right to refund for exports other than physical exports did not accrue under law, which in the impugned period is permitted for physical exports only, there is no conflict between Rule 3, 4 and 5 of Cenvat Credit Rules. Appeal dismissed - decided against appellant.
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2018 (8) TMI 889
CENVAT Credit - inputs - credit denied on premise that the activity undertaken by the appellant does not amount to manufacture - Held that:- The fact is on record that the appellant is purchasing raw CI castings and doing certain processes on that, namely, shot blasted, grinding, erasing, chipping, painting, oiling, proof machining and measuring, thereafter, they sold to their buyers. As without these processes, these CI Castings are not usable by their customers, therefore, in terms of under Section 2(f) of Central Excise Act, 1944 read with Section VI of 17 Central Excise Act, 1985, the activity undertaken by the appellant amounts to manufacture - Cenvat credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 888
Penalty on M/s. Standard Electricals - the transferor company (appellant herein) shall stand dissolved without winding up, once the scheme comes into effect - Held that:- Admittedly, the appellant was juristic person and on juristic person, the penalty can be recovered from a person only and cannot be fastened liability on the successor - the recovery of penalty from M/s. Havells India Limited. set aside.
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2018 (8) TMI 887
Maintainability of appeal - question of law or question of facts - Held that:- This case is based on facts and no question of law has been brought in knowledge by the Ld. AR. Therefore, the objection raised by the Ld. AR there is a substantial question of law involved is not sustainable - appeal dismissed.
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2018 (8) TMI 886
CENVAT Credit - extended period of limitation - it was alleged that the invoices although in the name of the appellant, but, delivery of the goods mentioned in the invoices has been done to Bansal Processing House - it was alleged that the appellant is not maintaining proper record of receipt of services on which they have taken Cenvat credit. Held that:- The appellant has received the goods in their factory, therefore, merely mentioning on the invoices “Delivery: Bansal Processing House” does not mean that the goods has been delivered to Bansal Processing House. In these circumstances, Cenvat credit cannot be denied to the appellant - credit allowed. CENVAT Credit - Rule 9 (6) of the Cenvat Credit Rules, 2004 - denial on the ground that the appellant is not maintaining proper record for availing of Cenvat credit - Held that:- It is a fact on record that in Cenvat Credit Account, the appellant has taken Cenvat credit on the strength of the invoices and there is no prescribed manner how to accounts records are to be maintained by the assessee - the appellant had established that they have taken Cenvat credit on the strength of invoices in their Cenvat credit account, the same is sufficient evidencing that the appellant is maintaining proper accounts for availing of Cenvat credit - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 885
Refund claim - refund rejected in terms of value addition norms - Area Based Exemption - N/N. 56/02-CE dt.14.11.2002 - Held that:- As the SCN dated 7.5.2014 was not adjudicated, in that circumstance, the impugned order was not required to be passed by the Commissioner (Appeals). Moreover, the proceedings were initiated vide show cause notice dated 7.5.2014 has been drooped against the appellant - impugned order not sustainable - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 884
Principles of Natural Justice - case of appellant is that impugned order stands passed by Commissioner without affording them a reasonable opportunity to put forth their case - Held that:- Though the Commissioner fixed various dates of personal hearing, under intimation to the appellants but as the review petition was pending before the Hon’ble High Court the appellants made a request to keep the proceedings in abeyance. The said request was not accepted by the adjudicating authority on the ground that there is no stay order staying the operation of earlier order of the Hon’ble Allahabad High Court and as such proceeded to decide the matter, without further providing opportunity to the appellants. As such the fact remains that the impugned order stands passed in the absence of any defence by the advocate - matter remanded to the adjudicating authority to decide the matter afresh after affording a proper opportunity to the appellant to put forth their defence. Imposition of penalties on co-noticees - Held that:- Their appeals are also remanded, inasmuch as the appeal of main appellants is being remanded and the learned advocate is allowed to raise all the above issues before the Adjudicating Authority. Appeal allowed by way of remand.
