TMI Tax Updates - e-Newsletter
August 6, 2016

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Refund - Excess interest paid was an arithmetic error and need to be rectified. Revenue not allowed to retain the excess amount - Tri

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Articles

1. READING DOWN MODEL IGST ACT (MISCELLANEOUS PROVISIONS)(LAST PART-12)

   By: Dr. Sanjiv Agarwal

News

1. RBI Governor launches Website 'सचेत' to curb Illegal Collection of Deposits

2. Statutory and Institutionalised framework for Monetary Policy; Central Government in consultation with RBI announces the Inflation Target of Four Percent

3. RBI Reference Rate for US $

4. Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies

Notifications

Customs

1. 38/2016 - dated 4-8-2016 - ADD

Seeks to amend notification No. 103/2011-Customs, dated 23.11.2011 to extend ADD on Opal Glass Ware originating in or exported from China PR & UAE

2. 37/2016 - dated 4-8-2016 - ADD

Seeks to amend notification No. 50/2011-Customs, dated 22.06.2011 to extend ADD on sewing machine needles originating in or exported from China PR

DGFT

3. 20/2015-2020 - dated 4-8-2016 - FTP

Continuation of Minimum Import Price (MIP) on 66 HS Codes of Iron and Steel under Chapter 72 of ITC (HS), 2012 – Schedule – 1 (Import Policy): amendment in import Policy Conditions

4. 19/2015-2020 - dated 4-8-2016 - FTP

Import/export policy for Human Biological Samples for commercial purposes: amendment Schedule – 1 (Import Policy) and Schedule – 2 (Export Policy) of ITC (HS), 2012

Circulars / Instructions / Orders

RBI

1. RBI/2016-17/34 - dated 4-8-2016

Implementation of Indian Accounting Standards (Ind AS)

Highlights / Catch Notes

Income Tax

• High Court Waives Penalty u/s 271C Due to Ambiguity in TDS Deduction Rules, Sections 194-C vs. 194-I.

  Case-Laws - HC : Penalty u/s 271C - non deduction of tds - when the TDS had to be deducted the question whether TDS had to be deducted under Section 194-C or 194-I of the Act was not a settled one. This explains why the CBDT itself had to issue circulars clarifying the position. Even this Court was persuaded to again frame a question on the issue in its order dated 5th September 2005. - no penalty - HC
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• Assessee permitted to prove if land is agricultural u/s 194LA during tax assessment proceedings.

  Case-Laws - HC : TDS u/s 194LA - assessee is entitled to establish in the assessment proceedings whether the land is agricultural land or not. - HC
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• High Court Quashes Case Transfer Order for Failing to Apply Proper Judicial Consideration and Reflect Spirit of the Law.

  Case-Laws - HC : Transfer of cases - the authority has not acted in the spirit in which it has to act while dealing with an issue of transfer. By merely reproducing and taking out the words from the statutory provisions, the order cannot be said to be passed upon application of mind - order of transfer quashed - HC
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• Payment to Steria France for managerial services exempt from technical service tax and withholding u/s 195.

  Case-Laws - HC : The payment made by the Petitioner to Steria France for the managerial services provided by the latter cannot be taxed as fee for technical services and are not liable to withholding of tax u/s 195 - HC
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• Taxpayer Entitled to Interest on Tax Refund Due to Officer's Delay, Per Section 244A(1)(a) of Income Tax Act.

  Case-Laws - HC : Interest u/s 244A on principal claim of refund of tax - AO has not made out the case of delay in refund for any period attributable to the assessee disentitling for interest - officer has no escape from granting interest to the assessee in terms of section 244A(1)(a) of the Act - HC
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• High Court Upholds Revenue Authorities on TDS Applicability u/s 194LA for Non-Agricultural Buildings Compensation.

  Case-Laws - HC : TDS u/s 194LA - The buildings do not form part of the agricultural lands or at any rate have not been shown to be in the nature of small farm houses or godowns for agricultural operations. The Tribunal therefore, committed an error in reversing the orders of the revenue authorities with respect to the applicability of section 194LA qua the compensation for the buildings. - HC
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Customs

• Refund Ordered for Excess CVD Paid on Mobile Handsets; Includes Interest, Deadline Set for Two Weeks.

  Case-Laws - HC : Claim of refund of excess CVD paid on import of mobile handsets including cellular phones - Respondents / revenue will now pay to the Petitioner the amount of refund as claimed together with interest due thereon up to the date of refund not later than two weeks from today. - HC
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• Arbitrary Value Increase of Imported Goods by EOU Unjustified; No Additional Payment or Comparable Imports Found, No Demand Valid.

  Case-Laws - AT : Valuation - arbitrary enhancement of the value of import goods - 100% EOU - There is no case that the respondent has paid any extra consideration to the foreign supplier. The department has also not made out a case that any contemporaneous import exists - No demand can be made - AT
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• Interest Not Payable for Extended Warehousing Period; Section 72(1) Circumstances Not Applicable.

  Case-Laws - AT : Demand of interest - extension of warehousing period after the expiry - This distinguishes the case from the purview of section 72 where none of the circumstance of section 72(1) was present. - Interest is not payable - AT
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• Court Overturns Gold Jewelry Seizure; Confiscation and Penalties Set Aside Due to Lack of Jurisdiction in SEZ Case.

  Case-Laws - AT : Seizure of gold jewellery - allegation smuggling from from SEEPZ SEZ area to Domestic tariff area (DTA) - The proceedings against the appellants are without jurisdiction. Consequently, the confiscation and penalties are set aside. Appeal is allowed - AT
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Service Tax

• Catering Service Tax Dispute Over Composite Billing Under Notification No. 12/2003-Service Tax, June 20, 2003.

  Case-Laws - AT : Valuation - claim of deduction / abatement of goods involved in catering - Notification No.12/2003-Service Tax, dated 20.06.2003 - The bill issued was a composite bill. There was no scope for the adjudicating authority to appreciate the value of the goods involved in the catering contract - demand confirmed - AT
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• Appellant's Claim for Tour Operator Status Denied Due to Lack of Evidence on Vehicle Rental Use.

  Case-Laws - AT : Classification - - vehicle was hired out to third person for the purpose of his journey - There was no tour actually conducted by the appellant in the present case. Neither the appellant adduced evidence in that regard nor also any of the circumstantial evidence could demonstrate in its favour to treat the appellant as a tour operator. - appellant’s claim fails on the plea of classification as tour operator - AT
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Central Excise

• Refund Approved for Overpaid Duty Due to Price Revision in Rate Contract; Examines Valuation and Unjust Enrichment Issues.

  Case-Laws - AT : Refund - valuation - price variation clause in the rate contract - excess payment of duty due to downward revision in the price / rate – unjust enrichment - refund allowed - AT
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• EOU Not Required to Reverse Cenvat Credit on Inputs Removed with CT-3 Certificate.

  Case-Laws - AT : Cenvat Credit - 100% EOU - Reversal of cenvat credit availed on inputs removed from the factory as such against CT-3 certificate - no reversal of credit is required - AT
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• Revenue Authority Must Refund Excess Interest Due to Calculation Error; Refund Approved.

  Case-Laws - AT : Refund - Excess interest deposited – interest calculated at higher rate - excess interest paid was an arithmetic error and need to be rectified. Revenue not allowed to retain the excess amount - refund allowed - AT
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• Refund Claim Denied: Credit Utilized Exceeded Availment During Relevant Quarters, Making Refund Inadmissible.

