Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 1, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
TMI Short Notes
Articles
News
Notifications
Customs
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43/2017 - dated
30-8-2017
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ADD
Levy of anti-dumping duty on "Styrene Butadiene Rubber (SBR)",originating in or exported from European Union, Korea RP or Thailand
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42/2017 - dated
30-8-2017
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ADD
Levy of definitive anti-dumping duty, on Castings for Wind Operated Electricity Generators originating in or exported from China PR
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83/2017 - dated
31-8-2017
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg
GST
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27/2017 - dated
30-8-2017
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CGST
Central Goods and Services Tax (Sixth Amendment) Rules, 2017 - Movement of goods and generation of e-way bill - To be effective from the date to be notified.
Law of Competition
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[F. No. Comp-07/4/2017-Comp-MCA - S.O. 2828(E) - dated
30-8-2017
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Competition Law
Central Government exempts, all cases of reconstitution, transfer of the whole or any part thereof and amalgamation of nationalized banks, under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), from the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of ten years
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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E-way bill - Inspection and verification of goods - Proper officer to make summary report within 24 hours - In in case of physical verification, no verification second time, unless there is specific report of tax evasion available subsequently.
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E-way bill - Verification of documents and conveyances. - Verification through RFID readers - Physical verification of conveyance only by proper officer or by any authorized person in case of specific information on evasion of tax
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E-way bill - Documents and devices to be carried by a person-in-charge of a conveyance - Goods and Services Tax - he may carry IRN (Invoice Reference Number) instead of Invoice, and e-way bill physical copy or mapped to RFID
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C.Govt. Prescribes Rules for generation of e-way bills / challan - when to be generated by the supplier of goods, recipient of goods or by the transporter of goods, manner of generation of consolidated e-way bill and duration / validity of e-way bills
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Central Goods and Services Tax (Sixth Amendment) Rules, 2017 - Movement of goods and generation of e-way bill - To be effective from the date to be notified. - Notification
Income Tax
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Superannuation fund - Withdrawing the approval of the petitioner under Rule 91 of the Income Tax Rules, 1962 - return of excess deposit into the fund by the employers - Income Tax authority directed to re-adjudicate the case - HC
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Validity of assessment u/s 143(3) r.w.s. 144C - the Assessing Officer said that he is passing draft assessment order and the assessee was also at liberty to file the objections before the DRP or accept the same, but in actual fact, the order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C - assessment order set aside
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Set off of deemed dividend against actual dividend paid by certain companies - dividend distribution tax as per section 115-O is in respect of dividend covered u/s 2(22)(a) to (d) and such income is exempt in the hands of shareholders u/s 10(34). However, deemed dividend u/s 2(22)(e) is taxable as no dividend distribution tax is payable on this income - set off not allowed.
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Head of the income - amount received for providing amenities to the tenant - amount towards furniture and other facilities including car parking, benefit of sanitary fittings is taxable as Income from house property - However, reimbursement of electricity charges, expenditure incurred for providing such services to be assessed separately under the head “Income from other sources”
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Reopening of assessment u/s 147 - deduction u/s 80-IC - requirement of NIC code and Excise Classification for information technology business - The question is not whether the action taken is in good faith or not. What is important is that the AO has exceeded its jurisdiction erroneously.
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According to CBDT Circular No. 20/2017 dated 12th June 2017 cash seized during searh opeartion u/s 132B can be adjsuted against advance tax payment.
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Additions to be made u/s 69C on account of alleged bogus purchases(Unexplained Income) is according to the estimation of net profit ranging from 12.5% to 25% depending upon nature of business.
Customs
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Valuation - enhancement of value - The value enhanced on the basis of the highest contemporaneous import cannot sustain - However, the same requires to be enhanced on the basis of the lowest value of such contemporaneous import
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Refund claim of ADD - denial on the ground that the appellant had not requested for re-assessment of bill of entry - in case by final notification, the ADD is reduced, the excess paid is to be refunded
Service Tax
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Levy of service tax - container detention charges - Such charges can at best be called as ‘penal rent’ for retaining the containers beyond the pre-determined period - the amount collected as ‘detention charges’ is not chargeable to service tax
Central Excise
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Extended period of limitation - Surprisingly, the adjudicating authority has made an observation that visit of officers for routine checkup and audit does not debar the invocation of larger period if new ground comes to law, which was not revealed by the assessee to the department. However, the adjudicating authority has not substantiated as to what new ground had come to light pursuant to audit.
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Classification multi media speakers with FM radio - these are speakers with added function and the main role of the item, in question, remains amplifying the sound received from outside source or from inbuilt feature - The product should continue to be classified as speakers under CETH 85184000.
VAT
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Registration under TNVAT Act - Whether sale and purchase activity was carried from the state - respondent cannot instruct upon the petitioner to register themselves under the TNVAT Act and merely because the Import and Export Code is from the office in Tamil Nadu - HC
Case Laws:
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Income Tax
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2017 (8) TMI 1301
Surplus arising out of the sale of agricultural land being treated as business income - nature of land - "capital asset" - beyond 8 kms. from the municipal limits - AO considered the transaction in the nature of adventure in the nature of trade - Held that:- The intention of the owners to do agricultural operation in the subject land is clear from the attendant facts and they had returned agricultural income for various assessment years preceding the impugned assessment year. They were having certificates issued by the competent authorities showing that the land was agricultural. No doubt, the Ld. CIT(A) has relied on various judgments for supporting his conclusion that the subject land could not be considered as agricultural and sale therefrom gave rise to business income. However, almost all of these judgments including that of the Hon’ble Apex Court in the case of Sarifibhai Mohamed Ibrahim vs. CIT and others (1993 (9) TMI 10 - SUPREME Court) and in the case of Smt. Asha George vs. ITO (2013 (1) TMI 545 - KERALA HIGH COURT) were examined by this Tribunal in the case of M.J. Thomas (2014 (10) TMI 353 - ITAT COCHIN). Hon’ble Madras High Court in the case of Shakuntala Vedachalam vs. Vanitha Manickavasagam (2014 (9) TMI 3 - MADRAS HIGH COURT) has also held that classification of land in revenue records, was clearly indicative of the nature of the land. In the circumstances, we are of the opinion that the subject land could only be considered as agricultural. Since it was situated beyond 8 kms. from the municipal limits, sale thereof would not result in any capital gains. Surplus could not have been treated as income from business since assessee had not ventured into the business of real estate. For the very same reason, we are of the opinion that the agricultural income returned by the assessee could not have been added to the total income since it was exempt u/s. 10(1) of the Act. - Decided in favour of assessee.
