Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 3, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Customs
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67/2018 - dated
2-8-2018
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Cus (NT)
Exchange Rates Notification No.67/2018-Custom(NT) dated 02.08.2018
GST - States
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71/GST-2 - dated
27-7-2018
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Haryana SGST
Notification regarding concessional HGST rate on specified handicraft items under HGST Act, 2017
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70/GST-2 - dated
27-7-2018
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Haryana SGST
Notification regarding amendment in notification no. 39/ST-2 dated 30.06.2017 under HGST Act, 2017
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69/GST-2 - dated
27-7-2018
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Haryana SGST
Notification regarding amendment in notification no. 36/ST-2 dated 30.06.2017 under HGST Act, 2017
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67/GST-2 - dated
27-7-2018
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Haryana SGST
Notification to insert explanation in notification no. 46/ST-2 dated 30.06.2017 by exercising power conferred under section 11(3) of the HGST Act, 2017
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66/GST-2 - dated
27-7-2018
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Haryana SGST
Notification regarding amendment in notification no. 49/ST-2 dated 30.06.2017 under HGST Act, 2017
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12/2018-State Tax (Rate) - dated
29-6-2018
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Mizoram SGST
Amendment in Notification No. 8/2017 – State Tax (Rate), dated the 7th July, 2017
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11/2018-State Tax (Rate) - dated
28-5-2018
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Mizoram SGST
Amendments in Notification No.4/2017-State Tax (Rate), dated the 7th July, 2017
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24932-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Notification on exemption of that amount of state tax leviable under section 9 of OGST Act which is in excess of the rate specified in the notification for the intra state supplies of handicraft goods.
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24924-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Amendment to notification No. 19833 dated 29.06.2017 regarding exemption of certain goods under section 11(1) of the OGST Act, 2017.
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24916-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Notification clarifying the scope and applicability of the notification No. 19869 dated 29.06.2017 bearing SRO No. 305/2017.
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24912-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Amendment to Notification No. 19881 dated 29.06.2017 bearing SRO No. 308/2017 regarding the activities or transactions which shall neither be treated as supply of goods nor a supply of services.
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24908-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Amendments in the Notification of the Government of Odisha, in the Finance Department No.19877-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017.
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24904-FIN-CT1-TAX-0043/2018 - dated
27-7-2018
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Orissa SGST
Amendments in the Notification of the Government of Odisha, in the Finance Department No.19873-FIN-CTI-TAX-0022-2017, dated the 29th June, 2017.
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24900-FIN-CT1-TAX-0043/2017 - dated
27-7-2018
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Orissa SGST
Amendment to Notification No. 19869 dated 29.06.2017 bearing SRO No. 305/2017 regarding change in the rate of tax on the intra-State supply of certain services.
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G.O. Ms. No. 19/2018-Puducherry GST (Rate) - dated
27-7-2018
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Puducherry SGST
Amendments in the Notification G.O. Ms. No.2/2017-Puducherry GST (Rate), dated the 29th June, 2017.
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G.O. Ms. No. 13/2018-Puducherry GST (Rate) - dated
27-7-2018
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Puducherry SGST
Amendments in the Notification of the Government of Puducherry, Commercial Taxes Secretariat issued vide G.O. Ms. No.11/2017-Puducherry GST (Rate), dated the 29th June, 2017.
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21/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Exempts the intra-state supplies of handicraft goods
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20/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Amendment in Notification No. 5/2017-State Tax (Rate). dated the 29th June, 2017
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19/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Seeks to amend Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017
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18/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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17/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Seeks to amend Notification No. 11/2017- State Tax (Rate) dated the 29th June. 2017
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16/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Seeks to amend Notification No. 14/2017- State Tax (Rate), dated the 29th June, 2017
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15/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Seeks to amend Notification No. 13/2017- State Tax (Rate), dated the 29th June, 201 7
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14/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Amendment in Notification No. 12/2017- State Tax (Rate). dated the 29th June, 2017
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13/2018-State Tax(Rate) - dated
28-7-2018
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Tripura SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29h June. 2017
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F. 1-11 (98)-TAX/GST/2017 - dated
17-7-2018
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Tripura SGST
Appointment of Authority for Advance Ruling of Tripura
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12/2018-State Tax (Rate) - dated
7-7-2018
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Tripura SGST
Amendment in Notification No. 8/2017-State Tax (Rate), dated the 29th June 2017
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F.1-11(91)-TAX/GST/2018 - dated
6-7-2018
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Tripura SGST
Tripura State Goods and Services Tax (Seventh Amendment) Rules, 2018
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST on supply of free services - Tickets distributed on complimentary basis - entire petition is based on the newspaper published in the local newspaper about distribution of free passed worth of ₹ 60.00 lac to Collector. - PIL dismissed.
Income Tax
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Capital gain - transfer of land within the meaning of Section 2(47)(v) - As no transfer of the said land had taken place under the Development Agreement, the occasion to compute capital gains as proposed, would not arise.
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Deduction u/s 43B / 36(1) - At least with respect to the employee's contributions, which the employer deducts from the salary of the employees, if it is not remitted into the fund within the due date, the employer not only has defaulted the stipulation in the labour legislation but has received an income; albeit an illegal enrichment.
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Disallowance u/s 43B - deduction of certain expenditure only after actual payments - With regard to interest paid to HDFC Bank, in our view, HDFC Bank is not public financial institution. It is only private sector Bank. Interest paid to HDFC is outside the purview of section 43B.
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Deduction U/s 80P - principles of mutuality - identity between contributor and participant - AO directed to verifying as to the rights, roles , entitlements , duties and responsibilities of these ‘Nominal Members.
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Penalty u/s.271(1)(c) - bonafide mistake - failure to voluntarily add back provision of gratuity in the computation of income - the fault of Chartered Accountant cannot be visited on the assessee - No penalty.
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Penalty u/s 271D or 271E - assessee has accepted loan/deposit from sister concern through journal entries i.e., otherwise then account payee cheque /draft thereby violated provisions of section 269SS and/ or 269T - No penalty
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Agricultural income - exemption u/s 10(1) - Merely because instead of horizontal use on soil, vertical space is used, does the growth of mushrooms stand apart from agricultural operations? - Whether agricultural production done under “controlled conditions”, results in the ‘product’ so raised not being a ‘product from agricultural activity’? - Held as agriculture income - not taxable u/s 10(1)
Customs
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Renewal of CHA License - The non renewal and revocation are two separate things under two distinct provisions of the Regulation, question of appellant to have been vexed twice, as is raised by him, is not sustainable.
DGFT
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Issue of RCMS - Services allotted to Services Export Promotion Council (SEPC)
Indian Laws
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The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018 - As passed by Loksabha
Service Tax
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Health club and fitness centre - whether the treatment given by the ayurvedic centres run by these resorts would come under therapeutic massages, etc.? - Held Yes - all the required conditions for such treatments to be treated as therapeutic are specified and will fall under the exclusions.
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Penalty u/s 76 of FA - No doubt the appellant had some difficulties on the financial front but that cannot be the reason for non-payment of tax once they have collected from the customers - levy of penalty confirmed.
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CENVAT Credit - most of the equipments or appliances to be used in the office cannot be said to be used in providing output services - credit denied on these items, except few.
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The law requires assessee itself to determine the classification of service and to pay tax on self assessment basis. Since the assessee has failed to act accordingly, the penalty u/s 76 and 78 have rightly been confirmed against the respondent
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Business Auxiliary Service - Agency Commission - Merely because the name of the guarantee has been changed from ‘Bank’ to ‘Corporate’ it cannot be said that it won’t fall under ‘Business Auxiliary Service’ as defined under Section 65 (105) of the Finance Act, 1994 - demand of Service Tax on the Corporate Guarantee Commission upheld.
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Commercial training or coaching Services - imparting education in courses - Providing Diploma - Mere approval in their favour by any such government university for conducting certain courses by distant education or by permitting them to do so under convergence scheme cannot cloth them with the title of deemed university - Demand confirmed invoking extended period of limitation
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Renting of Immovable Property Service - there is no justification for invoking the extended period and inasmuch as the entire demand is beyond the normal period of limitation.
Central Excise
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Non-speaking order - Though the appellant have placed various correspondences to show that there is no suppression of fact but instead of dealing with those material, the Ld. Commissioner (Appeals) conveniently ignored the same and concurred with the adjudicating authority - order set aside.
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Supply of Yarn to Handloom Societies - No end use condition can be self introduced in the notification - the fact of actual use of the yarn will not effect the appellant’s claim to the benefit of the notification. Such an extraneous condition cannot be imposed by the adjudicating authority on its own.
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Valuation - Job-Work - inclusion of notional interest on advances in assessable value - Rule 6 of the Valuation Rules 2000 - demand confirmed invoking extended period of limitation.
VAT
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Levy of Sales Tax - sale of voice transmission service - goods do not cover the electromagnetic waives or radio frequencies for the purposes of Article 366(29A)(d) and the goods in telecommunication are limited handset used for permissions of voice through airwaves.
Case Laws:
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GST
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2018 (8) TMI 137
Unable to upload Form GST TRAN-1 - input tax credit - Held that:- It was brought to the notice of the Central Board of Indirect Taxes (CBIC) and Customs about the difficulties faced by a section of tax payers owing to technical glitches on the GST and representations were given by the assessees. Therefore, the CBIC is setting up a Grievance Redressal Mechanism vide Circular No.39/13/2018-GST dated 03.4.2018. The respective Commissioner of GST and Central excise are directed to appoint Nodal Officer/Officers for the State of Tamil Nadu, if not already appointed, within a period of 2 weeks from the date of receipt of a copy of this order - petition disposed off.