  Case-Laws - AT : Refund - portion of carry forward of unutilized credit - during the period credit utilized in the relevant quarters is more than the credit availed by the appellant - refund claim not admissible - AT
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• Refund Claim Date Tied to Original Filing and Correction Date per Case Law in Central Excise Context.

  Case-Laws - AT : Refund claim – relevant date - when the defect was rectified, the date when original return filed needs to be considered - AT
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• Exemption notifications under Central Excise Tariff Act, 1985 require explicit tariff heading references for Chapter and Section Notes to apply.

  Case-Laws - AT : Classification - Chapter Notes/Section Notes given under the Central Excise Tariff Act, 1985 cannot be made applicable to interpret an entry contained in an exemption notification unless such exemption notification refers to some tariff headings in the body of the notification - AT
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• Cenvat Credit Order Deemed Unsustainable; Remanded for Further Consideration Due to Lack of Appellant Involvement in Inquiry.

  Case-Laws - AT : Cenvat Credit - eligible inputs - the impugned order is not sustainable in law as the subject order is merely relied upon the report of the RO without appellant being associated in the enquiry - matter remanded back - AT
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Case Laws:

• Income Tax

• 2016 (8) TMI 169
  Penalty u/s 271C - non deduction of tds - bonafide mistake - Held that:- A perusal of the impugned orders of the CIT(A) and the ITAT in the penalty proceedings reveals that neither of the said authorities considered the issue whether in fact there was reasonable cause for the Appellant to not have deducted TDS under Section 194-I of the Act. The ITAT on its part appears to have relied on the order passed by it on 12th July 2002 in the quantum proceedings, where it commented on the lack of bona fide plea/reasonable cause for the Appellant to deduct TDS under Section 194-C of the Act. This part of the order of the ITAT was in fact commented upon by this Court in its order dated 21st May 2004 while declining to frame a question of law in the appeal filed by the Assessee. The Court, however, clarified that the observations of the ITAT relating to bona fide belief/reasonable cause was of no consequence. The Court is unable to agree with the submission of Mr. Singh that the Assessee could not plead ignorance of law in view of the CBDT Circulars dated 8th August and 22nd August 1995. The CBDT’s circulars were at best the opinion of the CBDT and to the extent they were adverse to the Appellant, they were not binding on the Appellant. However, they were binding on the Revenue. As far as the Appellant was concerned, it was entitled to challenge the CBDT's circulars which did not support its case. In fact that is what the Appellant did in the present case. It questioned the order of the AO under Section 201(1) and 201(1A) of the Act before the CIT(A), then before the ITAT and ultimately this Court. Therefore, it cannot be said that there was a deliberate failure on the part of the Appellant to deduct the TDS under Section 194-I of the Act. The facts remains that at the stage when the TDS had to be deducted the question whether TDS had to be deducted under Section 194-C or 194-I of the Act was not a settled one. This explains why the CBDT itself had to issue circulars clarifying the position. Even this Court was persuaded to again frame a question on the issue in its order dated 5th September 2005. For all of the above reasons, the Court is inclined to accept the plea of the Appellant that since the issue whether the TDS was to be deducted from warehouse charges under Section 194-C or 194-I of the Act was a debatable one, there was a reasonable cause for the failure of the Appellant to deduct TDS under Section 194-I of the Act at the time such deduction had to be made. - Decided in favour of the Appellant and against the Revenue.

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• 2016 (8) TMI 168
  Land acquired being agriculture land - appellant’s case is that the lands acquired being agricultural lands were outside the ambit of section 194L and 194LA - revenue records not to be considered as additional evidence - Held that:- The appellant not having made an application for a certificate under section 197(1) of the Act cannot be precluded it from contending that it was not bound to deduct tax at source and to pay over the same in the assessment proceedings and in the appeals before the CIT(Appeals) and the Tribunal. The Tribunal further held that the assessee had made an application under section 197 and that he got a certificate from the Assessing Officer under that section vide a letter dated 25.01.2005. We had earlier referred to this letter and mentioned that it was important. What is important is that the letter was in response to an application under section 197 but only in relation to the compensation to be paid to the NRI land owners. The reply was also confined to NRIs under section 195 of the Act. No application was made under section 197 in respect of the residents of India. The order of the Tribunal, therefore, proceeds on a factually incorrect basis. The decision of the Tribunal, therefore, rejecting the application for admission of additional evidence in the form of revenue records is incorrect and based on incorrect findings of law and of fact. Even assuming that the revenue records do not conclusively establish the appellant’s case that the land was agricultural land, it cannot by any stretch of imagination be held that they are irrelevant. The revenue records are relevant to the issue as to whether the lands referred to therein are agricultural lands or not. To a question as to whether his department verified whether any actual agricultural activity is being conducted on the lands, he replied that their duty is only to identify the owners of the land and that they are not concern as to whether any agricultural activity is being carried on at the site or not. The Superintendent also expressly stated that no verification is required to be made or is actually made as to whether any agricultural activity is conducted on the land or not. The Assessing Officer held that in view of this evidence the appellant had not verified at the time of disbursement of compensation whether the land in question was actually being used for agricultural purposes or not. No inference can be drawn from this evidence that the land is not agricultural land. The assessee is entitled to establish in the assessment proceedings whether the land is agricultural land or not. - Decided in favour of assessee

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• 2016 (8) TMI 167
  Transfer of cases - application of mind - Held that:- The power exercised by the authority under Section 127 of the Act is thoroughly uncalled for in the absence of any linkage material of any nature. In view of facts prevailing on record, it clearly transpires that the authority has not acted in the spirit in which it has to act while dealing with an issue of transfer. By merely reproducing and taking out the words from the statutory provisions, the order cannot be said to be passed upon application of mind and therefore, it appears to the Court that the orders challenged in these petitions deserve to be set aside. For the reasons recorded above, the present petitions are allowed. The orders impugned dated 6.1.2016 are hereby quashed and set aside in each petition. The cases of the petitioner of SCA No.4473 of 2016 is ordered to be transferred back from the office of DCIT,Central Circle-3, Surat to ITO, Ward No.3(3)(9), Ahmedabad, (ii) the petitioner of SCA No.4474 of 2016 is ordered to be transferred back from the office of DCIT,Central Circle-3, Surat to ITO, Ward No.3(2)(2), Ahmedabad and (iii) petitioner of SCA No.4475 of 2016 is ordered to be transferred back from the office of DCIT,Central Circle-3, Surat to ITO, Ward No.3(3)(4), Ahmedabad and the respondent No.1 authority is directed to proceed with the same from the stage from where it may have presently reached. Rule made absolute in each matter.