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2017 (8) TMI 1300
Superannuation fund - Withdrawing the approval of the petitioner under Rule 91 of the Income Tax Rules, 1962 - return of excess deposit into the fund by the employers - Held that:- The authorities have to find out the quantum of payment required to be made by the respondent no.3, the quantum paid by the respondent no. 3 and the position after taking into account the settlement arrived. If such contentions are found factually correct, then, the question of applicability of Rule 91(2) of the Income Tax Rules, 1962 for the purpose of withdrawing the approval would not arise. On the other hand, if the claim of excess payment is not substantiated to be correct, then the Income Tax authority would be entitled to invoke Rule 91(2) of the Income Tax Rules, 1962 for the purpose of withdrawing the approval granted to the first petitioner. Again as rightly pointed out on behalf of the respondent nos. 8 and 9, such an issue has not been dealt with by the impugned order. As contended on behalf of the petitioners that, such issue has not been raised, as the parties are ad idem on the fact that, there is an excess payment made by the respondent no. 3 warranting the first petitioner to refund the same. With respect, the issue was raised by the respondent no. 3 in the reply dated June 8, 2007. The issue is one of mixed question of fact and law. The showcause notice and the reply thereto raises such an issue. The parties at issue are the Income Tax department and the respondent no. 3 as well as the first petitioner. It cannot be said, in the facts of the present case that, the Income Tax department had accepted that, there is an excess payment made by the respondent no. 3 to the first petitioner for the relevant years. The Income Tax department has also not accepted the quantum of the alleged excess payment. A consensus between the petitioner and the respondent no. 3 cannot bind the Income Tax department. In such circumstances, it would be appropriate to set aside the impugned order and remand the matter to the Income Tax authority for the purpose of deciding the show-cause notice and the reply thereto in accordance with law. Needless to say that, the Income Tax authority is at liberty to hear such parties and consults such documents as it deems appropriate. The authority will pass a reasoned order which it will communicate to the parties it has heard forthwith thereafter. It is expected that, the authority will complete the entire exercise within six weeks from the date of communication of this order to it.
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2017 (8) TMI 1299
Reopening of assessment u/s 147 - Eligibility to claim deduction u/s 80-IC - business of information technology - objection in claiming deduction is being that since the Assessee does not possess NIC code and Excise Classification, it is not entitled to the statutory deduction - Held that:- We find the Assessing Officer to have committed grave illegality in correctly and completely construing the provisions of the Schedule. In fact, from the observations of the Assessing Officer, reproduced supra, it stands admitted that the code/ classification, reproduced supra, is required only for such of those activities, which fall under the category of ‘manufacture’. Whether the Assessee is required to obtain sanction/permission/code, so prescribed or not, is not in dispute. It is true that notice is only subjective satisfaction and not final opinion, but then the Assessing Officer has decided the objections, already expressing an opinion on the assessee’s entitlement for statutory deduction. The question is not whether the action taken is in good faith or not. What is important is that the Assessing Officer has exceeded its jurisdiction erroneously. Which, in our considered view, he has so done, rendering the action to be absolutely illegal and unsustainable in law. - Decided in favour of assessee.
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2017 (8) TMI 1298
Validity of assessment u/s 153C r.w.s 143(3) - validity of satisfaction note prepared for subsequent years - Registration of the trust cancelled under Section 12AA(3) - Held that:- ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. - There was no satisfaction relate to four Assessment Years, namely, 2000-01 to 2003-04 - therefore assessment for four AY i.e. 2000-01 to AY 2003-04 set aside. In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected.
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2017 (8) TMI 1297
Adjustment of seized cash during searh opeartion u/s 132B against advance tax payment that was due - benefit of the Circular No. 20/2017 - Held that:- Circular No. 20/2017 makes clear that to grant the benefit of adjustment of seized cash against advance tax liability to all Assessees in default of payment of advance tax.The Court, therefore, sees no justification in the Department for not granting the benefit of the Circular No. 20/2017 to the two Assessees in appeal Direction issued to the Department to give the benefit of Circular No.20/2017 to both Assessees which in effect would mean that their requests for adjustment of the seized cash against their respective advance tax liability would stand allowed with effect from the date of the first request made by the Assessees, i.e. 13th December, 2011.- Decided in favour of assessee.
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2017 (8) TMI 1296
Bogus purchases - disallowance on account of transaction with the parties, which were involved in hawala transaction - purchases made from the open market without insisting genuine bills - Held that:- The assessee was a trader and on asking by the Assessing Officer, furnished the necessary details like bills, vouchers, payment through banking channel and the bank statements, therefore, the facts are distinguished, however, by taking a broader view, and considering the overall facts and circumstances, to plug the leakage of revenue, we are of the view that it will meet the end of justice if the addition is enhanced to 20% of the disallowance in place of 15% restricted by the Ld. Commissioner of Income Tax (Appeal), consequently, the appeals of the Revenue are partly allowed.
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2017 (8) TMI 1295
No levy of fees u/s 234E in intimation u/s 200A - delay in filing TDS statements - Held that:- The intimations were processed prior to 01.06.2015 u/s 200A of the Act and no fee is leviable u/s 234E in the intimation passed u/s 200A because 1.7.2012 is the date of insertion of section 234E into the Income Tax Act, 1961 whereas 1.6.2015 is the date of amendment/substitution of clause (c) to section 200A vide which it has been provided that fees payable under section 234E can be adjusted . Therefore, respectfully following the said decisions of Concept Management Consulting Ltd. Versus DCIT-CPC-TDS, Uttar Pradesh [2016 (10) TMI 430 - ITAT MUMBAI ] we direct the Assessing Officer to delete the fee charged u/s 234E of the Act - Decided in favour of assessee.
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2017 (8) TMI 1294
Validity of assessment u/s 143(3) r.w.s. 144C - No draft assessment order but final assessment order passed - no notice u/s. 143(2) was served - initiation of penalty proceedings u/s 271(1)(c) - Held that:- The demand got crystallized on passing of the draft assessment order, wherein the Assessing Officer had issued demand notice in ITNS-150 and had also initiated penalty proceedings. Undoubtedly, the said assessment was framed as draft assessment but in actual fact, the Assessing Officer had made the assessment in the hands of assessee by not only assessing the income but also determining the demand payable along with interest u/s 234A B C D and penalty proceedings. In the case of draft assessment order, proposed additions are to be made and the assessee is show caused either to accept the same or file the objections before the DRP. However, in the present facts, there was not a proposal for making addition but final assessment order was passed. Undoubtedly, the Assessing Officer said that he is passing draft assessment order and the assessee was also at liberty to file the objections before the DRP or accept the same, but in actual fact, the order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C of the Act. Accordingly, we hold that draft assessment order passed in the case is invalid in law. - Decided in favour of assessee.