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2018 (8) TMI 136
Levy of GST on supply of free services - Tickets distributed on complimentary basis - entire petition is based on the newspaper published in the local newspaper about distribution of free passed worth of ₹ 60.00 lac to Collector. No other material has been produced in the present petition in support of the allegations. Held that:- Recently, the Apex Court in case of Mohd. Sahil Vs. Union of India & Others [2018 (7) TMI 1827 - SUPREME COURT] has dismissed the public interest litigation which was filed on the basis of some newspaper reports. The present petition is also based on the newspapers report, hence, same is not liable to be entertained and accordingly dismissed.
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Income Tax
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2018 (8) TMI 135
Reopening of assessment - sanctioning/ permission to issue notice under Section 148 - notice not been granted by the Additional Commissioner of Income Tax - Held that:- It is undisputed position before us that in terms of Section 151(2) the sanctioning/ permission to issue notice under Section 148 has to be issued by the Additional Commissioner of Income Tax. We find that the AO had not sought the approval of the Designated Officer but of the Commissioner of Income Tax. This is clear from the Form used to obtain the sanction. In any case, the approval/ satisfaction recorded in the form submitted for sanction of the CIT by the Assessing Officer reproduced herein above, it is clear that the Additional Commissioner of Income Tax had not granted permission to initiate reopening proceedings against the Respondent-Assessee. The view of the Additional Commissioner of Income Tax was subject to the approval of his superior – the Commissioner of Income Tax. Thus, there was no final sanction granted by the Additional Commissioner of Income Tax for issuing the notice dated 25th March, 2011 to reopen the Assessment. Further, it is the Commissioner of Income Tax who directed the issuance of the notice under Section 148 of the Act to the Assessing Officer. Thus, it is very clear that the final sanction/ approval was that of the Commissioner of Income Tax as indicated in the Form and also in the two letters dated 24th March, 2011 and 25th March, 2011. As decided in Ghanshyam K. Khabrani v/s. Assistant Commissioner of Income Tax [2012 (3) TMI 266 - BOMBAY HIGH COURT] to hold that, the approval/ permission to issue the notice dated 25th March, 2011 had not been granted by the Additional Commissioner of Income Tax, but by the Commissioner of Income Tax and, thus in breach of Section 151 of the Act. - decided in favour of assessee
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2018 (8) TMI 134
Capital gain - transfer of land within the meaning of Section 2(47)(v) - Held that:- This issue now stands concluded in favour of the Respondent-Assessee and against the Appellant-Revenue by the decision of the Apex Court in CIT v/s. Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT OF INDIA] held that in terms of Section 2(47)(v) of the Act, transfer of any immovable property in part performance of a contract of the nature referred in Section 53A of the Transfer of Property Act will be completed only when the Agreement under Section 53A of the Transfer of Property Act is registered under the Indian Registration Act. Admittedly, the Agreement dated 20th April, 2007 has not been registered. Consequently, there is no transfer in terms of Section 2(47)(v) of the Act. The clause of the Agreement as referred to, in the Assessment Order makes it clear that M/s. Godrej Properties Ltd., has been granted license to enter upon and develop the property. However, the possession of the said land continues to be with the Respondent-Assessee. Further, the proviso to clause (6) of the Development Agreement clearly provides that nothing contained in the agreement shall be construed as grant of possession in part performance of the Agreement under Sections 2(47)(v) and 2(47)(vi) of the Act. As no transfer of the said land had taken place under the Development Agreement, the occasion to compute capital gains as proposed, would not arise. We have found that there is no transfer of the stock-in-trade i.e. land that has taken place in the previous year relevant to the subject Assessment Year. Therefore, the issue of determining the date of conversion of capital asset into stock-in-trade for the purposes of bringing it to tax under Section 45(2) of the Act, would become academic in this Assessment Year. Therefore, the Assessment Year, when the authority hold that the transfer/ sale of the land has taken place, the authorities in that year would determine independently of the impugned order of the Tribunal as well as our order, the date of conversion of capital assets into stock-in-trade and its value. This particularly so, as Questions (d), (e), (f) and (g) have not been entertained in the present facts, as they are academic.
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2018 (8) TMI 133
Failure to pay the employees' contribution under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948 before the due date provided under the said enactments - Held that:- The learned Judges had elaborately considered the decision in Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] and has found the provisions having application in different fields. Section 43B(b) dealt with the employer's contribution and sub-clause (va) of Section 36(1) was concerned with the employees contribution as rightly held. We do not find ourselves persuaded to take a different view with respect to employee's contribution and we respectfully follow the decision of the Division Bench of this Court in Merchem Ltd.[2015 (9) TMI 560 - KERALA HIGH COURT]. We, hence, answer the substantial question of law raised with respect to reconsideration of Merchem Ltd. in the negative, against the assessee and in favour of the Revenue. Whether the 'amounts payable', the reference obviously is to “any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other funds for the welfare of employees” as found in sub-clause (b) of Section 43B, which refers only to the employer's contribution and not the employee's contribution? - Held that:- On remittance of this contribution, within the due date, it is allowed as a deduction under Section 36. If it is not paid to the welfare fund within the due date provided under the relevant statute, it remains as an income in the books of accounts of the assessee/employer Company. The said contribution having not been paid to the applicable welfare fund within the due date provided, the assessee for all time is deprived of claiming such a remittance, made subsequently, as deduction from the income. This, as the Hon'ble Supreme Court noticed, is looking at the spirit behind the labour welfare legislation and the need for the employer to satisfy the remittance within the time provided under the statute creating the welfare fund. At least with respect to the employee's contributions, which the employer deducts from the salary of the employees, if it is not remitted into the fund within the due date, the employer not only has defaulted the stipulation in the labour legislation but has received an income; albeit an illegal enrichment. Sub-section (v) is with respect to and confined to a gratuity fund and does not have any relevance here. We, hence, answer the other questions of law framed, also against the assessee and in favour of the Revenue.
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2018 (8) TMI 132
Disallowance of “Project Monitoring Expenses” and “Erection and Commissioning Charges” - assessee failed to specify the reason of less profit before the A.O. in the year under consideration although turnover went up substantially as compared to previous year - ITAT deleted addition - Held that:- Having heard learned counsel on behalf of the appellant, we do not see any substantial question of law, as arising out from the order, as projected. Consequently, the appeal fails and is dismissed without any order as to cost.
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2018 (8) TMI 131
Addition made u/s. 14A r. w. r 8D - Held that:- It is the duty of assessee to justify the source of investment mad by the assessee in the investment / PPF irrespective of fact that the own fund of assessee exceeds the impugned investment. We find that the issue of disallowance of interest will accordingly be decided after verifying the details whether the impugned investment was made by the assessee out of her own fund or borrowed fund. Thus, in the interest of justice and fair play we are inclined to restore the issue back to the file of AO with a direction to verify the source of investment made by the assessee in the impugned equity shares / PPF. In terms of above, this ground of Revenue's appeal is allowed for statistical purposes.
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2018 (8) TMI 130
Disallowance u/s 14A - Held that:- We direct the AO to delete the disallowance made u/s 14A r.w.r. 8D(2)(iii) as the disallowance u/s 14A cannot exceed the exempt income. Ground No. 2 is allowed. Disallowance u/s 43B - Held that:- Hon’ble Supreme Court in various decisions held that levy of interest on breach of the respective Act is compensatory in nature. The interest which is in the nature of breach of Act alone can be disallowed and in compensatory nature cannot be disallowed. Ld. CIT(A) has relied on case laws on sales tax. In those cases, it was held that sales tax is a statutory obligation. But, in the present case, the interest is levied on service tax, excise duty and ESI. These are compensatory in nature unlike sales tax Act. Therefore, the provisions of section 43B are not attracted. With regard to interest paid to HDFC Bank, in our view, HDFC Bank is not public financial institution. It is only private sector Bank. Interest paid to HDFC is outside the purview of section 43B. The amounts paid towards interest under the aforementioned heads, do not come under the provisions of section 43B, hence, the disallowance is hereby deleted. Accordingly ground No. 3 is allowed.
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2018 (8) TMI 129
Deduction U/s 80P - breach of principles of mutuality as identity between contributor and participant was lost - Held that:- The assessee society has carved out two classes of members namely ‘Active Members’ and ‘Nominal Members’. The Active Members as per bye laws are those who have attended General Meeting of the society once in last five years and they have given deposits to assessee society or availed loan from assessee society atleast once in five year but there is another class namely ‘Nominal Members’ are those society members who as per bye laws are given membership after retirement. These members do not avail loan nor give deposits. While as per audited financial statements which are placed on record, these nominal members are allowed to keep their post–retirement benefits savings with the assessee society. These nominal members are not allowed to borrow from assessee society based on material on record which is before the tribunal. This aspect whether there is any breach of principles of mutuality on account of loss of complete identity between contributors and participants of surplus requires to be verified from records of the assessee society in context of recent decision of Hon’ble Supreme Court in the case of The Citizen Co-operative Socierty Limited (2018 (1) TMI 290 - SUPREME COURT OF INDIA) so far as these ‘Nominal Members’ are concerned and to determine whether the assessee society gets disentitled to deduction u/s 80P based on breach of principles of mutuality as identity between contributor and participant was lost which the AO shall determine in set aside proceedings. The Constitution of India vide Article 265 provides that taxes not to be imposed save by authority of law . No tax shall be levied or collected except by authority of law. The mandate being to levy and collect correct taxes on correct income computed under authority of law. The tribunal has wide powers to pass such orders as it deems fit which is the mandate of Section 254(1) of the 1961 Act . Thus in our considered view under these circumstances, in the interest of justice and fairness to both the parties, the matter need to be restored to the file of the AO for limited purposes of verifying as to the rights, roles , entitlements , duties and responsibilities of these ‘Nominal Members’ in context of the decision of the Hon’ble Supreme Court in the case of ‘The Citizen Co-operative Society Limited(supra) as per our elaborate discussions above. Appeal of the Revenue is allowed partly for statistical purposes
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2018 (8) TMI 128
Admission of additional evidence - estimate profit at the rate of 15% of the turnover - Held that:- The rules of procedure are subservient to substantive law to serve justice and not to scuttle justice at threshold on technical nitty-gritties unless malafide is writ large on the part of tax-payer which is not so in the instant case. The mandate of the 1961 Act is to compute correct taxes as per provisions of the 1961 Act which is supported by mandate of Article 265 of the Constitution of India. CIT(A) ought to have admitted these additional evidences filed by the assessee and evaluated/verified on the touchstone of merits but instead learned CIT(A) proceeded to estimate profit at the rate of 15% of the turnover (before deducting partners remuneration) after discarding these evidences at threshold on technical grounds despite evidences filed by the assessee before learned CIT(A). CIT(A) ought to have forwarded the said additional evidences to the AO for submission of remand report on merits after their evaluation/verification by the AO as per Rule 46A(3) of the 1962 Rules. The learned CIT(A) erred in not admitting additional evidences and in estimating profits despite having all evidences before it to compute income as per provisions of the 1961 Act r.w.r. 46A of the 1962 Rules. In our considered view and in the interest of substantial justice to both the parties in exercise of our powers u/s 254(1) of the 1961 to pass such orders as deem fit, the matter is restored to the file of the AO for fresh/de-novo framing of assessment by AO on merits in accordance with law after admitting all the evidences filed by the assessee .