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• 2016 (8) TMI 166
  TDS u/s 195 - withholding of tax - payments made/ to be made to Steria France under the Management Services Agreement - whether the payment made by Steria (India) for the management services provided by Steria France will not be taxable in India in the hands of Steria France as per the provisions of the DTAA entered into between India and France? - Held that:- AAR appears to have failed to notice that the wording of Clause 7 of the Protocol makes it self-operational. It is not in dispute that the IndiaFrance DTAA was itself notified by the Central Government by issuing a notification under Section 90 of the Act. It is also not in dispute the separate Protocol signed between India and France simultaneously forms an integral part of the Convention itself. The preamble in the Protocol, which states “the undersigned have agreed on the following provisions which shall form an integral part of the Convention”, makes this position clear. Once the DTAA has itself been notified, and contains the Protocol including para 7 thereof, there is no need for the Protocol itself to be separately notified or for the beneficial provisions in some other Convention between India and another OECD country to be separately notified to form part of the IndoFrance DTAA. The Court is, therefore, unable to agree with the conclusion of the AAR that the Clause 7 of the Protocol, which forms part of the DTAA between India and France, does not automatically become applicable and that there has to be a separate notification incorporating the beneficial provisions of the DTAA between India and UK as forming part of the India- France DTAA. What is being provided by Steria France to the Petitioner in terms of the Management Services Agreement is managerial services. It is plain that once the expression 'managerial services' is outside the ambit of ‘fee for technical services’, then the question of the Petitioner having to deduct tax at source from payment for the managerial services, would not arise. It is, therefore, not necessary for the Court to further examine the second part of the definition, viz., whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are “made available” to the Petitioner by the DTAA with France. As regards the nature of the service being provided under the Management Services Agreement, again the Court is unable to find any case made out by the Revenue before the AAR that what was provided was anything other than the managerial service which in any event stands excluded in the definition of the “fees for technical services” under the IndoUK DTAA. Consequently, this question also does not survive for consideration. Thus the payment made by the Petitioner to Steria France for the managerial services provided by the latter cannot be taxed as fee for technical services and are not liable to withholding of tax under Section 195 of the Act. - Decided in favour of assessee

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• 2016 (8) TMI 165
  Interest under Section 244A on principal claim of refund of tax - Held that:- Sub-section (2) of section 244A provides that the assessee shall not be entitled to interest for the period of delay in issuing the proceedings leading to the refund that is attributable to the assessee. In other words, if the issue of the refund order is delayed for any period attributable to the assessee, then the assessee shall not be entitled to interest for such period. This is of course an exception to clauses (a) and (b) of section 244A(1) of the Act. In other words, if the issue of the proceedings, that is, refund order, is delayed for any period attributable to the assessee, then the assessee is not entitled to interest of such period. Further, what is clear from sub-section (2) is that, if the officer feels that delay in refund for any period is attributable to the assessee, the matter should be referred to the Commissioner or Chief Commissioner or any other notified person for deciding the issue and ordering exclusion of such periods for the purpose of granting interest to the assessee under section 244A(1) of the Act. In this case, there was no decision by the Commissioner or Chief Commissioner on this issue and so much so, we do not think the Assessing Officer made out the case of delay in refund for any period attributable to the assessee disentitling for interest. So much so, in our view, the officer has no escape from granting interest to the assessee in terms of section 244A(1)(a) of the Act

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• 2016 (8) TMI 164
  TDS on Payment of compensation on acquisition of certain immovable property - applicability of section 194LA qua the compensation for the buildings - Held that:- Section 194LA applies when the compensation for acquisition of immovable property is being disbursed. Term 'immovable property' has been explained in clause(ii) of the Explanation to section 194LA as to mean any land (other than agricultural land) or any building or part of a building. If the trees are seen separate from the agricultural land, it would not form part of this immovable property. If on the other hand, such trees are seen as part of the land under acquisition, the same would form compensation for acquisition of agricultural land. We may also notice that many of these trees are fruit bearing trees. Any compensation for loss of fruit bearing trees must necessarily be part of the compensation for agricultural land. The Land Acquisition Officer while awarding the compensation would determine the market value of the land and in cases where such land also has fruit bearing trees, would separately compensate for loss of such trees. In view of such factors, we do not seen any applicability of section 194LA for compensation to the trees. Coming to controversy regarding the compensation for buildings, at the outset, we are somewhat surprised by the observations of the Tribunal that the State Government had determined a uniform rate for the land under acquisition which could not be a market reality and therefore, for the farmers' houses standing on the land, higher market rate was considered for such landowners. In the opinion of the Tribunal, therefore, in reality what was paid to the farmers on account of buildings was not a compensation for buildings, but was higher amount of compensation for acquisition of the lands. These observations are not borne out from the awards, copies of which are placed on record, or from any other contemporaneous material suggesting any adjustment on part of the State Government in determining the market value of the land. We do not find on what basis the Tribunal was prompted to make such observations. In any case, being dehors the evidence on record, we discard such conclusion of the Tribunal. What therefore, emerges from the record is that the Land Acquisition Officer bifurcated his award by awarding separate compensation for the land, for the building and for the trees. The compensation for the building comprised substantial portion of total compensation so worked out. For example, in the award dated 21.1.2008, against compensation of Rs. 36.95 crores for the land, compensation of Rs. 24.56 crores was assessed for building. Likewise, in other award, against value of land of Rs. 30.08 crores, cost of construction inclusive of trees was shown to be Rs. 26.18 crores. There is nothing on record to suggest that the buildings in question were only small residential units of the farmers who were cultivating the land or that they were in the nature of godown for storing the agricultural implements or agricultural produce. Even if therefore, the lands were in the nature of agricultural lands, for the purpose of deducting tax under section 194LA of the Act, the question of deducting tax on the compensation for buildings would certainly arise. The buildings do not form part of the agricultural lands or at any rate have not been shown to be in the nature of small farm houses or godowns for agricultural operations. The Tribunal therefore, committed an error in reversing the orders of the revenue authorities with respect to the applicability of section 194LA qua the compensation for the buildings.

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• 2016 (8) TMI 163
  Addition on account of Transfer Pricing upward adjustment - pledging of shares fot taking term loan - ITAT deleted the addition - Held that:- Assessee was correct in pointing out that though at one stage, the assessee had intended to pledge its shares for guarantee in favour of an AE, however, such transaction did not go through since the RBI permission, which was needed, was not granted. The TPO ventured in the realm of conjectures when he recorded that despite this refusal, the assessee may have gone through with the pledging of shares, but there is nothing on the record to suggest that despite refusal from RBI, assessee pledged the shares. The CIT (Appeals) as well as the Tribunal found that the RBI's letter, placed on record, concerns the same transaction. On both counts thus, there was evidence suggesting that the transaction of assessee pledging its shares fell through for want of RBI permission, no question of law arises Disallowance under Section 14A for interest for earning tax free income - ITAT deleted the addition - Held that:- In this respect, the Tribunal noted that the assessee had sufficient interest free funds for investing into tax free investments. The Tribunal, therefore, accepted assessee's version that interest free funds were not diverted for such investment. The Tribunal placed reliance on decision of this Court in case of Commissioner of Income Tax vs. Torrent Power Ltd. [2014 (6) TMI 185 - GUJARAT HIGH COURT ] . In view of such facts, we do not find any question of law arises.

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• 2016 (8) TMI 162
  License fee receipt - business income or house from property - Held that:- The specific clauses of the licence deed, the Court is satisfied that the income earned by the Assessee from the licence fee could not be characterised as rent and, therefore, income from house property. The Court is of the view that the AO and the ITAT were in error in coming to a contrary conclusion. They appear to have overlooked that the Assessee had consistently treated the licence fees collected as business income since AY 1982-83. In Commissioner of Income Tax v. Neo Poly Pack (P) Ltd. (2000 (4) TMI 26 - DELHI High Court ) in similar circumstances, applying the rule of consistency, the Court declined to frame a question of law urged by the Revenue that the licence fee earned by the owner of the property ought to be treated as income from house property and not business income.