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2017 (8) TMI 1293
Deemed dividend u/s 2(22)(e) - transactions with intergroup companies treated as deemed dividend in the hands of the assessee - Held that:- AO as well as the CIT(A) having accepted the fact that goods sent on consignment basis is supported by delivery challans and also is a fact that it is possible that these goods were transferred between companies based on stock received by one company from the other, erred in rejecting the explanations of the assessee merely for the reason that there is no narration of entries given under the head ‘other entries’ to indicate that money was given based on transfer of goods. We, further are of the opinion that if the goods sent on consignment basis is more than the amount of other entries appearing in the ledger accounts, and which has a direct and immediate nexus between money advanced and transfer of goods as claimed by the assessee, the AO was incorrect in including those items for the purpose of quantification of deemed dividend. Therefore, we deem it appropriate to set aside the issue to the file of the AO for further verification with reference to the details filed by the assessee to ascertain the correct facts as to whether the other entries appearing in the ledger accounts represent amount paid against goods sent on consignment basis; hence, we set aside the issue to the file of the AO and direct the AO to verify the issue before quantifying the amount of deemed dividend for the assessment years 2005-06 and 2007-08. Set off of deemed dividend against actual dividend paid by certain companies - liability to dividend distribution tax - Held that:- Dividend declared and paid by ITPL was not liable to dividend distribution tax u/s 115-O read with section 2(22)(e). M/s ITPL had declared and paid dividend which needs to be set off against the deemed dividend quantified by the AO. We do not find any merits in the arguments of the assessee for the reason that dividend distribution tax as per section 115-O is in respect of dividend covered by clauses (a) to (d) of section 2(22) and such income is exempt in the hands of shareholders u/s 10(34). However, deemed dividend u/s 2(22)(e) is taxable as no dividend distribution tax is payable on this income. Therefore, the arguments of the assessee with regard to set off of deemed dividend against actual dividend paid is rejected. Disallowance of interest expenditure against interest income assessed under the head ‘Income from other sources’- Held that:- We find merits in the arguments of the asssssee for the reason that any expenditure incurred wholly and exclusively for earning income which is taxable u/s 56 is allowable as deduction u/s 57 of the Act. In this case, the assessee claims to have taken overdraft loan against fixed deposit and the resultant interest has been claimed as deduction against interest income earned on Fixed Deposits. However, keeping it in view that assessee failed to furnish the purpose of taking overdraft facility to ascertain whether the said interest expenditure is wholly and exclusively incurred for earning interest income. Therefore, we are of the view that the issue needs to be examined by the AO in the light of the above discussions and hence, we set aside the issue to the file of the AO for further verification. Levy of penalty u/s 271(1)(c) - Held that:- As the additions made by the AO u/s 2(22)(e) towards inter-group companies’ transfers has been set aside by us to the file of the AO for fresh adjudication in the light of explanations , the order passed by the AO levying penalty u/s 271(1)(c) cannot be sustained and hence, the same is hereby quashed and the issue is left open to the AO to initiate penalty proceedings after completion of assessment proceedings, as per law.
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2017 (8) TMI 1292
TDS u/s 194H - bank guarantee charges paid to domestic and foreign banks - Non compliance of TDS provisions - Held that:- There is no quarrel that the issue stood squarely covered in assessee’s favor by the decision of this Tribunal rendered in Kotak Securities Limited Vs. DCIT [2012 (2) TMI 77 - ITAT MUMBAI] where the Tribunal held that since the payment were on ‘principal to principal’ basis, the same was not covered within the meaning of commission and brokerage u/s 194H. The same view is fortified by CBDT notification No. 56/2012 dated 31/12/2012 which clearly says that no TDS is required against bank guarantee commission paid to bank listed in the second Schedule to RBI Act, 1934. However, foreign bank is excluded from the scope of said circular. Therefore, at the outset, we are inclined to hold that there was no requirement to deduct TDS on bank guarantee commission of ₹ 371.25 Lacs paid by assessee to domestic bank.Also it is noted that CBDT circular do not cover payment to foreign banks and further provisions of Section 194H apply only to payments made to residents. Therefore , bank gaurantee charges are not covered u/s 194H - Revenue's appeal stands dsimissed. Assessee-in-default u/s 201(1) r.w.s. 201(1A) - Held that:-Since TDS liability dosent stand in above case relating to bank gaurantee charges then consequential interest u/s 201(1A) on the same is also been dismissed. TDS on telephone expenses / data card expenses - Held that:- Since the assessee has contended that the data card expenses is akin to telephone expenses and mere reimbursement of data card expenses to employees, we restore the matter back to the file of AO for the purpose of verification of the said contention and decide accordingly as per law. Needless to say, any reimbursement of mere data card expenses to employees, which are primarily in the nature of telephone expenses do not fall within the meaning of ‘Fees for technical services’ or ‘royalty’. TDS on internet charges - TDS u/s 194I or 194J - AO opines that the same are in the nature of ‘Fees for Technical Services’ as well as ‘royalty’ - Held that:- CIT(A) went a step further in noting that the said expenditure was not only ‘fees for technical services’ but also covered u/s 194I being in the nature of rent for usage of equipment. A perusal of the sample invoice placed in the paper book, prima facie, reveals that the said expenditure is towards ‘internet services’ & ‘internet dedicated line’. Therefore, this being the case, the nature of services being availed by the assessee requires re-appreciation by lower authorities and hence, the matter is remitted back to the file of Ld. AO to re-examine the nature of services and thereafter, determine the true character of the same i.e. whether fees for technical services / royalty / rent or payment towards usage of standard internet facility and in particular, the following observation of Apex Court regarding ‘fees for technical services’ made in CIT Vs. Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT]. Resultantly, the assessee’s appeal stands partly allowed for statistical purposes.
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2017 (8) TMI 1291
Penalty u/s 271AAA - income was duly included into the return filed in pursuance to the notice issued U/s 153A - statement U/s 132 of the Act admitted undisclosed income - Held that:- the assessee in his statement U/s 132 of the Act admitted undisclosed income and specified the manner in which such income was derived, which is evident from the reply to question No. 16 recorded during the course of search. The revenue has not disputed the fact that the assessee had paid tax together with the interest if any in respect of the undisclosed income, therefore, out of the three conditions for immunity against the penalty under sub-section (i) of Section 271AAA of the Act are duly specified in the present case. As in answer to question No. 16 of the sworn statement recorded on oath u/s 132(4) of the Act has clearly specified the manner of deriving undisclosed income. Therefore, when assessee has complied with Sub section (2) of section 271 AAA of the Act, AO’s action cannot be justified and sustained. In the present case, he has sustained the penalty on the ground that the assessee has failed to substantiate the manner in which the undisclosed income was derived. The facts are identical and arise from the same search, therefore, the finding of the ld. CIT(A) is contradictory. Under these facts and circumstances, we restore this appeal to the file of the ld. CIT(A) for decision afresh.