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2018 (8) TMI 127
Addition on account of income from undisclosed sources - Held that:- We note that assessee has candidly admitted the fact that the impugned seized document was written by himself. It has been also stated by the assessee that in the letter filed before the AO that this page contains a brief summary of future fund flow position. Thereafter, the assessee has also given explanation about the transactions stated therein. Now, in these circumstances, this document cannot be considered to be a dumb document, as considered by the first appellate authority while deleting the entire addition made by the Assessing Officer. The first part is of ₹ 1,40,00,000/- whereby it has been written that the same has been "given already", which denotes the payments made by the assessee. The transaction mentioned therein has also been explained by the assessee as recorded in the books of accounts. In this regard the assessee has placed before us copy of the ledger account in the Paper Book. Thus, the contention of the Ld. DR that assessee has failed to discharge its onus that the transactions are accounted for in the books of accounts, is not correct. When such transactions have been recorded in the books of accounts, there is no justification for making addition of the same in the hands of the assessee. The ld. CIT(A) has correctly deleted the addition of ₹ 1.40 crore. As regards the balance of ₹ 31,04,166/- the nature of amounts aggregating to ₹ 32.00 lakhs (Rs.25.00 lacs, ₹ 2.00 lacs and ₹ 5.00 lacs as given/paid to MMTL, Aeroplast and towards S. Tax respectively as noted on the paper). These amounts of ₹ 25.00 lakhs and ₹ 2.00 lakhs should, therefore, be considered as payment by the assessee, as also explained before us with reference to PB 32 and ₹ 5.00 lakhs is accepted by the Assessing Officer itself as explained. Taking all the above figures into account, in our considered opinion, it would be justified to sustain the addition to the extent of ₹ 31,04,166/- Accordingly, the addition made by the Assessing Officer deserves to be restricted to ₹ 31,04,166/- and the ld. CIT(A) was not justified in deleting the entire addition made by the Assessing Officer. As a result, the appeal of the Revenue deserves to be allowed in part by restricting the addition to ₹ 31,04,166/- as against ₹ 1,87,04,166/- made by the Assessing Officer. - Appeal of the Revenue is partly allowed.
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2018 (8) TMI 126
TPA - comparable selection criteria - Held that:- In our considered opinion, the comparables selected by the assessee and also by the TPO are functionally different from the functions of the assessee. In the light of findings given in A.Y 2008-09, we are of the view that both the assessee and TPO must carry out fresh search for selection of comparables having functions, similarity in the segment sales and post sales support. We, accordingly, restore this issue to the file of the TPO with the above directions. TPO is directed to decide the issue afresh after giving reasonable opportunity of being heard to the assessee. In so far as provision of management and support services are concerned, we find that the assessee has given complete details of the technical services utilised by it from its AE and the same are exhibited at pages 704 to 708 of the paper book. Details of management services have also been given by the assessee. We find that the TPO/DRP has nowhere considered the details submitted by the assessee. DR pointed out that in so far as management services are concerned, the assessee has not brought anything on record to suggest what type of services were given by the AEs for which the assessee had made the payments. In so far as technical services are concerned, the ld. DR fairly conceded that the details were furnished but not properly appreciated by the TPO. Considering the facts in totality, we are of the considered view that this issue also needs fresh adjudication. We, accordingly, restore this issue to the file of the TPO. The TPO is directed to decide the issue afresh after considering the detailed submissions/documentary evidences furnished by the assessee. The assessee is directed to furnish the details of services utilised by it for which it has made the payments to its AEs. The assessee is further directed to demonstrate what benefits it has received from its AEs. The TPO is directed to consider the same and decide the issue afresh after giving reasonable opportunity of being heard to the assessee.
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2018 (8) TMI 125
Penalty u/s 271(1)(c) - undisclosed interest income on FDR - Held that:- No doubt, the assessee in the returns filed in response to the notice u/s 148 for both the years did not offer the interest income on FDR to tax and claimed the same as exempt. At the same time, it is to be kept in mind that all particulars were very much available in the records based on which the Assessing Officer had reopened the assessment and also made the addition subsequently in the reopening assessment. We find merit in the argument of the ld. counsel for the assessee that the claim of exemption made by the assessee can at best be a wrong claim but it cannot be called a false claim. The Courts have invariably held in various decisions that while the penalty proceedings u/s 271(1)(c) are attracted for making a false claim, however, such penalty is not leviable merely because the assessee has made a wrong claim - merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue that by itself would not, in our opinion, attract the penalty u/s 271(1)(c). - Decided in favour of assessee
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2018 (8) TMI 124
Reopening of assessment - addition invoking the provisions of section 41(1) - Held that:- Here we find that in the reasons recorded it has been clearly mentioned that there has been a waiver of loan amounting to ₹ 7,00,66,000/- and the same is assessable as income which has not been assessed as such. Hence on the touch stone of Hon’ble Apex Court decision in the case of Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA) it can be clearly said that there is a tangible material for the Assessing Officer to come to the conclusion that there is an escapement of income from business. Hence, the reasons do have a live link with the formation of the belief. As regards the merits of the case, we find that the assessee had raised additional evidences and additional ground. In an affidavit mentioned above, it has been said that the amount raised from ECB (External Commercial Borrowing) were utilized mainly to repay the loan from financial institutions. The loan agreement itself mentions that the ECB loan was for general funding requirement. Now the assessee is making a U-turn and claiming that the said loan was utilized to pay off earlier financial institutions loans which in turn were used for acquisition of capital asset. In this regard, we note that firstly these submissions and documents were not before the authorities below. In our considered opinion, they need to be verified with reference to the original records as to whether the claim of the assessee as above is correct or not. It is only after that that it has to be considered as to whether the new claim of the assessee that the said ECB loan was used for capital purposes, can be entertained.Upon careful consideration, in the interest of justice, we remit the issue to the file of the Assessing Officer. The Assessing Officer shall consider the issue afresh after giving a factual finding regarding the veracity of the assessee’s new claim mentioned hereinabove. - Decided partly in favour of assessee for statistical purposes.
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2018 (8) TMI 123
Penalty u/s.271(1)(c) - bonafide mistake - failure to voluntarily add back provision of gratuity in the computation of income, holding this mistake as malafide even though all facts were disclosed - Held that:- The disclosure of provision for gratuity as income in the balance sheet of the current year filed with the return of income and offering such provision for gratuity as income in preceding year’s computation of income, inspire confidence on the submission of the assessee that it was due to the mistake of Chartered Accountant not to add back such provision in the computation of income of the year under consideration. Therefore, in view of the decision in the case of CIT vs. Rice Mills (SD) (2004 (8) TMI 57 - PUNJAB AND HARYANA HIGH COURT) where it has been held that the fault of Chartered Accountant cannot be visited on the assessee, in our considered opinion, no adverse inference can be drawn against the assessee. This being a bonafide mistake, the assessee did not challenge the quantum addition made by the Assessing Officer. This, however, would not be proper in the interest of justice to saddle penalty against the assessee in the peculiar facts and circumstances of the case and the circumstantial evidences available to prove the bonafide mistake with no ulterior motive on the part of assessee, as assessment proceedings and penalty proceedings are two separate and distinct proceedings. Accordingly, the penalty imposed by the assessee and confirmed by ld. CIT(A) deserve to be cancelled. - Decided in favour of assessee
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2018 (8) TMI 122
Penalty u/s 271D or 271E - assessee has accepted loan/deposit from sister concern through journal entries i.e., otherwise then account payee cheque /draft thereby violated provisions of section 269SS and/ or 269T - AO held that the assessee has not made out any reasonable cause as prescribed 273B - Held that:- Considering the decision of Hon’ble Jurisdictional High Court in assessee group case in Ajinath Hi Tech Builder Pvt Ltd [2018 (2) TMI 603 - BOMBAY HIGH COURT], Triumph International Finance(I) Ltd [2012 (6) TMI 358 - BOMBAY HIGH COURT] and in Assessee’s group case in DCIT vs. Aashthavinayak Estate Company Ltd. (2018 (5) TMI 1745 - ITAT MUMBAI) that there was reasonable cause for the assessee to receive deposits of loan or repayment of loans through journal entries. Therefore, in our view the assessee case is squarely falls under a reasonable cause within the meaning of section 273B.