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• 2016 (8) TMI 161
  Disallowance of job work charges - ITAT upholding the decision of CIT (A) whereby the disallowance has been restricted to 2.5% from 25% - Held that:- The Tribunal, while dismissing the Revenue's appeal, noted that before CIT (Appeals), the assessee had pointed out the relevant details with full addresses of the vendors and copies of their bills. These vendors were from Bhivandi, Maharastra. It was not possible to obtain a confirmatory letter from each of them after long passage of time. The Tribunal noted that the Assessing Officer had not recorded any justifiable reason for making such disallowance on estimate basis. The Tribunal was of the opinion that in the line of the business namely of manufacturing of grey cloth, finished cloth could not be sold unless it is weaved and processed and the cost of weaving and processing is direct cost which has to be incurred by the assessee. The assessee had supplied the list of parties to whom weaving charges have paid with complete addresses of such persons. He had also filed copies of bills of job work expenses containing details such as names and addresses of the parties. Thus, the issue was examined by the CIT (Appeals) and the Tribunal on the basis of available materials on record. Such concurrent findings do not call for any interference - Decided against revenue

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• 2016 (8) TMI 160
  TDS liability u/s 194C - payments on account of Civil and grass cutting, construction and maintenance and for painting job work - Held that:- Exchange of information between the assessee and the Assessing Officer though may not have direct bearing on the requirement of deducting tax at source in relation to such expenditure, undisputedly, these expenditures came pointedly under scrutiny of the Assessing Officer in connection with genuineness thereof. The fact that the Assessing Officer in his order of assessment dated 29.12.2008 made certain adhoc disallowances of Rs. 1,50,000/- towards such expenditure would only emphasize this aspect. Thus all the expenditures to which the Assessing Officer now wishes to attach the requirement of deduction of tax at source, were not only part of the original returns filed by the assessee, came up for minute examination by the Assessing Officer in the context of justification and genuineness of claim. Reopening beyond a period of four years on this sole ground, therefore, was not permissible. Additionally, we also notice that para4 of the Assessing Officer's letter dated 26.9.2008 require the assessee to supply copy of ledger account of tax deducted from various payments made to subcontractor, job work charges, transportation, etc. In response to such inquiry of the Assessing Officer, the assessee conveyed that during the year under consideration, no tax had been deducted at source. In short, the case of the assessee was that no such tax was required to be deducted. If the Assessing Officer wanted to contest this contention of the assessee, it was open for him to do so during the original assessment proceedings. Having dropped this line of disallowance in the order of assessment by accepting the assessee's return, any attempt on his part now to reexamine the question shall be based on change of opinion.

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• 2016 (8) TMI 159
  Deduction under section 80HHC - Whether the Income Tax Appellate Tribunal is right in law and on facts in holding that 90% of profit of sale of licence computed in the proportion of export turnover to the total turnover should be added to the profit of business for computation of deduction u/s 80HHC? - Held that:- We have also gone through the judgment cited by learned advocate for the respondent. In the case of ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income-Tax reported in [2012 (2) TMI 101 - SUPREME COURT OF INDIA] it is observed that, “ninety percent of not the gross rent or gross interest but only the net interest or rent, which had been included in the profits of business of the assessee as computed under the head “Profits and gains of business or profession”, was to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business.- Decided in favour of the assessee

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• 2016 (8) TMI 158
  Deduction under section 80HHC - Whether the Income Tax Appellate Tribunal is right in law and on facts in holding that 90% of profit of sale of licence computed in the proportion of export turnover to the total turnover should be added to the profit of business for computation of deduction u/s 80HHC? - Held that:- We have also gone through the judgment cited by learned advocate for the respondent. In the case of ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income-Tax reported in [2012 (2) TMI 101 - SUPREME COURT OF INDIA] it is observed that, “ninety percent of not the gross rent or gross interest but only the net interest or rent, which had been included in the profits of business of the assessee as computed under the head “Profits and gains of business or profession”, was to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business.- Decided in favour of the assessee

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• 2016 (8) TMI 157
  Deduction under section 80HHC - exclusion of Sales Tax and Excise duty from the total turnover for computing deduction under section 80HHC even after insertion of section 145A - Held that:- The question posed for our consideration in this appeal is answered in favour of the assessee and against the revenue and it is held that the Tribunal was justified in law and on facts in confirming the order passed by Commissioner (Appeals) directing to exclude Sales Tax and Excise duty from the total turnover for computing deduction under section 80HHC even after insertion of section 145A of the Act. See Commissioner of Income Tax v. Meghmani Industries Ltd. [2014 (1) TMI 808 - GUJARAT HIGH COURT ] - Decided against Revenue.

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• 2016 (8) TMI 156
  Approval under Section 10(23C)(vi) - condone the delay in filing an application - Held that:- After receipt of the reply and written submission and after affording an opportunity of personal hearing, the respondent pointed out that there is no power for condoning the delay in filing the application in Form No.56D and with regard to alternative prayer, the same was also rejected stating that the assessment year is defined under Section 2(9) to mean the period of 12 months commencing on the 1st April of every year and therefore, the application cannot be treated as application for the assessment year 2013-2014. Ultimately, in paragraph 4.4 of the impugned order, the application was rejected as out of time. However, without stopping there, the respondent thereafter, proceeded to analyze the objective of the Society, which, in my view, was an exercise not called for. Having rejected the application on the ground of limitation, the question of examining the merits of the matter would not arise and it is a superseded exercise. However, considering the legal position that there is no power to condone the delay in filing an application under Section 10(23C) of the Act, this Court is not inclined to exercise its extraordinary jurisdiction to condone the delay. However, this Court is inclined to give appropriate direction to the respondent to consider the petitioner's application as an application for the subsequent assessment year, namely, 2013-2014 in accordance with law. Such direction is issued considering the peculiar facts and circumstances of the case and that the petitioner could not have made an application for the subsequent assessment year 2013-2014, since their application for assessment year 2012-2013 was still pending consideration and the impugned order came to be passed only on 13.11.2013. The respondent is at liberty to consider the amended objectives of the petitioner Trust. Accordingly, the writ petition is partly allowed and the finding rendered by the respondent that the petitioner's application cannot be considered as the same is time barred is affirmed and the finding with regard to objectives of the Society by respondent holding that the Society cannot be said to be solely for education purpose is set aside.