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2017 (8) TMI 1290
Compensation received for providing amenities to the tenant - Income to be taxed under which head Whether “Income from house property” or “Income from business” - providing furniture and other facilities including car parking, benefit of sanitary fittings, water supply, additional electricity supply for which separate agreement has been entered into - Held that:- Compensation received for providing amenities is also to be assessable under the head “Income from house property”, more particularly, when the building is let out to the tenant to whom amenities are also provided by way of separate agreement which is inseparable from the leave and licence agreement entered into with the tenant for letting out premises. Also TDS is deducted under The head TDS on rent as per 194I. Similar decision is taken by CIT(A) in assessee's own case for AY 2008-09 and taxed the whole Income under the Head House Property. The CIT(A), after considering relevant facts, has rightly upheld the action of the AO. We do not find any error in the order of the CIT(A); hence we reject the ground raised by the assessee. Disallowance of total expenditure claimed by the assessee against business receipts as the same are treated as compensation receipts and are taxed under the Head Income from House Property - standard deduction provided u/s 24 - Held that:- On perusal of the details filed by the assessee, we find that the assessee has incurred an amount of ₹ 44,44,226 towards electricity expenses and claims that the same has been reimbursed by the service receiver which is included in the compensation provided for amenities. Therefore, we are of the view that any amount paid towards reimbursement of electricity charges needs to be excluded for the purpose of compensation received from providing amenities for the purpose of computation of “Income from house property”. Accordingly, we set aside the issue to the file of the AO and direct the AO to examine the claim of the assessee in regards to the details furnished. In case it is found that electricity charges incurred and reimbursed is included in compensation payments, then the AO is directed to exclude such charges for the purpose of computation of gross receipts under the head “Income from house property”. We further direct the AO to consider reimbursement of electricity charges and allow expenditure incurred by the assessee for providing such services separately under the head “Income from other sources”. Accordingly, the ground raised by the assessee is partly allowed, for statistical purposes.
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2017 (8) TMI 1289
Taxability in hands of society - fund transferred to ‘Distribution Pool Fund Account’ - Society assessed to tax on its income as ‘person’ as defined under Section 2(31) - entitlement to claim exemption over its profits paid to its members and claim it as expenditure in the accounts before offering the profit for tax - Held that:- Relying upon the decision dated 21.7.2017 [2017 (7) TMI 1015 - SUPREME COURT], SC dismissed the present Special Leave Petition. As decided by HC [2016 (12) TMI 237 - KARNATAKA HIGH COURT] the very fact that the Bye-laws permit the Society to recover the ‘manufacturing expenses’ and ‘other dues’ from its members is a sufficient and a robust indication that the ownership of the Salt to the extent of their respective share of each individual member continues to remain with the respective member himself. This inference is fortified by Clause 80 of the Bye – laws, which permits the members to raise loan on the ‘security’ of their proportional interest in the ‘Agar’ and ‘Salt produced’. Income of the Society cannot be anything beyond the scope of Chapter XVI of the Bye – laws. Therefore, logically the amount transferred to the ‘Distribution Pool Fund Account’ cannot be brought within the umbrella of Chapter XVI. Hence, it is not taxable in the hands of the Society. In the premise, the substantial question of law deserves to be answered against the appellant – Revenue.
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2017 (8) TMI 1288
Absence of proper genuineness of creditors - Additions to profit of the assessee u/s 41(1) - Held that:- The assessee has submitted the chart before us which shows that out of total outstanding sundry creditors 1,26,99,643/- are added back to income u/s 41(1) of the Act and some of the amounts was returned back. The Ld. A.R. has also submitted before us that same parties are there in the year under consideration and their liability was existing up to A.Y.2013-14. Therefore, we restore this matter back to the file of the AO to verify the same and decide the issue afresh in light of the above chart. In the result, appeal of the assessee is allowed for statistical purposes. Additions invoking the provisions of section 43B and disallowance of unpaid service tax liability - CIT(A) has deleted the addition on the ground that section 43B would attract only to a case where an item is allowable as deduction but because of failure to make payment such deduction would not be allowed - Held that:- The section 43B is applicable in the case of sales tax and excise duty but same could not be in case of service tax. The Ld. CIT(A) held that the assessee’s service provider is merely acting as an agent of the government, he is not entitled to claim deduction on account of service tax, therefore, no disallowance can be made on analogy of service tax . - department appeal is dismissed. Disallowance of bad debts - Held that:- Issue in disallowance of bad debt is covered by the Hon’ble Supreme Court in the case of TRF Ltd. (2010 (2) TMI 211 - SUPREME COURT) that it is not necessary for assessee to establish that the debt in fact has become irrecoverable. When a bad debt occurs it leads to closing of customer account therefore, our interference is not required.- Assessee's appeal is allowed for statistical purposes and department appeal is dismissed.
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2017 (8) TMI 1287
Whether Credit of TDS and TCS is allowed to assessee, collected on behalf of the mining department - Rejection on basis that such credit is to be given in the hands of the lessees of the Mines. - Held that:- There is no ambiguity so far as the provision of law is concerned under section 206C(1C) of the Act mandate every person, who grants a lease or licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any mine or quarry, to another person, other than a public section company for the use of such mine or quarry for the purpose of business shall, at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipts of such amount from the licensee or lessee in cash or by the issue a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee of any such licence, contract for lease of the nature specified u/s 206C(1C). Admittedly, the assessee does not fall in the category mentioned here in above neither the assessee is a licensee or lessee nor the assessee is given contract to use the mines for business. However, it is not clear whether the individuals who had paid the excess royalty also claimed credit of tax collected at source. The case of the assessee is that it deposited amount at the instance of the Mining Department, Government of Rajasthan and the said department issued the certificate in favour of the assessee. Thus the issue is restored to the file of AO to verify, whether any other individual claimed credit of tax on the payment of excess royalty, if not then the claim of the assessee may be allowed, in the interest of justice, as the Revenue is not legally entitled to withhold such tax, which is deposited by a wrong person. However, the Revenue would be at liberty to claim tax liability if any arising out of such transaction from the appropriate person. Appeal of the assessee is allowed for statistical purposes.
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2017 (8) TMI 1286
Bogus purchases - unexplained income - addition u/s 69C on the basis of estimation of % net profit- proof of genuineness - Held that:- The assessee has failed to produce those parties before the AO to prove that the parties are in existence and the purchases made from those parties are genuine in nature. It is also an undisputed fact that the Sales-tax Department of Maharashtra has conducted an investigation and listed those parties as hawala operators / bogus sellers involved in the activity of providing accommodation entries without actual delivery of goods. Though the assessee filed certain evidences in the form of sales bills and payment details to prove the purchases are genuine, but failed to file further evidences in the form of delivery notes, weigh bridge slips, etc. Therefore, prima facie, the assessee failed to discharge the onus cast upon him to prove the purchases as genuine. As in the case of Vijay Proteins Ltd vs CIT (2015 (1) TMI 828 - GUJARAT HIGH COURT ) observed that additions cannot be made of total bogus purchases and what needs to be taxed is only the profit element embedded in such bogus purchases depending upon the nature of business.With the observations held in this case , therefore we directed the AO to estimate net profit of 20% on alleged bogus purchases made from those parties in present case - Appeals of revenue are partly allowed.