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2018 (8) TMI 883
SSI Exemption - crossing of threshold limit - Adjudicating Authority did not find favour with the appellant's contention on the trading activities and accordingly confirmed the demand by treating the entire clearances as that of being appellant's own manufactured goods - appellant claimed bonafide belief - Penalty - Held that:- The Revenue has allegedly taken into account the traded goods - demand set aside. The appellants crossed the SSI Exemption limit during the period 2006-07 till 2011-12 and were not paying the duties on the excess clearances. In such a scenario, the appellant's belief of bona-fide cannot be appreciated in as much as, the assessee's non-payment of duty continued for a long period and it cannot be said that the appellant was not aware of such limit. In as much as, they themselves were availing the benefit of the SSI Exemption Notification and are expected to know the value of exempted clearances. It is for them to bring to the notice of the Revenue or to start paying duty on their own, once they cross the limit. Appeal allowed in part.
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2018 (8) TMI 882
SSI Exemption - Clubbing of clearances - dummy units - SCN not issued to other parties, whose clearances are sought to be clubbed, but Addendum was issued including the names of the other four units, who were not a party in the first Show Cause Notice and the subsequent Adjudication Order. Held that:- Once an Order-in-Original is withdrawn, the Show Cause Notice, which had already merged with the Order-in-Original, is no longer available, in which case the Addendum subsequently issued by the Revenue and adjudicated upon cannot be held to be in accordance with law - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 881
SSI Exemption - clubbing of clearances - dummy units - notice not issued to the other four units, whose clearances sought to be clubbed - Held that:- Admittedly the proceedings were not initiated against the other units, whose clearances are sought to be clubbed with the clearances of the M/s D. P. Garg & Co. The issue involved in the case of M/s Garg Industries [2015 (4) TMI 1023 - CESTAT NEW DELHI] is identical to the facts of the present case. There also the clearances of the other units were sought to be clubbed with the clearances of M/s Garg Industries and the Tribunal by taking note of the fact that the notice has not been issued to the other units, set aside the confirmation of demands - In the present case also admittedly the notice does not stands issued to the other four units, whose clearances sought to be clubbed in the clearances of M/s D. P. Garg & Co. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 880
Investigation and demand pursuant to search/ inspection in the factory - Held that:- It is deemed fit and proper to confirm the demand of ₹ 1,63,815/-. As the appellant had deposited the duty at the time of investigation on 03-04/08/1999 they are entitled to benefit of concessional penalty of 25% on the confirmed amount of ₹ 1,63,815/- which works out to ₹ 40,953/- - the Adjudicating Authority is directed to calculate the interest and to adjust the same from the excess amount is still left unadjusted out of the amount of ₹ 4,75,000/-. Appeal disposed off.
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CST, VAT & Sales Tax
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2018 (8) TMI 935
Branch transfers or stock transfers - declaration of ‘F’ Form under Rule 12(5) of the Central Sales Tax (Registration and Turnover) Rules, 1957 - Time Limitation - declaration to be filed within a period of one calendar month - Held that:- Rule 12(5) of the CST (R & T) Rules, 1957, is directory in nature and the second proviso of Rule 12(5) of the CST (R & T) Rules, 1957, clearly envisages that the particulars to be furnished in ‘F’ Forms can even be supplied to the Assessing Authority in a separate annexure attached such declaration form. Therefore, giving one declaration form for one calendar month as provided in the first proviso is a mere procedural formality rather than a substantive provision. The stipulations made in the declaration form ‘F’ are nothing but giving particulars of the relevant document in support of branch transfers or stock transfers made by the assessee from one branch to another or from its one unit to another. Such transactions obviously do not attract sales tax liability under the provisions of CST Act, 1956. The furnishing of ‘F’ forms is distinct and different from the declaration in Forms ‘C’ and ‘D’ under the CST Act, 1956, and upon furnishing of which, depends the availment of concessional rate of tax by the selling dealer. Petition dismissed - decided against Revenue.