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• 2016 (8) TMI 155
  Deduction under Section 80 HHC cannot be permitted in case of loss or negative profit. In that view of the matter, the contention raised by the revenue is required to be accepted. Whether net interest or gross interest should be considered while computing deduction under Section 80 HHC - Held that:- Tribunal was right in law and on facts in holding that net interest should be considered instead of gross interest while computing the deduction u/s.80HHC of the Act. See ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income-Tax [2012 (2) TMI 101 - SUPREME COURT OF INDIA ] Whether the ITAT was right to include interest income in the eligible profits for computing the deduction u/S.80HH & 80IA of the Act of 1961 though there is no immediate and direct nexus with the industrial activities of the assessee? - Held that:- As decided in GASKETS AND RADIATORS DISTRIBUTORS [2006 (9) TMI 97 - GUJARAT HIGH COURT ] Tribunal as well as the C.I.T. (Appeals) both have committed an error in treating the income of interest on deposits, export incentive, octroi refund and sales in India to be part of the total profits to work out total turnover and qualifying profit and treating the same as business income, and the Income Tax Appellate Tribunal was not right in allowing the assessee's claim regarding rebate under Section 80HHC of the Act by holding that the receipts such as interest on deposits, export incentive, octroi refund, and sales in India would form part of the total profits and to work out the total turnover and qualifying profits. - Decided against assessee

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• 2016 (8) TMI 154
  Disallowance of interest - borrowed funds which is diverted to the sister concern, without charging interest - Held that:- We are of the opinion that the Tribunal has not committed any error in deleting the addition made on account of disallowance of interest relating to the borrowed funds which is diverted to the sister concern without charging interest. From the above, it is clear that the Tribunal has correctly approached the issue which has been proposed in the present Tax Appeals. When there was no evidence brought on record by the Department for the Tribunal to hold otherwise, we hold that the issue is appropriately concluded in favour of the assessee and against the Revenue. The Tribunal has rightly relied upon the decision of the Apex Court in the case of Munjal Sales Corporation (2008 (2) TMI 19 - Supreme Court ). It is borne out that the advances were either for commercial expediency given to its sister concern or the assessee was having surplus interest free funds. - Decided in favour of the assessee

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• 2016 (8) TMI 153
  Penalty u/s. 271 (1)(c) - Held that:- Perusal of the order of the CIT (Appeals) on the quantum as well as penalty and perusal of the order of the Tribunal on quantum would persuade us that the entire issue of taxable amount of the principal sum was the highly debatable issue. The CIT (Appeals) noted that the assessee had made full disclosures and presented full accounts which were duly audited. Thus, at best, it was a case of wrong claim in law and not any attempt on part of the assessee to suppress the income or provide inaccurate particulars thereof. In any case, therefore, the penalty would not be leviable. - Decided in favour of assessee.

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• 2016 (8) TMI 152
  Profit on sales of shares - "capital gain" OR "business income" - Held that:- Assessing Officer without referring to the total transactions and the period for which shares in question were hold, made certain broad general observations. However, Commissioner of Income tax (Appeals) noted that the appellant had shown shares of Rs. 42,000/- of Oriental Bank of Commerce as investment since 01.06.1995 and shares of IPCL worth Rs. 3.26 lacs as investment since 31.03.2001. Share of Alliance Frontline Funds was shown as investment since 01.02.2003. The assessee company had share capital of Rs. 8.45 crores, reserve of Rs. 72.32 lacs. He was therefore of the opinion that looking to the balance sheet in the earlier years as investment and the period of holding of the shares and also that the assessee had invested its own funds and not used borrowed funds for purchase of shares, the sale of shares cannot be taxed as business income. We are in agreement with the view expressed by the Commissioner of Incometax (Appeals) and the Tribunal. Looking to the period for which the shares were held, the number of transactions, the fact that the shares were shown as investments in the books of the assessee since long and that the assessee had not utilized any funds borrowed from purchase of the share, the Assessing Officer committed error in treating the shares as the business income of the assessee. Decided in favour of assessee.

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• 2016 (8) TMI 151
  ALP determination - non affording the Petitioner an opportunity of being heard - Held that:- Assessee has not filed the Accountant’s report under Section 92E of the Act. Yet the AO has to proceed to determine the ALP under Section 92C (3) of the Act or refer the matter to the TPO to determine the ALP under Section 92CA (1) of the Act in case the Assessee has not declared one or more international transactions in the report filed under Section 92E of the Act. As explained in the above situations in para 3.2, the AO must provide an opportunity of being heard to the taxpayer before recording his satisfaction or otherwise. CBDT’s Instruction No. 15 of 2015 as replaced by CBDT Instruction No.3 of 2016 dated 10th March 2016 clarifies the correct legal position and cannot be construed as not applying to the facts on hand. Since it is a procedural aspect and is intended to the benefit to the Assessee, it requires to be applied even in the present case where a reference was earlier made by the AO to the TPO on 31st March 2013 and thereafter. Thus the Court is of the view that the three references made by the AO to the TPO on the question of determination of ALP of the alleged international transactions involving the Petitioner and its AE have been made without affording the Petitioner an opportunity of being heard as was required by law. This, as explained by the Bombay High Court in Vodafone India Services (P) Limited v. Union of India (2013 (12) TMI 547 - BOMBAY HIGH COURT ), and reaffirmed by the CBDT’s Instruction No. 3 of 2016, is a procedural requirement implicit in Section 92 CA (1) of the Act. Accordingly, the said three references made by the AO to the TPO for determination of the said question for the AYs 2011-12, 2012-13 and 2013-14 are hereby set aside.

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• Customs

• 2016 (8) TMI 184
  Claim of refund of excess CVD paid on import of mobile handsets including cellular phones. - mobile handsets including cellular phones - Held that:- it is not open to the Authority to refuse to consider the application for refund only because an appeal has not been filed against the assessment order. With the Petitioner having already placed all the relevant documents on record and with the only reason for rejection of the refund application being the untenable ground of alleged failure by the Petitioner to submit reassessed B/Es, the Court sees no reason why the Respondents should be permitted to deny the Petitioner the grant of refund any longer. Accordingly, the refund claim filed by the Petitioner on 28th December 2015 is allowed. The Respondents will now pay to the Petitioner the amount of refund as claimed together with interest due thereon up to the date of refund not later than two weeks from today. - Decided against the revenue cost.

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• 2016 (8) TMI 183
  Import of goods against DEEC license - Denial of benefit of Notification No. 203/92-Cus - The benefit of said notification was sought to be denied on the ground that the goods exported for procuring the said license were manufactured by availing the benefit of input stage credit. Clause (V)(a) of Notification No. 203/92-Cus prohibited availment of input stage credit in respect of such goods. - Held that:- even if the third party exporter had availed input stage credit, the benefit of Notification No. 203/92 cannot be availed. The appellants has been the declaration as prescribed under the Schedule of the Notification to this aspect while applying for the said license. The appellant has failed to substitute the declaration made by them for obtaining this certificate. The appellant has, at no stage, given any evidence that no credit has been availed. While it is correct that when allegation is made by a person, the same is to be proved by that person. However, in this case, there is a specific declaration by the appellant that they have followed the conditions of the notification which include that the goods exported have not been availed the input stage credit. The appellants have failed to substitute the said declaration by providing evidence. Demand confirmed with interest - However, penalty u/s 114A set aside - Decided partly in favor of assessee.

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• 2016 (8) TMI 182
  Valuation - arbitrary enhancement of the value of import goods - 100% EOU - supply to related parties - the adjudicating authority has enhanced the value by 100% for the purpose of finalization of assessment under Rule 8 of Customs Valuation Rules, 1988. - Held that:- Even though the respondent has not submitted certain documents but it could not be established on the basis of any material that the value of imported goods has been influenced due to the relationship between the foreign supplier and the respondent. There is no case that the respondent has paid any extra consideration to the foreign supplier. The department has also not made out a case that any contemporaneous import exists. - the adjudicating authority enhanced the value arbitrarily. - Decided against the revenue.

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• 2016 (8) TMI 181
  Demand of interest - extension of warehousing period after the expiry - Held that:- The present case of the appellant is that when the goods entered the warehouse, there was no EPCG license with the appellant. But during storage of the goods in warehouse, appellant got EPCG license. Based on such license clearance was allowed. The adjudicating authority has recorded that the period of storage having been expired under section 61(1) of the Customs Act 1962, extension was granted to it under the proviso thereunder. Once such an extension is granted and the EPCG license was with the appellant at the time of clearance, the case clearly falls within the purview of section 68 of the Customs Act, 1962. This distinguishes the case from the purview of section 72 where none of the circumstance of section 72(1) was present. - Interest is not payable - Decided in favor of assessee.