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2018 (8) TMI 121
Estimation of suppressed turnover - assessee's contentions that quantification of undisclosed turnover is only an estimate based on figures in pencil with respect to few plots only and that there is no corroborative evidence - Held that:- Before us also assessee has not furnished any evidence to counter the working of AO. Since there is some basis for working out the so called suppressed turnover and assessee’s main contentions are on the reconciliation of the said working, we are of the opinion that estimation of turnover based on the so called registers/entries in pencil cannot be faulted. Thus, the grounds on this issue (Ground Nos. 1 to 6) are accordingly rejected. Determination of suppressed turnover - Held that:- Since prima-facie future sales cannot be considered as suppressed turnover for the period upto date of search, the gross receipts to that extent requires to be excluded in quantifying the suppressed turnover for the impugned assessment years. Since this aspect requires examination by the AO, we direct the AO to exclude the amounts pertaining to plots unsold as on date of search, so as to quantify the suppressed turnovers upto AY. 2014-15. In the year 2015-16 & 2016-17 i.e., of subsequent years, AO is free to verify this aspect but the unsold plots as on date of search cannot be considered for suppressed turnover particularly for quantifying the turnovers on the ratio of accounted turnover in the impugned assessment years. AO is directed to examine this aspect and exclude the turnover as directed above while determining the suppressed turnover. Grounds are considered allowed for statistical purposes. Estimation of profit - Held that:- In this case, the quantification itself was done on the third party registers, where only the indicative sale prices were recorded. Since more than 70% of the turnover was recorded and the profit at 4% was accepted by AO, we are of the opinion that estimation at 12.5% is reasonable on the facts of the case. Honourable Jurisdictional High Court in the case of ACIT Vs. Ravi Foods Pvt. Ltd., has confirmed net profit rate of 3.91%. That case however, pertain to a food business case, but not real estate. Generally in real estate/contract cases, profit is estimated at 12.5%. As assessee has mostly sold real estate plots, we are of the opinion that estimation of income at 12.5% on the suppressed turnover will meet the ends of justice. Accordingly, modifying the order of CIT(A), we direct the AO to determine the profit at 12.5% of the determined suppressed turnover. Ground on this issue is considered partly allowed. Disallowance u/s 40(a)(ia) - Held that:- AO has not specified whether the assessment order has been passed earlier for AY. 2013-14. Even otherwise by that time the search has happened and assessments have been taken up, the proceedings for AY. 2013-14 have already become crystallised and AO can only consider the undisclosed income on the basis of the seized material or any other information which has come to the knowledge of AO. Since there is no evidence pertaining to the issues on which disallowance was made, we agree with the findings of Ld.CIT(A). As seen from the table mentioned in the assessment order regarding various disallowances, it is also not verifiable on what basis AO has quantified the violations u/s. 40(a)(ia) and 40A(3) of the Act, the details of which are not forthcoming from the order. There is no merit in the contentions of Revenue. - revenue appeal diminished.
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2018 (8) TMI 120
Business income Vs. Other sources - Deduction u/s 36(1)(viii) - Whether income from non-performing assets should be assessed on cash basis and not on mercantile basis despite the assessee maintaining mercantile system of accounting - method of accounting - Held that:- No reason to entertain this Special Leave Petition, which is, accordingly, dismissed. However, the question of law is kept open.
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2018 (8) TMI 119
Disallowance for payments made for donation - Addition on account of interest payment to its sister concerns and other group companies at lower rate than it had to pay to the borrowers - Addition 40A - cash payments being not covered under Rule 6DD(g) - Addition on account of repairs and maintenance - Held that:- Special Leave Petition is dismissed.
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2018 (8) TMI 118
Substantial question of law arises for consideration:- “Whether in the facts and circumstances, the ITAT was correct in holding that amounts received as incentive from Engine Manufacturers by the assessee were capital in nature?” Second question as identical issue was decided by another Division Bench by this Court in CIT v. Jetlite India Ltd. [2015 (11) TMI 304 - DELHI HIGH COURT] - Held that:- SLP dismissed.
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2018 (8) TMI 117
Eligibility for deduction u/s 10AA - surplus amount in the freight export account and in the insurance export as derived from export activities - whether ITAT has failed to appreciate the fact as brought on record by the Assessing Officer regarding disallowance of deduction u/s 10AA of deemed profit of ₹ 5021944/- not eligible for deduction u/s 10AA? - Held that:- Special Leave Petition is dismissed leaving the question of law open.
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2018 (8) TMI 116
TDS u/s 194C - difference between the amounts shown by the assessee and the IRCTC in their books of accounts - Held that:- Special Leave Petitions are dismissed on the ground of delay as well as on merits.
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2018 (8) TMI 115
Period of limitation available with the Assessing Officer for completing the assessment - Whether the Appellate Tribunal is correct in holding that the assessment u/s. 143(3) r.w.s. 254 should be completed within 9 months from the end of the financial year of Tribunal's Remand Order i.e. upto 31/12/2010 disregarding the specific provision u/s. 153(3) of the Act? - addition of interest - Held that:- Special Leave Petition is dismissed on the ground of delay.
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2018 (8) TMI 114
Entitlement to exemption under the provisions of Section 11 and 12 - Charitable purposes - Held that:- Special Leave Petition is dismissed on the ground of delay as well as on the ground of low tax effect leaving the question of law open.
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2018 (8) TMI 113
Reopening of assessment - disallowance u/s 40(a)(ia) - reason to believe - Held that:- Special Leave Petitions are dismissed both on the ground of delay and merits.
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2018 (8) TMI 69
Agricultural income - exemption u/s 10(1) - Merely because instead of horizontal use on soil, vertical space is used, does the growth of mushrooms stand apart from agricultural operations? - Held that:- The process followed in the case of Best Roses Biotech (P.) Ltd.[2011 (11) TMI 373 - ITAT AHMEDABAD] in similar to the process followed by the assessee. Hence, the view of the courts was that the income in question was agricultural income and the explanation only acknowledges this fact. We should not take a ‘pedantic’ view on this issue. The view of the legislature is more expansive and purposive than the view of the courts. In view of the above discussion, we conclude that “soil”, even when separated from land and placed in trays, pots, containers, terraces, compound walls etc., continues to be a specie of land and hence “land” for the sole purpose of determining whether activity performed on such land is for production of an agricultural product. Whether mushroom is a “fungi” and not “vegetable” - Held that:- It is clear that we cannot restrict the word “product” to ‘plants’, ‘fruits’, ‘vegetables’ or such botanical life only. The only condition is that the “product” in question should be raised on the land by performing some basic operations. Mushroom produced by the assessee is a product. This product is raised on land/soil, by performing certain basic operation. The product draws nourishment from the soil and is naturally grown, by such operation on soil which require expenditure of “human skill and labour”. The product so raised has utility for consumption, trade and commerce and hence would qualify as an “agricultural product” the sale of which gives rise to agricultural income. Mushroom, like vegetables and other crops or plants are grown on soil/land and are always attached to the soil until harvested. They draw their nourishment from the soil only. The product mushroom does not arise from any secondary agricultural operation. Unlike in the case of CIT vs. Kokine Dairy (1938 (4) TMI 3 - RANGOON HIGH COURT) relied on by the Ld.AO it cannot be said that production of mushroom is remotely connected with land. This product arises from land and is attached to land during growth and thereafter, just like ‘plants’ or a ‘crop’. Comparison made by the Ld.AO with sale of silk cocoons by relying on the judgment in the case of K.Lakshmansa & Co. vs. CIT [1980 (11) TMI 36 - KARNATAKA HIGH COURT] is wrong, as on facts silkworms feed on mulberry leaves and are not products which are raised from land. Mulberry leaves which are product arising from land, are fodder to silk worms. Hence, we conclude that Mushroom on the facts and circumstances of this case is an agricultural product raised from land. Whether agricultural production done under “controlled conditions”, results in the ‘product’ so raised not being a ‘product from agricultural activity’? - Held that:- ITAT Pune Bench in the case of Asst. CIT v. KF Bio Plants (P.) Ltd. [2012 (9) TMI 1105 - ITAT PUNE] held that the nature of agricultural income would not change merely because agricultural operation was carried out in a greenhouse under a controlled environment. The assessee in that case was engaged in the business of plant floriculture and tissue culture, and claimed exemption of income as being agricultural income under section 10(1) of the Act. The A.O. disallowed the exemption on the ground that basic operation was done in a greenhouse. The ITAT held that the involvement of a greenhouse and controlled environment would not change the nature of agricultural income. As basic operations are performed by expenditure of human skill and labour on land by the assessee, which results in the raising of the ‘product’ called “Edible white button mushroom” on the land and as this product has utility for consumption, trade and commerce, the income arising from the sale of this product is agricultural income and hence exempt u/s 10(1) of the Act. - Decided in favour of the assessee.
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Customs
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2018 (8) TMI 112
Quantum of penalty - Forgery of large number of documents - Clearance of goods on the basis of false documents - Whether given the concurrent findings and the circumstances established, the imposition of a higher penalty on the appellant was justified? Held that:- This Court is of the opinion that the imposition of different amounts as penalties upon the appellant on the one hand and the other two employees on the other, in the peculiar facts of this case, does not appear to be justified - Although the Revenue’s counsel sought to justify this difference by emphasising upon the nature of the role, what appears from the record is that the lower authorities were carried away by the fact that the appellant was a Manager whereas, the other two were lesser ranked employees. The penalty imposed upon the appellant of ₹ 20 lacs each under Section 112 and 114AA of the Customs Act, is hereby reduced to ₹ 6 lacs under each provision - Appeal allowed in part.