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Customs
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2017 (8) TMI 1262
Valuation - enhancement of value - assessable value based on contemporaneous imports - Held that: - The adjudicating authority has discussed in detail that there was reasonable ground for doubting the transaction value, since the country of origin was not clear from the goods and the documents furnished. Out of the 25 items imported, for 14 items the value has been enhanced on the basis of the value of contemporaneous import furnished by the appellant. But the Department has adopted the highest of such contemporaneous import. This according to the appellant is against the provisions laid in sub Rule (3) of Rule (4) of Customs Valuation Rules, 2007 - sub Rule (3) provides that in applying this Rule, if more than one transaction value of identical goods is found, the lowest of such value shall be used to determine the value of imported goods. This being the law, the enhancement of the value on the basis of the highest of the contemporaneous import is unjustified. The value enhanced on the basis of the highest contemporaneous import for the 14 items cannot sustain and the same is set aside. However, the same requires to be enhanced on the basis of the lowest value of such contemporaneous import - For such re-computation / re-determination of the value of 14 items on the basis of the lowest value of the compared values, the matter requires to be remanded. In regard to 11 items, the department has enhanced the value on the basis of NIDB data - Held that: - the NIDB data cannot be made the basis for enhancement of value - enhancement of value to be set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 1261
Refund claim of ADD - time limitation - denial on the ground that the appellant had not requested for re-assessment of bill of entry - sub section (2) of Section 9A of Customs Tariff Act, 1975 - Held that: - It is very much clear from Rule 9A (2) that in case by final notification, the ADD is reduced, the excess paid is to be refunded - the issue is squarely covered by the decision in the case of CAPRIHANS INDIA LTD. Versus COLLECTOR OF CUSTOMS, BOMBAY [2001 (3) TMI 126 - CEGAT, COURT NO. I, NEW DELHI], where it was held that After the issue of the final notification dated 18-1-1994, the Government had no semblance of right to retain the money belonging to the importer. Government was retaining the importer's money without any legal sanction. When money of the importer was wrongly retained by the Government and was utilising it for its own purpose, the principle underlying quasi contract or restitution must apply - the rejection of refund is unjustified - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2017 (8) TMI 1258
Initiating Insolvency Resolution Process against the Applicant Company - issuance of directions activating the moratorium under Section 14 - Held that:- The petitioner has disclosed all the details required by Section 10 of the Code read with Rule-7 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The particulars of the corporate applicants and those of the financial debt have been disclosed in all material particulars. The name of the Interim Resolution Professional has also been proposed. The record of the financial debt as per the Books of the Corporate-Applicant; and record of the 'Operational Debtors'; certificate of eligibility of the Interim Resolution Professional, Books of Accounts showing default; copies of the audited financial statement for the Financial Year ending 31.03.2016 and 31.03.2015. (Annexure - P) all have been placed on record. A list of assets and liabilities as on 31.03.2016 has also been disclosed. The petitioner satisfies all the statutory requirements. The respondent has not been able to point out any defect warranting refusal to admit the petition. Therefore, we are inclined to admit the petition. As a sequel to the above discussion, the petition is admitted. As a necessary consequence, we declare a moratorium for the purposes referred to in Section 14 of the Code and direct the Interim Resolution Professional to make a public announcement of the initiation of corporate Insolvency Resolution Process and call for the submission of claims under Section 14 of the Code. The moratorium as contemplated in Section 14 shall come in operation with the exceptions as enumerated in Section 14(2) and (3).
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2017 (8) TMI 1257
Insolvency and Bankruptcy procedures - order of moratorium - Held that:- Petition deserves to be admitted and accordingly it is admitted. This Adjudicating Authority is appointing Shri Ravi Kapoor, who has shown his address at 4th Floor, Shaival Plaza, Near Gujarat College, Ellisbridge, Ahmedabad-380006, and Registration Number as IBBI/IPA-002/IP- 00076/2016-17/1203, as 'Interim Insolvency Resolution Professional' under Section 13(1) of the Code. This Adjudicating Authority directs the Applicant to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(l)(b) of the Code. In view of the commencement of the Insolvency Resolution Process with the admission of this Petition and appointment of the Interim Insolvency Resolution Professional, this Adjudicating Authority hereby passed the order declaring moratorium under Section 13(1)(a) prohibiting the following as laid down in Section 14 of the Code; (i) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (iii) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (iv) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. The supply of goods and essential services to the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central Government. The order of moratorium shall not apply to such transactions that might be notified by the Central Government in consultation with any financial sector regulator in view of sub-section (3) of Section 14 of the Code. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14.
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Service Tax
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2017 (8) TMI 1285
Levy of service tax - various CHA services - Various Business Auxiliary Services - Break Bulk fee as CHA service - Freight Rebate as BAS - Airline Commission as BAS - Airline Incentive as BAS - CCX fee as BAS - Held that: - the Mumbai Bench in the case of DHL Logistics Private Limited Versus Commissioner of Central Excise, Mumbai-II [2017 (8) TMI 600 - CESTAT MUMBAI], has held that freight rebate, airline commission and airline incentive are not liable to levy of service tax and has held the issue in favour of assessee. Following the same, we hold that the demand of service tax in respect of above three services is not sustainable and requires to be set aside. CCX fee as BAS - Held that: - The Tribunal in the case of DHL Logistics Private Limited held that demand under CCX fee as BAS is sustainable. Following the same, we hold that the demand in the appeal has to be sustained. Break Bulk fee as CHA service - whether the said fee would fall under BAS? - Held that: - the demand of service tax on the charges like break bulk fee, agency fee, unallocated income, system currency assessment factor and expenses reimbursement are not subject to levy of service tax under BAS prior to 1.5.2006. The demand on these charges is required to be set aside. Penalty - Held that: - several amendments were brought into the definition of Business Auxiliary Service - Further, a new entry Business Support Service was introduced from 1.5.2006. In view thereof, we hold that imposition of penalty is unwarranted. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 1284
Club or Association Services - service charges collected by assessee under the head subscription, affiliation fees, young leader forum - Held that: - Section 96J was introduced inserted in the Finance Act, 2011 w.e.f. 08.04.2011 where the services were services were brought under clutches of the Service Tax. Prior to which the Service Tax was not applicable - In the instant case, the period in dispute (16.06.2005 to 31.03.2008) is prior to the introduction of Section 96J. When it is so, then the Service Tax is not applicable in the instant case - appeal allowed. Renting of immovable property services for the period 01.06.2007 to 31.12.2007 - penalty - Held that: - an identical issue has come up before the Tribunal in the case of Arora Products vs Addl. Commissioner of Central Excise, [2008 (3) TMI 343 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR], wherein it was observed that on combined reading of provisions of Sections 11A(2B) and 2(C) of the Central Excise Act, 1944 and in view of the fact that duty leviable has already been deposited prior to the show cause notice, no penalty could be imposed under Section 11AC - appeal allowed. Convention/sponsorship charges for the period 18.04.2006 to 31.12.2007 - reverse charge mechanism - Held that: - in the impugned order no discussion has been made regarding the nature of the charges. When it is so, then we set aside the impugned order in this regard and remand the matter to the adjudicating authority to decide the issue de novo - matter on remand. Mandap Keeper's Services for the period 01.10.2002 to 31.12.2007 - penalty - Held that: - the demand was paid before the issuance of the show cause notice - penalty set aside - appeal allowed. Appeal allowed in part and part matter on remand.