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• 2016 (8) TMI 180
  Valuation - related persons - Special Valuation Scheme - addition of technical information and knowhow fee of USD 2.1 lakhs paid by the appellant to the exporter - Held that:- We are unable to appreciate summary conclusion based on assumption. It is the case of the appellant that they have provided all the material record in support of their plea. However, we find the same was not recorded and the appellant's failure to furnish the record has been concluded as reason for rejecting the appeal. - Matter remanded back.

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• 2016 (8) TMI 179
  Valuation - loading of 45% to the invoice value - related parties - Held that:- Commissioner (Appeals) did not examine that whether loading of 45% on the invoice value is Justified, abruptly concluded that further loading is desirable. - When the order of learned Commissioner (Appeals) is of the above nature, and that demonstrates that there is violation of natural justice and appellant was not put to notice, such an order shall not stand to meet the judicial scrutiny - Matter remanded back.

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• 2016 (8) TMI 178
  Seizure of gold jewellery - allegation smuggling from from SEEPZ SEZ area to Domestic tariff area (DTA) - proceedings were commenced and concluded without issue of a show-cause notice as prescribed in section 124 of Customs Act, 1962 - Held that:- Even if the goods are subject to duty, section 12 of Customs Act, 1962 is not applicable owing to the definition of import ; the charging section is section 26 of Special Economic Zones Act, 2005 which is outside the scope of invoking by the original authority. Colloquial comprehension or usage of export or import in relation to movement of goods to and from zones cannot substitute for the statutory definitions. Recourse to penal provisions without clear understanding of legalities is the surest mode of reverting to arbitrariness and lawlessness that preceded the dawn of civilization. The activities of the units in the zones are also subject to review of annual performance by the legally constituted Approval Committee. It would be well-nigh impossible for the units to remove finished products or inputs without detection at the time of such annual review. And shortage or failure to account for inputs is visited by recovery of duty and other penal action in accordance with the Special Economic Zones Act, 2005. There are adequate safeguards in that Act without the need to indulge in misadventure under the Customs Act, 1962 that does not extend to special economic zones. There are also provisions for action in the event of illicit removal by units. The notice issued by the Development Commissioner of SEEPZ Special Economic Zone is testimony to it; proceedings thereon will suffice to safeguard the economic integrity of the nation. The proceedings against the appellants are without jurisdiction. Consequently, the confiscation and penalties are set aside. Appeal is allowed. - Decided in favor of appellant.

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• Corporate Laws

• 2016 (8) TMI 171
  Report from Official Liquidator - Held that:- The record indicates that as per the order dated 26.4.2016, the Official Liquidator has not filed any further report. Cumulatively considering the aforesaid facts therefore, the Official Liquidator is hereby directed to file an appropriate report within a period of eight weeks from today based upon the report of the Chartered Accountant as regards various claims and for appropriate direction for making payment to the shareholders for residuary amount lying with the Official Liquidator after due compliance of the Rules as prescribed under the Act.

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• 2016 (8) TMI 170
  Winding up petition - Respondent Company is unable to pay its debts - Held that:- As the reference filed by the Respondent Company before the BIFR and which was registered on 10 December, 2015, is not non-est in the eyes of law, and therefore, there is no question of the Respondent Company getting protection under Section 22 of SICA, 1985. Therefore, unable to accept the submission of Mr Kadam that this Petition cannot proceed and/or be heard and finally disposed of. As it is not in dispute that a huge amount is due and payable by the Respondent Company to the Petitioner. In fact, in the consent terms filed in this Court dated 19 June, 2014, the Respondent Company has expressly admitted its liability to the Petitioner in the sum of Rs. 95.32 Crores. Admittedly, this amount has not been paid. In fact, Mr Kadam very fairly conceded before me that as far as merits of this Petition are concerned, the Respondent Company has no defence and the only point canvassed before me was the one dealt by me earlier. In this view of the matter, I find that the Respondent Company is indebted to the Petitioner for huge amounts and therefore commercially insolvent and unable to pay its debts. In this view of the matter, the Company Petition is allowed in terms of prayer clauses (a) and (b) which read as under:- (a) that the Company viz. S. Kumars Nationwide Limited, be wound up by and under the orders and directions of this Hon'ble Court under the provisions of the Companies Act, 1956, and the Official Liquidator attached to this Hon'ble Court be appointed as the Liquidator of the Company and all its assets, books of accounts, vouchers, files, documents etc. with all powers under the Companies Act, 1956; (b) that pending hearing and final disposal of this Petition, the Official Liquidator of this Hon'ble Court or some other fit and proper person be appointed Provisional Liquidator of the Company i.e. S. Kumars Nationwide Limited with all powers under the Companies Act, 1956, including power to take charge of all the assets, properties, stock-in-trade, books of accounts and Bank accounts of the Company. As the learned counsel appearing on behalf of the Respondent Company, prays that the operation of this order be stayed for a period of four weeks from today. The said request is vehemently opposed by all the Petitioners. Considering that there are conflicting decisions on the point decided it would be, in the interest of justice to stay the operation of this order for a period of four weeks from today to enable the Respondent Company to test this order in appeal. It is, however, clarified that the interim orders passed in the Company Petitions, namely, the orders dated 28 August, 2014 read with the order dated 15 September, 2014 shall continue to operate against the Respondent Company.

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• Service Tax

• 2016 (8) TMI 191
  Waiver of pre-deposit - Supply of tangible goods services - scope of “taxable service” as per Section 65 (105)(zzzzj) - supply of tangible goods without transferring the right of possession and effective control of such machinery, equipment and appliances. - Held that:- Prima facie, the tax liability on the applicant for the above mentioned service appears to be sustainable. The applicability of service tax in terms of the above legal provisions to the applicant has to be examined in detail, which will necessarily be undertaken at the time of final hearing of the case along with the question of applicability of time bar to the demand, as pleaded by the applicant. - Stay granted partly.

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• 2016 (8) TMI 190
  Demand of service tax under Reverse charge mechanism - ‘sponsorship service' - Held that:- M/s Punjab State Sports Council has issued a specific certificate that the amount has been paid by the appellant as the donation for organising the games and no contrary evidence has been produced by the Revenue. In that circumstance, the appellant has made out a case of complete waiver of pre-deposit. Accordingly, we waive the pre-deposit of entire amount of service tax, interest and penalties and stay recovery thereof during the pendency of the appeal. - stay granted.

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• 2016 (8) TMI 189
  Refund of the service tax paid under protest by them in view of the audit objection - it was submitted that the contract for laying pipeline for water supply of WSIS to Namakkal Municipality, which is for the distribution of drinking water and hence is not chargeable to service tax and the service tax paid by them under protest has to be refunded - Held that:- both the lower authorities have recorded a finding that the appellant has not submitted copy of the tender notice and other documents in order to come to a conclusion that the work executed by the appellant is under ‘works contract’. On a specific query from the Bench, learned Chartered Accountant submits that they will be and are in a position to produce all the documents and justify their claim for the refund of the amount. Since the documents which are annexed to the appeal memoranda and produced before the Tribunal for the first time, we are of the considered view that the adjudicating authority should be given an opportunity to examine the same and come to a conclusion on the refund claim filed by the appellant. Matter remanded back.