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2018 (8) TMI 111
Refund of Differential Duty - quantification of duty on the basis of on shore receipt quantity and not on the basis of quantity mentioned in the bills of lading - rejection of refund on the ground of time limitation - whether refund claim filed by the appellant is governed by Section 27 of the Customs Act, 1962 and consequently it is time-barred or otherwise? Held that:- Though the amount of refund claim is related to duty paid and the said amount is customs duty including the duty on the actual receipt quantity. Therefore, the entire amount paid by the appellant is nothing but customs duty only irrespective to the fact that certain portion of the duty was not payable. Under the Customs Act, any amount which is refundable has to pass the test provided under Section 27 of the Customs Act, 1962 - In the said Act, there is no other provisions made for refund of any amount which was paid either without authority of law or was not payable for any reason. Therefore, all the refund claims under the Customs Act has to be dealt with under the provisions of Section 27. The Hon'ble Supreme Court in various judgments held that all the refund claims of customs and excise has to be governed by Section 27 of the Customs Act or Section 11B of the Central Excise Act, 1944 - Any refund filed before the Customs/ Central Excise authorities can only process the claim under Customs/ Central Excise Acts and the departmental authorities have no jurisdiction to go beyond the provisions made under the Act and limitations provided under Section 27/Section 11B - reliance placed in the case of Collector of Central Excise, Chandigarh vs. Doaba Co-operative Sugar Mills [1988 (8) TMI 103 - SUPREME COURT OF INDIA]. Calculation of relevant date - Held that:- As per clause (b) of sub Section (1B) of Section 27, where the duty became refundable as a consequence of any judgment, decree, order or direction of the appellate authority, the limitation of one year shall be computed from the date of such judgment, decree, order or direction - In the present case, the demand of duty on short imported goods stands set-aside as per the order of Commissioner (Appeal) and as a consequence, the appellant become eligible for refund of the said amount. Therefore, in terms of clause (b) of sub-Section (1B) of Section 27, the period of one year shall be computed from the date of Commissioner (Appeal) order. Accordingly, the refund application filed beyond one year from that date is clearly time barred. Appeal dismissed - decided against appellant.
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2018 (8) TMI 110
Renewal of CHA License - Regulation 9(2) of Customs Brokers Licensing Regulation, 2013 - case of Revenue is that for seeking renewal of the license, Regulation 5 of CBLR only is applicable - revocation of License - Held that:- There has been negligence on part of the custom broker in conducting KYC of the EIC holder and he has failed to verify the functioning at the given address of the importer. Thereby, the contravention of Regulation (n) of CBLR read with Circular No. 9 of 2010-Cus is held to have been proved. The mensrea in respect of all the allegations as stated in the Show Cause Notice dated 01.06.2018 is held to have been established beyond doubt - the appellant has failed to observe obligation (d), (e), and (f) of Regulation 14 of CBLR. Renewal of License - appellant has challenged the same on the ground that he cannot be vexed twice for the same set of facts - Held that:- The said ground is not sustainable in the given circumstances as non renewal of license under Order 9 Sub-Rule 2 of CBLR and the revocation thereof are two different things. For this reason, the ground taken by appellant that the license has not been revoked but the suspension thereof, does not extend an unfettered right to the CHA to seek renewal of the said license at the time of its expiry without meeting the mandatory criteria for the same. It is apparent from CBL Regulations that the provision under which the renewal can be sought is again Regulation 5 only where a fresh license can be obtained by the applicant with the only difference that Regulation 4 shall not be applicable in case of renewal. The non renewal and revocation are two separate things under two distinct provisions of the Regulation, question of appellant to have been vexed twice, as is raised by him, is not sustainable. Appeal dismissed - decided against appellant.
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2018 (8) TMI 109
Penalties u/s 112(a) and 114AA of the Customs Act, 1962 - it was alleged that appellants have concealed the facts regarding actual weighment and providing of correct description of the imported goods from the Customs department - Held that:- Sections 112(a) and 114AA of the Act provides for imposition of penalty for improper importation of goods and use of false and incorrect material respectively. Sections 112(a) of CA - Held that:- In the instant case, it is an admitted fact that the goods in question were confiscated under Section 111(l) and 111(m) of the Act and the same were redeemed on payment of redemption fine. Thus, it is not in dispute that for the wrongful acts and deeds, the goods were rendered liable for confiscation and accordingly, the provisions contained in Section 112 of the Act are satisfied for imposition of penalty - however, the quantum of penalty reduced. Penalty u/s 114AA of CA - Held that:- In absence of any specific findings with regard to sign / using of any declaration, statement or document, the provisions of Section 114AA of the Act cannot be invoked for imposition of penalties on the appellant - penalty set aside. Appeal allowed in part.
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Insolvency & Bankruptcy
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2018 (8) TMI 138
Corporate Insolvency Resolution Process - Held that:- This Adjudicating Authority has ascertained the existence of a default on the part of the Corporate Debtor/ Guarantor. The Financial Creditor has fulfilled all the requirements of law and has also proposed the name of IRP after obtaining the written consent in Form-2. Therefore, CP/699/(IB)/CB/2017 is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Ms. Aishwarya Mohan Gahrana is hereby appointed as IRP, as has been proposed by the Financial Creditor.The moratorium is hereby declared which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in section 14 of the I&B Code, 2016
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Service Tax
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2018 (8) TMI 108
Benefit of N/N. 25/2012 dated 20.06.2012 - transportation of timber/wooden logs, which are used by them as raw materials in their manufacture - Held that:- The petitioner case is that that after the order of the Commissioner which was in favour of the petitioner, the amount of duty was refunded to the petitioner which the department is demanding back - Till the next date of hearing such a demand is stayed.
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2018 (8) TMI 107
Intellectual property service - consideration for affixing of brand name - whether constitutes Business Auxiliary services of intellectual property services? - Held that:- There is no merit in the appeal - Admission is refused and the civil appeal is, accordingly, dismissed.
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2018 (8) TMI 106
Health club and fitness centre - whether the treatment given by the ayurvedic centres run by these resorts would come under therapeutic massages, etc.? - CBEC Circular No. B11/1/2002-TRU dated 1.8.2002. Held that:- Ongoing through the records maintained by these ayurvedic centres, it is seen that they are maintaining case-sheets/treatment files and the treatment process schedule which is a normally done by hospitals also. By the mere fact that the ayurvedic centres are located in the premises of the resorts, it cannot be said that they cease to be ayurvedic centres coming to ayurvedic treatment per se. In view of the clear findings of the Commissioner (A) and the documentary findings produced by the respondents, it is seen that the ayurvedic centres are providing therapeutic treatment under ayurvedic system. Going by the mere fact that the centres are located in the resorts and sometimes the duration of treatment is for one or two days, it cannot be concluded that the massages or treatments offered by these centres are only for general well-being and not for any therapeutic value. Not all the people who stay in the resort may take the treatment. What is important is whether such treatments are given by a qualified Doctor/Doctors and whether the procedures are prescribed under therapeutic tests. It is not the department’s contention that the massages and panchakarma and other treatments provided by the respondents are not mentioned in ayurvedic texts - all the required conditions for such treatments to be treated as therapeutic are specified and will fall under the exclusion provided by the Board Circular cited above. Appeal dismissed - decided against Revenue.
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2018 (8) TMI 105
Penalty u/s 76 of FA - default in payment of service tax within the stipulated time i.e., by 5th of every month immediately following the calendar month in which the service is provided - Rule 6(1) of Service Tax Rule, 1994 read with Section 68 of the Act. Held that:- In the present case the appellant has collected the service tax but has not deposited the same in the Government Treasury and when the show-cause notice was issued for the default, thereafter, the assessee paid the service tax along with interest - further, the only ground raised by the appellant for seeking waiver of penalty under Section 80 is that they had financial difficulties on account of which they could not pay the service tax in time but this is not a sufficient ground because they have collected the service tax from their customers. In the past also, the appellant has committed default in payment of service tax in time. No doubt the appellant had some difficulties on the financial front but that cannot be the reason for non-payment of tax once they have collected from the customers - The Tribunal in the case of Triton Communications Pvt. Ltd. [2005 (7) TMI 595 - CESTAT, MUMBAI], has held that financial crisis is not a reasonable cause for failure to pay tax. Appeal dismissed - decided against appellant.
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2018 (8) TMI 104
CENVAT Credit - office equipments, tables, chairs, split air conditioners, power plant battery, HDPE cables, equipments, miscellaneous window cooled sets, air conditioner EA sets, W/C diesel EA - remaining 50% credit on capital goods - Held that:- The Cenvat Credits can be availed on the capital goods as per Rule 2(a)(A) and (B) of Cenvat Credit Rules, 2004 - On perusal of definition of capital goods, it is found that anything which does not fall under any of the Chapter as mentioned in Clause (i) above will not be a capital good unless it is a component spare or accessory for anything in said Clause (i). For all or any of these to be accessory we need to know the relevance of their use, for the provider of Telecom Services, the output service is Telephone & Cellular Network. Thus, any article/ thing /object which is used for transmission & reception of said network can be called as component/ spare/ accessory of the goods in Clause (i) as mentioned above, upon which the Cenvat Credit can be availed. Most of the articles of Annexure A are equipments or appliances to be used in the office of the appellant or any office, hence cannot be categorized as such component/ spare/ accessory of the goods which are rendering output service herein, and hence, are not the goods on which the Credit can be availed - OFC, HDPE, batteries and ACs for server rooms are the inputs used in providing output service. Hence, the appellant are entitled to claim Cenvat Credit on these items only. Appeal dismissed - decided against appellant.