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2017 (8) TMI 1283
Maintenance or Repair Services - the immovable property belonging to the appellants are leased/rented to various IT companies - The department was of the view that prior to 01.06.2007, the appellants are liable to pay service tax under the category of Maintenance or Repair Services - Held that: - Taking into consideration the concession made by the appellants that they are liable to pay service tax for the said services for the disputed period, we consider that the matter can be remanded to the adjudicating authority for the limited purpose of recalculation of net tax liability after giving the benefit of Cenvat credit that the appellant would have been eligible to avail during the impugned period. Penalty u/s 78 - Held that: - the appellants are a State Government Undertaking primarily set up for promoting the housing and promoting IT and IT enabled services. This being so, nefarious intent of evading service tax cannot be expected of them - appellants were under a reasonable cause for non-discharging the tax liability and accordingly, we find it proper to set aside the penalty - penalty set aside. Appeal allowed by way of remand.
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2017 (8) TMI 1282
SEZ unit - Refund of service tax - N/N. 09/2009-S.T., dated 3-3-2009 as amended by No. 15/2009-S.T., dated 20-5-2009 - denial on the ground that the requirements of notification dated 3-3-2009 have not been complied with by the appellant - Held that: - the disputed service were duly approved by the Development Commissioner in terms of notification dated 3-3-2009. Thus, the services consumed within the SEZ area should qualify for refund benefit under the Notification dated 3-3-2009, upto 19-5-2009, for the reason that notification dated 20-5-2009 will not have any retrospective application and the same will apply prospectively - rejection of refund not sustainable. Since, the service tax refund for the period upto 20-5-2009 has not been quantified, the matter should go back to the original authority for quantification of the refund amount. Appeal allowed by way of remand.
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2017 (8) TMI 1281
Levy of service tax - container detention charges - whether the “container detention charges” is subject to service tax or not? - Circular No. 121/2/2010-S.T., dated 26-4-2010 - Held that: - Circular No. 121/2/2010-S.T., dated 26-4-2010 states that To retain the container beyond the pre-holding period is neither a service provided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as ‘penal rent’ for retaining the containers beyond the pre-determined period - the amount collected as ‘detention charges’ is not chargeable to service tax - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1280
Taxability - promotion of business of ICD - services by CHA to clients - appellant got ex gratia payment from the ICD through which cargo were shipped - Held that: - when the incentives for promotion of the business of the ICD is paid and it was pre-decided then the same is chargeable to service tax - appeal dismissed - decided against appellant.
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2017 (8) TMI 1279
Recall of the order - maxim vigilantibus et non dormientibus jura subveniunt - Held that: - the appeal was dismissed on 2-5-2014 and after a gap of two years, the appellant has made the deposit in the month of April, 2016 but under the pressure of the department when notice under Section 87B of the Finance Act was issued - as per the maxim viailatibus et non dormientibus jura sub veniunt, law helps those who are vigilant and not those who go to sleep - application to recall the order rejected - decided against applicant.
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2017 (8) TMI 1278
Gross receipts – Demand – the decision in the case of SCOTT WILSON KIRKPATRICK (I) PVT. LTD. Versus COMMR. OF ST, BANGALORE [2006 (10) TMI 4 - CESTAT, BANGALORE] contested, where it was held that Gross receipts cannot be subject to service tax as part of the amount is on account of reimbursable expenses - condonation of delay - Held that: - Delay in filing the appeal is condoned as the appellant had been pursuing the appeal before the High Court under the provisions of Section 35G of the Central Excise Act, 1944 - however, the decision in the above case upheld, and the present appeal dismissed, as there is no merit in the appeal - decided against appellant.
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2017 (8) TMI 1277
Refund of service tax paid - subsequent exemption - recovery of tax so paid from the Municipal corporation / service recipient - As per the condition in the contract (E-tender), the amount to be offered was to include all taxes and levies - the decision in the case of Malwa Engineering Works Versus The Union of India And Others [2016 (10) TMI 801 - PUNJAB & HARYANA HIGH COURT] contested, where it was held that Once the amount offered by the petitioner included all taxes and levies and subsequently, the levy of service tax was withdrawn by the Government, that amount being one of the component in the price offered by the petitioner, he is not entitled to claim that from the Municipal Corporation, as that amount was to be received and paid to the department concerned - Held that: - the decision in the above case upheld - SLP dismissed.
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Central Excise
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2017 (8) TMI 1276
Deemed credit - assessee being SSI, availed Modvat Credit facility, as envisaged in N/N. 1/93 - Held that: - the facts of this case are also identical to facts in First Appeal No. 95 of 2005 and, thus, the said judgment that would be delivered by us in the said First Appeal, would apply to the facts of this case also. We are, thus, not rendering separate reasons for allowing this appeal - appeal allowed - decided in favor of assessee.
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2017 (8) TMI 1275
Area Based Exemption - N/N. 32/99-CE dated 08.07.1999 - assessee-Appellants have undertaken 25% expansion which was denied by the adjudicating authority - Held that: - an identical issue has come up before this Tribunal in assessee-Appellants own case Commissioner of Central Excise & Service Tax, Dibrugarh Versus M/s. Greenply Industries Ltd. [2016 (8) TMI 841 - CESTAT KOLKATA], where it was held that in view of the clarification dated 15.10.2009 discussed by the Adjudicating authority it cannot be said that no expansion in the installed capacity could be enhanced by the Respondent. There could be various stages by which installed capacities could be enhanced by the appellant so long as it remains within the licenced capacity decided by State Forest department in the light of Supreme Court s judgement dated 15.01.1998. There is also no requirement under Notification No.32/99-CE dated 08.07.1999 that licensed capacity fixed by State forest department has to be taken into consideration while allowing expansion and that appellant should in one go install all machinery required to cater to the licensed capacity sanctioned - benefit of notification allowed - appeal dismissed - decided against Revenue.