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2018 (8) TMI 879
Demand notice in Form VAT 202 dated 8.1.2018 - recovery of sales tax deferment - Held that:- There is no legal and valid ground for interference - SLP dismissed.
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2018 (8) TMI 878
Reassessment of tax - Section 28(2)(ii) of the Act - Validity of SCN - Held that:- In the show-cause-notice as well as impugned order, it has been mentioned that the appellate authority did not allow the appeal on merit, but the appeal was allowed only on the ground of limitation. This ground taken in the show-cause-notice as well as appeal is prima facie against the record. The appellate authority had passed the order in appeal and allowed the same on merit as well as on limitation and, therefore, the very basis of show-cause-notice and the impugned order is incorrect. The Department cannot take recourse to the proceedings under Section 29(7) of the Act after the order of appellate authority which was passed on merit as well as on limitation. Petition allowed - decided in favor of petitioner.
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2018 (8) TMI 877
Attachment of agricultural land - the property to put on auction and the entire sale consideration will directly be paid to the VAT Department - It is the case on behalf of the applicants that one Bharat Gajera, who was to purchase the agricultural land being survey No.75, Block No.76, situated at Kumbhariya, Surat, had backed away and therefore, the applicants could not sale the said property and thereby could not deposit the amount of ₹ 4.51 crores with the Department. Held that:- As it is now reported that even the proposed purchaser–Kirit Bhimjibhai Patel is not ready and willing to purchase the agricultural land in question, Shri Ravani, learned Advocate appearing on behalf of the applicants does not press the present application and seeks permission to withdraw the same. Under the circumstances, the present application stands dismissed as withdrawn, as it is reported and it is not in dispute and it is an admitted position that the applicants and others have not acted as per the order passed in SCA No.2173 of 2017 and they have even not acted as per the undertakings given by them and as the aforesaid properties are in fact under attachment for the dues of the VAT Department, the properties mentioned hereinbelow, except property No.3 – 3/2885/C, Bhanawala Apartment, Salabatpura, Surat (which is the subject matter of SCA No.11249 of 2018) should now to be sold and put to auction by the Department to realize the amount due and payable to the Department. Now the Department to dispose of the aforesaid properties under attachment of this Court pursuant to order passed by this Court dated 28.03.2017 in SCA No.2173 of 2017 by public auction and realize the amount and the amount of sale consideration shall be appropriated towards dues of M/s.Dhru Automobiles. Till then, the aforesaid properties, except property at Sr. No.3-3/2885/C, Bhanawala Appartment, Salabatpura, Surat shall be continued under attachment. The Department now through public auction to realize the amount towards its dues at the earliest, but not later than 4 months from today. Application disposed off.
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Indian Laws
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2018 (8) TMI 934
Whether forfeiture of gratuity, under The Payment of Gratuity Act, 1972 (hereinafter referred to as ‘the Act’), is automatic on dismissal from service? Held that:- There is no case for the Bank that the misconduct of the respondent-employee has caused any financial loss to the Bank, and therefore, forfeiture, taking recourse to sub-Section (6) of Section 4 of the Act, cannot be resorted to - the respondent-employee is entitled to the protection of the bipartite settlement. Though the learned Counsel for the appellant-Bank has contended that the conduct of the respondent-employee, which leads to the framing of charges in the departmental proceedings involves moral turpitude, the contention cannot be appreciated. It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude. To be an offence, the act should be made punishable under law. That is absolutely in the realm of criminal law. In the present case, there is no conviction of the respondent for the misconduct which according to the Bank is an offence involving moral turpitude. Hence, there is no justification for the forfeiture of gratuity on the ground stated in the order dated 20.04.2004 that the “misconduct proved against you amounts to acts involving moral turpitude” - the requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law. Forfeiture of gratuity is not automatic on dismissal from service; it is subject to sub-Sections (5) and (6) of Section 4 of The Payment of Gratuity Act, 1972. Appeal dismissed - decided against appellant.
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