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2018 (8) TMI 103
Construction services - various activities done by the appellant - it is observed that the appellant, even prior to the registration were engaged in construction services, but have not discharged the liability for the period with effect from April 2005 to September 2009 - benefit of abatement denied - whether all such activities of the assessee/respondent can be categorized as Commercial or Industrial Construction Services? Held that:- Perusal of definition of commercial or industrial construction services makes it clear that the services rendered by the appellant will fall under Sub-clause C thereof. Since the material is also provided by the service provider, the case of the appellant as far as completion and finishing services as detailed above are concerned, it stands clearly covered under Item No. 5 of the Table given in Notification No. 1/2006-ST dated 01.03.2006 - the Commissioner (Appeals) has rightly extended the benefit of this notification. The other construction services which are residential in nature, the phraseology itself takes that Contract out of the definition of Commercial and Industrial Construction. Hence, levying the demand for the said construction under the head of it being commercial is, therefore, not at all sustainable. Levy has rightly been done away. Commercial nature of services - Held that:- dmittedly assessee/respondent is constructing Ambedkar Peeth, a programme under Government of Rajasthan for M/s AVS and is also rendering services to a PSU, i.e., Jaipur Vidyut Vitran Nigam Limited (JVVNL) both being the authorities under Government of Rajasthan in services rendered to them will clearly be out of the ambit of the above definition of Commercial and Industrial Construction. Resultantly, any demand raised for these constructions under Commercial or Industrial Construction Services is not sustainable - demand rightly set aside. Penalty u/s 76, 77 and 78 of FA - Suppression of facts - Held that:- Since the assessee/respondent has not filed the Service Tax return in the form ST3 in the manner and frequency required under Service Tax Rules, 1994 and has also failed to pay the due Service Tax, the same amounts to the deliberate suppression of facts - Otherwise also, the law requires assessee itself to determine the classification of service and to pay tax on self assessment basis. Since the assessee/respondent has failed to act accordingly, the penalty under Section 76 and 78 have rightly been confirmed against the respondent - the penalty under Section 77 has been done away as being not warranted in view of the penalties imposed under Section 76 and 78. Appeal allowed in part.
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2018 (8) TMI 102
Business Auxiliary Service - Levy of Service Tax - Agency Commission - Corporate Guarantee Commission - Held that:- The definition of ‘Business Auxiliary Service’ is very wide and it covers all the activities which promotes business of clients. The services detailed under clause iv of Section 65 (105) (zzb) of the Act made taxable from 10/09/2004 - the nature of corporate guarantee as well as of bank guarantee is one and the same i.e. for facilitation of the lending facilities - The copies of the said debit notes clearly indicate the transactions with regard to lending facilities in India and therefore through Corporate Guarantee Commission the appellant are chargeable to Service Tax. And the commission paid was taxable under ‘Business Auxiliary Service’. Merely because the name of the guarantee has been changed from ‘Bank’ to ‘Corporate’ it cannot be said that it won’t fall under ‘Business Auxiliary Service’ as defined under Section 65 (105) of the Finance Act, 1994 - demand of Service Tax on the Corporate Guarantee Commission upheld. Agency Commission - benefit of N/N. 13/2003-ST dated 20/06/2003 (as amended) - Held that:- This notification exempts Service Tax payable on Commission Agent Services in relation to agricultural produce. The lower Authorities have not extended the benefit while taking the view that the committee rice is not covered under the said notification but in the case of Kohinoor [2017 (3) TMI 1289 - CESTAT NEW DELHI], the Tribunal has taken the view that commission paid for export of rice to Commission Agents will be entitled to benefit of the Notification, particularly in view of the Circular issue by the Board dated 26/05/2011 - the demand for Service Tax on Agency Commission set aside. Appeal allowed in part.
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2018 (8) TMI 101
Commercial training or coaching Services - imparting education in courses - B.Sc. Management/ BBA - M.Sc. International Business - PGDM/PGP/MBA - Diploma in design. Whether imparting of these courses by the appellants constitute rendering a service of commercial training or coaching centre? - Held that:- Though the contention of the appellant is that they are recognized universities under IGNOU and AICT and PTU all being the state functionaries, the appellant also becomes the university recognized by law - there is no single document produced by the appellants to show that IILM has ever been recognized as deemed university by any of the universities constituted under law. Mere approval in their favour by any such government university for conducting certain courses by distant education or by permitting them to do so under convergence scheme cannot cloth them with the title of deemed university. Course which is vocational in nature - N/N. 24/2004-ST dated 10.09.2004 - Held that:- Perusal of said Notification clarifies that the same is not applicable to the appellants. Vocational training institute as per the explanation of said Notification is held to mean an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training offering courses in designated trades as notified under the Apprentices Act, 1961. There is nothing on record to prove said affiliation - demand confirmed. Extended period of limitation - penalty - Held that:- The appellants are admittedly imparting education against heavy considerations. It is apparent on record that they have tried to avoid their tax liability under different pleas i.e. on the ground of them being a charitable trust, another ground of them being a deemed university and of them being imparting education under the aegis of the bodies constituted under the force of law - the appellants being an education imparting institute cannot be presumed to have acquired a wrong interpretation of the legal provisions or notifications or circular still taking the benefit thereof is definitely a deliberate non-disclosure of correct fact and as such suppression of fact - extended period and penalty rightly invoked. Appeal allowed - decided in favor of Revenue.
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2018 (8) TMI 100
Commercial or Industrial Construction Service - providing and laying water supply system to Grater Noida - Held that:- The activity undertaken by the appellant for laying water supply system for Greater Noida, is not covered by the definition of ‘Commercial or Industrial Construction Service’ - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 99
Jurisdiction - power of Member (Judicial)/HOD to constitute a Larger Bench - Section 129 read with Section 129C sub-section (5) of CA - Constitution of Larger Bench by President only - difference of opinion - majority order - Held that:- In view of difference and majority opinion on the preliminary objection raised, the hearing is adjourned sine-die. Put up the file before Hon'ble President of CESTAT, as and when he joins.
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2018 (8) TMI 98
Renting of Immovable Property Service - Held that:- There is no dispute about the factual position that all the three appellants starting discharging their service tax liability under the category of “Renting of Immovable Property”, with effect from 01/06/2007, after getting themselves registered with the department. No objection was ever raised by the Revenue at the time of registration or at any time thereafter. Extended period of limitation - Held that:- The extended period is invocable only when there are positive evidences of any suppression or mis-statement, with intent to evade payment of duty. In the absence of the same, the demands raised beyond the normal period are liable to be stuck down as barred by limitation - Inasmuch as the entire facts were known to the Revenue, there is no justification for invoking the extended period and inasmuch as the entire demand is beyond the normal period of limitation. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (8) TMI 97
CENVAT Credit - distribution by ISD - Held that:- The Special Leave Petitions are dismissed on the ground of low tax effect, leaving the question of law open.
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2018 (8) TMI 96
100% EOU - de-bonding of unit - N/N. 23/2003-CE - Held that:- There is no merit in the appeal and same is dismissed.
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2018 (8) TMI 95
Commission of offence under Section 9 and 9AA of the Central Excise Act, 1944 - evasion of payment of duty - removal of excisable goods in contravention of the provision of the Act and the Rules made thereunder - failure to supply the information as required by the Rules and giving false information. Held that:- It is admitted position in this case that genesis of the present complaint is the order in Original Case No.3/95 passed by the Commissioner of Central Excise, New Delhi, dated 29.12.1995, which confirmed demands for differential excise duty made on the Petitioner-Company vide show cause notice dated 27.03.1987 and levied penalty on the Petitioner-Company and the individual accused. The said order in original dated 29.12.1995 stood set aside by the CEGAT vide its judgment dated 04.09.1998 - In the instant case, Union of India was asked to seek instructions as to whether any such withdrawal petition has been filed on behalf of the Department in terms of the aforesaid circular, but no instruction has been received by the Union of India. Continuance of the criminal proceeding against the Petitioner in terms of order passed in Original Case No.03/95 dated 29.12.1995 will amount to abuse of process of the Court and mere harassment to the petitioner - application allowed.
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2018 (8) TMI 94
Principles of Natural Justice - petitioner argued that it is deprived of an opportunity of defending the show cause notice in the absence of the copies of the documents relied upon by the Department/Revenue being not supplied - Held that:- With great difficulties and obstacles parties get an opportunity to argue old appeals and the Tribunal therefore should not pass any orders which would delay the proceedings further. Public interest suffers adversely if any tentative and prima faice view is expressed, like in the present manner, and it delays the final hearing of the appeal and thereafter the passing of the orders. The available material should have been taken into account to dispose of the appeal. Tribunal directed to pass final order in the appeal by reserving the right of both sides to raise appropriate contentions with regard to the interim directions and in the event they are aggrieved and dissatisfied with the final orders in the appeal. Petition disposed off.
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2018 (8) TMI 93
Clandestine production and removal - Gutkha - demand based on confessional statement - Held that:- The confirmation of demand was solely on the basis of confessional statement of Shri Manoj Hora and therefore, following the ruling by Hon’ble Gujarat High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS SAAKEEN ALLOYS PVT. LTD. [2014 (5) TMI 606 - GUJARAT HIGH COURT], it is held that the confirmation of demand is not sustainable - since the demand is not liable to be confirmed equal amount of penalty is also not liable to be imposed. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 92
Penalty u/s 11 AC sub-section (1) (a) of Central Excise Act, 1944 - malafide intent present or not - clearance of semi-finished fibre to group units on payment of duty - Held that:- The admitted fact of the present case is that the appellant was clearing its goods after making payment of duty. It is after the Board’s Circular dated 13th February, 2003, which came to the notice of the appellant that they prayed vide their own request dated 18th January, 2013, to the Department for the provisional assessment order qua the duty to have been paid by them on their semi-finished fibre as being cleared by them to their group units. It is after the said request that the Department demanded details from the appellants since the year 2008-09 till the year 2012-13 - It is also very much apparent and admitted that prior the impugned show cause notice could have been issued, the appellants deposited the differential duty of ₹ 22,40,011/- for the period w.e.f. 2009-10 to 2012-13 (no clearances in the year 2008-09) alongwith the interest of ₹ 2,84,502/- for the period 2011-12 and 2012-13. It becomes absolutely clear that the facts came to the notice of the Department on the request of the appellant itself and that the appellant was paying duty as per its own calculation. Thus, in essence the conduct of the appellant amounts to offering its activities to assessment. The conduct, therefore is opined bonafide - The reasoning given by the appellant in their defence has also been held logical. The findings to my opinion suffer no infirmity in the given facts and circumstances of the case. Hence the order to that extent is therefore, upheld. Reduced penalty - Held that:- The duty has been already paid by the appellant for both these years as well. He is liable to pay interest only if there is any differential amount of duty yet to be paid by the appellant for both these years. There is neither such evidence nor any finding in this respect. The interest for the subsequent years has already stands deposited by the appellant alongwith the differential amount of duty paid - the appellant having no malafide intention to evasion of duty, this is a fit case to not to be covered under the proviso to Section 11AC of Central Excise Act - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 91
Clandestine manufacture and removal - suppression of production - excess of stock - case of appellant is that the SCN has been issued on the basis of statements given by the officers of the appellants which made under duress and have not been supported by any concrete evidence - it was also alleged that the stock of alleged excess was taken on the basis of an eye estimate - Held that:- The fact of discharged of the accused in the criminal proceedings is a strong reason and ground for holding that the impugned order of learned Commissioner is not sustainable - the impugned order is liable to be set aside on the discharged of the company and persons involved in the case by the Hon’ble Special Court of Economic Offences - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 90
Time Limitation - non-speaking order - levy of duty on printed plastic stickers - Held that:- Though the appellant have placed various correspondences to show that there is no suppression of fact but instead of dealing with those material, the Ld. Commissioner (Appeals) conveniently ignored the same and concurred with the adjudicating authority - the Ld. Commissioner has not passed a speaking order - the matter remanded to the Ld. Commissioner (Appeals) to re-consider the issue on limitation - appeal allowed by way of remand.