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2017 (8) TMI 1274
Valuation - production of various counts of yarn, and cleared to sister units - Section 4 (1) (b) read with Central Excise (Valuation) Rules, 2000 - Time limitation - revenue neutrality - Held that: - the appellant was following the cost of production as certified by a Cost Accountant. The department arrives at a different value of cost of production. Thus, the value adopted by the appellant is not baseless and on this score also, no mens rea can be attributed to the appellant. Time limitation - Held that: - Against the audit objection raised, which was conducted in May, 2005, the appellant had replied with reasons / details. In spite of this, the SCN is seen issued in March 2007 on the very same ground invoking extended period alleging suppression of facts, which in our view, is not acceptable - there cannot be any intention to evade payment of duty. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1273
Refund of excess paid duty - The ld. Commissioner (Appeals) has found that the amount recovered was not adjudged through any proceedings - Section 11 of the Central Excise Act, 1944 - Held that: - Section 11 of the Central Excise Act, 1944 did not authorize recovery of any sums which have not been adjudged and confirmed by the Competent Authority and that the said amount was not confirmed by any Adjudicating Authority. Therefore, the Original Authority had no power to recover the same under said Section 11 of the Central Excise Act, 1944 - appeal dismissed - decided against Revenue.
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2017 (8) TMI 1272
CENVAT credit - iron & steel items such as Chequered Plate, G.P. Sheet, H.R. Plate, G.P. Coil cut into sheet, H.R. Sheet, Cobble Plate etc. and on welding electrodes, used for manufacturing of Sponge Iron - Held that: - whether iron and steel item is to be considered as part or component or accessory of capital goods can be decided by applying user test as decided in Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT OF INDIA] and elaborated in CCE Vs.Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where it was held that Applying the "user test" on the facts in hand, we have no hesitation in holding that the steel plates and M.S. Channels, used in the fabrication of chimney would fall within the ambit of "capital goods" as contemplated in Rule 57Q - credit allowed. Penalty - Held that: - Reliance placed in the decision of Hon’ble Madras High Court in CCE, Salem Vs. Madras Aluminium Co. Ltd. [2016 (12) TMI 1374 - MADRAS HIGH COURT] which also deals with the scope of credit on similar items and also application of the concept of support structure while deciding the dispute, where it was held that there is no willful intent to evade duty and hence the question of invoking the penalty under section 11AC would not arise - penalty set aside. Credit allowed - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (8) TMI 1271
Valuation of imported goods - dry Ginger of Chinese origin - valid basis for enhancement of value - Held that: - reliance placed in the case of Vijaya International Impex Versus Commissioner of Customs (Seaport-Import) [2017 (6) TMI 991 - CESTAT CHENNAI], where it was unequivocally held that the transaction value is required to be accepted unless there are valid reasons for rejection of the said value as provided in the Customs Valuation Rules. Neither the market enquiry nor NIDB data will be a valid ground to disregard the transaction value. The DRI alert prices, or the appellant's own statement or public ledger information or email retrieved in respect of another importer or for that matter, price trend analysis made by a website of Samex Agency, cannot, by any stretch of imagination, be considered as valid basis for enhancement of the transaction value - when such contemporaneous imported goods have assessable value determined at US$ 800 /MT by the Commissioner (Appeals), which order has not been appealed against, the department cannot then assail the declared transaction value of US$ 800 /MT of identical goods imported by the appellants and instead enhance the same on basis of information from websites and so on. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1270
Reversal of CENVAT credit - destruction of semi finished goods in fire - whether assessee is required to reverse the Cenvat credit attributed to input destroyed as such or contained in the semi finished goods? - Held that: - there is no provision in law to recover the cenvat credit in respect input contained in semi finished goods destroyed in fire. The only rule which restrict availment of Cenvat credit is provided under Rule 6 of Cenvat Credit Rules. Accordingly to the said provisions when input is used in manufacture of exempted goods Cenvat credit is not available - In fact of the present case there is no dispute that input contained in semi finished goods was meant for use in the manufacture of dutiable goods and the same was used in the exempted goods, therefore provisions of Rule 6(1) is not applicable. As regard the specific provision for reversal of Cenvat credit on input contained in the goods which destroyed in the fire was brought w.e.f. 7-1-2007 under Rule 3(5)(c) of Cenvat Credit Rules whereas present case is pertaining to the period 9-6-2006 therefore this provision of Rule 3(5)(c) of Cenvat Credit rules is also not applicable - the Cenvat credit in respect of input either as such or in the form of semi finished goods lost in fire, cannot be denied - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1269
Valuation - extended period of limitation - It appeared to the Department that the appellant was clearing Methylene Chloride with Chloroform for various industrial consumers at different rates - Held that: - What is not disputed is that the entire proceedings have emanated subsequent to internal audit conducted by the department of the appellant - We find that while many of these contention of the appellant with regard to limitation have been taken note of by the adjudicating authority, however, they have been summarily brushed aside without any justifiable explanation. Surprisingly, the adjudicating authority has made an observation that visit of officers for routine checkup and audit does not debar the invocation of larger period if new ground comes to law, which was not revealed by the assessee to the department. However, the adjudicating authority has not substantiated as to what new ground had come to light pursuant to audit. Higher appellate forums have consistently held that to invoke extended period, the elements of suppression of facts have to be proved and that too with intent to evade payment of duty. This is certainly not the case here. The entire proceedings are hit by limitation - appeal allowed on the ground of limitation.
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2017 (8) TMI 1268
Benefit of N/N. 70/92-CE - Job-work - denial on the ground that the packing material was not covered under the said notification and their principal manufacturer had not filed the prescribed undertaking under the said notification - Held that: - Since the supplier of raw material (Indian Ordnance Factories) has submitted an undertaking and the notification does not expressly prescribe that the undertaking should be furnished before or at the time of clearance of goods, we feel that there is substantial compliance of the condition of the notification - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1267
Classification of goods - multi media speakers with FM radio - SSI exemption - use of brand name of others by GE in the manufacture of multi media speakers - whether the goods are classified under CETH 85184000 or under CETH 85279990? - Held that: - the product basically contains two speakers and a woofer. FM radio is built in, in the woofer. The whole set is a multi media speaker system generally connected to other devices like computers or audio players for sound output. A comparison of the above goods with multi media speakers + sub-woofer, without FM radio, indicates that both the products are almost identical except for the fact that in one, there is a an additional built in FM radio, in the sub-woofer - As clearly shown in the sales brochure, the main function of the product is being provided by speaker system with sub-woofer - similar issue of classification of multi media speakers having additional function of USB port and FM radio came up for consideration by the Tribunal in Logic India Trading Company [2016 (3) TMI 5 - CESTAT BANGALORE]. The Tribunal held that the impugned goods are speakers with added function and the main role of the item, in question, remains amplifying the sound received from outside source or from inbuilt feature. Applying the interpretative rules and section note 3 of Section XVI, the Tribunal held that the product should be classified as speakers only - The product should continue to be classified as speakers. SSI exemption - use of brand name - manufacture - Held that: - mere printing of brand name or packing will not amount to manufacture in case where there is no legal concept of “deemed manufacture”, specifically provided by any provisions applicable to the said product - The applicability of SSI exemption for the products manufactured by GE has to be re-verified with the details submitted by the GE to arrive at duty liability, if any. They have claimed that the turnover during the impugned periods is well below the threshold limit of ₹ 1.5 crores. This needs reverification and confirmation by the Jurisdictional officer. Penalty - Held that: - the appeal against penalty under Rule 26, filed by M/s Kaizen Computech Ltd. is also to be allowed. Appeal allowed in part and [part matter on remand.