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• 2016 (8) TMI 188
  Rejection of refund claim of the service tax paid on the freight, terminal handling charges (THC) and documentation charges as per Notification No.41/2007-ST. - export of goods - Held that:- When there is no dispute as to the export of the goods and availment of THC services and the discharge of service tax by the service provider, the refund application of the appellant should have been allowed without any reservation. - appellant is eligible for refund of the amount of the service tax paid by the service provider on the services rendered for terminal handling charges. However, the refund claim of the service tax paid on freight and documentation charges is rejected as conceded by the learned counsel. - Decided partly in favor of assessee.

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• 2016 (8) TMI 187
  Levy of penalty u/s 78 - non-payment of service tax on TDS portion initially - suppression of facts or not - Held that:- Law at the infancy stage may certainly cause difficulties and hardship to the assessee as well as the tax gatherers since various interpretations and technicalities are involved. The facts and circumstances of the case does not demonstrate any defiant attitude of the appellant towards law. No mens rea appears to be present to appreciate that Revenue was deliberately made to suffer. In these circumstances, there appears a preventable reason to exonerate the appellant from penal consequences of law under section 78 of the Finance Act, 1994, by invoking section 80 of the Act. - Penalty waived - Decided in favor of assessee.

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• 2016 (8) TMI 186
  Valuation - claim of deduction / abatement of goods involved in catering - Notification No.12/2003-Service Tax, dated 20.06.2003 - Held that:- Even today when the matter is heard by Tribunal, nothing came out from the appellant to demonstrate what was the value of the goods used in the catering contract for sale since the copies of the details annexed at page nos. 73 to 79 of the paper book does not reveal any such thing. The bill issued to M/s. Corborundum Hospital Ltd., was a composite bill. There was no scope for the adjudicating authority to appreciate the value of the goods involved in the catering contract. Accordingly, there is no scope to hold that the orders of the authority below suffers from any legal infirmity. Demand of service tax confirmed - however, penalty levied u/s 76 and 78 waived invoking section 80 - Decided partly in favor of assessee.

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• 2016 (8) TMI 185
  Classification - tour operator service or Rent-a-Cab Service - denial of refund - vehicle was hired out to third person for the purpose of his journey - Held that:- Appellant failed to show presence of any of ingredients of section 65 (78) of the Finance Act, 1994 to call it as a tour operator. The essential requirement of that section is that there should be tour and the tour relates to the defined origin and defined destination and such tour is by a vehicle covered by a permit granted under Motor Vehicle Law. There was no tour actually conducted by the appellant in the present case. Neither the appellant adduced evidence in that regard nor also any of the circumstantial evidence could demonstrate in its favour to treat the appellant as a tour operator. - appellant’s claim fails on the plea of classification as tour operator. - Decided against the assessee.

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• Central Excise

• 2016 (8) TMI 201
  Cenvat Credit - 100% EOU - Reversal of cenvat credit availed on inputs removed from the factory as such against CT-3 certificate – Rule 3(4) of the erstwhile Cenvat Credit Rules, 2002 - Held that:- The Hon’ble High court of Karnataka in the case of CCE Bangalore Vs. Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT] has observed that, "there was no duty payable, as the said inputs were removed with the previous permission of the department as reflected in CT-3" - inputs can be considered as excisable goods and clearance of the same can be placed on par with clearance of excisable goods. - Contention of the Revenue devoid of merits - decided in favor of assessee.

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• 2016 (8) TMI 200
  Refund - valuation - price variation clause in the rate contract - excess payment of duty due to downward revision in the price / rate – unjust enrichment - Held that:– The decision of the Hon’ble Supreme Court in the case of MRF Ltd. (1997 (3) TMI 104 - SUPREME COURT OF INDIA) is distinguishable inasmuch as in that case its stand clearly observed by the Hon’ble Supreme Court that there was no contract between the parties - If there is a subsequent reduction in price, based on price variation clause in rate contract, the assessment has to be considered as provisional. Non observance of procedure under Rule 7 of Central Excise Rules, 2004 will not render the assessment as final assessment and refund can be granted in such a situation. appeal allowed. refund granted - decided in favor of appellant.

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• 2016 (8) TMI 199
  Cenvat Credit - eligible inputs - iron and steel items - Oxygen Gas, Thermal Insulation and welding electrodes - used in fabrication and maintenance work - Held that:- cenvat credit on iron and steel items not admissible in the light of the CESTAT Larger Bench decision in the case of Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) - However, appellant cannot be held to suppress any material facts deliberately to evade duty or to avail ineligible credit and therefore, the demand for extended period was not sustainable - Penalty not imposed. Regarding Oxygen Gas and welding electrodes - Held that:- The Supreme Court in the case of Ramala Sahkari Chini Mills [2016 (2) TMI 902 - SUPREME COURT] also held cenvat credit on welding electrodes used in maintenance of machines admissible. Matter remanded back for quantification of demand - Decided partly in favor of appellant.

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• 2016 (8) TMI 198
  Classification - Goods manufactured by the appellant made of plastic availing exemption under notification no.33/99-CE – appellate authority rejected claim contending goods falling under excise tariff heading 39.01 to 39.14 to be plastic material and claims appellant goods not to be plastic material falling under tariff heading 39.22 and 39.26 – Held that:– Chapter Notes/Section Notes given under the Central Excise Tariff Act, 1985 cannot be made applicable to interpret an entry contained in an exemption notification unless such exemption notification refers to some tariff headings in the body of the notification. - Similar view was taken by CESTAT, Delhi in the case of Kurlon Ltd. vs.- Commissioner of Central Excise, Meerut-I (2014 (4) TMI 334 - CESTAT NEW DELHI) while interpreting similar entry in Notification No.50/2003-C.E. dated 10.06.2003. There is no specification that plastic under Sl.No.13(IV) should fall under C.E.T.H 39.01 to 39.14 – appellant eligible to claim exemption – decided in favor of assessee.

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• 2016 (8) TMI 197
  Refund claim rejected – relevant date - original refund claim filed within period of limitation – defects corrected filing revised return after some time – appellant claimed refund filing date to be taken when original refund claim filed – respondent contended return to be complete in all respects when revised return filed and hence taken as date of return filed. - Held that:– when the defect was rectified, the date when original return filed needs to be considered – decided in favor of assesse.

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• 2016 (8) TMI 196
  Refund - portion of carry forward of unutilized credit - rule 5 of cenvat credit rules – during the period credit utilized in the relevant quarters is more than the credit availed by the appellant - Revenue had contended that as per Clause-4 of Notification No. 05/2006-CE(NT) dated 14.03.006 only credit taken and utilized during a particular quarter has to be taken into consideration while sanctioning refund of unutilized credit relating to exports of finished goods in that particular quarter. Held that:- assesse allowed refund of credit only when not in a position to utilized input credit/input service credit against goods exported - credit lying unutilized in the Cenvat credit account in the beginning of the quarter is not relevant when appellant is manufacturing and clearing goods both indigenously and for export and a common Cenvat credit with respect to inputs is taken – refund claim not admissible – decided in favor of revenue.

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• 2016 (8) TMI 195
  Refund - Excess interest deposited – interest calculated at higher rate – Held that:- excess interest paid was an arithmetic error and need to be rectified. Revenue not allowed to retain the excess amount – appeal allowed – decided in favor of appellant.