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2018 (8) TMI 89
Condonation of delay of 21 days in filing appeal - Held that:- The ground stated in the appeal memo that the order was sent to the factory office that was received by the security personnel is not a convincing ground in the sense that such important registered letter cannot be dealt in such casual manner and assigned to the security personnel to handle the same and it appears improbable that such letter would take more than 3 weeks to travel a distance of 20 km to reach its head office - Therefore no illegality or infirmity is found in the order of Commissioner (Appeals). Appeal dismissed - decided against appellant.
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2018 (8) TMI 88
Clandestine removal - it was alleged that Kanpur unit are receiving the raw materials from their factory located at Malwan, Fatehpur i.e. the present appellant - The Tribunal’s decision in appellant own case [2008 (1) TMI 782 - CESTAT, NEW DELHI] passed in respect of their Kanpur unit vide which the allegation of clandestine removal, which was primarily based upon the receipt of raw material from the present appellant at Fatehpur unit, without payment of duty, where the Tribunal has already set aside the demand against their Kanpur unit. Held that:- Grounds of allegations in the present case as also in their Kanpur unit is based upon the same set of records, which were recovered by the visiting officers from the Kanpur unit. Further, while demanding duty from Kanpur unit, on the allegations of clandestine removal, it was revenue’s own case that they have received the unaccounted raw material from their unit located at Fatehpur i.e. present appellant - In the present appeal also it is the revenue’s case that the appellants have cleared their final products i.e. Ingots & Billets to their unit located at Kanpur, who has further utilized the same for clandestine manufacture and removal - As such it is seen that the allegations as also the evidences in both the cases are interconnected. As the Tribunal has set aside the demand against the Kanpur unit, this fact leads to the inevitable conclusion that the Tribunal has not agreed with the revenue’s stand that the Kanpur unit was receiving raw material from Fatehpur unit. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 87
Validity of SCN - confiscation of raw material - Held that:- The said show cause notice was issued without proper appreciation of the facts and application of provisions of law. Further the computation of differential duty to be demanded was also not on the basis of settled law. Further raw materials were also proposed to be confiscated. The raw materials cannot be confiscated under the provisions of Central Excise law. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 86
Evasion of duty - goods involved in the said parallel invoices did not suffer duty - Held that:- Before issue of show cause notice said duty was paid and interest was paid during compliance to Order of Stay passed by this Tribunal - penalty upheld - The appellant is given an option to pay 25% of the said penalty within a period of 30 days from the receipt of this order. Clandestine supply of goods to V.K. Industries - Held that:- Except the inspection certificates there was no other evidence such as procurement of raw materials, clandestine removal, realization of sale proceeds, etc., and therefore, the said allegation is not sustainable. Personal penalty on the other appellant under Rule, 26 of Central Excise Rules, 2002 - Held that:- Since there was no confiscation of goods, personal penalty of ₹ 13 lakhs imposed on the other appellant under Rule 26 of Central Excise Rules, 2002 is set aside. Appeal allowed in part.
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2018 (8) TMI 85
CENVAT Credit - common input services used in manufacture of excisable goods as well as in providing trading activities - Rule 6(3) of the Cenvat Credit Rules - extended period of limitation - penalty - Held that:- The learned Commissioner (Appeals) upheld the part demand but set aside the penalty imposed upon appellant and Revenue is not in appeal against that part of the impugned order - The circumstances for imposition of penalty as also for the invocation of extended period are identical inasmuch as both pre-suppose a mala fide mind with intention to evade payment of duty. It is well settled that if penalty has been set aside, thus leading to believing the bona fide of the appellant, the normal period of limitation would not be available to the Revenue - the demand raised beyond the normal period of limitation is not justified, the same is set aside. However, a part of a demand would fall within the limitation period and the learned advocate has given undertaking to reverse the proportion Cenvat Credit in respect of common services, so utilized by them - matter remanded for the purpose of quantification of the amount of credit required to be reversed by appellant.
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2018 (8) TMI 84
Supply of Yarn to Handloom Societies - N/N. 5/98-CE and 5/99-CE - whether the yarn so supplied by the appellant was actually used by the societies or not? - Held that:- As per Notification, such yarn was required to be supplied by the assessee on the orders of the National Handloom Corporation subject to production of certificate and the fact that the payment for the same stands made by cheque drawn by such Cooperative Society or Corporation, as the case may be, on its own bank account - Admittedly, both the conditions stand satisfied by the appellant, inasmuch as certificate stands produced and the consideration stands received by way of cheque. There is no further obligation cast upon the assessee to find out the truth, as to whether the yarn supplied by them to various societies, under the direction of the Apex body i.e. NHDC stands actually used by such societies on handloom. An identical issue was considered by the Tribunal in the case of M/s West Dinajpur Spinning Mills Ltd. Vs Commissioner of Central Excise, Kolkata [2006 (7) TMI 390 - CESTAT, KOLKATA] wherein it was observed that there being no further condition as regards the disposal of purchased yarn by the Apex body, revenue’s anxiety to reach the purchaser of the Apex body and the ultimate use of the yarn is beyond the scope of the notification. The yarn having been purchased by Apex body NHDC, it was their duty to see the fair distribution of the same to the handloom sector. No end use condition can be self introduced in the notification. In the absence of such requirement built in the notification inasmuch the certificate for intended use were issued, and further use of the same being in the hands of the Apex body, who are held responsible for distribution, the fact of actual use of the yarn will not effect the appellant’s claim to the benefit of the notification. Such an extraneous condition cannot be imposed by the adjudicating authority on its own. Appeal allowed - decided in favor of appellant.
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2018 (8) TMI 83
Supply of pipes or pipe fittings for water project - N/N. 6/2002-CE dt. 1.3.2002 - benefit of notification denied on the ground that the pipes fittings were used between the 1st storage tank point to various village storage tanks i.e. beyond 1st storage tanks - Held that:- The issue has been considered by this Tribunal in Electrosteel Casting Ltd. [2008 (10) TMI 424 - CESTAT, KOLKATA], where it was held that the pipes of higher dimension have been allowed exemption in addition to the pipes required upto the first storage point - benefit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 82
SSI Exemption - N/N. 9/2001-CE dt. 1.3.2001 - clubbing of clearances - Rural area - branded goods - branded goods manufactured at Goa Unit, which is situated in Rural Area - Held that:- On the same issue for the earlier period, this Tribunal, in appellant own case COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V VERSUS SHAKTI INDUSTRIES [2008 (7) TMI 668 - CESTAT, MUMBAI], after scrutiny of the facts and interpreting the Notification No. 9/2000 -CE dt. 1.3.2000 worded in similar line with Notification No. 9/2000-CE dt. 1.3.2000, observed that the appellants are eligible to benefit of Notification No. 9/2000-CE dt. 1.3.2000 and the value of clearance of their Goa unit cannot be added to the clearance value of Mumbai unit in computing the aggregate value of clearances under the said Notification - clearances cannot be clubbed - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 81
Waiver of penalty - Non-payment of duty - manufacture of excisable goods for continuous period of three years but no duty paid - appellant were farmers and claimed ignorance of law - Held that:- Non-payment of excise duty on the manufacture of excisable goods came to the knowledge of the Department on the basis of intelligence and visit by the officer to the factory premises of the appellant. There is no dispute of the fact that duty has not been paid continuously for three years. It is difficult to appreciate that the appellant has not paid the excise duty due to ignorance of law, which cannot be a defense for non-compliance with the provisions of Central Excise law - penalty upheld - appeal dismissed - decided against appellant.
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2018 (8) TMI 80
Reversal of CENVAT Credit - Capital goods destroyed by fire - Rule 3(5C) of the CENVAT Credit Rules, 2004 - Held that:- The rule reveals that CENVAT credit used in the manufacture of the finished goods is required to be reversed on remission of the duty allowed on the finished goods destroyed in fire - In the present case, demand is confirmed for recovery of credit on capital goods, on destruction of the said capital goods in fire, inside the factory, which is not prescribed under the said provisions - demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 79
Penalty u/r 15(2) of CCR read with Section 11AC of the CEA - Reversal of credit availed on cesses alongwith Interest - Held that:- It is an admitted fact on record that the EDI system was not updated at the time of filing the bill of entry by the appellant. Appellant had also paid such amount into the Central Government account. Thus, under such circumstances, it cannot be said that taking of CENVAT credit of the duty amount paid into the Government exchequer would call for invocation of penal provisions contained in the CENVAT structure - also there is no mala fide intention - penalty not warranted - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 78
CENVAT Credit - input services - pest control services - telephone services - repair and maintenance of air conditioner - export related services - Held that:- It is not the case of Revenue that appellant had used/utilised the disputed services for the personal benefit or consumption of its employees. Since the disputed services were used in or in relation to the manufacture of the final product and having nexus with the ultimate final product manufactured by the appellant, CENVAT Credit on the disputed services cannot be denied by the department - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 77
Principles of Natural Justice - proper discussion of submissions made by appellant not done - Refund claim of duty paid twice - denial on account of unjust enrichment - Held that:- The adjudicating authority has not discussed in detail aspect of the each and every piece of evidence produced by the assessee in support of their claim that the refund is due to them and its burden has not been passed on to the customers. In absence of proper reasoning on the documents/evidences, the Revenue filed an appeal before the Ld. Commissioner (Appeals) disputing the finding of the Adjudicating Authority that the hurdle of unjust enrichment has not been passed by the assessee. Also, from the record it is found that a report from the Range Superintendent was obtained by the Adjudicating Authority wherein the Range Superintendent had reported in favour of the assessee. Such report has also not been handed over to the assessee. It is prudent to remand the matter to the adjudicating authority, to examine all the evidences in detail and record a specific finding on the issue of passing of the incidence of duty paid and claimed as refund by the assessee - appeal allowed by way of remand.