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2017 (8) TMI 1266
Compounded Levy Scheme - Pan Masala packed manually in tins - CBEC (Tax Research Unit) vide circular dated 04.08.2008 - Held that: - the circular clarifies that the Compounded Levy Scheme notified under Section 3A will not be applicable to Pan Masala packed in tin containers manually. Such scheme is specifically notified only for pan Masala packed in FFS machines - the demand of duty on Pan Masala packed in tin containers cannot be sustained and is set aside. Demand of duty made on the basis of pouch packing machines installed in the factory on 01.07.2008 - Held that: - From a perusal of Section 3A ibid, along with the relevant N/N. 29 and 30/2008 CE NT dated 01.07.2008, it is evident that the Compounded Levy Scheme notified mandatorily required the manufacturer to pay duty as per the number of FFS machines installed in the factory. The manufacturer has the option of getting his machines sealed to avoid demand of duty under the above scheme - it is not disputed that the machines were installed in the factory and not sealed on 01.07.2008 i.e. available for manufacture of Pan Masala on 01.07.2008. Consequently, in terms of the scheme notified under Section 3A, the appellant is liable to pay duty for one day on 01.07.2008 for the machines which were installed in the factory and are sealed. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 1265
CENVAT credit - input - erection, commission and installation services received for the purpose of making a temporary shed for the storage of goods - denial of credit on the ground that the service of erection, commission and installation is not used in or in relation to the manufacture of final product - Held that: - the services of setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, are in the inclusion category of definition of “input service” - setting up of the factory also includes the storage place in the factory premises - in the present case the service received for setting up of storage is admissible input service. Even the independent storage is also included in the definition of input service - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1264
CENVAT credit - input - paver blocks used for repair of road in the factory yard - Held that: - only those goods can be treated as input which are used directly or indirectly in relation to manufacture of final product - In this case the paver blocks cannot be said to have been used in or in relation to the manufacture of final product even it is not contributing in relation to the plant and machinery in the performance of manufacture of final product - The road of the factory premises is similar to the construction activity; accordingly, it falls under the exclusion category - the paver blocks is not qualified as the input - appeal dismissed - decided against appellant.
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2017 (8) TMI 1263
CENVAT credit - non-payment of duty by supplier - case of the department is that the CENVAT credit which the appellants has availed in respect of the duty which was not paid by the supplier therefore the appellant is not entitled to the CENVAT credit - Held that: - the fact is not under dispute that appellant have bonafidely purchased the goods, with cover of valid duty paying invoice and payment of the entire amount of invoices to the supplier. The input covered under invoice was received and used by the appellants. In these facts, irrespective of whether the supplier has discharged the duty in time or otherwise, the eligibility of the cenvat credit to the appellants cannot be disputed. This issue has been clarified by the Board in the circular dated 15.12.2003 referred by the appellants - the Board has clarified the due to non-payment of duty by the supplier, action against the consignee to recover the CENVAT credit availed in such cases need not be resorted to as long as the bonafide nature of the transaction is not disputed. In the present case, there is no dispute about the bonafide nature of the transaction. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (8) TMI 1260
Principles of Natural Justice - validity of assessment - non application of mind on the part of the respondents - Held that: - this court can safely presume that the respondent had passed these impugned orders solely for the purpose of implementing the proposal given by the Enforcement Wing, which should not have been done, as pointed out by this Court, in several decisions, that the report of the Enforcement Wing can, at best, be a cause of action, for issuing show cause notice. Once the dealer files objections, the Assessing Officer has to independently apply his mind and take a decision on the facts placed before him - matters are remanded back to the respondent, for fresh consideration - appeal allowed by way of remand.
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2017 (8) TMI 1259
Registration under TNVAT Act - Whether sale and purchase activity was carried from its registered office situated in Tamil Nadu - IEC code taking in the name of registered office - Detention of goods - Held that: - The admitted position is that the petitioner which has unincorporated joint venture is not a registered dealer in the State of Tamil Nadu under the provisions of Tamil Nadu Value Added Tax Act or the Central Sales Tax Act. However, the petitioner is a registered dealer under the provisions of the Andhra pradesh Value Added Tax Act. The import has taken place in the project work done by the petitioner at in the State of Andhra Pradesh. Therefore, it is to be seen as to whether merely because a branch or liaison office established in Chennai, would run the transaction as a sale within the State - the answer would be negative. Thus, there is nothing on record to show that the joint venture with address at Chennai had sold the goods to the Joint venture with address at Andhra Pradesh. It may not be true that the Import and Export Code has been obtained in the name of the petitioner joint venture, giving the Chennai address, that by itself will not create a doubt in the transaction nor permit the transaction as a sale within the State of Tamil Nadu. For such interpretation given, it would be contrary to the section 5 (2) of the Central Sales Tax Act which provides that a sale or purchase of goods shall be deemed to be take place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents or title to the goods before the goods have crossed the customs frontiers of India. I have no hesitation to conclude that there is no element of sale within the State of Tamil Nadu and the respondent cannot instruct upon the petitioner to register themselves under the TNVAT Act and merely because the Import and Export Code is from the office in Tamil Nadu cannot be a feature to doubt any transaction - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (8) TMI 1256
Proceedings instituted against the appellant under Section 420 I.P.C., pending before the Judicial Magistrate First Class at Saundatti - Held that:- Today, Mr. K.V. Vishwanathan, learned senior counsel, has handed over two demand drafts for the said sum of ₹ 3,50,000/- (Rupees Three Lakhs and Fifty Thousand), which has been duly acknowledged by the learned counsel appearing for Respondent No.2. Since it is a matter essentially arising under Section 138 of the Negotiable Instruments Act, we are of the view that in the interest of justice and for securing ends of justice, the disputes are also given a quietus. Accordingly, complaint under C.C. No.487 of 2015 pending before the Judicial Magistrate, First Class, at Saundatti stands quashed.
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