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• 2016 (8) TMI 194
  Cenvat credit eligible on input service - GTA service used for the purpose of outward transportation of goods from factory to premises – Held that:- assessee failed to establish fact of bearing the risk of loss to goods during transit before adjudicating authority – case remanded to adjudicating authority - appeals allowed by way of remand.

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• 2016 (8) TMI 193
  Cenvat Credit - GTA services - outward transportation - upto the place of removal – appellant failed to submit documentary evidence that freight charges are the integral part of the price of the goods – Held that:– appellant to produce all relevant documents and will get opportunity to be heard - impugned order set aside – remand of both appeal to original adjudicating authority.

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• 2016 (8) TMI 192
  Cenvat Credit - eligible inputs - As per appellant he has used the said cement in the foundation of boiling house equipments like boiler, vacuum pan and evaporator and the said angle, channels and CTD bars for fabrication of supporting structures of the boiling house equipments like boiler, vacuum pan and evaporator and the chequered plates in fabrication of cane carrier and cane unloader. - Certificate of expert not produced before lower authorities and reliance placed upon the report of RO at the time of passing of impugned order – Held that:– the impugned order is not sustainable in law as the subject order is merely relied upon the report of the RO without appellant being associated in the enquiry - case remanded back to original authority. - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2016 (8) TMI 177
  Levy of penalty on the assessee for non-filling of Column-6 in From-38 in respect of the goods such as Trolleys, tyres and other wooden items, which were being transported from Rajpura (Punjab). - The goods were on a onward journey from Rajpura (Punjab) to Agra and were intercepted by the Mobile Squad - Held that:- one thing, which is clear that the seizing authority itself has recorded that the goods, which were seized were found accompanied with certain documents. The Tribunal remained completely silent upon this aspect of the matter and has relied heavily on the fact that more than once the assessee had taken goods without filling column-6 of Form-38 and has drawn its conclusion from this fact that it seems that the assessee was a habitual defaulter. After examining this aspect of the matter, I am of the opinion that the Tribunal should have returned a finding on this fact also as to whether the documents, which were there before it would reflect whether or not there was intention to evade tax and as to whether documents supported the case of the assessee at all. Matter remanded back to tribunal.

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• 2016 (8) TMI 176
  Validity of default assessments of tax and interest - Refund - Input tax credit - carry forward of excess credit - After the amendment to Section 11(2) of the DVAT Act with effect from 12th September 2013, the credit earned for the fourth quarter of 201314 could not be carried forward to the next tax period. - Held that:- The notices of default assessments of tax and interest and penalty bristle with numerous illegalities. First, as already noticed instead of processing refunds within the time granted under Section 38 of the DVAT Act, the AVATO compounded the problem by seeking to re-open the assessments for the earlier years including the period for which the refund was claimed using the order passed by this Court recording the assurance of the learned counsel for the respondent on 3rd June, 2016 in WP(C) 5584/2016 as a trigger. This is totally contrary to the law explained in several judgments which have been referred to hereinabove. Secondly, with the AVATO himself acknowledging that the authority in DVAT-50 was not available, there was no question of him proceeding further in the matter and issuing notices of default assessments of tax, interest and penalty in the manner that he has done. Thirdly, in an obvious violation of the principles of natural justice, with the AVATO by not informing the Petitioner of the adjourned date of hearing when he failed to attend office on 5th July 2016, which was the date fixed. took up the matters in his chamber on 9th July 2016 which, being a second Saturday, was a holiday and then reserved the matter for orders on 12th July 2016. The notices of default assessment of tax and interest and penalty are undoubtedly in violation of the principles of natural justice and patently illegal. The Court does not consider it necessary to do say anything more to demonstrate the patent illegality attached to the actions of the AVATO, triggered as they were by the order dated 3rd June 2016 passed by this Court. The Court, therefore, has no hesitation in setting aside the notices of default assessment of tax and interest and penalty dated 12th July 2016 issued by the AVATO Further refund shall be allowed with interest. - Decided in favor of assessee and against the revenue.

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• 2016 (8) TMI 175
  Levy of purchase tax - inter state purchase of goods - validity of order - Held that:- Significantly, the Tribunal while dealing with this issue records that the purchases effected by the revisionist was liable to be characterized as an inter-State sale. Despite recording the above, it has held the revisionist liable to pay tax under Section 3-AAAA of the Act. As rightly submitted by the learned counsel for the revisionist in terms of the plain and express language of sub clause (iii) to the Proviso to Section 3-AAAA, the purchasing dealer is exempted from payment of tax if he resells such goods within the State or in the course of inter-State trade or commerce or exports them out of the territory of India. Surely therefore even if the finding of the Tribunal of the purchases being inter-State sale is accepted then also the revisionist was not liable to pay tax under Section 3-AAAA. The liability therefore thrust upon the revisionist on this score cannot be sustained. Accordingly this revision shall stand allowed - Decided in favor of assessee.

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• 2016 (8) TMI 174
  Validity of order - violation of principles of natural justice. - Petitioner was given an opportunity for a personal hearing on any of the working days at the office of the Officer. According to the petitioner, unless the posting date is given, there could not be a proper hearing in the matter. - Held that:- it is a settled principles of law that when an alternate remedy is available, this Court shall not normally interfere unless in exceptional circumstances, when there is violation of principle of natural justice or jurisdictional error or patently illegality being committed. In the present case, the allegation is that there is violation of principles of natural justice. The assessing officer had proceeded on the basis that the fact of mistake was admitted, which is clear from the reply itself. In the said circumstances, I do not think that any prejudice had been caused to the petitioner for not giving further opportunity for hearing - Writ petition dismissed - Decided against the petitioner.

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• 2016 (8) TMI 173
  Stay of demand of CST - the Commercial Tax Officer, directed the petitioner to furnish the security for the balance amount in the form of bank guarantee or security in the form as stipulated in Form No.6 with solvency certificate within the stipulated time. - Held that:- It is evident from Rule 19 (2) (e) and various sub clauses that several forms of security can be furnished in lieu of the payment of the amount. When the appellate authority had clearly indicated that the petitioner can seek for any other forms as stipulated, there is no further jurisdiction on the assessing officer to insist for security in any other form. Under such circumstances - writ petition allowed - order set aside - Decided in favor of petitioner.

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• 2016 (8) TMI 172
  Interstate sale / export of services - whether the appellant filed supporting documents like declaration form C or Form F or Form E1/Form E2 or not - Held that:- it is seen that the first respondent has accepted the receipt of documents on 18.9.2015 but has stated that the petitioner did not file objections nor filed declaration forms or other documents. The first respondent has not granted an opportunity of personal hearing, nor has he discussed about the documents which were received by him from the petitioner on 8.9.2015. Thus, the impugned order is a clear case of arbitrary exercise of power and in total violation of principles of natural justice. The impugned order is quashed and instead of remanding the matter to the first respondent, the first respondent is directed to place the entire assessment files to the second respondent, who shall nominate a competent officer having jurisdiction over the matter to proceed with the assessment. The said officer so nominated shall issue notice to the petitioner within a period of two weeks, fixing the date of personal hearing, peruse the documents that have been produced, and if any clarification is required, the same shall be clarified from the petitioner and thereafter, a speaking order shall be passed on merits and in accordance with law. - Matter remanded back.

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