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2018 (8) TMI 76
Valuation - Job-Work - inclusion of notional interest on advances in assessable value - Rule 6 of the Valuation Rules 2000 - demand of Interest and penalty - Extended period of Limitation. Held that:- In terms of the said Rule 6, money value of additional consideration received in any form has to be added the transaction value to arrive at the assessable value. In terms of explanation 2 appended to the said rule, notional interest on advances will have to be added to the transaction value only if the advanced received has influenced the fixation of price/ transaction value in respect of the customer who has tendered such advance. The explanation also provides that the test for determination whether such advance has influenced fixation of price/ transaction value with in respect of such customer can be charging of lower price for the same good from him in comparison to other customers. In the present case, there is no dispute on the facts that Appellant was making use of the machinery supplied to it by sister concern without making any payment towards the purchase of machine for the period under dispute. Neither they had paid any interest in respect of the amounts to be paid as price for the purchase of the said machine. Though they had been using the machinery from 1.09.2001 the complete payment in respect of the same was made in thirteen installments upto 31.03.2005. It is also an admitted fact that appellant has not paid any interest to the sister concern against the delay in the payment of the amount towards the purchase of such machinery. Thus amount due to be paid against the said machinery was nothing but an interest free advance given by the sister concern to the appellant. Thus in terms of Rule 6, the notional interest due in respect of these advances need to be added to the transaction value for determination of the assessable value if it can be shown that the these interest free advances have influenced the transaction value in respect of the sister concern and the job charges charged from them were lower than the job charges in respect of other customer. Extended period of limitation - Held that:- It is a fact on record that the matter came to light only when the unit was audited. Thereafter enquiries were made by the department from the appellant and the entire details were made available only after protracted communications - Extended period of limitation as provided under proviso to Section 11A (1) has been rightly invoked. Demand of Interest - Held that:- Since taxes has not been paid when the demand of interest cannot be set aside. It is a settled law that interest is an absolute liability cannot be waived in any circumstances. Penalty - Held that:- Since in the present case tax has been evaded by resorting to fraud, suppression, mis-statement etc. penalty under Section 11AC is justifiable and accordingly upheld - As it is already proved that the noticee had suppressed the facts, the consequences shall automatically follow. Appeal dismissed - decided against appellant.
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2018 (8) TMI 75
CENVAT Credit - input services - manpower recruitment & supply agency service - training & coaching service - denial on account of nexus - Held that:- The use/utilization of the disputed services were within the factory premises of the appellant for complying with statutory requirements mandated under the Factories Act, 1948 read with Maharashtra Factories Rules, 1963 - As per the requirements of said statutes, maintenance of garden and for providing medical / clinical facilities to the employees within the factory premises, is required to be adhered to by the manufacturer - since the appellant had availed such services for complying with the statutory requirements, the service tax paid thereon should be available for Cenvat credit - appeal allowed - decided in favor of appellant.
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2018 (8) TMI 74
CENVAT credit - fake invoices - raw material not received in the factory - it was alleged that they have not received the quantity of inputs mentioned in seven invoices but availed paper credit of the duty amount shown on these invoices - the entire case is based on statements of witnesses - denial of cross-examination - Held that:- The matter was remanded to the adjudicating authority for fresh adjudication after setting aside the order - Initiating the process of adjudication afresh includes allowing the examination and scrutiny of the evidence on record and also cross-examination of the witnesses - However, from the list of witnesses, there is no justification in the request of the appellant to cross-examine the officers, participated in investigation. Thus, the appellants be allowed cross-examination of the witnesses, whose statements were relied upon by the adjudicating authority in passing the impugned order. The appellants be allowed cross-examination of the witnesses, whose statements were relied upon by the adjudicating authority in passing the impugned order - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2018 (8) TMI 73
Time Limitation - Section 8(5) of the Entry Tax Act - Recovery of Entry Tax and penalty - Held that:- There is no reason to interfere with the impugned order. The Special Leave Petition is accordingly dismissed.
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2018 (8) TMI 72
Refund of tax paid on excess amount - price variation clause - Held that:- The review petitions and the connected papers have been properly perused - there are no merit in the review petitions and the same are accordingly dismissed.
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2018 (8) TMI 71
Levy of Sales Tax - sale of voice transmission service - goods or not - sales or not - tax was imposed on the ground that they goods under Section 2(5) of the said Act - According to the petitioners, the petitioner's voice communication service is only a service and eligible to “Service Tax” as laid down in the Finance Act, 1994 and therefore they got themselves registered with the Central Excise Authorities and the petitioners are regularly depositing service tax. Held that:- By the said judgment of the Hon'ble Apex Court in the case of Bharat Sanchar Nigam Limited and Another V/s. Union of India and Others [2006 (3) TMI 1 - SUPREME COURT], the nature of transaction by which the mobile connections are enjoyed has been put to rest by holding that it is not a sale but it is a service for if it would have been sale then the State legislature would have been competent to levy sales tax on the said transaction by invoking entry 54 of List II of the Seventh Schedule to the Constitution. However, it was only service then the Central Government alone would be entitled to levy service tax under Entry 97 List I - The said judgment therefore has settled the issue that goods do not cover the electromagnetic waives or radio frequencies for the purposes of Article 366(29A)(d) and the goods in telecommunication are limited handset used for permissions of voice through airwaves. The impugned notices issued by the Sales Tax Officer (Enforcement), Mazagaon, Mumbai i.e. respondent No.3 for imposition of tax from voice transmission service cannot be sustained and are liable to be quashed and set aside - petition allowed - decided in favor of petitioner.
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2018 (8) TMI 70
Demand of entry tax to be deposited before assessment order - - Section 8(5) of the Entry Tax Act - Recovery of Entry Tax and penalty - purchase of Hydraulic Excavator - It is the case on behalf of the petitioner that thereafter without passing any assessment order, the respondent authorities have issued the impugned demand notice to the petitioner on 20.02.2016 asking the petitioner to deposit entry tax on the purchase made on 29.09.2006 along with penal interest and penalty. Held that:- There shall be levied and collected entry of specified goods into local area, a tax on the purchase value thereof at such rates as may be fixed by the State Government by Notification in the Official Gazette but not exceeding the maximum rates specified in column no.3 of schedule. It further provides that such entry tax shall be in addition to the tax levied and collected, as octroi by a Municipal Corporations or any other local authority. It also further provides that amount of tax leviable, shall, subject to such conditions as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the law relating to Sales Tax as may be in force in any other State or Union Territory by an importer who has purchased the specified goods in that State. It also further provides that amount of tax leviable under the Entry Tax Act, shall, subject to such conditions as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the Central Sales Tax Act, 1956 on the purchase of the specified goods in the course of inter State trade or commerce. As per sub-section( 5) of Section 8, no order of assessment under sub-section (3) or (4) shall be made after the expiry of three years from the last date prescribed for furnishing of returns of the particular period. It further provides that if for any reason, such order is not made within the period aforesaid, then the return so furnished shall be deemed to have been accepted as correct and complete for assessing the tax due from such person. As per the scheme of the Act and as per Section 10, a person liable to pay the tax, shall before furnishing return as required by sub-section( 1) of Section 7, first pay into the Government treasury in the prescribed manner, the whole of the amount of tax due from him according to such return - In the present case, the importer is required to furnish return cum challan in Form 1, within three days of entry of specified goods into local area in case the importer is not registered dealer and in case importer is registered dealer shall furnish return cum challan under said Rule within a period of 21 days. Therefore, the limitation for assessment as provided under sub-section( 5) of Section 8 shall be three years from the last date prescribed for furnishing the return, provided the importer has filed the return. In case, the importer has not filed the return at all, sub-section( 5) of Section 8 shall not be applicable. The submission of the petitioner that impugned notice and / or assessment order are barred by limitation as provided under Section 8 of the Act is concerned, cannot be accepted. So far as submission on behalf of the petitioner that as they were of the opinion and they believed that the goods which were imported, were not specified goods and therefore, not liable to pay entry tax and therefore, they were required to file return and therefore, did not file the return is concerned, the aforesaid submission is contrary to the scheme of the Act and Rules - the submission on behalf of the petitioner that unless and until assessment order is passed and the amount of tax is determined there is no question of making payment of tax is concerned, the aforesaid submission is also contrary to the scheme of the Act and Rules. While making payment of entry tax as demanded, the petitioner shall be entitled to deduction in tax liability as provided under Section 4 of the Act. Principles of Natural Justice - Held that:- It appears that assessment order dated 13.06.2016 has been passed in haste and therefore, same can be said to be in principles of natural justice as no sufficient opportunity has been given to the petitioner. Therefore, the matter is required to be remanded to the appropriate authority to pass fresh order in accordance with law and on merits after giving opportunity to the petitioner on all aspects - matter on remand. Application allowed in part.
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